REG - Antofagasta PLC - HALF YEARLY FINANCIAL REPORT JUNE 2017 <Origin Href="QuoteRef">ANTO.L</Origin> - Part 5
22/08/2017 07:06
- Part 5: For the preceding part double click ID:nRSV5934Od
precautionary measures be taken to limit
the possibility of water contamination (without specifying who should take such measures); (d) requiring the removal of the
waste dump in Argentina as soon as possible but in accordance with a plan to be devised in the future by the court
appointed experts; and (e) that environmental monitoring continues. Los Pelambres will be filing an appeal imminently and
in the meantime notes that the court has not specified a timetable for compliance with the orders and who should be
responsible for performing these obligations. Nor has any form of bond or guarantee been ordered.
Separately, members of the Foreign Affairs Ministries of Argentina and Chile have met in a bilateral working group during
the year to discuss a possible diplomatic solution to this matter.
Los Pelambres will exercise all available legal avenues to defend its position and will continue to take steps to implement
the appropriate environmental measures on the Cerro Amarillo Waste Dump to prevent any potential environmental damage.
Twin Metals Minnesota - Federal Mineral Leases MNES-1352 and MNES-1353
On 8 March 2016, the Solicitor of the Department of the Interior issued a legal opinion concluding that the Bureau of Land
Management (BLM) has discretion to deny Twin Metals' application for renewal of federal mineral leases MNES-1352 and
MNES-1353. The United States Forest Service (USFS) declined to consent to renewal of the leases on 14 December 2016, and
BLM rejected Twin Metals' application to renew the leases the next day.
The BLM's denial relied on the Solicitor's Opinion's conclusion that it had discretion to deny the renewal, and BLM took
the view that USFS consent was required to renew the leases. According to BLM, because the USFS refused consent, BLM was
required to reject the lease renewal application.
The Forest Service's decision was based ofn the potential environmental impacts of sulphide-ore copper mining in the
Boundary Waters watershed. The USFS decision did not discuss the terms and conditions of the leases or the project, nor did
it address Twin Metals' legal rights to the leases.
On 12 September 2016, Twin Metals filed a complaint in the U.S. District Court in Minnesota against the United States, the
U.S. Department of the Interior, Secretary of the Interior Sally Jewell, Solicitor Hilary C. Tompkins and BLM. Twin Metals
brought claims under the Quiet Title Act (QTA) and the Administrative Procedure Act (APA) seeking to secure its rights to
the two federal mineral leases. Following the USFS withholding of consent and BLM's denial of renewal, Twin Metals filed an
amended complaint on 3 January, 2017, adding the U.S. Department of Agriculture, Secretary of Agriculture Thomas J.
Vilsack, the USFS and Chief of the USFS Thomas L. Tidwell as defendants. The amended complaint seeks similar relief under
the QTA and APA, and also requests that the court overturn the government's denial of the leases.
On 21 February 2017, Northeastern Minnesotans for Wilderness (NMW), a local environmental advocacy group, intervened in the
lawsuit. On 5 June 2017, the government and NMW each filed a motion to dismiss Twin Metals' complaint. Twin Metals is
currently preparing its response to these motions.
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 2017 the Group contribution
was $3.5 million (six months ended 30 June 2016 - nil; year ended 31 December 2016 - $10.0 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. During the six months ended 30 June
2017 the Group contributed $0.2 million (six months ended 30 June 2016 - $1.0 million; year ended 31 December 2016 - $1.0
million)
The Group´s 50% interest in Minera Zaldívar which was acquired on 1 December 2015, which is a joint venture with Barrick
Gold Corporation. Antofagasta is the operator of Zaldívar from 1 December 2015 onwards.
b) Associates
The Group has a 40% interest in Inversiones Hornitos S.A. During the six months ended 30 June 2017 the Group paid $86.2
million (six months ended 30 June 2016 -$70.0 million; year ended 31 December 2016 - $112.6 million) to Inversiones
Hornitos in relation to the energy supply contract at Centinela. During the six months ended 30 June 2017 the Group has
received dividends from Inversiones Hornitos S.A. of $8.4 million (six months ended 30 June 2016 - $13.6 million; year
ended 31 December 2016 - $10.1 million).
The Group has a 30% interest in Parque Eólico El Arrayán S.A. ("El Arrayán"). During the six months ended 30 June 2017 the
Group paid $20.9 million (six months ended 30 June 2016 - $19.9 million; year ended 31 December 2016 - $38.1 million) to El
Arrayan in relation to the energy supply at Los Pelambres.
During 2017, the Group sold its 40% interest in Alto Maipo SpA ("Alto Maipo").
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 2017 the Group incurred $0.1 million (Six months
ended 30 June 2016 - $2.3 million; year ended 31 December 2016 - $1.0 million) of exploration costs at these properties.
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
Jean - Paul Luksic Ollie Oliveira
Chairman Director
21 August 2017
Independent review report to Antofagasta Plc
Report on the interim condensed consolidated financial statements
Our conclusion
We have reviewed Antofagasta Plc's interim condensed consolidated financial statements (the "interim financial statements")
in the half-yearly financial report of Antofagasta Plc for the 6 month period ended 30 June 2017. Based on our review,
nothing has come to our attention that causes us to believe that the interim financial statements are not prepared, in all
material respects, in accordance with International Accounting Standard 34, 'Interim Financial Reporting', as adopted by
the European Union and the Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's Financial Conduct
Authority.
What we have reviewed
The interim financial statements comprise:
the condensed consolidated balance sheet as at 30 June 2017;
the condensed consolidated income statement and condensed consolidated statement of comprehensive income for the period
then ended;
the condensed consolidated cash flow statement for the period then ended;
the condensed consolidated statement of changes in equity for the period then ended; and
the explanatory notes to the interim financial statements.
The interim financial statements 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
Guidance and Transparency Rules sourcebook of the United Kingdom's Financial Conduct Authority.
As disclosed in note 1 to the interim financial statements, 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 (IFRSs) as adopted by the European Union.
Responsibilities for the interim financial statements and the review
Our responsibilities and those of the directors
The half-yearly financial report, including the interim financial statements, 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 Guidance and Transparency Rules sourcebook of the United Kingdom's Financial Conduct Authority.
Our responsibility is to express a conclusion on the interim financial statements 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 Guidance and Transparency Rules sourcebook of the United Kingdom's 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.
What a review of interim financial statements 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, 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 interim financial statements.
PricewaterhouseCoopers LLP
Chartered Accountants
London
21 August 2017
a) The maintenance and integrity of the Antofagasta Plc website is the responsibility of the directors; the work
carried out by the auditors does not involve consideration of these matters and, accordingly, the auditors accept no
responsibility for any changes that may have occurred to the interim financial statements since they were initially
presented on the website.
b) Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ
from legislation in other jurisdictions.
Production and Sales Statistics (not subject to audit or review)
a) Production and sales volumes for copper, gold and molybdenum
Production Sales
Six months Six months Year ended 31.12.2016 Six months Six months Year ended 31.12.2016
ended ended ended ended
30.06.2017 30.06.2016 30.06.2017 30.06.2016
000 tonnes 000 tonnes 000 tonnes 000 tonnes 000 tonnes 000 tonnes
Copper
Los Pelambres 164.2 172.1 355.3 150.2 173.6 351.6
Centinela 116.6 98.2 236.2 120.3 83.4 227.6
Antucoya 39.6 27.0 66.2 39.3 26.0 66.6
Michilla - - - - 0.9 0.9
Zaldívar 25.9 26.0 51.7 24.3 25.5 51.7
Group total 346.3 323.3 709.4 334.1 309.4 698.4
Gold 000 ounces 000 ounces 000 ounces 000 ounces 000 ounces 000 ounces
Los Pelambres 26.7 29.0 57.8 24.0 32.6 62.8
Centinela 85.5 80.5 213.0 90.6 64.5 208.6
Group total 112.2 109.5 270.8 114.6 97.1 271.4
Molybdenum 000 tonnes 000 tonnes 000 tonnes 000 tonnes 000 tonnes 000 tonnes
Los Pelambres 4.5 3.3 7.1 4.3 3.1 7.2
Silver 000 ounces 000 ounces 000 ounces 000 ounces 000 ounces 000 ounces
Los Pelambres 1,137.9 1,286.7 2,585.8 1,040.8 1,392.0 2,701.9
Centinela 626.5 482.0 1,313.0 649.8 356.2 1,159.0
Group total 1,764.4 1,768.7 3,898.8 1,690.6 1,748.2 3,860.9
b) Cash costs per pound of copper produced and realised prices per pound of copper and molybdenum sold
Cash costs Realised prices
Six months Six months Year ended 31.12.2016 Six months Six months Year ended 31.12.2016
ended ended ended ended
30.06.2017 30.06.2016 30.06.2017 30.06.2016
$/lb $/lb $/lb $/lb $/lb $/lb
Copper
Los Pelambres 1.08 1.02 1.06 2.74 2.18 2.35
Centinela 1.20 1.53 1.19 2.72 2.17 2.32
Antucoya 1.71 1.82 1.83 2.65 2.15 2.30
Michilla - - - - 1.85 -
Zaldivar (attributable basis - 50%) 1.60 1.50 1.55 - 2.15 -
Group weighted average (net of by-products) 1.24 1.26 1.20 2.72 2.17 2.33
Group weighted average (before deducting by-products) 1.57 1.60 1.54
Group weighted average (before deducting by-products and excluding tolling charges from concentrate) 1.37 1.38 1.33
Cash costs at Los Pelambres comprise:
On-site and shipping costs 1.19 1.06 1.09
Tolling charges for concentrates 0.27 0.26 0.27
Cash costs before deducting by-product credits 1.45 1.32 1.36
By-product credits (principally molybdenum) (0.36) (0.30) (0.30)
Cash costs (net of by-product credits) 1.09 1.02 1.06
Cash costs at Centinela comprise:
On-site and shipping costs 1.47 1.83 1.53
Tolling charges for concentrates 0.20 0.22 0.22
Cash costs before deducting by-product credits 1.67 2.05 1.75
By-product credits (principally gold) (0.47) (0.53) (0.56)
Cash costs (net of by-product credits) 1.20 1.52 1.19
LME average copper price 2.61 2.13 2.21
Gold $/oz $/oz $/oz
Los Pelambres 1,259 1,232 1,253
Centinela 1,276 1,316 1,257
Group weighted average 1,272 1,288 1,256
Market average price 1,238 1,219 1,248
Molybdenum $/lb $/lb $/lb
Los Pelambres 8.0 7.4 6.8
Market average price 8.0 6.1 6.5
Silver $/oz $/oz $/oz
Los Pelambres 16.4 16.1 17.4
Centinela 17.0 16.0 17.7
Group weighted average 16.6 16.1 17.5
Market average price 17.3 15.8 17.1
Notes to the production and sales statistics
(i) For the Group's subsidiaries the production and sales figures reflect the total amounts produced and sold by
the mine, not the Group's share of each mine. The Group owns 60% of Los Pelambres, 70% of Centinela and 70% of Antucoya.
For the Zaldívar joint venture the production and sales figures reflect the Group's proportional 50% share.
(ii) Los Pelambres produces copper and molybdenum concentrates, Centinela produces copper concentrate and copper
cathodes and Antucoya and Zaldívar produce copper cathodes. The figures for Los Pelambres and Centinela are expressed in
terms of payable metal contained in concentrate and in cathodes. Los Pelambres and Centinela are also credited for the gold
and silver contained in the copper concentrate sold. Antucoya and Zaldívar produce cathodes with no by-products.
(iii) Cash costs are a measure of the cost of operational production expressed in terms of cents per pound of
payable copper produced. Cash costs are stated net of by-product credits and include tolling charges for concentrates at
Los Pelambres and Centinela. Cash costs exclude depreciation, financial income and expenses, hedging gains and losses,
exchange gains and losses and corporate tax for all four operations.
(iv) Realised copper prices are determined by comparing revenue from copper sales (grossing up for tolling charges
for concentrates) with sales volumes for each mine in the period. Realised molybdenum and gold prices are calculated on a
similar basis. Realised prices reflect gains and losses on commodity derivatives, which are included within revenue.
(v) The totals in the tables above may include some small apparent differences as the specific individual figures
have not been rounded.
(vi) The production information and the cash cost information is derived from the Group's production report for
the second quarter of 2017, published on 26 July 2017.
22. Alternative performance measures
This preliminary results announcement includes a number of alternative performance measures, in addition to IFRS amounts.
These measures are included because they are considered to provide relevant and useful additional information to users of
the accounts. Set out below are definitions of these alternative performance measures, explanations as to why they are
considered to be relevant and useful, and reconciliations to the IFRS figures.
a) EBTIDA
EBITDA refers to Earnings Before Interest, Tax, Depreciation and Amortisation. EBITDA is calculated by adding back
depreciation, amortisation, profit or loss on disposals and impairment charges to operating profit. This comprises 100% of
the EBITDA from the Group´s subsidiaries, and the Group´s proportional share of the EBITDA of its associates and joint
ventures.
EBITDA is considered to provide a useful and comparable indication of the current operational earnings performance of the
business, excluding the impact of the historic cost of property, plant & equipment or the particular financing structure
adopted by the business.
At 30 June 2017
Los Pelambres Centinela Antucoya Zaldívar Exploration and evaluation Corporate and other items Mining Railway and other transport services Total
$m $m $m $m $m $m $m $m $m
Operating profit/(loss) 433.1 267.8 42.1 - (22.0) (27.4) 693.6 27.7 721.3
Depreciation and amortisation 88.6 152.2 37.8 - - 3.6 282.2 7.8 290.0
Profit on disposals - - - - - - - (0.1) (0.1)
EBITDA from subsidiaries 521.7 420.0 79.9 - (22.0) (23.8) 975.8 35.4 1,011.2
Proportional share of the EBITDA from associates and JV - - - 56.8 - (0.8) 56.0 12.6 68.6
Total EBITDA 521.7 420.0 79.9 56.8 (22.0) (24.6) 1,031.9 48.0 1,079.8
At 30 June 2016
Los Pelambres Centinela Antucoya Zaldívar Exploration and evaluation Corporate and other items Mining Railway and other transport services Total
$m $m $m $m $m $m $m $m $m
Operating profit/(loss) 338.5 (38.6) (0.5) - (18.9) (24.6) 255.9 31.7 287.6
Depreciation and amortisation 96.7 123.4 16.7 - - 3.2 240.0 7.3 247.3
Loss on disposals 0.2 - - - - - 0.2 - 0.2
EBITDA from subsidiaries 435.4 84.8 16.2 - (18.9) (21.4) 496.1 39.0 535.1
Proportional share of the EBITDA from associates and JV - - - 37.1 - (4.6) 32.5 7.5 40.0
Total EBITDA 435.4 84.8 16.2 37.1 (18.9) (26.0) 528.6 46.5 575.1
b) Cash costs
Cash costs are a measure of the cost of operational production expressed in terms of cents per pound of payable copper
produced.
This is considered to be a useful and relevant measure as it is a standard industry measure applied by most major copper
mining companies which reflects the direct costs involved in producing each lb of copper. It therefore allows a
straightforward comparison of the unit production cost of different mines, and allows an assessment of the position of a
mine on the industry cost curve. It also provides a simple indication of the profitability of a mine when compared against
the price of copper (per lb).
At 30.06.2017 At 30.06.2016
$m $m
Reconciliation of cash costs excluding tolling charges and by-product revenues:
Total Group operating costs (Note 4) 1,327.9 1,156.6
Less:
Total - Depreciation and amortisation (Note 4) (290.0) (247.3)
Total - Loss on disposal (Note 4) 0.1 (0.2)
Elimination of non-mining operations
Corporate and other items - Total operating cost (Note 4) (25.3) (21.4)
Exploration and evaluation - Total operating cost (Note 4) (22.0) (18.9)
Railway and other transport services - Total operating cost (Note 4) (45.4) (41.1)
Closure provision and other expenses not included within cash costs (6.9) (3.5)
Total cost relevant to the mining operations' cash costs 938.3 824.2
Copper sales volumes - excluding Antucoya Q1 2016/ and Zaldívar (tonnes) 309,800 271,100
Cash costs excluding tolling charges and by-product revenues ($/tonne) 3,029 3,040
Cash costs excluding tolling charges and by-product revenues ($/lb) 1.37 1.38
Reconciliation of cash costs before deducting by-products:
Tolling charges - copper - Los Pelambres (Note 5) 80.3 93.0
Tolling charges - copper - Centinela (Note 5) 52.0 38.7
Tolling charges - copper - total 132.3 131.7
Copper sales volumes - excluding Antucoya Q1 2016/full year 2015 and Zaldívar (tonnes) 309,800 271,100
Tolling charges ($/tonne) 427 486
Tolling charges ($/lb) 0.20 0.22
Cash costs excluding tolling charges and by-product revenues ($/lb) 1.37 1.38
Tolling charges ($/b) 0.20 0.22
Cash costs before deducting by-products (S/lb) 1.57 1.60
At 30.06.2017 At 30.06.2016
$m $m
Reconciliation of cash costs (net of by-products):
Gold revenue - Los Pelambres (Note 4) 30.1 40.1
Gold revenue - Centinela (Note 4) 115.1 84.5
Molybdenum revenue - Los Pelambres (Note 4) 68.5 43.8
Silver revenue - Los Pelambres (Note 4) 16.6 21.9
Silver revenue - Centinela (Note 4) 10.8 5.6
Total by-product revenue 241.1 195.9
Copper sales volumes - excluding Antucoya Q1 2016/and Zaldívar tonnes) 309,800 271,100
Tolling charges ($/tonne) 778 723
Tolling charges ($/lb) 0.34 0.34
Cash costs before deducting by-products (S/lb) 1.57 1.60
By-product revenue ($/lb) (0.34) (0.34)
Cash costs (net of by-products) ($/lb) 1.23 1.26
The totals in the tables above may include some small apparent differences as the specific individual figures have not been
rounded.
c) Attributable cash, cash equivalents & liquid investments, borrowings and net debt
Attributable cash, cash equivalents & liquid investments, borrowings and net debt reflects the proportion of those balances
which are attributable to the equity holders of the Company, after deducting the proportion attributable to the
non-controlling interests in the Group's subsidiaries.
This is considered to be a useful and relevant measure as the majority of the Group's cash tends to be held at the
corporate level and therefore 100% attributable to the equity holders of the Company, whereas the majority of the Group's
borrowings tend to be at the level of the individual operations, and hence only a proportion is attributable to the equity
holders of the Company.
June 2017 June 2016
Total amount Attributable share Attributable amount Total amount Attributable share Attributable amount
$m $m $m $m
Cash, cash equivalents and liquid investments:
Los Pelambres 283.6 60% 170.2 492.0 60% 295.2
Centinela 400.3 70% 276.9 462.7 70% 323.9
Antucoya 178.9 70% 125.2 146.5 70% 102.6
Corporate 1,245.8 100% 1,250.5 1,025.3 100% 1,025.3
Railway and other transport services 57.5 100% 57.5 53.6 100% 53.6
Total 2,166.1 1,880.3 2,180.1 1,800.6
Borrowings:
Los Pelambres (Note 19) (363.3) 60% (218.0) (381.1) 60% (228.7)
Centinela (Note 19) (1,058.8) 70% (741.2) (1,196.0) 70% (837.2)
Antucoya (Note 19) (988.1) 70% (691.7) (994.6) 70% (696.2)
Corporate (Note 19) (525.2) 100% (525.2) (526.3) 100% (526.3)
Railway and other transport services (Note 19) (90.3) 100% (90.3) (121.7) 100% (121.7)
Total (Note 19) (3,025.7) (2,266.4) (3,219.7) (2,410.1)
Net debt (859.6) (386.1) (1,023.5) (609.5)
This information is provided by RNS
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