REG - Antofagasta PLC - Q1 2019 PRODUCTION REPORT
NEWS RELEASE, 24 APRIL 2019
Q1 2019 PRODUCTION REPORT
IN LINE WITH EXPECTATIONS
Antofagasta plc CEO, Iván Arriagada said: "The Company has started 2019 as planned, delivering copper production in Q1 2019 of 188,600 tonnes, 22.6% higher than in the same period last year but 14.3% lower than the previous quarter, reflecting last year's unusual production profile of quarter-on-quarter increases.
"Net cash costs for the quarter were $1.24/lb, some 5c/lb lower than the full 2018 year and below our guidance for this year of $1.30/lb.
"The high level of operating performance achieved in the second half of last year continues and we are on-track for another record-setting year with full year production expected to increase by up to 9% to 750-790,000 tonnes.
"Our priorities for the year ahead remain our safety performance, maintaining our operating reliability and efficiency, and progressing the construction of the Los Pelambres expansion, which began during the quarter."
HIGHLIGHTS
PRODUCTION
· Copper production in Q1 2019 was 188,600 tonnes, in line with expectations and an increase of 22.6% compared with the same quarter in 2018, mainly due to higher throughput and the anticipated higher grades, particularly at Centinela
· Scheduled maintenance at Los Pelambres and Centinela, combined with lower grades led to production being 14.3% lower than the record performance in the previous quarter. Underlying operating performance remains strong
· Gold production was 62,200 ounces in Q1 2019, 92.6% higher than in Q1 2018 on higher grades at Centinela
· Molybdenum production increased by 12.9% compared to the same period in 2018 due to higher throughput and recoveries at Los Pelambres and production for the first time at Centinela in the first quarter
CASH COSTS
· Cash costs before by-product credits in the quarter decreased to $1.70/lb from $2.00/lb in the same period last year primarily because of higher production and weaker Chilean Peso. Costs increased by 25.3% compared to the previous period on lower grades and throughput
· Net cash costs were $1.24/lb in Q1 2019, compared to $1.54/lb in Q1 2018 and $0.99/lb in the previous quarter, reflecting the changes in cash costs before by-product credits
2019 GUIDANCE
· Guidance for the year is unchanged. Group copper production for the full year is expected to be 750-790,000 tonnes, on higher grades at Centinela Concentrates, particularly in Q2 and Q3
· Cash cost guidance before and after by-product credits is also unchanged at $1.70/lb and $1.30/lb respectively
OTHER
· As announced on 4 April, Los Pelambres successfully completed the debt financing of its $1.3 billion expansion project on favourable terms
· Execution of the Los Pelambres expansion project is progressing according to plan and was 14% complete (design, engineering, procurement and construction) by the end of the first quarter with 500 people mobilised to site
GROUP PRODUCTION AND CASH COSTS
Year to Date
Q1
Q4
2019
2018
%
2019
2018
%
Copper production
kt
188.6
153.8
22.6
188.6
220.0
(14.3)
Copper sales
kt
178.9
136.8
30.8
178.9
218.3
(18.0)
Gold production
koz
62.2
32.3
92.6
62.2
90.0
(30.9)
Molybdenum production
kt
3.5
3.1
12.9
3.5
3.3
6.1
Cash costs before by-product credits (1)
$/lb
1.70
2.00
(15.0)
1.70
1.43
18.9
Net cash costs (1)
$/lb
1.24
1.54
(19.5)
1.24
0.99
25.3
(1) Cash cost is a non-GAAP measure used by the mining industry to express the cost of production in US dollars per pound of copper produced.
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MINING OPERATIONS
Los Pelambres
Los Pelambres produced 89,200 tonnes of copper in Q1 2019, 10.0% higher than in the same quarter last year, on higher throughput and grades. Scheduled maintenance in January and lower grades impacted the quarter's production relative to the previous quarter, but in the unaffected months throughput continued the strong performance of Q4 2018.
Compared with Q1 2018 molybdenum production rose 6.5% to 3,300 tonnes in Q1 2019, primarily due to higher throughput and a reduction in inventories.
Gold production for the quarter was 15,600 ounces, 4.7% higher than the same period last year.
Cash costs before by-product credits in Q1 2019 were $1.44/lb, compared with $1.72/lb in Q1 2018. This decrease in costs was primarily due to the higher throughput and higher grades in Q1 2019 and the payment of one-off bonuses related to the completion of labour agreements signed in Q1 2018. Compared to the previous quarter costs increased by 9.1% on lower grade and throughput.
Net cash costs in Q1 2019 were $0.84/lb, 15.2% lower than in the same quarter last year on lower cash costs before by-product credits, partially offset by by-product credits reducing from $0.73/lb to $0.60/lb on lower realised molybdenum prices. Compared to the previous quarter net cash costs increased by 6.3% reflecting the increase in cash costs before by-product credits partly offset by higher by-product credits.
Maintenance of two of the ball mills is scheduled in Q2.
LOS PELAMBRES
Year to Date
Q1
Q4
2019
2018
%
2019
2018
%
Daily ore throughput
kt
171.9
165.2
4.1
171.9
180.3
(4.7)
Copper grade
%
0.68
0.64
6.3
0.68
0.72
(5.6)
Copper recovery
%
86.6
88.1
(1.7)
86.6
87.5
(1.0)
Copper production
kt
89.2
81.1
10.0
89.2
100.1
(10.9)
Copper sales
kt
74.9
73.2
2.3
74.9
103.7
(27.8)
Molybdenum grade
%
0.021
0.025
(16.0)
0.021
0.026
(19.2)
Molybdenum recovery
%
84.2
83.8
0.5
84.2
87.6
(3.9)
Molybdenum production
kt
3.3
3.1
6.5
3.3
3.3
0.0
Molybdenum sales
kt
3.3
2.9
13.8
3.3
4.0
(17.5)
Gold production
koz
15.6
14.9
4.7
15.6
17.1
(8.8)
Gold sales
koz
10.6
12.7
(16.5)
10.6
16.8
(36.9)
Cash costs before by-product credits (1)
$/lb
1.44
1.72
(16.3)
1.44
1.32
9.1
Net cash costs (1)
$/lb
0.84
0.99
(15.2)
0.84
0.79
6.3
(1) Includes tolling charges of $0.26/lb in Q1 2019, $0.23/lb in Q4 2018, $0.27/lb in Q1 2018
Centinela
Total copper production in Q1 2019 at Centinela was 68,800 tonnes, 45.5% higher than in the same quarter in 2018, primarily due to higher production of copper in concentrates. Compared with the record production in Q4 2018 total production decreased by 20.4%.
Copper in concentrates production was 44,600 tonnes in Q1 2019, 76.3% higher than in Q1 2018, primarily due to significantly higher grades and increased throughput in the concentrate plant.
Production of copper in concentrates fell 25.9% against Q4 2018. This was primarily due to lower grades and reduced throughput, which remained at high levels similar to those achieved in the previous quarter but was impacted by scheduled maintenance. Grades are expected to increase in Q2 and Q3 before weakening in Q4. Major maintenance of the SAG mill is planned in Q3.
Despite lower grades cathode production in Q1 2019 was 24,300 tonnes, 10.5% higher than in Q1 2018 driven by higher throughput at Encuentro Oxides.
Gold production was 46,600 ounces in Q1 2019, 168% higher than in the same period last year due to significantly higher gold grades, and higher throughput and recoveries. Grades in the quarter were 0.24 g/t compared with 0.12 g/t in the same period last year, but down from the high levels achieved in Q4 2018 of 0.36 g/t.
Cash costs before by-product credits at $1.85/lb in Q1 2019 were 23.9% lower than in the same quarter in 2018 due to the increase in production and weaker Chilean Peso. Compared to the previous quarter costs increased by 29.4% on lower production.
Net cash costs in Q1 2019 decreased by 36.7% to $1.38/lb reflecting lower cash costs before by-product credits and by-product credits increasing from $0.25/lb to $0.47/lb on higher gold production. Compared with Q4 2018 net cash costs increased as by-product credits reduced.
CENTINELA
Year to Date
Q1
Q4
2019
2018
%
2019
2018
%
CONCENTRATES
Daily ore throughput
kt
101.6
88.1
15.3
101.6
111.1
(8.6)
Copper grade
%
0.61
0.43
41.9
0.61
0.76
(19.7)
Copper recovery
%
81.9
81.4
0.6
81.9
82.7
(1.0)
Copper production
kt
44.6
25.3
76.3
44.6
60.2
(25.9)
Copper sales
kt
49.6
16.9
193.5
49.6
51.9
(4.4)
Molybdenum grade
%
0.009
-
-
0.009
0.005
80.0
Molybdenum recovery
%
77.9
-
-
77.9
-
-
Molybdenum production
kt
0.2
-
-
0.2
-
-
Molybdenum sales
kt
0.1
-
-
0.1
0.1
0.0
Gold grade
g/t
0.24
0.12
100.0
0.24
0.36
(33.3)
Gold recovery
%
65.8
64.6
1.9
65.8
67.3
(2.2)
Gold production
koz
46.6
17.4
167.8
46.6
72.9
(36.1)
Gold sales
koz
50.9
11.0
362.7
50.9
60.9
(16.4)
CATHODES
Daily ore throughput
kt
49.7
37.4
32.9
49.7
50.8
(2.2)
Copper grade
%
0.62
0.77
(19.5)
0.62
0.77
(19.5)
Copper recovery
%
73.4
73.8
(0.5)
73.4
69.9
5.0
Copper production - heap leach
kt
22.6
20.5
10.2
22.6
24.8
(8.9)
Copper production - total (1)
kt
24.3
22.0
10.5
24.3
26.2
(7.3)
Copper sales
kt
24.8
21.1
17.5
24.8
24.7
0.4
Total copper production
kt
68.8
47.3
45.5
68.8
86.4
(20.4)
Cash costs before by-products (2)
$/lb
1.85
2.43
(23.9)
1.85
1.43
29.4
Net cash costs (2)
$/lb
1.38
2.18
(36.7)
1.38
0.90
53.3
(1) Includes production from ROM material
(2) Includes tolling charges of $0.17/lb in Q1 2019, $0.15/lb in Q4 2018, $0.16/lb in Q1 2018
Antucoya
Antucoya produced 17,900 tonnes of copper in Q1 2019, 22.6% higher than the same quarter last year on higher throughput and grades and 11.4% lower than in the previous quarter as grades declined from 0.41% to 0.37%. Maintenance is scheduled during Q3.
During the quarter, the cash costs were $2.22/lb compared to $2.29/lb in Q1 2018. This was due to higher production during the period and a weaker Chilean Peso, partly offset by increased acid costs.
ANTUCOYA
Year to Date
Q1
Q4
2019
2018
%
2019
2018
%
Daily ore throughput
kt
75.8
63.7
19.0
75.8
72.7
4.3
Copper grade
%
0.37
0.34
8.8
0.37
0.41
(9.8)
Copper recovery
%
71.4
70.1
1.9
71.4
76.0
(6.1)
Copper production
kt
17.9
14.6
22.6
17.9
20.2
(11.4)
Copper sales
kt
17.0
14.9
14.1
17.0
24.3
(30.0)
Cash costs
$/lb
2.22
2.29
(3.1)
2.22
1.75
26.9
Zaldívar
Copper production at Zaldívar was 12,700 tonnes in Q1 2019, a 17.6% increase compared with the same period last year on higher grades partly offset by lower throughput, which was also lower than in Q4 2018, impacted during the current quarter by scheduled maintenance and an interruption in the water supply following unexpected heavy rains and unplanned equipment stoppages. Increased grade and lower recoveries reflects the higher proportion of sulphides added to the heap during the quarter.
Cash costs at $1.91/lb in Q1 2019 rose by 2.7% compared to Q1 2018 primarily due to higher acid prices and partially compensated by higher production and weaker local currency.
ZALDÍVAR
Year to Date
Q1
Q4
2019
2018
%
2019
2018
%
Daily ore throughput
kt
29.1
30.8
(5.5)
29.1
42.8
(32.0)
Copper grade
%
1.25
0.70
78.6
1.25
0.93
34.4
Copper recovery (1)
%
60.6
62.3
(2.7)
60.6
66.3
(8.6)
Copper production - heap leach (2)
kt
9.5
8.3
14.5
9.5
10.0
(5.0)
Copper production - total (2,3)
kt
12.7
10.8
17.6
12.7
13.3
(4.5)
Copper sales (2)
kt
12.6
10.7
17.8
12.6
13.7
(8.0)
Cash costs
$/lb
1.91
1.86
2.7
1.91
1.88
1.6
(1) Average over full leach cycle
(2) Group's 50% share
(3) Includes production from secondary leaching
Transport Division
Total transport volumes in in Q1 2019 were 1.5 million tonnes, 1.4% lower than in the same quarter last year and 7.5% lower than Q4 2018.
Railway volumes were impacted by severe flooding in February that affected the rail network in the higher parts of El Loa province around Calama and the Bolivian border. Additionally one of the Division's customers had a temporary smelter stoppage which reduced its cathodes shipments during the quarter. By the end of the quarter the operations were back to normal.
TRANSPORT DIVISION
Year to Date
Q1
Q4
2019
2018
%
2019
2018
%
Rail
kt
1,145
1,217
(5.9)
1,145
1,257
(8.9)
Road
kt
308
257
19.8
308
314
(1.9)
Total tonnage transported
kt
1,453
1,474
(1.4)
1,453
1,571
(7.5)
Commodity prices and exchange rates
Year to Date
Q1
Q4
2019
2018
%
2019
2018
%
Copper
Market price
$/lb
2.82
3.16
(10.6)
2.82
2.80
0.9
Realised price
$/lb
3.03
2.86
6.2
3.03
2.68
13.0
Gold
Market price
$/oz
1,307
1,330
(1.7)
1,307
1,229
6.4
Realised price
$/oz
1,309
1,348
(2.9)
1,309
1,253
4.5
Molybdenum
Market price
$/lb
11.8
12.2
(3.6)
11.8
12.1
(2.2)
Realised price
$/lb
12.0
14.9
(19.3)
12.0
12.1
(0.7)
Exchange rates
Chilean Peso
per $
667
602
10.8
667
679
(1.8)
The spot commodity prices for copper, gold and molybdenum as at 31 March 2019 were $2.94/lb, $1,292/oz and $12.1/lb respectively, compared with $2.70/lb, $1,282/oz and $11.3/lb as at 31 December 2018 and $3.03/lb, $1,325/oz and $11.3/lb as at 31 March 2018.
The provisional pricing adjustments for copper, gold and molybdenum for the quarter were positive $76.4 million, negative $0.6 million and positive $2.7 million respectively.
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