Atalaya: Spanish Copper Miner with Strong Balance Sheet

Santiago Domingo Cebrian of Magallanes Value Investors presented his in-depth investment thesis on Atalaya Mining (UK: ATYM) at European Investing Summit 2020.

Thesis summary:

Atalaya Mining is a Spanish copper company that produced 45ktn in 2019 and will reach 55ktn in 2020.

Its unique producing asset is the Riotinto project, which is an open-pit copper mine in the Iberian Pyrite Belt, 65km northwest of Seville. Riotinto is a legendary mine where the mining giant Rio Tinto Group was born in 1873 (and also the Spanish football), when a British consortium bought the mine to the Spanish State for 92 million of pesetas. Afterwards, the mine changed hands several times until its closure in 2001. The commercial production was restarted in 2016 thanks to the current shareholder base (Trafigura, Yanggu Copper, Liberty Metals & Mining…) and management team (Alberto Lavandeira CEO…).

Atalaya is a mid-high cost producer (AISC 2.2$/lb) but its strong balance sheet is the shelter from any storm.

The copper price should be well above 3$/lb to incentivize new supply which is necessary to fulfil the demand that grows around 2-3% per year and will be boosted by electric vehicle adoption and renewable energy.

All in all, and assuming a copper price of 3$/lb, Atalaya would be trading at EV/FCFF <5x.

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About the instructor:

Santiago Domingo is an investment analyst at Magallanes Value Investors. Magallanes is an independent equity-only asset management, following value investment philosophy and controlled by its founders. Magallanes’ aim is to preserve and increase its clients’ capital by overperforming the market in the long term. Prior to Magallanes, Santiago worked as an equity portfolio manager for Solventis Asset Management, as an analyst for a start-up called OralSurgeryTube and in the Endesa´s financial department. Santiago holds a Bachelor´s degree in Finance and Accounting from University of Zaragoza and a Master´s degree in Institutions and Financial Markets from CUNEF.

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