REG - Antofagasta PLC - HALF YEARLY FINANCIAL REPORT <Origin Href="QuoteRef">ANTO.L</Origin> - Part 5
19/08/2016 12:35
- Part 5: For the preceding part double click ID:nRSP2314Hd
investments 1,731.6 432.8 - 15.7 2,180.1
Bank borrowings due within one year (753.4) 72.2 (107.2) - (788.4)
Bank borrowings due after one year (1,963.3) (496.8) 135.0 - (2,325.1)
Finance leases due within one year (5.5) 13.9 (32.9) (0.3) (24.8)
Finance leases due after one year (29.9) 2.1 (48.5) (2.1) (78.4)
Preference shares (3.0) - (0.1) - (3.1)
Total borrowings (2,755.1) (408.6) (53.7) (2.4) (3,219.8)
Net (debt)/cash (1,023.5) 24.2 (53.7) 13.3 (1,039.7)
Net cash
Net cash at the end of each period was as follows:
Six months Six months Year ended 31.12.2015
ended ended
30.06.2016 30.06.2015
$m $m $m
Cash, cash equivalents and liquid investments 2,180.1 3,220.0 1,731.6
Total borrowings (3,219.7) (2,476.4) (2,755.1)
(1,039.6) 743.6 (1,023.5)
20. Litigation and Contingent liabilities
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 financial statements 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
Two 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 have been ongoing for a number of years.
Following the agreement reached between Los Pelambres and the Caimanes community in April, one of these claims - a claim in
which the plaintiffs sought demolition of the dam wall on the basis of the risk that its collapse would pose to the
community - was finally settled before the Supreme Court in August.
In the second claim, the plaintiffs had argued that the tailings dam affected their alleged water rights and the
environment. This allegation was based on assertions that the dam interfered with the flow and quality of the water in the
Pupío stream, a stream that passes through the valley in which the dam is built down to the Caimanes community. This claim
was rejected by the trial Court of Los Vilos in a judgement 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 a 3-2 majority decision, upheld the appeal
and ordered Los Pelambres to submit back to the trial Court of Los Vilos, within one month, an implementation plan for
works that would ensure that the operation of the dam did not affect the normal flow and quality of the waters of the Pupío
stream. That Court decided that the plan submitted by Los Pelambres was not sufficient to address the requirements of the
Supreme Court order, and that as a consequence Los Pelambres must demolish part, or all, of the tailings dam wall. Los
Pelambres appealed the Court's decision and in December 2015 the Court of Appeals ordered that, before it issues its
decision, a Court appointed engineer must review the plan submitted by Los Pelambres and issue a report explaining whether
or not the proposed works are enough to ensure that the flow of the Pupío stream to the Caimanes community is not altered
by the operation of the tailings dam and, if the proposed works are not deemed to be sufficient to achieve this purpose,
what additional or other works must be performed by Los Pelambres to achieve this goal. This report was submitted in June
2016 and confirmed that the proposed works are sufficient to comply with the decision of the Supreme Court. The Court of
Appeal issued its final decision earlier in August 2016 accepting the plan of works. Los Pelambres has six months to submit
the final details of the work plan to the Court, including the additional works set out in the agreement reached with the
Caimanes community. It remains probable that the claimants in this case will seek leave from the Supreme Court of Chile to
appeal this decision, however the Supreme Court will need to determine whether or not to accept that appeal in light of the
surrounding circumstances and only if the appeal were accepted, would the Supreme Court be required to consider anything
more substantive. Taking into account the agreement between Los Pelambres and the Caimanes community and the report issued
by the independent expert appointed by the Court of Appeal of La Serena, Los Pelambres does not expect there to be a
successful appeal in this case.
Los Pelambres - Cerro Amarillo Waste Dump
In 2004, Los Pelambres received all of the required authorisations from the Chilean government to deposit waste-rock from
its mining activities in its current location (the "Cerro Amarillo Waste Dump"). According to the then official Chilean
maps (1996), this area was located entirely within Chile. In 2007, Chile modified the official maps in this area without
making the changes public.
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, showing that part of the
Cerro Amarillo Waste Dump was located in Argentina.
In May 2014, Xstrata Pachón S.A. ("Xstrata Pachón"), a subsidiary of Glencore plc 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 when Los
Pelambres was depositing rock on the Cerro Amarillo Waste Dump it violated several Argentinian laws relating to the
misappropriation of land, unlawful appropriation of water bodies and that people's health was 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.
In the civil case, a final decision on these preliminary objections is still pending and substantive arguments will not be
made until and unless these preliminary objections are finally rejected.
In the meantime, and in accordance with a preliminary measure required by the Federal Court of San Juan, Los Pelambres and
the Province of San Juan executed an agreement in April 2016 by means of which Los Pelambres has committed itself to
perform a preventative process to isolate any environmental impacts of the Cerro Amarillo Waste Dump, regularly monitor
underground and surface waters, and undertake other additional actions requested by the Province.
In the criminal proceedings, in March 2016, the Federal Court of Appeals of Mendoza held that the Argentinian courts had
jurisdiction to hear this matter and MLP has taken steps to appeal this decision.
Los Pelambres will exercise all available legal avenues to defend its position and will continue to take steps to implement
the environmental isolation of the Cerro Amarillo Waste Dump in accordance with the agreement reached with the Province of
San Juan and the requirements of the Federal Court of San Juan.
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 2016 the Group contribution
was nil (six months ended 30 June 2015 - $2.1 million; year ended 31 December 2015 - $4.0 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. The balance due from Energía Andina
S.A. to the Group at during the six months ended 30 June 2016 was nil (six months ended 30 June 2015 - nil; year ended 31
December 2015 was less than $0.1 million).
During the six months ended 30 June 2016 the Group contributed $1.0 million to Energia Andina. (six months ended 30 June
2015 -$0.6 million; year ended 31 December 2015 - $1.3 million).
The Group´s 50% interest in Minera Zaldivar which was acquired on 1 December 2015 (see Note 14), which is a joint venture
with Barrick Gold Corporation. Antofagasta is the operator of Zaldivar 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 2016 The Group paid $70.0
million (six months ended 30 June 2015 -$62.5 million; 2015 - $130.1 million) to Inversiones Hornitos in relation to the
energy supply contract at Centinela. During the six months ended 30 June 2016 the Group has received dividends from
Inversiones Hornitos S.A. for $13.6 million (six months ended 30 June 2015 - $6.6 million; year ended 31 December 2015 -
$12.1 million).
The Group has a 30% interest in Parque Eólico El Arrayán S.A. ("El Arrayán"). During the six months ended 30 June 2016 The
Group paid $19.9 million (six months ended 30 June 2015 - $21.9 million; year ended 31 December 2015 - $42.0 million) to El
Arrayan in relation to the energy supply at Los Pelambres.
The Group has a 40% interest in Alto Maipo SpA ("Alto Maipo"). During the six months ended 30 June 2016 the Group has not
made capital contributions to Alto Maipo. The balance due from Alto Maipo to the Group at six months ended 30 June 2015 was
$235.2 million (Six months ended 30 June 2015 - $164.4 million; year ended 31 December 2015 -$229.7 million) representing
loan financing with an interest rate of LIBOR six-months plus 4.25%.
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 2016 the Group incurred $2.3 million (Six months
ended 30 June 2015 - $2.3 million; year ended 31 December 2015 - $4.2 million) of exploration work 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
J-P Luksic WM Hayes
Chairman Director
15 August 2016
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 2016. 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 Rules and Transparency Rules 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 2016;
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
Rules and Transparency Rules 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 Rules and Transparency Rules 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 Rules and Transparency Rules 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 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 interim financial statements.
PricewaterhouseCoopers LLP
Chartered Accountants
London
15 August 2016
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 31.12.2015 Six months Six months Year ended 31.12.2015
ended ended ended ended
30.06.2016 30.06.2015 30.06.2016 30.06.2015
000 tonnes 000 tonnes 000 tonnes 000 tonnes 000 tonnes 000 tonnes
Copper
Los Pelambres 172.1 169.4 363.2 173.6 163.4 366.0
Centinela 98.1 118.4 221.1 83.4 110.5 224.4
Antucoya 27.0 - 12.2 26.0 - 9.2
Michilla - 15.6 29.4 0.9 16.2 30.8
Zaldivar 26.0 - 4.4 25.5 - 5.5
Group total 323.3 303.4 630.3 309.4 290.1 635.9
Gold 000 ounces 000 ounces 000 ounces 000 ounces 000 ounces 000 ounces
Los Pelambres 29.0 22.3 51.4 32.6 22.5 53.4
Centinela 80.5 90.1 162.5 64.5 83.5 165.8
Group total 109.5 112.4 213.9 97.1 106.0 219.2
Molybdenum 000 tonnes 000 tonnes 000 tonnes 000 tonnes 000 tonnes 000 tonnes
Los Pelambres 3.3 4.7 10.1 3.1 4.4 9.9
Silver 000 ounces 000 ounces 000 ounces 000 ounces 000 ounces 000 ounces
Los Pelambres 1,286.7 1,035.0 2,451.9 1,392.0 899.9 2,281.9
Centinela 482.0 592.6 1,028.5 356.2 537.3 1,055.1
Group total 1,768.7 1,627.6 3,480.3 1,748.2 1,437.2 3,337.0
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 31.12.2015 Six months Six months Year ended 31.12.2015
ended ended ended ended
30.06.2016 30.06.2015 30.06.2016 30.06.2015
$/lb $/lb $/lb $/lb $/lb $/lb
Copper
Los Pelambres 1.02 1.36 1.23 2.18 2.51 2.24
Centinela 1.53 1.67 1.85 2.17 2.56 2.33
Antucoya 1.82 - n/a 2.15 - 2.49
Michilla - 2.25 2.14 1.85 2.67 0.00
Zaldivar (attributable basis - 50%) 1.50 - 1.73 2.15 - 0.00
Group weighted average (net of by-products) 1.26 1.53 1.50 2.17 2.54 2.28
Group weighted average (before deducting by-products) 1.60 1.88 1.81
Group weighted average (before deducting by-products and excluding tolling charges from concentrate) 1.38 1.66 1.58
Cash costs at Los Pelambres comprise:
On-site and shipping costs 1.06 1.40 1.24
Tolling charges for concentrates 0.26 0.27 0.27
Cash costs before deducting by-product credits 1.33 1.67 1.51
By-product credits (principally molybdenum) (0.30) (0.31) (0.28)
Cash costs (net of by-product credits) 1.02 1.36 1.23
Cash costs at Centinela comprise:
On-site and shipping costs 1.83 1.94 2.07
Tolling charges for concentrates 0.22 0.20 0.20
Cash costs before deducting by-product credits 2.06 2.13 2.27
By-product credits (principally gold) (0.53) (0.46) (0.42)
Cash costs (net of by-product credits) 1.53 1.67 1.85
LME average 2.13 2.69 2.50
Gold $/oz $/oz $/oz
Los Pelambres 1,232 1,203 1,141
Centinela 1,316 1,227 1,159
Group weighted average 1,288 1,222 1,155
Market average price 1,219 1,206 1,160
Molybdenum
Los Pelambres 7.4 7.0 5.7
Market average price 6.1 8.0 6.7
Silver $/oz $/oz $/oz
Los Pelambres 16.1 16.4 15.4
Centinela 16.0 16.4 15.4
Group weighted average 16.1 16.5 15.5
Market average price 15.8 15.9 15.4
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, 70% of Antucoya and
99.9% of Michilla. For the Zaldivar 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, Michilla and Zaldivar 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, Michilla and Zaldivar 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 2016, published on 27 July 2016.
1 EBITDA excluding the Group's share of EBITDA from associates and joint ventures.
This information is provided by RNS
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