TIDMANTO
RNS Number : 4440N
Antofagasta PLC
26 October 2016
NEWS RELEASE, 26 OCTOBER, 2016
Q3 2016 PRODUCTION REPORT
STRONG PRODUCTION GROWTH IN Q3
WITH ANTUCOYA ACHIEVING PRODUCTION CAPACITY
Antofagasta plc CEO, Iván Arriagada said, "Antofagasta has had a
strong quarter, with copper production up 8.7% versus Q2 2016 and
Antucoya reaching production capacity in August. Performance is
expected to continue to improve during the final quarter of the
year, with full year 2016 copper production expected to be close to
the lower end of the original guidance range of 710,000 to 740,000
tonnes.
"Since becoming CEO I have continued to focus our efforts on
reducing costs and improving operational efficiencies, and here
again we are making good progress with net cash costs decreasing by
5.6% to $1.18/lb. We now expect cash costs for the full year to be
$1.25/lb, 5c/lb lower than previously guided.
"As part of these efficiency programmes we have also reviewed
our mine plans and wider operational activities to improve decision
making and the accuracy of forecasting. This has involved a
rigorous assessment of our plans with a focus on profitable tonnes
and a higher level of certainty without compromising safety or
operational standards. Following this review, production in 2017 is
expected to be in the range of 685,000 to720,000 tonnes."
SUMMARY
PRODUCTION
-- Copper production in Q3 2016 was 180,600 tonnes, 8.7% higher
than in the previous quarter with Antucoya reaching full production
in August
-- Group copper production for the year to date of 503,900
tonnes was 9.4% higher than in the same period last year, primarily
due to new production from Zaldívar and Antucoya, offset by the
closure of Michilla at the end of 2015
-- Gold production was 70,300 ounces in the quarter, a 33.1%
increase on Q2 2016 largely due to higher gold grades at
Centinela
-- Molybdenum production at Los Pelambres was 1,900 tonnes in Q3
2016, compared to 1,600 tonnes in Q2 2016 with higher grades at Los
Pelambres
CASH COSTS
-- Cash costs before by-product credits in Q3 2016 were
$1.54/lb, 1.9% lower than in Q2 2016. This decrease mainly reflects
the increase in production and further cost savings achieved
through the Cost and Competitiveness Programme (CCP)
-- Year to date cash costs before by-product credits at $1.58/lb
were 13.2% lower than the comparable period last year reflecting
increased production and cost savings from the CCP
-- Net cash costs were $1.18/lb in Q3 2016, a 5.6% decrease
compared with the previous quarter primarily due to lower cash
costs before by-product credits and increased gold production and
price
-- Year to date net cash costs were $1.23/lb, an 18.0% decrease
compared to the same period in 2015 and 2.4% lower than in H1
2016
OTHER
-- Following the announcement of a forecast 10-20% total cost
overrun for the Alto Maipo hydroelectric project, combined with the
expected significant decrease in long term energy prices in Chile
resulting from the growing contribution of solar and wind power
generation, Los Pelambres is reviewing its options with respect to
the project and the potential impact on the carrying value of this
investment
-- Los Pelambres is working to address charges recently raised
by the Chilean environmental authority (SMA). These charges are
unrelated to previous court cases and water protests and the
company is analysing various alternatives to resolve the
situation
-- Labour agreements with a term of three years have been
successfully concluded with the workforce union at Antucoya and the
supervisors unions at Los Pelambres and Zaldívar
GUIDANCE
-- Production growth is expected to continue in Q4 2016 and
guidance for the year is expected to be close to the lower end of
the 710-740,000 tonnes range provided at the beginning of the
year
-- Production in 2017 is expected to be in the range of
685-720,000 tonnes reflecting the completion of the Centinela
Concentrates throughput expansion and the first full year of
production at Antucoya offset by a decline in grade at Centinela
and lower throughput at Los Pelambres as it processes a higher
proportion of hard ore
-- Net cash costs guidance for 2016 is lowered from $1.30/lb to $1.25/lb
-- Capital expenditure for the current year and 2017 is expected
to be below $900 million in both years
GROUP PRODUCTION AND CASH COSTS Year to Date Q3 Q2
-------------------------------------- ----------------------- ------ ------ ------
2016 2015 % 2016 2016 %
------------------------------ ------ ------ ------ ------- ------ ------ ------
Copper production(1) kt 503.9 460.4 9.4 180.6 166.2 8.7
Copper sales(2) kt 491.7 455.6 7.9 182.3 155.2 17.5
Gold production koz 179.7 158.2 13.6 70.3 52.8 33.1
Molybdenum production kt 5.2 7.3 (28.8) 1.9 1.6 18.8
------------------------------ ------ ------ ------ ------- ------ ------ ------
Cash costs before by-product
credits(3) $/lb 1.58 1.82 (13.2) 1.54 1.57 (1.9)
Net cash costs(3) $/lb 1.23 1.50 (18.0) 1.18 1.25 (5.6)
------------------------------ ------ ------ ------ ------- ------ ------ ------
(1) Includes pre-commercial production at Antucoya of 12,700
tonnes, which is not included in unit cost calculations
(2) Includes pre-commercial production sales at Antucoya of 11,800 tonnes
(3) Cash cost is a non-GAAP measure used by the mining industry
to express the cost of production in US dollars per pound of copper
produced
This announcement contains inside information.
Investors - Media - London
London
Andrew Lindsay alindsay@antofagasta.co.uk Carole Cable antofagasta@brunswickgroup.com
Paresh Bhanderi pbhanderi@antofagasta.co.uk Will Medvei antofagasta@brunswickgroup.com
Telephone +44 20 7808 0988 Telephone +44 20 7404 5959
Investors - Media - Santiago
Santiago
Alfredo Atucha aatucha@aminerals.cl Pablo Orozco porozco@aminerals.cl
Telephone +56 2 2798 7000 Carolina cpica@aminerals.cl
Pica
Telephone +56 2 2798 7000
----------------- ---------------------------- ----------------- -------------------------------
MINING OPERATIONS
Los Pelambres
Los Pelambres produced 87,200 tonnes of copper in Q3 2016
compared with 89,800 tonnes in the previous quarter. This decrease
is mainly due to lower grades and recoveries during the quarter,
partly offset by higher throughput. During the first nine months of
the year, copper production at Los Pelambres was 259,300 tonnes,
2.4% lower than the same period last year. This decrease was due to
lower throughput as harder ore becomes a bigger component of the
feed to the processing facilities.
Sales of copper were lower than production in Q3 2016 as
unfavourable weather conditions disrupted shipments of concentrate
at the quarter end. Shipments have since returned to normal.
Molybdenum production was 18.8% higher at 1,900 tonnes in Q3
2016 compared to the previous quarter, primarily due to higher
throughput and grade. During the first nine months of the year
5,200 tonnes of molybdenum were produced, compared to 7,300 tonnes
in 2015 due to lower grade and recovery.
Cash costs before by-product credits in Q3 2016 were $1.43/lb,
compared with $1.33/lb in the previous quarter. This increase was
principally due to lower production and the stronger peso. Compared
with the first nine months of last year, cash costs before
by-product credits at $1.36/lb were 11.7% lower than in 2015.
Net cash costs in Q3 2016 at $1.08/lb were 8.0% higher than in
the previous quarter, reflecting the increase in cash costs before
by-product credits. For the first nine months of the year net cash
costs were down 17.5% to $1.04/lb due to lower cash costs before
by-product credits, as explained above, and higher realised
by-product prices.
LOS PELAMBRES Year to date Q3 Q2
2016 2015 % 2016 2016 %
------------------------------ ------ ------ ------ ------- ------ ------ -------
Daily ore throughput kt 153.8 167.5 (8.2) 158.1 155.8 1.5
Copper grade % 0.70 0.70 - 0.70 0.73 (4.1)
Copper recovery % 89.1 87.5 1.8 88.6 89.6 (1.1)
Copper production kt 259.3 265.6 (2.4) 87.2 89.8 (2.9)
Copper sales kt 254.2 262.2 (3.1) 80.6 90.2 (10.6)
------------------------------ ------ ------ ------ ------- ------ ------ -------
Molybdenum grade % 0.016 0.020 (20.0) 0.016 0.015 6.7
Molybdenum recovery % 78.6 81.8 (3.9) 79.0 80.3 (1.6)
Molybdenum production kt 5.2 7.3 (28.8) 1.9 1.6 18.8
Molybdenum sales kt 5.4 7.0 (22.9) 2.3 1.3 76.9
Gold production koz 43.1 35.5 21.4 14.2 14.8 (4.1)
Gold sales koz 47.1 36.1 30.5 14.5 16.9 (14.2)
------------------------------ ------ ------ ------ ------- ------ ------ -------
Cash costs before by-product
credits(1) $/lb 1.36 1.54 (11.7) 1.43 1.33 7.5
Net cash costs(1) $/lb 1.04 1.26 (17.5) 1.08 1.00 8.0
------------------------------ ------ ------ ------ ------- ------ ------ -------
(1) Includes tolling charges of $0.27/lb in Q3 2016, $0.26/lb in
Q2 2016, $0.27/lb in 2016 YTD and 0.27/lb in 2015 YTD
After the period end Los Pelambres received notification of
various charges against it from the Chilean environmental authority
(SMA). Los Pelambres remains committed to full compliance and is
working to address these charges, some of which have been under
discussion for several years. The charges do not relate to the
court cases that were resolved earlier this year or to the protests
about water availability last year. The company is analysing
various alternatives and is confident that it can resolve the
situation in a manner acceptable to the SMA. Furthermore, the
likelihood of the mine having to be closed, even temporarily, as a
consequence of the charges is regarded as extremely low, as is the
imposition of any significant fines.
Los Pelambres annually spends some $40 million a year on
sustainability.
Centinela
Total copper production at Centinela was 62,000 tonnes in Q3
2016, 28.4% higher than in the previous quarter due to higher
production of copper in concentrates and higher cathode
production.
Production of copper in concentrates in Q3 2016 at 47,700 tonnes
was 32.5% higher than in the previous quarter primarily due to
significantly higher grades, higher throughput and improved
recoveries. Copper in concentrates in the first nine months of the
year was 9.6% higher compared to the same period last year, with
120,900 tonnes produced, as higher throughput and recoveries more
than offset the decline in grade. In the short term grades are
expected to increase during Q4 2016 as mining moves to a higher
grade zone, before falling lower in 2017.
Sales of copper concentrate were significantly higher in Q3 2016
than production as stocks, which had accumulated at the port as a
result of poor weather at the end of June, were shipped in
July.
Cathode production in Q3 2016 was 14,300 tonnes, a 15.3%
increase on the 12,400 tonnes produced in Q2 2016 largely as a
result of increased throughput as restrictions in the reclamation
system eased in the quarter. Higher grades at 0.82%, together with
improved recoveries also contributed to the increase in
production.
Compared with the same period last year, cathode production
during 2016 was 33.0% lower as grades declined in line with
expectations as mining moved into the lower grade zones of the
Tesoro Noreste and Tesoro Central pits.
Gold production was 56,100 ounces in Q3 2016, 18,100 ounces
higher than in the previous quarter primarily due to an increase in
grade, as well as higher throughput and recoveries.
Cash costs before by-product credits were $1.63/lb in Q3 2016
compared with $1.98/lb in the previous quarter. This 17.7% decrease
in costs was mainly due to higher production during the
quarter.
In the first nine months of the year cash costs before
by-product credits were $1.89/lb, 14.1% lower than the same period
last year, as progress on the cost reduction programme continues
and the company benefits from lower consumables' prices and
favourable exchange rates offsetting declines in grade at both
Centinela Concentrates and Centinela Cathodes.
Net cash costs in Q3 2016 were $1.05/lb, compared to $1.49/lb in
Q2 2016, with significantly higher gold production and an improved
realised price. During the first nine months of the year net cash
costs were $1.35/lb compared to $1.78/lb due to higher realised
gold prices and higher gold production.
Following the quarter end, major maintenance was conducted at
the concentrator plant in the first week of October. A fault was
detected with the SAG mill motor which led to the mill being shut
down for an additional five days impacting production by some 3,000
tonnes.
CENTINELA Year to date Q3 Q2
2016 2015 % 2016 2016 %
------------------------------- ------ ------ ------ ------- ----- ----- -------
CONCENTRATES
------ ------ ------ ------- -----
Daily ore throughput kt 90.9 81.2 11.9 92.2 88.5 4.2
Copper grade % 0.57 0.61 (6.6) 0.65 0.54 20.4
Copper recovery % 87.2 86.4 0.9 88.5 87.1 1.6
Copper production kt 120.9 110.3 9.6 47.7 36.0 32.5
Copper sales kt 115.2 110.2 4.5 55.8 25.8 116.3
------------------------------- ------ ------ ------ ------- ----- ----- -------
Gold grade g/t 0.24 0.25 (4.0) 0.29 0.22 31.8
Gold recovery % 72.7 73.7 (1.4) 73.0 69.2 5.5
Gold production koz 136.6 122.7 11.3 56.1 38.0 47.6
Gold sales koz 133.3 125.2 6.5 68.8 26.9 155.8
------------------------------- ------ ------ ------ ------- ----- ----- -------
CATHODES
------------------------------- ------ ------ ------ ------- ----- ----- -------
Daily ore throughput kt 21.5 25.5 (15.7) 23.4 19.3 21.2
Copper grade % 0.78 1.03 (24.3) 0.82 0.76 7.9
Copper recovery % 69.8 68.7 1.6 74.2 72.9 1.8
Copper production - heap
leach kt 33.1 50.1 (33.9) 12.4 10.2 21.6
Copper production - total((1) kt 39.3 58.7 (33.0) 14.3 12.4 15.3
Copper sales kt 38.4 59.0 (34.9) 14.5 10.9 33.0
Total copper production kt 160.2 169.0 (5.2) 62.0 48.3 28.4
------------------------------- ------ ------ ------ ------- ----- ----- -------
Cash costs before by-product
credits(2) $/lb 1.89 2.20 (14.1) 1.63 1.98 (17.7)
------------------------------- ------ ------ ------ ------- ----- ----- -------
Net cash costs(2) $/lb 1.35 1.78 (24.2) 1.05 1.49 (29.5)
------------------------------- ------ ------ ------ ------- ----- ----- -------
(1) Includes production from ROM material
(2) Includes tolling charges for copper in concentrates of
$0.21/lb in Q3 2016, $0.21/lb in Q2 2016, $0.22/lb in 2016 YTD and
$0.20/lb 2015 YTD
Antucoya
The plant achieved production capacity in August. Improvements
to the dust suppression systems have been implemented in the
primary crusher during the quarter with positive results, and will
be installed in the secondary crusher by the end of October
2016.
Copper production at Antucoya was 19,400 tonnes in Q3 2016,
34.7% higher than in the previous quarter due to higher grades,
throughput and recoveries. During the quarter the cash costs were
$1.68/lb, compared to $1.82/lb in Q2 2016, which reflects the
ramp-up of the operation to full production capacity.
ANTUCOYA Year to date Q3 Q2
2016 2015 % 2016 2016 %
---------------------- ------ ------ ----- ----- ----- ------
Daily ore throughput kt 62.8 - - 69.7 64.9 7.4
Copper grade % 0.40 - - 0.43 0.35 22.9
Copper recovery % 70.6 - - 71.9 68.2 5.4
Copper production kt 46.4 - - 19.4 14.4 34.7
Copper sales kt 45.5 - - 19.6 14.2 38.0
---------------------- ------ ------ ----- ----- ----- ------
Cash costs(1) $/lb 1.74 - - 1.68 1.82 (7.7)
---------------------- ------ ------ ----- ----- ----- ------
(1) Cash costs from Q2 2016 onwards following commercial
production being reached on 1 April 2016
Zaldívar
The Group's share of copper production at Zaldívar was 12,000
tonnes in Q3 2016, compared with 13,600 tonnes in Q2 2016 as lower
throughput was partly offset by higher grade and higher recoveries.
Copper production for the first nine months of the year was 38,000
tonnes.
Cash costs increased to $1.73/lb in Q3 2016 compared with
$1.42/lb in the previous quarter primarily due to lower copper
production. Cash costs for the first nine months of 2016 were
$1.58/lb.
ZALDÍVAR Year to date Q3 Q2
2016 2015 % 2016 2016 %
------------------------------ ------ ------ ----- ----- ----- -------
Daily ore throughput kt 46.5 - - 45.2 49.7 (9.1)
Copper grade % 0.60 - - 0.62 0.55 12.7
Copper recovery % 67.5 - - 70.4 69.4 1.4
Copper production - heap
leach(1) kt 26.7 - - 8.5 10.0 (15.0)
Copper production - total(1,
2) kt 38.0 - - 12.0 13.6 (11.8)
Copper sales(1) kt 37.5 - - 11.9 14.0 (15.0)
------------------------------ ------ ------ ----- ----- ----- -------
Cash costs $/lb 1.58 - - 1.73 1.42 21.8
------------------------------ ------ ------ ----- ----- ----- -------
(1) Group's 50% share
(2) Includes production from secondary leaching
Transport
Total volumes transported by the division were 1.6 million
tonnes in Q3 2016, slightly lower than in the previous quarter.
Total volumes for the year to date were 4.9 million tonnes, 13.2%
higher than in the same period last year due to additional demand
from customers, which has been accommodated through the improved
performance of the rolling stock fleet and better utilisation of
the truck fleet.
Year to date Q3 Q2
2016 2015 % 2016 2016 %
--------------------------- ---- ------ ------ ----- ------ ------ ------
Rail kt 4,043 3,516 15.0 1,318 1,357 (2.9)
Road kt 907 855 6.1 313 292 7.2
--------------------------- ---- ------ ------ ----- ------ ------ ------
Total tonnage transported kt 4,949 4,371 13.2 1,630 1,649 (1.2)
--------------------------- ---- ------ ------ ----- ------ ------ ------
Depreciation, amortisation and tax
The effective tax rate for the year is expected to be 40-45%,
and depreciation and amortisation for the full year is expected to
be similar to 2015 ($576 million).
Commodity prices and exchange rates
Year to date Q3 Q2
2016 2015 % 2016 2016 %
---------------- ------ ------ ------ ------- ------ ------ -------
Copper
--------------------------------------------------------------------------
Market price $/lb 2.14 2.59 (17.2) 2.17 2.15 0.9
Realised price $/lb 2.18 2.39 (8.8) 2.18 2.08 4.8
---------------- ------ ------ ------ ------- ------ ------ -------
Gold
--------------------------------------------------------------------------
Market price $/oz 1,258 1,179 6.7 1,335 1,259 6.0
Realised price $/oz 1,300 1,183 10.0 1,315 1,255 4.8
---------------- ------ ------ ------ ------- ------ ------ -------
Molybdenum
--------------------------------------------------------------------------
Market price $/lb 6.4 7.3 (11.4) 7.0 7.0 -
Realised price $/lb 7.3 6.2 17.8 7.2 10.3 (30.1)
---------------- ------ ------ ------ ------- ------ ------ -------
Exchange rates
--------------------------------------------------------------------------
per
Chilean peso $ 681 621 9.6 662 678 (2.4)
---------------- ------ ------ ------ ------- ------ ------ -------
The spot commodity prices for copper, gold and molybdenum as at
30 September 2016 were $2.20/lb, $1,316/oz and $6.71/lb
respectively compared with $2.20/lb, $1,322/oz and $7.5/lb as at 30
June 2016 and $2.35/lb, $1,115oz and $5.30/lb as at 30 September
2015.
The provisional pricing adjustments for copper, gold and
molybdenum for the quarter were positive $4.4 million, negative
$2.6 million and negative $1.2 million respectively.
The provisional pricing adjustments for copper, gold and
molybdenum for the first nine months of the year were positive
$25.4 million, $3.6 million and $9.2 million respectively.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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