Atalaya Mining Regulatory News (ATYM)

ATALAYA MINING PLC

MANAGEMENT'S REVIEW AND

UNAUDITED INTERIM CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

30 September 2022

Notice to Reader

The accompanying unaudited interim condensed consolidated financial statements of Atalaya Mining Plc have been prepared by and are the responsibility of Atalaya Mining Plc's management.

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 2021 and 30 September 2022 and results of operations for the three and nine months ended 30 September 2022 and 2021.

This report has been prepared as of 8 November 2022. The analysis hereby included is intended to supplement and complement the unaudited interim condensed consolidated financial statements and notes thereto ("Financial Statements") as at and for the period ended 30 September 2022. 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 2021, and the unaudited interim condensed consolidated financial statements for the period ended 30 September 2021. These documents can be found on Atalaya's website at www.atalayamining.com.

Atalaya prepares its Annual Financial Statements in accordance with International Financial Reporting Standards ("IFRSs") as adopted by the EU and its Unaudited Interim Condensed Consolidated Financial Statements in accordance with International Accounting Standard 34: Interim Financial Reporting. 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 constitute 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. Incorporation and description of the Business

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 ("AIM") in May 2005 under the symbol ATYM and on the Toronto Stock Exchange ("TSX") on 20 December 2010 under the symbol AYM. The Company continued to be listed on AIM and the TSX as at 30 September 2022.

Atalaya is a European mining and development company. 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, elsewhere in Europe and Latin America.

The Group currently owns four mining projects: Proyecto Riotinto, Proyecto Touro, Proyecto Masa Valverde and Proyecto Ossa Morena. In addition, the Company has an earn-in agreement to acquire three investigation permits at Proyecto Riotinto Este.

Proyecto Riotinto

The Company owns and operates through a wholly owned subsidiary, "Proyecto Riotinto", an open-pit copper mine located in the Iberian Pyrite Belt, in the Andalusia region of Spain, approximately 65 km northwest of Seville. A brownfield expansion of this mine was completed in 2019 and successfully commissioned by 31 March 2020.

Proyecto Touro

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. Proyecto Touro is currently in the permitting process.

In November 2019, Atalaya executed the option to acquire 12.5% of Explotaciones Gallegas del Cobre, S.L. the exploration property around Touro, with known additional mineralisation, which will add to the potential of Proyecto Touro.

Proyecto Masa Valverde

On 21 October 2020, the Company announced that it entered into a definitive purchase agreement to acquire 100% of the shares of Cambridge Mineria España, S.L. (since renamed Atalaya Masa Valverde, S.L.U.), a Spanish company which fully owns the Masa Valverde polymetallic project located in Huelva (Spain). Proyecto Masa Valverde is currently in the permitting process.

Proyecto Riotinto Este

In December 2020, Atalaya entered into a Memorandum of Understanding with a local private Spanish company to acquire a 100% beneficial interest in three investigation permits (known as Peñas Blancas, Cerro Negro and Herreros investigation permits), which cover approximately 12,368 hectares and are located immediately east of Proyecto Riotinto.

Proyecto Ossa Morena

In December 2021, Atalaya announced the acquisition of a 51% interest in Rio Narcea Nickel, S.L., which owned several investigation permits in the Ossa Morena Metallogenic Belt in Spain. In July 2022, Atalaya increased its stake in the company to 99.9% as a result of an equity raise to fund the exploration activities under the investigation permits.

2. Overview of Operational Results

Proyecto Riotinto

The following table presents a summarised statement of operations of Proyecto Riotinto for the three and nine months ended 30 September 2022 and 2021, respectively.

(*) Refer Section 5 of this Management Review.

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

Three months operational review

The plant processed 3.9 million tonnes consistent with throughput in Q3 2021 of 3.9 million tonnes, highlighting the plant's ability to operate above its 15 million tonne per annum nameplate capacity.

Copper grade was 0.41% in Q3 2022, representing an increase from the comparative period in Q3 2021 of 0.40%.

Copper recoveries in Q3 2022 were 84.62%, which were consistent with expectations but below Q3 2021 due to the characteristics of the ore processed during the quarter.

Copper production in Q3 2022 was 13,453 tonnes, which was in line with production in Q3 2021.

On-site copper concentrate inventories at the end of Q3 2022 were approximately 4,349 tonnes.

Nine months operational review

Ore processed in YTD 2022 was 11,451,805 tonnes, below the comparable period in YTD 2021 as a result of the Q1 2022 transportation sector strike and temporary maintenance shutdown.

Ore grade during YTD 2022 was 0.39% Cu compared with 0.41% Cu in YTD 2021, due to lower grades earlier in 2022 as a result of blending with lower grade stockpiles due to pit sequencing. Copper recovery was 85.70% versus 85.63% in YTD 2021. Concentrate production amounted to 180,635 tonnes, which was below YTD 2021 production of 206,018 tonnes.

Production of copper contained in concentrate during YTD 2022 was 38,300 tonnes, below the comparable with 42,225 tonnes in 2021. Payable copper in concentrates was 36,494 tonnes compared with 40,165 tonnes of payable copper in YTD 2021.

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 Basis of Reporting. The Company is aware that the inflationary pressure on the goods and services required for its business along with the geopolitical developments in Ukraine and its impact on energy prices may still have further impact on how the Company can manage it operations and is accordingly keeping its guidance under regular review. Should the Company consider the current guidance no longer achievable, then the Company will provide a further update.

Operational guidance

Guidance for Proyecto Riotinto is unchanged from previously announced outlook.

As announced in the Company's Q3 2022 Operations update, full year copper production guidance continues to be 52,000 - 54,000 tonnes. The copper grade for Q4 2022 is expected to be higher than the average grade processed in YTD 2022.

The cost guidance ranges that were announced in the Company's Q2 and H1 2022 Financial Results are also unchanged. Cash costs and AISC for 2022 are expected to be in the range of $2.95 - 3.25/lb copper payable and $3.25 - 3.45/lb copper payable, respectively. Although input cost inflation remains high, realised electricity prices so far in Q4 2022 have decreased meaningfully from Q3 2022 levels, including the spikes in August 2022. This decrease is primarily the result of lower European gas prices, which have benefitted from mild weather and sufficient supply of LNG cargoes.

4. Overview of the Financial Results

The following table presents summarised consolidated income statements for the three and six months ended 30 September 2022, with comparatives for the three and nine months ended 30 September 2021, respectively.

Three months financial review

Revenues for the three-month period ended 30 September 2022 amounted to €82.3 million (Q3 2021: €107.2 million). Lower revenues compared with the same quarter in the previous year were driven by lower realised copper prices compared with Q3 2021 partially offset by stronger US Dollar rate against the Euro.

Realised prices including QPs closed in the Period were $3.83/lb copper during Q3 2022 compared with $4.31/lb copper in Q3 2021. The realised price, excluding QPs closed in the Period were approximately $3.52/lb during the quarter.

Costs of sales for the three-month period ended 30 September 2022 amounted to €84.8 million, compared with €55.4 million in Q3 2021. Unit operating costs in Q3 2022 were significantly higher than in Q3 2021 due to the high cost of electricity, diesel and other supplies as result of inflation and the geopolitical situation in Ukraine.

Cash costs in Q3 2022 were $3.34/lb payable copper compared with $2.19/lb payable copper in the same period last year. Q3 2022 operating costs were higher than in Q3 2021 mainly due to the significantly higher cost of electricity (€20.2 million higher) and other supplies, despite the stronger US Dollar/Euro rate which offset a portion of the higher operating costs. AISC for Q3 2022, excluding one-off investments in the tailings dam, were $3.49/lb payable copper compared with $2.48/lb payable copper in Q3 2021.

Sustaining capex for Q3 2022 amounted to €1.6 million compared with €1.1 million in Q3 2021. Sustaining capex mainly related to continuous enhancements in the processing systems of the plant. In addition, the Company invested €2.9 million in the project to increase the tailings dam during Q3 2022 (Q3 2021: €2.8 million). Stripping costs capitalised during Q3 2022 amounted to €nil (Q3 2021: €2.5 million).

Capex associated with the construction of the 50 MW solar plant amounted to €0.4 million in Q3 2022, while investments in the E-LIX Phase I plant totalled €6.5 million, of which €4.9 million was booked as long term loans to Lain Technologies Ltd.

Administrative and other expenses amounted to €0.9 million (Q3 2021: €2.3 million) and 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 on Atalaya's projects portfolio for the three-month period ended 30 September 2022 amounted to €0.1 million (Q3 2021: €0.4 million) while an additional €0.9 million in project costs were capitalised.

EBITDA for the three months ended 30 September 2022 amounted to negative €4.3 million compared with positive EBITDA for Q3 2021 of €48.8 million.

The main item below the EBITDA line is depreciation and amortisation of €9.0 million (Q3 2021: €7.8 million). Net financing costs for Q3 2022 amounted to €0.5 million (Q3 2021: €0.5 million).

Nine months financial review

Revenues for the nine-month period ended 30 September 2022 amounted to €262.0 million (YTD 2021: €304.3 million). Reduced revenues were driven by lower copper prices and lower volumes of concentrate sold in YTD 2022 partially offset by stronger average US Dollar rates against Euro.

Copper concentrate production during the nine-month period ended 30 September 2022 was 180,635 tonnes (YTD 2021:  206,018 tonnes) with 181,541 tonnes of copper concentrates sold in the period (YTD 2021: 213,966 tonnes). Lower production levels were mainly the result of lower grades and lower throughput following the transport sector strike in Q1 2022. Inventories of concentrates as at the reporting date were 4,349 tonnes (31 Dec 2021: 4,232 tonnes).

Realised copper prices including QPs closed for YTD 2022 were $4.18/lb compared with $4.08/lb in the same period of 2021. Concentrates were sold under offtake agreements in place. The Company did not enter into any hedging agreements in either 2022 or 2021.

Costs of sales for the nine-month period ended 30 September 2022 amounted to €217.8 million, compared with €149.1 million in Q3 2021. Unit operating costs in YTD 2022 were significantly higher than in YTD 2021 due to the significantly higher cost of electricity (€49.6 million higher), diesel and other supplies as result of inflation and the geopolitical situation in the Ukraine.

Cash costs during YTD 2022 were $3.26/lb payable copper compared with $2.16/lb payable copper in the same period last year. Higher cash costs were primarily due to the significantly higher electricity price as well as increased costs for other supplies. The stronger US Dollar/Euro rate in YTD 2022 offset a portion of the higher operating costs. AISC excluding investment in the tailings dam in the nine-month period were $3.47/lb payable copper compared with $2.49/lb payable copper in YTD 2021. The increase is mainly attributable to the higher cash costs despite lower capitalised stripping costs, which amounted to €0.7 million in YTD 2022 compared with €8.3 million invested in YTD 2021.

Sustaining capex for the nine-month period ended 30 September 2022 amounted to €4.5 million, compared with €4.5 million in the same period the previous year. Sustaining capex related to enhancements in processing systems of the plant. In addition, the Company invested €9.4 million in the project to increase the tailings dam, compared with €9.5 million in 2021.

Capex associated with the construction of the 50 MW solar plant amounted to €12.1 million in YTD 2022, while investments in the E-LIX Phase I plant totalled €12.9 million, of which €10.2 million was booked as long-term loans to Lain Technologies Ltd.

Corporate costs for the first nine-month period ended 30 September 2022 were €5.4 million, compared with €5.3 million in YTD 2021. Corporate costs mainly include the Company's overhead expenses.

Exploration costs related to Atalaya's project portfolio for the nine-month period ended 30 September 2022 and amounted to €0.5 million (YTD 2021: €0.8 million) while an additional €2.2 million in project costs were capitalised.

EBITDA for the nine months ended 30 September 2022 amounted to €37.1 million, compared with €148.2 million in YTD 2021.

Depreciation and amortisation amounted to €25.3 million for the nine-month period ended 30 September 2022 (YTD 2021: €23.6 million) as a result of the higher finished assets under construction.

Net finance costs for YTD 2022 amounted to €1.5 million (YTD 2021 €0.8 million).

On 10 August 2022 the Board declared an interim dividend of US$0.036 per share.

 Copper prices

The average realised copper price excluding QPs decreased by 17.0% from $4.24 per pound in Q3 2021 to $3.52 per pound in Q3 2022. Realised copper prices including QPs closed decreased by 11.0% from $4.31 per pound in Q3 2021 to $3.83 per pound in Q3 2022.

The average prices of copper for the three months ended 30 September 2022 and 2021 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. Higher realised prices than market averages are mainly due to the final settlement of invoices where QP was fixed in the previous quarter due to a short open period when copper prices were higher. Q3 2022 realised price excluding QPs closed was approximately $3.52/lb, in line with average spot prices for the quarter.

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, capitalised stripping costs, exploration and geology costs, corporate costs and recurring sustaining capital expenditures but excludes one-off sustaining capital projects, such as the tailings dam project.

Realised price per pound of payable copper is the value of the copper payable included in the concentrate produced including the discounts and other features governed by the offtake agreements of the Group and all discounts or premiums provided in commodity hedge agreements with financial institutions if any, expressed in USD per pound of payable copper and before silver credits, TC/RCs, penalties freights and other cost items included in the sales invoices and booked as revenues. 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 September 2022 and 31 December 2021.

Liquidity information

(1) Includes borrowings

Unrestricted cash and cash equivalents (which include cash at both Group level and Operation level) as at 30 September 2022 increased to €107.3 million from €92.1 million at 31 December 2021. The increase in cash balances is the result of net cash flow generated in the period and drawdown of debt to fund development of the 50 MW solar plant. Restricted cash of €0.3 million represented the amount in escrow out of which the Company has paid interest of €9.6 million on 7 and 8 April 2022 (following the trial in February and March 2022) and €1.1 million on 16 May 2022 to Astor under the Master Agreement. Following the payment made in May 2022, the balance (less an amount representing £280,000, or~€350k being the remaining potential liability to Astor on costs) reverted to the Company and it has been classified as unrestricted cash.

As of 30 September 2022, Atalaya reported a working capital surplus of €106.8 million, compared with a working capital surplus of €102.4 million at 31 December 2021. The main liability of the working capital is trade payables related to Proyecto Riotinto contractors and, to a lesser extent, short-term loans following the drawdown of credit facilities during Q3 2022.

The increase in working capital resulted from higher cash balances and inventory levels.

Overview of the Group's cash flows

Three months cash flows review

Cash and cash equivalents decreased by €19.5 million during the three months ended 30 September 2022. This was due to cash used in operating activities amounting to €3.8 million, the cash used in investing activities amounting to €8.7 million and the cash used from financing activities totalling €12.6 million and partially offset by net foreign exchange differences of €5.6 million.

Cash generated from operating activities before working capital changes was €4.2 million. Atalaya increased its trade receivables in the period by €9.8 million, decreased its inventory levels by €0.6 million and increased its trade payables by €11.8 million.

Investing activities during the quarter consumed €8.7 million, relating mainly to the 50 MW solar plant construction, tailings dam project, the PP&E portion of the E-LIX Phase I Plant and continuous enhancements in the processing systems of the plant.

Financing activities during the quarter were negative €12.6 million as result of debt repayments and payment of the 2022 interim dividend.

Nine months cash flows review

Cash and cash equivalents increased by €0.1 million during the nine-month period ended 30 September 2022. This was due to cash from operating activities amounting to €17.6 million, cash used in investing activities amounting to €36.0 million, cash from financing activities amounting to €2.8 million and net foreign exchange differences of €15.7 million.

Cash generated from operating activities before working capital changes was €37.0 million. Atalaya increased its trade payables in the period by €15.5 million, increased its inventory levels by €13.1 million and increased its trade receivable balances by €17.7 million.

Investing activities during YTD 2022 amounted to €36.0 million, relating mainly to the 50 MW solar plant construction, tailings dam project, the PP&E portion of the E-LIX Phase I Plant, the acquisition of lands around Riotinto and continuous enhancements in the processing systems of the plant.

Financing activities during the YTD 2022 increased by €2.8 million driven by the use of unsecured credit facilities for the financing of the 50 MW solar plant. The financing was made by unsecured credit lines by three major Spanish banks having a three to six-year tenure and an average annual interest rate of approximately 1.7% and are partially offset by schedule repayments during the period.

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 mainly denominated in Euros ("EUR") which is the functional currency of the Group, 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 nine months ended 30 September 2022, Atalaya recognised a foreign exchange profit of €5.6 million and €15.7 million, respectively. Foreign exchange profits mainly related to changes in the period in 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:

7. Sustainability

Health and Safety

Despite the good trend in the first half of the year 2022, the results for the third quarter have not improved with respect to the same period of the previous year, in consequence, the frequency and severity index, up until 30 September 2022 are 7.0 and 0.16, respectively. In Q3 2022 there were seven minor accidents with sick leave. This means that it is necessary to redouble our efforts to enhance the safety culture, including that of contractors, in order to reach "zero injuries".

The consolidation of the leadership in site field activity and its integration into the company's Management System should be highlighted. Random checks at the entrances and exits to prevent work under the influence of psychoactive substances are operating normally. In this respect, the campaign to raise awareness about working without being under the influence of alcohol and other psychoactive substances continues.

In this quarter, training our staff continued on basic life support and rules of action in the event of health emergencies.

Finally, the Proyecto Riotinto health and safety management system has undergone the legal audit established by the Occupational Risk Prevention Act, with successful outcomes.

Environment

During the third quarter of 2022, the environmental department has continued environmental monitoring of the site activities and management of the natural environment. Key points of the quarter:

· Four minor environmental incidents (spillages over unpaved and paved areas) were registered.

· A total rainfall of 37,9 l/m2 was recorded in Q3 2022, which was around 119% more than in the same period of previous year. The total rain collected for the hydrological year (October 2021 to September 2022) is 405,4 l/m2, which is 32% less than the rainfall recorded in the previous hydrological year.

· On 22 June 2022 the document to request AAI (Plant Environmental Permit) for E-LIX Phase I Plant was submitted.

· The additional measures included in the action plan for dust control continued to be implemented, increasing periodic irrigation, implementing new coordination measures and carrying out exhaustive monitoring of the emissions generated in the operation.

· All the periodic internal controls of non-point (diffuse) emissions into the atmosphere have been carried out, and the results of the controls are within the limit values set out in the regulations. The rest of periodic and mandatory controls have been carried out without incidents. In addition, during the quarter, several reports were handed to the Administration bodies.

· Environmental inspections were performed daily, mainly focused on chemical storage and handling, housekeeping, waste management, uncontrolled releases and environmentally friendly practices carried out in the project by ARM's and contractors' personnel. Additionally, dust control and drainage system inspections were performed regularly. 96 inspections in total were carried out during the third quarter, including, plant, mine area and the contractors' camps.

Corporate Social Responsibility

Social responsibility activities have made steady progress in the third quarter of the year, with Atalaya Mining and its wholly owned Fundación Atalaya Riotinto leading multiple initiatives to reinforce its support to the communities surrounding the projects.

In this regard, Atalaya is working with the municipalities in various projects, based on the already long standing collaboration agreements in place. Example of this includes the agreements made with the municipality of Campofrío, that will support a street refurbishment project that includes the acquisition and installation of urban furniture, ornamental items and a new fountain. Also, the municipality of Zalamea La Real has implemented the second phase of its integral project to solve historical issues with its municipal water supply system. Finally, La Granada de Riotinto and Atalaya have agreed to start the refurbishment of a public playground and the municipal sporting facilities.

The Foundation has also agreed to support a number of initiatives by local institutions, associations and individuals, including the support to the publication of a book by a local writer, the sponsoring of a local cycling team formed by Atalaya´s employees and the release of an album by a local renowned musician.

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 2021.

The Company continues to monitor the principal risks and uncertainties that could materially impact the Company's results and operations, including the areas of increasing uncertainty such as COVID-19, inflationary pressure on goods and services required for the business and geopolitical developments worldwide.

9. Critical accounting policies, estimates, judgements, assumptions and accounting changes

The preparation of Atalaya's Financial Statements in accordance with IFRS requires management to make estimates, judgements 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 2021.

As at 30 September 2022, there are no significant changes in critical accounting policies or estimates to those applied in 2021.

10. Other Information

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

Unaudited interim condensed consolidated financial statements on subsequent pages

By Order of the Board of Directors

Unaudited Interim Condensed Consolidated Income Statements

(All amounts in Euro thousands unless otherwise stated)

For the period ended 30 September 2022 and 2021

The notes on subsequent pages are an integral part of these Unaudited Interim Condensed Consolidated Financial Statements.

Unaudited Interim Condensed Consolidated Statement of Financial Position

(All amounts in Euro thousands unless otherwise stated)

As at 30 September 2022 and 2021

The notes on subsequent pages are an integral part of these Unaudited Interim Condensed Consolidated Financial Statements. The unaudited interim condensed consolidated financial statements were authorised for issue by the Board of Directors on 8 November 2022 and were signed on its behalf.

Unaudited Interim Condensed Consolidated Statements of Changes in Equity

(All amounts in Euro thousands unless otherwise stated)

As at 30 September 2022 and 2021

 (All amounts in Euro thousands unless otherwise stated)

For the period ended 30 September 2022 and 2021

(1) The share premium reserve is not available for distribution

The notes on subsequent pages are an integral part of these Unaudited Interim Condensed Consolidated Financial Statements.

Unaudited Interim Condensed Consolidated Statement of Cash Flows

(All amounts in Euro thousands unless otherwise stated)

For to the period ended 30 September 2022 and 2021

The notes on subsequent pages are an integral part of these Unaudited Interim Condensed Consolidated Financial Statements.

Notes to the Unaudited Interim Condensed Consolidated Financial Statements

(All amounts in Euro thousands unless otherwise stated)

For the period ended 30 September 2022 and 2021

1. Incorporation and summary of business

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 September 2022.

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.

Principal activities

Atalaya is a European mining and development company. 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, elsewhere in Europe and Latin America.

The Group currently controls four mining projects: Proyecto Riotinto, Proyecto Touro, Proyecto Masa Valverde and Proyecto Ossa Morena. In addition, the Group has an earn-in agreement to acquire three investigation permits at Proyecto Riotinto Este.

Proyecto Riotinto

The Company owns and operates through a wholly owned subsidiary, "Proyecto Riotinto", an open-pit copper mine located in the Iberian Pyrite Belt, in the Andalusia region of Spain, approximately 65 km northwest of Seville. A brownfield expansion of this mine was completed in 2019 and successfully commissioned by Q1 2020.

Proyecto Touro

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. Proyecto Touro is currently in the permitting process.

In November 2019, Atalaya executed the option to acquire 12.5% of Explotaciones Gallegas del Cobre, S.L. the exploration property around Touro, with known additional reserves, which will provide high potential to the Proyecto Touro.

Proyecto Masa Valverde

On 21 October 2020, the Company announced that it entered into a definitive purchase agreement to acquire 100% of the shares of Cambridge Mineria España, S.L. (since renamed Atalaya Masa Valverde, S.L.U.), a Spanish company which fully owns the Masa Valverde polymetallic project located in Huelva (Spain). Proyecto Masa Valverde is currently in the permitting process.

Proyecto Riotinto Este

In December 2020, Atalaya entered into a Memorandum of Understanding with a local private Spanish company to acquire a 100% beneficial interest in three investigation permits (known as Peñas Blancas, Cerro Negro and Herreros investigation permits), which cover approximately 12,368 hectares and are located immediately east of Proyecto Riotinto.

 Proyecto Ossa Morena

In December 2021, Atalaya announced the acquisition of a 51% interest in Rio Narcea Nickel, S.L., which owns 17 investigation permits. The acquisition also provided a 100% interest in three investigation permits that are also located along the Ossa- Morena Metallogenic Belt. In Q3 2022, Atalaya increased its ownership interest in POM to 99.9%, up from 51%, following completion of a capital increase that will fund exploration activities.

2. Basis of preparation and accounting policies

2.1 Basis of preparation

(a) Overview

These condensed interim financial statements are unaudited.

The unaudited interim condensed consolidated financial statements for the period ended 30 September 2022 have been prepared in accordance with International Accounting Standard 34: Interim Financial Reporting. IFRS comprise the standard issued by the International Accounting Standard Board ("IASB"), and IFRS Interpretations Committee ("IFRICs") as issued by the IASB. Additionally, the unaudited interim condensed consolidated financial statements have also been prepared in accordance with the IFRS as adopted by the European Union (EU), using the historical cost convention, except for the revaluation of certain financial instruments that are measured at fair value at the end of each reporting period, as explained below.

These unaudited interim condensed consolidated financial statements 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 2021. These unaudited interim condensed consolidated financial statements do not include all 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 Group's annual report for the year ended 31 December 2021. The accounting policies are unchanged from those disclosed in the annual consolidated financial statements for the year ended 31 December 2021.

(b) Going concern

These unaudited condensed interim consolidated financial statements have been prepared based on 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.

The Directors have considered scenarios of disruption in Proyecto Riotinto including market volatility in commodity prices for a period of at least 12 months since the approval of these unaudited condensed interim consolidated financial statements, and after reviewing them, the current cash resources, forecasts and budgets, timing of cash flows, borrowing facilities, sensitivity analyses and considering the associated uncertainties to the Group's operations have a reasonable expectation that the Company has adequate resources to continue operating in the foreseeable future.

Management continues to monitor the impact of geopolitical developments. Currently no significant impact is expected in the operations of the Group.

2.2 New standards, interpretations and amendments adopted by the Group

The accounting policies adopted in the preparation of the unaudited condensed interim consolidated financial statements are consistent with those followed in the preparation of the Group's annual consolidated financial statements for the year ended 31 December 2021, except for the adoption of new standards effective as of 1 January 2022. The Group has not early adopted any standard, interpretation or amendment that has been issued but is not yet effective.

Several amendments and interpretations apply for the first time in 2022, but do not have a material impact on the unaudited condensed interim consolidated financial statements of the Group.

Reference to the Conceptual Framework - Amendments to IFRS 3

The amendments replace a reference to a previous version of the IASB's Conceptual Framework with a reference to the current version issued in March 2018 without significantly changing its requirements.

The amendments add an exception to the recognition principle of IFRS 3 Business Combinations to avoid the issue of potential 'day 2' gains or losses arising for liabilities and contingent liabilities that would be within the scope of IAS 37 Provisions, Contingent Liabilities and Contingent Assets or IFRIC 21 Levies, if incurred separately. The exception requires entities to apply the criteria in IAS 37 or IFRIC 21, respectively, instead of the Conceptual Framework, to determine whether a present obligation exists at the acquisition date.

The amendments also add a new paragraph to IFRS 3 to clarify that contingent assets do not qualify for recognition at the acquisition date. These amendments had no impact on the interim condensed consolidated financial statements of the Group as there were no contingent assets, liabilities and contingent liabilities within the scope of these amendments arisen during the period.

Property, Plant and Equipment: Proceeds before Intended Use - Amendments to IAS 16

The amendment prohibits entities from deducting from the cost of an item of property, plant and equipment, any proceeds of the sale of items produced while bringing that asset to the location and condition necessary for it to be capable of operating in the manner intended by management. Instead, an entity recognises the proceeds from selling such items, and the costs of producing those items, in profit or loss.

These amendments had no impact on the interim condensed consolidated financial statements of the Group as there were no sales of such items produced by property, plant and equipment made available for use on or after the beginning of the earliest period presented.

IFRS 1 First-time Adoption of International Financial Reporting Standards - Subsidiary as a first-time adopter

The amendment permits a subsidiary that elects to apply paragraph D16(a) of IFRS 1 to measure cumulative translation differences using the amounts reported in the parent's consolidated financial statements, based on the parent's date of transition to IFRS, if no adjustments were made for consolidation procedures and for the effects of the business combination in which the parent acquired the subsidiary. This amendment is also applied to an associate or joint venture that elects to apply paragraph D16(a) of IFRS 1. 

These amendments had no impact on the interim condensed consolidated financial statements of the Group as it is not a first-time adopter.

IFRS 9 Financial Instruments - Fees in the '10 per cent' test for derecognition of financial liabilities

The amendment clarifies the fees that an entity includes when assessing whether the terms of a new or modified financial liability are substantially different from the terms of the original financial liability. These fees include only those paid or received between the borrower and the lender, including fees paid or received by either the borrower or lender on the other's behalf. There is no similar amendment proposed for IAS 39 Financial Instruments: Recognition and Measurement. These amendments had no impact on the interim condensed consolidated financial statements of the Group as there were no modifications of the Group's financial instruments during the period.

2.3 Fair value estimation

The fair values of the Group'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 other financial assets is based on quoted market prices at the reporting date. The quoted market price used for financial assets held by the Group 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 Group 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).

2.4 Critical accounting estimates and judgements

The preparation of the unaudited interim condensed consolidated financial statements require management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the accompanying disclosures, and the disclosure of contingent liabilities at the date of the consolidated financial statements. Estimates and assumptions are continually evaluated and are based on management's experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in future periods.

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.

A full analysis of critical accounting estimates and judgements is set out in Note 3.3 to the 2021 audited financial statements.

3. Business and geographical segments

Business segments

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

Copper concentrates produced by the Group are sold to three off-takers as per the relevant offtake agreements. In addition, the Group has spot agreements for the concentrates not committed to off-takers.

Geographical segments

The Group's mining activities are located in Spain. The commercialisation of the copper concentrates produced in Spain is carried out through Cyprus. Sales transactions to related parties are on arm's length basis in a similar manner to transaction with third parties. Accounting policies used by the Group in different locations are the same as those contained in Note 2.