TIDMANTO
RNS Number : 0099V
Antofagasta PLC
25 January 2017
NEWS RELEASE, 25 JANUARY, 2017
Q4 2016 PRODUCTION REPORT
STRONG FINISH TO THE YEAR
Antofagasta plc CEO, Iván Arriagada said: "As expected
Antofagasta put in a strong performance in the final quarter of
2016 with production up 13.8% versus the previous quarter. As a
result, copper production for the full year was just under 710,000
tonnes, 12.5% higher than in 2015.
"Reflecting our continued focus on profitable tonnes, net cash
costs for 2016 fell by 20.0% year-on-year, to $1.20/lb benefiting
from rigorous cost control, increased production and lower input
prices.
"During the year our new Antucoya mine successfully ramped up to
full production and our latest acquisition, Zaldívar, contributed
its first full year of production. Both operations are now fully
integrated into the Group and are operating well.
"Looking ahead into 2017 we remain focused on operating and cost
efficiencies, and achieving our production targets. Although we
believe the industry has passed the low point in this commodity
cycle, uncertainty persists and we need to build carefully on the
solid foundations of our existing operations."
HIGHLIGHTS
PRODUCTION
-- Copper production in Q4 2016 was 205,500 tonnes, 13.8% higher
than the previous quarter with strong performances from Centinela,
Zaldívar and Los Pelambres driven by higher grades and increased
throughput.
-- Group copper production for the full year increased by 12.5%
compared to 2015 to 709,400 tonnes. This was driven by higher
copper production at Centinela and additional production coming
from the Group's new Antucoya and Zaldívar operations, partly
offset by the closure of Michilla at the end of 2015.
-- Gold production was 91,100 ounces in Q4 2016, a 29.7%
increase on Q3 2016 due to higher grades and throughput at
Centinela. For the full year production was 270,900 ounces, 26.6%
higher than in 2015, again reflecting better grades and throughput
at Centinela.
-- Molybdenum production at Los Pelambres was 2,000 tonnes in Q4
2016 and 7,100 tonnes for the full year. This was a small increase
for the quarter and a 3,000 tonne decrease for the full year as
grades and recoveries fell.
CASH COSTS
-- Cash costs before by-product credits in Q4 2016 were
$1.46/lb, 5.2% lower than in Q3 2016 as production volumes
increased, particularly at Centinela.
-- Cash costs before by-product credits for the full year were
$1.54/lb, 27c/lb lower than last year as a result of the successful
cost savings achieved during the year, higher production and the
previously announced change in the estimation method for deferred
stripping costs.
-- Net cash costs were $1.13/lb in Q4 2016, a 4.2% decrease
compared with the previous quarter. This was primarily due to lower
cash costs before by-products credits and higher production of gold
and molybdenum
-- Net cash costs for 2016 were $1.20/lb, 20.0% lower than in
2015. This reflected the lower cash costs before by-product
credits, higher gold production and higher realised prices for gold
and molybdenum, partly offset by lower molybdenum production.
2017 GUIDANCE
-- Group production in 2017 is expected to be in the range of
685-720,000 tonnes of copper (as previously announced), 185-205,000
ounces of gold and 8,500-9,500 tonnes of molybdenum.
-- Group cash cost before by-product credits in 2017 are
expected to be similar to this year's at $1.55/lb and net cash cost
are expected to be approximately $1.30/lb.
OTHER
-- As previously announced in November, the Group agreed the
sale of the majority of the assets of Michilla for a total
consideration of $52 million.
-- As announced on 20 January, Los Pelambres will transfer its
40% interest in Alto Maipo to AES Gener and the pricing of the
electricity provided by the project to Los Pelambres will be
reduced. This transaction is subject to approval by the
lenders.
GROUP PRODUCTION AND CASH COSTS Full Year Q4 Q3
-------------------------------------- ----------------------- ------ ------ ------
2016 2015 % 2016 2016 %
------------------------------ ------ ------ ------ ------- ------ ------ ------
Copper production(1) kt 709.4 630.3 12.5 205.5 180.6 13.8
Copper sales(2) kt 698.5 636.0 9.8 206.7 182.3 13.4
Gold production koz 270.9 213.9 26.6 91.1 70.3 29.7
Molybdenum production kt 7.1 10.1 (29.7) 2.0 1.9 5.3
------------------------------ ------ ------ ------ ------- ------ ------ ------
Cash costs before by-product
credits(3) $/lb 1.54 1.81 (14.9) 1.46 1.54 (5.2)
Net cash costs(3) $/lb 1.20 1.50 (20.0) 1.13 1.18 (4.2)
------------------------------ ------ ------ ------ ------- ------ ------ ------
(1) Includes pre-commercial production at Antucoya of 12,700
tonnes, which is not included in the 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
Investors - London Media - 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 - 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
MINING OPERATIONS
Los Pelambres
Los Pelambres produced 96,100 tonnes of copper in Q4 2016
compared with 87,200 tonnes in the previous quarter. This increase
is mainly due to higher grades and improved plant reliability. In
the full year 2016, copper production decreased by 2.1% compared
with last year. This decrease is primarily due to lower throughput
as a greater proportion of harder ore is processed in the plant,
which was partly offset by higher mined grades.
Molybdenum production was slightly higher at 2,000 tonnes in Q4
2016 compared to 1,900 in the previous quarter, primarily due to
higher grades partially offset by lower recoveries. Production for
the full year of 7,100 tonnes was 29.7% lower than in 2015, due to
lower grades and recoveries during the course of 2016.
Cash costs before by-product credits in Q4 2016 were $1.35/lb,
compared with $1.43/lb in the previous quarter. This improvement
was principally a result of higher grades and lower energy
consumption. For the full year, cash costs before by-product
credits at $1.36/lb were 9.3% lower than in 2015, primarily due to
a change in the estimation method for deferred stripping costs.
Net cash costs in Q4 2016 at $1.11/lb were 2.8% higher than in
the previous quarter due to lower realised prices for by-products.
Net cash costs for the full year 2016 were $1.06/lb compared with
$1.23/lb in 2015. This decrease is mainly due to higher realised
prices for gold and molybdenum, slight offset by lower molybdenum
production.
As previously announced, negotiations between Los Pelambres, AES
Gener SA ("Gener", the majority shareholder of Alto Maipo SpA) and
the lenders to the project have reached an advanced stage, subject
to final approval by the lenders. Los Pelambres has agreed with
Gener that it will transfer its 40% interest in Alto Maipo to Gener
and the electricity price applicable to the Power Purchase
Agreement with Alto Maipo will be reduced. The carrying value of
Los Pelambres's investment in Alto Maipo of $356 million will be
written off.
LOS PELAMBRES Full Year Q4 Q3
------------------------------
2016 2015 % 2016 2016 %
------------------------------ ------ ------ ------ ------- ------ ------ -------
Daily ore throughput kt 155.6 168.2 (7.5) 160.8 158.1 1.7
Copper grade % 0.73 0.70 4.3 0.77 0.70 10.0
Copper recovery % 88.6 87.9 0.8 87.2 88.6 (1.6)
Copper production kt 355.4 363.2 (2.1) 96.1 87.2 10.2
Copper sales kt 351.6 366.0 (3.9) 97.4 80.6 20.8
------------------------------ ------ ------ ------ ------- ------ ------ -------
Molybdenum grade % 0.017 0.021 (19.0) 0.020 0.016 25.0
Molybdenum recovery % 75.8 80.4 (5.7) 69.7 79.0 (11.7)
Molybdenum production kt 7.1 10.1 (29.7) 2.0 1.9 5.3
Molybdenum sales kt 7.2 9.9 (27.3) 1.8 2.3 (21.7)
Gold production koz 57.8 51.4 12.5 14.7 14.2 3.5
Gold sales koz 62.8 53.4 17.6 15.7 14.5 8.3
------------------------------ ------ ------ ------ ------- ------ ------ -------
Cash costs before by-product
credits(1) $/lb 1.36 1.50 (9.3) 1.35 1.43 (5.6)
Net cash costs(1) $/lb 1.06 1.23 (13.8) 1.11 1.08 2.8
------------------------------ ------ ------ ------ ------- ------ ------ -------
(1) Includes tolling charges of $0.27/lb in Q4 2016, $0.27/lb in
Q3 2016, $0.27/lb in FY 2016 and $0.27/lb in FY 2015
Centinela
Centinela finished the year with a strong quarter. Total copper
production was 22.6% higher in the fourth quarter than the third
quarter following a significant increase in grades and improved
throughput. Total production for the full year 2016 was 6.8% higher
than in 2015 primarily as a result of higher sulphides grades and
completion of the concentrator expansion project, although this was
partly offset by lower throughput in the Centinela Cathodes plant
and the expected continued decline in oxide grades.
Production of copper in concentrates was 59,500 tonnes in Q4
2016, compared with 47,700 tonnes in the previous quarter primarily
as a result of significantly higher grades.
Copper in concentrate production for the full year was 24.2%
higher year-on-year mainly reflecting expanded throughput capacity
following the installation of new tailings thickeners and
modifications to the grinding and flotation circuits. Higher grades
and slightly higher recoveries also helped increase production
during the year.
Cathode production in Q4 2016 was 16,500 tonnes, a 15.4%
increase on the 14,300 tonnes produced in Q3 2016 largely as a
result of higher grades and slightly higher throughput, partly
offset by lower recoveries. Compared with the full year 2015,
cathode production during 2016 was 26.5% lower as grades declined
as expected with mining in the lower grade zones of the Tesoro
Central and Tesoro Noreste pits.
Gold production was 76,400 ounces in Q4 2016, 20,300 ounces
higher than in the previous quarter primarily due to significant
increase in grade slightly offset by lower recovery. For the full
year 2016 gold production was 213,000 ounces, some 31% higher than
in 2015 mainly due to higher throughput and grades as recoveries
remained flat across the two years.
Cash costs before by-product credits were $1.45/lb in Q4 2016
compared with $1.63/lb in the previous quarter. This decrease in
costs was mainly due to higher production in the quarter. Cash
costs before by-product credits for the year were 22.9%, or 52c/lb,
lower than in 2015 of which 23c/lb was a result of a change in the
estimation method for deferred stripping costs and the balance was
due to higher production.
In addition to the fall in cash costs before by-product credits,
higher gold production helped reduce net cash costs by 17.1% in Q4
2016 compared to the previous quarter and, combined with a higher
realised gold price, by 35.7% to $1.19/lb for the full year.
CENTINELA Full Year Q4 Q3
2016 2015 % 2016 2016 %
------------------------------- ------ ------ ------ ------- ----- ----- -------
CONCENTRATES
------ ------ ------ ------- -----
Daily ore throughput kt 92.1 84.2 9.4 95.7 92.2 3.8
Copper grade % 0.63 0.58 8.6 0.82 0.65 26.2
Copper recovery % 87.7 85.5 2.6 88.7 88.5 0.2
Copper production kt 180.4 145.2 24.2 59.5 47.7 24.7
Copper sales kt 171.7 145.6 17.9 56.5 55.8 1.3
------------------------------- ------ ------ ------ ------- ----- ----- -------
Gold grade g/t 0.28 0.24 16.7 0.40 0.29 37.9
Gold recovery % 72.2 72.3 (0.1) 71.3 73.0 (2.3)
Gold production koz 213.0 162.5 31.1 76.4 56.1 36.2
Gold sales koz 208.7 165.8 25.9 75.4 68.8 9.6
------------------------------- ------ ------ ------ ------- ----- ----- -------
CATHODES
------------------------------- ------ ------ ------ ------- ----- ----- -------
Daily ore throughput kt 22.1 25.4 (13.0) 24.0 23.4 2.6
Copper grade % 0.81 0.98 (17.3) 0.90 0.82 9.8
Copper recovery % 70.7 68.9 2.6 72.8 74.2 (1.9)
Copper production - heap
leach kt 46.7 64.4 (27.5) 14.5 12.4 16.9
Copper production - total((1) kt 55.8 75.9 (26.5) 16.5 14.3 15.4
Copper sales kt 55.8 78.8 (29.2) 17.5 14.5 20.7
Total copper production kt 236.2 221.1 6.8 76.0 62.0 22.6
------------------------------- ------ ------ ------ ------- ----- ----- -------
Cash costs before by-product
credits(2) $/lb 1.75 2.27 (22.9) 1.45 1.63 (11.0)
------------------------------- ------ ------ ------ ------- ----- ----- -------
Net cash costs(2) $/lb 1.19 1.85 (35.7) 0.87 1.05 (17.1)
------------------------------- ------ ------ ------ ------- ----- ----- -------
(1) Includes production from ROM material
(2) Includes tolling charges for copper in concentrates of
$0.23/lb in Q4 2016, $0.21/lb in Q3 2016, $0.22/lb in FY 2016 and
$0.20/lb FY 2015
Antucoya
Copper production at Antucoya was 19,700 tonnes in Q4 2016, 1.5%
higher than in the previous quarter as higher throughput was offset
by lower grade and recoveries. For the full year, Antucoya produced
66,200 tonnes of copper, in line with guidance for the year and
54,000 tonnes more than in its 2015 start-up year.
During the quarter cash costs were inflated by the payment of
one-off signing bonuses following the conclusion of labour
negotiations with the unions in October equivalent to 14c/lb. Costs
in Q4 2016 were $1.98/lb compared to $1.68/lb in Q3. Cash costs for
the full year were $1.83/lb.
ANTUCOYA Full Year Q4 Q3
2016 2015 % 2016 2016 %
---------------------- ------ ----- ----- ------ ----- ----- -------
Daily ore throughput kt 67.6 31.7 113.2 81.7 69.7 17.2
Copper grade % 0.39 0.36 8.3 0.37 0.43 (14.0)
Copper recovery % 70.6 73.2 (3.6) 70.5 71.9 (1.9)
Copper production kt 66.2 12.2 442.6 19.7 19.4 1.5
Copper sales kt 66.6 9.2 623.9 21.1 19.6 7.7
---------------------- ------ ----- ----- ------ ----- ----- -------
Cash costs(1) $/lb 1.83 1.98 1.68 17.9
---------------------- ------ ----- ----- ------ ----- ----- -------
(1) Cash costs from Q2 2016 onwards following commercial
production being reached on 1 April 2016
Zaldívar
Copper production at Zaldívar was 13,700 tonnes in Q4 2016,
14.2% higher than in the previous quarter as the mine achieved its
highest level of throughput since it was acquired by the Group. The
benefit of the increased throughput and the significantly higher
grades in the quarter will be spread over the 330 days of the heap
leach cycle. For the full year Zaldívar produced 51,700 tonnes of
copper cathodes.
Cash costs decreased to $1.47/lb in Q4 2016 compared with
$1.73/lb in the previous quarter primarily due to higher copper
production and an adjustment to inventory values. Cash costs for
2016 were even lower than expected at the beginning of the year at
$1.54/lb as sulphide leach recoveries benefitted from experience
gained at other Group operations and grades were higher than
anticipated.
ZALDÍVAR Full Year Q4 Q3
2016 2015(1) % 2016 2016 %
-------------------------------- ------ ----- -------- ----- ----- -------
Daily ore throughput kt 48.1 52.7 45.2 16.6
Copper grade % 0.66 0.81 0.62 30.6
Copper recovery % 66.4 67.3 70.4 (4.4)
Copper production - heap
leach((2) kt 35.6 9.6 8.5 12.9
Copper production - total(2,3) kt 51.7 13.7 12.0 14.2
Copper sales((2) kt 51.7 14.2 11.9 19.3
-------------------------------- ------ ----- -------- ----- ----- -------
Cash costs $/lb 1.54 1.47 1.73 (15.0)
-------------------------------- ------ ----- -------- ----- ----- -------
(1) No 2015 figures. Group acquired its interest in Zaldívar on 1 December 2015
(2) Group's 50% share
(3) Includes production from secondary leaching
Transport
Total volumes transported by the division were 1.5 million
tonnes in Q4 2016, 5.0% lower than in the previous quarter, due to
a decline in acid availability in the region. For the year
transport volumes were 6.5 million tonnes, 6.3% higher than in 2015
due to increased customer demand and improved performance of the
rolling stock fleet and better fleet utilisation.
Full Year Q4 Q3
2016 2015 % 2016 2016 %
--------------------------- ---- ------- ------- ---- ------- ------- -------
Rail kt 5,310 4,933 7.6 1,269 1,318 (3.7)
Road kt 1,186 1,180 0.5 280 313 (10.5)
--------------------------- ---- ------- ------- ---- ------- ------- -------
Total tonnage transported kt 6,496 6,113 6.3 1,548 1,630 (5.0)
--------------------------- ---- ------- ------- ---- ------- ------- -------
Commodity prices and exchange rates
Full Year Q4 Q3
2016 2015 % 2016 2016 %
---------------- ------ ------ ------ ------- ------ ------ -------
Copper
--------------------------------------------------------------------------
Market price $/lb 2.21 2.50 (11.6) 2.40 2.17 10.6
Realised price $/lb 2.33 2.28 2.2 2.69 2.18 23.4
---------------- ------ ------ ------ ------- ------ ------ -------
Gold
--------------------------------------------------------------------------
Market price $/oz 1,248 1,160 7.6 1,220 1,335 (8.6)
Realised price $/oz 1,256 1,155 8.7 1,168 1,315 (11.2)
---------------- ------ ------ ------ ------- ------ ------ -------
Molybdenum
--------------------------------------------------------------------------
Market price $/lb 6.5 6.7 (3.0) 6.6 7.0 (5.7)
Realised price $/lb 6.8 5.7 19.3 5.2 7.2 (27.8)
---------------- ------ ------ ------ ------- ------ ------ -------
Exchange rates
--------------------------------------------------------------------------
per
Chilean peso $ 677 654 3.5 666 662 0.6
---------------- ------ ------ ------ ------- ------ ------ -------
The spot commodity prices for copper, gold and molybdenum as at
the end of 2016 were $2.51/lb, $1,148/oz and $6.75/lb respectively
compared with $2.20/lb, $1,316/oz and $6.71/lb as at 30 September
2016 and $2.13/lb, $1,062/oz and $5.30/lb as at 31 December
2015.
The provisional pricing adjustments for copper, gold and
molybdenum for the quarter were positive $127.9 million, negative
$5.6 million and negative $6.8 million respectively.
The provisional pricing adjustments for copper, gold and
molybdenum for the year were positive $153.6 million, negative $1.9
million and positive $2.4 million respectively.
Depreciation, amortisation and tax
As previously announced, depreciation and amortisation for the
full year is expected to be similar to 2015 ($576 million).
The effective tax rate is now expected to be lower than
previously announced at approximately 35%.
2017 Guidance
Los Pelambres Centinela Antucoya Zaldívar Group
-------------------- ------ -------------- ---------- --------- -------------- ----------
Production
-------------------- ------ -------------- ---------- --------- -------------- ----------
Copper kt 330 - 345 220 - 230 80 - 85 55 - 60 685 - 720
Gold koz 45 - 55 140 - 150 - - 185 - 205
Molybdenum kt 8.5 - 9.5 - - - 8.5 - 9.5
-------------------- ------ -------------- ---------- --------- -------------- ----------
Grade
-------------------- ------ -------------- ---------- --------- -------------- ----------
Copper % 0.66 0.60 0.37 0.75 -
-------------------- ------ -------------- ---------- --------- -------------- ----------
Cash costs
-------------------- ------ -------------- ---------- --------- -------------- ----------
Cash costs
before by-product
credits $/lb 1.45 1.75 1.60 1.50 1.55
Net cash costs((1) $/lb 1.15 1.35 1.60 1.50 1.30
-------------------- ------ -------------- ---------- --------- -------------- ----------
(1) Includes by-product credits at a gold price of $1,250/oz and
a molybdenum price of $6.0/lb
Group copper production for 2017 is expected to be in the range
of 685-720,000 tonnes, similar to the 709,400 tonnes produced in
2016. Centinela will be operating at its newly expanded capacity
and the Group will benefit from the first year of full production
from Antucoya and start-up production from Encuentro Oxides.
However, this growth will be offset by lower mined grades at
Centinela and Los Pelambres.
Group gold production for 2017 is expected to be in the range of
185-205,000 ounces, a decrease of 24-32% on 2016, and molybdenum
production is expected to be 8,500-9,500 tonnes, 20-34% higher than
in 2016, reflecting changes in mined grade.
Group cash costs before by-product credits for 2017 are expected
to be almost unchanged at $1.55/lb as further expected savings and
the decrease in costs at Antucoya and Zaldívar are offset by a
lower contribution from the lowest cost mine, Los Pelambres. Net
cash costs are expected to increase by some 10c/lb to $1.30/lb.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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