The £20k spent on this rocketing FTSE 250 share last year is now worth it…
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Strong asset prices have boosted returns for a few FTSE 250 shares in the previous year. It’s not just gold stocks that have taken off – the rising copper price has continued Atalaya Mining‘s (LSE:ATYM) shares are through the roof.
In exactly 12 months, the red metal producer has increased by a staggering 160%. Earlier today (14 January), it hit new record highs of 925p per share after the release of production numbers that beat the 2025 forecast.
All this means that a £20,000 investment in Atalaya last year will now be worth £52,000. And I think the miner can continue to bring good returns.
Want to know why?
Copper boom
Strong performance helped the Atalaya share rally last year (more on this later). But the biggest driver of its rise since last year has been rising copper prices.
At $13,160 per tonne, the base metal is up 46% from mid-January 2025. It has been plagued by fears of supply shortages following production problems in key regions.
But why did Atalaya’s share price outperform copper during this period? It comes down to the utility effect, where the profits of the miners can increase significantly, as their costs remain constant even as the income balloon.
But the leverage factor is not always a good thing for copper stockholders. If metal prices fall, profits (and inflated share prices) can get upset pretty quickly.
This is dangerous for Atalaya’s forward-looking investors. A company may collapse, for example, if economic indicators turn negative and copper declines. The good news is that things are looking good for industrial metals in the face of supply problems and strong demand from the green energy and technology sectors.
Power of operation
A rise in the price of copper is of limited benefit if the company is struggling to get the metal out of the ground. Fortunately, Atalaya has been making significant progress in performance, as Wednesday’s latest update revealed.
This showed Q4 production of 11,500 tonnes, beating City forecasts by mid-single digit percentages. As a result, total production was 51,139 tons, up from 46,227 in 2024.
Despite lower-than-expected ore grades, a combination of strong ore processing and better availability drove another strong performance from Atalaya. The company projected full-year production of 51,000 to 54,000 tons from its Spanish property in 2026.
It has also made strong progress in reducing costs in recent months. These fell by 13% between January and September, the latest data showed. At an average of $6,260 per tonne, this was well below what copper had been changing hands for all time.
What’s next for Atalaya shares?
Given its performance record and strong copper price outlook, City analysts expect Atalaya shares to continue to rise. Their 12-month target price is 960p per share, up 4% from current levels.
I think forecasts can be improved quickly during the year, helped by the meeting of key performance measures. These include the approval and feasibility of progress at Touro, and resource expansion and plant development at Riotinto (ie, the Spanish state, not the London-listed miner).
Despite its strong price gains, Atalaya shares still look cheap to me, trading at a forward price growth (PEG) ratio of 0.4. I think the FTSE 250 company is worth serious consideration as copper prices continue to rise.
