REG - Antofagasta PLC - PRELIMINARY RESULTS FOR THE YEAR ENDED 2016 <Origin Href="QuoteRef">ANTO.L</Origin> - Part 5
14/03/2017 07:07
- Part 5: For the preceding part double click ID:nRSN3337Zd
sale
investment, as described in note 15.
(3) Exchange differences arising on the translation of the Group's net investment in foreign controlled companies are taken
to the foreign currency translation reserve. The cumulative differences relating to an investment are transferred to the
income statement when the investment is disposed of.
(4) Retained earnings and movements in reserves of subsidiaries include those arising from the Group's share of associates
and joint operations.
(5) Actuarial gains or losses relating long - term employee benefits, as described in note 19.
24. Reconciliation of profit before tax to net cash inflow from operating activities
Year ended 31.12.2016 Year ended 31.12.2015
$m $m
Profit before tax from continuing operations 284.6 242.8
Profit before tax from discontinued operations 35.1 875.6
Depreciation and amortisation 578.4 576.1
Net loss on disposals 19.7 10.2
Provision against carrying value of assets 456.6 -
Profit on disposal of discontinued operations (35.1) (859.0)
Net finance expense 71.1 39.2
Net share of results from associates and joint ventures 111.3 5.8
Decrease in inventories 3.9 60.5
(Increase)/decrease in debtors (124.9) 137.7
Increase/(decrease) in creditors and provisions 56.6 (230.6)
Cash flows from operations 1,457.3 858.3
25. Analysis of changes in net debt
At 1.1.2016 Cash flows Other Exchange At 31.12.2016
$m $m $m $m $m
Cash and cash equivalents 807.5 (103.1) - 11.9 716.3
Liquid investments 924.1 408.1 - - 1,332.2
Total cash and cash equivalents and liquid investments 1,731.6 305.0 - 11.9 2,048.5
Bank borrowings due within one year (753.4) 215.0 (275.8) - (814.2)
Bank borrowings due after one year (1,963.3) (460.7) 225.6 - (2,198.4)
Finance leases due within one year (5.5) 1.5 (18.5) - (22.5)
Finance leases due after one year (29.9) 29.7 (80.3) (2.1) (82.6)
Preference shares (3.0) 0.1 (0.1) 0.5 (2.5)
Total borrowings (2,755.1) (214.4) (149.1) (1.6) (3,120.2)
Net debt (1,023.5) 90.6 (149.1) 10.3 (1,071.7)
Net debt
Net debt at the end of each year was as follows:
At 31.12.2016 At 31.12.2015
$m $m
Cash, cash equivalents and liquid investments 2,048.5 1,731.6
Total borrowings (3,120.2) (2,755.1)
(1,071.7) (1,023.5)
26. Litigation and Contingent liabilities
Antofagasta plc or its subsidiaries is subject to various claims which arise in the ordinary course of business. 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 - 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 April 2016, in accordance with a preliminary measure required by the Federal Court of San Juan, Los Pelambres and the
Province of San Juan entered into an agreement pursuant to which Los Pelambres agreed to implement 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 November 2016, the Province set aside the agreement. Notwithstanding this, between November 2016 and January 2017, Los
Pelambres removed the truck tyres that had previously been stored at the Cerro Amarillo Waste Dump as had been agreed.
In February 2017, at the Province of San Juan's request, Los Pelambres filed a provisional action plan to close the Cerro
Amarillo Waste Dump with the civil courts, which is currently subject to review by the parties to the proceedings and the
judge.
In the criminal proceedings, current and former directors and officers of Los Pelambres are in the process of providing
testimony as named co-defendants in this case.
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 USFS decision was based on 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, 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.
The government has not yet responded to the amended complaint.
27. 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 2016 the Group contributed $10.0 million (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 SA
to the Group at 31 December 2016 was nil (2015 - nil). During the year ended 31 December 2016 the Group contributed $1.0
million to Energia Andina (2015 - $1.3 million).
The Group´s has a 50% interest in Minera Zaldivar, 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 SA. The Group paid $112.6 million (2015 - $130.1 million) to
Inversiones Hornitos in relation to the energy supply contract at Centinela. During 2016 the Group received dividends from
Inversiones Hornitos S.A. for $10.1 million (2015 - $12.1 million).
The Group has a 30% interest in Parque Eólico El Arrayán SA ("El Arrayán"). The Group paid $38.1 million (2015 - $42.0
million) to El Arrayan in relation to the energy supply contract at Los Pelambres. During 2016 were a capital decrease of
$0.9 million.
The Group has a 40% interest in Alto Maipo SpA ("Alto Maipo"). During 2016 the Group made provisions for capital
contributions to Alto Maipo of $36 million (2015 - $42.8 million). 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%.
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 SA, Madeco SA and Compañía Cervecerías Unidas SA, which are subsidiaries of Quiñenco SA, 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 2016 Group incurred $1.0 million (2015 - $4.2
million) of exploration work at these properties.
28. 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.
2016 2015
Year ended rate $1.2185=£1; $1 = Ch$669.47 $1.4828=£1; $1 = Ch$710.16
Average rates $1.3593=£1; $1 = Ch$676.80 $1.5284=£1; $1 = Ch$654.47
29. Distribution
The Annual Report and Financial Statements for the year ended 31 December 2016, together with the Notice of the 2017 Annual
General Meeting, will be posted to all shareholders in April 2017. 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 24 May 2017.
30. Production and Sales Statistics (not subject to audit or review)
See notes following Note 30 (b).
a) Production and sales volumes for copper, gold and molybdenum
Production Sales
Year ended 31.12.2016 Year ended 31.12.2015 Year ended 31.12.2016 Year ended 31.12.2015
000 tonnes 000 tonnes 000 tonnes 000 tonnes
Copper
Los Pelambres 355.4 363.2 351.6 366.0
Centinela 236.2 221.1 227.6 224.4
Antucoya 66.2 12.2 66.6 9.2
Michilla - 29.4 0.9 30.8
Zaldivar 51.7 4.4 51.7 5.5
Group total 709.4 630.3 698.5 635.9
Gold 000 ounces 000 ounces 000 ounces 000 ounces
Los Pelambres 57.8 51.4 62.8 53.4
Centinela 213.0 162.5 208.6 165.8
Group total 270.9 213.9 271.4 219.2
Molybdenum 000 tonnes 000 tonnes 000 tonnes 000 tonnes
Los Pelambres 7.1 10.1 7.2 9.9
Silver 000 ounces 000 ounces 000 ounces 000 ounces
Los Pelambres 2,585.8 2,451.9 2,701.9 2,281.9
Centinela 1,313.0 1,028.5 1,159.0 1,055.1
Group total 3,898.8 3,480.3 3,860.9 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
Year ended 31.12.2016 Year ended 31.12.2015 Year ended 31.12.2016 Year ended 31.12.2015
$/lb $/lb $/lb $/lb
Copper
Los Pelambres 1.06 1.23 2.35 2.24
Centinela 1.19 1.85 2.32 2.33
Antucoya 1.83 - 2.30 -
Michilla - 2.14 - 2.49
Zaldivar 1.55 1.73 - -
Group weighted average (net of by-products) 1.20 1.50
Group weighted average (before deducting by-products) 1.54 1.81
Group weighted average (before deducting by-products and excluding tolling charges from concentrate) 1.33 1.58
Cash costs at Los Pelambres comprise:
On-site and shipping costs 1.09 1.24
Tolling charges for concentrates 0.27 0.27
Cash costs before deducting by-product credits 1.36 1.51
By-product credits (principally molybdenum) (0.30) (0.28)
Cash costs (net of by-product credits) 1.06 1.23
Cash costs at Centinela comprise:
On-site and shipping costs 1.53 2.07
Tolling charges for concentrates 0.22 0.20
Cash costs before deducting by-product credits 1.75 2.27
By-product credits (principally gold) (0.56) (0.42)
Cash costs (net of by-product credits) 1.19 1.85
LME average 2.21 2.50
$ $
Gold
Los Pelambres 1,253 1,141
Centinela 1,257 1,159
Group weighted average 1,256 1,155
Market average price 1,248 1,160
Molybdenum
Los Pelambres 6.8 5.7
Market average price 6.5 6.7
Silver
Los Pelambres 17.4 15.4
Centinela 17.7 15.4
Group weighted average 17.5 15.5
Market average price 17.1 15.4
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 owned 99.9% of Michilla prior to
disposal.
(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. Antucoya produces cathodes with no by-products, as did Michilla.
(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 30(a) and the cash cost information in Note 30(b) are derived from the
Group's Q4 2016 production report, published on January 25, 2017.
31. 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 31 December 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) 484.9 246.0 (213.4) - (44.3) (62.3) 410.9 56.1 467.0
Depreciation and amortisation 195.7 299.4 62.7 - - 5.2 563.0 15.4 578.4
Loss on disposals 0.2 17.1 - - - 0.6 17.9 1.8 19.7
Provision against the carrying value of assets 241.0 - 215.6 - - - 456.6 - 456.6
EBITDA from subsidiaries 921.8 562.5 64.9 - (44.3) (56.5) 1,448.4 73.3 1,521.7
Proportional share of the EBITDA from associates and JV (0.8) - - 85.1 - 5.7 90.0 14.4 104.4
Total EBITDA 921.0 562.5 64.9 85.1 (44.3) (50.8) 1,538.4 87.7 1,626.1
At 31 December 2015
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) 555.0 (131.0) - - (101.9) (75.1) 247.0 42.0 289.0
Depreciation and amortisation 191.6 367.6 - - - 3.1 562.3 13.8 576.1
Loss on disposals 2.7 1.8 - - - 4.4 8.9 2.6 11.5
EBITDA from subsidiaries 749.3 238.4 - - (101.9) (67.6) 818.2 58.4 876.6
Proportional share of the EBITDA from associates and JV (0.6) - - 6.8 - 6.9 13.1 20.4 33.5
Total EBITDA 748.7 238.4 - 6.8 (101.9) (60.7) 831.3 78.8 910.1
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 31.12.2016 At 31.12.2015
$m $m
Reconciliation of cash costs excluding tolling charges and by-product revenues:
Total Group operating cost (Note 4) 3,154.7 2,936.7
Less:
Total - Depreciation and amortisation (Note 4) (578.4) (576.1)
Total - Loss on disposal (Note 4) (19.7) (11.5)
Total - Provision against the carrying value of asset (Note 4) (456.6) -
Elimination of non-mining operations
Corporate and other items - Total operating cost (Note 4) (56.5) (67.6)
Exploration and evaluation - Total operating cost (Note 4) (44.3) (101.9)
Railway and other transport services - Total operating cost (Note 4) (86.9) (94.0)
Closure provision and other expenses not included within cash cost (53.4) (75.4)
Total cost relevant to the mining operations' cash cost 1,858.9 2,165.0
Copper sales volumes - excluding Antucoya Q1 2016/full year 2015 & Zaldivar (tonnes) 634,000 621,200
Cash costs excluding tolling charges and by-product revenues ($ per tonne) 2,932 3,485
Cash costs excluding tolling charges and by-product revenues ($ per lb) 1.33 1.58
Reconciliation of cash costs before deducting by-products:
Tolling charges - copper - Los Pelambres (Note 5) 192,200,000 198,800,000
Tolling charges - copper - Centinela (Note 5) 108,900,000 95,200,000
Tolling charges - copper - total 301,100,000 294,000,000
Copper sales volumes - excluding Antucoya Q1 2016/full year 2015 & Zaldivar (tonnes) 634,000 621,200
Tolling charges ($ per tonne) 475 473
Tolling charges ($ per lb) 0.22 0.22
Cash costs excluding tolling charges and by-product revenues ($ per lb) 1.33 1.58
Tolling charges ($ per lb) 0.22 0.22
Cash costs before deducting by-products (S per lb) 1.54 1.81
b) Cash costs (continued)
Reconciliation of cash costs (net of by-products):
Gold revenue - Los Pelambres (Note 4) 78,500,000 60,700,000
Gold revenue - Centinela (Note 4) 261,200,000 191,300,000
Molybdenum revenue - Los Pelambres (Note 4) 94,000,000 105,300,000
Silver revenue - Los Pelambres (Note 4) 46,100,000 34,500,000
Silver revenue - Centinela (Note 4) 20,000,000 15,900,000
Total by-product revenue 499,800,000 407,700,000
Copper sales volumes - excluding Antucoya Q1 2016/full year 2015 & Zaldivar (tonnes) 634,000 621,200
Tolling charges ($ per tonne) 788 656
Tolling charges ($ per lb) 0.35 0.30
Cash costs before deducting by-products (S per lb) 1.54 1.81
By-product revenue ($ per lb) (0.35) (0.30)
Cash costs (net of by-products) ($ per lb) 1.20 1.50
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.
2016 2015
Total amount Attributable share Attributable amount Total amount Attributable share Attributable amount
$m $m $m $m
Cash, cash equivalents and liquid investments:
Los Pelambres 143.0 60% 85.8 248.8 60% 149.3
Centinela 384.0 70% 268.8 598.8 70% 419.1
Antucoya 152.9 70% 107.0 138.6 70% 97.0
Corporate 1,328.1 100% 1,328.1 531.5 100% 531.5
Railway and other transport services 40.5 100% 40.5 213.9 100% 213.9
Total (Note 25) 2,048.5 1,830.2 1,731.6 1,410.8
Borrowings:
Los Pelambres (Note 18) (391.7) 60% (235.0) (372.3) 60% (223.4)
Centinela (Note 18) (1,127.4) 70% (789.2) (1,264.3) 70% (885.0)
Antucoya (Note 18) (985.3) 70% (689.7) (968.9) 70% (678.2)
Corporate (Note 18) (524.8) 100% (524.8) (27.6) 100% (27.6)
Railway and other transport services (Note 18) (91.0) 100% (91.0) (122.0) 100% (122.0)
Total (Note 18 and 25) (3,120.2) (2,329.7) (2,755.1) (1,936.2)
Net debt (1,071.7) (499.5) (1,023.5) (525.4)
1 Excluding the Group's share of EBITDA from associates and joint ventures.
This information is provided by RNS
The company news service from the London Stock ExchangeRecent news on Antofagasta
See all newsREG - Antofagasta PLC - ANTOFAGASTA PLC ANNOUNCES PRICING OF BOND
AnnouncementREG - Antofagasta PLC - FINAL DIVIDEND PAYABLE
AnnouncementREG - Antofagasta PLC - Q1 2024 PRODUCTION REPORT
AnnouncementREG - Antofagasta PLC - NOTIFICATION OF TRANSACTIONS
AnnouncementREG - Antofagasta PLC - 2023 REPORTING SUITE, 2024 AGM & CORPORATE UPDATE
Announcement