ANTO Antofagasta Plc

By Alex MacDonald

LONDON--Chilean copper producer Antofagasta PLC (ANTO.LN) said Wednesday that its copper output rose last quarter due to new mines in its portfolio and signalled that production would continue to grow this year, albeit less than several analysts had expected.

The FTSE-100 miner also warned that it expects its effective tax rate to jump to a range of between 60% and 65% for 2015 compared with 46% the year before when its reports its full-year results on March 15. This is due to non-deductible items such as international exploration costs that are expected to have a greater weighting amid lower earnings expectations stemming from a protracted commodities price rout.

In terms of output, the miner said copper production rose 8.2% to 169,900 metric tons for the three months ended Dec. 31, compared with the third quarter due in part to contributions from its recently commissioned Antucoya mine and the purchase of a 50% stake in the Zaldivar mine from Barrick Gold Corp. (ABX.T) in December.

This however wasn't enough to stem a 10.6% drop in copper output to 630,300 tons last year stemming from lost production due to heavy rainfall in the Atacama desert, where several of its mines are located, water-scarcity related protests at its flagship Los Pelambres mine, and delays in the ramp up of its Antucoya mine due to equipment failures. The figure was broadly in line with a guidance of 635,000 tons that had been revised.

Gold output also fell 21% to 213,900 ounces last year, even though it rose 22% to 55,700 ounces in the fourth quarter compared with the previous quarter.

At 1302 GMT, the company's shares were down 3.3% at 365.3 pence a share while the FTSE 350 mining index was down 1.3%.

Citigroup analysts said in a note that the effective tax rate was significantly higher than consensus forecast of 36%. "This implies that consensus 2015 earnings could be entirely wiped off, resulting in net loss outcome versus current expectation of $91 million net profit," the Citi analysts said.

Looking ahead, the company plans to produce between 710,000 tons and 740,000 tons of copper, 245,000 ounces to 275,000 ounces of gold and 8,000 tons to 9,000 tons of molybdenum this year due to the ramp up of its Centinela Concentrates project as well as the full-year contribution from its Antucoya and Zaldivar mines.

Canaccord Geunity analyst Nick Hatch said the production guidance was 12% to 16% below his expectations however the company's cash cost guidance was better than expected.

Antofagasta plans to reduced its cash cost after credits from the sale of byproducts such as gold and molydenum to $1.35 a pound in 2016, down 10% from the year before.

Net cash costs rose 4.9% last year to $1.50 a pound, missing the company's guidance of $1.47 a pound.

Write to Alex MacDonald at alex.macdonald@wsj.com

(END) Dow Jones Newswires

January 27, 2016 08:32 ET (13:32 GMT)

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