REG - Antofagasta PLC - PRELIMINARY RESULTS FOR THE YEAR ENDED 2016 <Origin Href="QuoteRef">ANTO.L</Origin> - Part 4
14/03/2017 07:07
- Part 4: For the preceding part double click ID:nRSN3337Zc
- 0.2 4.0 -
Interest Derivatives
Centinela (3.6) - (3.6) 3.1 (2.9)
Railway and other transport services (2.3) - (2.3) 0.5 (0.5)
(5.8) - (5.8) 7.5 (3.3)
The gains/(losses) recognised in reserves are disclosed before non-controlling interests and tax.
The net financial liability resulting from the balance sheet mark-to-market adjustments is analysed as follows: At 31.12.2016 At 31.12.2015 $m $m Analysed between: Current assets 2.2 0.2 Non-current assets 0.2 - Current liabilities (2.0) (2.0) Non-current liabilities (0.5) (1.5) (0.1) (3.3) (ii) Outstanding derivative financial instrumentsCommodity derivativesThe Group periodically uses commodity derivatives to manage its exposure to commodity price fluctuations.- Min-max instruments At
31.12.2016 For instruments held at 31.12.2016 Copper production hedged Average Min Average Max Weighted average remaining period from 1 January 2017 Covering a period up 000 tonnes $/lb $/lb Months to: Centinela 72,000 2.25 2.84 12.0 31-12-2017 Exchange derivativesThe Group periodically uses foreign exchange derivatives to reduce its exposure to fluctuations in the exchange rates influencing operating costs and the fair value of non-US dollar denominated assets or liabilities. The Group had no such
instruments in place at 31 December 2016.Interest derivativesThe Group periodically uses interest derivatives to reduce its exposure to interest rate movements.- Interest rate swaps The Group has used interest rate swaps to swap the floating rate interest relating to the Centinela project financing and long-term loans at the Railway for fixed rate interest. At 31 December 2016 the Group had entered into the contracts outlined below. Start date Maturity date Actual notional amount Weighted Average
Fixed Rate $m % Centinela 15-02-2011 15-08-2018 70.0 3.372 Railway and other transport services 12-08-2014 12-08-2019 90.0 1.634 The actual notional amount hedge depends upon the amount of the related debt currently outstanding.
At 31.12.2016 At 31.12.2015
$m $m
Analysed between:
Current assets 2.2 0.2
Non-current assets 0.2 -
Current liabilities (2.0) (2.0)
Non-current liabilities (0.5) (1.5)
(0.1) (3.3)
(ii) Outstanding derivative financial instrumentsCommodity derivativesThe Group periodically uses commodity
derivatives to manage its exposure to commodity price fluctuations.- Min-max instruments
At 31.12.2016 For instruments held at 31.12.2016
Copper production hedged Average Min Average Max Weighted average remaining period from 1 January 2017 Covering a period up
000 tonnes $/lb $/lb Months to:
Centinela 72,000 2.25 2.84 12.0 31-12-2017
Exchange derivativesThe Group periodically uses foreign exchange derivatives to reduce its exposure to fluctuations in the
exchange rates influencing operating costs and the fair value of non-US dollar denominated assets or liabilities. The Group
had no such instruments in place at 31 December 2016.Interest derivativesThe Group periodically uses interest derivatives
to reduce its exposure to interest rate movements.- Interest rate swaps The Group has used interest rate swaps to swap
the floating rate interest relating to the Centinela project financing and long-term loans at the Railway for fixed rate
interest. At 31 December 2016 the Group had entered into the contracts outlined below.
Start date Maturity date Actual notional amount Weighted Average Fixed Rate
$m %
Centinela 15-02-2011 15-08-2018 70.0 3.372
Railway and other transport services 12-08-2014 12-08-2019 90.0 1.634
The actual notional amount hedge depends upon the amount of the related debt currently outstanding.
7. Net finance expense
Year ended 31.12.2016 Year ended 31.12.2015(Restated)
$m $m
Investment income
Interest receivable 20.4 16.1
Fair value through profit or loss 6.5 1.4
26.9 17.5
Interest expense
Interest expense (86.0) (33.5)
Preference dividends (0.1) (0.2)
(86.1) (33.7)
Other finance items
Time value effect of derivatives 1.0 0.1
Unwinding of discount on provisions (10.0) (8.5)
Impairment of available for sale investments - (1.0)
Foreign exchange (2.9) (14.8)
(11.9) (24.2)
Net finance expense (71.1) (40.4)
During 2016, $9.2 million relating to net interest expense and other finance items at Antucoya (year ended 31 December 2015
- $29.6 million), $2.3 million at Centinela (year ended 31 December 2015 - $4.1 million) and $0.5 million at Los Pelambres
(year ended 31 December 2015 - $1.2 million) was capitalised, and is consequently not included within the above table.
The fair value through profit or loss line represents the fair value gains relating to liquid investments.
8. Taxation
The tax charge for the year comprised the following:
Year ended 31.12.2016 Year ended 31.12.2015(Restated)
$m $m
Current tax charge
Corporate tax (principally first category tax in Chile) (222.1) (54.8)
Mining tax (royalty) (35.3) (20.4)
Withholding tax (3.8) (12.9)
Exchange losses on corporate tax balances - (1.0)
(261.2) (89.1)
Deferred tax credit/(charge)
Corporate tax (principally first category tax in Chile) (27.5) (53.0)
Exceptional items 204.9 -
Mining tax (royalty) (24.8) (10.4)
Withholding tax provision - (1.9)
152.6 (65.3)
Total tax charge (income tax expense) (108.6) (154.4)
The rate of first category (i.e. corporate) tax in Chile is currently 24% (2015-22.5%). The rate will increase to 25.5% in
2017 and then 27% from 2018 onwards.
In addition to first category tax the Group incurs withholding taxes on remittance of profits from Chile. Withholding tax
is levied on remittances of profits from Chile at 35% less first category (i.e. corporation) tax already paid in respect of
the profits to which the remittances relate.
The Group's mining operations are also subject to a mining tax (royalty). Production from Los Pelambres and, the Tesoro
Central and Mirador pits at Centinela cathodes are currently subject to a rate of 4% of taxable operating profit and
Centinela concentrates of 5%, and production from the Tesoro North East pit and the run-of-mine processing at Centinela
cathodes is subject to a rate of between 5-14%, depending on the level of operating profit margin.
31.12.2016 31.12.2016 Year ended
BEFORE EXCEPTIONAL ITEMS AFTER EXCEPTIONAL ITEMS 31.12.2015 (Restated)
$m % $m % $m %
Profit before tax 875.9 - 284.6 242.8
Tax at the Chilean corporate rate tax of 24% (2015 - 22.5%) (210.2) 24.0 (68.3) 24.0 (54.6) 22.5
Provision against carrying value of assets (exceptional items) - - 63.0 (22.1) - -
Effect of increase in future first category tax rates on deferred tax balances (24.6) 2.8 (24.6) 8.6 (8.9) 3.7
Items not deductible from first category tax (23.7) 2.7 (23.7) 8.3 (21.2) 8.7
Items not subject to first category tax 8.5 (1.0) 8.5 (2.9) 4.1 (1.7)
Carry-back tax losses resulting in credits at historic tax rates (5.4) 0.6 (5.4) 1.8 (25.8) 10.6
Mining tax (royalty) (60.1) 6.9 (60.1) 21.1 (31.8) 13.1
Withholding taxes - - - - (14.8) 6.1
Withholding taxes - adjustment to previous year (3.8) 0.4 (3.8) 1.3 - -
Tax effect of share of results of associates and joint ventures 5.6 (0.6) 5.6 (1.9) (0.5) 0.2
Net other items 0.2 (0.0) 0.2 (0.0) (0.9) 0.4
Tax expense and effective tax rate for the year (313.5) 35.8 (108.6) 38.2 (154.4) 63.6
The tax charge for 2016 was $108.6 million and the effective tax rate was 38.2%. The exceptional impairment provisions had
an impact on the overall tax charge and the reconciliation of the effective tax rate, and accordingly we have presented the
tax reconciliation above both including and excluding the impact of the exceptional items. Excluding these exceptional
impairment provisions, the 2016 tax charge was $313.5 million and the effective tax rate was 35.8%.This effective tax rate
varied from the statutory rate principally due to the effect of increase in future first category tax rates on deferred tax
balances (impact of $24.6 million / 2.8%), the effect of expenses not deductible for Chilean corporate tax purposes
(principally the funding of expenses outside of Chile) and items not subject to first category tax (impact of $15.2 million
/ 1.7%) and the mining tax (impact of $60.1 million / 6.9%).
The current and deferred tax relating to items that are charged directly to equity was $2.1 million (2015 - $1.4 million).
The main factors which are expected to impact the sustainability of the Group's existing effective tax rate (excluding
exceptional items) is the increase in the rate of first category (i.e. corporate) tax in Chile from the 2016 rate of 24%
to 25.5% in 2017 and then 27% from 2018 onwards.
There are no significant tax uncertainties which would require critical judgements, estimates or potential provisions.
9. Discontinued operations
(i) Profit for the period from discontinued operations
On 30 December 2016 the Group completed the disposal of Minera Michilla SA ("Michilla").
During 2015 the Group disposed of its Water division, Aguas de Antofagasta SA ("ADASA") and its transport operation in
Bolivia, Empresa Ferroviaria Andina S.A. ("FCA").
The results of Michilla for the period prior to disposal as well as the profit on disposal have been presented on the
"Profit for the period from discontinued operations" line in the income statement, as were ADASA and FCA in 2015,
reflecting the following amounts:
MICHILLA Year ended ADASA FCA MICHILLA Year ended
31 December 31 December
2016 2015
$m $m $m $m $m $m
Revenues 3.8 3.8 53.9 12.9 168.9 235.7
Total operating costs (10.2) (10.2) (34.9) (20.2) (153.5) (208.6)
Net finance income (1.4) (1.4) (0.1) (0.2) 1.2 0.9
Profit/(loss) before tax (7.8) (7.8) 18.9 (7.5) 16.6 28.0
Attributable tax expense 4.4 4.4 (3.9) - (6.0) (9.9)
Profit/(loss) of discontinued operations (3.4) (3.4) 15.0 (7.5) 10.6 18.1
Profit/(loss) on disposal of discontinued operations 42.9 42.9 853.2 (5.6) - 847.6
Attributable tax expense (1.2) (1.2) (252.4) - - (252.4)
Net profit attributable to discontinued operations (attributable to owners of the Company) 38.3 38.3 615.8 (13.1) (10.6) 613.3
During the period, Michilla SA, contributed $13.6 million cash outflow (2015 - $23.0 million cash inflow) to the Group´s
net cash flow from operating activities, nil (2015 - nil) in respect to net cash used in investing activities and paid nil
(2015 - nil) in net cash provided in financing activities. During 2015 ADASA contributed $21.7 million to the Group´s net
cash flow from operating activities, $19.2 million in respect to net cash used in investing activities and paid $2.0
million in net cash provided in financing activities. During 2015 FCA contributed $2.2 million to the Group´s net cash flow
from operating activities, $2.1 million in respect to net cash used in investing activities and paid $0.1 million in net
cash provided in financing activities.
(ii) Disposal of Minera Michilla SA
On 30 December 2016, the Group disposed of its 100% interest in Minera Michilla SA ("Michilla").The proceeds on disposal of
$54.3 million were received in cash ($52.3 million) and a short-term receivable ($2.0 million). The gain on disposal of MIC
is analysed below. No investment was retained in the former subsidiary.
The net assets of Michilla at the date of disposal were as follows:
At 30 December 2016
Proceeds $m
Cash and cash equivalents 52.3
Receivable 2.0
54.3
Asset Disposed of:
Inventories (0.1)
Trade and other receivables (0.7)
Cash and cash equivalents (42.3)
Long-term provision 35.8
Deferred tax liabilities (4.1)
Total carrying amount disposed 11.4
Profit on disposal of discontinued operations 42.9
Loss for the year (3.4)
Total profit on disposal of discontinued operations (before tax) 39.5
Attributable tax expense (1.2)
Profit on disposal of discontinued operations (before tax) 38.3
Net cash inflow arising on disposal:
Consideration received in cash and cash equivalents 52.3
Less: Cash and cash equivalents disposed of (42.3)
10.0
10. Earnings per share
Basic and diluted earnings per share is calculated on profit after tax and non-controlling interests giving profit for the
period attributable to the owners of the parent of $158.0 million (2015 - $608.2 million) and amounted to 16.0 cents and
based on 985,856,695 ordinary shares. There was no potential dilution of ordinary shares in either year.
Profit after tax attributable to the owners of the parent before exceptional items represents underlying net earnings. In
the year ended 31 December 2016, underlying net earnings were $379.8 million and resulted in underlying earnings per share
of 38.6 cents.
11. Dividends
The Board has recommended a final dividend of 15.3 cents per ordinary share or $151.0 million in total (2015 - nil). The
interim dividend of 3.1 cents per ordinary share or $30.6 million in total was paid in September 2016 (2015 interim
dividend of 3.1 cents per ordinary share or $30.6 million in total). This gives total dividends proposed in relation to
2016 (including the interim dividend) of 18.4 cents per share or $181.4 million in total (2015 - 3.1 cents per ordinary
share or $30.6 million in total).
Dividends per share actually paid in the year and recognised as a deduction from net equity under IFRS were 3.1 cents per
ordinary share or $30.6 million in total (2015 -12.9 cents per ordinary share or $127.2 million in total) being the interim
dividend for the year and the final dividend proposed in respect of the previous year.
Further details of the currency election timing and process (including the default currency of payment) are available on
the Antofagasta plc website (www.antofagasta.co.uk) or from the Company's registrar, Computershare Investor Services PLC on
+44 870 702 0159.
12. Intangible assets
Year ended 31.12.2016 Year ended 31.12.2015
$m $m
Balance at the beginning of the year 150.1 118.6
Acquisition - 150.1
Disposal - (113.7)
Amortisation - (2.4)
Foreign currency exchange difference - (2.5)
Balance at the end of the year 150.1 150.1
The $150.1 million intangible asset reflects the value of Twin Metals' mining property assets. The mining properties will
be amortised once production commences.
13. Property, plant and equipment
Mining Railway and other transport Year ended 31.12.2016 Year ended 31.12.2015
$m $m $m $m
Balance at the beginning of the year 8,438.8 162.3 8,601.1 8,213.9
Additions 904.8 16.9 921.7 984.3
Additions - depreciation capitalised 87.6 - 87.6 28.3
Reclassification 3.8 (0.1) 3.7 123.8
Acquisition - - - 20.8
Adjustment to capitalised decommissioning provisions 16.9 - 16.9 (35.7)
Depreciation (563.0) (15.4) (578.4) (590.7)
Depreciation capitalised in PP&E and in inventories (79.2) - (79.2) (44.9)
Provision against the carrying value of assets (215.6) - (215.6) -
Assets derecognized due to loss of control of subsidiary - - - (84.6)
Asset disposals/write off (18.0) (2.3) (20.3) (12.3)
Foreign currency exchange difference - - - (1.8)
Balance at the end of the year 8,576.1 161.4 8,737.5 8,601.1
Future capital commitments at 31 December 2016 were $196.1 million (31 December 2015 - $283.1 million) of which $129.8
million were related to the development of the Encuentro Oxides project.
Borrowing costs of $12.0 million were capitalised, mainly at Antucoya (2015 - $60 million). The average interest rate for
the amounts capitalised was 1.1% (2015 - 1.2%).
Reclassifications of $3.7 million are mainly related to the capitalisation of interest of $9.3 million, depreciation of
machinery used in construction of $14.6 million and other expenses incurred during the commissioning of Antucoya and
credits related to a refund from a contractor for contract underperformance of $24.9 million and credits related to sales.
At 31 December 2016, assets capitalised relating to the decommissioning provision were $147.2 million (at 31 December 2015,
$137.4 million).
Depreciation capitalised in property, plant and equipment of $87.6 million related to stripping cost depreciation of $64.8
at Pelambres and Centinela and $22.8 million related to Antucoya depreciation capitalized during the commissioning period.
14. Investment in associates and joint ventures
Inversiones Hornitos ATI El Arrayan Alto Maipo MineraZaldívar Energía Andina Tethyan Copper Year ended Year ended
31.12.2016 31.12.2015
$m $m $m $m $m $m $m $m $m
Balance at the beginning of the year 75.1 8.1 23.2 33.5 998.9 10.3 - 1,149.1 198.1
Obligations on behalf of JV - - - - - - (2.5) (2.5) -
Capital contribution - - - 36.0 - 1.0 10.0 47.0 48.1
Capital decrease and others - - (0.9) - 0.3 - - (0.6) -
Adjustment to Purchase price - - - - (45.0) - - (45.0) 1,001.7
Gains/(losses) in fair value of cash flow hedges deferred in reserves of associates - - 0.3 4.1 - - - 4.4 (16.0)
Fair value of investment in associate upon reclassification to subsidiary - - - - - - - - (67.4)
Provision against carrying value of assets - - - (74.0) - (8.1) - (82.1) -
Share of profit/(loss) before tax 8.9 (1.9) (1.0) 0.4 41.9 - (10.6) 36.4 (4.4)
Share of tax (2.5) 0.2 0.4 - (12.4) - - (13.0) (1.4)
Share of income/(loss) from associate 6.4 (1.7) (0.6) 0.4 29.5 - (10.6) 23.4 (5.8)
Dividends received (10.2) - - - - - - (10.2) (12.1)
Balance at the end of the year 71.3 6.5 22.0 - 983.7 3.2 - 1,086.6 1,149.1
Obligations on behalf of JV - - - - - - (3.1) (3.1) (2.5)
Share of income/(loss) from associate 6.4 (1.7) (0.6) 0.4 29.5 - (10.6) 23.4 (5.8)
Provision against carrying value of assets (exceptional items) - - - (74.0) - (8.1) - (82.1) -
Other comprehensive income of associates to profit for the year (exceptional items) - - - (52.6) - - - (52.6) -
Net share of results from associates and joint ventures 6.4 (1.7) (0.6) (126.2) 29.5 (8.1) (10.6) (111.3) (2.5)
The investments which are included in the $1,083.5 million balance at 31 December 2016 are set out below:
Investment in associates
(i) The Group's 40% interest in Inversiones Hornitos SA, which owns the 165MW Hornitos thermoelectric power
plant operating in Mejillones, in Chile's Antofagasta Region. The Group has a 16-year power purchase agreements with
Inversiones Hornitos SA for the provision of up to 40MW of electricity for Centinela.
(ii) The Group's 30% interest in ATI, which operates a concession to manage installations in the port of
Antofagasta.
(iii) The Group´s 30% interest in El Arrayan, which operates an 115MW wind-farm project. The Group has a 20-year
power purchase agreements with El Arrayan for the provision of up to 40MW of electricity for Los Pelambres.
(iv) The Group has a 40% interest in Alto Maipo SPA ("Alto Maipo"), which is developing two run-of-river
hydroelectric power stations located in the upper section of the Maipo River, approximately 50 kilometres to the southeast
of Santiago. The remaining 60% interest is held by AES Gener SA ("Gener"). As explained in Note 3, the Group has been
reviewing its options with respect to its investment in Alto Maipo following the announcement of a significant forecast
cost overrun for the project. In January 2017 the Group entered into an agreement with Gener to dispose of its stake in
Alto Maipo to Gener for a nominal consideration. Accordingly, an impairment provision of $367.6 million has been recognised
in respect of the total carrying value relating to the project, comprising the $74.0 million investment in associate
balance as shown above, $241.0 million of loan financing (including accrued interest) and $52.6 million of mark-to-market
losses in respect of derivative financial instruments held by Alto Maipo previously deferred in reserves.
During 2016 the Group made provision for capital contributions of $36.0 million (2015 - $42.8 million). During the year the
Group provided nil loan financing (2015 - $63.9 million) to Alto Maipo. The balance due from Alto Maipo to the Group at 31
December 2016 was nil after provision (2015 - $229.7 million) representing loan financing with an interest rate of LIBOR
six-months plus 4.25%. During 2016 a fair value loss of $4.1 million (2015 - $14.4 million loss) was recognised in relation
to the mark-to-market of the derivative financial instruments with this amount deferred in reserves as it formed part of a
designated cash flow hedging relationship.
The Group has a 20-year power purchase agreement with Alto Maipo for the provision of up to 110 MW of electricity for Los
Pelambres from the completion date of the project.
Investment in joint ventures
(v) The Group's 50% interest in Minera Zaldívar SpA ("Zaldívar"), was acquired on 1 December 2015 (see Note 16).
Zaldívar is an open-pit, heap-leach copper mine located in Northern Chile, which produces approximately 100,000 tonnes of
copper cathodes annually.
Total preliminary consideration for the transaction was $1,005.0 million in cash, subject to adjustments based on the net
debt and working capital levels of Zaldívar at the completion date. The net debt and working capital adjustments were
finalised in August 2016 and resulted in a final adjusted consideration of $949.7 million. Including capitalized
acquisition costs of $7.0 million the initial investment in joint venture balance is therefore $956.7 million. The
allocation of the fair values of the individual assets and liabilities effectively contained within the overall investment
in joint venture balance was also completed during 2016.
(vi) The Group's 50.1% (2014 - 50.1%) interest in Energia Andina, which is a joint venture with Origin Geothermal
Chile Limitada for the evaluation and development of potential sources of geothermal and solar energy.
In February 2017 the disposal of the interest in Javiera was agreed. The terms of the sale agreement indicate a recoverable
value for the interest in Javiera which is $8.1 million below the carrying value, and accordingly an impairment provision
for this amount has been recognised. The terms of the sale agreement is subject to certain closing conditions, and the
transaction is expected to complete during the first half of 2017.
(vii) The Group's 50% interest in Tethyan Copper Company Limited ("Tethyan"), which is a joint venture with Barrick
Gold Corporation over Tethyan's mineral interest in Pakistan, which is now subject to international arbitration. As the net
carrying value of the interest in Tethyan is negative it is included within non-current liabilities, as the Group is liable
for its share for the joint ventures obligations.
15. Available for sale investments
Year ended 31.12.2016 Year ended 31.12.2015
$m $m
Balance at the beginning of the year 2.7 15.6
Additions - 0.2
Reclassification - (9.4)
Movement in fair value 1.7 (3.2)
Disposal - (0.2)
Foreign currency exchange differences 0.2 (0.3)
Balance at the end of the year 4.6 2.7
Available for sale investments represent those investments which are not subsidiaries, associates or joint ventures and are
not held for trading purposes. The fair value of all equity investments are based on quoted market prices.
16. Acquisition of 50% stake in Zaldívar
On 1 December 2015 Antofagasta completed its acquisition of a 50% stake in Compañia Minera Zaldívar SpA ("Zaldívar") from
Barrick Gold Corporation ("Barrick"), pursuant to an agreement entered into on 30 July 2015. As a result, Antofagasta
became operator of the Zaldívar mine. Zaldívar is an open-pit, heap-leach copper mine located in Northern Chile, which
produces approximately 100,000 tonnes of copper cathodes annually.
Given that Antofagasta and Barrick have joint control over Zaldívar, Antofagasta is accounting for its 50% stake in
Zaldívar as a joint venture, using the equity method of accounting.
Total preliminary consideration for the transaction was $1,005.0 million in cash, subject to adjustments based on the net
debt and working capital levels of Zaldívar at the completion date. The net debt and working capital adjustments were
finalised in August 2016 and resulted in a final adjusted consideration of $949.7 million. Including capitalized
acquisition costs of $7.0 million the initial investment in joint venture balance is therefore $956.7 million. The
allocation of the fair values of the individual assets and liabilities effectively contained within the overall investment
in joint venture balance was also completed during 2016.
17. Inventories
Year ended Year ended
31.12.2016 31.12.2015
$m $m
Current:
Raw materials and consumables 189.4 162.0
Work in progress 141.9 97.7
Finished goods 62.1 37.4
393.4 297.1
Non-current:
Work in progress 157.3 263.9
157.3 263.9
Non-current work-in-progress is expected to be processed more than 12 months after the balance sheet date.
18. Borrowings
Notes At 31.12.2016 At 31.12.2015
$m $m
Los Pelambres
Corporate loans (i) (17.5) (52.3)
Short-term loan (ii) (312.0) (312.1)
Finance leases (iii) (62.2) (7.9)
Centinela
Corporate loans (iv) (743.8) (889.8)
Shareholder loan (subordinated debt) (v) (183.6) (174.5)
Short-term loan (vi) (200.0) (200.0)
Antucoya
Project financing (senior debt) (vii) (608.7) (630.2)
Shareholder loan (subordinated debt) (viii) (330.4) (308.7)
Short-term loan (ix) (30.0) (30.0)
Finance leases (x) (16.2) -
Corporate and other items
Long- term loan (xi) (497.2) -
Finance leases (xii) (25.1) (24.6)
Railway and other transport services
Long-term loans (xiii) (89.4) (119.1)
Finance leases (xiv) (1.6) (2.9)
Preference shares (xv) (2.5) (3.0)
Total (3,120.2) (2,755.1)
(i) Corporate loans at Los Pelambres are unsecured and US dollar denominated. These loans have a remaining term of 1 year
and have an interest rate of LIBOR six-month rate plus margins of between 0.9% - 1.6%.
(ii) The short-term loan (PAE) is US dollar denominated, comprising a working capital loan for an average period of 1 year
and has an interest rate of LIBOR six-month rate plus margin of between 0.05% - 0.16%.
(iii) Finance leases at Los Pelambres are US dollar denominated, comprising $62.2 million at an interest of LIBOR six-month
rate plus 3.43% with a remaining duration of 8.4 years.
(iv) Senior debt at Centinela is US dollar denominated, comprising $743.8 million in respect of syndicated loans. These
loans are for a remaining term of 3.5 years and have an interest rate of LIBOR six-month rate plus 1%. The loans are
subject to financial covenants which require that specified net debt to EBITDA and EBITDA to finance expense ratios are
maintained.
The Group has used interest rate swaps to swap the floating rate interest for fixed rate interest. At 31 December 2016 the
current notional amount hedged of the senior debt at Centinela was $70 million.
(v) The long-term subordinated debt is US dollar denominated, provided to Centinela by Marubeni Corporation with a duration
of 5.5 years and weighted average interest rate of LIBOR six-month rate plus 3.75%. Long term subordinated debt provided by
Group companies to Centinela has been eliminated on consolidation
(vi) The short-term loan (PAE) is US dollar denominated, comprising a range of working capital loans for an average period
of 1 year and have an interest rate of LIBOR six-month plus margins of between 0.1% - 0.3%
(vii) Senior debt at Antucoya is US dollar denominated, comprising $608.7 million in respect of syndicated loans. These
loans are for a remaining term of 10.5 years and have an interest rate of LIBOR six-month rate plus 1.9%.
(viii) The long-term subordinated debt is US dollar denominated, provided to Antucoya by Marubeni with duration of 10.5
years and an interest rate of LIBOR six-month rate plus 3.65%. Long-term subordinated debt provided by Group companies to
Antucoya has been eliminated on consolidation.
(ix) The short-term loan is US dollar denominated, comprising a working capital loan for an average period of 1 year and
has an interest rate of LIBOR six-month rate plus 0.9%
(x) Finance leases at Antucoya are US dollar denominated, with a maximum remaining duration of 7 years and with an average
interest rate of approximately LIBOR six-month rate plus 2.0%.
(xi) The long term loan at Corporate (Antofagasta plc) of $497.2 million has variable interest rate of LIBOR six-month rate
plus 1.5% with a duration of five years.
(xii) Finance leases at Corporate and other items are denominated in Unidades de Fomento (i.e. inflation-linked Chilean
pesos) and have a remaining duration of 11.5 years and are at fixed rates with an average interest rate of 5.29%.
(xiii) Long-term loans at Railway and other transport services are US dollar denominated, mainly comprise a loan for $89.4
million with a duration of 3.5 years and with an interest rate of LIBOR six-month rate plus 0.48%.The Group has used
interest rate swaps to swap the floating rate interest for fixed rate interest. At 31 December 2016 the current notional
amount hedged of the long-term debt at Railway and other transport services was $90.0 million.
(xiv) Finance leasing at Railway and other transport services are Chilean peso denominated, with a maximum remaining
duration of 1.5 years and with a fixed interest rate of 4.8%
(xv) The preference shares are sterling-denominated and issued by the Company. There were 2 million shares of £1 each
authorised, issued and fully paid at 31 December 2016. The preference shares are non-redeemable and are entitled to a fixed
cumulative dividend of 5% per annum. On winding up they are entitled to repayment and any arrears of dividend in priority
to ordinary shareholders, but are not entitled to participate further in any surplus. Each preference share carries 100
votes in any general meeting of the Company.
Maturity of borrowings
At 31.12.2016 At 31.12.2015
$m $m
Short-term borrowings (836.8) (758.9)
Medium and long-term borrowings (2,283.4) (1,996.2)
Total (3,120.2) (2,755.1)
At 31 December 2016 $29.1 million (2015 - $38.4 million) of the borrowings has fixed rate interest and $3,091.1million
(2015 - $2,716.7 million) has floating rate interest. The Group periodically enters into interest rate derivative contracts
to manage its exposure to interest rates. As explained in Note 6, these include interest rate swaps which have the effect
of converting $160.0 million of floating rate borrowings into fixed rate borrowings. Details of any derivative instruments
held by the Group are given in Note 6.
19. Post-employment benefit obligation
Year ended Year ended
31.12.2016 31.12.2015
$m $m
Balance at the beginning of the year (86.9) (103.0)
Current service cost (15.5) (16.6)
Actuarial gains 7.8 2.3
Interest cost (4.4) (4.1)
Charge capitalised (0.5) (3.6)
Reclassification 1.3 (0.3)
Paid in the year 12.2 14.0
Disposal - 8.9
Foreign currency exchange difference (6.2) 15.5
Balance at the end of the year (92.2) (86.9)
The post-employment benefit obligation relates to the provision for severance indemnities which are payable when an
employment contract comes to an end, in accordance with normal employment practice in Chile and other countries in which
the Group operates. The severance indemnity obligation is treated as an unfunded defined benefit plan, and the calculation
is based on valuations performed by an independent actuary.
20. Decommissioning & restoration and other long term provisions
Year ended Year ended
31.12.2016 31.12.2015
$m $m
Balance at the beginning of the year (394.0) (434.3)
Charge to operating profit in the year (9.3) (25.8)
Unwind of discount to net interest in the year (5.5) (5.0)
Capitalised adjustment to provision (16.9) 35.7
Reclassification (1.1) -
Utilised in the year 3.7 30.1
Disposal 35.8 1.5
Foreign currency exchange difference (4.8) 3.8
Balance at the end of the year (392.1) (394.0)
Decommissioning and restoration costs relate to the Group's mining operations. Costs are estimated on the basis of a formal
closure plan and are subject to regular independent formal review. It is estimated that the provision will be utilised from
2024 until 2059 based on current mine plans.
During the year ended 31 December 2016, the decommissioning and restoration provisions at the Group's mining operations
decreased by a net total of $1.9 million.
21. Deferred tax assets and liabilities
Year ended Year ended
31.12.2016 31.12.2015
$m $m
Net position at the beginning of the year (951.6) (875.2)
Charge to tax on profit in year (48.7) (83.0)
Deferred tax recognised directly in equity (2.1) 1.4
Deferred tax credit relating to exceptional impairment provisions 204.9 -
Reclassification 3.0 (0.8)
Disposal (3.7) 8.8
Foreign currency exchange difference 0.1 -
Net position at the end of the year (798.1) (951.6)
Analysed between:
Deferred tax assets 82.8 124.6
Deferred tax liabilities (880.9) (1,076.2)
Net position (798.1) (951.6)
The deferred tax balance of $798.1 million (2015 - $951.6 million) includes liabilities of $878.8 million (2015 - $965.0
million) due in more than one year. All amounts are shown as non-current on the face of the balance sheet as required by
IAS 12.
22. Share capital and share premium
There was no change in share capital or share premium in the year ended 2016 or 2015.
23. Other reserves and retained earnings
Year ended Year ended
31.12.2016 31.12.2015
$m $m
Hedging reserves(1)
At 1 January (44.1) (36.2)
Parent and subsidiaries net cash flow hedge fair value (losses)/gains (2.4) 0.1
Parent and subsidiaries net cash flow hedge gains transferred to the income statement 4.1 3.5
Share of other comprehensive gains/(losses) of equity accounted units, net of tax 3.1 (10.2)
Share of other comprehensive gains of equity accounted units, net of tax transferred to the income statement 31.6 -
Tax on the above (1.1) (1.3)
At 31 December (8.8) (44.1)
Available for sale revaluation reserves(2)
At 1 January (12.9) (10.7)
Gain/(losses) on available for sale investment 1.7 (3.2)
Losses on available for sale securities transferred to the income statement - 1.0
At 31 December (11.2) (12.9)
Foreign currency translation reserves(3)
At 1 January (2.3) (0.5)
Currency translation reclassified on disposal - (1.8)
Tax on the above - -
At 31 December (2.3) (2.3)
Total other reserves per balance sheet (22.3) (59.3)
Retained earnings(4)
At 1 January 6,416.4 5,932.1
Parent and subsidiaries profit for the year 269.3 614.0
Equity accounted units' loss after tax for the year (111.3) (5.8)
Actuarial gains(5) 5.1 4.5
Tax relating to components of other comprehensive income (0.3) (1.2)
Total comprehensive income for the year 6,579.2 6,543.6
Dividends paid (30.6) (127.2)
At 31 December 6,548.6 6,416.4
(1) The hedging reserve records gains or losses on cash flow hedges that are recognized initially in equity (through other
comprehensive income), as described in note 6.
(2) The available for sale revaluation reserves record fair value gains or losses relating to available for
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