Atalaya Mining Regulatory News (ATYM)

AIM: EMED TSX: EMD 6 February 2012

Proposed Subscription, Cost Overrun Support and Off-take Arrangements with Cornerstone Customer

EMED Mining Public Limited ("EMED Mining" or "the Company"), the Europe-based minerals development and exploration company, is pleased to announce that the Company and one of its subsidiaries have entered into conditional agreements with a cornerstone customer Yanggu Xiangguang Copper Co. Ltd ("XGC") for an aggregate funding package of US$30 million (intended as to half in the form of share capital and half in the form of a future standby debt facility) in exchange for a 10% ordinary equity position in EMED Mining (on a fully-diluted basis) and the grant of limited off-take rights over the Rio Tinto Mine's copper production.

Highlights of transaction with XGC

·; XGC to provide $15 million equity by way of a subscription for new ordinary shares in the Company at a price of 9 pence per share (or approximately US$0.14) (the "Subscription").

·; XGC to conditionally agree to provide or arrange a $15 million subordinated debt facility as required by the providers of senior debt finance (who will be providing the senior debt for the purposes of the restart of operations of the Rio Tinto Mine) (the "Cost Overrun Support").

·; The Company's subsidiary, EMED Marketing Limited ("EMED Marketing") has granted XGC off-take rights over 25% of current reported copper reserves, at market prices.

·; XGC would complement the existing strong international shareholder base dominated by European, North American and Australian shareholders.

Further information on the transaction with XGC and the related agreements between the parties are set out below.

Highlights of Concurrent Activities

·; The Company is also in advanced discussions with potential project financiers with a view to finalising a mandate in respect of the provision of project debt of $175 million.

·; The agreements with XGC together with the project finance negotiations represent part of the planned finance, hedging, bonding and insurance package for the start-up funding of the Rio Tinto Mine, subject to a number of conditions including Spanish regulatory approvals and shareholder approval.

·; Discussions continue with the regulatory authorities in Andalucia, Spain on the various permits required to start project works at the end of 2012 and production to start in 2013. As part of the project preparations, EMED Mining has ensured that the Andalucian Government has also met most of the Company's carefully assembled set of large shareholders including XGC.

In relation to the potential mandate to project financiers, the Company is in advanced detailed discussions with a number of leading global financial institutions and a further announcement is expected to be made on this in due course. The quantum of $175 million caters for previously reported project capital estimates supplemented by contingency provisions for the expanded land footprint agreed with the Andalucian Government, anticipated revisions in equipment specifications or prices, foreign exchange movements and working capital buffers. A detailed break-down will be updated and reported in due course when the conditions of regulatory permitting are confirmed and detailed engineering and procurement can be finalised.

As regards the regulatory permitting of our plans for the Rio Tinto Mine, the Company is in frequent and intense discussions with the Andalucían Government, which has also referred some of the project documentation for review by the peak national technical review agencies as part of their approval processes.

Harry Anagnostaras-Adams, theManaging Director of EMED Mining said, "Progress continues on the key business plan tasks for the quarter and the Company's finance plans head in the previously reported targeted direction.

"The financing and offtake arrangements announced today reflect our long-stated commitment to build the highest-quality links for a small portion of our production into China, the key driver of global demand for our product, and to do so via an alliance with leading Chinese metal processor XGC is especially pleasing.

"This complements our overall product strategy wherein most of our production is expected to be delivered for copper production use in Spain and other European smelters, with whom we have also established appropriate dialogue".

Enquiries

Further Information on the XGC Transaction

Subscription

The Company and XGC have entered into a subscription agreement (the "Subscription Agreement") pursuant to which a subsidiary of XGC, Hong Kong Xiangguang International Holdings Limited ("Xiang Guang HK"), has conditionally agreed to subscribe for 105,378,519 new ordinary shares of 0.25 pence each in the capital of the Company (the "Subscription Shares") at a price per share of 9 pence each (or approximately US$0.14). The proceeds of the Subscription will be used for general working capital purposes, particularly in connection with the Company's ongoing efforts in connection with the restart of copper production at the Rio Tinto Mine.

The Subscription Agreement is subject to a number of conditions including: the approval of the Company's shareholders to the issue of the Subscription Shares; the approval of the Chinese National Development and Reform Committee; Toronto Stock Exchange approval; and admission of the Subscription Shares to trading on the AIM market. Such conditions are required to be satisfied (or where possible, waived) on or before 31 March 2012 (or such later date as the parties may agree) (the "Long Stop Date"). The parties may terminate the Subscription Agreement if the conditions are not satisfied by the Long Stop Date and XGC may terminate prior to completion where there is a material adverse effect concerning the Company or its subsidiaries.

Upon completion of the Subscription, Xiang Guang HK will hold approximately 10% of the fully-diluted capital and approximately 11% of the issued capital of the Company. Subject to completion of the Subscription, the Company will grant XGC and Xiang Guang HK a right to participate in future share issues by the Company (save in respect of certain exempt issues set out in the Subscription Agreement ("Exempt Issues") on a pro rata basis for such time as their combined interest in the issued share capital of the Company exceeds 5%. The Company has also granted XGC the right to appoint a director to the EMED board of directors (the "Board") for such time as XGC and Xiang Guang HK combined interest in the issued share capital of the Company equals 8% or more of the Company's issued share capital (excluding shares issued pursuant to Exempt Issues) and there remains an amount drawn down and outstanding to XGC in respect of the Cost Overrun Support. Any appointment to the Board must be approved by the Board and the Company's nominated adviser.

XGC has undertaken not to dispose, and procure that Xiang Guang does not dispose, of any interest in the Subscription Shares for a period of 6 months following completion of the Subscription, save in certain limited circumstances.

As noted above, the Subscription is conditional, amongst other things, on the Company's shareholders approving the issue of the Subscription Shares. The Company will publish a circular in due course convening an extraordinary general meeting to seek such approval and will make a further announcement following such publication of the time and place of the meeting.

Cost Overrun Support

EMED Mining and XGC have entered into a commitment letter containing the indicative terms for a $15 million Cost Overrun Support facility. Pursuant to the Commitment Letter, XGC has conditionally agreed to arrange, underwrite, provide or procure the Cost Overrun Support as required by the financial institutions which will provide the principal debt facility (the "Senior Facility") to be used to fund the restart of commercial production at the Rio Tinto Mine. The obligations of XGC under the Commitment Letter are subject to certain conditions including the entry into the definitive Cost Overrun Support facility documents by no later than 31 December 2014 (as may be extended by agreement between EMED Mining and XGC). The Commitment Letter will terminate if the Subscription Agreement does not become unconditional by the Long Stop Date.

EMED Mining may seek cost overrun support from third parties; however if it does so XGC has the right (exercisable in 30 days) to match the terms and conditions offered by a third party for cost overrun support.

Pursuant to the terms of the Commitment Letter, interest will accrue at 150 basis points per annum over the margin on the Senior Facility; EMED Mining would pay a commitment fee of 1% per annum (or the same as under the Senior Facility, if higher) and an arrangement fee of 2% (flat). The Cost Overrun Support would be available concurrently with drawdown under the Senior Facility and second ranking security is to be granted over the asset and share package granted to the providers of the Senior Facility.

Off-take Agreement

Pursuant to an off-take agreement entered into today, ("Off-take Agreement") EMED Marketing is obliged to produce, sell and deliver to XGC 30% of copper concentrates produced from the Rio Tinto Mine each year, until the delivery of a cumulative quantity equivalent to 25% of the Rio Tinto Mine's production for the first 10 years of commercial mine production based on its current reported copper reserves as set forth in the Behre Dolbear NI 43-101 Independent Technical Report dated 17 November 2010.

EMED Marketing may terminate the Off-take Agreement in certain circumstances including, (i) a breach by XGC of its obligations pursuant to the Off-take Agreement or (ii) the Subscription Agreement failing to become unconditional by the Long Stop Date; or (iii) XGC failing to enter into (prior to 31 December 2014) or fulfilling any of its obligations under the definitive documentation for the Cost Overrun Support for any reason (other than the failure of the Company to negotiate terms not provided for in the Commitment Letter in good faith, or the Company acting unreasonably in any such negotiations).

Information on XGC

XGC is one of the world's largest Copper smelting, refining and processing group located in Shandong province of China, with a designed smelting capacity of 450,000mt/y Cu from concentrate and refining capacity of 600,000mt/y Copper cathodes. It employs the state-of-art copper smelting technology of double flash smelting and converting. XGC's parent company, GMK Holding Co., Ltd ("GMK"), is a leading privately owned enterprise group in China including significant food production interests.

EMED Mining and XGC were advised by LN Metals International Limited and Canaccord Genuity London respectively in relation to the above mentioned proposals.

Cautionary Notes

This announcement contains "forward looking information" which may include, but is not limited to, statements with respect to the completion of the Subscription, the use of proceeds, shareholder approval in respect of the issuance of the Subscription Shares, TSX approval of the transactions, Chinese governmental approval of the transactions, admission of the Subscription Shares to trading on AIM, the execution of definitive documentation in respect of the Cost Overrun Support facility and the ability of the Company to fulfill its obligations under the Offtake Agreement. "Forward looking information" may also include statements with respect to the future financial or operating performance of the Company, its subsidiaries and its projects, the future price of metals, the estimation of ore reserves and resources, the conversion of estimated resources into reserves, the realization of ore reserve estimates, the timing and amount of estimated future production, costs of production, capital, operating and exploration expenditures, costs and timing of the development of new deposits, costs and timing of future exploration, requirements for additional capital, government regulation of mining operations, environmental risks, reclamation expenses, title disputes or claims, limitations of insurance coverage and the timing and possible outcome of pending litigation and regulatory matters. Often, but not always, forward looking statements can be identified by the use of words such as "plans", "expects", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates" or "does not anticipate", or "believes" or variations (including negative variations) of such words and phrases, or state that certain actions, events or results "may", "could", "would", "might" or "will" be taken, occur or be achieved. Accordingly, readers should not place undue reliance on forward looking statements.

Forward looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company and/or its subsidiaries to be materially different from any future results, performance or achievements expressed or implied by the forward looking statements. Such factors include, among others, general business, economic, competitive, political and social uncertainties; the actual results of current exploration activities; actual results of reclamation activities; conclusions of economic evaluations; changes in project parameters as plans continue to be refined; future prices of metals; the future costs of capital to the Company; possible variations of ore grade or recovery rates; failure of plant, equipment or processes to operate as anticipated; accidents, labour disputes and other risks of the mining industry; political instability, terrorist attacks, insurrection or war; delays in obtaining governmental approvals or financing or in the completion of development or construction activities, as well as those factors discussed in the section entitled "Risk Factors" in the Company's annual information form.

Although the Company 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 to differ from those anticipated, estimated or intended. Forward looking statements contained herein are made as of the date of this announcement and the Company disclaims any obligation to update any forward looking statements, whether as a result of new information, future events or results or otherwise. 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. Accordingly, readers should not place undue reliance on forward looking statements.