TIDMANTO
RNS Number : 0426T
Antofagasta PLC
20 July 2022
NEWS RELEASE, 20 JULY 2022
Q2 2022 PRODUCTION REPORT
FULL YEAR GUIDANCE REVISED
Antofagasta plc CEO, Iván Arriagada said: "In the first half of
2022 we produced 268,600 tonnes of copper at a net cash cost of
$1.82/lb. Reduced production levels and higher costs compared to
last year reflect the expected impact of the drought and the
temporary closure of the concentrate pipeline at Los Pelambres in
June, as well as lower grades at Centinela Concentrates.
"Looking to the second half of the year, we expect production to
increase quarter-on-quarter as throughput recovers at Los Pelambres
with increased water availability, grades improve at Centinela
Concentrates and as the copper in concentrates, stockpiled at Los
Pelambres' concentrator plant, is moved to the port.
"The significant decline in the copper price since the beginning
of June has reinforced our commitment to control costs,
particularly during this period of higher input prices and general
inflation.
"Following the pipeline incident at Los Pelambres, and the
continued uncertainty about water availability, full year copper
production is now expected to be 640-660,000 tonnes. The impact of
this and the high current levels of inflation are partially offset
by the weakening of the Chilean peso and we now estimate full year
net cash cost guidance at $1.65/lb."
HIGHLIGHTS
PRODUCTION
-- Group copper production(1) in Q2 2022 was 129,800 tonnes , a
decrease of 6.5% compared to the previous quarter, mainly due to
the previously announced concentrate pipeline incident at Los
Pelambres which reduced reported production during the period by
approximately 23,000 tonnes. Operation of the pipeline resumed by
the end of the period and 12,000 tonnes of copper in concentrates
stockpiled at the concentrator plant will be moved to the port by
October
-- Group copper production(1) in the first six months of the
year was 268,600 tonnes , 25.7% lower than in the same period last
year mainly due to the expected temporary reduction in throughput
at Los Pelambres as a result of the drought and the concentrate
pipeline incident, and expected lower grades at Centinela
Concentrates. Throughput at Los Pelambres was 36.2% lower than in
H1 2021, and the grades at Centinela Concentrates were 25.4%
lower
-- Gold production for the quarter decreased by 7.8% to 35,400
ounces compared with Q1 mainly due to the concentrate pipeline
incident, and for the first six months decreased by 38.8% to 73,800
ounces mainly due to expected lower grades at Centinela
-- Molybdenum production was 2,000 tonnes , the same as the
previous quarter. For the year to date, production was 4,000
tonnes, 31.0% lower than in the same period last year due to lower
throughput and grades at Los Pelambres
CASH COSTS
-- Cash costs before by-product credits in the quarter were
$2.40/lb , 6c/lb higher than in the first quarter and for the first
half of the year were $2.37/lb, 37.0% higher than in the same
period last year mainly due to the temporary decrease in production
and higher input prices, particularly for diesel and sulphuric
acid. General inflation was largely offset by the weaker Chilean
peso
-- Net cash costs were $1.90/lb in Q2 2022 and $1.82/lb for the
first half of the year , compared to $1.75/lb in the previous
quarter and $1.14/lb in the first half of 2021, reflecting the
increase in cash costs before by-product credits and slightly lower
by-product credits due to lower by-product production, partially
offset by higher realised prices
GROWTH PROJECTS UPDATE
-- The Los Pelambres Expansion project was 82% complete as at the end of the quarter
-- Completion of the desalination plant is expected in Q4 2022
and of the concentrator plant expansion in early 2023
2022 GUIDANCE
-- Full year copper production for the Group is revised
downwards to 640-660,000 tonnes. This revision mainly reflects the
impact of the pipeline incident and the continued uncertainty
arising from the water shortage at Los Pelambres
-- The drought has continued at Los Pelambres during the period
although there has been heavier precipitation in July. The revised
guidance range incorporates a low probability negative outlook for
water availability for the rest of the year. Strict water
management protocols remain in place to optimise water usage and
mitigate the impact of low water availability
-- With increases in diesel and other input prices, net cash
cost guidance is increased to $1.65/lb, assuming market consensus
estimates of by-product prices and the Chilean Peso exchange rate
are achieved for the rest of the year
-- As announced in April, Group capital expenditure for the year is expected to be $1.9 billion
SUSTAINABILITY
-- From April this year all mining operations have been
operating solely using renewable energy significantly reducing the
Company's Scope 2 emissions
OTHER
-- As previously announced, there was a leak in the concentrate
pipeline at Los Pelambres on 31 May. This has been repaired and
operation of the pipeline resumed on 26 June. A full assessment of
the incident found no material or irreversible environmental impact
and the pipeline was approved for reopening by the relevant local
regulator (Sernageomin). A review is underway to ensure enhanced
safety conditions are incorporated into pipeline operations ahead
of the replacement of the pipeline which is currently being
permitted and is expected to be completed in 2025. Engagement with
members of the local communities concerned about the safety of the
pipeline by the Company together with the local authorities were
concluded successfully
-- Copper concentrates stockpiled at the concentrate plant will
be transferred to the port by October using the spare capacity of
the pipeline. It is estimated that the full impact of the
disruption will be a loss of approximately 15,000 tonnes of
production over the full year
-- The Constitutional Convention completed the draft of the new
constitution on 4 July. A national referendum to accept or reject
the new constitution will be held on 4 September
-- The government presented a tax reform bill to Congress on 1
July and a new proposal for the mining royalty on 11 July. This
proposal is being evaluated by the mining industry. The initial
view is that it is more onerous than the proposal made by the
Senate Mining and Energy Committee in January, but less onerous
than the original proposal made by the lower house in May 2021. The
new draft will now be discussed and approved by the Senate before
being passed to the lower house for its consideration
-- On 11 July the Company released a special report on its tax
payments in respect of 2021. The report provides detailed
information about the nature of the taxes paid by the Company and
the amounts paid, and can be found on the Antofagasta website
GROUP PRODUCTION AND CASH COSTS Year to Date Q2 Q1
----------------------- ------ ------
2022 2021 % 2022 2022 %
------------------------------------- ------ ------ ------- ------ ------ ------
Copper production(1) Kt 268.6 361.5 (25.7) 129.8 138.8 (6.5)
Copper sales Kt 263.0 346.1 (24.0) 147.1 115.9 26.9
Gold production Koz 73.8 120.5 (38.8) 35.4 38.4 (7.8)
Molybdenum production Kt 4.0 5.8 (31.0) 2.0 2.0 0.0
------------------------------ ------ ------ ------ ------- ------ ------ ------
Cash costs before by-product
credits (2) $/lb 2.37 1.73 37.0 2.40 2.34 2.6
Net cash costs (2) $/lb 1.82 1.14 59.6 1.90 1.75 8.6
------------------------------ ------ ------ ------ ------- ------ ------ ------
(1) Copper production for copper in concentrates is defined as
tonnes of filtered concentrate at the port of export
(2) 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 - Media - London
London
Andrew Lindsay alindsay@antofagasta.co.uk Carole Cable antofagasta@brunswickgroup.com
Telephone +44 20 7808 0988 Telephone +44 20 7404 5959
Rosario Orchard rorchard@antofagasta.co.uk
Telephone +44 20 7808 0988 Media - Santiago
Pablo Orozco porozco@aminerals.cl
Carolina Pica cpica@aminerals.cl
Telephone +56 2 2798 7000
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MINING OPERATIONS
Los Pelambres
Los Pelambres produced 44,300 tonnes of copper in Q2 2022, 18.1%
lower than in the previous quarter. This decrease is mainly as a
result of the leak in the concentrate pipeline detected on 31 May
and access restrictions implemented by some members of the local
communities concerned about the safety of the pipeline. The
pipeline has now been repaired and engagement with the local
communities successfully concluded. Pipeline operations resumed on
26 June.
During the shutdown approximately 12,000 tonnes of copper in
concentrates were stockpiled at the plant. These will not be
reported as production until they are filtered at the port, which
is expected to be completed by October.
In the first six months of 2022, copper production decreased by
41.9% to 98,400 tonnes compared with the same period last year.
This decrease includes the impact of the leak in the concentrate
pipeline, but was mainly driven by the expected reduced throughput,
which was down 36.2% compared with the prior year due to water
restrictions arising from the drought.
Molybdenum production was 1,400 tonnes in Q2 2022, the same as
the previous quarter. Production for the first six months of the
year decreased to 2,700 tonnes from 5,100 in H1 2021, due to lower
throughput and molybdenum grades.
Gold production for the first six months of 2022 was 15,400
ounces, 12,600 ounces lower than in the same period last year due
to expected lower throughput and gold grades.
Cash costs before by-product credits in Q2 2022 were $2.06/lb,
4.0% higher than Q1, and for the first six months of 2022 were
$2.02/lb, 33.8% higher than the same period last year. This was due
to the decrease in production, higher input prices, mainly diesel
and explosives, and general inflation, partially offset by the
weaker Chilean peso.
Net cash costs in Q2 2022 increased by 10c/lb compared to Q1
2022 to $1.37/lb and for the year to date increased by 59.0% to
$1.32/lb. This reflected the higher cash costs before by-product
credits.
Major maintenance was completed at Los Pelambres during the
quarter.
As at the end of H1 the Los Pelambres Expansion project was 82%
complete (engineering, procurement and construction).
LOS PELAMBRES Year to Date Q2 Q1
----------------------- ------ ------
2022 2021 % 2022 2022 %
------------------------------------- ------ ------ ------- ------ ------ -------
Daily ore throughput kt 104.5 163.9 (36.2) 110.1 98.8 11.4
Copper grade % 0.66 0.66 0.0 0.64 0.68 (5.9)
Copper recovery % 90.7 89.7 1.1 89.3 92.3 (3.3)
Copper production kt 98.4 169.3 (41.9) 44.3 54.1 (18.1)
Copper sales kt 96.3 165.5 (41.8) 54.4 41.9 29.8
------------------------------ ------ ------ ------ ------- ------ ------ -------
Molybdenum grade % 0.017 0.021 (19.0) 0.018 0.016 12.5
Molybdenum recovery % 85.0 84.6 0.5 83.9 86.5 (3.0)
Molybdenum production kt 2.7 5.1 (47.1) 1.4 1.4 0.0
Molybdenum sales kt 2.7 4.9 (44.9) 1.5 1.2 25.0
Gold grade g/t 0.043 0.048 (10.4) 0.042 0.044 (4.5)
Gold recovery % 72.9 66.5 9.6 72.4 73.5 (1.5)
Gold production koz 15.4 28.0 (45.0) 6.8 8.6 (20.9)
Gold sales koz 15.2 25.8 (41.1) 8.8 6.4 37.5
------------------------------ ------ ------ ------ ------- ------ ------ -------
Cash costs before by-product
credits (1) $/lb 2.02 1.51 33.8 2.06 1.98 4.0
Net cash costs (1) $/lb 1.32 0.83 59.0 1.37 1.27 7.9
------------------------------ ------ ------ ------ ------- ------ ------ -------
(1) Includes tolling charges of $0.18/lb in Q2 2022, $0.16/lb in
Q1 2022, $0.17/lb YTD 2022 and $0.15/lb YTD 2021
Centinela
Total copper production in H1 2022 was 111,300 tonnes, 15.7%
lower than in H1 2021 due to expected lower ore grades at Centinela
Concentrates, slightly offset by higher grades at Centinela
Cathodes. Total copper production in Q2 2022 was 55,600 tonnes in
line with the previous quarter.
Production of copper in concentrates was 33,300 tonnes in Q2
2022, 1.2% higher than the previous quarter and 66,200 tonnes for
the half year, 26.8% lower than in the same period last year,
mainly due to expected lower copper grades which were 0.44%
compared to 0.59% in H1 2021. This was partially offset by
increased throughput with the concentrator averaging above design
capacity throughput for the full half year.
Copper cathode production during the quarter was 22,200 tonnes,
3.1% lower than Q1 2022, and for the first six months it was 45,100
tonnes, 8.2% higher than in the same period last year primarily due
to expected higher grades and recoveries.
Gold production in Q2 was 28,600 ounces, 4.0% lower than the
previous quarter and in H1 it was 58,400 ounces, 36.9% lower than
H1 last year as grades, which are correlated to copper grades, and
recoveries decreased.
Molybdenum production in H1 2022 increased to 1,300 tonnes from
700 tonnes in H1 2021, due to higher grades.
Cash costs before by-product credits in Q2 were $2.66/lb, 1.5%
lower than in the previous quarter due to major maintenance
completed during Q1. Cash costs before by-product credits for the
first six months of 2022 were $2.68/lb, 48.9% higher than the same
period in 2021 primarily due to lower production and higher input
costs, particularly for diesel, sulphuric acid and explosives.
General inflation was largely offset by the weaker Chilean
peso.
By-product credits decreased from $0.77/lb in Q1 to $0.63/lb in
Q2 due to lower realised prices and lower gold production. For the
first six months of 2022, by-product credits were $0.70/lb, 2c/lb
lower than in the same period last year.
Net cash costs in Q2 2022 were $2.03/lb, 5.2% higher than the
previous quarter, and during the first six months of the year net
cash costs were $1.98/lb, 90c/lb higher than in H1 2021 reflecting
the increase in cash costs before by-product credits and the
slightly lower by-product credits.
Major maintenance is still scheduled in Q3 2022 and is included
in full year guidance.
CENTINELA Year to Date Q2 Q1
----------------------- ------ ------
2022 2021 % 2022 2022 %
------------------------------------- ------ ------ ------- ------ ------ -------
CONCENTRATES
Daily ore throughput kt 107.3 104.7 2.5 110.6 104.0 6.3
Copper grade % 0.44 0.59 (25.4) 0.45 0.44 2.3
Copper recovery % 80.0 84.7 (5.5) 78.8 81.4 (3.2)
Copper production kt 66.2 90.4 (26.8) 33.3 32.9 1.2
Copper sales kt 64.5 80.8 (20.2) 42.0 22.5 86.7
------------------------------ ------ ------ ------ ------- ------ ------ -------
Molybdenum grade % 0.013 0.009 44.4 0.013 0.013 0.0
Molybdenum recovery % 60.7 46.2 31.4 61.7 59.7 3.4
Molybdenum production kt 1.3 0.7 85.7 0.6 0.6 0.0
Molybdenum sales kt 1.2 0.8 50.0 0.7 0.4 75.0
Gold grade g/t 0.15 0.22 (31.8) 0.15 0.15 0.0
Gold recovery % 65.3 72.4 (9.8) 64.0 66.7 (4.0)
Gold production koz 58.4 92.5 (36.9) 28.6 29.8 (4.0)
Gold sales koz 58.3 77.9 (25.2) 36.1 22.2 62.6
------ ------ ------- ------ ------ -------
CATHODES
Daily ore throughput kt 56.3 56.3 0.0 57.3 55.4 3.4
Copper grade % 0.64 0.60 6.7 0.62 0.65 (4.6)
Copper recovery % 66.1 65.1 1.5 64.5 67.8 (4.9)
Copper production - heap
leach kt 43.4 39.8 9.0 21.3 22.1 (3.6)
Copper production - total
(1) kt 45.1 41.7 8.2 22.2 22.9 (3.1)
Copper sales kt 42.5 38.6 10.1 20.0 22.6 (11.5)
------------------------------ ------ ------ ------ ------- ------ ------ -------
Total copper production kt 111.3 132.1 (15.7) 55.6 55.8 (0.4)
Cash costs before by-product
credits (2) $/lb 2.68 1.80 48.9 2.66 2.70 (1.5)
Net cash costs (2) $/lb 1.98 1.08 83.3 2.03 1.93 5.2
------------------------------ ------ ------ ------ ------- ------ ------ -------
(1) Includes production from ROM material
(2) Includes tolling charges of $0.14/lb in Q2 2022, $0.14/lb in
Q1 2022, $0.14/lb YTD 2022 and $0.12/lb YTD 2021
Antucoya
Antucoya produced 18,900 tonnes of copper in Q2 2022, 8.6%
higher than in the previous quarter mainly due to a 12.0% increase
in throughput, which was at its highest level since the mine opened
in 2015. Production in the first six months of 2022 was 36,400
tonnes, 7.8% lower than the same period last year due to expected
lower grades, partially offset by higher throughput.
During the quarter, cash costs were $2.59/lb compared to
$2.40/lb in Q1. For the first six months, cash costs were 22.5%
higher than in H1 2021 at $2.50/lb due to lower production and
increased input costs, particularly for sulphuric acid, diesel and
explosives. General inflation was largely offset by the weaker
Chilean peso.
A labour negotiation with the supervisors' union was
successfully concluded during the quarter before the November 2022
deadline. The labour agreement with the workers' union expires at
the end of September.
ANTUCOYA Year to Date Q2 Q1
-------------------- ----- -----
2022 2021 % 2022 2022 %
----------------------------- ----- ----- ------ ----- ----- ------
Daily ore throughput kt 87.2 84.0 3.8 92.1 82.2 12.0
Copper grade % 0.32 0.35 (8.6) 0.32 0.31 3.2
Copper recovery % 69.0 68.4 0.9 68.6 69.4 (1.2)
Copper production kt 36.4 39.5 (7.8) 18.9 17.4 8.6
Copper sales kt 37.1 40.1 (7.5) 19.7 17.4 13.2
---------------------- ------ ----- ----- ------ ----- ----- ------
Cash costs $/lb 2.50 2.04 22.5 2.59 2.40 7.9
---------------------- ------ ----- ----- ------ ----- ----- ------
Zaldívar
Copper production at Zaldívar in Q2 2022 was 11,000 tonnes, 4.3%
lower than in the previous quarter due to lower grades and
throughput, partially offset by higher recoveries. Production for
the year to date was 22,500 tonnes, 9.2% higher compared with the
same period last year due to higher copper grades and
recoveries.
Following completion of the Chloride Leach project, recoveries
are projected to increase as the project ramps up. The methodology
of reporting recoveries has been changed to be consistent with
other operations and now reflect recoveries in the period rather
than over a 12-month period.
Cash costs during Q2 were $2.18/lb, 3.8% higher than in Q1 2022,
and for the first six months of 2022 were $2.14/lb compared with
$2.46/lb in the same period in 2021, mainly due to higher
production partially offset by higher input prices.
ZALDÍVAR Year to Date Q2 Q1
--------------------- ----- -----
2022 2021 % 2022 2022 %
---------------------------------- ----- ----- ------- ----- ----- ------
Daily ore throughput kt 39.3 40.3 (2.5) 39.0 39.5 (1.3)
Copper grade % 0.81 0.78 3.8 0.78 0.84 (7.1)
Copper recovery (1) % 53.7 50.6 6.1 54.2 53.2 1.9
Copper production - heap
leach (2) kt 15.8 15.2 3.9 7.6 8.2 (7.3)
Copper production - total
(2,3) kt 22.5 20.6 9.2 11.0 11.5 (4.3)
Copper sales (2) kt 22.7 21.1 7.6 11.1 11.6 (4.3)
Cash costs $/lb 2.14 2.46 (13.0) 2.18 2.10 3.8
----- ----- ----- -----
(1) Metallurgical recoveries during the period. Prior periods
have been restated
(2) Group's 50% share
(3) Includes production from secondary leaching
Transport Division
Total transport volumes in Q2 2022 were 1.8 million tonnes, 7.5%
higher than in the previous quarter, mainly due to customers' lower
production and poor weather conditions during Q1.
For the first six months of the year, transport volumes
increased by 11.8% as new rail transport contracts have ramped up
during the period.
TRANSPORT Year to Date Q2 Q1
--------------------- ------ ------
2022 2021 % 2022 2022 %
-------------------------------- ------ ------ ----- ------ ------ -----
Rail kt 2,708 2,514 7.7 1,398 1,310 6.7
Road kt 861 678 27.0 451 410 10.0
Total tonnage transported kt 3,570 3,192 11.8 1,849 1,720 7.5
------ ------ ------ ------
Commodity prices and exchange rates
Year to Date Q2 Q1
---------------------- ------ ------
2022 2021 % 2022 2022 %
------ ------ ------ ------ ------
Copper
Market price $/lb 4.43 4.13 7.3 4.32 4.53 (4.6)
Realised price $/lb 4.13 4.42 (6.6) 3.42 5.05 (32.3)
---------------- ------ ------ ------ ------ ------ ------ -------
Gold
Market price $/oz 1,873 1,808 3.6 1,873 1,877 (0.2)
Realised price $/oz 1,899 1,776 6.9 1,821 2,021 (9.9)
---------------- ------ ------ ------ ------ ------ ------ -------
Molybdenum
Market price $/lb 18.7 12.7 47.2 18.4 19.1 (3.7)
Realised price $/lb 18.0 16.1 11.8 16.4 19.9 (17.6)
---------------- ------ ------ ------ ------ ------ ------ -------
Exchange rates
per
Chilean peso $ 826 720 14.7 843 808 4.3
---------------- ------ ------ ------ ------ ------ ------ -------
Spot prices for copper, gold and molybdenum as at 30 June 2022
were $3.74/lb, $1,815/oz and $17.1/lb respectively, compared with
$4.69/lb, $1,933/oz and $19.3/lb as at 31 March 2022 and $4.26/lb,
$1,760/oz and $19.0/lb as at 30 June 2021.
The provisional pricing adjustments for copper, gold and
molybdenum for the quarter were negative $312.7 million, negative
$2.0 million and negative $14.1 million respectively.
The provisional pricing adjustments for copper, gold and
molybdenum for the year to date were negative $206.8 million,
positive $3.7 million and negative $13.2 million respectively.
The US$/CHP exchange rate as at 30 June 2022 was 932, compared
with 845 as at 31 December 2021.
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