TIDMANTO TIDMTTM
RNS Number : 9494W
Antofagasta PLC
25 August 2015
NEWS RELEASE, 25 AUGUST 2015
HALF YEARLY FINANCIAL REPORT FOR THE SIX MONTHS ENDED 30 JUNE
2015
Antofagasta plc CEO Diego Hernández said:
"With our robust balance sheet and cash generative operations we
are well positioned for the current low point in the copper price
cycle. Our position has recently been improved by the sale in June
of our water division and this position of financial strength
allows us to view the current trading environment both as a time
that presents opportunities, as well as a time of challenge.
"Last month we announced the acquisition of a 50% stake in the
world-class Zaldívar copper mine in Chile. Zaldívar is a
high-quality asset that, on completion, will boost the Group's
production and will be accretive to earnings and cash flow. This
was a rare opportunity to acquire a good-quality copper asset, and
we took it. We expect the new joint venture with Barrick Gold at
Zaldívar to leverage the expertise of both companies and that
improvements from operational and administrative synergies will be
achieved and, in the longer term, additional upside will be
realised following further exploration of the mine's resources.
"Operationally we continue to focus on delivering the Antucoya
mine, which is due to start production in Q3 2015 and, together
with Zaldívar and the expansion of Centinela Concentrates, is
expected to translate into a period of steady growth through 2016.
We are also studying further development options in our principal
mining districts at Los Pelambres and Centinela, which will
generate a pipeline of growth opportunities over the coming
years.
"Throughout this period of lower copper prices Antofagasta has
had a rigorous approach to cost control at our operations and we
are on-track to make $160 million savings in 2015. Good-quality
assets and tight capital discipline means we can weather the
current downturn and maintain our competitive position in this
challenging environment and when the copper cycle begins to
recover, we will enjoy healthy margin growth."
Financial performance
-- Revenue was $1,785.9 million, 31.4% lower than in the H1 2014
following significant declines in copper and by-product prices and
lower sales volumes due to delayed shipments from bad weather
-- EBITDA was $561.6 million, a 48.6% decline reflecting the
lower revenue which was partly offset by a 18.9% decrease in
operating costs
-- Total operating costs were $1,224.3 million, $284.0 million
lower than in H1 2014 of which $198 million was due to a reduction
in costs and the balance was due to lower volumes
-- Net earnings from continuing operations, were $86.3 million,
in line with the decrease in EBITDA with improved net finance
expenses and lower taxes
-- Operating cash flow was $807.7 million compared with $1,170.0 million in the H1 2014
-- Interim dividend of 3.1 cents per share, representing a 35%
pay-out ratio of the half year net earnings
-- Capital expenditure was $595.9 million, down from $767.3
million in first six months of 2014
-- Group attributable net cash was $1,030.5 million, increased
by the proceeds from the sale of the water division
Operational performance
-- Group copper production in H1 2015 was 303,400 tonnes, 13%
lower than in the same period last year primarily due to the impact
of the protests at Los Pelambres and the heavy rains at Centinela
in Q1
-- Copper sales for the half year were 290,100 tonnes as bad
weather delayed shipments over the period end. These normalised in
July
-- Group cash costs before by-product credits were $1.88/lb, in
line with 2014 as improvements in costs were offset by lower
production
-- Group net cash costs were $1.53/lb, up 4.8% compared to 2014
primarily reflecting lower gold production and lower realised
molybdenum prices at Los Pelambres
-- Group production guidance for the year is 665,000 tonnes
reflecting the delayed commissioning and ramp-up at Antucoya. Group
net cash cost guidance for the year is $1.47/lb as a result of
lower production and lower by-product prices
Project update
-- Antucoya first production delayed to the end of Q3 due to
commissioning issues relating to the crusher circuit
-- Environmental Impact Assessments ("EIA") submitted for
approval on the Centinela Second Concentrator and under preparation
on the Los Pelambres Incremental Expansion project
-- Construction of Encuentro Oxides is underway with first production expected in late 2016
-- Feasibility study on the molybdenum plant at Centinela
completed with first production expected in the Q1 2017
Zaldivar Acquisition
-- 50% interest in the Zaldivar copper mine in Chile acquired
from Barrick Gold Corporation is expected to be earnings and cash
flow accretive. Total consideration of $1.0 billion, $980 million
to be paid at closing (expected end of 2015) with the balance paid
in equal annual instalments of $5 million each during the following
five years
SIX MONTHS ENDING 30 JUNE 2015 2014 %
--------------------------------------- ------- -------- ------------ -------
Group revenue $m 1,785.9 2,601.8(1) (31.4)
EBITDA (2) $m 561.6 1,093.5(1) (48.6)
Earnings per share cents 8.8 31.2(1) (71.9)
Dividend per share cents 3.1 11.7 (73.5)
Cash flow from operations $m 807.7 1,170.0 (31.0)
Group attributable net cash at period
end (3) $m 1,030.5 403.5 155.4
Average realised copper price $/lb 2.54 3.08 (17.5)
-------
Copper sales kt 290.1 343.3 (15.5)
Gold sales koz 106.0 125.2 (15.3)
Molybdenum sales kt 4.4 3.2 37.5
Cash costs before by-product credits
(4) $/lb 1.88 1.87 0.5
Net cash costs $/lb 1.53 1.46 4.8
--------------------------------------- ------- -------- ------------ -------
(1) Restated to exclude the results from discontinued operations
(the water division) for the period
(2) EBITDA refers to Earnings Before Interest, Tax, Depreciation
and Amortisation and is calculated by adding back depreciation,
amortisation, profit or loss on disposals and impairment charges to
operating profit from subsidiaries. See Note 3 to the half yearly
results below.
(3) Cash refers to the total of cash, cash equivalents and
liquid investments, as analysed in Note 18 to the half yearly
results below.
(4) Cash cost is a method used by the mining industry to express
the cost of production in US dollars per pound of copper and is
further explained in Note 22(b) to the half yearly results
below.
Investors - London Public Relations Advisors - London
Andrew Lindsay alindsay@antofagasta.co.uk Carole Cable
antofagasta@brunswickgroup.com
Paresh Bhanderi pbhanderi@antofagasta.co.uk Robin Wrench antofagasta@brunswickgroup.com
Telephone +44 20 7808 0988 Telephone +44 20 7404 5959
Investors - Santiago Media - Santiago
Alfredo Atucha aatucha@aminerals.cl Pablo Orozco
porozco@aminerals.cl
Telephone +56 2 2798 7000 Carolina Pica cpica@aminerals.cl
Telephone +56 2 2798 7000
DIRECTORS' COMMENTS FOR THE SIX MONTHS ENDED 30 JUNE 2015
FINANCIAL
Group revenues for the first six months of the year were
$1,785.9 million, 31.4% lower than in the same period last year
reflecting the 17.8% fall in realised copper prices as well as
lower by-product revenues and the 15.5% decrease in sales
volumes.
EBITDA for the current period was $561.6 million, a 48.6%
decrease on the comparative period in 2014, primarily reflecting
the lower revenues, partly offset by lower operating costs and
lower production. This has resulted in earnings per share from
continuing operations for the period of 8.8 cents per share, a
71.9% decrease compared with the comparative period.
The sale of the water division in June for $947.3 million
(following completion adjustments) and the division's results are
reported as discontinued operations and 2014's results have been
restated to reflect this.
The interim ordinary dividend of 3.1 cents per share, represents
a 35% pay-out of the half year earnings per share for continuing
operations.
PRODUCTION AND COSTS
Group copper production in the first half of 2015 was 303,400
tonnes, 12.9% lower than in the same period last year primarily due
lower grades as expected and lower throughput and recoveries at Los
Pelambres. Group gold production was 112,500 ounces in the first
six months of the year, 11,300 ounces less than in the first half
of 2014 due to lower production at Los Pelambres. Molybdenum
production at Los Pelambres was 4,700 tonnes in the first half of
2014, compared with 3,300 tonnes in the first six months of 2014,
principally due to a higher molybdenum-grade zone being mined
during Q2 2015.
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Total operating costs for the first half of 2015 were $1,224.3
million, 18.8% or $284.0 million less than in the equivalent period
in 2014. Some 30% of the decrease was due to the fall in volumes
and the balance of $198 million was due to reduced costs, including
lower energy prices and foreign exchange savings.
Group cash costs before by-product credits in the first half of
2015 at $1.88/lb were flat compared with the same period last
year.
Net cash costs for the first half of 2015 at $1.53/lb were 4.8%
higher than the same period last year again due primarily to lower
gold production and lower realised molybdenum prices at Los
Pelambres.
WATER DIVISION SALE
As previously announced, the Group sold Aguas de Antofagasta
S.A. (ADASA), its water division, to Empresas Públicas de Medellín
(EPM) on 2 June 2015 for a total cash consideration of $947.3
million after completion adjustments and before taxes and
transaction costs. The division contributed $18.9 million to the
Group's 2015 profits before tax up until the date of sale, with
EBITDA of $24.3 million. The gross assets of the division as of the
date of sale were $225.9 million.
The sale will allow Antofagasta to focus more closely on its
core business and advance its various development projects, whilst
reinforcing the strength of its balance sheet.
ZALDIVAR ACQUISITION
On 30 July the Company announced it had entered into a
definitive agreement with Barrick Gold Corporation ("Barrick")
under which Antofagasta will acquire a 50% interest in Compañia
Minera Zaldívar Limitada ("Zaldivar"), and will become the operator
of the Zaldivar copper mine.
Zaldivar is an open-pit, heap-leach copper mine located in
Northern Chile with over 20 years of operating history. In 2014,
Zaldivar produced approximately 100,000 tonnes of copper at a net
cash cost of $1.79/lb, and generated $244 million of income before
income tax. As reported by Barrick, as of 31 December 2014,
Zaldivar has 2.5 million tonnes of contained copper in proven and
probable reserves, which supports a current reserve life of
approximately 14 years, with further upside potential through
exploration.
Total consideration for the transaction is $1,005 million in
cash, which consists of $980 million upon closing, subject to
customary adjustments, and five annual payments of $5 million per
year, starting in 2016. The transaction is expected to be
immediately accretive to Antofagasta's earnings and cash flow per
share.
TAX
As previously announced, in September 2014 a comprehensive tax
reform bill was enacted into Chilean law. The key changes set out
in the bill which will impact the Group relate to corporation tax
and withholding tax.
From 2017, two alternative taxation systems will apply - either
the partially-integrated system or the attributable system.
Companies can elect to pay corporation tax and withholding tax
under either system and an election must be made by the end of
2016. The Chilean government is currently undertaking a review of
the tax reform, in order to determine whether aspects of the new
tax systems can be simplified or improved.
It is expected that the Group's effective tax rate will increase
by around 2-3% from 2017 onwards when the new system is
adopted.
The Group's effective tax rate for the first half of 2015 is
39.6% (H1 2014 - 33.2%) for continuing operations. This is mainly
due to the increase in the Chilean statutory corporate tax rate to
22.5% in 2015 (20% in H1 2014), and higher net deferred tax charges
which arise as the rate of Chilean corporate tax will increase to
24% in 2016 and 27% from 2017 onwards.
DEPRECIATION
Depreciation for the first half of 2015 is $253.0 million, $11.4
million higher than the same period last year, but $73.7 million
lower than in the second half of 2014 when Michilla's assets were
written-down to zero ahead of the planned mine closure and the
depreciation of capitalised stripping costs (under IFRIC 20) at
Centinela was lower.
COST REDUCTIONS
The Group continues to focus on cost control at each of the
operations and projects, building on the savings that were achieved
in 2014. The review of all costs including the supply chain, work
practices and use of contractors continued in the first half of
2015 and further operational and capital cost savings have been
identified.
Work continues on centralising and simplifying the supply chain
and the current focus of the Group's cost-reduction programme is on
establishing common maintenance practices across all operations,
improving the productivity of service contracts by re-engineering
and streamlining processes where appropriate, improving the
efficiency of the corporate centre (for example by consolidating
supply management for the Group's operations, major projects and
exploration activities) and improving energy efficiency across the
Group in terms of both cost and consumption.
Cost savings have also been captured in relation to the supply
of goods through agreements with major suppliers. The Group is also
using high-performance steel grinding media at Los Pelambres and
Centinela which are sourced from China and the central procurement
department has allocated resources to source specific product
categories directly from Chinese suppliers.
The Group is targeting savings of approximately $160 million in
2015 as a result of its cost-saving and productivity initiatives
and as at 30 June 2015 approximately 44% of these had been
achieved.
SAFETY
Sadly, during the first half of the year one of our contractors
was involved in a fatal accident at Michilla. Antofagasta
management and staff extend their heartfelt condolences to the
family of Sergio Bruna Cortés who passed away. A thorough
investigation process was completed at Michilla and administrative
actions have been taken to safeguard the Group's employees and
contractors. The Group remains committed to achieving zero
fatalities and is continually working to strengthen and deepen the
safety culture at all of the operations under the Group Safety and
Health model. This model aims to eliminate fatalities and increase
safety awareness by focusing on critical activities and controls,
increasing organisational learning and emphasising responsibility,
accountability and proactive risk control measures.
Further information on the Group's effort to support and develop
safety culture within the business is set out on pages 53-54 of the
2014 Annual Report and Accounts.
OUTLOOK
As previously announced, the Group has reduced full year copper
production guidance to 665,000 tonnes to reflect the delayed
commissioning and ramp-up at Antucoya. As a result of lower
production and lower by-products prices, particularly molybdenum
and gold, net cash cost guidance for the Group has been updated to
$1.47/lb. From 2016 onwards we expect growth in production driven
by Antucoya, the expansion at Centinela Concentrates and the
addition of Zaldivar.
The copper market is largely in balance with a small surplus
expected in the second half of 2015 as demand is expected to
improve following a very weak first half. In China, credit
tightness over the last year or so has impacted demand and the
focus is now on government policies incentivising industrial
activity and consumption. This government economic stimulation,
especially through investment programmes, significantly impacts
both supply and demand and this is further impacted by global
macroeconomic issues. In the medium to longer term the Group
remains confident that steady demand growth from emerging markets -
notably China, where we anticipate considerable additional spend on
its power infrastructure in coming years - combined with the
current slowdown in investment in new mine expansions will lead to
a shortfall in supply and support a recovery in the copper
prices.
The molybdenum price fell 32.2% in the first half of 2015 as
demand from the oil industry weakened and in anticipation of new
production from recently commissioned projects. In the short term
the price is expected to remain at current levels.
This year will continue to be a year of prudence as the Group
continues to capture operational and capital cost savings.
REVIEW OF OPERATIONS AND PROJECTS
MINING DIVISION
LOS PELAMBRES
Operating profit
Operating profit at Los Pelambres was $309.8 million in the
first half of 2015, compared with $661.0 million in the first six
months of 2014. This decrease in profitability is explained by
lower realised copper prices which decreased from $3.04/lb to
$2.51/lb and reduced revenue by $219.9 million, lower production as
a result of disruptions following the actions of protesters in the
first quarter of 2015 that impacted production by some 8,000
tonnes, lower grades and higher net cash costs due to lower gold
production and lower realised molybdenum prices, which more than
halved year-on-year.
Production
Copper production was 169,400 tonnes in the first half of 2015,
compared with 196,600 tonnes in the same period last year. This
13.8% decrease was mainly due to disruptions following the actions
of protesters in the first quarter of 2015 and lower recoveries and
grades.
Molybdenum production of 4,700 tonnes was higher in the first
half of 2015 compared to the same period last year, due to
significantly higher grades as mining entered a new higher-grade
phase of the pit. Gold production was 33.6% lower in the first half
of 2015 at 22,300 ounces produced, compared with 33,600 ounces in
the first six months of 2014.
Costs
Cash costs before by-product credits were $1.67/lb in the first
half of the year, $0.05/lb higher than in the same period last
year. This 3.1% increase was mostly due to lower production, partly
offset by lower energy prices and the depreciation of the Chilean
peso. Net cash costs for the first half of 2015 were $1.36/lb,
compared with $1.21/lb in the first half of 2014 mainly due to
lower gold production and lower realised molybdenum prices.
Capital expenditure
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Capital expenditure in the first six months of 2015 was $92.8
million, which included new mine equipment and infrastructure.
Legal update - Mauro tailings dam
Since the Mauro tailings dam began operating in 2008 there have
been a series of legal claims by some members of the local
community at Caimanes who are seeking to stop the operation of the
dam. Two of these claims are ongoing and allege that the dam
interferes with the rights of the Caimanes community; the first
claims that it affects the flow and quality of the Pupío stream,
and the second that the tailings dam wall would not withstand an
extreme seismic event.
These claims have been through various courts and stages of
appeal, but Los Pelambres has always complied with all applicable
laws, regulations and controls and successfully defended its right
to continue operating the dam.
Claim that the dam affects the flow and quality of the Pupío
stream
In March 2015 the trial Court of Los Vilos ruled that Los
Pelambres' plan of works to ensure that the operation of the
tailings dam does not affect the normal flow and quality of the
Pupío stream was insufficient and ordered Los Pelambres to destroy
part, or all, of the tailings dam wall. Los Pelambres has appealed
the Court's decision and a decision on the appeal by the Court of
Appeals of La Serena is expected in the second half of this
year.
Claim that the dam wall would not withstand extreme seismic
events
In May 2015, the Court of Appeals of La Serena reversed a
previous ruling by the trial Court of Los Vilos concluding that the
design, construction and operation of the Mauro tailings dam had
been properly undertaken according to best practices and that there
was no evidence or indication that the dam constituted a threat to
the Caimanes community.
Legal update - Cerro Amarillo Waste Dump
In 2004, Los Pelambres received all of the required
authorisations from the Chilean government to deposit a waste-rock
dump ("Cerro Amarillo Waste Dump") in its current location which,
according to the then official Chilean maps (1996), was located
within Chile. In 2007 Chile modified the official maps in this area
without making the changes public. Los Pelambres stopped using the
relevant area of the Cerro Amarillo Waste Dump in 2011.
In February 2012, a binational border commission, established to
clarify the exact position of the Chile/Argentina border,
determined accurately the location of the border in the area of the
Cerro Amarillo Waste Dump, which showed that part of the Cerro
Amarillo Waste Dump was now located in Argentina.
In May 2014 Xstrata Pachón S.A. ("Xstrata Pachón"), a subsidiary
of Glencore and the holder of the mining properties on the
Argentinian side of the border, filed a claim against Los Pelambres
before the Federal Court of San Juan, Argentina, alleging that Los
Pelambres had unlawfully deposited waste-rock on its property.
Xstrata Pachón has also filed a criminal complaint before a
different Federal Court of San Juan alleging that Los Pelambres has
violated several Argentinian laws relating to the misappropriation
of land, unlawful appropriation of water bodies and that people's
health is in jeopardy from the alleged contamination that the Cerro
Amarillo Waste Dump might generate.
In both cases, Los Pelambres has submitted preliminary
objections to the Argentinian courts, which are still pending. Once
they are resolved, each party may appeal to higher courts.
The Cerro Amarillo Waste Dump is a pile of inert waste rock and
any potential future environmental impact could be easily prevented
with the implementation of an environmental closure plan, which is
the accepted and recommended practice. Los Pelambres has offered to
implement a closure plan in line with the requirements of the
Provincial Authorities of San Juan, but Xstrata Pachón has rejected
this proposal outright, even though this solution would address all
of the alleged environmental concerns.
Los Pelambres will exercise all available legal avenues to
defend its position and will continue to seek to reach an
understanding with the relevant authorities in Argentina to allow
the environmental closure of the Cerro Amarillo Waste Dump.
Details of certain legal claims are set out in Note 19 to the
half yearly results below.
CENTINELA
Operating profit
The operating profit at Centinela in the first six months of
2015 was $66.3 million, compared with $285.4 million in the same
period last year. Whilst net cash costs were in line with the first
half of 2014 supported by higher gold grades and recoveries, the
realised copper price decreased from $3.09/lb in first half of 2014
to $2.56/lb in the same period in 2015 impacting revenues by $154.1
million.
Production
Centinela produced 118,400 tonnes of copper in the first half of
2015 compared with 128,300 tonnes in the first half of 2014 as a
result of lower throughput at the concentrator plant and lower
grades at Centinela Cathodes, partly offset by higher grades at
Centinela Concentrates.
Copper in concentrate production for the first six months of the
year was 4.7% lower compared with the same period last year at
78,400 tonnes reflecting lower throughput as a result of a shutdown
following unexpected heavy rains in the Atacama desert and
scheduled maintenance, partly offset by higher grades. Sales were
some 7,900 tonnes lower than production as heavy ocean swells
delayed shipments at the period end, but have been made up during
July as weather conditions improved.
Gold production in the first half of the year was in line with
the same period last year as lower throughput was offset by higher
grades and recoveries.
Costs
Compared with the first six months of 2014, cash costs before
by-product credits were 1.4% lower, mainly as a result of the
'one-off' signing bonuses paid to employees following the
conclusion of labour negotiations in Q2 2014 and lower costs
following the merger of Esperanza and El Tesoro into Minera
Centinela, partly offset by higher TC/RCs. Net cash costs for the
first half of 2015 were in line with those in the same period last
year primarily reflecting higher gold grades and recoveries.
Capital expenditure
Capital expenditure in the first six months of 2015 was $222.9
million, which included approximately $76.1 million related to the
expansion to throughput of 105,000 tonnes per day, $45.3 million
related mine equipment and spare parts and $52.6 million related to
stripping works at the Tesoro Central pit.
MICHILLA
Operating profit
Michilla had an operating profit of $10.6 million in the first
six months of 2015, in comparison to $9.7 million in the same
period last year. The operating profit was supported by an
improvement in Michilla's cash costs, which fell from $2.38/lb in
the first half of 2014 to $2.25/lb in the same period in 2015
reflecting higher grades and lower input costs.
Production
Copper production at Michilla was 15,600 tonnes during the first
six months of 2015, 32.8% lower than in the same period last year
primarily as a result of significantly lower throughput as the mine
comes towards its date of closure, partly offset by higher grades
and increased production from secondary leaching.
Costs
Cash costs for the first half of 2015 were $2.25/lb compared
with $2.38/lb in the first half of 2014. This decrease was
primarily due to higher grades and lower input costs, partly offset
by lower production.
Closure
As previously announced, the decision has been made to close the
mine at the end of 2015.
GROWTH PROJECTS AND OPPORTUNITIES
The Group seeks growth in Chile and abroad through the
development of projects and other growth opportunities with a focus
on value. The Group's primary focus is on brownfield development to
ensure that potential production from the Los Pelambres and
Centinela district's is maximised through debottlenecking and
incremental expansions. The Group also has a portfolio of
longer-term growth options which are currently being evaluated as
part of several pre-feasibility and feasibility studies. Given the
early-stage nature of some of these projects, their potential and
timing are inherently uncertain, therefore the following outline is
only intended to provide a high-level indication of potential
opportunities.
The Group's exploration and evaluation expenditure in the first
six months of 2015 was $56.1 million in comparison to expenditure
in the same period last year of $93.4 million with reduced
evaluation expenditure at Twin Metals and lower exploration
expenditure both in Chile and internationally, where several joint
ventures have been terminated.
Projects under construction
Antucoya
Antucoya is an oxide deposit located approximately 45km east of
Michilla in Chile's Antofagasta Region. The Group has a 70%
economic interest in the project.
The project is now in commissioning, however, production has
been delayed by unexpected levels of dust in the crusher circuits
and issues relating to the tripper in the tertiary crushers and, as
a result, crushers have been operating at less than full capacity
during the commissioning phase. Rectification work is underway to
improve the performance of the tripper and control the dust
emissions to allow the crushers to operate at full capacity and to
reach full production of 85,000 tonnes per year of copper
cathodes.
By the end of June, approximately 725,000 million tonnes of
crushed material were stacked on the heap, however as a result of
these delays, production for the year is now expected to be 10,000
tonnes, reduced from 40,000 tonnes. Cash costs are expected to be
approximately $1.80/lb for the first five years of full production.
The mine plan includes proved and probable ore reserves of 615.0
million tonnes of 0.35% copper (using a cut-off grade of 0.16%)
over the 20-year mine life.
Total construction costs, pre-financing, for the project are
within the budget of $1.9 billion, of which approximately $1.8
billion has been incurred up to 30 June 2015.
Molybdenum Plant
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During the first half of the year, the feasibility study on the
construction of a separate molybdenum plant at Centinela has been
completed and the permitting process is now underway. The plant is
expected to come into production in the first quarter of 2017
producing some 2,400 tonnes of molybdenum a year for the first five
years, before it increases once the second concentrator at
Centinela is completed to approximately 6,500 tonnes per year.
Encuentro Oxides
Construction of Encuentro Oxides is underway and will provide
feed for Centinela's cathode plant. It is expected to produce
approximately 50,000 tonnes of copper cathode per year over an
eight-year period and allow the existing cathode plant to maintain
its annual output at approximately 100,000 tonnes for the remainder
of the mine life. Importantly the Encuentro Oxides project also
acts as a funded pre-strip of the sulphide deposit that lies below
that will be processed at Centinela's second concentrator, when it
is built.
The main capital expenditure items of the project include the
open pit mine, a crushing circuit, heap leach facilities and a
pipeline to take the copper-rich solution to the existing Centinela
SX-EW plant for processing. Additionally, a run-of-mine ("ROM")
heap will be developed later for lower-grade copper ore.
The project is on time and on budget, with pre-stripping now
well advanced and first production expected in late 2016.
Total capital costs for the project are expected to be $636
million, of which $148.8 million has been incurred up to 30 June
2015.
Brownfield growth projects
The Group recognises the importance of optimising production
from existing operations and, as such, is focused on improving
efficiency through debottlenecking and incremental plant expansions
of its existing mines. Brownfield expansions offer lower-risk,
lower-capital intensive operational performance and the Group has
three main brownfield projects at its existing operations.
Centinela incremental expansion to 105,000tpd
During the first half of the year, work continued on the
optimisation of Centinela concentrator plant to increase the level
of throughput to 105,000 tonnes per day. This project, which
includes the installation of additional tailings thickeners,
crushing equipment and new flotation cells, was expected to be
completed in late 2015 however the unexpected heavy rains in the
Atacama desert in March 2015 have delayed the completion of the
project by two months and the ramp-up to 105,000 tonnes a day is
now expected to commence in early 2016.
The total capital expenditure required for this project is
approximately $520 million, of which $412.9 million has been spent
as at 30 June 2015.
Centinela Second Concentrator
During the first half of the year, the Environmental Impact
Assessment ("EIA") on the Centinela Second Concentrator was
submitted to the relevant authorities. The second concentrator is
expected to have a daily ore throughput of approximately 90,000
tonnes, with annual copper, gold and molybdenum production of
140,000 tonnes, 150,000 ounces and 3,000 tonnes respectively.
Production could commence in 2019 and the pre-feasibility capital
development costs estimated at $2.7 billion have not changed. The
project is currently undergoing internal review before moving to
feasibility study stage in the second half of 2015.
Following the completion of the second concentrator in 2019,
there is further scope to increase the plant capacity by over 60%
and metal production by a further 60,000 tonnes of copper, 20,000
ounces of gold and 3,000 tonnes of molybdenum. The Centinela Mining
District remains a key focus area for the Group with over 8 billion
tonnes of resources giving significant optionality as to how the
district is developed in the future.
Los Pelambres Incremental Expansion
The feasibility study on the incremental brownfield expansion
which would increase Los Pelambres' daily plant throughput from the
current 175,000 tonnes per day to 205,000 tonnes per day,
representing a 15% increase, continued in the first half of
2015.
Data collection is underway for the Environmental Impact
Assessment ("EIA") which is required by the Chilean authorities as
part of the development if this project and the EIA is expected to
be submitted during 2016. The feasibility study will be finalised
upon approval of the EIA, as the outcome of the EIA may impact the
content of the feasibility study.
The brownfield expansion is necessary to provide additional
grinding capacity without which the mine would see a drop in
throughput levels as the mine plan moves into a harder ore phase
towards the end of the decade. The capacity of the expansion is
constrained by the increased proportion of harder ore in the mill
feed, which reduces the rate of throughput, and the maximum
capacity of the conveyor that transports ore from the pit to the
concentrator plant. Average copper production will increase by
90-95,000 tonnes, with a net increase in average production of
approximately 40-45,000 tonnes of copper per year, over the
production that would have been achieved if there had been no
increase in the hardness of the ore.
Following the agreement earlier in the year to install a
desalination plant as part of the expansion, the current estimate
of the capital cost of the project is $1.6 billion.
Longer-term growth projects
Los Pelambres
Los Pelambres remains a world-class deposit with a resource base
more than three times that of the current mine plan. A full
expansion could see a considerable increase in the current
throughput capacity, however, the Group's current focus remains on
the nearer-term, incremental expansion.
An expansion of this scale and complexity will take time to
progress requiring extensive permitting and the support of the
local communities. Currently, no significant evaluation work is
planned.
United States - Twin Metals
Twin Metals Minnesota LLC ("Twin Metals") is a copper, nickel
and platinum group metals ("PGM") underground-mining project which
holds the Maturi, Maturi Southwest, Birch Lake and Spruce Road
copper-nickel PGM deposits in Minnesota, USA.
Optimisations of the pre-feasibility study, which was completed
in June 2014, are being evaluated following the Group's acquisition
of Duluth Metals Limited in January 2015 and the permitting process
is advancing. It is expected that the updated pre-feasibility study
will be approved during the course of 2016 and the permitting
application will be submitted to the authorities in 2017. The
project has significant reserves of copper and nickel with a long
mine life, and is a world-class deposit in terms of size. During
the first half of 2015 a total of $13.5 million (2014 half year
$20.8 million) of expenditure was incurred on the project.
Other exploration and evaluation activities
The Group has a wide range of early-stage exploration activities
in areas beyond the existing core locations of the Centinela and
Los Pelambres mining districts, both through its in-house
exploration team and through partnerships with third parties, in
order to build a portfolio of longer-term opportunities across
Chile and the rest of the world.
Given the downturn in the copper price in 2014 and the first
half of this year, the Group continues to identify areas where it
can capture cost savings. As a result, the Group has reduced its
exploration and evaluation expenditure in 2015 from $93.4 million
in the first half of 2014 to $56.1 million.
Chile
The Group has prioritised its exploration activities in Chile to
identify prospective targets on the main copper porphyry belts in
the northern and central regions and will advance several projects
during the second half of 2015.
The total expenditure on exploration and evaluation activities
in Chile during the first half of 2015 was $35.8 million (2014 half
year - $61.5 million).
International
The Group has a portfolio of early-stage exploration interests
held through a number of strategic alliances, joint ventures and
earn-in agreements with companies focused on exploration in their
respective regions. The Group's approach is to partner with
experienced junior exploration companies, funding their exploration
programmes and benefiting from their local expertise and
knowledge.
During the first half of the year several joint ventures were
terminated and as at 30 June 2015, the Group has over 18 earn-in
agreements and strategic alliances across Africa, Australia,
Europe, and the Americas.
International exploration expenditure during the first half of
the year was $6.8 million (2014 half year - $11.1 million).
Energy Opportunities
Over the last few years the Group has acquired a series of
interests in energy generators and projects as part of its strategy
to support the power supply requirements of the mining operations.
The strategy has a particular focus on renewable energy generation,
supporting the Group's broader aim of increasing the sustainability
of its operations.
El Arrayán
The Group has a 30% interest in Parque Eolico El Arrayán SpA
("El Arrayán"), approximately 400 km north of Santiago which in
June 2014 commissioned the largest wind farm in Chile and now
supplies approximately 20% (40MW) of Los Pelambres' energy
requirements under a 20-year supply contract.
Inversiones Hornitos
The Antofagasta Railway Company ("FCAB") owns a 40% interest in
Inversiones Hornitos SA ("Inversiones Hornitos"), which operates
the 165MW Hornitos thermoelectric power plant in Mejillones, in
Chile's Antofagasta Region. Inversiones Hornitos supplies Centinela
under long-term power purchase agreements ("PPAs").
Alto Maipo
The Group holds a 40% interest in the 531MW Alto Maipo
run-of-river hydroelectric project located in the upper section of
the Maipo river, approximately 50km to the southeast of
Santiago.
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As part of the transaction, the Group signed two 20-year PPAs
that will secure the provision of up to 160MW to Los Pelambres. The
first PPA started in January 2015 and the second will start at the
end of 2018 on completion of the Alto Maipo project.
Total capital costs for the project are expected to be $2.1
billion, of which approximately $250 million has been incurred by
the Group up to 30 June 2015.
Solar Energy
Last year Los Pelambres signed long-term PPAs with two solar
power providers for a total of 50MW of power, approximately 25% of
its total energy requirement. Power has been provided to Los
Pelambres under the first of these PPAs since June 2015 and the
second will start in the second half of 2016. These PPAs provide
secure renewable energy supply to Los Pelambres for a 20-year
period.
TRANSPORT DIVISION
Total transport volumes in the first half of 2015 were 3.4
million tonnes compared with 3.5 million tonnes in the first half
of 2014, comprising 2.8 million tonnes of rail volumes (2014 half
year - 2.9 million tonnes) and 0.6 million tonnes of road volumes
(2014 half year - 0.6 million tonnes).
Revenue decreased by 9.0% to $84.1 million, following unexpected
heavy rains in the Atacama region which damaged the tracks the
railway and stopped almost all operations for 15 days while repair
work was carried out. Consequently, operating profit decreased by
36.5% to $20.2 million.
WATER DIVISION
As mentioned above, the Group sold the water division on 2 June
2015.
FINANCIAL REVIEW FOR THE SIX MONTHS ENDED 30 JUNE 2015
Results (unaudited)
Six months Six months Movement Movement
ended ended
30.06.2015 30.06.2014 $m %
$m $m
Revenue 1,785.9 2,601.8 (815.9) (31.4)
-------------------------------------- ----------- ----------- --------- ---------
EBITDA 561.6 1,093.5 (531.9) (48.6)
-------------------------------------- ----------- ----------- --------- ---------
Depreciation, amortisation
and disposals (253.0) (241.6) 11.4 4.7
-------------------------------------- ----------- ----------- --------- ---------
Net finance expense (11.1) (23.6) (12.5) (53.0)
-------------------------------------- ----------- ----------- --------- ---------
Profit before tax 297.3 820.8 (523.5) (63.8)
-------------------------------------- ----------- ----------- --------- ---------
Income tax expense (117.8) (272.6) (154.8) (56.8)
-------------------------------------- ----------- ----------- --------- ---------
Profit from continuing operations 179.5 548.2 (368.7) 67.3
-------------------------------------- ----------- ----------- --------- ---------
Profit from discontinued operations 619.5 23.4 596.1 2,547.4
-------------------------------------- ----------- ----------- --------- ---------
Earnings per share from continuing
operations (US cents) 8.8 31.2 (22.4) (71.8)
-------------------------------------- ----------- ----------- --------- ---------
Earnings per share from discontinued
operations (US cents) 62.8 2.4 60.4 2,516.7
-------------------------------------- ----------- ----------- --------- ---------
Total earnings per share from
continuing and discontinued
operations (US cents) 71.6 33.6 38.0 113.1
-------------------------------------- ----------- ----------- --------- ---------
Net cash 743.6 (1.6) 742.2 -
-------------------------------------- ----------- ----------- --------- ---------
A detailed segmental analysis of the components of the income
statement is contained in Note 3 to the preliminary results
announcement.
The following table reconciles between EBITDA in the first half
of 2014 and the first half of 2015:
$m
---------------------------------------- --------
EBITDA in the first half of 2014 1,093.5
---------------------------------------- --------
Revenue
---------------------------------------- --------
Decrease in copper volumes sold (297.5)
---------------------------------------- --------
Decrease in copper realised price (409.2)
---------------------------------------- --------
Increase in tolling charges (7.7)
---------------------------------------- --------
Decrease in revenue from copper
concentrate and cathodes (714.4)
---------------------------------------- --------
Decrease in gold revenues (40.5)
---------------------------------------- --------
Decrease in silver revenues (14.7)
---------------------------------------- --------
Increase in molybdenum revenues (38.0)
---------------------------------------- --------
Decrease in revenue from by-products (93.2)
---------------------------------------- --------
Decrease in transport division
revenue (8.3)
---------------------------------------- --------
Decrease in Group revenue (815.9)
---------------------------------------- --------
Operating costs
---------------------------------------- --------
Decrease in mining operational
costs 241.5
---------------------------------------- --------
Increase in charge for closure
provisions (4.8)
---------------------------------------- --------
Decrease in exploration and evaluation
costs 37.3
---------------------------------------- --------
Decrease in other mining division
costs and corporate costs 7.6
---------------------------------------- --------
Decrease in operating costs for
mining division 281.6
---------------------------------------- --------
Decrease in transport division
operating costs 2.4
---------------------------------------- --------
Decrease in EBITDA (531.9)
---------------------------------------- --------
EBITDA in the first half of 2015 561.6
---------------------------------------- --------
Revenue
Group revenue in the first half of 2015 was $1,785.9 million,
31.4% below the $2,601.8 million achieved in the first half of
2014. The decrease of $815.9 million mainly reflected a decrease in
the realised copper price and lower copper sales volumes, as well
as lower by-product revenues.
Revenue from the mining division
Revenue from copper concentrate and copper cathodes
Revenue from copper concentrate and copper cathode sales
decreased by $714.4 million, or 32.4%, to $1,498.8 million,
compared with $2,204.1 million in first six months of 2014. The
decrease reflected the impact of lower sales volumes and lower
realised prices and increased tolling charges.
(i) Copper volumes
Copper sales volumes decrease from 343,400 tonnes in the first
half of 2014 to 290,100 tonnes in this period. The decrease in
sales volumes accounted for a decrease of $297.5 million in revenue
from copper concentrate and cathode sales.
(ii) Realised copper prices
The Group's average realised copper price decreased to $2.54 per
pound in first six months of 2015 (first six month of 2014 - $3.08
per pound). The level of decrease was higher than the reduction in
the average LME copper price, which decreased to $2.69 per pound
from $3.14 in 2013, due to a higher level of negative provisional
pricing adjustments in the current period compared with the prior
year. The decrease in average realised prices led to a $409.2
million reduction in revenue from copper concentrate and cathode
sales.
Realised copper prices are determined by comparing revenue
(gross of tolling charges for concentrate sales) with sales volumes
in the period. Realised copper prices differ from market prices
mainly because, in line with industry practice, concentrate and
cathode sales agreements generally provide for provisional pricing
at the time of shipment with final pricing based on the average
market price for future periods (normally about 30 days after
delivery to the customer in the case of cathode sales and up to 150
days after delivery to the customer in the case of concentrate
sales). Realised copper prices also reflect the impact of realised
gain or losses of commodity derivative instruments hedge accounted
for in accordance with IAS 39 "Financial Instruments: Recognition
and Measurements".
Provisional pricing adjustments decreased initially invoiced
sales (before adjusting for tolling charges) by $109.2 million in
first six months of 2015, compared with a decrease of $57.4 million
in the first six months of 2014. The negative adjustment in the
current period reflected the decrease in the copper price in first
six months of 2015 and negative period-end mark to market
adjustment reflecting the decrease in the price immediately prior
to the period-end. Further details of provisional pricing
adjustments are given in Note 4 to the half yearly financial
report.
In first six months of 2015 revenue also includes a loss of $0.1
million (first six months of 2014 - gain of $8.2 million), mainly
relating to commodity derivatives which matured during the year.
Further details of hedging activity in the period are given in Note
4(b) to the half yearly financial report.
(iii) Tolling charges
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Tolling charges for copper concentrate increased by $7.7 million
to US$133.0 million in the first six months of 2015 from $125.3
million in the first six months of 2014. This reflected increased
tolling charges at Los Pelambres and Centinela Concentrates
(previously Esperanza), mainly due to an increase in average
tolling charges during the period.
Tolling charges are deducted from concentrate sales in reporting
revenue and hence the increase in these charges has had a negative
impact on revenue.
Revenue from molybdenum, gold and other by-products
Revenue from by-products at Los Pelambres and Centinela
Concentrates relate mainly to molybdenum and gold, and a lesser
extent silver. Revenue from by-products decreased by $93.3 million
or 30.6% to $212.0 million in the first half of 2015, compared with
$305.3 million in the first half of 2014.
Revenue from gold in concentrate (net of tolling charges) was
$129.1 million (first half of 2014 - $169.6 million), a decrease of
$40.5 million, which mainly reflected a decrease in volumes as well
as realised price. The realised gold price was $1,222.1 per ounce
in the first half of 2015 compared with $1,355.3 per ounce in the
first half of 2014, with the decrease largely reflecting the
general reduction in average market prices. Gold sales volumes
decreased from 125,200 ounces in the first half of 2014 to 106,000
ounces in this period, mainly due to the lower gold grades at
Pelambres.
Revenue from molybdenum (net of roasting charges) was $59.7
million (first half of 2014 - $97.7 million), a decrease of $38.0
million. The decrease was mainly due to a lower realised price of
$7.0 per pound (first half of 2014 - $14.8 per pound) partly offset
by increased sales volumes of 4,400 tonnes (first half of 2014 -
3,200 tonnes).
Revenue from silver decreased by $14.8 million to $23.2 million
in the first six month of 2015 (first six months of 2014 - $38.0
million). The decrease was due to lower sales volumes of 1.4
million ounces (first half of 2014 - 2.0 million ounces) as well as
decreased realised silver price of $16.5 per ounce (first half of
2014 - $19.8 per ounce).
Revenue from the transport division
Revenue from the transport division (FCAB) decreased by $8.3
million or 9.0% to $84.1 million. This reflected a decrease in
tonnages transported and the impact of the weaker Chilean peso.
Operating costs (excluding depreciation, amortisation and
disposals)
Operating costs (excluding depreciation and amortisation)
amounted to $1,224.3 million (first half of 2014 - $1,508.3
million), a decrease of $284.0 million. This was mainly due to
lower mining operational costs, reduced exploration, evaluation and
corporate costs, and lower sales volumes.
Operating costs (excluding depreciation and amortisation) at the
mining division
Operating costs at the mining division decreased by $281.6
million to $1,174.1 million in the first six months of 2015, a
decrease of 19.3%. Of this decrease, $241.5 million is attributable
to lower mining operational costs. As explained above, copper sales
volumes decrease from 343,400 tonnes in the first half of 2014 to
290,100 tonnes in this period.
In addition, weighted average unit cash costs for the Group
excluding by-product credits (which are reported as part of
revenue) and tolling charges for concentrates (which are deducted
from revenue) decreased from $1.69/lb in first half of 2014 to
$1.66/lb in this period.
Exploration and evaluation costs decreased by $37.3 million to
$56.1 million (first half of 2014 - $93.4 million). This mainly
reflected decreased exploration activity at the Centinela district
in Chile and reduced expenditure at Twin Metals.
The income statement includes a charge for mine closure
rehabilitation of $9.0 million (first half of 2014 - charge of $4.2
million). This mainly reflects higher costs at Michilla and to a
lesser extent at Los Pelambres and Centinela in the period.
Operating costs (excluding depreciation, amortisation and
disposals) at the transport division
Operating costs at the transport division decreased by $2.4
million to $50.2 million.
EBITDA and operating profit from subsidiaries and joint
ventures
EBITDA
EBITDA (earnings before interest, tax, depreciation, and
amortisation) from subsidiaries and joint ventures decreased by
$531.9 million or 48.6% to $561.6 million in the first six months
of 2015 (first six months of 2014 - $1,093.5 million).
EBITDA at the mining division decreased by 49.9% from $1,053.7
million in the first half of 2014 to $527.7 million in this period.
As explained above, this was mainly due to the decrease in the
realised copper price and copper volumes, partly offset by the
lower unit cash cost and lower exploration and evaluation
expenses.
EBITDA at the transport division decreased by $5.9 million to
$33.9 million in the first half of 2015, mainly reflecting the
decreased revenue as explained above and partly offset by lower
operating costs.
Depreciation, amortisation and disposals
The depreciation, amortisation and disposals charge was slightly
higher at $253.0 million (first half of 2014 - $241.6 million),
with increased depreciation at Centinela partly offset by reduced
depreciation at Michilla.
Operating profit from subsidiaries
As a result of the above factors, operating profit from
subsidiaries decreased by 63.5% to $308.4 million.
Share of results from associates and joint ventures
The Group's share of results from its associates and joint
ventures was a loss of $0.2 million (first half of 2014 - loss of
$7.5 million). This mainly reflects lower expenditure in respect of
the Energia Andina and Tethyan Copper joint ventures.
Net finance expense
Net finance expense in the first half of 2015 was $11.1 million,
compared with a net finance expense of $23.6 million in the first
half of 2014.
Six months Six months
ended ended
30.06.15 30.06.14
$'m $'m
--------------------- ----------- -----------
Investment income 8.8 8.3
--------------------- ----------- -----------
Interest expense (15.7) (27.9)
--------------------- ----------- -----------
Other finance items (4.2) (4.0)
--------------------- ----------- -----------
Net finance expense (11.1) (23.6)
--------------------- ----------- -----------
Interest income increased from $8.3 million in first six months
of 2014 to $8.8 million in first six months of 2015.
Interest expense decreased from $27.9 million in the first half
of 2014 to $15.7 million in the first half of 2015, mainly due to a
decrease of interest expense at Centinela due to a one-off interest
expense in 2014 related to the renegotiation of the senior debt as
well as lower interest expense at Los Pelambres.
Other finance items comprised a loss of $4.2 million (first half
of 2014 - loss of $4.0 million). A gain of $0.1 million (first half
of 2014 - loss of $3.3 million) has been recognised in respect of
the time value element of changes in the fair value of commodity
derivative options, which is excluded from the designated hedging
relationship, and is therefore recognised directly in profit or
loss. Foreign exchange gains included in finance items were $0.5
million in first half of 2015, compared with a gain of $6.7 million
in first half of 2014. An expense of $4.8 million (first half of
2014 - $7.6 million) has been recognised in relation to the
unwinding of the discount on provisions.
Profit before tax
As a result of the factors set out above, profit before tax
decreased by $523.5 million or 63.8% to $297.3 million in the first
half of 2015 compared with $820.8 million in the previous
period.
Income tax expense
The tax charge in the first half of 2015 was $117.8 million
(first half of 2014 - $272.6 million) and the effective tax rate
was 39.6% (first half of 2014 - 33.2%).
Six months Six months
ended Effective ended Effective
30.06.2014 tax 30.06.2014 tax
rate rate
$m % $m %
----------------------------------- ----------- ---------- ----------- ----------
Profit before tax from continuing
operations 297.3 820.8
----------------------------------- ----------- ---------- ----------- ----------
Taxes (Current and deferred)
----------------------------------- ----------- ---------- ----------- ----------
Corporate tax (79.4) 26.7 (180.3) 22.0
----------------------------------- ----------- ---------- ----------- ----------
Royalty (23.3) 7.8 (43.4) 5.3
----------------------------------- ----------- ---------- ----------- ----------
Withholding tax (14.8) 5.0 (48.8) 5.9
----------------------------------- ----------- ---------- ----------- ----------
Exchange rate (0.3) 0.1 (0.1) -
----------------------------------- ----------- ---------- ----------- ----------
Total tax charge (117.8) 39.6 (272.6) 33.2
----------------------------------- ----------- ---------- ----------- ----------
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The effective rate of corporate tax was 26.7% compared to the
statutory tax rate of 22.5%. The difference was principally due to
deferred tax charges which arise as the rate of Chilean corporate
tax will increase in future years, and the effect of items not
deductible for corporate tax (principally exploration and
evaluation expenditure outside of Chile). In addition, the overall
effective tax rate reflects the Chilean mining royalty charge of
$23.3 million and a withholding tax charge of $14.8 million. In the
first half of 2014 the total charge was $272.6 million, with an
overall effective tax rate of 33.2% compared with the statutory
rate of corporate tax of 20%. The effective rate of corporate tax
was 22.0% compared to the statutory rate of 20.0%, principally due
to the impact of items not deductible for corporate tax. In
addition, the overall effective tax rate in the first half of 2014
reflected a Chilean mining royalty charge of $43.4 million and a
withholding tax charge of $48.8 million. Further details are given
in Note 7 of the half yearly financial report.
Profit from discontinued operations
On 2 June 2015 the Group completed the disposal of the water
division and the resulting profit of $619.5 million has been
reflected as within profit from discontinued operations. The water
division's results have been restated for the comparative periods
and therefore a profit of $23.4 million has been reflected for the
first half of 2014. Further details are given in note 8 of the half
yearly financial report.
Non-controlling interests
Profit for the first half of the year attributable to
non-controlling interests was $93.2 million, compared with $240.8
million in the first half of 2014, reflecting the lower profit
attributable to the non-controlling interests as a consequence of
the decrease in the earnings of the mining operations analysed
above.
Earnings per share
Six months Six months
ended ended
30.06.15 30.06.14
US cents US cents
-------------------------------------- ----------- -----------
Earnings per share from continuing
operations 8.8 31.2
--------------------------------------- ----------- -----------
Earnings per share from discontinued
operations 62.8 2.4
--------------------------------------- ----------- -----------
Total continuing and discontinued
operations 71.6 33.6
--------------------------------------- ----------- -----------
Earnings per share calculations are based on 985,856,695
ordinary shares. As a result of the factors set out above, profit
in the first half of 2015 attributable to equity shareholders of
the Company was $705.8 million compared with $330.8 million in the
first half of 2014. Accordingly, earnings per share from continuing
and discontinued operations were 71.6 cents in the first half of
2015 compared with 33.6 cents in first half of 2014, an increase of
113.1%.
Dividends
Dividends per share proposed in relation to the period are as
follows:
Six months Six months
ended ended
30.06.15 30.06.14
US cents US cents
------------------------------------------ ----------- -----------
Ordinary
------------------------------------------ ----------- -----------
Interim 3.1 11.7
------------------------------------------- ----------- -----------
Final - -
------------------------------------------ ----------- -----------
Total dividends to ordinary shareholders 3.1 11.7
------------------------------------------- ----------- -----------
The Board determines the appropriate dividend each year based on
consideration of the Group's cash balance, the level of free cash
flow and earnings generated during the year and significant known
or expected funding commitments. It is expected that the total
annual dividend for each year would represent a payout ratio based
on net earnings for that year of at least 35%.
The Board has recommended a final dividend for the first half of
2015 of 3.1 cents per ordinary share, which amounts to $30.6
million and will be paid on 8 October 2015 to shareholders on the
Register at the close of business on 18 September 2015.
Capital expenditure
Capital expenditure decreased by $168.0 million from $767.3
million in the first half of 2014 to $599.8 million in the period.
This was mainly due to decreased construction costs at Antucoya
which is now in commissioning, partly offset by increased
expenditure in respect of the Encuentro Oxides project.
Derivatives financial instruments
The Group periodically uses derivative financial instruments to
reduce exposure to commodity price movements. At 30 June 2015, the
Group had commodity swaps for 2,400 tonnes of copper production
covering a total period up to 31 January 2016.
The Group also periodically uses interest rate swaps to swap the
floating rate interest for fixed rate interest. At 30 June 2015 the
Group had entered into contracts at Centinela for a maximum
notional amount of $123 million at a weighted average fixed rate of
3.372 % fully maturing in August 2018. The Group had also entered
into contracts in relation to a financing loan at Ferrocarril
Antofagasta Bolivia for a maximum notional amount of $150 million
at weighted average fixed rate of 1.634% fully maturing in August
2019.
Cash flows
The key features of the Group cash flow statement are summarised
in the following table.
Six months Six months
ended ended
30.06.15 30.06.14
$m $m
--------------------------------------------- ----------- -----------
Cash flows from continuing and discontinued
operations 807.7 1,170.0
---------------------------------------------- ----------- -----------
Income tax paid (191.2) (389.0)
---------------------------------------------- ----------- -----------
Net interest paid (10.6) (17.2)
---------------------------------------------- ----------- -----------
Disposal of subsidiary 947.3 -
--------------------------------------------- ----------- -----------
Capital contribution and loan to associates (39.4) (84.9)
---------------------------------------------- ----------- -----------
Capital increase from non-controlling
interest - 3.8
---------------------------------------------- ----------- -----------
Change in ownership interest in subsidiary - (30.9)
---------------------------------------------- ----------- -----------
Acquisition of available-for-sale
investments - (1.5)
---------------------------------------------- ----------- -----------
Purchases of property, plant and equipment (662.3) (788.5)
---------------------------------------------- ----------- -----------
Acquisition of mining properties (78.0) -
--------------------------------------------- ----------- -----------
Proceeds from sale of property, plant
and equipment - 0.6
---------------------------------------------- ----------- -----------
Dividends paid to equity holders of
the Company (96.6) (848.8)
---------------------------------------------- ----------- -----------
Dividends paid to non-controlling
interests - (192.2)
---------------------------------------------- ----------- -----------
Dividends from associate 6.6 20.0
---------------------------------------------- ----------- -----------
Other items - 2.0
---------------------------------------------- ----------- -----------
Changes in net cash relating to cash
flows 683.5 (1,156.6)
---------------------------------------------- ----------- -----------
Exchange and other non-cash movements 61.7 (7.5)
---------------------------------------------- ----------- -----------
Movement in net cash in the period 745.2 (1,166.2)
---------------------------------------------- ----------- -----------
Net cash at the beginning of the year (1.6) 1,311.2
---------------------------------------------- ----------- -----------
Net cash at the end of the year 743.6 145.0
---------------------------------------------- ----------- -----------
Cash flows from continuing and discontinued operations were
$807.7 million in the first half of 2015 compared with $1,170.0
million in the first half of 2014. This reflected EBITDA for the
period of $561.6 million (first half of 2014 - $1,093.5 million)
adjusted for a net working capital decrease of $240.8 million
(first half of 2014 - decrease of $41.7 million).
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Cash tax payments in the first half of 2015 year were $191.2
million (first half of 2014 - $389.0 million), comprising corporate
tax of $165.6 million (first half of 2014 - $99.0 million), mining
tax of $11.7 million (first half of 2014 - $59.0 million) and
withholding tax of $12.9 million (first half of 2014 - $231.1
million). These amounts differ from the current tax charge in the
consolidated income statement of $117.8 million (first half of 2014
- $272.6 million) mainly because cash tax payments for corporate
tax and the mining tax partly comprise the settlement of
outstanding balances in respect of the previous year's tax charge
and payments on account for the current year based on the prior
year profit levels.
Disposal of subsidiary of $947.3 million relates to the disposal
Aguas de Antofagasta S.A., which carried out of the group's water
operations. Further details are given in Note 8 of the half yearly
financial report.
Contributions and loans to associates and joint ventures of
$39.4 million mainly relate to the Group's share of the funding of
the development of the Alto Maipo project.
Cash disbursements relating to capital expenditure in the first
half of 2015 were $662.3 million compared with $788.5 million in
the first half of 2014. This included expenditure of $175.4 million
at Antucoya (first half of 2014 - $373.5 million), $233.6 million
relating to Centinela (first half of 2014 - $223.8 million) and
$101.8 million relating to Los Pelambres (first half of 2014 -
$109.5 million).
Dividends paid to ordinary shareholders of the Company in the
first half of 2015 were $96.6 million (first half of 2014 - $848.8
million), which related to the payment of the final dividend
declared in respect of the previous year.
Dividends paid by subsidiaries to non-controlling shareholders
were nil (first half of 2014 - $192.2 million).
Financial position
At 30.06.15 At 30.06.14
$m $m
------------------------- ------------ ------------
Cash, cash equivalents
and liquid investments 3,220.0 2,264.4
--------------------------- ------------ ------------
Total borrowings (2,476.4) (2,119.4)
--------------------------- ------------ ------------
Net cash at the end
of the period 743.6 145.0
--------------------------- ------------ ------------
At 30 June 2015 the Group had combined cash, cash equivalents
and liquid investments of $3,220.0 million (30 June 2014 - $2,264.4
million). Excluding the non-controlling interest share in each
partly-owned operation, the Group's attributable share of cash,
cash equivalents and liquid investments was $2,785.0 million (30
June 2014 - $1,864.2 million).
New borrowings in the first half of 2015 were $357.3 million
(first half of 2014 - $1,167.9 million), including new short-term
borrowings at Los Pelambres of $200.0 million and new long-term
borrowings at Antucoya of $85.3 million. Repayments of borrowings
and finance leasing obligations in the first half of 2015 were
$188.6 million, relating mainly to repayments at Los Pelambres of
$177.4 million.
Total Group borrowings at 30 June 2015 were $2,479.4 million (at
30 June 2014 - $2,119.4 million). Of this, $1,754.8 million (at 30
June 2014 - $1,460.7 million) is proportionally attributable to the
Group after excluding the non-controlling interest shareholdings in
partly-owned operations.
Foreign currency exchange differences
The principal subsidiaries with a functional currency other than
the US dollar are Chilean peso denominated, of which the most
significant was Aguas de Antofagasta S.A. ("ADASA"), which was
disposed of in June 2015. For the six months ended 30 June 2015 the
currency translation loss recognised in net equity was $3.9 million
(first six months ended 30 June 2014 - loss of $8.5 million) and
reflect the effect between 1 January 2015 and the date of the
disposal of ADASA.
Going concern
The Group's business activities, together with those factors
likely to affect its future performance, are set out in the Review
of Operations. Details of the cash flows of the Group during the
period, along with its financial position at the period-end are set
out in this Financial Review. The half yearly financial report
includes details of the Group's cash, cash equivalent and liquid
investment balances in Note 18, and details of borrowings are set
out in Note 15.
In assessing the Group's going concern status the Directors have
taken into account the above factors, including the financial
position of the Group and in particular its significant balance of
cash, cash equivalents and liquid investments, the borrowing
facilities (including the undrawn committed facilities) in place
and their terms, the current copper price and market expectations
in the medium-term, the Group's expected operating cost profile and
the its capital expenditure and financing plans.
After making appropriate enquiries, the Directors consider that
it is appropriate to adopt the going concern basis of accounting in
preparing the half yearly financial report.
Principal risks and uncertainties
There are a number of potential risks and uncertainties which
could have a material impact on the Group's performance over the
remaining six months of the financial year and could cause actual
results to differ materially from expected and historical results.
The Directors do not consider that the principal risks and
uncertainties have changed since the publication of the annual
report for the year ended 31 December 2014. A detailed explanation
of the risks summarised below can be found in the Risk Management
section of that annual report which is available at
www.antofagasta.co.uk. Key headline risks relate to the
following:
-- Community relations
-- Strategic resources
-- Operational risks
-- Development projects
-- Political, legal and regulatory risks
-- Health and safety
-- Environmental management
-- Growth opportunities
-- Commodity prices
-- Foreign currency exchange
-- Identification of new mineral resources
-- Ore reserves and mineral resources estimates
-- Talent and labour relations
Cautionary statement about forward-looking statements
This half yearly financial report contains certain
forward-looking statements. All statements other than historical
facts are forward-looking statements. Examples of forward-looking
statements include those regarding the Group's strategy, plans,
objectives or future operating or financial performance; reserve
and resource estimates; commodity demand and trends in commodity
prices; growth opportunities; and any assumptions underlying or
relating to any of the foregoing. Words such as "intend", "aim",
"project", "anticipate", "estimate", "plan", "believe", "expect",
"may", "should", "will", "continue" and similar expressions
identify forward-looking statements.
Forward-looking statements involve known and unknown risks,
uncertainties, assumptions and other factors that are beyond the
Group's control. Given these risks, uncertainties and assumptions,
actual results could differ materially from any future results
expressed or implied by these forward-looking statements, which
speak only as at the date of this report. Important factors that
could cause actual results to differ from those in the
forward-looking statements include: global economic conditions;
demand, supply and prices for copper; long-term commodity price
assumptions, as they materially affect the timing and feasibility
of future projects and developments; trends in the copper mining
industry and conditions of the international copper markets; the
effect of currency exchange rates on commodity prices and operating
costs; the availability and costs associated with mining inputs and
labour; operating or technical difficulties in connection with
mining or development activities; employee relations; litigation;
and actions and activities of governmental authorities, including
changes in laws, regulations or taxation. Except as required by
applicable law, rule or regulation, the Group does not undertake
any obligation to publicly update or revise any forward-looking
statements, whether as a result of new information, future events
or otherwise.
Past performance cannot be relied on as a guide to future
performance.
Condensed Consolidated Income Statement
Six months Six months Year ended
ended ended 31 December
30 June 30 June 2014
2015 2014
(Unaudited) (Restated (Restated)
/Unaudited)
Notes $m $m $m
Group revenue 2,3 1,785.9 2,601.8 5,165.5
Total operating costs (1,477.3) (1,749.9) (3,587.3)
------------ -------------------------- -----------------------------
Operating profit from subsidiaries 2,3 308.6 851.9 1,578.2
Share of results from associates
and joint ventures 3 (0.2) (7.5) (4.1)
------------ -------------------------- -----------------------------
Total profit from operations,
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August 25, 2015 02:00 ET (06:00 GMT)
associates and joint ventures 2,3 308.4 844.4 1,574.1
Investment income 8.8 8.3 16.8
Interest expense (15.7) (27.9) (44.6)
Other finance items (4.2) (4.0) (36.4)
------------ -------------------------- -----------------------------
Net finance expense 6 (11.1) (23.6) (64.2)
------------ -------------------------- -----------------------------
Profit before tax 297.3 820.8 1,509.9
Income tax expense 7 (117.8) (272.6) (702.9)
------------ -------------------------- -----------------------------
Profit for the period from
continuing
operations 179.5 548.2 807.0
============ ========================== =============================
Discontinued operations
Profit for the period from
discontinued
operations 8 619.5 23.4 43.7
------------ -------------------------- -----------------------------
Profit for the period 799.0 571.6 850.7
============ ========================== =============================
Attributable to:
Non-controlling interests 93.2 240.8 390.9
Equity holders of the Company
(net earnings) 705.8 330.8 459.8
------------ -------------------------- -----------------------------
US cents US cents US cents
Basic earnings per share 9
From continuing operations 8.8 31.2 42.2
From discontinued operations 62.8 2.4 4.4
------------ -------------------------- -----------------------------
Total continuing and discontinued
operations 71.6 33.6 46.6
Condensed Consolidated Statement of Comprehensive Income
Six months Six months Year
ended
ended ended 31 December
30 June 30 June 2014
2015 2014
(Unaudited) (Unaudited)
Notes $m $m $m
Profit for the period 799.0 571.6 850.7
Items that may be were reclassified subsequently
to profit or loss:
Gains/(losses) in fair value of cash flow
hedges deferred in reserves 2.5 6.9 (0.2)
Gains/(losses) in fair value of cash flow
hedges of associates deferred in reserves 0.7 (26.2) (42.0)
Losses in fair value of available-for-sale
investments 13 (1.3) (2.9) (6.1)
Currency translation adjustment 8 (3.9) (8.5) (26.2)
Deferred tax effects arising on cash flow
hedges deferred in reserves (0.3) (1.5) 2.1
Losses/(gains) in fair value of cash flow
hedges transferred to the income statement 2.5 (4.7) (8.5)
Losses in fair value of available-for-sale
investments transferred to income statement - - 26.3
Deferred tax effects arising on amounts
transferred to the income statement (0.5) 0.9 1.8
------------ ------------ ------------
Total Items that may be were reclassified
subsequently to loss (0.3) (36.0) (52.8)
Items that will not be subsequently reclassified
to profit or loss:
Actuarial (losses)/gains on defined benefit
plans (5.7) 2.0 (17.4)
Tax on items that will not be subsequently
reclassified 0.9 (0.4) 4.2
------------ ------------ ------------
Total Items that will not be subsequently
reclassified to loss (4.8) (1.6) (13.2)
Total other comprehensive income (5.1) (34.4) (66.0)
Total comprehensive income for the period 793.9 537.2 784.7
============ ============ ============
Attributable to:
Non-controlling interests 93.8 233.6 370.1
Equity holders of the Company 700.1 303.6 414.6
------------ ------------ ------------
Condensed Consolidated Statement of Changes in Equity
For the six months ended 30
June 2015
Fair Non-
Share Share Hedging value Translation Actuarial Retained Net controlling
capital premium reserves reserves reserves reserves earnings equity interests Total
$m $m $m $m $m $m $m $m $m $m
Balance at 1
January 2015 89.8 199.2 (36.2) (10.7) (0.5) (20.2) 5,952.3 6,173.7 1,861.0 8,034.7
Total
comprehensive
income for the
period - - 0.8 (1.3) (3.9) (1.4) 705.9 700.1 93.8 793.9
Dividends - - - - - - (96.6) (96.6) (80.0) (176.6)
Balance at 30
June 2015 89.8 199.2 (35.4) (12.0) (4.4) (21.6) 6,561.6 6,777.2 1,874.8 8,652.0
=========== ================ ========= ========= ============ ========== ========= ======== ============ ============
For the six months ended
30 June 2014
Fair Non-
Share Share Hedging value Translation Actuarial Retained Net controlling
capital premium reserves reserves reserves reserves earnings equity interests Total
$m $m $m $m $m $m $m $m $m $m
Balance at 1
January 2014 89.8 199.2 (6.8) (30.9) 25.7 (10.4) 6,457.9 6,724.5 1,939.1 8,663.6
Total
comprehensive
income for the
period - - (17.4) (2.9) (8.5) 1.6 330.8 303.6 233.6 537.2
Change in
ownership
interest in
subsidiaries - - - - - - 1.5 1.5 (32.4) (30.9)
Capital increase
in
non-controlling
interest - - - - - - (2.7) (2.7) 2.7 -
Capital
contribution
from
non-controlling
interests - - - - - - - - 3.8 3.8
Dividends - - - - - - (848.8) (848.8) (192.2) (1,041.0)
Balance at 30
June 2014 89.8 199.2 (24.2) (33.8) 17.2 (8.8) 5,938.7 6,178.1 1,954.6 8,132.7
=========== ================ ========= ========= ============ ========== ========= ======== ============ ============
For the year ended 31 December
2014
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August 25, 2015 02:00 ET (06:00 GMT)
Fair Non-
Share Share Hedging value Translation Actuarial Retained Net controlling
capital premium reserves reserves reserves reserves earnings equity interests Total
$m $m $m $m $m $m $m $m $m $m
Balance at 1
January 2014 89.8 199.2 (6.8) (30.9) 25.7 (10.4) 6,457.9 6,724.5 1,939.1 8,663.6
Total comprehensive
income for the
year - - (29.4) 20.2 (26.2) (9.8) 459.8 414.6 370.1 784.7
Change in ownership
interest in
subsidiaries - - - - - - 1.5 1.5 (32.0) (30.5)
Loss of control
in subsidiaries - - - - - - - - (56.7) (56.7)
Capital increase
in non-controlling
interest - - - - - - (2.7) (2.7) 2.7 -
Capital contribution
from non-controlling
interests - - - - - - - - 50.0 50.0
Dividends - - - - - - (964.2) (964.2) (412.2) (1,376.4)
Balance at 31
December 2014 89.8 199.2 (36.2) (10.7) (0.5) (20.2) 5,952.3 6,173.7 1,861.0 8,034.7
========== ============ ========= ========= ============ ========== ========= ======== ============ ==========
Dividends
Dividends to ordinary shareholders Notes
of the Company
Per share US cents US cents US cents
Dividends per share proposed in
relation to the period 10
- ordinary dividend (interim) 3.1 11.7 11.7
- ordinary dividend (final) - - 9.8
3.1 11.7 21.5
========= ========================= ===============================
Dividends per share paid in the period
and deducted from net equity
- ordinary dividend (interim) - 11.7 11.7
- ordinary dividend (final) 9.8 86.1 86.1
9.8 97.8 97.8
========= ========================= ===============================
In aggregate $m $m $m
Dividends proposed in relation
to the period 10 30.6 115.4 212.0
Dividends paid in the period and
deducted from net equity 96.6 964.2 964.2
========= ========================= ===============================
Condensed Consolidated Balance Sheet
At 30.06.14 At 31.12.14
At 30.06.15 (Restated) (Restated)
Non-current assets Notes $m $m $m
Intangible assets 11 150.1 122.9 118.6
Property, plant and equipment 12 8,535.1 7,924.6 8,213.9
Investment property 2.2 2.7 2.6
Inventories 233.8 247.8 247.8
Investment in associates and in joint
ventures 161.4 129.0 198.1
Trade and other receivables 233.9 242.3 239.5
Available-for-sale investments 13 4.5 15.7 15.6
Deferred tax assets 144.6 87.2 104.6
9,465.6 8,772.2 9,140.7
------------ ------------ ------------
Current assets
Inventories 442.4 460.0 382.5
Trade and other receivables 511.6 915.2 810.3
Current tax assets 129.5 87.7 106.9
Derivative financial instruments 5 0.1 10.8 0.2
Liquid investments 18 1,366.8 1,426.8 1,529.1
Cash and cash equivalents 18 1,853.2 837.6 845.4
4,303.6 3,738.1 3,674.4
------------ ------------ ------------
Total assets 13,769.2 12,510.3 12,815.1
============ ============ ============
Current liabilities
Short-term borrowings 15 (465.8) (327.6) (284.5)
Derivative financial instruments 5 (2.9) (3.5) (7.5)
Trade and other payables (806.0) (807.1) (793.8)
Current tax liabilities (254.3) (33.2) (77.6)
(1,529.0) (1,171.4) (1,163.4)
------------ ------------ ------------
Non-current liabilities
Medium and long-term borrowings 15 (2,010.6) (1,791.8) (2,091.6)
Derivative financial instruments 5 (2.8) (4.9) (3.5)
Trade and other payables (3.2) (3.5) (4.8)
Post-employment benefit obligations (102.6) (84.5) (103.0)
Decommissioning & restoration and
other long term provisions (432.3) (508.3) (434.3)
Deferred tax liabilities (1,036.7) (813.2) (979.8)
(3,588.2) (3,206.2) (3,617.0)
------------ ------------ ------------
Total liabilities (5,117.2) (4,377.6) (4,780.4)
============ ============ ============
Net assets 8,652.0 8,132.7 8,034.7
Equity
Share capital 16 89.8 89.8 89.8
Share premium 16 199.2 199.2 199.2
Other reserves (73.4) (40.8) (67.6)
Retained earnings 6,561.6 5,929.9 5,952.3
Equity attributable to equity holders
of the Company 6,777.2 6,178.1 6,173.7
Non-controlling interests 1,874.8 1,954.6 1,861.0
Total equity 8,652.0 8,132.7 8,034.7
============ ============ ============
The interim financial information was approved by the Board of
Directors on 24 August 2015.
Condensed Consolidated Cash Flow Statement
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2015 2014 2014
Notes $m $m $m
Cash flows from continuing and discontinuing
operations 17 807.7 1,170.0 2,507.8
Interest paid (20.2) (25.0) (45.4)
Income tax paid (191.2) (389.0) (641.5)
Net cash from continuing and discontinued
activities 596.3 756.0 1,820.9
----------- ----------- -------------
Investing activities
Capital contributions and loans to
associates and joint ventures (39.4) (84.9) (125.2)
Dividends from associate 6.6 20.0 20.0
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August 25, 2015 02:00 ET (06:00 GMT)
Acquisition of available-for-sale
investments 13 - (1.5) (5.9)
Disposal of subsidiary 8 947.3 - -
Acquisition of mining properties (78.0) - -
Reclassification - - (7.6)
Proceeds from sale of property plant
and equipment - 0.6 1.7
Purchases of property, plant and equipment (662.3) (788.5) (1,646.3)
Net decrease in liquid investments 162.3 644.6 542.3
Interest received 9.6 7.8 16.5
Net cash used in investing activities 346.1 (201.9) (1,204.5)
----------- ----------- -------------
Financing activities
Dividends paid to equity holders of
the Company (96.6) (848.8) (964.2)
Dividends paid to preference shareholders
of the Company (0.1) (0.1) (0.2)
Dividends paid to non-controlling
interests - (192.2) (412.2)
Capital increase from non-controlling
interests - 3.8 50.0
Net proceeds from issue of new borrowings 16 357.3 1,167.9 1,583.4
Repayments of borrowings (182.9) (413.8) (570.9)
Repayments of obligations under finance
leases 16 (5.7) (6.5) (12.2)
Change in ownership interest in subsidiaries - (30.9) (30.9)
Net cash used in financing activities 72.0 (320.6) (357.2)
----------- ----------- -------------
Net increase in cash and cash equivalents 1,014.4 233.5 259.2
=========== =========== =============
Cash and cash equivalents at beginning
of the period 845.4 613.7 613.7
Net increase/(decrease) in cash and
cash equivalents 18 1,014.4 233.5 259.2
Effect of foreign exchange rate changes 18 (6.6) (9.6) (27.5)
Cash and cash equivalents at end of
the period 18 1,853.2 837.6 845.4
=========== =========== =============
Notes
1. General information and accounting policies
a) General information
These June 2015 interim condensed consolidated financial
statements ("the condensed financial statements") are for the six
months ended 30 June 2015. The condensed financial statements are
unaudited.
The information for the year ended 31 December 2014 does not
constitute statutory accounts as defined in section 434 of the
Companies Act 2006. A copy of the statutory accounts for that year
has been delivered to the Registrar of Companies. The auditor's
report on these accounts was not qualified, did not include a
reference to any matters to which the auditor drew attention by way
of emphasis without qualifying the report and did not contain
statements under section 498(2) (regarding adequacy of accounting
records and returns) or section 498(3) (regarding provision of
necessary information and explanations) of the Companies Act
2006.
The Group completed the sale of its Water Division, Aguas de
Antofagasta S.A. to Empresas Públicas de Medellín, on 2 June, 2015.
In these interim consolidated financial statements the results of
the Water Division for the current period relating to the five
months to May 2015 are shown in the income statement on the line
for "Profit for the period from discontinued operations". The
comparative results for the prior periods have accordingly been
restated in order to present the comparative figures on the "Profit
for the period from discontinued operations" line.
A reclassification between property, plant and equipment and
current inventories has been made in the prior period comparative
figures related to Ferrocarril Antofagasta Bolivia (FCAB). This has
resulted in an increase in current inventories and a corresponding
decrease in property, plant and equipment of $13.0 million as at 30
June 2014 and $13.2 million as at 31 December 2014.
A reclassification between current and long-term inventories has
been made in the prior period comparatives figures, to ensure that
the classification of inventory balances is fully in the line with
the detailed mine plans. This has resulted in a $72.0 million
increase in the long-term inventory balance as at 30 June 2014 from
$175.8 million to $247.8 million and a corresponding $72.0 million
decrease in the current inventory balances as at 30 June 2014 from
$519.0 million to $447.0 million.
During 2014 the Group merged Minera Esperanza and Minera El
Tesoro into a single entity - Minera Centinela. The production of
copper concentrate which was previously within Minera Esperanza is
now referred to as Centinela concentrates, and the production of
copper cathodes which was previously within Minera El Tesoro is
referred to as Centinela cathodes. In the comparatives for the six
months ended 30 June 2014 the results and balances for Esperanza
and El Tesoro have been combined into a single segment for
Centinela, consistent with the current year presentation.
b) Basis of preparation
The annual financial statements of Antofagasta plc for the year
ended 31 December 2014 were prepared in accordance with
International Financial Reporting Standards (IFRS) and with those
parts of the companies Act 2006 applicable to companies reporting
under IFRS. For these purposes, IFRS comprise the standards issued
by the International Accounting Standards Board ("IASB") and
Interpretations issued by the International Financial Reporting
Interpretations Committee (IFRIC) that have been endorsed by the
European Union ("EU"). The condensed set of financial statements
included in this half-yearly financial report has been prepared in
accordance with the accounting policies for the year ended 31
December 2014 and the International Accounting Standard (IAS) 34
Interim Financial Reporting and the requirements of the UK
Disclosure and Transparency Rules (DTR) of the Financial Conduct
Authority (FCA) in the United Kingdom as applicable to interim
financial reporting.
The condensed financial statements represent a "condensed set of
financial statements" as referred to in the DTR issued by the FCA.
Accordingly, they do not include all of the information required
for a full annual financial report and are to be read in
conjunction with the Group's financial statements for the year
ended 31 December 2014.
c) Going concern
Having reassessed the principal risks of the Group the Directors
considered it appropriate to adopt the going concern basis of
accounting in preparing the half-yearly financial report.
d) Accounting policies
The following International Financial Reporting Standards
(IFRS), amendments and interpretations are effective for the first
time in the current period.
Adoption of new accounting standards
Annual improvements 2011 - 2013 Cycle - improvements to four
IFRSs
IFRIC 21, Levies.
The application of these standards and interpretations effective
for the first time in the current period has had no significant
impact on the amounts reported in these condensed consolidated
financial statements.
Accounting standards issued but not yet effective applied
The following accounting standards, interpretations and
amendments have been issued by the IASB, but are not yet
effective:
New Standards Effective date (Subject
to EU endorsement)
-------------------------------------- -------------------------
IFRS 9, Financial instruments Annual periods beginning
on or after January 1,
2018
-------------------------------------- -------------------------
IFRS 14, Regulatory Deferral Accounts Annual periods beginning
on or after January 1,
2016
-------------------------------------- -------------------------
IFRS 15, Revenue from Contracts Annual periods beginning
with Customers on or after January 1,
2018
-------------------------------------- -------------------------
Amendments to IFRSs Effective date (Subject
to EU endorsement)
----------------------------------------- --------------------------
IAS 19,Defined Benefit Plans, Employee Annual periods beginning
Contributions (Amendments to IAS on or after February 1,
19) 2015
----------------------------------------- --------------------------
Annual improvements 2010 - 2012 Annual periods beginning
Cycle - improvements to six IFRSs on or after February 1,
2015
----------------------------------------- --------------------------
Accounting for Acquisitions of Interests Annual periods beginning
in Joint Operations (Amendments on or after January 1,
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to IFRS 11) 2016
----------------------------------------- --------------------------
Clarification of Acceptable Methods Annual periods beginning
of Depreciation and Amortisation on or after 1 January
(Amendments to IAS 16 and IAS 38) 2016
----------------------------------------- --------------------------
Agriculture: Bearer Plants (Amendments Annual periods beginning
to IAS 16 and IAS 41) on or after 1 January
2016
----------------------------------------- --------------------------
Equity Method in Separate Financial Annual periods beginning
Statements (Amendments to IAS 27) on or after January 1,
2016
----------------------------------------- --------------------------
Sale or Contribution of Assets between Annual periods beginning
an on or after January 1,
Investor and its Associate or Joint 2016
Venture, (Amendments to IFRS 10
and IAS 28)
----------------------------------------- --------------------------
Investment Entities: Applying the Annual periods beginning
Consolidation Exception (Amendments on or after January 1,
to IFRS 10,IFRS 12 and IAS 28) 2016
----------------------------------------- --------------------------
Disclosure Initiative Annual periods beginning
(Amendments to IAS 1) on or after January 1,
2016
----------------------------------------- --------------------------
Annual improvements 2012 - 2014 Annual periods beginning
Cycle - improvements to four IFRSs on or after July 1, 2016
----------------------------------------- --------------------------
The Group is continuing to evaluate the impact of adopting these
new standards and interpretations.
The Group is continuing to evaluate in detail the potential
impact of IFRS 15 Revenue from contracts with customers, but does
not currently expect this to have a material impact.
2. Total profit from operations, associates and joint ventures
Six months Six months
ended ended Year ended
30 June 30 June 31 December
2015 2014 2014
$m $m $m
Group revenue 1,785.9 2,601.8 5,165.5
Cost of sales (1,185.9) (1,379.8) (2,887.1)
Gross profit 600.0 1,222.0 2,278.4
Administrative and distribution
expenses (213.6) (248.9) (463.9)
Closure provision (9.0) (4.2) 7.2
Severance charges (7.7) (6.3) (18.1)
Exploration and evaluation costs (56.1) (93.4) (167.5)
Other operating income 6.3 7.7 21.1
Other operating expenses (11.3) (25.0) (79.0)
Operating results from subsidiaries 308.6 851.9 1,578.2
Share of income from associates
and joint ventures (0.2) (7.5) (4.1)
Total profit from operations,
associates and joint ventures 308.4 844.4 1,574.1
=========== =========== =============
3. Segmental analysis
The Group's reportable segments are as follows:
-- Los Pelambres
-- Centinela
-- Michilla
-- Antucoya
-- Exploration and evaluation
-- Railway and other transport services
-- Water concession
-- Corporate and other items
For management purposes, the Group is organised into three
business divisions based on their products - Mining, Railway and
other transport services and the Water concession. The mining
division is split further for management reporting purposes to show
results by mine and exploration activity. Los Pelambres, Centinela
and Michilla are all operating mines and Antucoya is a development
project. Los Pelambres produces primarily copper concentrate and
molybdenum as a by-product, Centinela produces primarily copper
concentrate containing gold as a by-product and copper cathodes.
Michilla produces copper cathodes. The transport division provides
rail cargo (based in Chile and Bolivia) and road cargo (based in
Chile) together with a number of ancillary services (based in
Chile). The water division produces and distributes potable water
to domestic customers and untreated water to industrial customers
in Chile's Antofagasta Region. The Exploration and evaluation
segment incurs exploration and evaluation expenses. "Corporate and
other items" also comprise costs incurred by the Company,
Antofagasta Minerals S.A., the Group's mining corporate centre and
other entities, that are not allocated to any individual business
segment. Consistent with its internal management reporting, the
Group's corporate and other items are included within the mining
division.
Management monitors the operating results of business segments
separately for the purpose of making decisions about resources to
be allocated and of assessing performance. Segment performance is
evaluated based on the operating profit of each of the
segments.
a) Segment revenues and results
For the six months ended 30 June 2015
Los Centinela Michilla Antucoya Exploration Corporate Mining Railway Water Total
Pelambres and and and concession
evaluation other other
items transport
services
$m $m $m $m $m $m $m $m $m $m
Revenue 918.3 688.4 95.1 - - - 1,701.8 84.1 - 1,785.9
------------------- ---------- ---------- --------- ---------- ------------ ---------- ---------- ---------- ----------- ----------
EBITDA 396.8 217.6 10.6 - (56.1) (41.2) 527.7 33.9 - 561.6
Depreciation
and amortisation (86.3) (151.3) - - - (1.1) (238.7) (13.8) - (252.5)
Gain/(loss)
on disposals (0.7) - - - - - (0.7) 0.2 - (0.5)
---------- ---------- ----------- ----------
Operating
profit/(loss) 309.8 66.3 10.6 - (56.1) (42.3) 288.3 20.3 - 308.6
Share of
results from
associates
and joint
ventures (0.9) - - - - (3.5) (4.4) 4.2 - (0.2)
Investment
income 4.6 1.9 0.3 - - 1.6 8.4 0.4 - 8.8
Interest
expense (0.6) (12.7) - - - (0.6) (13.9) (1.8) - (15.7)
Other finance
items (1.3) 2.5 0.5 (1.1) - (2.9) (2.3) (1.9) - (4.20)
---------- ---------- ----------- ----------
Profit/(loss)
before tax 311.6 58.0 11.4 (1.1) (56.1) (47.7) 276.1 21.2 - 297.3
Tax (94.3) (5.9) (2.2) 2.6 1.9 (97.9) (19.9) (117.8)
---------- ---------- --------- ---------- ------------ ---------- ---------- ---------- ----------- ----------
Profit for
the period
from continuing
operations 217.3 52.1 9.2 1.5 (56.1) (45.8) 178.2 1.3 - 179.5
Profit for
the period
from discontinued
operations - - - - - - - - 619.5 619.5
---------- ---------- --------- ---------- ------------ ---------- ---------- ---------- ----------- ----------
Profit for
the period 217.3 52.1 9.2 1.5 (56.1) (45.8) 178.2 1.3 619.5 799.0
Non-controlling
interests (84.3) (9.7) (0.1) 0.4 - - (93.7) 0.5 - (93.2)
---------- ---------- ----------- ----------
Net
earnings/(losses) 133.0 42.4 9.1 1.9 (56.1) (45.8) 84.5 1.8 619.5 705.8
(MORE TO FOLLOW) Dow Jones Newswires
August 25, 2015 02:00 ET (06:00 GMT)
Additions to non-current
assets
Capital
expenditure 92.8 222.9 - 132.5 - 124.1 572.3 7.2 16.4 595.9
========== ========== ========= ========== ============ ========== ========== ========== =========== ==========
Segment assets
and liabilities
Segment assets 3,906.8 5,081.9 174.5 1,787.4 - 1,423.9 12,374.5 1,394.7 - 13,769.2
Segment
liabilities (1,352.2) (2,004.1) (96.5) (1,073.7) - (111.3) (4,637.8) (479.4) - (5,117.2)
========== ========== ========= ========== ============ ========== ========== ========== =========== ==========
For the six months ended 30 June 2014
Los Centinela Michilla Antucoya Exploration Corporate Mining Railway Water Total
Pelambres and and and concession
evaluation other other
items transport
services
$m $m $m $m $m $m $m $m $m $m
Revenue 1,356.6 988.8 164.0 - - - 2,509.4 92.4 - 2,601.8
========== ========== ========= ========= ============ ========== ========== ========== =========== ==========
EBITDA 743.8 402.1 42.4 - (93.4) (41.2) 1,053.7 39.8 - 1,093.5
Depreciation
and amortisation (83.2) (116.7) (32.2) - - (1.4) (233.5) (8.0) - (241.5)
Gain/(loss)
on disposals 0.4 - (0.5) - - - (0.1) - - (0.1)
------------ ----------
Operating
profit/(loss) 661.0 285.4 9.7 - (93.4) (42.6) 820.1 31.8 - 851.9
Share of
results from
associates
and joint
ventures (1.7) - - - - (10.5) (12.2) 4.7 - (7.5)
Investment
income 3.3 2.0 0.3 - - 2.5 8.1 0.2 - 8.3
Interest
expense (2.5) (23.7) - - - (1.5) (27.7) (0.2) - (27.9)
Other finance
items (3.1) 2.7 (5.2) 2.2 - 0.1 (3.3) (0.7) - (4.0)
--------- ------------ ----------
Profit/(loss)
before tax 656.9 266.4 4.8 2.2 (93.4) (52.0) 785.0 35.8 - 820.8
Tax (165.7) (58.5) (0.6) 1.1 - 5.7 (218.0) (54.6) - (272.6)
---------- ---------- --------- --------- ------------ ---------- ---------- ---------- ----------- ----------
Profit for
the period
from continuing
operations 491.2 207.9 4.2 3.3 (93.4) (46.3) 567.0 (18.8) - 548.2
Profit for
the period
from discontinued
operations - - - - - - - - 23.4 23.4
---------- ---------- --------- --------- ------------ ---------- ---------- ---------- ----------- ----------
Profit for
the period 491.2 207.9 4.2 3.3 (93.4) (46.3) 567.0 (18.8) 23.4 571.6
Non-controlling
interests (195.5) (57.9) (0.1) (0.4) - 12.3 (241.6) 0.8 - (240.8)
---------- ---------- --------- --------- ------------ ---------- ---------- ---------- ----------- ----------
Net
earnings/(losses) 295.7 150.0 4.1 2.9 (93.4) (34.0) 325.4 (17.7) 23.1 330.8
========== ========== ========= ========= ============ ========== ========== ========== =========== ==========
Additions to non-current
assets
Capital
expenditure 111.2 249.4 5.1 374.4 - 11.0 751.1 8.3 7.9 767.3
========== ========== ========= ========= ============ ========== ========== ========== =========== ==========
Segment assets
and liabilities
Segment assets 4,045.7 4,996.1 214.8 1,220.3 - 1,352.9 11,829.8 446.3 234.2 12,510.3
Segment
liabilities (1,310.2) (1,894.9) (97.4) (833.2) - (98.0) (4,233.7) (102.3) (41.6) (4,377.6)
========== ========== ========= ========= ============ ========== ========== ========== =========== ==========
For the year ended 31 December 2014
Los Centinela Michilla Antucoya Exploration Corporate Mining Railway Water Total
Pelambres and and and concession
evaluation other other
items transport
services
$m $m $m $m $m $m $m $m $m $m
Revenue 2,663.6 1,985.7 335.4 - - - 4,984.7 180.8 - 5,165.5
========== ========== ========= ========= ============ ========== ========== ========== =========== ==========
EBITDA 1,518.6 767.2 58.7 - (167.5) (99.2) 2,077.8 68.7 - 2,146.5
Depreciation
and amortisation (178.3) (301.5) (87.3) - - (2.6) (569.7) (22.5) - (592.2)
Gain/(loss)
on disposals (2.5) (1.3) (0.4) - - 28.7 24.5 (0.6) - 23.9
------------ ----------
Operating
profit/(loss) 1,337.8 464.4 (29.0) - (167.5) (73.1) 1,532.6 45.6 - 1,578.2
Share of
results from
associates
and joint
ventures (1.3) - - - - (9.3) (10.6) 6.5 - (4.1)
Investment
income 7.5 4.2 0.7 - - 3.9 16.3 0.5 - 16.8
Interest
expense (3.8) (36.6) - - - (2.4) (42.8) (1.8) - (44.6)
Other finance
items (2.5) 2.9 (8.3) 3.3 - (31.4) (36.0) (0.4) - (36.4)
--------- ------------ ----------
Profit/(loss)
before tax 1,337.7 434.9 (36.6) 3.3 (167.5) (112.3) 1,459.5 50.4 - 1,509.9
Tax (441.7) (214.9) 1.3 (9.7) - 25.0 (640.0) (62.9) - (702.9)
---------- ---------- --------- --------- ------------ ---------- ---------- ---------- ----------- ----------
Profit for
the period
from continuing
operations 896.0 220.0 (35.3) (6.4) (167.5) (87.3) 819.5 (12.5) - 807.0
Profit for
the period
from discontinued
operations - - - - - - - - 43.7 43.7
---------- ---------- --------- --------- ------------ ---------- ---------- ---------- ----------- ----------
Profit for
the period 896.0 220.0 (35.3) (6.4) (167.5) (87.3) 819.5 (12.5) 43.7 850.7
Non-controlling
interests (352.3) (56.2) 0.3 3.8 - 12.4 (392.0) 1.1 - (390.9)
---------- ---------- --------- --------- ------------ ---------- ---------- ---------- ----------- ----------
Net
earnings/(losses) 543.7 163.8 (35.0) (2.6) (167.5) (74.9) 427.5 (11.4) 43.7 459.8
========== ========== ========= ========= ============ ========== ========== ========== =========== ==========
Additions to non-current
assets
Capital
(MORE TO FOLLOW) Dow Jones Newswires
August 25, 2015 02:00 ET (06:00 GMT)
expenditure 229.6 535.6 11.1 707.1 - 51.4 1,534.8 21.2 25.0 1,581.0
========== ========== ========= ========= ============ ========== ========== ========== =========== ==========
Segment assets
and liabilities
Segment assets 3,680.2 5,152.9 181.9 1,619.8 - 1,557.9 12,192.7 410.0 212.4 12,815.1
Segment
liabilities (1,255.2) (2,014.6) (114.6) (994.7) - (138.2) (4,517.3) (212.1) (51.0) (4,780.4)
========== ========== ========= ========= ============ ========== ========== ========== =========== ==========
b) Entity wide disclosures
Revenue by product
Six months Six months
ended ended Year ended
30 June 30 June 31 December
2015 2014 2014
$m $m $m
Copper
- Los Pelambres 817.0 1.192.3 2,348.6
- Centinela concentrates 339.7 534.3 1,073.8
- Centinela cathodes 238.0 313.5 631.9
- Michilla 95.1 164.0 335.4
Gold
- Los Pelambres 26.9 40.3 80.5
- Centinela concentrates 102.1 129.3 256.3
Molybdenum
- Los Pelambres 59.7 97.7 182.8
Silver
- Los Pelambres 14.7 26.3 51.7
- Centinela concentrates 8.5 11.7 23.7
----------- ----------- -------------
Total Mining 1,701.8 2,509.4 4,984.7
Railway and transport services 84.1 92.4 180.8
1,785.9 2,601.8 5,165.5
=========== =========== =============
Revenue by location of customer
Six months Six months
ended ended Year ended
30 June 30 June 31 December
2015 2014 2014
$m $m $m
Europe
- United Kingdom 2.7 4.7 8.2
- Switzerland 72.7 66.1 138.5
- Spain 28.7 58.3 160.6
- Germany 63.2 43.1 146.1
- Rest of Europe 46.3 104.9 137.7
Latin America
- Chile 85.6 112.1 215.3
- Rest of Latin America 27.2 68.7 180.9
North America
- United States 61.0 71.2 133.7
Asia Pacific
- Japan 615.7 1,005.8 1,965.4
- China 444.1 584.7 1,253.1
- Rest of Asia 338.7 482.2 826.0
----------- ----------- -------------
1,785.9 2,601.8 5,165.5
=========== =========== =============
Information about major customers
In the first half of 2015 the Group's mining revenues included
$351.0 million related to one large customer that individually
accounted for more than 10% of the Group's revenues (six months
ended 30 June 2014 - one large customer representing $454.2
million; year ended 31 December 2014 - one large customer
representing $970.0 million).
Non-current assets by location of asset
At 30.06.15 At 30.06.14 At 31.12.14
$m $m $m
- Chile 9,270.6 8,479.2 8,934.8
- Bolivia 26.0 36.7 30.9
- USA 171.2 94.4 67.4
- Other (1.3) - 0.6
9,316.5 8,610.3 9,033.7
============ ============ ============
The non-current assets balance disclosed by location of assets
excludes financial instruments, available-for-sale investments and
deferred tax assets.
4. Revenues
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 one to five months after shipment to the
customer. The provisional pricing mechanism within the sale
agreements is an embedded derivative under IFRS. Gains and losses
from the marking-to-market of open sales are recognised through
adjustments to revenue 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 in the
market price references for that commodity in the majority of the
Group's contracts.
In addition to mark-to-market and final pricing adjustments,
revenue also includes realised gains and losses relating to
derivative commodity instruments. Details of these realised gains
or losses are shown in the tables below. Further details of
derivative commodity instruments in place at the period end are
given in Note 6.
Copper and molybdenum concentrate sales are stated net of
deductions for tolling charges, as shown in the tables below.
For the period ended 30 June 2015
Los Michilla Los Los
Pelambres Centinela Centinela Pelambres Centinela Pelambres
Gold Gold
Copper Copper Copper Copper in in Molybdenum
concentrate concentrate cathodes cathodes concentrate concentrate concentrate
$m $m $m $m $m $m $m
Provisionally
invoiced
gross sales 978.2 418.2 242.5 97.1 27.0 105.3 80.2
Effects of
pricing
adjustments
to previous
year invoices
Reversal of
mark-to-market
adjustments at
the end
of the
previous year 45.5 19.6 1.4 0.4 - 1.8 2.0
Settlement of
sales invoiced
in the
previous year (101.6) 49.6 (5.7) (2.3) - 3.6 (7.1)
------------ ------------ ---------- --------- ------------ ------------ ------------
Total effect of
adjustments
to previous
year invoices
in the current
period (56.1) 69.2 (4.3) (1.9) - 5.4 (5.1)
------------ ------------ ---------- --------- ------------ ------------ ------------
Effects of
pricing
adjustments
to current
period invoices
Settlement of
sales invoiced
in the current
period 14.3 (83.4) 1.2 (0.2) - (6.6) (2.8)
Mark-to-market
adjustments
at the end of
the current
period (31.9) (18.9) (1.3) 0.1 - (1.6) (4.2)
------------ ------------ ---------- --------- ------------ ------------ ------------
Total effect of
adjustments
to current
period
invoices (17.6) (102.3) (0.1) (0.1) - (8.2) (7.0)
------------ ------------ ---------- --------- ------------ ------------ ------------
Total pricing
adjustments (73.7) (33.1) (4.4) 2.0 - (2.8) (12.1)
Realised
(losses)/gains
on commodity
derivatives - - (0.1) - - - -
Revenue before
deducting
tolling
charges 904.5 385.1 238.0 95.1 27.0 102.5 68.1
Tolling charges (87.5) (45.4) - - (0.1) (0.4) (8.4)
Revenue net of
tolling
charges 817.0 339.7 238.0 95.1 26.9 102.1 59.7
============ ============ ========== ========= ============ ============ ============
For the period ended 30 June 2014 Los Michilla Los Los
Pelambres Centinela Centinela Pelambres Centinela Pelambres
Gold Gold
Copper Copper Copper Copper in in Molybdenum
concentrate concentrate cathodes cathodes concentrate concentrate concentrate
(MORE TO FOLLOW) Dow Jones Newswires
August 25, 2015 02:00 ET (06:00 GMT)
$m $m $m $m $m $m $m
Provisionally
invoiced
gross sales 1,309.3 595.1 316.9 157.3 40.5 126.3 86.3
Effects of
pricing
adjustments
to previous
year invoices
Reversal of
mark-to-market
adjustments at
the end
of the
previous year (27.1) (8.8) (1.0) 0.1 - 4.5 1.1
Settlement of
sales invoiced
in the
previous year (27.7) (7.3) 0.3 (0.3) - (1.7) 0.2
------------ ------------ ---------- --------- ------------ ------------ ------------
Total effect of
adjustments
to previous
year invoices
in the current
period (54.8) (16.1) (0.7) (0.2) - 2.8 1.3
------------ ------------ ---------- --------- ------------ ------------ ------------
Effects of
pricing
adjustments
to current
period invoices
Settlement of
sales invoiced
in the current
period (13.6) (14.9) (3.3) (2.0) (0.1) (1.8) 14.4
Mark-to-market
adjustments
at the end of
the current
period 31.2 15.7 0.8 0.5 - 2.0 3.2
------------ ------------ ---------- --------- ------------ ------------ ------------
Total effect of
adjustments
to current
period
invoices 17.6 0.8 (2.5) (1.5) (0.1) 0.2 17.6
------------ ------------ ---------- --------- ------------ ------------ ------------
Total pricing
adjustments (37.2) (15.3) (3.2) (1.7) (0.1) 3.0 18.9
Realised
(losses)/gains
on commodity
derivatives - - (0.2) 8.4 - - -
Revenue before
deducting
tolling
charges 1,272.1 579.8 313.5 164.0 40.4 129.3 105.2
Tolling charges (79.8) (45.5) - - (0.1) - (7.5)
Revenue net of
tolling
charges 1,192.3 534.3 313.5 164.0 40.3 129.3 97.7
============ ============ ========== ========= ============ ============ ============
For the year ended 31 December 2014
Los Michilla Los Centinela Los
Pelambres Centinela Centinela Pelambres Pelambres
Gold Gold
Copper Copper Copper Copper in in Molybdenum
concentrate concentrate cathodes cathodes concentrate concentrate concentrate
$m $m $m $m $m $m $m
Provisionally
invoiced
gross sales 2,642.5 1,226.8 640.6 322.0 80.4 267.8 213.7
Effects of
pricing
adjustments
to previous
year invoices
Reversal of
mark-to-market
adjustments at
the end
of the
previous year (27.1) (8.8) (1.0) 0.1 - 4.5 1.2
Settlement of
sales invoiced
in the
previous year (27.7) (9.8) 1.2 (0.3) 0.4 (2.0) 0.2
------------ ------------ ---------- --------- ------------ ------------ ------------
Total effect of
adjustments
to previous
year invoices
in the current
year (54.8) (18.6) 0.2 (0.2) 0.4 2.5 1.4
------------ ------------ ---------- --------- ------------ ------------ ------------
Effects of
pricing
adjustments
to current year
invoices
Settlement of
sales invoiced
in the current
year (29.8) (19.7) (7.7) (4.3) - (11.7) (15.2)
Mark-to-market
adjustments
at the end of
the current
year (45.5) (19.6) (1.3) (0.4) - (1.8) (2.0)
------------ ------------ ---------- --------- ------------ ------------ ------------
Total effect of
adjustments
to current
year invoices (75.3) (39.3) (9.0) (4.7) - (13.5) (17.2)
------------ ------------ ---------- --------- ------------ ------------ ------------
Total pricing
adjustments (130.1) (57.9) (8.8) (4.9) 0.4 (11.0) (15.8)
Realised gains
on commodity
derivatives - - 0.1 18.3 - - -
Revenue before
deducting
tolling
charges 2,512.4 1,168.9 631.9 335.4 80.8 256.8 197.9
Tolling charges (163.8) (95.1) - - (0.3) (0.5) (15.1)
Revenue net of
tolling
charges 2,348.6 1,073.8 631.9 335.4 80.5 256.3 182.8
============ ============ ========== ========= ============ ============ ============
The revenue from the individual products shown in the above tables
is reconciled to total Group revenue in note 3(b).
(i) Copper concentrate
The typical period for which sales of copper concentrate remain
open until settlement occurs is a range of approximately three to
five months from shipment date.
At 30 June 2015 sales totalling 159,000 tonnes remained open as
to price, with an average mark-to-market price of $2.61/lb compared
with an average provisional invoice price of $2.75/lb.
At 30 June 2014 sales totalling 191,800 tonnes remained open as
to price, with an average mark-to-market price of $3.19/lb compared
with an average provisional invoice price of $3.07/lb.
At 31 December 2014 sales totalling 199,200 tonnes remained open
as to price, with an average mark-to-market price of $2.86/lb
compared with an average provisional invoice price of $3.01/lb.
(ii) Copper cathodes
The typical period for which sales of copper cathodes remain
open until settlement occurs is approximately one month from
shipment date.
At 30 June 2015 sales totalling 13,800 tonnes remained open as
to price, with an average mark-to-market price of $2.61/lb compared
with an average provisional invoice price of $2.66/lb.
At 30 June 2014 sales totalling 11,800 tonnes remained open as
to price, with an average mark-to-market price of $3.19 /lb
compared with an average provisional invoice price of $3.14
/lb.
At 31 December 2014 sales totalling 13,800 tonnes remained open
as to price, with an average mark-to-market price of $2.88/lb
compared with an average provisional invoice price of $2.94
/lb.
(iii) Gold in concentrate
The typical period for which sales of gold in concentrate remain
open is approximately one month from shipment date.
At 30 June 2015 sales totalling 58,100 ounces remained open as
to price, with an average mark-to-market price of $1,170/oz
compared with an average provisional invoice price of
$1,197/oz.
At 30 June 2014 sales totalling 69,000 ounces remained open as
to price, with an average mark-to-market price of $1,322/oz
compared with an average provisional invoice price of
$1,293/oz.
At 31 December 2014 sales totalling 81,600 ounces remained open
as to price, with an average mark-to-market price of $1,186 /oz
compared with an average provisional invoice price of
$1,209/oz.
(iv) Molybdenum concentrate
The typical period for which sales of molybdenum remain open is
approximately two months from shipment date.
At 30 June 2015 sales totalling 2,000 tonnes remained open as to
price, with an average mark-to-market price of $7.0/lb compared
with an average provisional invoice price of $7.9/lb.
At 30 June 2014 sales totalling 1,700 tonnes remained open as to
price, with an average mark-to-market price of $14.5 /lb compared
with an average provisional invoice price of $13.6 /lb.
At 31 December 2014 sales totalling 1,900 tonnes remained open
as to price, with an average mark-to-market price of $9.0/lb
compared with an average provisional invoice price of $9.4/lb.
(MORE TO FOLLOW) Dow Jones Newswires
August 25, 2015 02:00 ET (06:00 GMT)
As detailed above, the effects of gains and losses from the
marking-to-market of open sales are recognised through adjustments
to revenue in the income statement and to trade debtors in the
balance sheet. The effect of mark-to-market adjustments on the
balance sheet at the end of each period are as follows:
Effect on debtors of period
end
mark-to-market adjustments
At 30.06.15 At 30.06.14 At 31.12.14
$m $m $m
Los Pelambres - copper concentrate (31.9) 31.2 (45.5)
Los Pelambres - molybdenum concentrate (4.2) 3.2 (2.0)
Centinela - copper concentrate (18.9) 15.7 (19.6)
Centinela - gold in concentrate (1.6) 2.0 (1.8)
Centinela - copper cathodes (1.3) 0.8 (1.3)
Michilla - copper cathodes 0.1 0.5 (0.4)
(57.8) 53.4 (70.6)
============ ============ ============
5. Financial instruments
a) Categories of financial instruments
The carrying value of financial assets and financial liabilities
is shown below:
At 30.06.15 At 30.06.14 At 31.12.14
$m $m $m
Financial assets
Derivatives in designated hedge accounting
relationships 0.1 10.8 0.2
Available-for-sale-investments 4.5 15.7 15.6
Loans and receivables at amortised cost
(including cash
and cash equivalents) 2,598.7 1,941.7 1,895.2
Fair value through profit and loss (liquid
investments and mark-to-mark debtors) 1,366.8 1,480.2 1,529.1
Financial liabilities
Derivatives in designated hedge relationships (5.7) (8.4) (11.0)
Financial liabilities measured at amortised
cost (3,227.8) (2,930.0) (3,104.1)
Fair value through profit and loss (mark-to-mark
creditors) (57.8) - (70.6)
The fair value of financial assets and financial liabilities
carried at amortised cost is not materially different from the
carrying value presented above.
Fair value of financial instruments
An analysis of financial assets and financial liabilities
measured at fair value is presented below:
Level Level Level At At 30.06.14 At 31.12.14
1 2 3 30.06.15
Recurring fair
value measurements $m $m $m $m $m $m
Financial assets
Derivatives in
designated hedge
accounting
relationships - 0.1 - 0.1 10.8 0.2
Available-for-sale
investments 4.5 - - 4.5 15.7 15.6
Fair value through
profit and
loss 1,366.8 - - 1,366.8 1,426.8 1,529.1
Debtors - - - - 53.4 -
mark-to-market
Financial
liabilities
Derivatives in
designated hedge
relationships - (5.7) - (5.7) (8.4) (11.0)
Creditors
mark-to-market - (57.8) - (57.8) - (70.6)
Recurring fair value measurements are those that are required in
the balance sheet at the end of each reporting period.
Non-recurring fair value measurements are those that are
required in particular circumstances e.g. when the recoverable
amount of an asset is determined to be fair value less cost to sell
according to IAS 36 Impairment of assets. There were no
non-recurring fair value measurements in the six months ending 30
June 2015.
Derivatives in designated hedge accounting relationships are
valued using a discounted cash flow analysis valuation model, which
includes observable credit spreads and using the applicable yield
curve for the duration of the instruments for non-optional
derivatives, and option pricing models for optional derivatives.
These are level 2 inputs as described below.
Available-for-sale investments are investments in shares on
active markets and are valued using unadjusted quoted market values
of the shares at the financial reporting date. These are level 1
inputs as described below.
Provisionally priced metal sales for the period are
marked-to-market at the end of the period. Gains and losses from
the marking-to-market of open sales are recognised through
adjustments to revenue in the income statement and trade debtors in
the balance sheet. Forward prices at the end of the period are used
for copper sales while period-end average prices are used for
molybdenum concentrate sales. These are level 2 inputs as described
below.
Financial assets measured at fair value through profit and loss
are highly liquid current asset investments that are valued using
market prices at the period end. These are level 1 inputs as
described below.
The inputs to the valuation techniques described above are
categorised into three levels, giving the highest priority to
unadjusted quoted prices in active markets (level 1) and the lowest
priority to unobservable inputs (level 3 inputs):
- Level 1 fair value measurement inputs are unadjusted quoted
prices in active markets for identical assets or liabilities.
- Level 2 fair value measurement inputs are derived from inputs
other than quoted market prices included in level 1 that are
observable for the asset or liability, either directly or
indirectly.
- Level 3 fair value measurement inputs are unobservable inputs for the asset or liability.
The degree to which inputs into the valuation techniques used to
measure the financial assets and liabilities are observable and the
significance of these inputs in the valuation are considered in
determining whether any transfers between levels have occurred. In
the six months ending 30 June 2015 there were no transfers between
levels in the hierarchy.
b) Embedded derivatives
As explained in Note 5, 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. The provisional pricing mechanism within the sale
agreements is an embedded derivative under IFRS. Details of the
provisional pricing arrangements are included in Note 5.
c) Derivative financial instruments
The Group periodically uses derivative financial instruments to
reduce its exposure to commodity price, foreign exchange and
interest rate 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 derivatives recognise in the income statement have
been recorded within revenue. 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.
(i) Mark-to-market adjustments and income statement impact
The balance sheet mark-to-market adjustments in respect of
derivatives at the end of each period, and the total effect on the
income statement and reserves for each period are as follows. The
impact on reserves is shown before tax and non-controlling
interests.
For the six months ended 30 June 2015
Impact on
reserves Fair value
for six months recorded
Impact on income statement ended at on balance
for six months ended 30.06.15 30.06.15 sheet 30.06.15
Realised Losses resulting Total Gains/(losses) Net financial
gains/(losses) from net gain/(loss) resulting asset/(liability)
mark-to-market from
adjustments mark-to-market
on hedging adjustments
instruments on hedging
instruments
$m $m $m $m $m
Commodity
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Derivatives
Centinela (0.1) - (0.1) (0.1) 0.1
Foreign exchange
derivatives
Antucoya 0.2 - 0.2 3.8 -
Interest
Derivatives
Centinela (1.9) - (1.9) 1.4 (4.6)
Railway and
other transport
services (0.7) - (0.7) (0.1) (1.1)
(2.5) - (2.5) 5.0 (5.6)
For the six months ended 30 June 2014
Impact on
reserves Fair value
for six recorded
Impact on income statement months ended on balance
for six months ended 30.06.14 at 30.06.14 sheet 30.06.14
Realised Losses resulting Total Gains/(losses) Net financial
gains/(losses) from net gain/(loss) resulting Asset/(Liability)
mark-to-market from
adjustments mark-to-market
on hedging adjustments
instruments on hedging
instruments
$m $m $m $m $m
Commodity
Derivatives
Centinela (0.2) - (0.2) 0.4 -
Michilla 8.4 (4.3) 4.1 1.4 8.4
Foreign exchange
derivatives
Michilla (1.0) - (1.0) (2.4) (0.7)
Antucoya - 1.0 1.0 1.5 2.4
Interest
Derivatives
Centinela (2.5) - (2.5) 1.7 (7.7)
-- 4.7 (3.3) 1.4 2.6 2.4
For the year ended 31 December 2014
Impact on Fair value
reserves recorded
for the on balance
Impact on income statement year ended sheet 31.12.14
for the year ended 31.12.14 at 31.12.14
Realised Losses resulting Total (Losses)/gains Net financial
(losses)/gains from mark-to-market net resulting (liability)/
adjustments (loss)/gain from mark-to-market asset
on hedging adjustments
instruments on hedging
instruments
$m $m $m $m $m
Commodity
Derivatives
Centinela 0.1 - 0.1 0.6 0.2
Michilla 18.3 (5.0) 13.3 (6.2) -
Foreign exchange
derivatives
Michilla (4.1) - (4.1) (1.7) -
Antucoya - (0.1) (0.1) (3.8) (4.0)
Interest Derivatives
Centinela (4.8) - (4.8) 3.4 (6.0)
Railway and
other transport
services (1.0) - (1.0) (1.0) (1.0)
8.5 (5.1) 3.4 (8.7) (10.8)
The gains/(losses) recognised in reserves are disclosed before
non-controlling interests and tax.
The net financial asset/(liability) resulting from the balance sheet
mark-to-market adjustments is analysed as follows:
At 30.06.15 At 30.06.14 At 31.12.14
$m $m $m
Analysed between:
Current assets 0.1 10.8 0.2
Current liabilities (2.9) (3.5) (7.5)
Non-current
liabilities (2.8) (4.9) (3.5)
(5.6) 2.4 (10.8)
(ii) Outstanding derivative financial instruments
Commodity derivatives
The Group periodically uses commodity derivatives to manage its exposure
to commodity price fluctuations.
- Futures - arbitrage
The Group has futures for copper production, to swap COMEX price exposure
according to the Group's pricing policy. For instruments held
At 30.06.15 at 30.06.15
Weighted average Covering
Copper production remaining period a period
hedged from 1 July 2015 up
tonnes Months to:
Centinela 2,400 0.5 31-01-2016
(iii) Foreign exchange derivatives
The Group periodically uses foreign exchange derivatives to reduce its
exposure to fluctuations in the exchange rates influencing operating
costs and the fair value of non-US dollar denominated assets or liabilities.
(iv) Interest derivatives
The Group periodically uses interest derivatives to reduce its exposure
to interest rate movements.
- Interest rate swaps
The Group has used interest rate swaps to swap the floating rate interest
relating to the Centinela project financing and long-term loans at the
Railway for fixed rate interest. At 30 June 2015 the Group had entered
into the contracts outlined below.
Weighted
Actual Average
Start Maturity notional Fixed
date date amount Rate
$m %
Centinela 15-02-2011 15-08-2018 122.5 3.372
Railway and
other transport
services 12-08-2014 12-08-2019 150.0 1.634
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The actual notional amount hedge depends upon the amount of the related
debt currently outstanding.
6. Net finance expense
Six months Six months
ended ended Year ended
30 June 30 June 31 December
2015 2014 2014
$m $m $m
Investment income
Interest receivable 6.8 6.2 14.2
Fair value through profit or loss 2.0 2.1 2.6
8.8 8.3 16.8
Interest expense
Interest expense (15.6) (27.7) (44.4)
Preference dividends (0.1) (0.2) (0.2)
(15.7) (27.9) (44.6)
Other finance items
Time value effect of derivatives 0.1 (3.3) (5.1)
Unwinding of discount on provisions (4.8) (7.4) (9.0)
Impairment of available-for-sale
investments - (26.3)
Foreign exchange 0.5 6.7 4.0
(4.2) (4.0) (36.4)
Net finance expense (11.1) (23.6) (64.2)
In the six months ended 30 June 2015, $24.0 million relating to
net interest expense and other finance items at Antucoya (six
months ended 30 June 2014 - $9.1 million; year ended 31 December
2014 - $27.4 million), Centinela at June 2015 $12.7 million (six
months ended 30 June 2014 - $23.7 million; year ended 31 December
2014 - $36.6 million) and Los Pelambres at June 2015 $0.6 million
(six months ended 30 June 2014 - $2.5 million; year ended 31
December 2014 - $3.8 million) was capitalised during the period,
and is consequently not included within the above table.
7. Taxation
The tax charge for the period comprised the following:
Six months Six months
ended ended Year ended
30 June 30 June 31 December
2015 2014 2014
$m $m $m
Current tax charge
Corporate tax (principally first
category tax in Chile) (65.3) (167.4) (361.5)
Mining tax (royalty) (12.3) (36.2) (71.9)
Withholding tax (12.9) (231.1) (279.3)
Exchange gains/(losses) on corporate
tax balances (0.3) (0.1) (0.6)
(90.8) (434.8) (713.3)
Deferred tax credit/(charge)
Corporate tax (principally first
category tax in Chile) (18.0) (12.9) 10.2
Adjustment to deferred tax attributable
to changes in tax rates - - (215.1)
Mining tax (royalty) (11.0) (7.2) (7.2)
Withholding tax provision (1.9) 182.3 222.5
(30.9) 162.2 10.4
Total tax charge (income tax
expense) (121.7) (272.6) (702.9)
The rate of first category (i.e. corporate) tax in Chile is
currently 22.5% (six months ended 30 June 2014 - 20%; year ended 31
December 2014 - 21%).
On 29 September 2014 a significant reform of the Chilean system
was enacted into law. The corporate tax rates which now apply in
the period from 2014 to 2016 are: 2014 - 21%; 2015 - 22.5%; 2016 -
24%. The 21% rate for 2014 applied retrospectively with effect from
1 January 2014.
From 2017 two alternative taxation systems will apply - either
the partially-integrated system or the attributable system. The
default position for the Group's operating companies is the
partially-integrated system. The companies can each elect to apply
the attributable system, provided there is unanimous agreement from
that company's shareholders.
Under the partially-integrated system the corporate tax rate
will be 25.5% in 2017 and 27% from 2018 onwards. The company's
shareholders will pay withholding tax based on the cash
distributions made by the company, as with the current tax system.
If the company's shareholders are not tax resident in countries
with applicable tax treaties with Chile the withholding tax rate
will be 17.45%, and so if the company distributes all of its
earnings the total corporate and withholding tax burden will be
44.45%. If the company's shareholders are tax resident in countries
with applicable tax treaties with Chile the withholding tax will be
8%, and so if the company distributes all of its earnings the total
corporate and withholding tax burden will be 35%.
Under the attributable system the corporate tax rate will be 25%
from 2017 onwards. The company's shareholders must pay withholding
based on the profits earned by the company in the period, rather
than based on cash distributions, at a rate of 10%. The total tax
burden will therefore be 35%.
In order for any of the Group's operating companies to apply the
attributable system rather than the default partially-integrated
system, that company's shareholders must make a unanimous election
to the Chilean Revenue Service by November 2016. The attributable
system will then apply to that company for 5 years before it is
possible to make a further election to move to the
partially-integrated system if the company does not wish to
continue with the attributable system at that point.
The Group's deferred tax balances were recalculated in 2014
using the new tax rates which are expected to apply in the future
periods when the temporary differences are expected to reverse.
Given that the partially integrated system is the default system
for the Group's operating companies, and is the system which will
apply unless the companies' shareholders make a unanimous election
to adopt the attributable system, the partially integrated system
rates were used when recalculating the deferred tax balances. This
resulted in an increase in the net deferred tax liabilities during
2014 of $220.6 million, which was reflected via a deferred tax
charge in the income statement. This resulted in a total effective
tax rate for the Group in 2014 of 45.9%. Excluding this deferred
tax charge, the effective tax rate for the Group in 2014 would have
been 31.9%. The impact on net earnings of this deferred tax charge
was $142.2 million and the impact on 2014 earnings per share was
14.4 cents per share.
The Group's mining operations are also subject to a mining tax
(royalty). From 1 January 2013 production from Los Pelambres, the
Tesoro Central and Mirador pits at Centinela Cathodes and Michilla
have been subject to the mining tax at a rate of 4% applied to
taxable operating profit, and Centinela has been subject to a rate
of 5%. Production from the Tesoro North-East pit and the
run-of-mine processing at Centinela Cathodes has been subject to a
rate of 5%-14% of taxable operating profit based on a sliding scale
with minimum rate of 5% applying to operations with an operating
profit margin of below 35% and maximum rate of 14% applied to
operations with an operating profit margin above 85%.
In addition to first category tax and the mining tax, the Group
incurs withholding taxes on any remittance of profits from Chile
and deferred tax is provided on undistributed earnings to the
extent that remittance is probable in the foreseeable future.
Withholding tax is levied on remittances of profits from Chile at
35% less first category (i.e. corporate) tax already paid in
respect of the profits to which the remittances relate.
Six months ended Six months ended Year ended
30 June 2015 30 June 2014 31 December 2014
$m % $m % $m %
Profit before tax 297.3 820.8 1,509.9
Tax at the Chilean corporate tax rate of 22.5% (2014
- 21%) (66.9) 22.5 (164.2) 20.0 (317.1) 21.0
Tax effect of share of results of associates and
joint ventures - (1.6) 0.2 (0.9) 0.1
Effect of increase in future first category tax
rates on deferred tax balances (11.5) 3.9 - - (215.1) 14.3
Items not subject to or deductible from first
category tax (1.0) 0.3 (14.8) 1.8 (33.5) 2.2
Royalty (23.3) 7.8 (43.4) 5.3 (79.1) 5.2
Withholding tax (14.8) 5.0 (48.8) 5.9 (56.8) 3.8
Exchange differences (0.3) 0.1 0.2 - (0.4) -
Tax expense and effective tax rate for the period (117.8) 39.6 (272.6) 33.2 (702.9) 46.6
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The tax charge for the six months ended 30 June 2015 was $117.8
million and the effective tax rate was 39.6%. This rate varied from
the standard rate (comprising first category tax) principally due
to the effect of items not deductible from first category tax
(mainly corporate items which principally comprise exploration and
evaluation costs), the effect of the increase in future first
category tax rates on deferred tax balances, a withholding tax
charge of $14.8 million and the effect of the mining tax which
resulted in a charge of $23.3 million.
8. Discontinued operations
(i) On 24 April, 2015 the Group entered into a sale agreement to
dispose of Aguas de Antofagasta S.A. ("ADASA"), which carried out
of the group's water operations. The disposal was completed on 2
June 2015. The results of ADASA for the period prior to disposal as
well as the profit on disposal have been presented on the "Profit
for the period from discontinued operations" line in the income
statement, reflecting the following amounts:
Six months Six months
ended ended Year ended
30 June 30 June 31 December
2015 2014 2014
$m $m $m
Turnover 53.9 59.6 124.9
Total operating costs (34.9) (30.5) (63.4)
Net finance income (0.1) 0.8 2.1
Profit before tax 18.9 29.9 63.6
Attributable tax expense (3.9) (6.5) (19.9)
Profit of discontinued operations 15.0 23.4 43.7
Profit on disposal of discontinued
operations(1) 857.6 - -
Attributable tax expense(2) (253.1) - -
Net profit attributable to discontinued
operations (attributable to owners
of the Company) 619.5 23.4 43.7
(1) Profit on disposal included a loss of $3.9 million related
to the accumulated currency translation adjustment relating to
ADASA which has been reclassified from translation reserves in
other comprehensive income to the income statement upon
disposal.
(2) Tax expense includes $133.0 million related to withholding
tax.
During the period, Aguas de Antofagasta S.A., contributed $21.7
million to the Group's net cash flow from operating activities,
$19.2 million in respect to net cash used in investing activities
and paid $2.0 million in net cash provided in financing
activities.
(ii) Disposal of Aguas de Antofagasta S.A.
On 2 June 2015, the Group disposed of its 100% interest in Aguas
de Antofagasta S.A. ("ADASA").The proceeds on disposal of $967.2
million were received in cash. The gain on disposal of ADASA is
analysed below. No investment was retained in the former
subsidiary.
The net assets of Aguas de Antofagasta S.A. at the date of
disposal were as follows:
At
31 May 2015
$m
Intangibles 113.7
Property, plant and equipment 66.9
Inventories 2.0
Current tax asset 2.5
Trade receivables 20.9
Cash and cash equivalents 19.9
Trade payables (18.3)
Borrowings (80.2)
Retirement benefit obligation (2.8)
Long-term provision (1.6)
Deferred tax liabilities (13.4)
Total carrying amount disposed 109.6
Satisfied by:
Cash and cash equivalents 967.2
Net cash inflow arising on disposal:
Consideration received in cash and cash equivalents 967.2
Less: Cash and cash equivalents disposed of (19.9)
947.3
9. Earnings per share
Basic and diluted earnings per share is calculated on profit
after tax and non-controlling interests giving net earnings of
$705.8 million (six months ended 30 June 2014 - $330.8 million,
year ended 31 December 2014 - $459.8 million) and amounted to 9.8
cents and based on 985,856,695 ordinary shares. There was no
potential dilution of ordinary shares in any period.
10. Dividends
The Board has declared an interim dividend of 3.1 cents per
ordinary share for the 2015 half year (2014 half year - 11.7
cents). Dividends are declared and paid gross. Dividends actually
paid in the period and recognised as a deduction from net equity
under IFRS were 9.8 cents per ordinary share (2014 half year - 86.1
cents), representing the final dividend declared in respect of the
previous year.
The interim dividend will be paid on 8 October 2015 to ordinary
shareholders that are on the register at the close of business on
18 September 2015. Shareholders can elect (on or before 21
September 2015) to receive this interim dividend in US Dollars,
Pounds Sterling or Euro, and the exchange rate to be applied to
interim dividends to be paid in Pounds Sterling or Euro will be set
as soon as reasonably practicable after that date (which is
currently anticipated to be on 24 September 2015). Further details
of the currency election timing and process (including the default
currency of payment) are available on the Antofagasta plc website
(www.antofagasta.co.uk) or from the Company's registrar,
Computershare Investor Services PLC on +44 870 702 0159.
11. Intangible assets
Six months Six months
ended ended Year ended
30 June 30 June 31 December
2015 2014 2014
$m $m $m
Balance at the beginning
of the period 118.6 133.0 133.0
Additions - - 14.1
Acquisition 150.1 - -
Disposal (113.7) - -
Amortisation (2.4) (4.9) (10.9)
Foreign currency exchange
difference (2.5) (5.2) (17.6)
Balance at the end of the
period 150.1 122.9 118.6
The opening balance related to a 30 year concession to operate
the water rights and facilities in the Antofagasta Region of Chile
which the Group's wholly-owned subsidiary, Aguas de Antofagasta
S.A., acquired in December 2003 and any other subsequent additions
or acquisitions subject to the terms of the concession. This
intangible asset was being amortised on a straight-line basis over
the life of the concession, or the useful life of any component
part if less.
On 2 June 2015, the Group sold the 100% of the wholly-owned
subsidiary, Aguas de Antofagasta S.A. to Empresas Públicas de
Medellin and the Group derecognised all the asset of its subsidiary
at the date of the sale (See Note 14).
12. Property, plant and equipment
Six months Six months
Railway ended ended Year ended
and other Water 30 June 30 June 31 December
Mining transport Concession 2015 2014 2014
$m $m $m $m $m $m
Balance at the beginning
of the period 7,963.4 198.3 52.2 8,213.9 7,424.8 7,424.8
Additions 572.3 7.2 16.4 595.9 767.3 1,581.0
Reclassification 66.6 - - 66.6 28.4 (0.8)
Acquisition 20.8 - - 20.8 - -
Adjustment to capitalised
decommissioning
provisions - - - - 7.5 (48.1)
Depreciation (238.7) (13.8) - (252.5) (242.6) (595.1)
Depreciation capitalised (40.4) - - (40.4) (44.7) (26.4)
Assets derecognized
due to loss of control
of subsidiary - - - - - (94.4)
Asset disposals (0.7) (0.2) (66.9) (67.8) (0.4) (6.3)
Foreign currency
exchange difference - 0.3 (1.7) (1.4) (2.7) (7.6)
Balance at the end
of the period 8,343.3 191.8 - 8,535.1 7,937.6 8,227.1
Depreciation of 40.4 million (30 June 2014 - $44.7 million; 31
December 2014 - $26.4 million) has been capitalised within
property, plant and equipment or inventories, and accordingly is
excluded from the depreciation charge recorded in the income
statement.
Future capital commitments at 30 June 2015 were $401.7 million
(30 June 2014 - $589.8 million; 31 December 2014 - $253.2 million)
of which $157.4 million were related to the development of Oxides
Encuentro project.
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Additions include $167.4 million related to property plant and
equipment of Twin Metals as part of the Duluth acquisition.
13. Available-for-sale investments
Six months Six months
ended ended Year ended
30 June 30 June 31 December
2015 2014 2014
$m $m $m
Balance at the beginning of the
period 15.6 16.6 16.6
Additions - 1.5 5.9
Reclassification (9.4) - -
Movements in fair value (1.3) (2.9) (6.1)
Foreign currency exchange difference (0.4) 0.5 (0.8)
Balance at the end of the period 4.5 15.7 15.6
Available-for-sale investments represent those investments which
are not subsidiaries, associates or joint ventures and are not held
for trading purposes. The fair value of all equity investments are
based on quoted market prices.
The reclassification of $9.4 million is related with the
acquisition of Duluth Metals Limited ("Duluth"). As at 31 December
2014 the Group held 17.2% of Duluth's share capital, with a fair
value of US$9.4 million, accounted for as an available for sale
investment. As explained in Note 14, in January 2015 the Group
completed its acquisition of 100% of Duluth. Duluth holds a 60%
stake in Twin Metals Minnesota Limited ("Twin Metals"), a company
in which the Group held a 40% stake as at December 2014.
Accordingly, as a consequence of the acquisition of Duluth the
Group has a 100% interest in Duluth and as a result of this a 100%
interest in Twin Metals. From January 2015 Twin Metals has
therefore been consolidated as a 100% subsidiary of the Group, with
this $9.4 million balance forming part of the total consideration
reflected in the accounting for the acquisition of the
subsidiary.
14. Duluth Metals Limited transaction
In January 2015 the Group completed its acquisition of 100% of
Duluth Metals Limited ("Duluth"). The principal asset of Duluth was
its 60% stake in Twin Metals Minnesota Limited ("Twin Metals"), a
company in which the Group held the remaining 40% stake as at
December 2014. The principal asset of Twin Metals is its
copper-nickel-PGM deposit in north-eastern Minnesota, and the
transaction has accordingly been accounted for as the acquisition
by the Group of the remaining 60% interest in that asset.
Immediately prior to the completion of the transaction the Group
held 17.2% of Duluth's share capital. The fair value of the
consideration transferred to acquire the remaining 82.8% of the
share capital of Duluth in January 2015 was $44.3 million,
reflecting the agreed acquisition price of C$0.45 per share. In
addition, transaction costs of $6.3 million have been included as
part of the cost of the asset acquisition. The carrying value of
the Group's existing investment in associate balance relating to
its 40% interest in Twin Metals at the date of the transaction in
January 2015 was $67.4 million, and the carrying value of the
Group's existing available for sale investment balance relating to
its 17.2% holding of Duluth's share capital at that date was $9.4
million. As part of the acquisition agreement the Group also agreed
to redeem convertible debentures previously issued by Duluth at a
cash cost of $31.7 million, and has also acquired the other sundry
net liabilities of Duluth.
This has resulted in the Group consolidating 100% of the assets
and liabilities relating to Twin Metals with effect from January
2015. The principal assets recognised at that date were an
intangible asset balance of $150.1 million reflecting the value of
the mining property assets, and a property, plant & equipment
balance of $20.8 million relating to land and buildings. In
addition, a liability of $31.7 million was recognised in respect of
the Duluth convertible debentures which were subsequently redeemed
by the Group, along with $11.8 million of other sundry net
liabilities of Duluth and Twin Metals.
15. Borrowings
At 30.06.15 At 30.06.14 At 31.12.14
$m $m $m
Los Pelambres
Corporate loans (69.8) (315.0) (87.2)
Short-term loan (246.0) - (206.0)
Finance leases (10.1) (14.4) (12.5)
Centinela
Project financing (senior debt) (887.3) (881.7) (884.1)
Shareholder loan (subordinated
debt) (170.6) (163.3) (167.0)
Corporate loans - (89.7) -
Finance leases - (0.1) (0.1)
Antucoya
Project financing (senior debt) (623.3) (436.5) (572.7)
Shareholder loan (subordinated
debt) (282.2) (176.1) (241.7)
Finance leases (0.6) (1.7) (1.1)
Corporate and other items
Finance leases (27.8) (33.0) (29.7)
Railway and other transport
services
Long-term loans (148.6) - (148.6)
Finance leases (2.5) - (3.2)
Water concession
Long-term loan - - (14.6)
Andino
Bonds (3.0) (3.0) (3.0)
Short-term loans (1.5) (1.5) (1.5)
Preference shares (3.1) (3.4) (3.1)
Total (see Note 17) (2,476.4) (2,119.4) (2,376.1)
At 30 June 2015 $48.0 million (30 June 2014 - $47.5 million; 31
December 2014 - $67.5 million) of the borrowings has fixed rate
interest and $2,428.4 million (30 June 2014 - $2,071.9 million; 31
December 2014 - $2,308.6 million) has floating rate interest. The
Group periodically enters into interest rate derivative contracts
to manage its exposure to interest rates. As explained in Note 5,
these include interest rate swaps which have the effect of
converting $272.5 million of floating rate borrowings into fixed
rate borrowings. Details of any derivative instruments held by the
Group are given in Note 6(c).
16. Share capital and share premium
There was no change in share capital or share premium in the six
months ended 30 June 2015 or the comparative periods.
17. Reconciliation of profit before tax to net cash inflow from
operating activities
Six months Six months
ended ended Year ended
30 June 30 June 31 December
2015 2014 2014
$m $m $m
Profit before tax from continuing
and discontinued operations 1,173.8 850.7 1,573.5
Depreciation and amortisation 252.5 247.5 606.0
Net profit on disposals 1.3 (0.2) (24.1)
Profit on disposal of discontinued
operation (857.6) - -
Net finance expense 11.1 22.8 62.1
Share of results from associates
and joint ventures 0.2 7.5 4.1
(Increase)/decrease in inventories (46.0) (17.0) 32.1
Decrease in debtors 251.9 6.2 124.8
Increase in creditors and provisions 20.5 52.5 129.3
Cash flows from continuing and
discontinued operations 807.7 1,170.0 2,507.8
18. Analysis of changes in net (debt)/cash
At 01.1.15 Cash flows Other Exchange At 30.06.15
$m $m $m $m $m
Cash and cash equivalents 845.4 1,014.4 - (6.6) 1,853.2
Liquid investments 1,529.1 (162.3) - - 1,366.8
Total cash and cash equivalents
and liquid investments 2,374.5 852.1 - (6.6) 3,220.0
Bank borrowings due within
one year (276.0) (28.6) (154.6) 0.2 (459.0)
Bank borrowings due after
one year (2,050.5) (145.8) 221.4 1.5 (1,973.4)
Finance leases due within
one year (8.5) 5.7 (3.8) (0.1) (6.7)
Finance leases due after
one year (38.0) - 2.8 1.0 (34.2)
Preference shares (3.1) - - - (3.1)
Total borrowings (2,376.1) (168.7) 65.8 2.6 (2,476.4)
Net (debt)/cash (1.6) 683.4 65.8 (4.0) 743.6
At 30 June 2015 other category mainly reflects derecognition of
$80.2 million loan borrowing at Aguas Antofagasta S.A.
Net cash
Net cash at the end of each period was as follows:
At 30.06.15 At 30.06.14 At 31.12.14
$m $m $m
Cash, cash equivalents
and liquid investments 3,220.0 2,264.4 2,374.5
Total borrowings (2,476.4) (2,119.4) (2,376.1)
743.6 145.0 (1.6)
19. Litigation and Contingent liabilities
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Antofagasta plc or its subsidiaries are subject to various
claims which arise in the ordinary course of business. No provision
has been made in the half-yearly financial report and none of these
claims are currently expected to result in any material loss to the
Group. Details of the principal claims in existence either during,
or at the end of, the period and the current status of these claims
are set out below:
Los Pelambres - Mauro tailings dam
As previously announced, during 2008 Los Pelambres entered into
binding settlements in respect of litigation relating to the Mauro
tailings dam. Since then, there have been a series of civil claims
filed by some members of the Caimanes community (which is located
near the Mauro tailings dam) seeking to stop the operation of the
dam. Many of these claims have been rejected by the relevant
courts.
Two of these claims are currently ongoing and Los Pelambres is
continuing to take necessary steps to protect its position.
In the first claim, the plaintiffs have argued that the tailings
dam affects their alleged water rights and the environment. This
allegation is based on assertions that the dam interferes with the
flow and quality of the water in the Pupío stream, a stream that
passes through the Caimanes community. This claim was rejected by
the Civil Court in Los Vilos in a judgment issued in November 2012,
which was then affirmed by the Court of Appeals of La Serena in
August 2013. In October 2014, the Supreme Court, by split decision,
upheld the appeal and ordered Los Pelambres to submit back to the
Civil Court in Los Vilos, within one month, an implementation plan
for works that would ensure that the operation of the dam does not
affect the normal flow and quality of the waters of the Pupío
stream. Los Pelambres believes that the requirements of this order
have already been met as Los Pelambres has undertaken significant
works to ensure that the flow of the Pupío stream is not altered
and that the operation of the tailings dam does not affect the
quantity or quality of these waters - something that has been
confirmed by accredited independent assessors and other public
services in Chile and confirmed by the Supreme Court in a parallel
decision. Nevertheless, on 21 November 2014, Los Pelambres
submitted this plan to the Civil Court in Los Vilos. On 6 March
2015 that Court found that the plan submitted by Los Pelambres was
not sufficient to address the requirements of the Supreme Court
order, and as a consequence Los Pelambres must destroy part, or
all, of the tailings dam wall. Los Pelambres considers the ruling
to be flawed, has appealed the Court's decision and is considering
the exercise of all available legal measures that may be required
to overturn this decision and address its potential
consequences.
In the second claim, the plaintiffs are seeking demolition of
the dam on the basis of the risk that its collapse would pose to
the community. The Civil Court in Los Vilos issued a decision in
May 2014 denying the demolition request but ordering Minera Los
Pelambres to undertake some additional measures to ensure
protection of the community, in the event of a major earthquake or
similar natural event. These measures would need to be reviewed and
agreed with the technically competent bodies responsible for
supervision of the dam. The decision of the Court of Los Vilos was
appealed by both the plaintiffs and Los Pelambres to the Court of
Appeal of La Serena. In April 2015 the Court of Appeal of La Serena
upheld Los Pelambres's appeal, overturning the decision of the
Court of Los Vilos and rejecting completely the plaintiff's claim.
The decision of the Court of Appeal has been appealed by the
plaintiffs to the Supreme Court.
Los Pelambres - Cerro Amarillo Waste Dump
In 2004, Los Pelambres received all of the required
authorisations from the Chilean government to deposit a waste-rock
dump ("Cerro Amarillo Waste Dump") in its current location which,
according to the then official Chilean maps (1996), was located
within Chile. In 2007 Chile modified the official maps in this area
without making the changes public. Los Pelambres stopped using the
relevant area of the Cerro Amarillo Waste Dump in 2011.
In February 2012, a binational border commission, established to
clarify the exact position of the Chile/Argentina border,
determined accurately the location of the border in the area of the
Cerro Amarillo Waste Dump, which showed that part of the Cerro
Amarillo Waste Dump was now located in Argentina.
In May 2014 Xstrata Pachón S.A. ("Xstrata Pachón"), a subsidiary
of Glencore and the holder of the mining properties on the
Argentinian side of the border, filed a claim against Los Pelambres
before the Federal Court of San Juan, Argentina, alleging that Los
Pelambres had unlawfully deposited waste-rock on its property.
Xstrata Pachón is seeking the removal of the waste-rock that is on
the Argentinian side of the border to Chile and compensation for
any other alleged damage.
Xstrata Pachón has also filed a criminal complaint before a
different Federal Court of San Juan alleging that Los Pelambres has
violated several Argentinian laws relating to the misappropriation
of land, unlawful appropriation of water bodies and that people's
health is in jeopardy from the alleged contamination that the Cerro
Amarillo Waste Dump might generate.
In both cases, Los Pelambres has submitted preliminary
objections to the Argentinian courts, which are still pending. Once
they are resolved, each party may appeal to higher courts. The
whole court process to final judgement could take several
years.
In March 2015, the Federal Court of San Juan issued an interim
ruling ordering certain specific measures aimed at the
environmental closure of the portion of the waste dump in
Argentina, once the relevant permits have been granted. Los
Pelambres has filed an appeal before the Court of Appeals of
Mendoza seeking to lift the order of the Court of San Juan.
As the Cerro Amarillo Waste Dump is a pile of inert waste rock,
any potential future environmental impact could be easily prevented
with the implementation of an appropriate environmental closure
plan, which is the accepted and recommended practice, but this
solution requires the willingness of all the parties. To date there
has been no adverse environmental impact.
Los Pelambres has offered to implement a comprehensive closure
plan for the whole dump (both in Argentina and Chile) to settle the
dispute, in line with the requirements of the Provincial
Authorities of San Juan, but Xstrata Pachón has rejected this
proposal outright, even though this solution would address all of
the alleged environmental concerns.
Los Pelambres will exercise all available legal avenues to
defend its position and will also seek to reach an understanding
with the relevant authorities in Argentina to allow for the
environmental closure of the Cerro Amarillo Waste Dump.
Tethyan Copper Company Pty Limited
The Group holds a 50% interest in Tethyan Copper Company Pty
Limited ("Tethyan"), its joint venture with Barrick Gold
Corporation ("Barrick"). In February 2011, Tethyan submitted an
application for a mining lease to the Government of Balochistan
which was subsequently rejected in November 2011. Tethyan is
pursuing two international arbitrations in order to protect its
legal rights: one against the Government of Pakistan under the
auspices of the International Centre for Settlement of Investment
Disputes ("ICSID"), and another against the Government of
Balochistan under the auspices of the International Chamber of
Commerce ("ICC"). Tethyan is seeking monetary damages only and is
no longer seeking the grant of a mining lease at Reko Diq. During
2014, Tethyan presented arguments on preliminary issues before the
ICC tribunal (including as to the jurisdiction of the ICC tribunal)
and on jurisdiction and merits before the ICSID tribunal. Both
arbitrations are continuing: Tethyan prevailed on the preliminary
issues before the ICC Tribunal, which will now proceed to consider
the merits of the parties' respective claims, while a decision from
the ICSID Tribunal on jurisdiction and liability is anticipated
during 2015.
20. Post balance sheet events
On 30 July 2015 the Group has entered into a definitive
agreement with Barrick Gold Corporation ("Barrick") under which
Antofagasta will acquire a 50% interest in Compañia Minera Zaldívar
Limitada ("Zaldivar"), and will become the operator of the Zaldivar
copper mine.
Total consideration for the transaction is US$1,005 million in
cash, which consists of US$980 million upon closing, subject to
customary adjustments, and five annual payments of US$5 million per
year, starting in 2016. Zaldivar is an open-pit, heap-leach copper
mine located in Northern Chile with over 20 years of operating
history. In 2014, Zaldivar produced approximately 100,000 tonnes of
copper at a net cash cost of US$1.79/lb, and generated US$244
million of income before income tax.
The transaction is subject to customary regulatory approvals,
and is expected to close in the fourth quarter of 2015.
21. Related party transactions
a) Joint ventures
The Group has a 50% interest in Tethyan Copper Company Limited
("Tethyan"), which is a joint venture with Barrick Gold Corporation
over Tethyan's mineral interests in Pakistan. During the six months
ended 30 June 2015 the Group contributed $2.1 million (Six months
ended 30 June 2014 - $2.5 million; year ended 31 December 2014 -
$8.5 million) to Tethyan.
The Group has a 50.1% interest in Energía Andina, which is a
joint venture with Origin Energy Geothermal Chile Limitada for the
evaluation and development of potential sources of geothermal and
solar energy. The balance due from Energía Andina S.A. to the Group
at during the six months ended 30 June 2015 was nil (Six months
ended 30 June 2014 - nil; year ended 31 December 2014 was less than
$0.1 million).
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During the six months ended 30 June 2015 the Group contributed
$0.6 million to Energia Andina. (Six months ended 30 June 2014
-$5.0 million; year ended 31 December 2014 - $7.7 million).
b) Associates
The Group has a 40% interest in Inversiones Hornitos S.A. During
the six months ended 30 June 2015 The Group paid $62.5 million (Six
months ended 30 June 2014 -$68.6 million; 2014 - $175.3 million) to
Inversiones Hornitos in relation to the energy supply contract at
Centinela. During the six months ended 30 June 2015 the Group has
received dividends from Inversiones Hornitos S.A. for $6.6 million
(Six months ended 30 June 2014 - $20 million; year ended 31
December 2014 - $20 million).
The Group has a 30% interest in Parque Eólico El Arrayán S.A.
("El Arrayán"). During the six months ended 30 June 2015 The Group
paid $21.9 million (Six months ended 30 June 2014 - nil; year ended
31 December 2014 - $12 million) to El Arrayan in relation to the
energy supply at Los Pelambres. During the six months ended 30 June
2015 The Group has contributed was nil to El Arrayán (Six months
ended 30 June 2014 - nil; year ended 31 December 2014 - $2.6
million).
The Group has a 40% interest in Alto Maipo SpA ("Alto Maipo").
During the six months ended 30 June 2015 The Group has made capital
contributions to Alto Maipo (Six months ended 30 June 2014 - nil;
2014 - nil). The balance due from Alto Maipo to the Group at six
months ended 30 June 2015 was $164.4 million (Six months ended 30
June 2014 - $124.4 million; year ended 31 December 2014 -$152.4
million) representing loan financing with an interest rate of LIBOR
six-months plus 4.25%.
As explained in Note 14, the Group completed its acquisition of
Duluth Metals Limited ("Duluth") in January 2015. As a result of
the acquisition the Group now has 100% interest in Twin Metals
Minnesota Limited ("Twin Metals") and therefore it has been
consolidated as subsidiary of the Group. During the period between
July 2014 and December 2014, The Group had 40% interest in Twin
Metals which was accounted as an associate and during this period
the Group contributed $2.8 million to Twin Metals. Before July 2014
Twin Metals was controlled by the Group and accounted for as a
subsidiary, and therefore all contributions from the Group to Twin
Metals were between consolidated Group subsidiaries.
c) Other related parties
The ultimate parent company of the Group is Metalinvest
Establishment, which is controlled by the E. Abaroa Foundation, in
which members of the Luksic family are interested. The Company's
subsidiaries, in the ordinary course of business, enter into
various sale and purchase transactions with companies also
controlled by members of the Luksic family, including Banco de
Chile S.A., Madeco S.A. and Compañía Cervecerías Unidas S.A., which
are subsidiaries of Quiñenco S.A., a Chilean industrial and
financial conglomerate the shares of which are traded on the
Santiago Stock Exchange. These transactions, all of which were on
normal commercial terms, are in total not considered to be
material.
The Group holds a 51% interest in Antomin 2 Limited ("Antomin
2") and Antomin Investors Limited ("Antomin Investors"), which own
a number of copper exploration properties. The Group originally
acquired its 51% interest in these properties for a nominal
consideration from Mineralinvest Establishment, a company
controlled by the Luksic family, which continues to hold the
remaining 49% of Antomin 2 and Antomin Investors. The Group is
responsible for any exploration costs relating to the properties
held by these entities. During the six months ended 30 June 2015
The Group incurred $2.3 million (Six months ended 30 June 2014 -
$13.9 million; year ended 31 December 2014 - $17.0 million) of
exploration work at these properties.
In March 2014 the Group acquired an additional 25.7% interest in
Michilla for $30.9 million, increasing the Group's interest from
74.2% to 99.9%. This included the acquisition of the 7.973% stake
held by Minera Cerro Centinela S.A., an entity ultimately
controlled by the Luksic family, for $9.6 million. Prior to this
transaction, Michilla paid dividends of $1.6 million to Minera
Cerro Centinela S.A.
RESPONSIBILITY STATEMENT
We confirm to the best of our knowledge:
a) the condensed set of financial statements has been prepared
in accordance with IAS 34 Interim Financial Reporting;
b) the half yearly financial report includes a fair review of
the information required by DTR 4.2.7R (being an indication of
important events that have occurred during the first six months of
the financial year, and their impact on the half yearly financial
report and a description of the principal risks and uncertainties
for the remaining six months of the financial year); and
c) the half yearly financial report includes a fair review of
the information required by DTR 4.2.8R (being disclosure of related
party transactions that have taken place in the first six months of
the financial year and that have materially affected the financial
position or the performance of the Group during that period and any
changes in the related party transactions described in the last
annual report that could have a material effect on the financial
position or performance of the Group in the first six months of the
current financial year).
By order of the Board
J-P Luksic WM Hayes
Chairman Director
24 August 2015
Independent review report to Antofagasta PLC
Report on the condensed consolidated interim financial
statements
Our Conclusion
We have reviewed the consolidated interim financial information,
defined below, in the interim financial statements of Antofagasta
PLC for the six months ended 30 June 2015. Based on our review,
nothing has come to our attention that causes us to believe that
the condensed consolidated interim financial information is not
prepared, in all material respects, in accordance with
International Accounting Standard 34 as adopted by the European
Union and the Disclosure and Transparency Rules of the United
Kingdom's Financial Conduct Authority.
This conclusion is to be read in the context of what we say in
the remainder of this report.
What we have reviewed
The condensed consolidated interim financial information, which
are prepared by Antofagasta PLC, comprise:
--the Consolidated balance sheet as at 30 June 2015;
--the Consolidated income statement and statement of
comprehensive income for the period then ended;
--the Consolidated statement of cash flows for the period then
ended;
--the consolidated statement of changes in equity for the period
then ended; and
--the explanatory notes to the condensed consolidated interim
financial information.
As disclosed in note 2, the financial reporting framework that
has been applied in the preparation of the full annual financial
statements of the Group is applicable law and International
Financial Reporting Standards (IFRS's) as adopted by the European
Union.
The condensed consolidated interim financial information
included in the half-yearly financial report have been prepared in
accordance with International Accounting Standard 34, 'Interim
Financial Reporting', as adopted by the European Union and the
Disclosure and Transparency Rules of the United Kingdom's Financial
Conduct Authority.
What a review of condensed consolidated financial information
involves
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410, 'Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity' issued by the Auditing Practices Board for use in
the United Kingdom. A review of interim financial information
consists of making enquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other
review procedures.
A review is substantially less in scope than an audit conducted
in accordance with International Standards on Auditing (UK and
Ireland) and, consequently, does not enable us to obtain assurance
that we would become aware of all significant matters that might be
identified in an audit. Accordingly, we do not express an audit
opinion.
We have read the other information contained in the half-yearly
financial report and considered whether it contains any apparent
misstatements or material inconsistencies with the information in
the condensed consolidated interim financial information.
Responsibilities for the condensed consolidated interim
financial information and the review
Our responsibilities and those of the directors
The half-yearly financial report, including the condensed
consolidated interim financial information, is the responsibility
of, and has been approved by, the directors. The directors are
responsible for preparing the half-yearly financial report in
accordance with the Disclosure and Transparency Rules of the United
Kingdom's Financial Conduct Authority.
Our responsibility is to express to the company a conclusion on
the condensed consolidated interim financial information in the
half-yearly financial report based on our review. This report,
including the conclusion, has been prepared for and only for the
company for the purpose of complying with the Disclosure and
Transparency Rules of the Financial Conduct Authority and for no
other purpose. We do not, in giving this conclusion, accept or
assume responsibility for any other purpose or to any other person
to whom this report is shown or into whose hands it may come save
where expressly agreed by our prior consent in writing.
PricewaterhouseCoopers LLP
Chartered Accountants
24 August 2015
London
Notes:
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