Atalaya Mining PLC Announces Acquires Masa Valverde Polymetallic VMS Project

Acquisition of the Masa Valverde polymetallic VMS project in Huelva, Spain

NICOSIA, October 21, 2020 - Atalaya Mining plc (AIM:ATYM)(TSX:AYM), is pleased to announce that it has entered into a definitive purchase agreement to acquire 100% of the Masa Valverde polymetallic project located in Huelva, Spain ("Proyecto Masa Valverde" or "Masa Valverde") through the acquisition of 100% of a Spanish company (altogether the "Transaction").

Under the terms of the agreement, Atalaya will make an aggregate €1.4 million cash payment in two installments of approximately the same amount. The first payment will be made when the mining permit is granted and the second when first production is achieved from the concessions.

Transaction highlights

· Acquisition of one of the largest undeveloped volcanogenic massive sulphide ("VMS") deposits in the prolific Iberian Pyrite Belt and 28kms SW of Proyecto Riotinto.

· Historic total inferred resources at the Masa Valverde deposit of 66Mt at 0.67% Cu, 1.92% Zn, 0.90 % Pb, 34 g/t Ag and 0.63 g/t Au (or 2.57% Cu eq.) divided in several zones as described later in this note.

· Further infill drilling will commence shortly with the aim of upgrading current resources and providing the basis to complete scoping and pre-feasibility studies reports.

·Strong exploration upside potential in the immediate surroundings as evidenced by the recent discovery of the Majadales sulphide body, included in the Transaction and located 1.2km ESE of Masa Valverde, which is not included in the historic resource estimate.

·Several similar targets remain pending for systematic drilling within the two exploration permits acquired, which cover an area of approximately 4,000 hectares.

·Potential synergies with Atalaya's existing Riotinto operations should assist the route towards permitting and mine development.

Alberto Lavandeira, CEO, commented:

"We are extremely pleased to announce the acquisition of Proyecto Masa Valverde at an attractive cost and at the right development stage. Masa Valverde already has a significant defined resource which could increase during subsequent evaluation phases, paving the way for quick project development. 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."

This announcement contains information which, prior to its publication constituted inside information for the purposes of Article 7 of Regulation (EU) No 596/2014.

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About Atalaya Mining Plc

Atalaya is an AIM and TSX-listed mining and development group which produces copper concentrates and silver by-product at its wholly owned Proyecto Riotinto site in southwest Spain. In addition, the Group has a phased, earn-in agreement for up to 80% ownership of Proyecto Touro, a brownfield copper project in the northwest of Spain. For further information, visit www.atalayamining.com

Qualified Person Statement

Alberto Lavandeira has reviewed the technical information contained within this announcement in his capacity as a Qualified Person, as required under the AIM Rules for Companies. Alberto Lavandeira is the Chief Executive Officer for the Company and is a member of good standing with the Association of Mining Engineers of Spain, with over 41 years' experience.

Proyecto Masa Valverde overview

Masa Valverde was discovered in 1986 by the Adaro/Peñarroya JV when drill testing a 0.8mGal residual gravity anomaly. It is located within the world-class Iberian Pyrite Belt of southern Spain and Portugal. Geographically, the project lies just 14km SW from Valverde del Camino town, 6km south from the active Sotiel polymetallic UG mine (Mubadala/Trafigura JV) and approximately 28km SW from Proyecto Riotinto copper mine. It consists of two investigation permits totaling approximately 4,000 hectares in aggregate.

From a geological viewpoint the Masa Valverde deposit is located along the Southern Domain of the Iberian Pyrite Belt which was supplied by continental sources and relatively minor, local volcanic activity (Leistal et al., 1998). It includes most of the large deposits: Aznalcollar-Los Frailes, Sotiel-Migollas-Elvira, Masa Valverde and Tharsis among others. They share a series of common features such as slate host-rock, stratabound mineralization, presence of a well-defined underlying "stockwork", lack of strong zonation of metal contents, and high pyrite content (Tornos et al., 2009). Its formation corresponds to a single event of Late Famennian (Devonian) age, close to the boundary with the Carboniferous (Tornos et al., 2009).

Masa Valverde is a blind polymetallic project with a current NI 43-101 compliant resource as detailed below:

Mineral Resource estimate¹ for the Masa Valverde deposit excerpted from the report No: R438.2017, NI 43-101 Technical Report on The Masa Valverde Project, Huelva Province, Spain, by CSA Global Canada Geosciences Ltd (report effective date: December 15, 2017).

¹ Numbers rounded to reflect the precision of an Inferred MRE and do not include factors such as external dilution, mining losses and process recovery losses.

² Resource classification as defined by the Canadian Institute of Mining, Metallurgy and Petroleum in their document "CIM Definition Standards for Mineral Resources and Mineral Reserves" of May 2014.

The resource is underpinned by more than 48,000m of historic diamond drilling and an extensive geological and geophysical database. Overall drill spacing is +/-100m. Within the historical resource drilling several higher grade Zn and Cu-rich zones have been identified. Based on that, it is expected that additional infill drilling will enhance the continuity and thus the grade and resource quality. The table below includes selected drill holes intercepts

The known deposit is 1350m long, up to 200m wide and plunges 30º NW from a depth of approximately 430m to at least 800m below surface. It is made up of two massive sulphide bodies separated by a stockwork zone that can exceed 100m in thickness. The upper body true thickness varies between a few meters and 70m whilst the lower body is smaller and thinner but this may be due to incomplete drilling. The deposit seems to be closed off both laterally and at depth although additional drilling will be needed to confirm it.

Mineralogy is quite similar to other massive sulphide deposits in the Iberian Pyrite Belt ("IPB") consisting of pyrite and, to a lesser degree and in order of decreasing abundance, sphalerite, galena, chalcopyrite, tetrahedrite and arsenopyrite. Massive sulphides can be Zn or Cu rich as well as the stockwork type mineralization although in this case Cu is predominant.

Preliminary metallurgical test-work carried out by SGS Canada in 2016 showed that sulphide mineralization is recoverable by conventional flotation, producing acceptable Zn and Cu concentrate grades and encouraging Cu recoveries in the massive sulphide Cu ore and in the stockwork. However Zn recoveries are moderate-low in the Zn-rich polymetallic mineralization.

QEMSCAN work indicates potential recoveries for Cu of 74-90%, 74-94% for Zn and 79-90% for Pb, strongly suggesting that a more comprehensive testwork program is likely to improve these recoveries considerably.

Deleterious metals contents as As and Hg are relatively high in the massive sulphide ores. However the Cu-rich, stockwork-type mineralization has very low levels in those elements.

Majadales discovery

Atalaya originally acquired an option over Proyecto Masa Valverde for a two-year period (2018 - 2019). The main objective was to find new mineralized bodies around the known deposit. Exploration activities included geophysics (200km VTEM survey and ground and borehole EM surveys), core drilling (21,530m in 42 drill holes) and a detailed mineralogical study, among others. Of those holes, 30 were focused on the Majadales discovery and the rest for testing other geophysical anomalies (8 holes) and to explore the NW and SE extensions of Masa Valverde (4 holes). Total expenditures during the option period amounted to €2.7 million and were funded by Atalaya. Those works led to the discovery of the Majadales massive sulphide deposit in July 2018. It was the fifth hole of the campaign and the second one drill testing a coincident gravity and EM anomaly.

Majadales sulphide body, located 1.2 km ESE of Masa Valverde, consists of a mineralized layer of mostly massive and semi-massive sulphides and minor stockwork-type mineralization. It is NW-SE oriented and gently dipping 25º to NE. The current orebody dimensions are 650m by 200m, true thicknesses varying between 4 and 24.5m and situated between 300-430m depth. Average grades of the massive sulphides drill intercepts are 1%Cu, 2.8%Zn, 1.3%Pb and 0.30g/t Ag. Preliminary mineralogical work showed that pyrite is the predominant sulphide followed by chalcopyrite sphalerite and galena. Minor sulphide minerals are arsenopyrite and tethrahedrite. As and Hg are relatively high.

The deposit is mostly closed in all directions. However the east limit corresponds to a NE trending post-mineral fault that leaves open the possibility for a deposit extension on the other side of the fault. Limited drilling conducted so far between Masa Valverde and Majadales, where a VTEM anomaly had been delineated, failed to connect both deposits. However additional exploration drilling is warranted in order to confirm this.

A summary with some of the best drill holes intersections is inserted below:

Exploration potential

The Masa Valverde project consist on two investigation permits named PI Valverde and PI Beas that cover approximately 4,000 has in the Iberian Pyrite Belt.

Most of the exploration work completed up to now has been done in PI Valverde, where Masa Valverde and Majadales deposits have been discovered.

The exploration potential inside PI Valverde is considered by Atalaya to be high. Several significant geophysical and geochemical anomalies still remain poorly drill tested. The most significant one being Campanario-Descamisada, a 5km long, NW trending geochemical and geophysical anomaly with abundant old workings, gossans and some promising shallow drill intercepts in historical drilling (8.25m at 1.27% Cu). Atalaya Mining had completed just 3 holes in this anomaly during the option period, all of which intersected stockwork and disseminated sulphide mineralization which clearly deserves follow up work.

PI Beas is located south of PI Valverde, and the property is covered by shales of the Culm Group, which represent the hanging wall of the volcanic unit that hosts the massive sulfide orebodies. This permit remains so far almost unexplored.

Refer to Atalaya's website for the full announcement with images https://atalayamining.com/investors-announcements/

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SOURCE: Atalaya Mining plc