Atalaya Mining Regulatory News (ATYM)

7 September 2017

Atalaya Mining Plc.

("Atalaya" or the "Company")

Q2 and H1 2017 Interim Financial Statements

Atalaya Mining Plc. (AIM: ATYM; TSX: AYM) is pleased to announce its unaudited quarterly results for the three and six months ended 30 June 2017, together with the unaudited, condensed, interim consolidated financial statements.

Operational Highlights

Proyecto Riotinto

· Copper production during Q2 2017 was 9,058 tonnes, 3% higher than copper production in the previous quarter of 8,805 tonnes. Copper production during H1 2017 was 17,863 tonnes compared with 8,489 tonnes during H1 2016.

· Ore processed during the quarter was 2,154,907 tonnes in line with previous quarter when ore processed was 2,196,299 tonnes. During H1 2017 ore processed was 4,351,206 tonnes compared with 2,442,728 tonnes during H1 2016.

· Copper recovery during the quarter was 85.16% slightly above the previous quarter of 84.63%. Copper recovery for H1 2017 averaged 84.90% representing an improvement over 82.20% during H1 2016.

· The Company maintains its copper production guidance for Proyecto Riotinto of 34,000 to 40,000 tonnes for 2017.

Expansion of Proyecto Riotinto

· In June 2017, the Board of Directors of the Company approved the commencement of a study to demonstrate the feasibility of increasing mining and processing capacity beyond the current 9.5 Mtpa, to a maximum of 15.0 Mtpa at Proyecto Riotinto. If proven feasible, copper production would reach approximately 50,000 tonnes per year.

Proyecto Touro

· In February of this year the Company announced the exercise of an option to acquire an initial 10% stake in Proyecto Touro. The agreement is based on a staged earn-in process to acquire up to 80% of the project. Proyecto Touro is located in Galicia, north-west Spain.

· The Company has also signed an option agreement to acquire exploration concessions that cover 122.7 km2 immediately surrounding Proyecto Touro, where mineralised copper occurrences are documented.

· Permitting of Proyecto Touro is progressing according to schedule. Metallurgical test-work has demonstrated that high grade clean concentrates and high recovery rates can be achieved.

· A technical report is at an advanced stage of development and is expected to be at a pre-feasibility level. Completion is anticipated during Q4 2017.

Financial Highlights

· Revenues of €53.4 million for Q2 2017 compared with €17.7 million in Q2 2016. Similarly, revenues for H1 2017 were €79.1 million compared with €22.6 million for the same period of 2016.

· Cash costs during Q2 2017 were $2.07/lb of payable copper, increased from cash costs of $1.83/lb of payable copper in Q1 2017. The increase was due to the expensing of a higher proportion of stripping costs as well as one off maintenance costs in the milling area during the quarter. All-in sustaining costs ("AISC") during Q2 2017 amounts to $2.30/lb of payable copper, also increased from $2.15/lb of payable copper during Q1 2017. Cash costs for H1 2017 were $1.97/lb payable copper versus $2.31/lb payable copper during H1 2016. AISC amounted to $2.22/lb payable copper during H1 2017 against $2.74/lb payable copper for H1 2016.

· Positive Earnings Before Interest, Taxation, Depreciation and Amortisation ("EBITDA") of €11.9 million in Q2 2017 compared with a negative EBITDA of €1.1 million in Q2 2016. The increase of €13.0 million in EBITDA was a result of the increase in the volume of copper concentrate sold, lower cash costs and higher realised copper prices. On acumulative basis EBITDA during H1 2017 was €24.5 million compared with a negative EBITDA of €3.6 million in H1 2016.

· Q2 2017 profit after tax amounted to €5.7 million (or €4.8 cents per share on a fully diluted basis) compared with a loss for Q2 2016 of €3.2 million (or -€2.8 cents per share on a fully diluted basis). Profits after tax for H1 2017 were €10.9 million versus a loss of €6.5 million during H1 2016.

· Inventories of concentrate at 30 June 2017 amounted to €1.6 million.

· Working capital deficit has consistently improved over the last two quarters as a result of cash generated from operations. At the end of Q2 2017 working capital deficit was €14.1 million from €20.0 million at the end of Q1 2017 and €25.4 million at 31 December 2016. Unrestricted cash balances as at 30 June 2017 amounted to €1.6 million.

· Cash flows from operating activities before changes in working capital were €11.7 million for Q2 2017 compared with a negative cash flow of €1.2 million during Q2 2016. Cumulative for H1 2017, cash flows from operating activities before changes in working capital were €24.0 million for H1 2017 compared with a negative cash flow of €3.7 million during H1 2016.

· Net cash flows used in operating activities after changes in working capital were negative €4.3 million for Q2 2017 compared with a cash flow of €7.4 million during Q2 2016. Net cash flows from operating activities after changes in working capital were €10.0 million for H1 2017 compared with of €8.9 million during H1 2016.

Corporate Highlights

· On 25 April 2017, Atalaya and Astor applied for permission to appeal to the Court of Appeal. On 11 August 2017, the Court of Appeal granted permission to both parties to appeal (although it rejected three of Astor's seven grounds). The Appeal is anticipated to take place by July 2018.

Alberto Lavandeira, CEO commented:

"I am pleased to report on a successful six months for Atalaya. Proyecto Riotinto is performing well, having produced 9,058 tonnes of copper in concentrate in the quarter. Approved studies to assess the viability of an expansion of the mine are progressing as planned and we look forward to updating the market with the results in due course. Operational and financial performance at Proyecto Riotinto gives us the confidence to reiterate our full year production guidance of 34,000-40,000 tonnes copper. Progress at Proyecto Touro is promising and we look forward to the prospect of bringing this mine in to commercial production in the near future."

About Atalaya Mining Plc

Atalaya is an AIM and TSX listed operational and development company which produces copper concentrates and silver by-product at its fully owned Proyecto Riotinto site in southwest Spain. In addition, the Company has a phased, earn-in agreement for up to 80% ownership of Proyecto Touro, a brownfield copper project in the northwest of Spain which is currently in the permitting stage. For further information, visit www.atalayamining.com

This announcement contains information which, prior to its publication constituted inside information for the purposes of Article 7 of Regulation (EU) No 596/2014.

Contacts:

ATALAYA MINING PLC

MANAGEMENT'S REVIEW AND

CONDENSED INTERIM CONSOLIDATED

FINANCIAL STATEMENTS

30 June 2017

(UNAUDITED)

Notice to Reader

The accompanying unaudited, condensed, interim consolidated financial statements of Atalaya Mining Plc have been prepared by and are the responsibility of Atalaya Mining Plc's management. The unaudited, condensed, interim consolidated financial statements have not been reviewed by Atalaya's auditors.

Introduction

This report provides an overview and analysis of the financial results of operations of Atalaya Mining Plc and its subsidiaries, to enable the reader to assess material changes in the financial position between 31 December 2016 and 30 June 2017 and results of operations for the six months ended 30 June 2017 and 2016.

This report has been prepared as of 7 September 2017. The analysis, hereby included, is intended to supplement and complement the unaudited, condensed, consolidated financial statements and notes thereto ("Financial Statements") as at and for the six months ended 30 June 2017. The reader should review the Financial Statements in conjunction with the review of this report and with the audited, consolidated financial statements for the year ended 31 December 2016, and the unaudited, condensed consolidated financial statements for the six months ended 30 June 2016. These documents can be found on the Atalaya website at www.atalayamining.com.

Atalaya prepares its Financial Statements in accordance with International Financial Reporting Standards ("IFRSs"). The currency referred to in this document is the Euro, unless otherwise specified.

Forward-looking statements

This report may include certain "forward-looking statements" and "forward-looking information" under applicable securities laws. Except for statements of historical fact, certain information contained herein constitutes forward-looking statements. Forward-looking statements are frequently characterised by words such as "plan", "expect", "project", "intend", "believe", "anticipate", "estimate", and other similar words, or statements that certain events or conditions "may" or "will" occur. Forward-looking statements are based on the opinions and estimates of management at the date the statements are made, and are based on a number of assumptions and subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ materially from those projected in the forward-looking statements. Assumptions upon which such forward-looking statements are based include that all required third party regulatory and governmental approvals will be obtained. Many of these assumptions are based on factors and events that are not within the control of Atalaya and there is no assurance they will prove to be correct. Factors that could cause actual results to vary materially from results anticipated by such forward-looking statements include changes in market conditions and other risk factors discussed or referred to in this report and other documents filed with the applicable securities regulatory authorities. Although Atalaya has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements, there may be other factors that cause actions, events or results not to be anticipated, estimated or intended. There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Atalaya undertakes no obligation to update forward-looking statements if circumstances or management's estimates or opinions should change except as required by applicable securities laws. The reader is cautioned not to place undue reliance on forward-looking statements.

1. Description of the business

Atalaya is a Cyprus based copper producer with mining interests in Spain. The Company is listed on the Alternative Investment Market of the London Stock Exchange ("AIM") and on the Toronto Stock Exchange ("TSX").

Proyecto Riotinto, fully owned by the Company's subsidiary Atalaya Riotinto Minera, S.L., is located in Huelva, Spain. The Company operates the Cerro Colorado open-pit mine and its associated processing plant of 9.5Mtpa where copper in concentrate and silver by-product are produced.

The Company has an initial 10% stake in Cobre San Rafael, S.L., the owner of Proyecto Touro, as part of an earn-in agreement which will enable the Company to acquire up to 80% of the copper project. Proyecto Touro is located in Galicia, north-west Spain.

2. Overview of operational results

Proyecto Riotinto

The following table presents a summarised statement of operations of Proyecto Riotinto for the three and six months ended 30 June 2017. Note that commercial production was declared in February 2016.

Note: The numbers in the above table may differ slightly between them due to roundings.

* Commercial production started in February 2016.

Three months operational review

Production of copper contained in concentrate in Q2 2017 was 9,058 tonnes significantly above 4,442 tonnes in Q2 2016 when the processing plant was still ramping up throughput. In terms of payable copper in concentrate, Q2 2017 production was 8,660 tonnes compared to 4,287 tonnes of payable copper in Q2 2016. Production of payable copper during Q2 2017 also improved with respect to Q1 2017 production of 8,403 tonnes of payable copper. The Company maintains its copper production guidance of 34,000 to 40,000 tonnes for 2017.

Ore mined in Q2 2017 was 2,265,785 tonnes well above 1,340,492 tonnes during Q2 2016 and slightly below 2,312,590 tonnes during Q1 2017. The mining contractor has launched a replacement programme for the mining fleet. New loaders and trucks are expected to be delivered to site over the next two quarters in anticipation of a potential increase in mining rates.

Ore processed in Q2 2017 was 2,154,907 tonnes also above 1,308,780 tonnes in Q2 2016 and in line with 2,196,299 tonnes in Q1 2017. Modifications to the primary milling circuit, which includes a pebble crusher in closed circuit with the primary mill, have reported better milling efficiencies.

Ore grade averaged 0.49% Cu in Q2 2017 compared to 0.44% Cu in Q2 2016. Copper recovery during the quarter was 85.16% slightly above the previous quarter of 84.63%.

During Q2 2017, the Company sold 55,574 tonnes of concentrates, compared to 22,701 tonnes in Q2 2016. Concentrate production in Q2 2017 amounted to 39,772 tonnes, compared to 20,727 tonnes for the same period in 2016. As at 30 June 2017, the Company had 2,277 tonnes of copper concentrates in inventories. The Company has not been impacted by the severe disruptions reported at ports across Spain due to strikes.

Six months operational review

Production of copper contained in concentrate during H1 2017 was 17,863 tonnes, compared to 8,489 tonnes in the same period of 2016. For comparative purposes commercial production was only declared in February 2016. Payable copper in concentrates was 17,063 tonnes compared to 8,283 tonnes of payable copper in H1 2016.

Ore mined in H1 2017 was 4,578,375 tonnes compared to 2,474,253 tonnes during H1 2016. Ore processed was 4,351,206 tonnes versus 2,442,728 tonnes in H1 2016.

Ore grade during H1 2017 was 0.49% Cu compared to 0.44% Cu in H1 2016. Copper recovery was 84.90% versus 82.20% in H1 2016. Concentrate production amounted to 79,954 tonnes significantly above H1 2016 production of 39,897 tonnes.

Study to increase copper production

In June 2017, the Board of Directors of the Company approved the commencement of a study to demonstrate the feasibility of increasing the mining and processing capacity beyond the current 9.5 Mtpa to a maximum of 15.0 Mtpa. This translates into an increase in copper production to approximately 50,000 tonnes per annum.

The study will revisit existing geological modelling and resource and reserve estimates with a view to maintaining life of mine in the range of 12 - 14 years. Mine planning and the existing mining fleet will be re-assessed. Processing capacity will be maximised and complemented with additional crushing and milling equipment. Flotation and concentrate handling modifications are not expected to be significant. Tailings storage facilities and auxiliary infrastructure will be re-evaluated.

Should the Board approved the expansion project, an indicative construction period is estimated to be 18-24 months after the investment has been approved.

Exploration and Geology

Near-mine exploration drilling continued from the previous quarter with a programme to test the lateral extension of Filon Sur. With the programme now essentially complete the exploration block model has been updated with results to be part of the resources and reserves update that will form part of the studies related to the Expansion to 15 Mtpa Project.

In-fill drilling exploration at Cerro Colorado was mainly centred in the north-western extension of the pit where better than anticipated mineralised intervals and grades have been discovered. This campaign is targeting inferred resources with the objective of increasing confidence levels and potential reclassification.

Proyecto Touro

The Company signed an option agreement to acquire exploration concessions that cover 122.7 km2 immediately surrounding Proyecto Touro, where mineralised copper occurrences are documented. An ambitious exploration programme is under elaboration.

Permitting of Proyecto Touro is progressing according to schedule. Studies and applications were submitted at the end of the quarter to the regional authorities for review and evaluation. Consultations with different administrative bodies have been held and local and regional stakeholders have been engaged in the process, with positive feedback received.

As previously reported, two important milestones have been achieved at Proyecto Touro: the first was the successful completion of metallurgical test-work which has demonstrated that high grade clean concentrates and high recovery rates can be achieved. The second was the completion of 26,557 m of exploration and in-fill drilling which will provide the basis of an NI 43-101 technical report.

The technical report is progressing ahead of schedule and is at an advanced stage of development. It is expected to be at a pre-feasibility level of detail in the near future, with completion brought forward to the beginning of Q4 from the original estimate of the end of FY 2017.

Corporate Social Responsibility ("CSR")

As part of the Company's Corporate Social Responsibility initiatives a significant archaeological programme was launched in June 2017 to study a number of archaeological sites including Cortalago, a Roman mining settlement of relevance. The programme is expected to last for 12 months. During Q2 2017, the discovery of a number of gold coins at the site attracted significant media interest, and included a formal presentation of the discovery at the Minas de Riotinto town Foundation.

3. Outlook

The forward-looking information contained in this section is subject to the risk factors and assumptions contained in the cautionary statement on forward-looking statements included in the introduction note of this report.

Operational guidance

Proyecto Riotinto operational guidance for 2017 remains as follows:

Copper head grade for 2017 was budgeted to average between 0.49% and 0.51% Cu, with a recovery rate of approximately 79% to 82%. Cash operating cost for 2017 is expected to be in the range of $1.90/lb - $2.10/lb. All-in sustaining cost for 2017 is expected to be in the range of $2.00/lb - $2.10/lb.

4. Overview of the financial results

The following table presents summarised consolidated income statements for the three and six months ended 30 June 2017, with comparatives for the three and six months ended 30 June 2016.

Three months financial review

Revenues for the three-month period ended 30 June 2017 amounted to €53.4 million (Q2 2016: €17.7 million). Higher revenues, compared to the same quarter in the previous year, were driven by higher volumes of concentrate sold and an increase in copper prices.

Realised prices of $2.61/lb copper during Q2 2017 compared to $2.11/lb copper in Q2 2016. Concentrates were sold under offtake agreements in place. The Company did not enter into any hedging agreements in Q2 2017.

Operating costs for the three-month period ended 30 June 2017 amounted to €41.0 million, compared to €15.9 million in Q2 2016. The increase was mainly due to higher mining and processing variable costs directly attributable to increase in copper production.

Cash costs of $2.07/lb payable copper during Q2 2017 compares to $2.36/lb payable copper in the same period last year. Cash costs were impacted by the expensing of a higher proportion of stripping costs during Q2 2017 compared to Q1 2017 as well as one-off maintenance costs in the milling area during the quarter. Capitalised stripping costs during Q2 2017 amounted to €1 million compared to €4.5 million in Q1 2017. All-in sustaining costs in the reporting quarter were $2.30/lb payable copper compared to $2.92/lb payable copper in Q2 2016 and to $2.15/lb payable copper in Q1 2017. The increase in AISC compared to Q1 2017 was mainly related to the one-off maintenance cost.

Sustaining costs for Q2 2017 amounted to €2.2 million compared to €nil in Q2 2016. Sustaining costs accounted for development programmes at the tailings storage facilities, flotation circuit and environmental measures.

Corporate expenses amounting to €0.2 million (Q2 2016: €2.4 million) include non-operating costs of the Cyprus office, corporate legal and consultancy costs, on-going listing costs, officers and directors' emoluments, and salaries and related costs of the corporate office. Corporate costs were partially offset by legal costs paid by Astor to the Company as a result of the Court ruling during Q2 2017.

Exploration costs at Proyecto Riotinto for the three-month period ended 30 June 2017 amounted to €0.3 million compared to €0.5 million in Q2 2016. All exploration costs at Proyecto Touro are capitalised.

EBITDA for the three months ended 30 June 2017 amounted to €11.9 million as a result of the increase in copper concentrate sold and higher realised copper prices, as compared to a negative EBITDA in Q2 2016 of €1.1 million.

The main item below the EBITDA line is depreciation and amortisation of €3.7 million (Q2 2016: €1.9 million). Net financing costs for Q2 2017 amounted to €0.9 million, including accretion cost of the discounted debt for Astor and interest cost for the Transamine prepayment.

Six months financial review

Revenues for the six-month period ended 30 June 2017 amounted to €79.1 million (H1 2016: €22.6 million). Commercial production at Proyecto Riotinto was declared in February 2016.

Copper concentrate production during the six months period ended on 30 June 2017 was 79,954 tonnes (H1 2016: 39,897 tonnes), 77,677 tonnes of copper concentrates were sold in the same period (H1 2016: 35,228 tonnes). Inventories of concentrates as at the reporting date were 2,277 tonnes (2016: 11,212 tonnes), with no inventories held as at 31 December 2016.

Realised price for the six months period in 2017 was $2.55/lb copper compared to $2.06/lb copper in the same period of 2016. Concentrates were sold under offtake agreements in place. The Company did not enter into any hedging agreements in 2017.

Operating costs for the six-month period ended 30 June 2017 amounted to €52.5 million, compared to €20.3 million in H1 2016. The increase was mainly due to higher mining and processing variable costs directly attributable to increase of copper production and the impact of the pre-stripping cost, as previously indicated in this report.

Cash costs of $1.97/lb payable copper during H1 2017 compares to $2.31/lb payable copper in the same period last year. All-in sustaining costs in the reporting quarter were $2.22/lb payable copper compared to $2.74/lb payable copper in H1 2016.

Sustaining costs for the six-month period amounted to €2.7 million, compared to €nil in the same period in the previous year. Sustaining costs accounted for improvements in the water supply systems, modifications to the processing flowsheet, upgrades at the main incoming substation and development programmes at the tailings storage facilities, flotation circuit and environmental measures.

Corporate costs for the first six months of 2017 were €1.6 million, compared to €5.2 million in H1 2016. Corporate costs mainly include Company overhead expenses as described before in this report.

Exploration costs related to Proyecto Riotinto for the six-month period ended 30 June 2017 amounted to €0.5 million, compared to €0.7 million in H1 2016. All exploration costs relating to Proyecto Touro during 2017 have been capitalized.

EBITDA for the six months ended 30 June 2017 amounted to €24.5 million, compared to a negative EBITDA in the same period of last year of €3.6 million.

Depreciation and amortisation amounted to €8.1 million for the six-month period ended 30 June 2017 (H1 2016: €2.5 million). The increase in depreciation was mainly driven by increase in production as all mining assets are depreciated per unit of production.

Net finance costs for the period of €1.7 million (H1 2016 €0.1 million) mainly relate to the unwinding of the net present value of the deferred consideration for Astor. In addition, the Company has also incurred interest costs for the Transamine prepayment and the Social Security debt. 

Realised copper prices

The average prices of copper for the three and six months ended 30 June 2017 and 2016 are summarised below:

Realised copper prices for the reporting period noted above have been calculated using payable copper and including provisional invoices and QPs together, compared to previous quarter, where QPs were included individually. As a result, the realised copper price per pound payable of copper in the reporting period was similar to the market average copper price as the Company had no hedges during the six-month period ended 30 June 2017.

5. Non-GAAP Measures

Atalaya has included certain non-IFRS measures including "EBITDA", "Cash Cost per pound of payable copper" and "realised prices" in this report. Non-IFRS measures do not have any standardised meaning prescribed under IFRS, and therefore they may not be comparable to similar measures presented by other companies. These measures are intended to provide additional information and should not be considered in isolation or as a substitute for indicators prepared in accordance with IFRS.

EBITDA includes gross sales net of penalties and discounts and all operating costs, excluding finance, tax, depreciation and amortisation expenses.

Cash Cost per pound of payable copper includes cash operating costs, including treatment and refining charges ("TC/RC"), freight and distribution costs net of by-product credits. Cash Cost per pound of payable copper is consistent with the widely accepted industry standard established by Wood Mackenzie and is also known as the C1 cash cost.

Realised prices per pound of payable copper is the value of the copper payable included in the concentrate produced including the penalties, discounts, credits and other feature governed by the offtake agreements of the Company and all discounts or premium provided in commodity hedge agreements with financial institutions, expressed in USD per pound of payable copper. Realised price is consistent with the widely accepted industry standard definition.

6. Liquidity and capital resources

Atalaya monitors factors that could impact its liquidity as part of Atalaya's overall capital management strategy. Factors that are monitored include, but are not limited to, the market price of copper, foreign currency rates, production levels, operating costs, capital and administrative costs.

The following is a summary of Atalaya's cash position as at 30 June 2017 and 31 December 2016 and cash flows for the three and six months ended 30 June 2017 and 2016.

Liquidity information

Unrestricted cash and cash equivalents as at 30 June 2017 increased to €1.6 million from €0.9 million at 31 December 2016. Increase in cash balances is the result of net cash flow incurred in the period. Cash balances are unrestricted and include balances at operational and corporate level.

Restricted cash remains at €0.3 million as at 30 June 2017 and mainly relates to deposit bond guarantees.

As of 30 June 2017, Atalaya reported a working capital deficiency of €14.1 million, compared with a working capital deficit of €25.4 million at 31 December 2016. The main liability of the working capital is trade payables. The trade payable account relates to the main contractor where the Company has reached certain agreements to reduce its deficit progressively during 2017 and 2018. The Company expects the deficit to be reduced over the next months with cash generated by operations.

In June 2017, the Company completed repayment of €16.9 million to the Social Security's General Treasury in Spain. The debt liability was incurred by the former owners of the assets. Repayment was completed according to the agreed repayment schedule.

During Q2 2017, the Company filed a formal claim in the Administrative Court relating to the previously announced government grant of €8.8 million. No amount has been recognised in the financial statements.

Overview of the cash flows of the Company

Three months cash flows review

Cash and cash equivalents decreased by €8.1 million during the three months ended 30 June 2017. This was due to cash used in operating activities amounting to €4.3 million and cash used in investing activities amounting to €3.8 million.

Cash generated from operating activities before working capital changes was €11.7 million. Atalaya reduced its trade receivables in the period by €13.0 million and its trade payables by €11.9 million and increased its inventory levels by €9.3 million.

Investing activities during the quarter consumed €3.8 million, relating mainly to the deferred mining costs.

Six months cash flows review

Cash and cash equivalents increased by €0.7 million during the six months ended 30 June 2017. This was due to cash from operating activities amounting to €10.0 million and cash used in investing activities amounting to €9.2 million.

Cash generated from operating activities before working capital changes was €24.0 million. Atalaya decreased its trade payables in the period by €4.8 million, as well as its inventory levels and its trade receivable balances by €3.8 million and €4.7 million, respectively.

Investing activities during the six-month period amounted to €9.3 million, relating mainly to the deferred mining costs.

Foreign exchange

Foreign exchange rate movements can have a significant effect on Atalaya's operations, financial position and results. Atalaya's sales are denominated in U.S. dollars ("USD"), while Atalaya's operating expenses, income taxes and other expenses are denominated in Euros ("EUR"), and to a much lesser extent in British Pounds ("GBP").

Accordingly, fluctuations in the exchange rates can potentially impact the results of operations and carrying value of assets and liabilities on the balance sheet.

During the three and six months ended 30 June 2017, Atalaya recognised a foreign exchange loss of €0.5 million and €0.8 million respectively.

The following table summarises the movement in key currencies versus the EUR:

In February 2017, the Company entered into certain foreign exchange hedging contracts to offset the agreements in force as at 31 December 2016. During Q2 2017, Atalaya did not have any currency hedging agreements.

Further information on the hedging agreements is disclosed in the unaudited, condensed interim consolidated financial statements that follow (Note 15).

7. Deferred consideration

Astor Case

On 6 March 2017, judgment in the case (the "Astor Case") brought by Astor Management AG ("Astor") was handed down in the High Court of Justice in London (the "Judgment"). On 31 March 2017, declarations were made by the High Court which gave effect to the Judgment. The High Court found that the deferred consideration under the master agreement entered into between the Company, Astor and others (the "Master Agreement") did not start to become payable when permit approval was granted for the Rio Tinto Copper Project ("Proyecto Riotinto"). Accordingly, the first instalment of the deferred consideration had not fallen due.

While the Court confirmed that the Company was not in breach of any of its obligations, the Master Agreement and its provisions remain in place.

As a consequence, the Judgment requires that, in accordance with the Master Agreement, Atalaya Riotinto Minera, S.L.U. must apply any excess cash, (after payment of operating expenses, sustaining capital expenditure, any senior debt service requirements and up to US$10 million (for non-Proyecto Riotinto related expenses), to pay approximately €43.9 million of the deferred consideration due to Astor under the Master Agreement and the amount of €9.1 million payable under the loan assignment early.

Accordingly, the Company recorded the liability of €53 million at fair value, using a discount rate on an estimated excess cash flow of Atalaya Riotinto Minera, S.L.U.

On 25 April 2017, Atalaya and Astor applied for permission to appeal to the Court of Appeal. On 11 August 2017, the Court of Appeal granted permission to both parties to appeal (although it rejected three of Astor's seven grounds). The Appeal is anticipated to take place by July 2018.

More details on the Astor Case are included in Note 14 of the unaudited, condensed interim consolidated financial statements that follow.

8. Risk factors

Due to the nature of Atalaya's business in the mining industry, the Company is subject to various risks that could materially impact the future operating results and could cause actual events to differ materially from those described in forward-looking statements relating to Atalaya. Readers are encouraged to read and consider the risk factors detailed in Atalaya's audited, consolidated financial statements for the year ended 31 December 2016.

9. Critical accounting policies, estimates and accounting changes

The preparation of Atalaya's Financial Statements in accordance with IFRS requires management to make estimates and assumptions that affect amounts reported in the Financial Statements and accompanying notes. There is a full discussion and description of Atalaya's critical accounting policies in the audited consolidated financial statements for the year ended 31 December 2016.

10. Other information

Additional information about Atalaya Mining Plc. is available at www.atalayamining.com

Condensed interim consolidated income statements

(unaudited)

The notes on pages 15 to 29 are an integral part of these condensed interim consolidated financial statements.

Condensed interim consolidated statements of financial position

(unaudited)

The notes on pages 15 to 29 are an integral part of these condensed interim consolidated financial statements.

Condensed interim consolidated statements of changes in equity

(unaudited)

The notes on pages 15 to 29 are an integral part of these condensed interim consolidated financial statements.

Condensed interim consolidated statements of cash flows

(unaudited)

The notes on pages 15 to 29 are an integral part of these condensed interim consolidated financial statements.

1. General information

Country of incorporation

Atalaya Mining Plc and its subsidiaries ("Atalaya" and/or the "Company"), was incorporated in Cyprus on 17 September 2004 as a private company with limited liability under Companies Law, Cap. 113 and was converted to a public limited liability company on 26 January 2005. Its registered office is at 1 Lampousa Street, Nicosia, Cyprus. The Company has offices in Minas de Riotinto in Spain and in Nicosia, Cyprus. The Company was listed on the AIM market of the London Stock Exchange in May 2005 and on the TSX on 20 December 2010.

Change of name and share consolidation

Following the Company's Extraordinary General Meeting ("EGM") on 13 October 2015, the change of name from EMED Mining Public Limited to Atalaya Mining Plc became effective on 21 October 2015. On the same day, the consolidation of ordinary shares came into effect, whereby all shareholders received one new ordinary share of nominal value Stg £0.075 for every 30 existing ordinary shares of nominal value Stg £0.0025.

Principal activities

The principal activity of the Company and its subsidiaries is to operate the recently commissioned Rio Tinto Copper Project ("Proyecto Riotinto") and to explore and develop metal production operations in Europe, with an initial focus on copper. The strategy is to evaluate and prioritise metal production opportunities in several jurisdictions throughout the well-known belts of base and precious metals mineralisation in the European region.

2. Basis of preparation and accounting policies

Basis of preparation

The condensed interim consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRSs). IFRSs comprise the standards issued by the International Accounting Standard Board ("IASB"), and IFRS Interpretations Committee ("IFRICs") as issued by the IASB. Additionally, the consolidated financial statements have also been prepared in accordance with IFRSs as adopted by the European Union (EU), using the historical cost convention.

These condensed interim consolidated financial statements are unaudited and include the financial statements of the Company and its subsidiary undertakings. They have been prepared using accounting bases and policies consistent with those used in the preparation of the consolidated financial statements of the Company and the Company for the year ended 31 December 2016. These condensed interim consolidated financial statements do not include all of the disclosures required for annual financial statements, and accordingly, should be read in conjunction with the consolidated financial statements and other information set out in the Company's 31 December 2016 Annual Report. The accounting policies are unchanged from those disclosed in the annual consolidated financial statements.

The Directors have formed a judgment at the time of approving the financial statements that there is a reasonable expectation that the Company and the Company have adequate available resources to continue in operational existence for the foreseeable future.

These consolidated financial statements have been prepared on the basis of accounting principles applicable to a going concern which assumes that the Company will realise its assets and discharge its liabilities in the normal course of business. Management has carried out an assessment of the going concern assumption and has concluded that the Company's will generate sufficient cash and cash equivalents to continue operating for the next twelve months.

Fair value estimation

The fair values of the Company's financial assets and liabilities approximate their carrying amounts at the reporting date.

The fair value of financial instruments traded in active markets, such as publicly traded trading and available‑for‑sale financial assets is based on quoted market prices at the reporting date. The quoted market price used for financial assets held by the Company is the current bid price. The appropriate quoted market price for financial liabilities is the current ask price.

The fair value of financial instruments that are not traded in an active market is determined by using valuation techniques. The Company uses a variety of methods, such as estimated discounted cash flows, and makes assumptions that are based on market conditions existing at the reporting date.

2. Basis of preparation and accounting policies (continued)

Fair value measurements recognised in the consolidated statement of financial position

The following table provides an analysis of financial instruments that are measured subsequent to initial recognition at fair value, grouped into Levels 1 to 3 based on the degree to which the fair value is observable.

· Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical assets or liabilities.

· Level 2 fair value measurements are those derived from inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).

· Level 3 fair value measurements are those derived from valuation techniques that include inputs for the asset or liability that are not based on observable market data (unobservable inputs).

Use and revision of accounting estimates

The preparation of the condensed interim consolidated financial statements requires the making of estimations and assumptions that affect the recognised amounts of assets, liabilities, revenues and expenses and the disclosure of contingent liabilities. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgments about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods.

Adoption of new and revised International Financial Reporting Standards (IFRSs)

The Company has adopted all the new and revised IFRSs and International Accounting Standards (IASs) which are relevant to its operations and are effective for accounting periods commencing on 1 January 2017. The adoption of these Standards did not have a material effect on the condensed interim consolidated financial statements.

Critical accounting estimates and judgements

The fair values of the Company's financial assets and liabilities approximate their carrying amounts at the reporting date. Estimates and judgments are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

The Company makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are unchanged from those disclosed in the annual consolidated financial statements.

Provisions are recognised when the Company has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation, and a reliable estimate of the amount can be made. If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects, where appropriate, the risks specific to the liability. Where discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost.

3. Business and geographical segments

Business segments

The Company has only one distinct business segment, being that of mining operations, mineral exploration and development.

Geographical segments

The Company's mining and exploration activities are located in Spain and its administration is based in Cyprus.

3. Business and geographical segments (continued)

Geographical segments (continued)

4. Net finance cost

5. Basic and fully diluted profit/(loss) per share

The calculation of the basic and fully diluted profit/(loss) per share attributable to the ordinary equity holders of the parent is based on the following data:

6. Property, plant and equipment

(1) Rehabilitation provision

(2) Stripping costs

(3) Includes motor vehicles, furniture, fixtures and office equipment which are depreciated over 5-10 years.

The above property, plant and equipment is located in Cyprus and Spain.

7. Intangible assets

(1) This addition relates to the deferred consideration as at 1 February 2016 (Note 14)

The useful life of the intangible assets is estimated to be not less than 16 ½ years according to the revised Reserves and Resources statement released in July 2016. The ultimate recoupment of balances carried forward in relation to areas of interest or all such assets including intangibles is dependent on successful development, and commercial exploitation, or alternatively sale of the respective areas. The Company conducts impairment testing on an annual basis unless indicators of impairment are present at the reporting date.

In considering the carrying value of the assets at Proyecto Riotinto, including the intangible assets and any impairment thereof, the Company assessed the carrying values having regard to (a) the current recovery value (less costs to sell) and (b) the net present value of potential cash flows from operations. In both cases, the estimated net realisable values exceeded current carrying values and thus no impairment has been recognised.

Goodwill amounting to €9,333,000 arose on the acquisition of the remaining 49% of the issued share capital of Atalaya Riotinto Minera S.L.U. ("ARM") back in September 2008. This amount was fully impaired on acquisition, in the absence of the mining license back in 2008.

8. Inventories

9. Trade and other receivables

The fair values of trade and other receivables approximate to their carrying amounts as presented above.

10. Share capital and share premium

Authorised capital

The Company's authorised share capital is 200,000,000 ordinary shares of Stg £0.075 each.

Issued capital

2017

No shares were issued in the period from 1 January 2017 to 30 June 2017.

Warrants

The Company has issued warrants to advisers to the Company. Warrants, noted below, expire three or five years after the grant date and have exercise prices ranging from Stg £1.425 to Stg £3.150.

Details of share warrants outstanding as at 30 June 2017:

Some of the warrants above expired during July and August 2017. Refer to Note 21.

11. Other reserves

Share options

On 23 February 2017, the Company granted 900,000 incentive share options to Persons Discharging Managerial Responsibilities ("PDMRs") and management in accordance with the Company's Share Option Plan 2013.

The share options expire five years from the date of grant, have an exercise price of £144.0 pence per share, based on the minimum share price in the five days preceding the grant date and vest in three equal tranches - one third on grant, one third on the first anniversary of the original grant date and one third on the second anniversary of the original grant date.

Details of share options outstanding as at 30 June 2017:

12. Trade and other payables