Atalaya Mining Regulatory News (ATYM)

12 September 2018

Atalaya Mining Plc.

("Atalaya" and/or the "Group")

Q2 and H1 2018 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 2018, together with the unaudited, condensed, interim consolidated financial statements.

Operating Highlights

Proyecto Riotinto

· Copper production during the three months ended 30 June 2018 ("Q2 2018") was 10,446 tonnes, 15% higher compared with 9,058 tonnes produced during the three months ended 30 June 2017 ("Q2 2017"). Copper production at Proyecto Riotinto during Q2 2018 replaces Q1 2018's as the second highest quarterly production on record. During the six months ended 30 June 2018 ("H1 2018) copper production was 19,887 tonnes compared with 17,863 tonnes during H1 2017, an 11% increase.

· Ore processed during Q2 2018 was 2,490,483 tonnes compared with 2,154,907 tonnes in Q2 2017. During H1 2018 ore processed was 4,697,344 tonnes compared with 4,351,206 tonnes processed in the same period last year.

· Copper recovery during the quarter was 87.3% (Q2 2017: 85.2%). Copper recovery for the six month period ended 30 June 2018 averaged 87.9% representing an improvement over 84.9% during H1 2017.

· An NI 43-101 compliant technical report on an updated resources and reserves estimate for Proyecto Riotinto was released on 9 July 2018. Highlights of the report include a 29% increase in open pit proven and probable mineral reserves at Cerro Colorado and a 21% increase in contained copper, with a reduction of the average strip ratio from 1.95:1 to 1.43:1.

Expansion to 15Mtpa at Proyecto Riotinto

· The expansion project to 15Mtpa is progressing according to schedule with engineering heading to completion and site construction activities picking up. Overall progress completion at the end of the reporting quarter was 41%. Procurement has progressed to 38% completed and engineering to 82% completed. Earthworks are well advanced and are expected to be completed by mid-Q3 2018. Civil engineering works are progressing with main activities now concentrated on the new SAG mill area. Structural steel works are ongoing in the flotation area. Installation of mechanical equipment has started in the concentrate handling area. The milling area is the critical path to completion. The expansion project is scheduled for mechanical completion at the end of Q2 2019.

Proyecto Touro

· Permitting of Proyecto Touro continues as anticipated with good progress made on addressing additional studies from the regional administration. During the quarter, efforts were concentrated on progressing detailed reports to address certain project improvements and recommendations from the public hearing process. These reports, including those received recently, are now expected to be submitted to the authorities before the end of Q3 2018.

· During the quarter, the Company announced the completion of a pre-feasibility study ("PFS") for the proposed open pit mine and concentrator at Proyecto Touro. The PFS report was prepared using the headings of, and guidance set out in the NI 43-101 report.

Financial Highlights

· Revenues of €48.9 million for Q2 2018 compared with €53.4 million in Q2 2017 as lower sales volume due to timing of sales offset higher copper price. Revenues for H1 2018 increased significantly to €101.5 million compared with €79.1 million for the same 2017 period, due to higher volumes and copper prices.

· Cash costs during Q2 2018 were $1.88/lb of payable copper, a decrease from cash costs of $2.27/lb of payable copper in Q1 2018 and similar to Q2 2017 ($1.88/lb). All-in sustaining costs ("AISC") during Q2 2018 amounted to $2.34/lb of payable copper representing a decrease from $2.65/lb of payable copper during Q1 2018. The decrease in costs per pound was mainly due to the beneficial impact of higher production volumes on fixed costs and, in the case of cash costs, the effect of the lower average strip ratio of the updated reserves and resources estimate which has resulted in a greater amount of stripping costs capitalised.

· Cash costs for H1 2018 were $2.07/lb payable copper versus $1.77/lb payable copper during H1 2017. AISC amounted to $2.49/lb payable copper during H1 2018 against $2.12/lb payable copper for H1 2017. AISC for H1 2018 remains in line with forecast for the year.

· EBITDA of €19.4 million in Q2 2018 compared with €11.9 million delivered in Q2 2017. The increase in EBITDA was mainly a result of higher realised copper prices. On an accumulative basis, EBITDA during H1 2018 was €34.4 million compared with €24.5 million in H1 2017.

· Significant year-on-year increase in profit after tax in Q2 2018 to €15.7 million (Q2 2017 of €6.1 million). Profits after tax for H1 2018 was €24.5 million compared with €11.8 million during H1 2017.

· Fully diluted earnings per share ("EPS") for Q2 2018 were 10.7 cents per share compared with 5.2 cents per share in Q2 2017. Fully diluted earnings per share for H1 2018 were 18.2 cents per share compared with 10.1 cents for the same period last year.

· Inventories of concentrate at 30 June 2018 amounted to €9.3 million (€4.8 million at 31 December 2017).

· Working capital surplus has strengthened over Q2 2018 as a result of cash generated from operations. At the end of Q2 2018 working capital was €32.7 million, representing a €6.2 million increase on Q1 2018 (€26.8 million). Unrestricted cash balances as at 30 June 2018 amounted to €51.1 million, which include the balance of proceeds from the equity raise in Q4 2017 to fund initial expansion costs.

· Cash flow from operating activities before changes in working capital was €20.4 million for Q2 2018 compared with a cash flow of €11.7 million during Q2 2017. For H1 2018, cash flows from operating activities before changes in working capital were €35.6 million compared with €24.0 million during H1 2017.

· Net cash flow from operating activities after changes in working capital was €12.3 million for Q2 2018 compared with a negative cash flow of €4.1 million during Q2 2017. Net cash flows from operating activities after changes in working capital were €30.7 million for H1 2018 compared with of €10.4 million during H1 2017.

Corporate Highlights

· Exercise of warrants over 262,569 ordinary shares of 7.5 pence in the Company at an exercise price of 142.5 pence per share announced on 1 June 2018.

Commenting on 2018's first half results, Alberto Lavandeira, CEO said:

"The first half of 2018 has been very positive with record production levels, robust copper prices and operating costs within our stated guidance. The Riotinto plant is operating well with recoveries at record levels during the period and our expansion plans are well on track. We are optimistic that the second half will continue to deliver results in line with our expectations."

About Atalaya Mining Plc

Atalaya is an AIM and TSX-listed mining and development group. It produces copper concentrates and silver by-product at its wholly owned Proyecto Riotinto site in southwest Spain, which is also undergoing a brownfield expansion. In addition, the Group has a phased, earn-in agreement for up to 80% ownership of Proyecto Touro, a brownfield copper project in the northwest of Spain 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:

Management's review

(All amounts in Euro thousands unless otherwise stated)

For the three and six months to 30 June 2018 and 2017 - (Unaudited)

ATALAYA MINING PLC

MANAGEMENT'S REVIEW AND

CONDENSED INTERIM CONSOLIDATED

FINANCIAL STATEMENTS

30 June 2018

(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 ("Atalaya" and/or "Group"), to enable the reader to assess material changes in the financial position between 31 December 2017 and 30 June 2018 and results of operations for the three and six months ended 30 June 2018 and 2017.

This report has been prepared as of 12 September 2018. The analysis, hereby included, is intended to supplement and complement the unaudited, condensed, interim consolidated financial statements and notes thereto ("Financial Statements") as at and for the three and six months ended 30 June 2018. 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 2017, and the unaudited, condensed interim consolidated financial statements for the three and six months ended 30 June 2017. These documents can be found on Atalaya's 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 AIM market of the London Stock Exchange and on the Toronto Stock Exchange ("TSX").

Proyecto Riotinto, wholly owned by the Company's subsidiary Atalaya Riotinto Minera, S.L.U., is located in Huelva, Spain. The Group 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. In December 2017, the Board of the Company approved and announced a project to expand Proyecto Riotinto's throughput capacity to 15Mtpa. The expansion is currently under construction and it is expected to be finalised during 2019.

The Group 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 Group to acquire up to 80% of the copper project. Proyecto Touro is located in Galicia, north-west Spain.

2. Overview of operating results

Proyecto Riotinto

The following table presents a summarised statement of operations of Proyecto Riotinto for the three and six wmonths ended 30 June 2018 and 2017.

(*) Refer to Section 5 of this Management's Review

Note: The numbers in the above table may slightly differ among them due to rounding.

Three months operating review

Copper production at Proyecto Riotinto for Q2 2018 has increased to 10,446 tonnes from 9,058 tonnes reported in Q2 2017, and 9,441 tonnes in Q1 2018, representing an increase of 15.3% and 10.6%, respectively.

This quarter's copper production replaces Q1 2018's as the second highest quarterly production on record.

In terms of ore milled, 2.5 million tonnes were processed in the quarter, the highest ever quarterly throughput. Copper head grade was in line with expectations. The increase in copper production during the quarter is mainly attributable to the high volume of ore milled with above-budgeted metallurgical recovery rates, averaging 87.31%. Processing throughput was better than expected mainly due to high utilisation rates.

Mining operations are progressing to plan and at similar levels to previous quarters. On a combined basis, ore, waste and marginal ore amounted to 2.6 million m3 in Q2 2018 versus 3.0 million m3 in Q1 2018. After the heavy rains in March, mining operations returned to the original mining plan from May onwards.

As part of the Company's continuous improvements programme, a cone crusher has been installed and it will operate as a secondary crusher. It is expected to become operational during Q3 2018. As previously reported, modifications to current screening and crushing arrangements are under evaluation as part of a de-bottlenecking exercise. Structural steel fabrication of the dome to cover the coarse ore stockpile has been completed and fully delivered to site. Construction is expected to be completed before the end of Q3 2018.

Dewatering of the Atalaya pit is ongoing as previously reported. Dewatering of Cerro Colorado pit after heavy rains in March was completed in mid-May 2018 with pumping systems now on standby.

On-site concentrate inventories at the end of the quarter were approximately 2,089 tonnes. All concentrate in stock at the beginning of the quarter and produced during the quarter was delivered to the port at Huelva.

A NI 43-101 compliant technical report on an updated resources and reserves estimate for Proyecto Riotinto was released on 9 July 2018. Highlights of the report include a 29% increase in open pit proven and probable mineral reserves at Cerro Colorado and a 21% increase in contained copper, with a reduction in the average strip ratio from 1.95:1 to 1.43:1.

Exploration focus has now turned to the underground potential of the remaining massive sulphides below Atalaya pit. A drilling campaign is now underway and is expected to last until June 2019.

2. Overview of operational results (continued)

Six months operating review

Production of copper contained in concentrate during H1 2018 was 19,887 tonnes, compared with 17,863 tonnes in the same period of 2017. Payable copper in concentrates was 18,991 tonnes compared with 17,063 tonnes of payable copper in H1 2017.

Ore mined in H1 2018 was 5,151,555 tonnes compared to 4,578,375 tonnes during H1 2017. Ore processed was 4,697,344 tonnes versus 4,351,206 tonnes in H1 2017.

Ore grade during H1 2018 was 0.48% Cu compared with 0.49% Cu in H1 2017. Copper recovery was 87.92% versus 84.90% in H1 2017. Concentrate production amounted to 89,568 tonnes significantly above H1 2017 production of 79,954 tonnes.

Expansion to 15Mtpa at Proyecto Riotinto

The expansion project to 15 Mtpa is progressing according to schedule with engineering heading to completion and site construction activities picking up. Overall progress completion at the end of the reporting quarter was 41%. Procurement has progressed to 38% completed and engineering to 82% completed. Earthworks are well advanced and are expected to be completed by mid-Q3 2018. Civil engineering works are progressing with main activities now concentrated on the new SAG mill area. Structural steel works are ongoing in the flotation area. Installation of mechanical equipment has started in the concentrate handling area. The milling area is the critical path to completion. The expansion project is scheduled for mechanical completion at the end of Q2 2019.

Updated technical report at Proyecto Riotinto

A NI 43-101 compliant independent technical report on an updated resources and reserves estimate for Proyecto Riotinto was released on 9 July 2018. This was based on the mined surface of the open pit as at 31 December 2017. Highlights of the report include a 29% increase in open pit proven and probable mineral reserves at Cerro Colorado and a 21% increase in contained copper, with a reduction of the average strip ratio from 1.95:1 to 1.43:1. The life of mine under report is 13.8 years, taking into account the current expansion project to 15 Mtpa which is scheduled for mechanical completion at the end of Q2 2019.

In accordance with the Group's existing accounting policy, the updated reserves and resources statement has been taken into account in determining the amount of deferred mining cost (i.e. stripping costs capitalised) and depreciation from 1 January 2018, the date to which the independent technical report relates. Changes to deferred mining cost and depreciation have been fully reflected in Q2 2018 as changes in estimates, and amounts reported in Q1 2018 have accordingly not been restated.

The lower average strip ratio has resulted in a lower capitalisation threshold for stripping costs from 1 January 2018, and this has resulted in a lower cash cost reported in Q2 2018. AISC has not been affected, as this already includes all mining costs whether or not deferred.

All mining assets at Proyecto Rio Tinto are depreciated over the life of mine using a unit of production schedule. Current production levels do not yet reflect the expansion project which is ongoing, and hence applying the updated production profile and increased reserves under the technical report has resulted in a lower amount of depreciation charge from 1 January 2018 reflected in the Q2 2018 results, which will increase when the expanded production levels come on stream during 2019.

Proyecto Touro

Permitting of Proyecto Touro continues as anticipated with good progress made on addressing additional studies from the regional administration. During the quarter, efforts were concentrated on progressing detailed reports to address certain project improvements and recommendations from the public hearing process. These reports, including those received recently, are now expected to be submitted to the authorities before the end of Q3 2018.

During the quarter, the Company announced the completion of a pre-feasibility study ("PFS") for the proposed open pit mine and concentrator at Proyecto Touro. The PFS report was prepared within the guidances set out in the Canadian Instrument NI 43-101. Highlights of the PFS report are:

· 392,000 tonnes of contained copper in P&P reserves;

· Average yearly production of 30,000 tonnes copper and 70,000 ounces of silver in concentrate;

· Pre-production capital expenditure of $165 million;

· All-in sustaining costs of US$1.85/lb of payable Cu net of silver credits; and

· NPV post-tax at 8% discount rate of $180 million using long term copper price of US3.00/lb.

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.

Operating guidance

Proyecto Riotinto operating guidance for 2018 remains as follows:

Copper head grade for 2018 is budgeted to average between 0.47% and 0.50% Cu, with a recovery rate of approximately 84% to 86%. Cash operating costs for 2018 are expected to be in the range of $2.15/lb - $2.30/lb, and AISC is estimated to be in the range of $2.50/lb - $2.60/lb.

4. Overview of the financial results

The following table presents summarised consolidated income statements for the three and six months ended 30 June 2018, with comparatives for the three and six months ended 30 June 2017.

 (*) Refer to Note 2.1. (c)

Three months financial review

Revenues for the three month period ended 30 June 2018 amounted to €48.9 million (Q2 2017: €53.4million). Lower revenues, compared with the same quarter in the previous year, were driven by lower volumes of concentrate sold and partially offset by higher realised prices.

During Q2 2018 the Company sold 46,172 tonnes of copper concentrate versus 55,574 tonnes sold in same quarter last year. Realised prices of $3.12/lb copper during Q2 2018 compared with $2.61/lb copper in Q2 2017.

All concentrates were sold under offtake agreements in place. The Group did not enter into any hedging agreements during the quarter.

Operating costs for the three month period ended 30 June 2018 amounted to €28.0 million, compared with €41.0 million in Q2 2017. Lower costs during 2018 related to (i) additional cost of sales of €10.0 million in the second quarter of 2017 as a high level of inventory held at 31 March 2017 was sold in the quarter; and (ii) a €3.0 million deferred mining cost capitalisation adjustment as per the updated strip ratio of 1:1.43.

4. Overview of the financial results (continued)

Cash costs of $1.88/lb payable copper during Q2 2018 were the same as in Q2 2017. All-in sustaining costs in the reporting quarter were $2.34/lb payable copper compared with $2.22/lb payable copper in Q2 2017.

Sustaining capex for Q2 2018 amounted to €2.5 million compared with €2.2 million in Q2 2017 and relates to continuous development programmes at the tailings storage facilities, optimisation of the flotation circuit and other processing systems.

Corporate expenses amounting to €1.0 million (Q2 2017: €0.2 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.

Exploration costs at Proyecto Riotinto for the three month period ended 30 June 2018 amounted to €0.2 million compared with €0.3 million in Q2 2017. All exploration costs at Proyecto Touro are capitalised.

Care and maintenance expenditures relate to the non-capitalised administration costs of Proyecto Touro.

EBITDA for the three months ended 30 June 2018 amounted to €19.4 million as compared to Q2 2017 of €11.9 million.

The main item below the EBITDA line is depreciation and amortisation of €2.2 million (Q2 2017: €3.7 million). Net financing costs for Q2 2018 amounted to €112k compared with €241k in Q2 2017.

Six months financial review

Revenues for the six-month period ended 30 June 2018 amounted to €101.5 million (H1 2017: €79.1 million).

Copper concentrate production during the six month period ending 30 June 2018 was 89,568 tonnes (H1 2017: 79,954 tonnes) 94,854 tonnes of copper concentrates were sold in the period (H1 2017: 77,677 tonnes). Inventories of concentrates as at the reporting date were 2,089 tonnes (31 Dec 2017: 4,797 tonnes).

Realised copper prices for H1 2018 were $3.08/lb copper compared with $2.55/lb copper in the same period of 2017. Concentrates were sold under offtake agreements in place. The Company did not enter into any hedging agreements in 2018.

Operating costs for the six-month period ended 30 June 2018 amounted to €64.3 million, compared with €52.5 million in H1 2017. Higher costs in 2018 were directly attributable to higher copper production.

Cash costs of $2.07/lb payable copper during H1 2018 compares with $1.77/lb payable copper in the same period last year. The higher costs were due to (i) €1 million lower capitalisation of deferred mining costs in H1 2018; and (ii) higher maintenance and technical services. All-in sustaining costs in the reporting quarter were $2.49/lb payable copper compared with $2.12/lb payable copper in H1 2017. The higher AISC compared with H1 2017 results from increased cash costs together with higher sustaining capex.

Sustaining capex for the six month period amounted to €5.2 million, compared with €2.7 million in the same period in the previous year. Sustaining capex was attributed to continuous development programmes at the tailings storage facilities, optimisation of the flotation circuit and other processing systems.

Corporate costs for the first six month of 2018 were €2.1 million, compared with €1.6 million in H1 2017. Corporate costs mainly include Company overhead expenses.

Exploration costs related to Proyecto Riotinto for the six-month period ended 30 June 2018 amounted to €0.4 million, compared with €0.5 million in H1 2017.

EBITDA for the six months ended 30 June 2018 amounted to €34.4 million, compared with €24.5 million in H1 2017.

Depreciation and amortisation amounted to €6.3 million for the six-month period ended 30 June 2018 (H1 2017: €8.2 million). Lower depreciation was mainly driven by an extension of the life of mine as per updated reserves and resources report

Net finance costs for H1 2018 amounted to €0.1 million (H1 2017 €0.5 million).

4. Overview of the financial results (continued)

Realised copper prices

The average prices of copper for the three and six months ended 30 June 2018 and 2017 are summarised below:

Realised copper prices for the reporting period noted above have been calculated using payable copper and including provisional invoices and final settlements of quotation periods ("QPs") together. Lower realised prices than market averages during the six months ended 30 June 2018, are mainly due to the final settlement of invoices whose QP was fixed in the previous quarter due to a short open period when copper prices were lower. The realised price of shipments during the quarter excluding QP was approximately $3.15/lb.

The Group had no hedges during the six month period ended 30 June 2018.

5. Non-GAAP Measures

Atalaya has included certain non-IFRS measures including "EBITDA", "Cash Cost per pound of payable copper", "All In Sustaining Costs" ("AISC") 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, impairment, 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.

AISC per pound of payable copper includes C1 Cash Costs plus royalties and agency fees, expenditures on rehabilitation, stripping costs, exploration and geology costs, corporate costs and sustaining capital expenditures.

During the final quarter of 2017, Atalaya carried out an exhaustive analysis of the methodology applied to the C1 cash cost and AISC. As a result of the analysis, management changed the methodology used when calculating C1 and AISC in the first three quarters of 2017. A full reconciliation including Q1 and Q2 2017 is included in section iii of the performance review in the 2017 Annual Report.

Realised price 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 Group 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 and cash flows as at 30 June 2018 and 31 December 2017.

Liquidity information

Unrestricted cash and cash equivalents as at 30 June 2018 increased to €51.1 million from €42.6 million at 31 December 2017. The 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, including the proceeds of the capital raise in Q4 2017.

Restricted cash remains at €0.3 million as at 30 June 2018 and mainly relates to deposit bond guarantees.

As of 30 June 2018, Atalaya reported a working capital surplus of €32.7 million, compared with a working capital surplus of €22.1 million at 31 December 2017. The surplus results from the equity raised in Q4 2017 and the cash generated by Proyecto Riotinto. The main liability of the working capital is trade payables. The principal trade payable account relates to the mining contractor where the Group has reached certain agreements to reduce the balance progressively during 2018.

In June 2017, the Group 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.

In 2016, the Group entered into a US$14.0 million copper concentrate prepayment agreement with Transamine Trading, S.A. an independent and privately owned commodity trader company based in Geneva. The duration of the prepayment was from 1 January 2017 to 31 December 2018 with terms at market conditions and the settlement was agreed to be paid through deductions from payments received for each shipment. On 15 September 2017, the Group fully settled the prepayment ahead of schedule. During December 2017, the Group decided not to extend the contract on the same terms during 2018 as permitted under the original agreement.

Overview of the Group's cash flows

Three month cash flows review

Cash and cash equivalents decreased by €1.2 million during the three months ended 30 June 2018. This was due to the net results of cash from operating activities amounting to €10.9 million, cash used in investing activities amounting to €12.5 million and cash from financing activities amounting to €0.5 million.

6. Liquidity and capital resources (continued)

Cash generated from operating activities before working capital changes was €20.4 million. Atalaya decreased its trade receivables in the period by €0.5 million, as well as its inventory levels by €0.3 million and its trade payables by €8.8 million.

Investing activities during the quarter consumed €12.5 million, relating mainly to the expansion project Capex and Rumbo Royalty Buyout and deferred mining costs capitalised.

Six months cash flows review

Cash and cash equivalents increased by €8.5 million during the six months ended 30 June 2018. This was due to cash from operating activities amounting to €29.2 million, cash used in investing activities amounting to €21.3 million and cash from financing activities amounting to €0.6 million.

Cash generated from operating activities before working capital changes was €35.6 million. Atalaya decreased its trade payables in the period by €8.7 million, as well as its inventory levels by €4.3 million and increased its trade receivable balances by €0.5 million.

Investing activities during the six-month period amounted to €21.3 million, relating mainly to the deferred mining costs, expansion project Capex and Rumbo Royalty Buyout.

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 2018, Atalaya recognised a foreign exchange profit of €0.9 million and €1.1 million respectively. Foreign exchange losses mainly related to change in the period end EUR and USD conversion rates, as all sales are cashed and occasionally held in USD.

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

In February 2017, the Group entered into certain foreign exchange hedging contracts to offset the agreements in force as at 31 December 2016. During H1 2018, 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. Rumbo royalty and Deferred consideration

Rumbo royalty

In July 2012, Atalaya Riotinto Minera, S.L. signed a royalty agreement with Rumbo 5 Cero, S.L. ("Rumbo"), at which Rumbo was entitled to receive a royalty payment of up to US $250,000 per quarter if the average copper sales price or LME price for the period is equal to or above $2.60/lb for ten years up to a maximum amount of US$10,000,000. As the average copper price for the third and fourth quarter of 2017 was above $2.60/lb, the company was obligated to pay a royalty amounted to US$500,000 to Rumbo. On 8 February 2018, the companies agreed to satisfy this payment through an issuance of 192,540 new ordinary shares at GB £7.5p.

On 5 April 2018, the Company signed a contract with Rumbo to purchase the remaining royalty agreement for a total consideration of US$4,750,000 to be paid through the issuance of 1,600,907 new ordinary shares of GB £7.5p.

7. Rumbo royalty and Deferred consideration (continued)

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.

In summary, the High Court found that the deferred consideration of €43.8 million (the "Deferred Consideration"), potentially payable to Astor under the master agreement entered into in 2008 between inter alia the Company and Astor (the "Master Agreement"), did not start to become payable when permit approval was granted for Proyecto Riotinto. In addition, the intra-group loans through which funding for the restart of mining operations were made available to the Company's subsidiary, Atalaya Riotinto Minera S.L. did not constitute a "Senior Debt Facility" so as to trigger payment of the Deferred Consideration. Accordingly, the first instalment of the Deferred Consideration has not fallen due.

Astor failed to show that there had been a breach of the all reasonable endeavours obligation contained in the Master Agreement to obtain a senior debt facility or that the Group had acted in bad faith in not obtaining a senior debt facility. While the Court confirmed that the Group was not in breach of any of its obligations, the Master Agreement and its provisions remain in place. Accordingly, other than up to US$10 million a year which may be required for non-Proyecto Riotinto related expenses, Atalaya Riotinto Minera S.L. cannot make any dividend, distribution or any repayment of the money lent to it by companies in the Group until the consideration under the Master Agreement (including the Deferred Consideration) has been paid in full.

As a consequence, the Judgment requires that, in accordance with the Master Agreement, Atalaya Riotinto Minera S.L. 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 the consideration due to Astor (including the Deferred Consideration and the amount of €9.1 million payable under the loan assignment agreement between the parties) early. The Court confirmed that the obligation to pay consideration early out of excess cash does not apply to the up-tick payments of up to €15.9 million (the "Up-tick Payments") and the Judgment notes that the only situation in which the Up-tick Payments could ever become payable is in the unlikely event that mining operations stop at Proyecto Riotinto and a senior debt facility is then secured for a sum sufficient to restart mining operations. Accordingly, the Group has recorded the liability of €53 million.

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 took place on 9 and 10 May 2018 and the Group expects the ruling to be issued in the coming months.

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 Group 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 2017.

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 2017.

10. Other information

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

* Refer to Note 2.1. (c)

The notes on pages 14 to 29 are an integral part of these unaudited condensed interim consolidated financial statements.

The notes on pages 14 to 29 are an integral part of these unaudited condensed interim consolidated financial statements

.

* Refer to Note 2.1. (c)

The notes on pages 14 to 29 are an integral part of these unaudited condensed interim consolidated financial statements.

* Refer to Note 2.1. (c)

The notes on pages 14 to 29 are an integral part of these unaudited condensed interim consolidated financial statements.

Notes to the condensed interim consolidated financial statements

(All amounts in Euro thousands unless otherwise stated)

For the three and six months to 30 June 2018 and 2017 - (Unaudited)

1. Incorporation and summary of business

Country of incorporation

Atalaya Mining Plc (the "Company") 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 Company was listed on AIM of the London Stock Exchange in May 2005 under the symbol ATYM and on the TSX on 20 December 2010 under the symbol AYM. The Company continued to be listed on AIM and the TSX as at 30 June 2018.

Additional information about Atalaya Mining Plc is available at www.atalayamining.com as per requirement of AIM rule 26.

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.

Summary of business

The Company owns and operates through a wholly-owned subsidiary, Proyecto Riotinto, an open-pit copper mine located in the Pyritic belt, in the Andalusia region of Spain, approximately 65 km northwest of Seville. A brownfield expansion of this mine is in progress.

In addition, the Company has a phased earn-in agreement to acquire up to 80% ownership of Proyecto Touro, a brownfield copper project in northwest Spain, which is currently at the permitting stage.

The Company's and its subsidiaries' business is focused on exploring for and developing metals 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 metal mineralisation in Spain and the Eastern European region.

2. Basis of preparation and accounting policies

2.1 Basis of preparation

(a) Overview

The unadited condensed interim consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS). IFRS comprises the standards issued by the International Accounting Standard Board ("IASB"), and IFRS Interpretations Committee ("IFRICs") as issued by the IASB. Additionally, the unaudited condensed consolidated financial statements have also been prepared in accordance with IFRS 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 2017. These unaudited 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 2017 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 unaudited condensed interim consolidated 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.

2. Basis of preparation and accounting policies (continued)

(b) Going concern

These unaudited condensed interim consolidated financial statements have been prepared on the basis of accounting principles applicable to a going concern which assumes that the Group 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 Group will generate sufficient cash and cash equivalents to continue operating for the next twelve months.

(c) 2016 Restatement

Deferred consideration (Note 14)

At the end of 2017 the discount rate used to value the liability for the deferred consideration was re-assessed to apply a risk free rate as required by IAS 37. The discounted amount, when applying this discount rate, was not considered significant and the Group has measured the liability for the deferred consideration on an undiscounted basis. The value of the liability is in line with the court ruling issued on 6 March 2017. Full details of the restatement to 2016 full year comparatives are set out in the audited, consolidated financial statements for the year ended 31 December 2017 available from the Atalaya website at www.atalayamining.com.

The Q2 and H1 2017 comparatives have been restated in line with this re-assessment as follows:

(1) The discount rate was re-assessed considering a risk free rate for the relevant periods as required by IAS 37. Discounting the provision using the risk free rate would not result in a significant impact to the financial statements and the Group has measured the liability on an undiscounted basis. The amount of the provision is in line with the court ruling. Finance costs have been revised to exclude the unwinding of discounts and amortisation charges based on the restated carrying amount of Intangible assets

2.2 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)

2.2 Fair value estimation (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).

2.3 Use and revision of accounting estimates

The preparation of the unaudited 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.

2.4 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 2018. The adoption of these Standards did not have a material effect on the condensed interim consolidated financial statements.

· IFRS 15 - Revenue from Contracts with Customers and Clarifications to IFRS 15 - Revenue from Contracts with Customers. New standard for recognising revenue (replaces IAS 11, IAS 18, IFRIC 13, IFRIC 15, IFRIC 18 and SIC 31). The Company has adopted IFRS 15 as of January 1, 2018.

· IFRS 9 - Financial Instruments and subsequent amendments. This standard replaces the classification, measurement, recognition and derecognition in accounts of financial assets and liabilities, hedge accounting, and impairment set out in IAS 39 Financial instruments: Recognition and Measurement. The Company has adopted IFRS 9 as of January 1, 2018.

· IFRS 16 - Leases. The new standard on leases that replaces IAS 17, IFRIC 4, SIC-15 and SIC-27. Effective for annual periods beginning on or after 1 January 2019. Early adoption is permitted for entities that apply IFRS 15 at or before the date of initial application of IFRS 16. IFRS 16 introduces a single, on-balance sheet lease accounting model for lessees. A lessee recognises a right-of-use asset representing it right to use the underlying asset and a lease liability representing its obligation to make lease payment. There are recognition exemptions for short-term leases and leases of low-value items. Lessor accounting remains similar to the current standard - i.e. lessor continue to classify leases as finance or operating leases. The Company will adopt IFRS 16 as of 1 January 2019.

2. Basis of preparation and accounting policies (continued)

2.5 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. Copper concentrates produced by the Group are sold to three offtakers as per the relevant offtake agreement (Note 17.3).

Geographical segments

The Group's mining activities are located in Spain. The commercialisation of the copper concentrates produced in Spain is carried out in Cyprus. Corporate costs and administration costs are based in Cyprus. Intercompany transactions within the Group are on arm's length basis in a manner similar to transaction with third parties.

* Refer to Note 2.1. (c)

4. Net finance cost

* Refer to Note 2.1. (c)

(1) Interest rate US$ 3 months LIBOR + 2.75%

5. Earnings per share

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

* Refer to Note 2.1. (c)

At 30 June 2018 there are 1,313,000 options (Note 11) and nil warrants (Note 10) (2017: 262,569 warrants and 1,400,000 options) which have been included when calculating the weighted average number of shares for 2018.

6. Property, plant and equipment

(1) Mine rehabilitation asset (Note 13). In 2018, it also includes the capitalisation of the remaining Rumbo royalty fee amounting to USD4,750,000 (ie. €4,025,000) paid through shares issue.

(2) Net of pre-commissioning sales

(3) Stripping costs

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

The above fixed assets are located mainly in Spain.

7. Intangible assets

(1) Permits include an amount of €5,000,000 that relates to the Touro Project mining rights.

 * Refer to Note 2.1. (c)

The useful life of the intangible assets is estimated to be not less than fourteen years from the start of production (the revised Reserves and Resources statement which was announced in July 2016 has increased the life of mine to 16 ½ years). In July 2018, the Company announced an updated technical report on the mineral resources and reserves of the Rio Tinto Copper Project. The Report increases the open pit mineral reserves by 29% and stated the life of mine as 13.8 years, considering the on-going expansion of the processing plant.

The ultimate recovery 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 Group conducts impairment testing on an annual basis unless indicators of impairment are not 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 Group assessed that no indicators were present as at 30 June 2018 and thus no impairment has been recognised.

Goodwill of €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 licence back in 2008.

8. Inventories

8. Inventories (continued)

Materials and supplies relate mainly to machinery spare parts. Work in progress represents ore stockpiles, which is ore that has been extracted and is available for further processing.

As of 30 June 2018, copper concentrate produced and not sold amounted to 2,089 tonnes. Accordingly, the inventory for copper concentrate was €1.4 million (31 Dec 2017: €4.8 million).

9. Trade and other receivables

Trade receivables are shown net of any interest applied to prepayments. Payment terms are aligned with offtake agreements and market standards and generally are 7 days on 90% of the invoice and the remaining 10% at the settlement date which can vary between 1 to 5 months.

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

10. Share capital and share premium

10. Share capital and share premium (continued)

Authorised capital

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

Issued capital

2018

a) On 13 February 2018, the Company issued 192,540 new ordinary shares of 7.5p to Rumbo at a price of 186.7p, thus creating a share premium of €410,146.

b) On 13 February 2018, the Company was notified that certain employees exercised options over 29,000 ordinary shares of 7.5p at a price of 144p, thus creating a share premium of €44,576.

c) On 5 April 2018, the Company signed with Rumbo a contract to purchase the whole royalty agreement for a total consideration of US$4,750,000 to be paid through the issuance of 1,600,907 new ordinary shares of 7.5p. After this transaction the share premium increased by €3,887,128. On 13 April 2018, the new ordinary shares were issued to Rumbo.

d) On 1 June 2018, 262,569 warrants were exercised at 142.5p per ordinary share. Hence, 262,569 ordinary shares of 7.5p were issued, thus creating a share premium of €405,087.

Warrants

The Company has issued warrants to advisers to the Group. Warrants expire three years after the grant date and have exercise price Stg £1.425.

Details of share warrants outstanding as at 30 June 2018:

On 1 June 2018, the Company has received notification for the exercise of warrants over 262,569 ordinary shares of 7.5p in the Company at an exercise price of 142.5p per share. As a result, the Company has received proceeds of GB£374,160.83 (Note 10 d)).

11. Other reserves