Atalaya Mining (AIM:ATYM, TSX:AYM) PLC has released encouraging drill results from its projects in southern Spain, which include a promising new massive sulphide discovery at one and a new high-grade zinc zone at another.
The firm already produces copper concentrates and silver by-product at its Proyecto Riotinto site and it has four drill rigs turning at its nearby Proyecto Masa Valverde (PMV) and Proyecto Ossa Morena (POM) regional projects.
The aim is to use the miner's 15 million tonnes per annum (Mtpa) plant as a central hub to potentially process ore from these assets and from Proyecto Riotinto East (PRE).
At the Mojarra Trend at the PMV project, the company told investors it had hit 18.75 metres (m) of polymetallic massive sulphides from a hole in a previously undrilled area - specifically 18.75m, from 434m depth, at 0.84% copper, 0.63% zinc, 0.66% lead and 76.24 grams per ton (g/t) silver, including a higher-grade zone of 6.80m at 1.22% copper and 101.60 g/t silver.
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Also at the Masa Valverde deposit at the PMV project, step-out drilling in the western area uncovered a new high-grade zinc zone, said Atalaya, with one hole intersecting 18m at 0.25% copper, 8.30% zinc, 2.49% lead, 60.17 g/t silver and 0.89 g/t gold.
Also at PMV, resource definition drilling encountered new zones of shallow polymetallic mineralisation, while at the Campanario Trendm, further drilling around the historical Campanario mine confirmed the lateral and up-dip continuity of the previously defined mineralization.
Initial results from a four-hole campaign at the Hinchona copper-gold prospect at POM, included an intersection of 3.40m (starting from 245.8m depth) at 0.80% copper, 1.84 g/t silver and 479 parts per million (ppm) cobalt.
Alberto Lavandeira, the CEO of Atalaya Mining hailed the discovery of the Mojarra Trend at the PMV project as "very promising".
"We acquired PMV in 2020, having discovered the small but high-grade polymetallic Majadales deposit, and in April 2022 announced a new NI 43-101 compliance resource estimate for the Masa Valverde and Majadales deposits," he said in a statement.
"Since then we have defined new, shallow and potentially economic mineralisation at the Campanario Trend and have now made a potentially new discovery at the previously undrilled Mojarra Trend.
"All of these achievements, together with the numerous geophysical targets that remain untested, confirm our belief that the ultimate resource potential of PMV is underexplored and far from defined," Lavandeira added.
Meanwhile, at POM, the CEO said the "encouraging" initial results at Hinchona provided confidence that further drilling was warranted.
"Exploration will remain a key activity for Atalaya in 2023 and our exploration budget is expected to reflect our geological team's recent successes and the growing list of targets across our exploration portfolio," said the company boss.
"We remain focused on expanding our resource base and identifying higher grade material that could be processed at our Riotinto plant, potentially providing an uplift to copper production by increasing the blended head grade."
Drilling will continue with four rigs until the end of 2022, noted the firm, with priority going to investigating the lateral continuity of the new discovery at Mojarra Trend, the area between Campanario and Cibeles historical mines, and the west extension of the high-grade mineralisation discovered in the hole at the Masa Valverde deposit at PMV.
Canaccord repeats a 'Buy'
Following the update, broker Canaccord repeated a 'Buy' rating and 385p share price target.
"We have written extensively about the potential for the company to develop higher value deposits to feed the Riotinto plant, and we foresee upside in both copper production (due to higher grades), and the potential for by-products by exploiting the polymetallic deposits identified," said analysts.
They reckon the priorities are the firm's San Dionisio open-pit deposit, which was not included in the latest release, which Canaccord estimates could add around £2-3 per share to its net present value (NPV), and the Proyecto Masa Valverde (underground) deposit.
"The company is progressing Preliminary Economic Studies for both of these deposits, and we expect news on this front in the new year. We estimate that the projects have low capital costs, and therefore highlight this as a key potential catalyst for the stock over the coming months."
In London, shares added around 4% to 298p each, while in Toronto, Atalaya shares gained 1.3% to C$4.56 each.
Contact the writer at giles@proactiveinvestors.com