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Atalaya Mining plc — Ultra-Condensed IC Thesis (5× Case)

Investment Case (30-second read)

Atalaya can justify ~5× equity upside by scaling copper production in Spain into a mid-tier European producer while benefiting from structurally higher copper prices — without relying on aggressive multiples or speculative exploration.

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Key Numbers (Bull Case)

Copper price: ~$6.0/lb (from ~$5.4/lb today)

Production: ~110 ktpa (vs ~55 ktpa today)

EBITDA: ~£740–750m

EV / EBITDA: ~8× (still conservative vs peers)

Implied Market Cap: ~£5.3bn (≈5× current)

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Value Drivers (Ranked)

1. Production growth — Riotinto optimisation + satellite feed; no mega-project required

2. Copper price regime shift — tight supply + electrification + EU security of supply

3. Multiple re-rating — net cash, long mine life, European jurisdiction

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Why the Market Pays Up

Strategic European copper exposure

Strong free cash flow at current prices

Balance sheet strength enables self-funded growth

Transition from single-asset to scalable platform

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What Must Go Right

Permitting and execution stay on track

Capital discipline maintained

Copper holds ≥ ~$5.0/lb long term

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One-Line Conclusion

If Atalaya doubles production while copper remains structurally tight, a ~£5bn equity valuation is justified on fundamentals alone — before optionality.

BroadfordBay - does the agreement end Sep 25?

And is there anything in it that would preclude the IRG having a say in it post Sep 25?

I appreciate that you aren't a contract lawyer (or maybe you are?!?!?)

What exactly is the relevance of September 2025 for the pipeline? Would Kurdistan / Turkey then be free to resume pumping through the shut in pipeline?

Trafigura are not interested in a buyout.

During the Investor Meet yesterday, Alberto said that there had been an approach(es) to Trafigura to buy their holding from a third party entities.

He is Trafigura's man on the board - head of M&A at Trafigura himself.

His personal holding could have potentially represented a conflict of interest between him and Traf - especialy s if indicated yesterday buyers have approached Traf to take them out.

Atalaya Mining PLC sale now in play

I bought a further 80,000 shares today following the RNS.

I note that Paul Hodges bought a further 50,000 shares today at 48pence.

Obviously, I view today's RNS as strongly bullish. Not bothered by the timing delay highlighted by today's RNS. Motivated by the additional contract wins. COP28 pledges by China (re wind) are also my motivating factors here

That's correct.

Vote against this proposal. Can't help feeling that this is somewhat of a shafting to loyal UK shareholders here.

Will be 19% witholding tax (but can be reduced to 10% if you claim back 9% - however this will entail arduous and expensive reclaiming from the Spanish Tax authorities).

The worst thing is, anyone holding in an ISA will not be able to get double taxation relief on the withholding tax.

Vote against!

Anyone else noticing how Paul Hodges appears to be acquiring all the meaningful free float in Windar?

He has now taken himself over 3% holding.

Anyone else notice how

1. Paul Hodges transferred his holding of approximately £500k into his ISA last week, thus giving up any downside tax protection on his holding (and protecting any further upside from CGT).

2. He had a further buy last week of 68,500 shares at 35.5 pence.

Both of the above (especially the ISA transfer) incredibly bullish on his behalf.

Russia produced 920,000 tonnes of refined copper in 2021, about 3.5% of the world total, out of which Nornickel produced 406,841 tonnes. UMMC and Russian Copper Company are the other two major producers, with Asia and Europe being Russia's key export markets.

If severe sanctions are imposed against Russian interests, copper price will spike to a far greater quantum than any energy inflationary pressures that will also surely follow.

Sale proceeds of Sanchez and Delgado (practically pound for pound) appear explicitly to cover exercise of all the options concerned. Alberto clearly has the personal resources to cover without requiring to follow suit.

Remaining shares held still subject to CGT on any further uplift.

Personal income tax liability not due for upto a year due to the date of exercise (January 22).

Nothing has changed

Still required over £2.5million cash from PDMRs to exercise.

I have to say that I am dar from expert on valuation metrics for miners.

However, my trading strategy that has served me well over the years (across multiple equities in various sectors) has been to follow director / PMDR buys. But top of the hierarchy of indicators for me are exercise of options by individual PMDRs, who:

1. Are located in low CGT jurisdictions
2. Are located in high personal income tax jurisdictions
3. Do not immediately sell issued shares
4. Are not serial directors and generally considered HNWI (High Net Worth Individuals) - important indicator as require borrowing at interest rates of circa 10%+ p.a. to exercise options - an extremely bullish indicator.

I would just look to page 11 of the January 2022 investor presentation - "Matsa Transaction Benchmarking".

Anywhere between an approx 47% - 170% premium to current share price. (I am aware that is an incredibly wide target).

At least any less than the 47% figure, and there would be no way the Board would be able to recommend a takeover to shareholders (and especially the institutional investors).

The proof is in the actions of the Directors/ PDMR exercising their options in the fashion that they did on the 25th January 2022 (RNSd on the 26th January 2022).

1. Tax year in Spain runs from 1st January to 31st December.

2. Remuneration from Employee Stock Options are considered ordianry income in Spain and are subject to 47% income tax rate in Spain at time of exercise. They are considered ineffecient tax wise.

3. CGT rates in Spain are 26% (differential in share price at time of exercise of option and eventual sale price).

4. Strike price of options will have to have been paid by PMDR personal reserves (circa EUR 3million total). A large amount for any employee(s) of the company.

5. The 21% differential in the tax rate, if options exercised now, is reason enough to exercise the options now ONLY if a major positive corporate event is coming imminently.

6. This is not an unusual personal tax planning tactic in Spain, and is considered prudent personal financial planning.

This is the proof

If Southern Copper are the buyers, it would represent a huge missed opportunity for Sandfire.

Atalaya has secured certain terms of exclusivity with Lain Tech for the use of E-LIX within the Iberian Pyrite Belt. Although not exactly being downplayed by the company, annual E-LIX revenues from future licensing deals could dwarf future revenue from conventional mining business model at Rio Tinto.

Sandfire's newly acquired resources (MATSA) are located 100% within the Iberian Pyrite Belt

Southern Copper Corporation are the other strong candidate for a takeover. Senior management (allegedly) have been to Huelva, and they have publically stated as recently at the beginning of February that they are looking to actively acquire, both in South America and any jurisdictions where mining is welcome. They have the liquidity, plus there is the obvious hispanic connection. They are currently producing 900,000 tonnes of copper per annum, but looking to expansion to 1.8million tonnes per annum. The only way to hit this goal is through acquiring additional assets.

https://www.bnamericas.com/en/news/southern-copper-seeking-large-scale-acquisitions

Southern Copper have the liquidity and capital to acquire for cash offer, without requiring either debt or capital raise.

I agree that a minority of these options required to be exercised due to time limit. But the vast majority of the options were under no such time restraint.

The exercise of these options is as significant an event as a director share purchase (due to no follow through sale of any shares acquired). A significant event is due to occur.

I note several sizable purchases now going through at the full ask.

Of further note, the options exercised by the Directors were not anywhere near to expiration.

For example, as per the RNS of 10th July 2019, the 400,000 options issued to Enrique Delgado (General Manager of Operations) only were set to expire on 8th July 2024.

Why exercise them so early now, and then not sell a proportion to cover the settlement cost? There must be a very strong incentive to retain all the shares acquired and fund the purchase from personal resources.

A bid is coming.

I am convinced that Sandfire are currently running the slide rule over Atalaya and a formal takeover approach is imminent.

1. MATSA mining complex only has 4.4 million tonnes ore annual processing capacity. Atalaya has 15 million tonnes capacity.

2. Additional resources of Atalaya within same geographical location as MATSA - especially with new drill results in Masa Valverde and imminent NI 43-101.

3.Exclusivity of E-LIX for the benefit of Atalya within Spain and Portugal - E-LIX would directly go to MATSA bottom line

4. Trafigura connection between both MATSA and Atalaya - would be looking to facilitate a transfer.

5. Most telling (and I was waiting to see the outcome if this) - none of the Directors who exercised options over 1.35 million shares last week have sold any of these shares, even though it cost them £2.5million to exercise these options. The exercise of these options has led to a income tax bill for them in the new Spanish tax year (which runs from Jan to Dec). Income tax in Spain (like the UK) is more than CGT rate. If they know bid is coming, and share price will motor due to bid / takeover, than they would prefer additional uplift in share price at CGT rate (and not income tax rate). The £2.5million exercise of the options is significant - this means they have confidence in the process.

Judging by the MATSA purchase price that just completed 1st February 2022, I expect a bid significantly north of current enterprise value. Personally, I would not be satisfied with a minimum of three times current EV - based on MATSA purchase. Otherwise I would vote against.

I hold position in size.