ATYM Atalaya Mining Plc

ATALAYA MINING PLC

MANAGEMENT'S REVIEW AND

UNAUDITED INTERIM CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

30 September 2024

Management review report

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 2023 and 30 September 2024 and results of operations for the three and nine months ended 30 September 2024 and 2023.

This report has been prepared as of 12 November 2024. 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 2024. 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 2023, and the nine months ended 30 September 2024, and the unaudited interim condensed consolidated financial statements for the period ended 30 September 2023. 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 as adopted by the European Union (IFRS-EU) and the interpretations of the IFRS Interpretations Committee (IFRS IC) approved by Regulations of the European Commission, 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 first listed on the Alternative Investment Market (AIM) of the London Stock Exchange in May 2005, trading under the symbol ATYM. On 29 April 2024, the Company was admitted to trading on the main market of the London Stock Exchange.

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 has interests in 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 two investigation permits at Proyecto Riotinto East.

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 Cobre San Rafael, S.L. 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 resources, which will provide further optionality to 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). Under the terms of the agreement Atalaya will make an aggregate €1.4 million cash payment in two instalments of approximately the same amount. The first payment of €0.7m was executed in January 2024 once the permits were granted. The second and final payment will be settled when first production is achieved from the concession.

In November 2023, the exploitation permit for the Masa Valverde and Majadales deposits was officially granted.

Proyecto Ossa Morena

In December 2021, Atalaya announced the acquisition of a 51% interest in Rio Narcea Nickel, S.L., which owns 9 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. During 2022 Atalaya rejected 8 investigation permits.

Atalaya will pay a total of €2.5 million in cash in three instalments and grant a 1% net smelter return ("NSR") royalty over all acquired permits. The first payment of €0.5 million was made following execution of the purchase agreement. The second and third instalments of €1 million each will be made once the environmental impact statement ("EIS") and the final mining permits for any project within any of the investigation permits acquired under the Transaction are secured.

Proyecto Riotinto East

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

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 2024 and 2023, respectively.

(1)   Represents the Cerro Colorado pit only.

(*) Refer Section 5 of this Management Review.

There may be slight differences between the numbers in the above table and the preliminary figures announced in the quarterly operations updates that are available on Atalaya's website at www.atalayamining.com

(1)   For the Cerro Colorado pit only.

Note: Some figures may not add up due to rounding.

Three months operational review

The plant processed ore of 4.3 million tonnes in Q3 2024 (Q3 2023: 3.9 million tonnes), compared with 4.1 million tonnes in Q2 2024, which represents strong plant performance above nameplate capacity of 15 million tonnes per annum.

Copper grade was 0.33% in Q3 2024 (Q3 2023: 0.38%), compared with 0.33% in Q2 2024, as a result of pit sequencing.

Copper recovery was 84.35% in Q3 2024 (Q3 2023: 87.00%), compared with 85.81% in Q2 2024, mainly due to lower grades and the characteristics of certain transitional ores.

Copper production was 11,901 tonnes in Q3 2024 (Q3 2023: 12,541 tonnes), compared with 11,583 tonnes in Q2 2024, mainly due to strong plant throughput.

On-site copper concentrate inventories at the end of Q3 2024 were approximately 12,557 tonnes.

Copper contained in concentrates sold was 12,569 tonnes in Q3 2024 (Q3 2023: 12,521 tonnes).

Nine months operational review

Production of copper contained in concentrate during YTD 2024 was 34,149 tonnes, compared with 38,892 tonnes in the same period of 2023. Lower production was mainly the result of lower grades and recoveries. Payable copper in concentrates was 32,323 tonnes compared with 37,043 tonnes of payable copper in YTD 2023.

Ore mined in YTD 2024 was 11.7 million tonnes compared with 11.2 million tonnes during YTD 2023. Ore processed was 12.2 million tonnes versus 11.7 million tonnes in YTD 2023, although lower grade stockpiles were processed in YTD 2024.

Ore grade during YTD 2024 was 0.33% Cu compared with 0.38% Cu in YTD 2023. Copper recovery was 84.96% versus 87.03% in YTD 2023. Concentrate production amounted to 182,615 tonnes below YTD 2023 production of 184,907 tonnes.

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. Should the Company consider the current guidance no longer achievable, then the Company will provide a further update.

Operational guidance

Proyecto Riotinto operational guidance for 2024 is as follows:

(1)   Lower end.

(2)   High end.

Production

Copper production for FY2024 is expected to be at the lower end of the 45,000 - 50,000 tonne guidance range, as previously announced.

Operating Costs

Cash cost and AISC for FY2024 are expected to be at the high end of the guidance ranges of $2.80 - 3.00/lb and $3.00 - 3.20/lb copper payable, respectively. AISC guidance excludes one-off investments in the tailings dam and ongoing waste stripping at the San Dionisio area, which are included in the non-sustaining capital investment guidance below.

Capital Expenditures

Non-sustaining capital investments are expected to be at the low end of the €64 - 73 million guidance range.

Exploration

Exploration expenditures are expected to be within the €5 - 7 million guidance range.

4.      Overview of the Financial Results

The following table presents summarised consolidated income statements for the three and nine months ended 30 September 2024, with comparatives for the three and nine months ended 30 September 2024, respectively.

Three months financial review

Revenues for the three-month period ended 30 September 2024 amounted to €86.8 million, compared to €85.4 million in the same period in 2023. Higher revenues compared with the prior year quarter were mainly due to higher realised prices partly and a higher volume of concentrate sold. In addition, there was an increase in silver credits and lower penalty charges.

Realised prices excluding QPs were US$4.13/lb copper during Q3 2024 compared with US$3.77/lb copper in Q3 2023. The realised price during the quarter, including QPs, was approximately US$4.12/lb.

Cost of sales for the three-month period ended 30 September 2024 was €65.6 million, up from €62.5 million in Q3 2023. Unit operating costs in Q3 2024 were higher than in Q3 2023 mainly due to a higher proportion of stripping costs being expensed (following the reserve update's higher capitalisation ratio) and higher electricity cost.

Cash costs of US$3.01/lb payable copper during Q3 2024 compared with US$2.82/lb payable copper in the same period last year. Higher cash costs were mainly driven by lower copper production in the quarter despite of a slightly weaker US Dollar/Euro exchange rate compared with Q3 2023. AISC for Q3 2024, excluding one-off investments in the tailings dam and San Dionisio stripping, were US$3.39lb payable copper compared with US$3.24/lb payable copper in Q3 2023.

Sustaining capex for Q3 2024 amounted to €2.2 million compared with €1.5 million in Q3 2023. Sustaining capex mainly related to continuous enhancement, and preservation of the plant's processing systems. In addition, the Company invested €3.5 million in the project to increase the tailings dam during Q3 2024 (Q3 2023: €3.4 million). Stripping costs capitalised for Cerro Colorado during Q3 2024 amounted to €2.4 million (Q3 2023: €5.2 million).

Capex associated with the construction of the 50 MW solar plant amounted to €2.4 million in Q3 2024 (Q3 2023: €6.3 million. Additionally, capex of €5.1 million was related to the San Dionisio area.

Investments in the E-LIX Phase I plant totalled €3.6 million of which €3.4 million was booked as a loan to Lain Technologies Ltd and €0.2 million was Capex (Q3 2023: €4.5 million).

Administrative and other expenses were €1.1 million in Q3 2024, compared to €2.4 million in Q3 2023. It includes non-operating costs of the Cyprus office, corporate legal and consultancy costs, ongoing listing costs, officers and directors' emoluments, and salaries and related costs of the corporate office.

Exploration expenses for the three month period ended 30 September 2024 amounted to €1.4 million, compared to €1.6 million in Q3 2023.

EBITDA for Q3 2024 totalled €17.0 million, compared with €19.1 million in Q3 2023.

Depreciation and amortisation expenses were €12.4 million in Q3 2024, compared to €9.0 million in Q3 2023.

Net foreign exchange differences resulted in a loss of €1.7 million for the three month period ended 30 September 2024, largely due to a weaker USD against the EUR by quarter-end.

Net finance costs were €0.6 million in Q3 2024, compared with €0.1 million in Q3 2023. This difference is driven the increase in unwinding of discount for the provision of rehabilitation costs.

Nine months financial review

Revenues for the nine-month period ended 30 September 2024 were €248.9 million, compared to €254.8 million in the same period in 2023. The decrease in revenues was predominantly due to a reduction in the volume of concentrate sold despite higher realised copper prices.

Copper concentrate production during the nine-month period ended 30 September 2024 was 182,615 tonnes (YTD 2023: 184,907 tonnes) with 176,780 tonnes of copper concentrates sold in the period (YTD 2023: 181,078 tonnes). Lower copper ore grades and lower recoveries were the main drivers of the production decline in YTD 2024 partially offset with an increase of ore processed. Inventories of concentrates as at the reporting date were 12,557 tonnes (31 Dec 2023: 6,722 tonnes).

Realised copper prices, excluding QPs, for YTD 2024 were US$4.22/lb copper compared with US$3.86/lb copper in the same period of 2023. The Company did not enter into any hedging agreements in 2024.

Cost of sales for the nine-month period ended 30 September 2024 amounted to €182.6 million, compared to €182.3 million in the nine-month period ended 30 September 2023. Operating costs in 2024 were slightly higher due to an increase of ore processed compared with the 2023 period. Costs were mainly driven by lower electricity and steel prices in the market and lower steel consumption partly offset mining costs increases related to lower stripping capitalisation.

Cash costs of US$2.96/lb payable copper during YTD 2024 compare with US$2.76/lb payable copper in the same period last year. Higher cash costs were mainly driven by reduced payable copper production during the period and higher mining cost related to the lower capitalisation of stripping costs. AISC excluding investment in the tailings dam and the waste stripping at the San Dionisio area in the nine-month period were US$3.26/lb payable copper compared with US$3.07/lb payable copper in YTD 2023. The increase was primarily due to higher cash costs.

Sustaining capex for the nine-month period ended 30 September 2024 amounted to €3.6 million, compared with €2.9 million in the same period the previous year. Sustaining capex mainly related to continuous enhancement and preservation of the plant's processing systems. In addition, the Company invested €11.0 million in the project to increase the tailings dam, compared with €10.3 million in 2023.

Capex associated with the construction of the 50 MW solar plant amounted to €5.1 million in YTD 2024 (€10.7 million in YTD 2023), with a total investment in the project of €37.7 million. Additionally, capex of €21.3 million was related to the San Dionisio area.

Investments in the E-LIX Phase I plant totalled €10.1 million (€12.9 million in YTD 2023), with €3.4 million (€7.5 million in YTD 2023) recorded as a loan and €6.7 million (€5.4 million in YTD 2023) to Capex.

Corporate expenses for the nine months ended 30 September 2024 were €6.1 million, compared to €8.0 million in the same period in 2023. This decrease is mainly due to the one-off costs incurred in 2023 related to the Group's transition to the LSE Main Market, most of which were expensed in 2023.

Exploration expenses totalled €3.3 million in the nine months ended 30 September 2024, down from €5.2 million in the same period in 2023, mainly as a result of higher capitalised costs incurred during the period in Proyecto Masa Valverde.

EBITDA for the nine month period ended 30 September 2024 was €53.7 million, down from €59.2 million in the same period in 2023.

Depreciation and amortisation expenses were €32.9 million for the nine-month period in 2024, compared to €27.2 million in 2023.

Net foreign exchange gains amounted to €0.6 million in the nine months ended 30 September 2024, compared with €0.8 million in the same period in 2023.

Net finance costs totalled €0.7 million in the nine-month period ended 30 September 2024, compared to a gain of €2.5 million in the same period in 2023, driven primarily by the fact that Q2 2023 interest income included €3.8 million received from the agreement reached with Astor in May 2023.

Copper prices

The average realised copper price (excluding QPs) increased by 9.6% to US$4.13/lb in Q3 2024, from US$3.77/lb in Q3 2023.

The average prices of copper for the three and nine month period ended 30 September 2024 and 2023 are summarised below:

Realised copper prices for the reporting period noted above have been calculated using payable copper and excluding both provisional invoices and final settlements of quotation periods ("QPs") together. The realised price during Q3 2024, including the QP, was approximately $4.12/lb.

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") "realised prices" and "Net Cash/Debt" 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.

Working capital is the difference between current assets and current liabilities.

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. Realised prices do not include period end mark to market adjustments in respect of provisional pricing 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 2024 and 31 December 2023.

Liquidity information

(1)   Includes borrowings

Unrestricted cash and cash equivalents (which include cash at both Group level and Operation level) as at 30 September 2024 decreased to €76.3 million from €121.0 million at 31 December 2023. The decrease in cash was mainly due to investments, repayment of financing and the payment of dividends which offset cash inflows from operations. Specifically, investments resulted from capital expenditure in the San Dionisio area, and higher financing outflows due to the repayment of operating facilities. Cash balances are unrestricted and include balances at operational and corporate level.

As of 30 September 2024, Atalaya reported a working capital surplus of €54.5 million, down from €68.6 million as of 31 December 2023. This decrease was primarily driven by the repayment of current payables.

Overview of the Group's cash flows

Three months cash flows review

For the three months ended 30 September 2024, the net cash outflow was €3.1 million, compared to a net inflow of €5.7 million in the same period in 2023. This outflow was a result of cash flows from operating activities amounting to €13.9 million, cash used in investing activities of €14.6 million, and cash outflows from financing activities totalling €2.4 million.

Cash generated from operating activities before changes in working capital was €16.5 million for Q3 2024. During this period, Atalaya's inventories increased by €4.1 million, trade and other receivables increased slightly by €0.1 million, and trade and other payables increased by €2.5 million.

Investing activities for the three-month period used €14.6 million, primarily due to the tailings dams project, E-LIX, San Dionisio area and continuous enhancements in the processing systems of the plant.

Financing activities in Q3 2024 led to cash outflows of €2.4 million, driven by dividend payments of €10.3 million and partially offset by net borrowing inflows of €8.0 million.

Nine months cash flows review

For the nine month period ended 30 September 2024, the total net cash outflow was €45.3 million, compared to a net outflow of €8.1 million in the same period in 2023. This was a result of cash flows from operating activities of €42.3 million, cash used in investing activities amounting to €49.5 million, and cash used in financing activities totalling €38.1 million.

Cash generated from operating activities before changes in working capital was €54.7 million for the nine month period ended 30 September 2024. Changes in working capital during this period included a €9.0 million increase in inventories, a €0.1 million increase in trade and other receivables, and a €nil million decrease in trade and other payables.

Investing activities for the nine month period resulted in a cash outflow of €49.5 million, with the majority of funds directed towards the tailings dams project, E-LIX, San Dionisio area and continuous enhancements in the processing systems of the plant.

Financing activities led to a net cash outflow of €38.1 million for the nine months, which included €10.3 million in dividend payments and €29.9 million in net repayments of borrowings, partially offset by proceeds of €2.5 million from the issuance of shares.

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 month periods ended 30 September 2023, Atalaya recognised a foreign exchange gain of €0.7 million and €0.8 million, respectively. Foreign exchange gains were primarily related to fluctuations in EUR and USD conversion rates, as all sales are received and occasionally held in USD.

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

7.      Sustainability

Corporate Social Responsibility

Atalaya sustained its social investment through Fundación Atalaya throughout the third quarter of the year. The foundation initiated a new series of programs to support social organizations in the Cuenca Minera region and maintained its agreements with local councils near the mining operations.

Fundación Atalaya assisted the Riotinto municipality by enhancing several streets, including pavement repairs, and by renovating two parks and playgrounds. Agreements with the Nerva municipality enabled the foundation to contribute funds for new LED lighting for the town and to acquire a road sweeper and lawn mower. In Zalamea, the town successfully completed the project to install solar panels at the local school, which now operates entirely on green energy.

The foundation also supported various sporting initiatives, such as Nerva CF and CD Runners Nerva, and cultural activities, including backing the local choir Aires Mineros and organizing a flamenco concert. Additionally, the foundation contributed to social causes, such as supporting the Food Bank, financing facility improvements for the Athenea Association (which assists individuals with mental disabilities), and installing new LED lighting at AFA El Campillo, dedicated to Alzheimer's care. Furthermore, the foundation aided the local Golf Club, the oldest in Spain, by installing solar panels.

Fundación Atalaya also made progress with its "Riotinto Experience" project. Initial field tests began using a specially designed vehicle for tourist visits to the mining operations, with final permits nearing completion.

Another notable initiative led by Fundación Atalaya was the Mining Operator Course. The fourth edition concluded successfully, with over 50% of participants securing employment in the sector.

Health and Safety

Regarding the results for the third quarter of 2024, compared to the same period in the previous year, there has been notable improvement, with cumulative indicators at the end of the third quarter also showing positive trends. The frequency index (FI) stands at 2.23, compared to 4.48 in the previous year, and the severity index (SI) is 0.06, down from 0.10 last year, comfortably meeting the annual targets for these metrics.

In terms of Industrial Hygiene, all planned actions for the third quarter were completed. Additionally, fire protection and basic life support training, both part of the annual programme, were conducted for the First Response Brigade.

Ergonomic risk assessments continued this quarter and yielded positive results, reviewing factors such as manual handling of loads, awkward postures, and repetitive movements for all roles. The planned 2024 review of risk assessments for various roles and workplaces is ongoing.

The third annual meeting of the Health and Safety Committee was also held this quarter, serving as a joint consultation and participation forum with workers' representatives. Additionally, two new requirements from the Labour Inspection, received in August, were addressed.

Phase II of the Zero Damage project commenced this quarter, incorporating AI to process and analyse survey data aimed at enhancing safety at the ARM facility. The project's scope and objectives were defined during this phase.

In September, an external entity conducted a legal audit of the occupational health and safety system to ensure compliance with current legislation, resulting in a satisfactory outcome with no Non-Conformities.

A continuous monitoring system for additives to prevent legionellosis in drinking water was also installed in September, alongside the renovation of the induction building at the main entrance. Lastly, monitoring for psychoactive substances continues at access points and within the infirmary.

Environment

During the third quarter of 2024, the environmental department continued implementing environmental monitoring actions and managing the natural environment. Key highlights of the quarter include:

§  One environmental incident was recorded, involving a spill over an unpaved area. The area was cleaned, and the waste was managed appropriately.

§  Total rainfall for Q3 2024 was 6.6 l/m², approximately 82% less than in the same period the previous year. However, cumulative rainfall for the hydrological year (October 2023 to September 2024) reached 832.5 l/m², which is 88% higher than the rainfall recorded in the prior hydrological year.

§  On 4 June, documents for the new substantial modification of the AAU related to the San Dionisio pit expansions were submitted. The project for exploitation and its Restoration Plan were submitted in May, with public consultation starting in August and concluding on 26 September.

§  In September, an authorisation request was submitted for geological surveys within the restricted-use area of Tinto River concerning the San Antonio orebody.

§  The additional measures outlined in the action plan against dust continued to be implemented, including intensified periodic irrigation, new coordination measures, and thorough monitoring of emissions generated by operations.

§  The Environmental Department continued working on the Restoration Plan for both operational and historical areas.

§  All routine internal controls for diffuse atmospheric emissions were conducted, with results staying within permissible limits. In July, the annual mandatory external controls for diffuse and point (channelled) emissions were completed without incident, meeting all limits. Other periodic and mandatory controls were also carried out without issues, and several reports were submitted to the relevant administrative bodies during the quarter.

§  Daily environmental inspections were conducted, focusing on chemical storage and handling, housekeeping, waste management, uncontrolled releases, and environmentally sustainable practices by ARM and contractor personnel. Additionally, regular inspections of dust control and the drainage system were performed. A total of 86 inspections were conducted during the third quarter, covering the plant, mining area, and contractors' camps.

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 2023.

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 the impact of macro-economic uncertainty on the business and geopolitical developments.

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 2023

Update in Ore Reserves and Its Financial Impact

In May 2024, Atalaya incorporated an update of its ore reserves based on an independent expert analysis in accordance with the Canadian Institute of Mining, Metallurgy and Petroleum ("CIM") Definition Standards on Mineral Resources and Mineral Reserves adopted by the CIM Council (the "CIM Standards"). This update has some impact on our financial statements and accounting estimates and reflects a revised understanding of the economic potential and operational requirements of our mining assets.

Further details are given in Note 2.4 to the Unaudited Interim Condensed Consolidated Financial Statements.

10.    Other Information

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

Unaudited interim condensed consolidated financial statements on subsequent pages.

By Order of the Board of Directors,

Neil Gregson

Chair

Nicosia, 12 November 2024