Atalaya Mining Regulatory News (ATYM)

24 November 2016

Atalaya Mining Plc

("Atalaya" or the "Company")

Operational review and release of Q3 2016 Financial Statements

Atalaya Mining plc (AIM:ATYM, TSX:AYM), the European mining and development company, announces its unaudited quarterly and interim results for the three and nine months to 30 September 2016, together with the unaudited, condensed interim consolidated financial statements.

These results are also available on the Company's website at www.atalayamining.com

Operating Highlights

· 97% increase quarter on quarter in production of tonnes of copper in concentrate (Q3 2016: 8,752 tonnes, Q2 2016: 4,442 tonnes).

· Increase in recoveries to 83.60% during Q3 2016 (Q2 2016: 80.46%). Plant performing very well and achieving a recovery rate of 87.09% during October 2016.

· Copper concentrate grades of over 21% remained consistent with the previous quarter and penalties are now well below the maximum levels stipulated by some smelters.

· 8,752 metric tonnes of copper metal produced during the quarter, with accumulated production of 17,241 metric tons for the nine months period, including January pre-commissioning production.

· 50% more tonnes of ore processed during Q3 2016 (2.0 million tonnes) compared to Q2 2016 (1.3 million tonnes).

· Following mechanical completion of the expansion project in May 2016, ramp-up is progressing according to plan. Minimal additional capex required until the end of the year.

· Updated NI 43-101 technical report for Proyecto Riotinto filed in September 2016, reporting a 12% increase in open pit reserves and extending the life of mine to 16.5 years.

· Water treatment plant now fully operational after successful commissioning during Q3 2016. De-watering of Cerro Colorado open pit progressing according to plan.

· Atalaya maintains its copper production guidance of 23,500 to 27,000 metric tons for 2016, with a bias towards the higher end of the scale.

Financial Highlights

As commercial production was declared in February 2016, no comparative operational data is available for 2015.

· Working capital position improvement of €4.2 million from Q2 2016.

· Revenues of €27.2 million and €49.9 million for the three and nine month periods, respectively.

· Cash cost reductions during Q3 2016 to $1.97/lb of payable copper (Q2 2016: $2.36/lb), with further reductions targeted in coming months as production levels get closer to the nominal plant capacity of 9.5Mtpa.

· EBITDA improved significantly in Q3 2016 compared with H1 2016 (negative €3.6 million) as a result of an increase in volume of copper concentrate sold, lower cash costs and higher realised copper prices. Positive EBITDA of €1.9 million for the period compared with a negative EBITDA of €1.6 million for the year to date.

· Loss of €1.5 million (or 1.3 cents per share) and €8.0 million (or 6.8 cents per share) for the three and nine month period respectively.

· Inventories of concentrate at 30 September 2016 amounted to approximately €9.3 million.

· Completion of US$14 million copper concentrate prepayment funding agreement with Transamine Trading S.A. to improve working capital position.

· Positive cash flows from operating activities for the nine months ended 30 September 2016 amounted to €5.5 million. Cash used for investment activities was €19.8 million.

· The average market prices of copper for the three and nine months ended 30 September 2016 were US$2.17/lb for the third quarter and US$2.14/lb for the nine months. The Company's realised copper prices for the same periods were US$2.18/lb and US$2.16/lb respectively.

Corporate Highlights

· Astor case - There has been no update to the Astor case since the release of the Q2 2016 financials. Atalaya continues to work closely with its legal advisors in preparing for trial at the High Court of Justice in London on 30 January 2017. Atalaya remains confident of a positive outcome of the upcoming trial and will update shareholders following the trial, or if there are any material developments in the meantime.

Alberto Lavandeira, CEO commented:

"We are gradually beginning to see the fruits of our efforts with positive cash flows from our operations. The combination of falling operating costs and improved levels of recovery and production reflect the increasing on-site efficiencies. The effect of the recent increase in the copper price on our share price demonstrates our leverage to copper. With the plant working now almost at nameplate capacity we are well placed to benefit from any future improvements in the copper price."

This announcement contains 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 SEPTEMBER 2016

(UNAUDITED)

Notice to Reader

The accompanying unaudited condensed interim consolidated financial statements of Atalaya have been prepared by and are the responsibility of Atalaya'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 ("Atalaya" and/or the "Group"), to enable the reader to assess material changes in the financial position between 31 December 2015 and 30 September 2016 and results of operations for the three and nine months ended 30 September 2016 and 2015.

This report has been prepared as of 23 November 2016. 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 three and nine months ended 30 September 2016. 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 2015, and the unaudited, condensed consolidated financial statements for the three and nine months ended 30 September 2015. 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. Highlights - three and nine months ended 30 September 2016

Operational performance

· Production during Q3 2016 was 8,752 metric tons of copper in concentrate (Q2 2016: 4,442 metric tons). This represents a 97% increase quarter on quarter.

· Recoveries increased to 83.60% during Q3 2016 (Q2 2016: 80.46%), with the plant performing very well and achieving a recovery rate of 87.09% during October 2016.

· 8,752 metric tons of copper metal produced during the quarter, with accumulated production of 17,241 metric tons for the nine months period, including January pre-commissioning production.

· 2.0 million metric tons of ore were processed during Q3 2016 (Q2 2016: 1.3 million metric tons).

· Expansion project completed in May 2016 and current ramp-up progressing according to plan, with minimal additional capex required until the end of the year.

· Atalaya maintains its copper production guidance of 23,500 to 27,000 metric tons for 2016, with a bias towards the higher end of the scale.

· Filing of an updated NI 43-101 technical report for Proyecto Riotinto in September 2016, with a 12% increase in open pit reserves and extending the life of mine to 16.5 years.

Financial performance

· Revenues of €27.2 million and €49.9 million for the three and nine month periods, respectively.

· Cash cost reductions during Q3 2016 to $1.97/lb of copper (Q2 2016: $2.36/lb), with further reductions expected in coming months as production levels get closer to the nominal plant capacity.

· Positive Earnings Before Interest, Taxation, Depreciation and Amortisation ("EBITDA") of €1.9 million for the three months period and negative EBITDA of €1.6 million for the nine months period. EBITDA has improved significantly in Q3 2016 as compared to H1 2016 (negative €3.6 million) as a result of an increase in volume of copper concentrate sold, lower cash costs and higher realised copper prices.

· Loss for the period of €1.5 million (or 1.3 cents per share) and €8.0 million (or 6.8 cents per share) for the three and nine months period ended 30 September 2016, respectively.

· Inventories of concentrate at 30 September 2016 amounted to approximately €9.3 million.

· Completion of US$14 million copper concentrate prepayment funding agreement with Transamine Trading S.A. to improve working capital situation.

· The Group presented positive cash flows from operating activities for the nine months ended 30 September 2016 amounting to €5.5 million. Cash used for investment activities was €19.8 million.

2. Overview of operational results

The following table presents a summarised statement of operations for the three and nine months ended 30 September2016. As commercial production was declared in February 2016, no operational data was available for 2015.

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

* Quarterly operation data compared to prior quarter. Commercial production started in February 2016.

** For comparison purposes, the nine month figures include pre-commissioning production for January 2016.

*** There were no operations in 2015.

Expansion project and production ramp-up

The expansion project was declared mechanically complete in May 2016, ahead of schedule and under budget. During Q3 2016, Atalaya focused on ramping up production to its target of 9.5Mtpa. Plant availability during Q3 2016 improved over previous quarters. The plant annualised rate of production level in September 2016 was 8.3Mtpa, compared to the annualised rate of 6.8Mtpa reported in June 2016. Atalaya is aiming to be operating at nameplate capacity by the end of 2016.

Mining and Processing

Atalaya mined 2.5 million metric tons of ore during Q3 2016, compared to 1.4 million metric tons mined in Q2 2016. The increase in metric tons mined was in order to maintain ore level in the stockpiles, which during Q3 2016, experienced higher consumption as the plant increased total ore processed. The quarterly average copper grade increased from 0.44% in Q2 2016 to an average grade of 0.52% in Q3 2016.

As the ramp-up production levels progressed as expected, ore treated at the plant increased from 1.3 million metric tons of ore in Q2 2016 to 2.0 million metric tons in Q3 2016. Plant availability during Q3 2016 was as planned, resulting in a progressive increase in the annualised level to 8.3Mtpa. The annualised rate in October 2016 was 8.6Mtpa.

Recovery rates and copper concentrate grade in Q3 2016 were 83.60% and 20.47%, respectively (80.46% and 21.43% in Q2 2016) reaching the design criteria. Similar recoveries and grade in concentrate should be expected for the coming months.

Production of copper in concentrate almost doubled to 8,752 metric tons in Q3 2016, compared with 4,442 metric tons in Q2 2016 as a result of higher ore processed, with better recoveries and grades.

Infrastructure

A water treatment plant is now fully operational after successful commissioning during Q3 2016. Dewatering of Cerro Colorado open pit is progressing according to plan.

Exploration and geology

During Q3 2016, Atalaya compiled and reported an updated technical report on its´s Mineral Resources and Reserves for Proyecto Riotinto. The report was compiled according to the Canadian National Instruments 43-101 and filed on a voluntary basis.

New mineral reserves estimation amounts to 152.8 million metric tons with an average copper grade of 0.45%, using variable, declining cut-off grades. New reserve estimates increased both copper metal contained by 12%, up to 681,000 metric tons and life of mine, up to 16.5 years.

Total open-pit measured and indicated mineral resources were estimated at 192.8 million metric tons, averaging 0.43% copper. Inferred mineral resources were estimated at 22.7 million metric tons, averaging 0.48% copper. These figures do not include any resources from the San Antonio/Planes deposit and from the San Dionisio/Atalaya zones. Although some of these zones could have some limited open pit potential, it is expected that, if economic, they would be mined using underground methods. After concentrating on infill drilling of the Cerro Colorado pit, Atalaya is now focusing exploration in extensions of new mineralisation at the Cerro Colorado and Atalaya pits.

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.

Operations guidance

The Riotinto Project operational guidance for 2016 remains as follows:

Copper head grade for 2016 is expected to average between 0.48% Cu and 0.50% Cu with a recovery rate of approximately 82%. Cash operating cost for Q4 2016 is expected to be in the range of $1.9/lb - 2.1/lb.

4. Overview of the financial results

The following table presents a summarised consolidated income statements for the three and nine months ended September 2016, with comparatives for the three and nine months ended September 2015.

Three months financial review

Revenues for the three-month period ended 30 September 2016 amounted to €27.2 million. Production levels during Q3 2016 increased as compared to production levels during Q2 2016 (no comparative data for 2015). Ore mined increased by 83.6% to reach 2,461,000 metric tons during Q3 2016. Ore processed in the plant also increased by 55.4% to 2,034,000 metric tons as Proyecto Riotinto gets closer to nameplate capacity. As of September 2016, the plant annualised rate of production level was 8.3Mtpa and management is confident that the 9.5Mtpa nameplate capacity will be reached by the year end. Average head grades during Q3 2016 also increased to 0.52% combined with better average recovery levels of 83.6%, compared to 0.44% and 80.46% respectively in Q2 2016.

The overall improvement in production ratios resulted in the operation almost doubling copper production from 4,442 metric tons of copper in Q2 2016 to 8,752 metric tons of copper during Q3 2016. Higher production of copper led to an increase in both sales of concentrate and inventories held as at 30 September 2016.

Sales of copper concentrate increased compared to Q2 2016 by 63.2% to 37,049 metric tons of concentrate and the realised copper prices were slightly higher at $2.18 per pound of copper compared to previous quarters of $2.11/lb of copper.

Operating costs (excluding depreciation and amortisation) for Q3 2016 amounted to €20.6 million compared to €15.9 million in Q2 2016. The increase was mainly due to higher mining and processing variable costs directly attributable to the increase of ore processed in the plant. In relation to the administrative expenses, the cost for Q3 2016 was €4.5 million, compared to €2.4 million in Q2 2016. However, in terms of cost for actual production levels, the cost decreased from $2.36/lb of payable copper in Q2 2016 to $1.97/lb of payable copper in Q3 2016. The decrease in cash costs was mainly due to onsite cost reductions in terms of $/lb of copper produced, as offsite costs, offtaker deductions and by-products credits were largely unchanged during Q3 2016.

Administrative expenses include both corporate costs not included in the cash cost calculations and administration costs of the project, which are included in the cost calculations. The costs excluded for cash cost calculation include directors' emoluments, corporate legal costs and other corporate costs.

Exploration costs for the period amounted to €246,000 compared to €517,000 in Q2 2016.

EBITDA for the three months ended 30 September 2016 amounted to a profit of €1.9 million as a result of increase in volume of copper concentrate sold and higher realised copper prices, as compared to Q2 2016 (EBITDA for the three months ended 30 June 2016 - loss €1.1 million). The main item below the EBITDA line is depreciation and amortisation of €2.5 million and the impairment of land options not exercised of €0.9 million.

Nine months financial review

Revenues for the nine-month period ended 30 September 2016 amounted to €49.9 million. Revenues relate to sales of copper concentrate to off takers since commercial production was declared in February 2016. Ore mined for the period was 4,936,000 metric tons. Ore processed in the plant increased significantly over the nine months of 2016 (392,000 metric tons of ore processed in January 2016 compared to 694,000 metric tons processed in September 2016). 72,276 metric tons of copper concentrate were sold during the nine-month period (including January sales which were pre-commission sales) or 67,291 metric tons of concentrate from February 2016 to September 2016.

Total operating costs and administration expenses (both excluding depreciation and amortisation costs) for the period amounted to €41 million and €9.7 million respectively. Administration expenses include general costs for Proyecto Riotinto and Group corporate costs amounting to €2 million for the nine-month period to September 2016.

Weighted cash costs for the nine months to September 2016 were $2.14/lb of payable copper, compared to $1.97/lb of payable copper in Q3 2016. As ramp-up progresses and reaches nameplate plant capacity, the cash cost per pound of copper reduces as fixed costs remain constant but with higher production levels.

Exploration costs amounted to €0.9 million, incurred mainly on work done on historical sites. As at 30 September 2016, 6,630 metres of Diamond Drill Hole drilling were done mainly in the lateral extension of Cerro Colorado. The current drilling campaign is focused on San Antonio - Planes, San Dionisio, Alfredo and Filon Sur.

EBITDA amounted to a loss of €1.6 million for the nine months to September 2016. This was impacted by the initial low levels of production and the high ramp-up costs. The main items below the EBITDA line are depreciation and amortisation of €5.0 million, the impairment of land options not exercised of €0.9 million, a net foreign exchange loss of €0.3 million and a net finance charge of €0.2 million.

Realised copper prices

The average prices of copper for the three and nine months ended 30 September 2016 are as summarised below. As commercial production was declared in February 2016, no operational data was available for 2015.

5. Non-GAAP Measures

Atalaya has included certain non-IFRS measures including "EBITDA", "Cash Operating Cost per pound of payable copper" and "realisable 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 all operating costs in the operation, excluding finance, tax, depreciation and amortisation expenses. The realised price for copper concentrate is the average price of copper per tonne sold over the period under analysis.

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

6. Liquidity and capital resources

Atalaya monitors factors that could impact its liquidity as part of the 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 costs and administrative costs.

The following is a summary of Atalaya's cash position and cash flows as at 30 September 2016 and 31 December 2015 and for the nine months ended 30 September 2016 and year ended 31 December 2015:

Liquidity information

Unrestricted cash and cash equivalents as at 30 September 2016 decreased to €4.1 million from €18.6 million at 31 December 2015. The decrease in the cash balances is the result of capital expenditures incurred in the period related to the finalisation of the expansion project, certain ramp-up inefficiencies and slow revenue cash inflows. Atalaya reported a working capital deficiency of €24.4 million at 30 September 2016, but reduced from the €28.6 million deficiency at 30 June 2016, compared with a €6.4 million deficit at 31 December 2015.

During Q3 2016, Atalaya announced the agreement entered with Transamine Trading, S.A., a privately owned commodity trading company, to prepay $14 million of copper concentrate, with a 15-month repayment period starting in October 2016.

Three months cash flow review

Atalaya used cash amounting to €6.1 million during the three months ended 30 September 2016. This was due to both operating activities and investing activities, which amounted to €3.5 million and €2.7 million, respectively.

Cash generated from operating activities before working capital changes was €2.0 million, however working capital variances resulted in negative cash flows from operations. Atalaya reduced its trade payables in the period by €5.0 million and increased its inventory levels and its trade balances by €4.1 million and €6.2 million, respectively.

Investing activities during the quarter consumed €2.7 million, relating mainly from final payments for equipment for the expansion project.

Nine months cash flow review

Atalaya used cash amounting to €14.3 million during the nine months ended 30 September 2016. The cash was used mainly for its investing activities, as plant construction was finalised in early 2016 with commercial production being declared in February 2016. Ramping up of the increased plant capacity to 9.5Mpta is expected by the end of 2016, only six months after it was mechanically completed in May 2016. Total cash consumed for investing activities for the reported period amounted to €19.8 million. Atalaya funded the investments mainly via an equity placement in 2015 and through ongoing negotiations with some of the key suppliers.

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 months ended 30 September 2016, Atalaya recognised a foreign exchange loss of €19,000 whilst for the nine months ended 30 September 2016, Atalaya recognised a foreign exchange loss of €296,000.

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

During Q3 2016, Atalaya signed certain short term currency hedging agreements to ensure a competitive rate to USD. Further information on the hedging agreements is disclosed in the Financial Statements (Note 14).

7. Contingencies

Astor

There has been no update in the Astor case since the release of the Q2 2016 financials. Atalaya continues to work closely with its legal advisors in preparing for trial at the High Court of Justice in London on 30 January 2017. Atalaya remains confident of a positive outcome of the upcoming trial and will update shareholders following the trial, or if there are any material developments in the meantime.

More details on contingencies are included in Note 17 of the Financial Statements that follow.

8. Risk factors

Due to the nature of Atalaya's business in the mining industry it is subject to various risks that could materially impact the future operating results of Atalaya 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 2015.

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 2015.

10. Other information

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

Atalaya Mining Plc

(All amounts in Euro thousands unless otherwise stated)

Condensed interim consolidated income statements

(unaudited)

Condensed interim consolidated statements of financial position

(unaudited)

Condensed interim consolidated statements of changes in equity

(unaudited)

Condensed interim consolidated statements of cash flows

(unaudited)

1. General information

Country of incorporation

Atalaya Mining Plc ("Atalaya Mining" and/or the "Company"), and its subsidiaries ("Atalaya" and/or the "Group"), was incorporated in Cyprus on 17 September 2004 as a private company with limited liability under the 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 Group has offices in Minas de Riotinto in Spain and in Nicosia, Cyprus. The Company was listed on AIM 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 (IFRS) including International Accounting Standard 34 "Interim Financial Reporting" and IFRIC interpretations 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 Group for the year ended 31 December 2015. 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 2015 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 Group have adequate available resources to continue in operational existence for the foreseeable future. 

The condensed interim 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. These condensed interim consolidated financial statements do not give effect to any adjustment, which would be necessary should the Company be unable to continue as a going concern and, therefore, be required to realise its assets and discharge its liabilities in other than the normal course of business and at amounts different than those reflected in the consolidated financial statements.

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.

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 Group 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 2016. 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 Group'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 Group 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 Group 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 Group has only one distinct business segment, being that of mining operations, mineral exploration and development.

Geographical segments

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

4. Net finance cost

5. Basic and fully diluted loss per share

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

* Adjusted for the 30:1 share consolidation which took place in October 2015

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