RNS Number : 0579J
Antofagasta PLC
27 November 2008
Antofagasta plc
Unaudited Results for the Nine Months ended 30 September 2008
London, 27 November 2008
Highlights
Nine months ended Nine months ended Change Full year
30 September 30 September 2007
2008 2007
US$'m US$'m % US$'m
Group turnover 3,310.3 2,838.6 16.6% 3,826.7
Group EBITDA 2,216.1 2,152.0 3.0% 2,824.0
Turnover
Group turnover in the nine months ended 30 September 2008 was US$3,310.3 million compared
with US$2,838.6 million in the same period of
2007. The increased revenue was mainly due to higher copper sales volumes, as well as lower
tolling charges and to a lesser extent increased
sales at the transport and water divisions. These factors were partly offset by reduced
molybdenum sales.
LME copper prices averaged 361.3 cents per pound compared with 321.5 cents per pound in
the nine months ended 30 September 2007.However, negative mark-to-market adjustments of open provisional sales due to the reduction in
the copper price at the end of the third
quarter resulted in a realised copper price lower than the LME average for the nine-month
period, at 349.1 cents per pound. This compared
with a similar realised copper price of 348.1 cents per pound for the nine months ended 30
September 2007, when an increasing copper price
resulted in positive pricing adjustments in that period. The net impact of provisional pricing
adjustments for the nine months ended 30
September 2008 was a cumulative negative adjustment of US$95.7 million (which comprised a
positive adjustment of US$111.5 million in respect
of the settlement of open sales during the period, and a negative period end mark-to-market
adjustment of US$207.2 million). The phasing of
the cumulative negative adjustment of US$95.7 million in the nine months ended 30 September
2008 was a positive adjustment of US$220.3 million in the first half of 2008, and a negative
adjustment of
US$316.0 million in the third quarter of 2008 reflecting the falling copper price that
quarter.
Market molybdenum prices, which did not differ significantly from prices realised by Los
Pelambres, averaged US$33.2 per pound in the
nine months, an increase from the average price of US$29.5 per pound in the nine months ended
30 September 2007.
Pricing adjustments in the final quarter of the year will depend on average metal prices
during the fourth quarter and mark-to-market
prices at the end of the year, relative to the mark-to-market prices at 30 September 2008 as
disclosed in Note 4. The weighted average mark
to market price at 30 September 2008 was 289.2 cents per pound for open copper sales (30 June
2008 - 387.8 cents per pound) and US$33.1 per
pound for open molybdenum sales (30 June 2008 - US$33.3 per pound).
The volume of copper sold was 362,100 tonnes (nine months ended 30 September 2007 -
298,700 tonnes). This mainly reflected the increased
production of 357,300 tonnes (nine months ended 30 September 2007 - 312,600 tonnes),
predominantly due to the higher throughput and ore
grades at Los Pelambres. Sales volumes in the comparative period in 2007 were also affected by
temporary differences in shipping and loading
schedules which resulted in an increase in inventories at the end of September 2007; there
were no significant timing differences at the end
of September 2008.
Molybdenum sales volumes were 5,600 tonnes and production volumes were 5,700 tonnes (nine
months ended 30 September 2007 - sales and
production volumes were both 7,400 tonnes). The expected reduced production, which was mainly
due to lower molybdenum ore grades, remains
marginally ahead of year-to-date forecast.
The transport and water divisions both performed strongly, with each business generating
revenue growth of more than 30%, reflecting a
combination of increased volumes, normal tariff adjustments and the stronger average Chilean
Peso exchange rate in the period.
Further details of production and sales volumes and realised prices by mining operation
are given in Note 2, and an analysis of turnover
by business segment is given in Note 3. Further details of the operating performance of each
mine and the rail and water division are also
given in the Group's third quarter production report released on 4 November 2008.
EBITDA
Group EBITDA in the nine months ended 30 September 2008 was US$2,216.1 million, compared
with US$2,152.0 million in the first nine
months of 2007. The increased revenues discussed above were partly offset by higher on-site
and shipping costs. As reported in the third
quarter production report, weighted average cash costs for the Group's mining operations,
which are stated net of by-product credits, were
73.6 cents per pound in the nine months ended 30 September 2008, compared with 30.2 cents per
pound in the comparative period in 2007.Excluding by-product credits (which are reported as part of turnover) and tolling charges for
concentrates (which are deducted from
turnover), weighted average cash costs for the Group (comprising on site and shipping costs in
the case of Los Pelambres and cash costs in
the case of the other two operations) increased from 88.1 cents per pound in the first nine
months of 2007 to 117.8 cents per pound in the
nine months ended 30 September 2008. This forecast increase in costs was largely due to
increased energy costs at all three mines, and higher sulphuric acid prices at El Tesoro and
Michilla; these cumulative
weighted average costs remain in line with budget. Further details of the cash costs of each
mine are given in the Group's third quarter
production report.
The amount recognised within turnover and EBITDA during the current period in respect of
the Group's commodity hedging programme was a
loss of US$7.9 million in respect of derivative instruments which matured during the period.In addition to this amount recognised within
EBITDA, a gain of US$5.8 million was recognised within other finance items, in respect of the
time value element of the mark-to-market
adjustments, which is excluded from the designated hedging relationship. A loss of US$2.0
million (on a pre-tax basis) was recognised
directly within reserves and minority interests, in respect of the intrinsic value element of
the mark-to-market adjustments, which forms
part of the designated effective hedging relationship. During the nine months ended 30
September 2007 the amount recognised in turnover and
EBITDA in relation to commodity hedging was a net loss of US$11.8 million.
Further details of cash costs by mining operation are given in Note 2, and an analysis of
EBITDA by business segment is given in Note 3.Details of commodity instruments, including those entered into after the period end, are given
in Note 5.
Cash and Borrowings
At 30 September 2008 the Group had cash and cash equivalents of US$3,648.6 million (31
December 2007 - US$2,212.5 million). Excluding
the minority share in each partly-owned operation, the Group's attributable share of total
cash and cash equivalents was US$3,332.5 million
(31 December 2007 - US$2,135.4 million). During the period the Group received proceeds of
US$1,401.2 million following the completion of the
transaction with Marubeni Corporation ("Marubeni") on 25 August 2008, whereby Marubeni
acquired a 30% interest in each of Minera Esperanza
and Minera El Tesoro, both of which were until then wholly owned by the Group. Total Group
borrowings at 30 September 2008 were US$245.5
million (31 December 2007 - US$266.0 million). Of this, US$163.5 million (31 December 2007 -
US$169.5 million) is proportionally
attributable to the Group after excluding the minority shareholdings in partly-owned
operations.
Basis of Information
The Group turnover and EBITDA figures included in this release for the nine-month period
ended 30 September 2008 are presented on a
basis consistent with the accounting policies used in the Group's 2008 Annual Report and
Financial Statements under International Financial
Reporting Standards and Interpretations ("IFRS").
The Group's three mining companies, Los Pelambres, El Tesoro and Michilla, will today also
file quarterly financial statements under
Chilean GAAP for the nine-month period ended 30 September 2008 with the Chilean securities
regulator, the Superintendencia de Valores y
Seguros de Chile ("SVS"). These filings are in accordance with mining tax legislation
introduced in Chile in 2005 which required companies
that have elected to enter a tax stability regime to publish quarterly financial information
from the 2006 financial year onwards. This
release includes a summary of the Chilean GAAP income statement, balance sheet and cash flow
statement for each of the three mining
companies to be filed with the SVS.
Investor relations - London : Media enquiries :
Antofagasta plc Bankside Consultants
Tel: +44 20 7808 0988 Tel: +44 20 7367
www.antofagasta.co.uk 8873
Keith Irons
Email:
Desmond O'Conor keith@bankside.com
Email:
doconor@antofagasta.co.uk
Tel: +44 20 7367
8874
Hussein Barma Oliver Winters
Email: Email:
hbarma@antofagasta.co.uk oliver.winters@
bankside.com
Enquiries - Santiago :
Antofagasta Minerals S.A.
Tel +562 798 7145
Alejandro Rivera
Email: arivera@aminerals.cl
Notes
1. General information and accounting policies
These unaudited third quarter results are for the nine-month period ending 30 September
2008. The Group turnover and EBITDA information,
including all comparatives, have been prepared on the basis of the accounting policies set out
in the Group's statutory accounts for the
year to 31 December 2007 and in accordance with applicable International Financial Reporting
Standards and Interpretations (IFRS) which have
been endorsed by the European Union.
While the turnover and EBITDA information contained in this nine month results
announcement has been computed in accordance with IFRS,
this announcement does not itself contain sufficient information to comply with IFRS. The
information included in this announcement for the
nine month periods ending 30 September 2007 and 30 September 2008 is unaudited.
The information contained in this announcement for the year ended 31 December 2007 does
not constitute statutory accounts. A copy of the
statutory accounts for that year has been delivered to the Registrar of Companies. The
auditors' report on these accounts was unqualified
and did not contain a statement under section 237(2) (regarding adequacy of accounting records
and returns) or section 237(3) (regarding
provision of necessary information and explanations) of the Companies Act 1985. The
comparative information contained in Note 2 of this
announcement is not derived from the statutory accounts for the year ended 31 December 2007
and is accordingly not covered by the auditors'
report.
2. Production and Sales Statistics
(See notes following Note 2(b).)
(a) Production and sales volumes for copper and molybdenum
Production
Sales
Nine months ended Nine months ended Full year Nine months ended Nine
months ended Full year
30 September 30 September 2007 30 September
30 September 2007
2008 2007 2008
2007
000 tonnes 000 tonnes 000 tonnes 000 tonnes
000 tonnes 000 tonnes
Copper
Los Pelambres 253.8 208.4 289.9 258.1
192.9 289.4
El Tesoro 68.1 69.4 93.0 69.3
70.6 93.3
Michilla 35.4 34.9 45.1 34.7
35.2 45.8
Group total 357.3 312.6 428.1 362.1
298.7 428.5
Molybdenum
Los Pelambres 5.7 7.4 10.2 5.6
7.4 10.0
(b) Cash costs per pound of copper produced and realised prices per pound of copper
and molybdenum sold
Cash cost
Realised prices
Nine months ended Nine months ended Full year Nine
months ended Nine months ended Full year
30 September 30 September 2007 30
September 30 September 2007
2008 2007
2008 2007
US cents US cents US cents
US cents US cents US cents
Copper
Los Pelambres 37.4 (12.1) (10.8)
344.4 358.5 328.3
El Tesoro 144.2 103.4 109.8
364.0 334.3 327.6
Michilla 197.4 137.7 143.5
354.9 318.8 313.8
Group weighted average (net of 73.6 30.2 31.6
349.1 348.1 326.6
by-products)
Group weighted average (before 130.6 108.4 110.7
deducting by-products)
Cash costs at Los Pelambres
comprise:
On-site and shipping cost 99.6 74.7 76.3
Tolling charges for 18.0 30.4 29.6
concentrates
Cash costs before deducting 117.6 105.1 105.9
by-product credits
By-product credits (80.2) (117.2) (116.7)
(principally molybdenum)
Cash costs (net of by-product 37.4 (12.1) (10.8)
credits)
LME average
361.3 321.5 323.3
US$ US$ US$
Molybdenum
Los Pelambres
33.4 31.7 31.7
Market average price
33.2 29.5 30.2
Notes to the production and sales statistics
(i) The production and sales figures represent the actual amounts produced and sold,
not the Group's share of each mine. The Group
owns 60% of Los Pelambres, 70% of El Tesoro with effect from 25 August 2008, on which date the
transaction with Marubeni Corporation
completed (100% prior to that date) and 74.2% of Michilla.
(ii) Los Pelambres produces copper and molybdenum concentrates, and the figures for Los
Pelambres are expressed in terms of payable
metal contained in concentrate. Los Pelambres is also credited for the gold and silver
contained in the copper concentrate sold. El Tesoro
and Michilla produce cathodes with no by-products.
(iii) Cash costs are a measure of the cost of operational production expressed in terms
of cents per pound of payable copper
produced. Cash costs are stated net of by-product credits and include tolling charges for
concentrates at Los Pelambres. Cash costs exclude
depreciation, financial income and expenses, hedging gains and losses, exchange gains and
losses and corporation tax for all three
operations. By-product calculations do not take into account mark-to-market gains for
molybdenum at the beginning or end of each period.
(iv) Excluding by-product credits (which are reported as part of turnover) and tolling
charges for concentrates (which are deducted
from turnover), weighted average cash costs for the Group (comprising on-site and shipping
costs in the case of Los Pelambres and cash costs
in the case of the other two operations) were 117.8 cents per pound in the nine months ended
30 September 2008 (nine months ended 30
September 2007 - 88.1 cents per pound; full year 2007 - 90.6 cents per pound).
(v) Realised copper prices are determined by comparing turnover from copper sales
(grossing up for tolling charges for concentrates)
with sales volumes for each mine in the period. Realised molybdenum prices at Los Pelambres
are calculated on a similar basis. The
difference between the realised prices and the average market prices for the period are mainly
due to the impact of provisional pricing
adjustments, as set out in Note 4. Realised prices also reflect gains and losses on commodity
derivatives, which are included within
turnover.
(vi) The totals in the tables above may include some small apparent differences as the
specific individual figures have not been
rounded.
(vii) The production information in Note 2(a) and the cash cost information in Note
2(b) is derived from the Group's production
report for the third quarter of 2008 published on 4 November 2008.
3. Turnover and EBITDA analysed by business segment
Turnover
EBITDA
Nine months ended Nine months ended Full year Nine
months ended Nine months ended Full year
30 September 30 September 2007 30
September 30 September 2007
2008 2007
2008 2007
US$'m US$'m US$'m
US$'m US$'m US$'m
Los Pelambres 2,304.8 1,936.5 2,651.9
1,740.8 1,626.9 2,178.0
El Tesoro 556.1 520.2 673.9
335.2 338.7 430.9
Michilla 271.5 247.4 316.8
121.0 140.7 169.2
Exploration - - -
(34.6) (21.8) (38.1)
Corporate and other items - - -
(34.8) 0.7 (5.6)
Mining 3,132.4 2,704.1 3,642.6
2,127.6 2,085.2 2,734.4
Railway and other transport 113.0 85.2 117.0
47.3 36.1 48.9
services
Water concession 64.9 49.3 67.1
41.2 30.7 40.7
Group turnover and EBITDA 3,310.3 2,838.6 3,826.7
2,216.1 2,152.0 2,824.0
Turnover at Los Pelambres by mineral:
Before deducting tolling charges Tolling
charges Net
of tolling charges
Nine months ended Nine months ended Full year Nine months ended Nine
months ended Full year Nine months ended
Nine months ended Full year
30 September 30 September 2007 30 September
30 September 2007 30 September
30 September 2007
2008 2007 2008
2007 2008
2007
US$'m US$'m US$'m US$'m
US$'m US$'m US$'m
US$'m US$'m
Copper 1,959.6 1,524.6 2,094.6 (92.7)
(120.8) (169.4) 1,866.9
1,403.8 1,925.2
Molybdenum 412.5 516.3 699.8 (9.5)
(18.1) (23.4) 403.0
498.2 676.4
Gold and silver 35.2 35.0 51.0 (0.3)
(0.5) (0.7) 34.9
34.5 50.3
Los Pelambres 2,407.3 2,075.9 2,845.4 (102.5)
(139.4) (193.5) 2,304.8
1,936.5 2,651.9
Notes to turnover and EBITDA by business segment
(i) Turnover from Railway and other transport services is stated after eliminating
inter-segmental sales to the mining division of
US$10.2 million (nine months ended 30 September 2007 - US$7.5 million; full year 2007 -
US$10.5 million).
Turnover from the water concession is stated after elimination inter-segmental sales to
the transport and mining divisions of US$2.2
million (nine months ended 30 September 2007 - US$0.2 million; full year 2007 - US$0.6
million).
(ii) Turnover includes the effect of both final pricing and mark-to-market adjustments
to provisionally priced sales of copper and
molybdenum concentrates and copper cathodes. Further details of such adjustments are given in
Note 4.
(iii) In the current period turnover and EBITDA includes a realised net loss of US$7.9
million in respect of commodity derivatives
which matured during the period (nine months ended 30 September 2007 - net loss of US$11.8
million; full year 2007 - net loss of US$14.0
million).
(iv) Los Pelambres produces and sells copper and molybdenum concentrates. It is also
credited for the gold and silver content in the
copper concentrate it sells. Turnover by type of metal is analysed below to show separately
the amounts prior to deduction of tolling
charges, the tolling charges involved and the net amounts included in turnover. El Tesoro and
Michilla do not generate by-products from
their copper cathode operations.
(v) EBITDA is calculated by adding back depreciation, amortisation and disposals of
plant, property and equipment and any impairment
charges to operating profit from subsidiaries, and does not include the profit on part
disposal of subsidiaries relating to the transaction
with Marubeni Corporation.
4. Embedded derivatives - provisionally priced sales
Copper and molybdenum concentrate sale agreements and copper cathode sale agreements
generally provide for provisional pricing of sales
at the time of shipment, with final pricing being based on the monthly average London Metal
Exchange copper price or monthly average
molybdenum price for specified future periods. This normally ranges from 30 to 180 days after
delivery to the customer.
Under IFRS, both gains and losses from the marking-to-market of open sales are recognised
through adjustments to turnover in the income
statement and to trade debtors in the balance sheet. The Group determines mark-to-market
prices using forward prices at each period end for
copper concentrate and cathode sales, and period-end month average prices for molybdenum
concentrate sales due to the absence of a futures
market for that commodity.
The mark-to-market adjustments at the end of each period and the effect on turnover in the
income statement for each period are as
follows:
Balance sheet -
net mark to market effect on debtors
At 30.09.08 At 30.09.07 At 31.12.07
US$'m US$'m US$'m
Los Pelambres - copper concentrate (199.3) 30.9 (72.8)
Los Pelambres - tolling charges for 2.4 (0.9) 2.6
copper concentrate
Los Pelambres - molybdenum (1.5) (0.1) 0.1
concentrate
El Tesoro - copper cathodes (5.7) 2.7 (1.0)
Michilla - copper cathodes (2.2) 1.3 0.1
(206.3) 33.9 (71.0)
(a) Copper sales
Nine months ended
Nine months ended
Full year
30 September 2008
30 September 2007
2007
US$'m US$'m US$'m
US$'m US$'m
US$'m US$'m US$'m US$'m
Los Pelambres El Tesoro Michilla
Los Pelambres El Tesoro
Michilla Los Pelambres El Tesoro Michilla
Copper concentrate Copper cathodes Copper cathodes
Copper concentrate Copper cathodes Copper
cathodes Copper concentrate Copper cathodes Copper cathodes
Provisionally invoiced gross 2,055.2 554.4 281.2
1,342.2 512.7 255.5
2,041.8 678.8 332.2
sales
Effects of pricing adjustments
to previous period invoices
Reversal of mark-to-market 72.8 1.0 (0.1)
110.1 (1.3) 0.6
110.1 (1.3) 0.6
adjustments at the end of the
previous period
Settlement of copper sales 58.3 1.9 1.0
(88.1) (6.6)
(3.2) (88.1) (6.5) (3.3)
invoiced in the previous
period
Total effect of adjustments to 131.1 2.9 0.9
22.0 (7.9)
(2.6) 22.0 (7.8) (2.7)
previous period invoices in
the current period
Effects of pricing adjustments
to current period invoices
Settlement of copper sales (27.4) 4.5 (0.5)
129.5 12.6 5.1
103.6 3.7 1.4
invoiced in the current period
Mark-to-market adjustments at (199.3) (5.7) (2.2)
30.9 2.7 1.3
(72.8) (1.0) 0.1
the end of the current period
Total effect of adjustments to (226.7) (1.2) (2.7)
160.4 15.3 6.4
30.8 2.7 1.5
current period invoices
Total pricing adjustments* (95.6) 1.7 (1.8)
182.4 7.4 3.8
52.8 (5.1) (1.2)
Realised (losses)/gains on - - (7.9)
- 0.1
(11.9) - 0.2 (14.2)
commodity derivatives
Turnover before deducting 1,959.6 556.1 271.5
1,524.6 520.2 247.4
2,094.6 673.9 316.8
tolling charges
Tolling charges (92.7) - -
(120.8) - -
(169.4) - -
Turnover net of tolling 1,866.9 556.1 271.5
1,403.8 520.2 247.4
1,925.2 673.9 316.8
charges
* The total net impact of provisional pricing adjustments at all three mines for the nine
months ended 30 September 2008, including both
the settlement of open sales during the period and mark to market adjustments at the end of
the period, was a negative adjustment of US$95.7
million (nine months ended 30 September 2007 - positive adjustment of US$193.6 million; full
year 2007 - positive adjustment of US$46.5
million).
Copper concentrate
Copper concentrate sales at Los Pelambres have an average settlement period of
approximately four months from shipment date. At 30
September 2008, sales totalling 133,100 tonnes remained open as to price, with an average
mark-to-market price of 289.1 cents per pound
compared with an average provisional invoice price of 357.1 cents per pound. At 30 September
2007, sales totalling 80,800 tonnes remained
open as to price, with an average mark-to-market price of 364.8 cents per pound compared with
an average provisional invoice price of 347.4
cents per pound. At 31 December 2007, sales totalling 99,400 tonnes remained open as to price,
with an average mark-to-market price of 302.4
cents per pound compared with an average provisional invoice price of 335.7 cents per pound.
Copper cathodes
Copper cathode sales at El Tesoro and Michilla have an average settlement period of
approximately one month from shipment date. At 30
September 2008, sales totalling 10,300 tonnes remained open as to price, with an average
mark-to-market price of 290.2 cents per pound
compared with an average provisional invoice price of 325.2 cents per pound. At 30 September
2007, sales totalling 11,200 tonnes remained
open as to price, with an average mark-to-market price of 365.9 cents per pound compared with
an average provisional invoice price of 350.2
cents per pound. At 31 December 2007, sales totalling 11,000 tonnes remained open as to price,
with an average mark-to-market price of 301.7
cents per pound compared with an average provisional invoice price of 305.4 cents per pound.
(b) Molybdenum sales
Nine months ended Nine months ended
Full year
30 September 30 September
2007
2008 2007
US$'m US$'m
US$'m
Los Pelambres Los Pelambres
Los Pelambres
Molybdenum Molybdenum
Molybdenum
concentrate concentrate
concentrate
Provisionally invoiced gross 409.6 489.3
670.9
sales
Effects of pricing adjustments
to previous period invoices
Reversal of mark-to-market (0.1) 2.4
2.4
adjustments at the end of the
previous period
Settlement of molybdenum sales 2.7 (1.0)
(1.0)
invoiced in the previous
period
Total effect of adjustments to 2.6 1.4
1.4
previous period invoices in
the current period
Effects of pricing adjustments
to current period invoices
Settlement of molybdenum sales 1.8 25.7
27.4
invoiced in the current period
Mark-to-market adjustments at (1.5) (0.1)
0.1
the end of the current period
Total effect of adjustments to 0.3 25.6
27.5
current period invoices
Total pricing adjustments 2.9 27.0
28.9
Turnover before deducting 412.5 516.3
699.8
tolling charges
Tolling charges (9.5) (18.1)
(23.4)
Turnover net of tolling 403.0 498.2
676.4
charges
Molybdenum sales at Los Pelambres have an average settlement period of approximately three
months after shipment date. At 30 September
2008, sales totalling 1,500 tonnes remained open as to price, with an average mark-to-market
price of US$33.1 per pound compared with an
average provisional invoice price of US$33.6 per pound. At 30 September 2007, sales totalling
2,100 tonnes remained open as to price, with
an average mark-to-market price of US$31.9 per pound compared with an average provisional
invoice price of US$31.9 per pound. At 31 December
2007, sales totalling 2,100 tonnes remained open as to price, with an average mark-to-market
price of US$32.5 per pound compared with an
average provisional invoice price of US$32.4 per pound.
5. Commodity derivatives
The Group periodically uses derivative financial instruments to reduce exposure to
commodity price movements. The Group does not use
such derivative instruments for speculative trading purposes.
The Group has applied the hedge accounting provisions of IAS 39 "Financial Instruments:
Recognition and Measurement". Changes in the
fair value of derivative financial instruments that are designated and effective as hedges of
future cash flows have been recognised
directly in equity, with such amounts subsequently recognised in the income statement in the
period when the hedged item affects profit or
loss. Any ineffective portion is recognised immediately in the income statement. Realised
gains and losses on commodity derivatives
recognised in the income statement have been recorded within turnover. The time value element
of changes in the fair value of derivative
options is excluded from the designated hedging relationship, and is therefore recognised
directly in the income statement within other
finance items.
The balance sheet mark-to-market adjustments in respect of commodity derivatives at the
end of each period, and the effect on turnover
and other finance items in the income statement for each period, are as follows:
Balance sheet Income statement effect
Net financial asset/(liability)
At 30.09.08 At 30.09.07 At 31.12.07 Nine months ended Nine months ended
Full year
30 September 30 September
2007
2008 2007
US$'m US$'m US$'m US$'m US$'m
US$'m
El Tesoro 1.1 (21.4) - 0.8 0.1
0.4
Michilla 3.3 (7.7) 0.5 (2.9) (11.9)
(13.7)
4.4 (29.1) 0.5 (2.1) (11.8)
(13.3)
During the nine months ended 30 September 2008 a loss of US$7.9 million was recognised
within turnover and EBITDA, in respect of
derivative instruments at Michilla which matured during the year. In addition to this amount
recognised within EBITDA, a gain of US$5.8
million was recognised within other finance items, in respect of the time value element of the
mark-to-market adjustments, which is excluded
from the designated hedging relationship. A loss of US$2.0 million (on a pre-tax basis) was
recognised directly within reserves and minority
interests, in respect of the intrinsic value element of the mark-to-market adjustments, which
forms part of the designated effective hedging
relationship.
At 30 September 2008, the Group had min/max instruments for 44,350 tonnes of copper
production (of which 35,700 tonnes relate to El
Tesoro and 8,650 tonnes relate to Michilla), covering a total period up to 31 December 2009.The weighted average remaining period covered
by these hedges calculated with effect from 1 October 2008 is 6.7 months. The instruments have
a weighted average floor of 245.6 cents per
pound and a weighted average cap of 384.6 cents per pound.
At 30 September 2008, the Group also had futures for 8,000 tonnes, to both buy and sell
copper production at El Tesoro, with the effect
of swapping COMEX prices for LME prices without eliminating underlying market price exposure,
covering a period to 31 January 2010. The
weighted average remaining period covered by these hedges calculated with effect from 1
October 2008 is 8.5 months.
6. Summary of mining companies' Chilean GAAP financial statements
(See notes following Note 6(c)).
The balance sheets, income statements and cash flow statements prepared under Chilean GAAP
and to be filed with the SVS are summarised
below.
(a) Balance sheets
Los Pelambres Los Pelambres El Tesoro El Tesoro
Michilla Michilla
At 30.09.08 At 30.09.07 At 30.09.08 At 30.09.07 At
30.09.08 At 30.09.07
US$'m US$'m US$'m US$'m
US$'m US$'m
Cash and cash equivalents 457.1 554.4 201.1 466.0
34.6 67.6
Trade and other receivables 101.6 315.2 157.1 70.0
22.6 27.7
Inventories 74.5 75.2 41.5 37.4
27.6 18.5
Current and deferred tax 56.4 33.8 7.0 4.1
4.2 5.3
assets
Current assets 689.6 978.6 406.7 577.5
89.0 119.1
Fixed assets 1,984.9 1,678.0 528.0 249.9
39.1 47.1
Other non-current assets 141.2 151.5 47.0 42.7
2.6 1.4
TOTAL ASSETS 2,815.7 2,808.1 981.7 870.1
130.7 167.6
Short term borrowings 78.6 86.0 - 14.4
- -
Trade and other payables 282.5 504.6 68.7 41.4
37.0 69.7
Current and deferred tax 37.9 - 2.8 10.8
- 10.5
liabilities
Current liabilities 399.0 590.6 71.5 66.6
37.0 80.2
Medium and long term 115.0 191.7 - 7.0
- -
borrowings
Trade and other payables 16.0 14.4 19.6 7.6
9.1 8.6
Deferred tax liabilities 164.6 146.6 35.9 32.4
- -
Non-current liabilities 295.6 352.7 55.5 47.0
9.1 8.6
Total liabilities 694.6 943.3 127.0 113.6
46.1 88.8
Share capital 373.8 373.8 91.0 91.0
78.4 78.4
Reserves 1,747.3 1,491.0 763.7 665.5
6.2 0.4
Total shareholders' equity 2,121.1 1,864.8 854.7 756.5
84.6 78.8
TOTAL LIABILITIES AND 2,815.7 2,808.1 981.7 870.1
130.7 167.6
SHAREHOLDERS' EQUITY
(b) Income statements
Los Pelambres Los Pelambres El Tesoro
El Tesoro Michilla
Michilla
Nine months ended Nine months ended Nine months ended
Nine months ended Nine months ended Nine
months ended
30 September 30 September 30 September
30 September 30 September
30 September
2008 2007 2008
2007 2008
2007
US$'m US$'m US$'m
US$'m US$'m
US$'m
Turnover 2,305.1 1,913.1 556.1
517.5 271.5
253.2
Operating costs (506.1) (316.3) (223.1)
(183.4) (161.0)
(112.5)
Operating margin 1,799.0 1,596.8 333.0
334.1 110.5
140.7
Administrative and (115.3) (54.9) (27.2)
(22.1) (14.0)
(11.9)
distribution expenses
Operating profit 1,683.7 1,541.9 305.8
312.0 96.5
128.8
Other income 5.0 7.8 1.8
0.5 1.6
2.3
Financial income 9.0 24.3 12.5
13.6 1.5
2.9
Financial expenses (8.4) (13.8) (0.8)
(2.2) -
(0.2)
Other expenses (3.2) (1.9) (0.8)
(1.6) -
(0.1)
Exchange difference (30.3) 6.5 1.2
(0.9) (4.5)
0.6
Net non-operating (27.9) 22.9 13.9
9.4 (1.4)
5.5
income/(expenses)
Profit before tax 1,655.8 1,564.8 319.7
321.4 95.1
134.3
Income tax expense (340.0) (294.0) (67.6)
(57.0) (19.0)
(25.3)
Profit for the financial 1,315.8 1,270.8 252.1
264.4 76.1
109.0
period
(c) Cash flow statements
Los Pelambres Los Pelambres El Tesoro
El Tesoro Michilla
Michilla
Nine months ended Nine months ended Nine months ended
Nine months ended Nine months ended Nine
months ended
30 September 30 September 30 September
30 September 30 September
30 September
2008 2007 2008
2007 2008
2007
US$'m US$'m US$'m
US$'m US$'m
US$'m
Net cash flow from operating 1,628.1 1,199.4 195.8
262.8 94.8
110.3
activities
Investing activities
Additions to fixed assets (272.1) (207.9) (286.0)
(8.8) (15.5)
(6.8)
Disposals of fixed assets - 7.1 -
- -
-
Other items - - -
- -
-
Net cash used in investing (272.1) (200.8) (286.0)
(8.8) (15.5)
(6.8)
activities
Financing activities
Dividends paid (1,020.0) (886.4) (229.0)
- (87.8)
(105.4)
Loans repaid (43.1) (43.1) (14.0)
(7.0) -
-
Net cash used in financing (1,063.1) (929.5) (243.0)
(7.0) (87.8)
(105.4)
activities
Net increase in cash and cash 292.9 69.1 (333.2)
247.0 (8.5)
(1.9)
equivalents
Cash and cash equivalents at 164.2 485.3 534.3
219.0 43.1
69.5
the beginning of the period
Cash and cash equivalents at 457.1 554.4 201.1
466.0 34.6
67.6
the end of the period
Notes to Chilean GAAP financial statements
(i) The above balance sheets, income statements and cash flow statements have been
derived from the quarterly financial statements of
Los Pelambres, El Tesoro and Michilla to be filed with the SVS in Chile. Certain detailed
lines in the individual statements have been
combined for convenience.
(ii) The balance sheets, income statements and cash flow statements above have been
prepared under Chilean GAAP and therefore do not
necessarily equate to the amounts that would be included in the Group's consolidated financial
statements for a corresponding period either
as to measurement or classification.
(iii) The amounts disclosed above represent the full amount for each company and not
the Group's attributable share. The Group owns
60% of Los Pelambres, 70% of El Tesoro with effect from 25 August 2008, on which date the
transaction with Marubeni Corporation completed
(100% prior to that date) and 74.2% of Michilla.
(iv) A translation into English of the full quarterly financial statements for each
company shown in summary form above will be
available on the Group's website www.antofagasta.co.uk.
7. Reconciliation of Chilean GAAP results to Turnover and EBITDA under IFRS for
individual business segments
(a) Turnover
Los Pelambres Los Pelambres
El Tesoro El Tesoro
Michilla Michilla
Nine Nine
Nine Nine
Nine Nine
months months
months months
months months
ended ended
ended ended
ended ended
30 September 30 September 30
September 30 September 30
September 30 September
2008 2007
2008 2007
2008 2007
Notes US$'m US$'m
US$'m US$'m
US$'m US$'m
Chilean GAAP - Turnover 2,305.1 1,913.1
556.1 517.5
271.5 253.2
Mark-to-market of 7(i) (0.3) 23.4
- 2.6
- 1.4
provisionally priced sales
Reclassification of realised 7(ii) - -
- 0.1
- (7.2)
gains/(losses) on commodity
derivatives to other operating
expense/reserves
IFRS - Turnover 2,304.8 1,936.5
556.1 520.2
271.5 247.4
(b) EBITDA
Los Pelambres Los Pelambres
El Tesoro El Tesoro
Michilla Michilla
Nine Nine
Nine Nine
Nine Nine
months months
months months
months months
ended ended
ended ended
ended ended
30 September 30 September 30
September 30 September 30
September 30 September
2008 2007
2008 2007
2008 2007
Notes US$'m US$'m
US$'m US$'m
US$'m US$'m
Chilean GAAP - Operating 1,683.7 1,541.9
305.8 312.0
96.5 128.8
profit
Depreciation & amortisation 56.3 51.9
31.3 26.9
19.6 14.4
Chilean GAAP - EBITDA 1,740.0 1,593.8
337.1 338.9
116.1 143.2
Mark-to-market of 7(i) (0.3) 23.4
- 2.6
- 1.4
provisionally priced sales
Mark-to-market of financial 7(ii) - -
- 0.1
- (7.2)
derivatives
Other IFRS and consolidation 7(iii) 1.1 9.7
(1.9) (2.9)
4.9 3.3
adjustments
IFRS - EBITDA 1,740.8 1,626.9
335.2 338.7
121.0 140.7
Notes to reconciliation of turnover and EBITDA
(i) Copper and molybdenum concentrate sale agreements and copper cathode sale
agreements generally provide for provisional pricing of
sales at the time of shipment, with final pricing being based on the monthly average London
Metal Exchange copper price or monthly average
molybdenum price for specified future periods. This normally ranges from 30 to 180 days after
delivery to the customer.
Under Chilean GAAP, the Group's accounting treatment is to value sales, which remain open
as to final pricing at the period end, in
aggregate at the lower of provisional invoice prices and mark-to-market prices at the balance
sheet date. The Group determines
mark-to-market prices using forward prices at each period end for copper concentrate and
cathode sales, and period-end month average prices
for molybdenum concentrate sales due to the absence of a futures market for that commodity.
Under IFRS, both gains and losses from the marking-to-market of open sales are recognised
through adjustments to turnover in the income
statement and to trade debtors in the balance sheet. Under IFRS, the Group determines
mark-to-market prices in the same way as under Chilean
GAAP.
This results in a GAAP adjustment in cases where the mark-to-market prices are higher than
the provisional invoice prices. For Los
Pelambres this results in a loss of US$0.2 million in respect of copper concentrate sales, and
a loss of US$0.1 million in respect of
molybdenum concentrate sales. No adjustment is required in respect of El Tesoro or Michilla.
(ii) The Group uses derivative financial instruments to reduce exposure to commodity
price movements. The Group does not use such
derivative instruments for trading purposes.
Under Chilean GAAP, such derivatives are held off the balance sheet. Gains or losses on
derivative instruments are matched in the income
statement against the item intended to be hedged. Such gains or losses are reflected by way of
adjustment to turnover.
Under IFRS, the Group has applied the hedge accounting provisions of IAS 39 "Financial
Instruments: Recognition and Measurement".Changes in the fair value of derivative financial instruments that are designated and
effective as hedges of future cash flows have been
recognised directly in equity, with such amounts subsequently recognised in the income
statement in the period when the hedged item affects
profit or loss. Any ineffective portion is recognised immediately in the income statement. Realised gains and losses on commodity
derivatives recognised in the income statement have been recorded within turnover. The time
value element of changes in the fair value of
derivative options is excluded from the designated hedging relationship, and is therefore
recognised directly in the income statement within
other finance items.
(iii) Other IFRS and consolidation adjustments are not material either individually or
in aggregate.
This information is provided by RNS
The company news service from the London Stock Exchange
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