REG - Antofagasta PLC - Preliminary Results Announcement <Origin Href="QuoteRef">ANTO.L</Origin> - Part 5
15/03/2016 07:06
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outright, even though this solution would address all of the alleged
environmental concerns.
Los Pelambres will exercise all available legal avenues to defend its position and will continue to seek to reach an
understanding with the relevant authorities in Argentina to allow the environmental closure of the Cerro Amarillo Waste
Dump.
28. 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 2015 the Group contributed $4.0 million (2014 - $8.5
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 31 December 2015 was less than $0.1 million (2014 - less than $0.1 million). During the year ended 31
December 2015 the Group contributed $1.3 million to Energia Andina (2014 - $7.7 million).
The Group´s 50% (2014 - 0%) interest in Minera Zaldivar which was acquired on 1 December 2015 (see Note 17), 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. The Group paid $130.1 million (2014 - $175.3 million) to
Inversiones Hornitos in relation to the energy supply contract at Centinela. During 2015, the Group has received dividends
from Inversiones Hornitos S.A. for $12.1 million (2014 - $20.0 million).
The Group has a 30% interest in Parque Eólico El Arrayán S.A. ("El Arrayán"). The Group paid $42.0 million (2014 - $12.0
million) to El Arrayan in relation to the energy supply at Los Pelambres. During 2014 the Group has contributed $2.6
million.
The Group has a 40% interest in Alto Maipo SpA ("Alto Maipo"). During 2015 the Group has made capital contributions to Alto
Maipo for $42.8 million (2014 - nil). The balance due from Alto Maipo to the Group at 31 December 2015 was $229.7 million
(2014 -$152.4 million) representing loan financing with an interest rate of LIBOR six-months plus 4.25%.
As explained in Note 16, the Group completed its acquisition of Duluth Metals Limited ("Duluth") in January 2015. As a
result of the acquisition the Group now has 100% interest in Twin Metals Minnesota Limited ("Twin Metals") and therefore it
has been consolidated as subsidiary of the Group. During the period between July 2014 and December 2014, The Group had 40%
interest in Twin Metals which was accounted as an associate and during this period the Group contributed $2.8 million to
Twin Metals. Before July 2014 Twin Metals was controlled by the Group and accounted for as a subsidiary, and therefore
all contributions from the Group to Twin Metals were between consolidated Group subsidiaries.
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 year ended 31 December 2015 Group incurred $4.2 million (2014 - $17.0
million) of exploration work at these properties.
In March 2014 the Group acquired an additional 25.7% interest in Michilla for $30.9 million, increasing the Group's
interest from 74.2% to 99.9%. This included the acquisition of the 7.973% stake held by Minera Cerro Centinela S.A., an
entity ultimately controlled by the Luksic family, for $9.6 million. Prior to this transaction, Michilla paid dividends of
$1.6 million to Minera Cerro Centinela S.A.
29. Currency translation
Assets and liabilities denominated in foreign currencies are translated into dollars and sterling at the year ended rates
of exchange. Results denominated in foreign currencies have been translated into dollars at the average rate for each
year.
2015
Year ended rate US$1.4828=£1; US$1 = Ch$710.16
Average rates US$1.5284=£1; US$1 = Ch$654.47
30. Distribution
The Annual Report and Financial Statements for the year ended 31 December 2015, together with the Notice of the 2016 Annual
General Meeting, will be posted to all shareholders in April 2016. The Annual General Meeting will be held at Church House
Conference Centre, Dean's Yard, Westminster, London SW1P 3NZ from 10:00 a.m. on Wednesday 18 May 2016.
31. Production and Sales Statistics (not subject to audit or review)
See notes following Note 32(b).
a) Production and sales volumes for copper, gold and molybdenum
Production Sales
Year ended 31.12.2015 Year ended 31.12.2014 Year ended 31.12.2015 Year ended 31.12.2014
000 tonnes 000 tonnes 000 tonnes 000 tonnes
Copper
Los Pelambres 363.2 391.3 366.0 386.0
Centinela 221.1 266.5 224.4 270.9
Antucoya 12.2 - 9.2 -
Michilla 29.4 47.0 30.8 46.1
Zaldivar 4.4 - 5.5 -
Group total 630.3 704.8 635.9 703.0
Gold 000 ounces 000 ounces 000 ounces 000 ounces
Los Pelambres 51.4 66.5 53.4 63.8
Centinela 162.5 204.4 165.8 203.6
Group total 213.9 270.9 219.2 267.4
Molybdenum 000 tonnes 000 tonnes 000 tonnes 000 tonnes
Los Pelambres 10.1 7.9 9.9 8.2
Silver 000 ounces 000 ounces 000 ounces 000 ounces
Los Pelambres 2,451.9 3,002.6 2,281.9 2,793.8
Centinela 1,028.5 1,354.9 1,055.1 1,320.9
Group total 3,480.3 4,357.5 3,337.0 4,114.7
b) Cash costs per pound of copper produced and realised prices per pound of copper and molybdenum sold
Cash costs Realised prices
Year ended 31.12.2015 Year ended 31.12.2014 Year ended 31.12.2015 Year ended 31.12.2014
$/lb $/lb $/lb $/lb
Copper
Los Pelambres 1.23 1.18 2.24 2.95
Centinela 1.85 1.63 2.33 3.02
Michilla 2.14 2.38 2.49 3.30
Zaldivar 1.85 - - -
Group weighted average (net of by-products) 1.50 1.43 3.00
Group weighted average (before deducting by-products) 1.81 1.83
Group weighted average (before deducting by-products and excluding tolling charges from concentrate) 1.58 1.65
Cash costs at Los Pelambres comprise:
On-site and shipping costs 1.24 1.35
Tolling charges for concentrates 0.27 0.21
Cash costs before deducting by-product credits 1.51 1.56
By-product credits (principally molybdenum) (0.28) (0.38)
Cash costs (net of by-product credits) 1.23 1.18
Cash costs at Centinela comprise:
On-site and shipping costs 2.07 1.96
Tolling charges for concentrates 0.20 0.16
Cash costs before deducting by-product credits 2.27 2.12
By-product credits (principally gold) (0.42) (0.48)
Cash costs (net of by-product credits) 1.85 1.63
LME average 2.50 3.11
$ $
Gold
Los Pelambres 1,141 1,265
Centinela 1,159 1,261
Group weighted average 1,155 1,262
Market average price 1,160 1,266
Molybdenum
Los Pelambres 5.7 11.0
Market average price 6.7 11.4
Silver
Los Pelambres 15.4 19.1
Centinela 15.4 18.4
Group weighted average 15.5 18.7
Market average price 15.4 19.1
Notes to the production and sales statistics
(i) The production and sales figures represent the actual amounts produced and sold, 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 (74.2% prior to
March 2014).
(ii) Los Pelambres produces copper and molybdenum concentrates, Centinela produces copper concentrate and copper
cathodes and Antucoya produces copper cathodes. The figures for Los Pelambres, Centinela and Antucoya 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. Michilla and Antucoya 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 in Note 32(a) and the cash cost information in Note 32(b) are derived from the
Group's production report for the Q4 of 2015, published on January 27, 2016.
c) Cash Cost Reconciliation
2015 2014
US$m US$m
Total Group operating cost (Note 4) 3,090.2 3,562.0
Less:
Total - Depreciation and amortisation (Note 4) (576.1) (581.7)
Total - (Loss)/gain on disposal (Note 4) (10.2) 23.9
Elimination of non-mining operations
Corporate and other items - Total operating cost (Note 4) (67.6) (99.2)
Exploration and evaluation - Total operating cost (Note 4) (101.9) (167.5)
Railway and other transport services - Total operating cost (Note 4) (94.0) (97.3)
Closure provision and other expenses not included within cash cost (Note 6) (75.4) (76.5)
Total cost relevant to the mining operation's cash cost 2,165.0 2,563.7
Copper sales volumes - excluding Antucoya and Zaldivar (tonnes) 621,200 703,000
Cash cost excluding tolling charges and by-product revenues ($ per tonne) 3,485 3,647
Cash cost excluding tolling charges and by-product revenues (cents per lb) 1.58 1.65
This information is provided by RNS
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