Atalaya Mining (TSX: AYM; LSE: ATYM) is acquiring the Masa Valverde polymetallic project in Spain for a total of €1.4 million (US$1.7 million) in cash from a private vendor.
The first payment for the project, which is 28 km southwest of Atalaya’s Proyecto Riotinto operation, is due when the mining permit is granted, and the second payment, when first production is reached.
Masa Valverde has an inferred resource of 66 million tonnes grading 0.67% copper, 1.92% zinc, 0.90% lead, 34 grams silver per tonne and 0.63 gram gold per tonne (2.57% copper-equivalent).
Atalaya said it is planning infill drilling to upgrade the resource and move the project towards scoping and prefeasibility studies.
The company also noted in a press release that the project has “significant exploration upside potential in the immediate surroundings as evidenced by the recent discovery of the Majadales sulphide body, included in the transaction and located 1.2 km east-southeast of Masa Valverde, which is not included in the historic resource estimate.” (Atalaya discovered the Majadales suphide body.)
Atalaya also stated that there will be synergies with its Riotinto operations, which should assist in permitting and mine development efforts.
“The proximity to our Riotinto operation, which is on track to meet its previously announced 2020 production guidance of 55,000-58,000 tonnes of copper during 2020, and the experience gained during its development and construction, will be fundamental as we convert this project into a mine,” Alberto Lavandeira, Atalaya’s chief executive, said in a statement.
Alexander Pearce, a mining analyst at BMO Capital Markets, commented in a research note to clients that Atalaya “has already undertaken €2.7 million worth of exploration work, having held an option on the project over 2018-2019,” and “intends to continue exploration activities with a view to upgrading existing resources for the basis of future technical reports.”
“While the project is at a relatively early stage, we note that its location near to Riotinto could provide potential for higher-grade copper feed to the existing mill, or indeed supplement historical polymetallic mineralization at Riotinto for a potential combined polymetallic project,” Pearce stated.
The Riotinto open-pit copper mine in Spain’s Pyrite Belt, about 65 km northwest of Seville, declared commercial production in February 2016.
In addition to Riotinto, Atalaya is earning an 80% interest in Proyecto Touro, a past-producing copper mine in northwestern Spain, which operated between 1973 and 1986. Atalaya envisions the project as an open-pit mine consisting of shallow pits.