Historical Related Party Transactions

Atalaya Mining PLC

01 December 2023

 

 

1 December 2023

Atalaya Mining Plc.

("Atalaya" or "the Company")

Historical Related Party Transactions

Atalaya Mining Plc (AIM: ATYM) has identified certain historical dealings with related parties where additional public disclosure is required. All of these dealings relate to amendments, entered into on preferable terms to the Company, to certain historical contracts. 

Background

In May 2015, the Company agreed terms with key stakeholders in a capitalisation exercise to finance the re-start of Proyecto Riotinto (the "2015 Capitalisation"). 

As part of the 2015 Capitalisation, the Company entered into offtake agreements with some of its large shareholders, one of which was Trafigura Pte Ltd ("Trafigura"), under which the total forecast concentrate production from Proyecto Riotinto was committed ("2015 Offtake Agreements"). Trafigura was a substantial shareholder in Atalaya and, therefore, a Related Party to the Company. As a result, the offtake agreement with Trafigura was deemed to be an AIM Rule 13 Related Party Transaction and appropriately disclosed in the Shareholder Circular published at the time.

In addition, in September 2015, the Company separately entered into a services agreement with Impala Terminals Huelva S.L.U. ("Impala Terminals") for the handling, storage and shipment of copper concentrates produced from Proyecto Riotinto ("2015 Port Handling Agreement"). At the time, Impala Terminals was majority owned by Trafigura. The agreement covered total export concentrate volumes produced from Proyecto Riotinto for three years for volumes not committed to Trafigura under its offtake agreement and for the life of mine for the volumes committed to Trafigura under its offtake agreement.

Spot Sales Agreements

Due to various expansions implemented at Proyecto Riotinto in recent years, as well as the production of pre-commercial concentrate in 2015 and 2016, volumes of concentrate have been periodically available for sale outside of the Company's various offtake agreements. As a result, from 2015 to November 2023, the Company completed 19 concentrate sales transactions on a spot basis ("Historical Spot Sales") outside of its offtake agreements, 10 of which were completed with Trafigura through amendments to its existing offtake agreement. Historical Spot Sales were the result of competitive tenders involving multiple potential buyers and were completed on an arm's length basis.

The Historical Spot Sales to Trafigura are shown below in Table 1 and represent an aggregate invoice value of approximately €159.9 million, or approximately 7.6% of the Company's total aggregate invoices over the eight year period. These transactions with Trafigura, although not individually identifiable, formed part of the related party transactions disclosure notes of the Company's financial statements since 2015.

Table 1: Historical Spot Sales to Trafigura

Transaction Date	Invoice Value (€m)
2015 November (pre-commercial)(1)	5.3
2015 December (pre-commercial)(1)	9.1
2016 March (pre-commercial)(1)	4.8
2020 December / 2021 January	19.9
2021 June	10.8
2021 June / July	15.7
2021 September	19.5
2021 December / 2022 May	29.9
2023 August	30.1
2023 October	14.8
Total	159.9

(1)   Shipments of concentrate produced before commerical production was declared, therefore the sales were not included in historical revenues, consistent with accounting standards.

As a result of an internal review, the Company has identified that the Historical Spot Sales transactions with Trafigura, as they technically sat outside the original 2015 Offtake Agreement, should have been evaluated as AIM Rule 13 Related Party Transactions individually but they were not evaluated as such at the time of being entered into.

The Company's independent directors (excluding Trafigura's nominee) consider, having consulted with its nominated adviser, that the terms of the Historical Spot Sales with Trafigura  were fair and reasonable insofar as its shareholders are concerned.

Port Handling Agreement Amendment

In September 2018, the Company entered into an amendment to the 2015 Port Handling Agreement, which included improved financial terms and a five year extension ("2018 Port Handling Extension Agreement").

In aggregate, the total fees paid to Impala Terminals, both directly and indirectly via deductions included in sales invoices, amounted to approximately €13 million during the period from October 2018 to October 2023. This represents approximately 1.3% of the Company's operating costs over the same period.

The Company notes that the fees payable to Impala Terminals were not included in the related party transactions disclosure notes of the Company's financial statements since the 2015 Port Handling Agreement was entered into. Future transactions with Impala Terminals, if it remains a related party, will be disclosed in the notes of all future financial statements. No amendments are required to be made to the Company's historical financial statements, as the fees payable to Impala Terminals were accurately accounted for.

As a result of an internal review, the Company has identified that the 2018 Port Handling Extension Agreement should have been evaluated as an AIM Rule 13 Related Party Transaction but it was not evaluated as such at the time.

The Company's independent directors (excluding Trafigura's nominee) consider, having consulted with its nominated adviser, that the terms of the 2018 Port Handling Extension Agreement were fair and reasonable insofar as its shareholders are concerned.

Further Review of Procedures

The Company regularly evaluates its internal controls and procedures to ensure compliance with all applicable rules and regulations. As a result, revisions to its reporting procedures are in the process of being implemented, in consultation with the Company's Board of Directors and its external advisors.

Contacts:

SEC Newgate UK	Elisabeth Cowell / Tom Carnegie / Matthew Elliott	+ 44 20 3757 6882
4C Communications	Carina Corbett	[phone]
Canaccord Genuity (NOMAD and Joint Broker)	Henry Fitzgerald-O'Connor / James Asensio	[phone]
BMO Capital Markets (Joint Broker)	Tom Rider / Andrew Cameron	[phone]
Peel Hunt LLP (Joint Broker)	Ross Allister / David McKeown	[phone]

About Atalaya Mining Plc

Atalaya is an AIM-listed mining and development group which produces copper concentrates and silver by-product at its wholly owned Proyecto Riotinto site in southwest Spain. Atalaya's current operations include the Cerro Colorado open pit mine and a modern 15 Mtpa processing plant, which has the potential to become a central processing hub for ore sourced from its wholly owned regional projects around Riotinto that include Proyecto Masa Valverde and Proyecto Riotinto East. In addition, the Group has a phased earn-in agreement for up to 80% ownership of Proyecto Touro, a brownfield copper project in the northwest of Spain, as well as a 99.9% interest in Proyecto Ossa Morena. For further information, visit www.atalayamining.com

 

END