Copper outshines gold in boost for FTSE 250 miner

Copper’s outperformance as the “commodity for all seasons” today powered the FTSE 250-listed Atalaya Mining Copper SA (LSE:ATYM) to record results and a 25% hike in shareholder dividend.

Atalaya, which owns and operates the Proyecto Riotinto complex in south-west Spain, reported the highest quarterly and half-year earnings in its history at 78.2 million euros (£66.8 million) and 126.2 million euros (£107.9 million) respectively.

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This was driven by a 46% jump in its average realised copper price to $6.14 per pound, alongside solid levels of production and a robust cost performance.

The performance translated into free cash flow of over 58 million euros (£49.6 million) during the quarter, which is also a record for Atalaya. It declared an interim dividend of 5.5 eurocents a share for payment on 30 September, up from 4.4 eurocents the year before.

Atalaya said its strong net cash position meant it was well-placed to fund various growth projects in Spain, especially Proyecto Touro in Galicia where the environmental impact statement is thought to be nearing completion.

Peel Hunt, which has a Buy recommendation and price target of 1,190p, said today: “We continue to believe that the receipt of the Touro permit is likely to act as a significant catalyst for the shares.”

The shares rose 17.8p to 1,009.8p, representing a year-to-date improvement of 19%. They are up 48% since the end of March, aided by copper’s rise of 21% over the same period to trade in record territory at today’s $6.63 per pound.

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The momentum has continued during August as US investors have priced in the potential cost of a universal US tariff on copper imports, as well as Middle East peace optimism and trade restrictions in the Democratic Republic of Congo.

Demand drivers include copper’s end-uses in relation to the AI-led grid and electricity generation build-out, which continue to offset recent bear case factors such as China’s weakening economic activity and otherwise subdued global demand.

Panmure Liberum noted today: “We’re amazed by how sensitive copper’s price is to a wide range of events – macro and fundamental. Indeed, it’s a ‘commodity for all seasons’, even outperforming gold in the once exclusive investor function of ‘safe haven’”.

The copper price broke away from the gold price for the first time in years when the US-Iran war led to a 20% correction for the price of gold but copper held steady.

The bank added: “It seems that in the confusion of that conflict – which threatened one-fifth of global oil supply – investors decided that copper is a better investment option than gold: it offers similar inflation protection (given its long-standing, tight tracking of the gold price) and promises an industrial-backed demand growth story (unlike gold).”

In terms of equity exposure, Panmure Liberum has a Buy recommendation and 580p price target on Glencore (LSE:GLEN) and Hold positions on Antofagasta (LSE:ANTO), Anglo American (LSE:AAL) and Rio Tinto  Ordinary Shares (LSE:RIO).