REG - Antofagasta PLC - 2022 Full-year results announcement
21/02/2023 07:00
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RNS Number : 4954Q Antofagasta PLC 21 February 2023
NEWS RELEASE, 21 FEBRUARY 2023
FULL-YEAR RESULTS FOR THE
YEAR ENDED 31 DECEMBER 2022
Strong Finish to the Year
Antofagasta plc CEO Iván Arriagada said: "The year ended strongly for the
Company. EBITDA was $2.9 billion this year, and I am pleased that our EBITDA
margin remained solid at 50%. Copper production reflected the expected
continuing drought in Chile and the effects of increased input prices, and the
pipeline incident at Los Pelambres. Over the year, we exited the Reko Diq
project in Pakistan recognising a $945 million exceptional gain and we expect
to receive that cash before the end of 2023.
"Operations reported a record safety performance with no serious incidents and
our Cost and Competitiveness Programme generated benefits of $124 million
which is significantly above our target of $50 million. We recognise climate
change as one of the greatest challenges facing the world today and
acknowledge our responsibility to be part of the solution. Since April 2022
all our electricity contracts are from renewable energy, significantly
reducing our Scope 2 emissions and allowing us to reach our goal three years
earlier than targeted.
"Looking ahead, the Los Pelambres expansion is expected to be in production
during Q2 including the new desalination plant which will significantly
alleviate the water constraints that we have experienced over the past 18
months. Also, copper and by-product production is expected to increase over
the course of 2023 and we expect cash costs before by-product credits to
remain in line with 2022. All this is supported by copper's fundamentals which
remain strong, with China showing signs of recovery and with the energy
transition underpinning the long-term demand for copper.
"In line with our dividend policy, the Board has recommended a final dividend
of 50.5 cents per share, to be approved by shareholders at the AGM, which
brings the total dividend for the year to 59.7 cents per share, equivalent to
a pay-out ratio of 100%, reflecting our positive outlook for 2023."
HIGHLIGHTS
Financial performance
· Revenue for the full year was $5,862 million, 22% lower than in
2021 reflecting a 12% decrease in copper sales and a 12% decrease in realised
copper prices
· EBITDA((1)) was $2,930 million, 39% lower than the previous year
on lower revenue and operating costs that increased by 10% mainly due to
inflation and higher input prices
· EBITDA margin((2)) decreased to 50.0% from 64.7% in 2021
· Cost and Competitiveness Programme (CCP) generated benefits of
$124 million in 2022, above the original target of $50 million, through
improved plant utilisation and more efficient use of inputs
· Profit before tax including exceptional items decreased by 26% to
$2,559 million
· Cash flow from operations was $2,738 million, 39% lower than in
2021 due largely to lower EBITDA
· Continuing strong balance sheet with a net debt to EBITDA ratio
at the end of the period of 0.3 times. Net debt was $886 million at the end of
the period compared with net cash of $540 million 12 months previously. This
movement largely reflects the $1,172 million payment of the 2021 final
dividend
· Capital expenditure increased modestly to $1,879 million((3)),
$102 million higher than in 2021 partly reflecting higher prices for
construction inputs with increased capital expenditure on sustaining projects
at Centinela, and higher mine development expenditure at Los Pelambres and
Centinela
· Underlying earnings per share from continuing operations and
excluding exceptional items((1)) of 59.7 cents, 82.8 cents lower than in 2021
· Exceptional gain of $945 million, following the completion of the
definitive agreements for the Company to exit its indirect interest in the
Reko Diq project
· Earnings per share from continuing operations including
exceptional items were 155.5 cents, 19% higher than in 2021
· Final dividend of 50.5 cents per share recommended, to be
approved by shareholders at the AGM, bringing the total dividend for the year
to 59.7 cents per share, equal to 100% of underlying earnings per share
Operating performance (as previously announced)
· Safety remains our top priority. With no serious incidents in
2022, all safety indicators improved during the year. The Mining division's
Lost Time Injury Frequency Rate fell by 32% and High Potential Incidents were
down by 37%
· Group copper production finished the year strongly and for the
full year was 646,200 tonnes, 10.4% lower than last year mainly due to the
temporary reduction in throughput (-12.0%) at Los Pelambres as a result of the
drought and the reduced concentrate pipeline availability in June, and
expected lower grades (-18.3%) at Centinela Concentrates
· Gold production for the full year was 176,800 ounces, 29.9% lower
than in the previous year as a result of the expected lower grades at
Centinela
· Molybdenum production for the full year was 9,700 tonnes, 7.6%
lower than in 2021 due to lower throughput and grades at Los Pelambres
· Cash costs before by-product credits((1)) in 2022 were $2.19/lb,
22.3% higher than last year mainly due to the impact of the drought and higher
input prices during the period, particularly for diesel and sulphuric acid,
partly offset by the weaker Chilean peso and the savings coming from our Cost
and Competitiveness Programme
· Net cash costs((1)) for the full year were $1.61/lb, 34.2% higher
than in 2021 due to higher cash costs before by-product credits
2023 Guidance (as previously announced)
· Group production in 2023 is expected to be 670-710,000 tonnes of
copper, 220-240,000 ounces of gold and 10-11,500 tonnes of molybdenum. Copper
guidance reflects that the Los Pelambres desalination and concentrator plants
will be in production during the second quarter of the year partly offset by
lower grades at Centinela Cathodes. Gold and molybdenum guidance reflects the
higher grades and recoveries expected at Centinela Concentrates
· Copper and by-product production is expected to increase quarter
on quarter through the year
· Group cash costs in 2023 before by-product credits are expected
to be $2.20/lb, in line with 2022 reflecting higher production, CCP savings
and decreased input costs, offset by inflation and a stronger Chilean peso
· Group net cash costs in 2023 are expected to be $1.65/lb as
by-product credits are forecast to decrease reflecting the expected fall in
gold and molybdenum prices
· Capital expenditure in 2023 is expected to be $1.9 billion((3)),
as sustaining and mine development expenditure increase to approximately $1.5
billion due to inflation, higher-than-average mine development at Centinela
Concentrates, detailed engineering works on the Los Pelambres desalination
expansion and concentrate pipeline projects and the expansion of the tailing
storage facility at Centinela. Development expenditure is expected to reduce
to $400 million and includes residual expenditure on the Los Pelambres
Expansion project and on engineering and pre-investment commitment work on the
Centinela Second Concentrator project
Other
· Total mineral resources increased by 921 million tonnes during
the year, including a maiden inferred resource at Encierro of 522 million
tonnes at 0.79% CuEq and an additional 100 million tonnes of inferred
resources at Cachorro, both of which are in northern Chile
· Cuprochlor-T proprietary primary leach process advanced during
the year and was incorporated into future mine plans
YEAR ENDING 31 DECEMBER 2022 2021 %
Revenue $m 5,862.0 7,470.1 (21.5)
EBITDA((1)) $m 2,929.7 4,836.2 (39.4)
EBITDA margin((1, 2)) % 50.0% 64.7% (22.7)
Profit before tax (including exceptional items) $m 2,558.9 3,477.1 (26.4)
Underlying earnings per share((1)) (continuing operations excluding cents 59.7 142.5 (58.1)
exceptional items)
Earnings per share (continuing operations including exceptional items) cents 155.5 130.9 18.8
Dividend per share cents 59.7 142.5 (58.1)
Cash flow from continuing operations $m 2,738.3 4,507.7 (39.3)
Capital expenditure((3)) $m 1,879.2 1,777.5 5.7
Net debt/(cash) at period end((1)) $m 885.8 (540.5) -
Average realised copper price $/lb 3.84 4.37 (12.1)
Copper sales kt 642.5 725.6 (11.5)
Gold sales koz 174.7 244.7 (28.6)
Molybdenum sales kt 9.2 10.4 (11.5)
Cash costs before by-product credits((1)) $/lb 2.19 1.79 22.3
Net cash costs((1)) $/lb 1.61 1.2 34.2
Note: The financial results are unaudited and prepared in accordance with
UK-adopted International Accounting Standards, unless otherwise noted below.
(1) Alternative performance measures as detailed on page 63 of this
Full-year results announcement
(2) Calculated as EBITDA/Revenue. If Associates and JVs revenue is
included the EBITDA margin was 46.7% in 2022 and 61.1% in 2021.
(3) On a cash basis
A copy of the 2022 Full-Year Results presentation is available for download
from the Company's website www.antofagasta.co.uk
(http://www.antofagasta.co.uk) .
There will be a presentation and Q&A at 10:30am GMT today hosted by Iván
Arriagada - Chief Executive Officer, Mauricio Ortiz - Chief Financial Officer
and René Aguilar, Vice President - Corporate Affairs and Sustainability.
Attendance can be in-person or by video. Further details can be found here
(https://www.antofagasta.co.uk/investors/news/2023/2022-full-year-results-participation-details/)
.
Investors - London Media - London
Andrew Lindsay alindsay@antofagasta.co.uk (mailto:alindsay@antofagasta.co.uk) Carole Cable antofagasta@brunswickgroup.com (mailto:antofagasta@brunswickgroup.com)
Rosario Orchard rorchard@antofagasta.co.uk (mailto:rorchard@antofagasta.co.uk) Telephone +44 20 7404 5959
Telephone +44 20 7808 0988
Media - Santiago
Pablo Orozco porozco@aminerals.cl (mailto:porozco@aminerals.cl)
Carolina Pica cpica@aminerals.cl (mailto:cpica@aminerals.cl)
Telephone +56 2 2798 7000
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FINANCIAL AND OPERATING REVIEW
2022 FINANCIAL HIGHLIGHTS
Revenue in 2022 was $5,862 million, 22% lower than in 2021 reflecting copper
sales volumes and prices, which both fell by 12%.
EBITDA was $2,930 million.
In December 2022 the Company exited its interest in the Reko Diq project in
Pakistan resulting in an exceptional gain of $945 million.
Profit before tax including exceptional items was $2,559 million, 26% lower
than in 2021 reflecting the lower EBITDA, partially offset by the Reko Diq
exceptional gain.
Earnings per share from continuing operations excluding exceptional items for
the year were 59.7 cents, a decrease of 82.8 cents or 58% compared with 2021
on lower EBITDA.
Earnings per share from continuing operations including exceptional items for
the year were 155.5 cents, reflecting the impact of exceptional gains of 95.8
cents, and were 18.8% higher than in 2021.
Cash flow from continuing operations was $2,738 million, a $1,769 million
decrease compared with 2021 due largely to lower EBITDA.
SUSTAINABILITY
Safety and health
Antofagasta prioritises the safety, health and wellbeing of its people. With
no fatal or serious safety incidents in 2022, all safety indicators improved
during the year.
In 2022 the Group continued to reduce the number of high potential incidents
(HPIs), recording a 35% reduction year-on-year due to improvements at both our
Mining and Transport divisions. HPIs are leading indicators of the
effectiveness of safety controls and are a key measure of our success in
strengthening them.
The Company seeks to keep its Lost Time Injury Frequency Rate (LTIFR) below a
score of 1. In 2022, the Mining division achieved 0.76, 32% better than 2021,
while the overall Group scored 0.84, a 37% improvement. This was due to
strengthened control strategies for high-risk tasks.
Communities
Antofagasta aims to create shared social value in the regions where we operate
through education and training initiatives, job creation and social investment
that addresses the needs of local communities. A commitment to respect human
rights underlines our interactions. The Company uses a multi-stakeholder, open
dialogue engagement approach to ensure that local communities participate in
the selection of our social investment projects through our Somos Choapa (We
are Choapa) and Diálogos para el Desarrollo (Dialogues for Development)
engagement mechanisms in the Choapa Province and the Antofagasta Region
respectively. Projects and programmes are usually implemented in collaboration
with third parties, such as civil society organisations and state
institutions. In 2022 $57 million were invested in community programmes.
Some of the community programmes implemented in 2022 were:
· The Company expanded our En Red digital community programme, which
has more than 20 initiatives that address the deficit of digital
infrastructure and skills in rural and underprivileged communities near our
operations.
· In the Antofagasta Region, the Company is an active participant in
the Antofagasta Mining Cluster, a public-private alliance that seeks to foster
the Region's economic development. The efforts are focused on developing human
capital and innovative local suppliers.
· The Company's scholarship programme supported 951 young people from
the Choapa Province and the Antofagasta Region in their secondary and tertiary
education.
· Los Pelambres stepped up efforts to ensure continuous water
availability for agriculture and other industrial uses rather than mining, and
irrigation in the drought stricken Choapa Province, through our Aproxima and
Confluye programmes. Two such initiatives were to fund the construction of two
ponds to capture the heavier than usual snowmelt in the Spring and to reline
55 km of irrigation canals to further reduce water losses.
Diversity and inclusion
The Group's Diversity and Inclusion Strategy, launched in 2018, has
transitioned from an awareness-raising phase about unconscious bias and
discrimination to introducing inclusive practices as an integral part of how
we work.
The Company is deepening its inclusive organisational culture that supports
the retention of all people including women and those with disabilities or
different cultural origins. In a key initiative, we ran a campaign on
respectful behaviours and held workshops on respectful environments.
In 2022, we increased the proportion of our female employees to 20.4%,
compared with 17.2% in 2021, meeting our goal for the year. This is a steady
improvement since 2018, when we set out to double female participation by the
end of 2022, compared with a baseline of 8.6% in 2017. We met that target a
year early, in 2021, and have set a new aspirational gender diversity goal for
women to represent 30% of employees by 2025.
Climate Change and emission targets
As a Group, we recognise climate change as one of the world's greatest
challenges and acknowledge that we are part of the solution. As a copper
producer, we supply an input that is critical for low-carbon technologies and,
at the same time, we are working to decarbonise our operations, putting
climate change at the heart of how we manage our business.
In 2021, the Group set targets to reduce direct and indirect emissions (Scopes
1 and 2) by 30% by 2025 compared with the 2020 baseline, equivalent to a
reduction of 730,000 tCO2e, and to achieve carbon neutrality by 2050 or
earlier, technology permitting. Now, and since April 2022, all our electricity
consumption is from renewable energy sources, reducing our Scope 2 emissions
to almost zero and allowing us to achieve our 30% reduction commitment three
years earlier than anticipated.
In 2022, we began working on a preliminary decarbonisation plan for all our
operations, defining the baselines, the truck replacement plan, energy input
projections and the assumptions for current and future technologies. During
2023, we will establish a new medium-term emission reduction goal for 2030 and
we will set out the steps needed to achieve carbon neutrality by 2050.
Water
Water consumption and efficiency have long been at the forefront of our Mining
division's concerns. Three of our four mining operations are located in the
Atacama Desert and the fourth, Los Pelambres, is in an area that has been
suffering a severe drought for the past 13 years, which, according to various
climate scenarios, is expected to continue. Consistent with our Climate Change
Strategy our operations are reducing their dependence on continental water
sources through improved water use efficiency and the increased use of sea
water as an overall proportion of our water consumption.
Centinela stopped extracting any continental water at the end of December and,
on completion of the planned expansion of the desalination plant at Los
Pelambres, which is expected in 2025, sea and recirculated water will account
for over 90% of the Mining division's operational water use.
Due to the continuing drought in the Choapa Valley, the DGA (Chile's water
administration department) recently reviewed the water distribution
arrangements in the valley. Under the current water rights, Los Pelambres has
a net positive impact on water availability in the Choapa Valley and following
this review by the DGA, along with other stakeholders in the Choapa Valley,
Los Pelambres will continue to engage in discussions with the relevant
authorities regarding any adjustments to the existing distribution
arrangements which have been in place for many years, including exercising any
administrative and legal procedures as may be required.
Zaldívar submitted an Environmental Impact Assessment (EIA) in 2018 which
included an application to extend its water extraction and mining permits to
2029 (with decreasing activity levels in 2030-2031). Currently, Zaldívar is
permitted to extract water and mine into 2025 and 2024, respectively. The 2018
application is still pending approval.
To ensure the continuity of the operation, Zaldívar plans to submit a DIA
(Declaration of Environmental Impact), a limited scope and less detailed
procedure than an EIA, requesting that the mining permit be extended from 2024
to 2025 so as to expire at the same date as the current water permit.
Zaldívar is also evaluating alternatives to the 2018 EIA application and
continues to work diligently with the authorities and consult with the local
indigenous community. These include the transition from the current
continental water source after completion of an extension to the current water
permit, to either procuring water from a third party or using raw seawater.
Alternatives could be contingent on the potential life of mine extension
arising from the development of the large primary sulphide resource at the
mine which is beyond the scope of the 2018 EIA application.
During the period, the company (as well as other named defendants) submitted a
response contradicting the allegations made by the Consejo de Defensa del
Estado (CDE), an independent governmental agency that represents the interests
of the Chilean state, who previously filed a claim against Minera Escondida,
Albemarle and Zaldívar, alleging that their extraction of water from the
Monturaqui-Negrillar-Tilopozo aquifer over the years has impacted the
underground water level. The litigation remains outstanding.
PRODUCTION AND CASH COSTS
During the year, copper production was 646,200 tonnes, 10.4% lower than in
2021, mainly due to the temporary reduction in throughput (-12.0%) at Los
Pelambres as a result of the drought and the reduced concentrate pipeline
availability in June, and expected lower grades (-18.3%) at Centinela
Concentrates.
Gold production was 176,800 ounces, 29.9% lower than in the previous year as a
result of the expected lower grades at Centinela.
Molybdenum production was 9,700 tonnes, 7.6% lower than in 2021 due to lower
throughput and grades at Los Pelambres.
The Transport division transported a record 7.1 million tonnes during 2022,
6.1% higher than in 2021.
Cash costs before by-product credits in 2022 were $2.19/lb, 22.3% higher than
last year mainly due to the impact of the drought and higher input prices
during the period, particularly for diesel and sulphuric acid, partly offset
by the weaker Chilean peso and the savings coming from our Cost and
Competitiveness Programme (CCP). Net cash costs for the full year were
$1.61/lb, 34.2% higher than in 2021 due to higher cash costs before by-product
credits.
COST AND COMPETITIVENESS PROGRAMME
The Group's Cost and Competitiveness Programme achieved more than double its
target, yielding benefits of $124 million. This total comprised $88 million
from cost savings and $36 million from productivity improvements.
The benefits were mainly achieved through higher utilisation of our processing
facilities, such as at Centinela where the concentrator operated at 4% above
design capacity and at Antucoya, which achieved record throughput for the
year. Also, the consumption rates for some key inputs were improved through
enhanced operational practices and the use of data analytics. These
initiatives were especially beneficial this year, partially offsetting the
impact of lower production and increased industry-wide input prices.
EXPLORATION AND EVALUATION COSTS
Exploration and evaluation costs increased by $10 million to $113 million,
mainly as a result of a higher level of activity particularly exploration in
Chile at Cachorro and Encierro.
NET FINANCE EXPENSE
Net finance expense for the year was $68 million compared with net finance
income of $16 million in 2021. This change was mainly due to the impact of the
translation of Chilean peso denominated monetary assets and liabilities
recognised in other finance items into US dollars.
TAXATION
The effective tax rate for the period was 37.4% before exceptional items and
23.6% after exceptional items, which compares with 36.5% and 35.7%
respectively in 2021.
The income tax expense for the year excluding exceptional items was $604
million, a decrease of 55% as a result of lower profits before tax. Income tax
paid during the year was $787 million compared with $777 million in 2021.
EXCEPTIONAL ITEMS
In December 2022 the Company exited its interest in the Reko Diq project in
Pakistan resulting in an exceptional gain of $945 million.
See the Reko Diq Project section below and Note 14 to the Full-year results
announcement for more information.
CAPITAL EXPENDITURE AND DEPRECIATION & AMORTISATION
Capital expenditure in 2022 was $1,879 million, including $561 million of
sustaining capital expenditure, $582 million mine development and $676 million
growth expenditure. This was an increase of $102 million on 2021 with
increased expenditure on sustaining projects at Centinela, and higher mine
development expenditure at Los Pelambres and Centinela. Further information is
included in the Review of Operations below.
Depreciation, amortisation and loss on disposals increased by $55 million to
$1.14 billion.
NET DEBT
Net debt at the end of the period was $886 million, largely reflecting the
$1,172 million payment of the 2021 final dividend. The Net Debt to EBITDA
ratio at the end of the period was 0.3 times. Cash flow from operations
reduced to $2,738 million compared with $4,508 million in 2021.
DIVIDENDS
The Board has recommended a final dividend for 2022 of 50.5 cents per share,
to be approved by shareholders at the AGM, which together with the interim
dividend of 9.2 cents per share amounts to a total dividend of 59.7 cents per
share. This is equal to a 100% pay-out ratio of underlying net earnings and is
consistent with the Company's dividend policy.
PROPOSED MINING ROYALTY
The Government presented a revised draft mining royalty bill to Congress in
October which was approved by the Senate Mining and Energy Committee in
January and passed to the Senate Treasury Committee for discussion. The bill
will then be debated in the Senate before being passed to the lower house for
its consideration.
CONSTITUTIONAL CONVENTION
After the proposed new Chilean constitution was rejected in a national
referendum in September 2022, Congress has adopted a new plan for drafting the
constitution. The plan includes specific boundaries for the scope of the
drafting process. The new constitution will be put to a vote in a national
referendum in December 2023.
MINERAL RESOURCES
The Group's total mineral resources increased by 921 million tonnes during the
year to 20,699 million tonnes containing approximately 14.1 million tonnes on
an attributable basis.
Cachorro, in northern Chile, reported its maiden inferred resources in 2021
and these were increased by over 70% during 2022 to 242.4 Mt at 1.21% copper
(cut-off grade of 0.5% copper), making the project one of the most important
manto-type deposits in the northern coastal belt in Chile. It lies between
Antucoya and Centinela and may benefit from the use of their facilities.
The Encierro project in the Chilean High Andes, 100 km east of the city of
Vallenar and 600km north of Santiago declared its maiden resources in 2022.
The deposit is a complex Cu-Au-Mo Miocene porphyry copper with inferred
resources of 522 Mt at 0.65% copper, 0.22 g/t gold and 74 ppm molybdenum
(cut-off grade of 0.5% copper).
CUPROCHLOR-T®
During 2022, we completed the validation of our in-house patented primary
sulphides leaching technology (Cuprochlor-T®) and made the technology
available to our operations to incorporate in their long-term planning. This
new technology may potentially unlock value from previously uneconomic mineral
resources which would not otherwise be processed. It could also bring forward
the profitable processing of ore otherwise scheduled to be mined in many
years' time, or that was previously considered to be uneconomic, at operations
with spare capacity in their cathode production facilities.
REKO DIQ PROJECT
In 2019 the World Bank Group's International Centre for Settlement of
Investment Disputes ("ICSID") awarded $5.84 billion in damages (compensation
and accumulated interest as at the date of the award) to Tethyan Copper
Company Pty Limited ("Tethyan"), the joint venture held equally by the Company
and Barrick Gold Corporation ("Barrick"), in relation to an arbitration claim
filed against the Islamic Republic of Pakistan ("Pakistan") following the
unlawful denial of a mining lease for the Reko Diq project in Pakistan in
2011.
In March 2022 the Company reached an agreement in principle with Barrick and
the Governments of Pakistan and Balochistan on a framework that provided for
the reconstitution of the Reko Diq project, and a pathway for the Company to
exit the Reko Diq project.
In December 2022 the parties entered into definitive agreements under which
the project was reconstituted under Tethyan and a consortium of Pakistani
state-owned enterprises acquired shares in the Tethyan subsidiary which holds
the project, and the ICSID award was resolved.
The proceeds from the acquisition of the shares of Tethyan's subsidiary will
be held by Tethyan until they are distributed to the Company before the end of
2023. An exceptional gain of $945 million has been recognised in the 2022
financial statements.
FUTURE GROWTH
The Group has a pipeline of growth projects to develop our significant mineral
resource base which we are currently advancing through a disciplined process
of project evaluation.
The Zaldívar Chloride Leach project was commissioned in 2022 and
pre-stripping of the Esperanza Sur pit project was completed in July. The Los
Pelambres Expansion project was 93% complete as at the end of 2022 with the
desalination plant and the concentrator plant expansion due to be in
production during the second quarter of this year.
Progress continues on the engineering and pre-investment studies for the
Centinela Second Concentrator project. In line with our disciplined approach
to capital allocation, the project will be sent to the Board for final
investment approval during 2023 following completion of the Los Pelambres
Expansion project and once there is sufficient clarity on the outcomes of the
ongoing discussions on the mining royalty and tax reform bills, and the
rewriting of the Chilean constitution.
COPPER MARKET
The copper price started the year strongly reaching an historic high in March
of $4.86/lb before falling to a low of $3.18/lb in July and recovering to
finally close the year at $3.81/lb.
Copper's price fluctuations reflected the broader volatility in the global
economy. Though the details differed in important ways for each major economy,
their growth was similarly dampened in 2022. Driving the slowdown were
headwinds that dominated headlines for much of the year: Russia's invasion of
Ukraine and the economic shockwaves and energy crisis it sparked; rising
inflation and interest rates; the lingering effects of COVID-19; China's
reduced economic activity; and ongoing supply shortages and strained global
supply chains.
Over the year the LME copper price averaged $4.00/lb, 5% lower than in 2021.
The copper market started 2023 strongly but has fallen back recently on
increased economic and geopolitical uncertainty. However, if the nascent
recovery of the Chinese market continues and any lasting disruptions to global
trade are avoided. Overall, the outlook is positive.
2023 GUIDANCE (as previously announced)
Copper production in 2023 is expected to be 670-710,000 tonnes with the Los
Pelambres desalination and concentrator expansion expected to be in production
during Q2 2023, and lower production at Centinela Cathodes. Copper production
is expected to increase quarter on quarter through the year.
Gold production for 2023 is expected to be 220-240,000 ounces, as grades and
recoveries increase at Centinela Concentrates. Molybdenum production is
expected to be 10-11,500 tonnes, as a result of higher throughput at Los
Pelambres and higher recoveries at Centinela.
Group cash costs in 2023 before and after by-product credits are expected to
be $2.20/lb and $1.65/lb respectively, reflecting higher production and
decreased input costs, offset by inflation and a stronger Chilean peso.
By-product credits are expected to decrease as gold and molybdenum prices
fall.
Capital expenditure in 2023 is expected to be $1.9 billion, as sustaining and
mine development expenditure increase for the year to approximately $1.5
billion, and development expenditure reduces to $400 million. Development
capital expenditure reflects construction inputs inflation and includes
residual expenditure on the Los Pelambres Expansion project. Sustaining and
mine development expenditure include higher-than-average mine development at
Centinela Concentrates, detailed engineering works on the Los Pelambres
desalination expansion and concentrate pipeline projects, the expansion of the
tailings storage facility at Centinela, and engineering and pre-investment
work on the Centinela Second Concentrator project.
REVIEW OF OPERATIONS
LOS PELAMBRES
2022 Performance
Operating Performance
As expected, the prolonged drought at Los Pelambres impacted copper
production, which was also affected by the concentrate pipeline incident.
EBITDA was $1,473 million, compared with $2,526 million in 2021, reflecting
lower copper realised prices, lower sales volumes and higher operating costs.
Production
Copper production for the year decreased by 15.3% to 275,000 tonnes, mainly
due to the lower throughput due the expected restrictions on water
availability during 2022 as a result of the accumulated impact of the
long-running drought conditions in the Los Pelambres area, and the pipeline
incident. Molybdenum production in 2022 was 7,200 tonnes, 21.7% lower than in
2021 due to a decline in throughput and grades. Gold production was 43,100
ounces, 19.0% lower than the previous year.
Costs
Cash costs before by-product credits were $1.84/lb, 15.7% higher than in 2021.
This was due to the lower production, higher input prices (mainly diesel,
explosives and energy) and general inflation, partially offset by the weaker
Chilean peso.
By-product credits increased from $0.70/lb in 2021 to $0.74/lb in 2022 due to
higher realised by-product prices despite lower production.
Net cash costs were $1.10/lb, 21c/lb higher than in 2021, reflecting the
increase in cash costs before by-product credits, partially offset by higher
by-product credits.
Capital expenditure
Capital expenditure during 2022 was $890 million, including $251 million on
sustaining capital expenditure and $496 million on growth projects.
As at the end of 2022 the Los Pelambres Desalination Plant and Concentrator
Expansion projects, including design, procurement and construction, were 93%
complete, and both are due to be in production during the second quarter of
2023.
Outlook for 2023
The forecast production for 2023 is 320-335,000 tonnes of copper, 7.5-8,500
tonnes of molybdenum and 45-55,000 ounces of gold. Higher production is due to
higher throughput, as the desalination and concentrator expansion are expected
to be in production by the end of Q2 2023.
Cash costs before by-product credits are forecast to be approximately $1.85/lb
and net cash costs $1.25/lb, reflecting higher production and decreased input
costs, offset by inflation and a stronger Chilean peso.
CENTINELA
2022 Performance
Operating Performance
Centinela Concentrates' grades declined in 2022. However, operational
reliability continued to improve and throughput averaged above design capacity
for the year as a whole.
EBITDA at Centinela was $1,157 million, compared with $1,919 million in 2021,
on lower copper and gold sales volumes, lower copper realised prices and
higher unit costs.
Production
Copper production was 247,500 tonnes, 9.7% lower than last year due to
expected lower ore grades at Centinela Concentrates, partially offset by
higher throughput.
Production of copper in concentrate was 149,300 tonnes, 19.5% lower than in
2021, reflecting expected lower ore grades (18.3%), partially offset by
throughput above the design capacity of 105,000 tonnes of ore per day. Copper
cathode production was 98,200 tonnes, 10.6% higher than in 2021 mainly due to
expected higher grades and recoveries, despite lower throughput.
Gold production was 133,700 ounces, 32.8% lower than in 2021, as grades, which
are correlated to copper grades, and recoveries decreased. Molybdenum
production was 2,400 tonnes on increased grades.
Costs
Cash costs before by-product credits in 2022 were $2.44/lb, 30.5% higher than
in 2021 due to the impact of lower copper production and higher input costs.
By-product credits were $0.69/lb, 5c/lb lower than in 2021 due to lower gold
production partially offset by higher molybdenum production and price.
Net cash costs were $1.75/lb, 62c/lb higher than 2021.
Capital expenditure
Capital expenditure was $857 million, including $431 million on mine
development, $252 million of sustaining capital expenditure and $174 million
on development capital expenditure.
Outlook for 2023
Production is forecast at 235-250,000 tonnes of copper, 175-185,000 ounces of
gold and 2.5-3,000 tonnes of molybdenum. Copper production will decrease
compared with 2022 as grades fall at Centinela Cathodes.
Cash costs before by-product credits are forecast to be approximately $2.55/lb
and net cash costs $1.70/lb.
ANTUCOYA
2022 Performance
Operating Performance
Antucoya continued to improve its operational reliability and consistency
during the year with throughput increasing by 4.6% compared with 2021.
EBITDA was $261 million compared with $337 million in 2021, reflecting higher
operating costs and the lower realised copper price.
Production
Antucoya produced 79,200 tonnes, 0.8% higher than last year due to higher
throughput, which averaged 89,400 tonnes per day for the year, the plant's
design capacity.
Costs
Cash costs for 2022 were $2.50/lb, 22.5% higher than in 2021 due to increased
input costs, particularly for sulphuric acid, diesel and explosives.
Capital expenditure
Capital expenditure was $67 million, including $58 million on sustaining
capital expenditure.
Outlook for 2023
Production is forecast to be 70-75,000 tonnes of copper and cash costs are
expected to be approximately $2.45/lb.
ZALDÍVAR
2022 Performance
Operating Performance
During 2022, Zaldívar ramped up its Chloride leach project following the
successful completion of its construction.
Attributable EBITDA was $147 million compared with $173 million in 2021.
Production
Attributable copper production was 44,500 tonnes, 1.1% higher than in 2021
mainly due to higher grades, partially offset by lower throughput.
Costs
Cash costs were $2.39/lb, unchanged from the previous year. The long leach
cycle of approximately 210 days generates a time lag in costs, so the full
effect of higher input prices is not yet fully reflected.
Capital expenditure
Attributable capital expenditure in 2022 was $55 million, of which $44 million
was sustaining capital expenditure.
Outlook for 2023
Attributable copper production is forecast to be 45-50,000 tonnes at a cash
cost of approximately $2.70/lb.
TRANSPORT DIVISION
2022 Performance
Operating performance
Tonnage transported in 2022 increased by 6.1% to an all-time record 7.1
million tonnes as new transport contracts have ramped up during the year.
EBITDA was $80 million, 17% higher than in 2021, reflecting the higher revenue
from increased volumes and better contracted sales prices.
Costs
The division has implemented several operational efficiency improvements this
year with positive results that led to increased volumes and cost optimisation
which will ensure its long-term competitiveness. In addition, it continued its
Cost and Competitiveness Programme to improve its cost structure, revenue
stream and operating standards, achieving benefits of some $9 million during
the year.
Outlook for 2023
The division has won or renewed nine contracts in 2022 and will continue with
the same focus in 2023. Over the coming years, the division has a portfolio of
projects that will allow it to increase its bulk materials transport volumes,
mainly for the copper and lithium industries.
The division continues to advance its plans to convert its land in the centre
of the city of Antofagasta from industrial to urban use. This has involved
extensive consultation with communities, neighbours and other stakeholders.
Remediation work will start in 2023.
GROWTH PROJECTS AND OPPORTUNITIES
Los Pelambres Expansion
This expansion project is divided into two phases. Phase 1 is expected to be
in production in the second quarter of 2023 and Phase 2 by the end of 2025.
Phase 1
This phase is designed to optimise throughput within the limits of the
existing operating, environmental and water extraction permits.
As mining progresses at Los Pelambres, ore hardness will increase. The
expansion is designed to compensate for this, increasing plant throughput from
its current capacity of 175,000 tonnes of ore per day to an average of 190,000
tonnes of ore per day. The expansion is divided into two sub-projects, the
construction of a desalination plant and water pipeline from the coast to the
El Mauro tailings storage facility, and the expansion of the concentrator
plant, which includes the installation of an additional SAG mill and ball
mill, and six additional flotation cells.
Annual copper production will be increased by an average of 60,000 tonnes per
year over 15 years, starting at approximately 40,000 tonnes per year for the
first four to five years and rising to 70,000 tonnes per year for the rest of
the period as the hardness of the ore increases and the benefit of the higher
milling capacity is fully realised.
In 2020 the decision was made to change the scope of the project and double
the planned capacity of the desalination plant from 400 l/s to 800 l/s.
However, the additional work on this expansion that can be carried out during
Phase 1 is limited by what is allowed under the permits that have already been
issued so the remaining work will be treated as a separate project subject to
the receipt of the necessary permits. The cost of the additional work is
included in the Phase 1 capital cost.
By the end of 2022, the desalination plant and the water pipeline were 95.7%
complete and commissioning was under way, with production expected in the
second quarter of 2023. At the concentrator plant expansion site, progress was
91.0% with production expected in the second quarter of 2023.
A detailed review of the project schedule and costs in early 2022 resulted in
the capital cost estimate for Phase 1 being increased to $2.2 billion (from
$1.7 billion). Of this increase, approximately $220 million was related to the
impact of COVID-19 on costs and the construction schedule, and $170 million
was related to general inflation, including increased input prices, wages,
labour incentives and logistics costs, with the balance reflecting other
adjustments to implementation plans and an updated contingency provision.
Phase 2 - Future expansion
Following the decision in 2020 to increase the size of the desalination plant,
Phase 2 of the expansion now requires two separate Environmental Impact
Assessment (EIA) applications; one for the expansion of the desalination plant
and one for the extension of the mine life of Los Pelambres through an
increase in the size of the El Mauro tailings storage facility. The latter EIA
will also provide the option to further increase the throughput capacity of
the concentrator plant.
Desalination plant expansion
This project will protect Los Pelambres from the future impact of climate
change and the deteriorating availability of water in the region. The project
cost will be reported as part of the Group's sustaining capital expenditure.
The project includes the expansion of the desalination plant and the
construction of a new water pipeline from the El Mauro tailings storage
facility to the concentrator plant. In 2021 Los Pelambres submitted the EIA
required for this project, which includes the desalination plant expansion and
two other sustaining capital infrastructure projects, the replacement of the
concentrate pipeline and the construction of certain planned enclosures at the
El Mauro tailings storage facility. EIA approval is expected in time for the
project to be completed in 2025/2026, by which time over 95% of Los
Pelambres's water needs will be fulfilled by desalinated or recirculated
water.
Mine life extension
The current mine life of Los Pelambres is 12 years and is limited by the
capacity of the El Mauro tailings storage facility. The scope of the second
EIA will include increasing the capacity of the tailings storage facility and
the mine waste storage. This will extend the mine's life by a minimum of 15
years, accessing a larger portion of Los Pelambres's six billion tonnes of
mineral resources. The EIA will also provide for the option to increase
throughput to 205,000 tonnes of ore per day, increasing copper production by
35,000 tonnes per year.
The capital expenditure to extend the mine life was estimated at approximately
$500 million in a 2014 pre-feasibility study, with most of the expenditure on
mining equipment and increasing the capacity of the concentrator and the El
Mauro tailings facility. Key studies on tailings and waste storage capacity
have advanced and community consultation is under way. The environmental and
social studies are being prepared and should be submitted to the authorities
during 2023/2024 as part of the EIA application.
Centinela Second Concentrator
We are currently evaluating the construction of a second concentrator and
tailings deposit some 7 km from the existing concentrator, to take place in
two phases. The EIA for both phases was approved in 2016.
Detailed engineering plans and costings have recently been updated for Phase 1
of the project and key contracts finalised, subject to Board approval of the
project. The capacity of the new concentrator will be 95,000 tonnes of ore per
day, producing on average approximately 170,000 tonnes of copper equivalent
(copper, gold and molybdenum) a year over the first 10 years of operation.
This will move Centinela into the first cost quartile of global producers.
The Phase 1 capital cost is estimated at $3.7 billion, including the cost of
the new water supply system. The increase on the previously quoted 2015
pre-feasibility estimate of $2.7 billion reflects inflation, design
improvements, heightened environmental and other regulatory requirements, and
the results of advanced engineering and a more detailed execution plan. The
estimate includes a concentrator plant, capitalised stripping, mining
equipment, a new tailings storage facility, a water pipeline and other
infrastructure, pre-commercial production operating costs, and owner's and
other costs.
The decision by the Board on whether to proceed with the project is expected
in 2023, with timing dependent on the outcome of ongoing discussions on the
tax reform and mining royalty bills and the rewriting of Chile's constitution.
Work on Phase 2 would only start once construction of Phase 1 is completed and
it is operating successfully.
The second concentrator and its potential further expansion to 150,000 tonnes
of ore per day will source ore initially from the recently opened Esperanza
Sur pit and later from the Encuentro pit. The sulphide ore in the Encuentro
pit lies under the Encuentro Oxides reserves, which are expected to be
depleted by 2026. These expansions will further progress maximising the
potential of Centinela's large mineral resource base.
During 2022 the Company continued the tender process inviting third parties to
provide water for Centinela's current and future operations by acquiring the
existing water supply system and building the new water pipeline. This process
is expected to be completed in 2023. The outsourcing of the water supply will
only proceed if it improves the net present value of the project.
Esperanza Sur pit
The Esperanza Sur pit is 4 km south of the Esperanza pit, close to Centinela's
concentrator plant. The deposit contains 1.4 billion tonnes of reserves with a
grade of 0.4% copper, 0.13g/t of gold and 0.012% of molybdenum.
Pre-stripping by a contractor was completed in July and Centinela has taken
over the operation of the pit using a fleet of 11 autonomous trucks, the first
to be used by the Group. Ore from the pit is now being processed at the
Centinela concentrator.
The opening of the Esperanza Sur pit improves Centinela's flexibility in
supplying its concentrator and, over the initial years, the higher-grade
material from the pit will increase production by some 10-15,000 tonnes of
copper per year, compared with production levels if material was supplied
solely from the Esperanza pit. This greater flexibility will allow Centinela
to smooth and optimise its year-on-year production profile, which has in the
past been variable.
Zaldívar Chloride Leach
This project is expected to increase copper recoveries by approximately 10
percentage points, with further upside in recoveries possible depending on the
type of ore being processed. This will increase copper production at Zaldívar
by approximately 10-15,000 tonnes per annum over the remaining life of the
mine.
The project was completed in early 2022 at a total capital cost of $190
million. The project included an upgrade of the Solvent Extraction (SX) plant,
new reagents facilities and the construction of additional washing ponds for
controlling the chlorine levels. Ramp-up is currently underway to achieve the
full improvement in recoveries and will extend into 2023.
As the Group equity accounts for its interest in Zaldívar, capital
expenditure at the operation is not included in Group total capital
expenditure amounts.
Twin Metals Minnesota
Twin Metals Minnesota (Twin Metals) is a wholly owned copper, nickel and
platinum group metals (PGM) underground mining project, which holds copper,
nickel/cobalt and PGM deposits in north-eastern Minnesota, US. The planned
project is over a portion of the total resource and envisages mining and
processing 18,000 tonnes of ore per day for 25 years and producing three
separate concentrates - copper, nickel/cobalt and PGM.
In 2019, Twin Metals submitted its Mine Plan of Operations (MPO) and Scoping
Environmental Assessment Worksheet Data Submittal, to the US Bureau of Land
Management (BLM, a bureau in the Department of Interior) and the Minnesota
Department of Natural Resources (DNR), respectively. However, over the past
two years, while the Twin Metals project was advancing its environmental
review, several actions were taken by the federal government that have changed
the potential outcomes for the project.
In 2021, the BLM rejected advancing Twin Metals' preference right lease
applications (PRLAs) and prospecting permit applications (PPAs).
In early 2022, the Department of Interior (DOI) took an additional action
through a legal opinion issued by the Office of the Solicitor (M-Opinion).
This action arbitrarily cancelled Twin Metals' federal mining leases 1352 and
1353, citing concerns with the reinstatement and renewal process.
Also in early 2022, the BLM stopped its evaluation of Twin Metals' MPO and an
administrative court dismissed Twin Metals' appeal of that decision.
In August 2022 Twin Metals filed a claim in federal court challenging the
administrative actions resulting in the rejection of the PRLAs, the
cancellation of its federal leases 1352 and 1353, the rejection of its MPO and
the dismissal of the administrative appeal of the MPO rejection. Twin Metals
considers the actions of the Government to be arbitrary and capricious,
contrary to the law and in violation of its rights. This action is pending.
In January 2023, the DOI issued an order effectively banning mining in
approximately 225,000 acres of the Superior National Forest for 20 years,
subject to valid existing rights. This action alone does not prevent Twin
Metals from proceeding with the project since it does not affect its
pre-existing rights.
FINANCIAL REVIEW FOR THE YEAR ENDED 31 DECEMBER 2022
Year ended Year ended
31.12.2022 31.12.2021
(Unaudited) (Audited)
Before exceptional items Before exceptional items Total
Exceptional Total Exceptional
items Items
$m $m $m $m $m $m
Revenue 5,862.0 - 5,862.0 7,470.1 - 7,470.1
EBITDA (including share of EBITDA from associates and joint ventures) 2,929.7 - 2,929.7 4,836.2 - 4,836.2
Total operating costs (4,227.7) - (4,227.7) (3,891.1) (177.6) (4,068.7)
Operating profit from subsidiaries 1,634.3 - 1,634.3 3,579.0 (177.6) 3,401.4
Net share of results from associates and joint ventures 48.1 - 48.1 59.7 - 59.7
Gain on disposal of investment in joint venture - 944.7 944.7 - - -
Operating profit from subsidiaries, and total profit from associates and joint 1,682.4 944.7 2,627.1 3,638.7 (177.6) 3,461.1
ventures
Net finance expense (68.2) - (68.2) 16.0 - 16.0
Profit before tax 1,614.2 944.7 2,558.9 3,654.7 (177.6) 3,477.1
Income tax expense (603.6) - (603.6) (1,332.9) 90.6 (1,242.3)
Profit from continuing operations 1,010.6 944.7 1,955.3 2,321.8 (87.0) 2,234.8
Profit for the year 1,010.6 944.7 1,955.3 2,321.8 (87.0) 2,234.8
Attributable to:
Non-controlling interests 422.3 - 422.3 917.4 27.2 944.6
Profit/loss attributable to the owners of the parent 588.3 944.7 1,533.0 1,404.4 (114.2) 1,290.2
Basic earnings per share Cents cents Cents cents Cents Cents
From continuing operations 59.7 95.8 155.5 142.5 (11.6) 130.9
The profit for the financial year attributable to the owners of the parent
(including exceptional items) increased from $1,290.2 million in 2021 to
$1,533.0 million in the current year. Excluding exceptional items, the profit
attributable to the owners of the parent decreased by $816.1 million to $588.3
million.
The full reconciliation between 2021 and 2022, including exceptional items, is $m
as follows:
Profit attributable to the owners of the parent in 2021 1,290.2
Less: exceptional items - 2021 114.2
Profit attributable to the owners of the parent in 2021 (excluding exceptional 1,404.4
items)
Decrease in revenue (1,608.1)
Increase in total operating costs (excluding exceptional items) (336.6)
Decrease in net share of profit from associates and joint ventures (excluding (11.6)
exceptional items)
Increase in net finance expenses (84.2)
Decrease in income tax expense (excluding exceptional items) 729.3
Decrease in non-controlling interests 495.1
(816.1)
Profit attributable to the owners of the parent in 2022 (excluding exceptional 588.3
items)
Exceptional items - 2022 944.7
Profit attributable to the owners of the parent in 2022 1,533.0
Revenue
The $1,608.1 million decrease in revenue from $7,470.1 million in 2021 to
$5,862.0 million in the current year reflected the following factors:
$m
Revenue in 2021 7,470.1
Decrease in copper sales volumes (799.4)
Decrease in realised copper price (704.5)
Increase in treatment and refining charges (3.8)
Decrease in gold revenue (122.5)
Increase in molybdenum revenue 25.9
Decrease in silver revenue (27.2)
Increase in Transport division revenue 23.4
(1,608.1)
Revenue in 2022 5,862.0
Revenue from the Mining division
Revenue from the Mining division decreased by $1,631.5 million, or 22%, to
$5,668.6 million, compared with $7,300.1 million in 2021. The decrease
reflected a $1,507.7 million reduction in copper sales and a $123.8 million
decrease in by-product revenue.
Revenue from copper sales
Revenue from copper concentrate and copper cathode sales decreased by $1,507.7
million, or 24%, to $4,905.5 million, compared with $6,413.2 million in 2021.
The decrease reflected the impact of $799.4 million from lower sales volumes,
$704.5 million from lower realised prices and $3.8 million from higher
treatment and refining charges.
(i) Copper volumes
Copper sales volumes reflected within revenue decreased by 12.2% from 681,000
tonnes in 2021 to 598,100 tonnes in 2022, decreasing revenue by $799.4
million. This decrease was due to lower copper sales volumes at Los Pelambres
(53,300 tonnes decrease) as a result of its decreased production due to the
concentrate pipeline issue and water shortage, and lower sales volumes at
Centinela (30,000 tonnes decrease) due to decreased production volumes
reflecting expected lower ore grades.
(ii) Realised copper price
The average realised copper price decreased by 12% to $3.84/lb in 2022 (2021 -
$4.37/lb), resulting in a $704.5 million decrease in revenue. The decrease in
the realised price reflected the lower LME average market price, which fell by
5% to $4.00/lb in 2022 (2021 - $4.23/lb), and a negative provisional pricing
adjustment of $169.7 million. The provisional pricing adjustment mainly
reflected the decrease in the year-end mark-to-market copper price to $3.80/lb
at 31 December 2022, compared with $4.42/lb at 31 December 2021. In addition,
during 2022 there was no impact in respect of commodity hedging instruments as
no hedges were in place during the year, whereas the prior year revenue
included a $126.8 million negative impact in respect of hedging instruments
which matured during 2021.
Realised copper prices are determined by comparing revenue (after adding back
treatment and refining charges for concentrate sales) with sales volumes in
the period. Realised copper prices differ from market prices mainly because,
in line with industry practice, concentrate and cathode sales agreements
generally provide for provisional pricing at the time of shipment with final
pricing based on the average market price in future periods (normally around
one month after delivery to the customer in the case of cathode sales and four
months after delivery to the customer in the case of concentrate sales).
Further details of provisional pricing adjustments are given in Note 6 to the
Full-year results announcement.
(iii) Treatment and refining charges
Treatment and refining charges (TC/RCs) for copper concentrate increased by
$3.8 million to $155.8 million in 2022, compared with $152.0 million in 2021
reflecting higher average TC/RC rates, offset by the decrease in concentrate
sales volumes at Los Pelambres and Centinela.
With sales of concentrates at Los Pelambres and Centinela, which are sold to
smelters and roasting plants for further processing into fully refined metal,
the price of the concentrate invoiced to the customer reflects the market
value of the fully refined metal less a "treatment and refining charge"
(TC/RC) deduction, to reflect the lower value of this partially processed
material compared with the fully refined metal. For accounting purposes, the
revenue amount is the invoiced amount, which is the market value of fully
refined metal less the treatment and refining charges. Under the standard
industry definition of cash costs, treatment and refining charges are regarded
as an expense and part of the total cash cost figure.
Accordingly, the increase in these charges has had a negative impact on
revenue in the year.
Revenue from molybdenum, gold and other by-product sales
Revenue from by-product sales at Los Pelambres and Centinela relate mainly to
molybdenum and gold and, to a lesser extent, silver. Revenue from by-products
decreased by $123.8 million or 14.0% to $763.1 million in 2022, compared with
$886.9 million in 2021.
Revenue from gold sales (net of treatment and refining charges) was $313.9
million (2021 - $436.4 million), a decrease of $122.5 million which reflected
a decrease in volumes slightly offset by a higher realised price. Gold sales
volumes decreased by 28.6% from 244,700 ounces in 2021 to 174,700 ounces in
2022 as the gold grades, which are often correlated to copper grades,
decreased, as did recoveries at Centinela. The realised gold price was
$1,801/oz in 2022 compared with $1,788/oz in 2021, reflecting the average
market price for 2022 of $1,800/oz (2021 - $1,799/oz) and a positive
provisional pricing adjustment of $3.5 million.
Revenue from molybdenum sales (net of roasting charges) was $392.3 million
(2021 - $366.4 million), an increase of $25.9 million. The increase was due to
the higher realised price of $20.8/lb (2021 - $17.4/lb), partially offset by
decreased sales volumes of 9,200 tonnes (2021 - 10,400 tonnes).
Revenue from silver sales decreased by $27.2 million to $56.9 million (2021 -
$84.1 million). The decrease was due to lower sales volumes of 2.7 million
ounces (2021 - 3.4 million ounces) and the lower realised silver price of
$21.2/oz (2021 - $24.9/oz).
Revenue from the Transport division
Revenue from the Transport division (FCAB) increased by $23.4 million or 13.8%
to $193.4 million (2021 - $170.0 million), mainly due to increased volumes and
better pricing in some contracts.
Total operating costs (excluding exceptional items)
The $336.6 million increase in total operating costs (excluding exceptional
items) from $3,891.1 million in 2021 to $4,227.7 million in the current year
reflected the following factors:
$m
Total operating costs in 2021 (excluding exceptional items) 3,891.1
Increase in mine-site operating costs 252.8
Increase in closure provision and other mining expenses 6.4
Increase in exploration and evaluation costs 9.8
Decrease in corporate costs (0.5)
Increase in Transport division operating costs 12.8
Increase in depreciation, amortisation and loss on disposals 55.3
336.6
Total operating costs in 2022 (excluding exceptional items) 4,227.7
Operating costs (excluding depreciation, amortisation, loss on disposals and
impairments) at the Mining division
Operating costs (excluding depreciation, amortisation, loss on disposals and
impairments) at the Mining division increased by $268.5 million to $2,965.4
million in 2022, an increase of 10.0%. Of this increase, $252.8 million was
attributable to higher mine-site operating costs. This increase in mine-site
costs reflected higher key input prices and general inflation, partly offset
by the impact of the decreased sales volumes, the weaker Chilean peso and cost
savings from the Group's Cost and Competitiveness Programme.
On a unit cost basis, weighted average cash costs excluding by-product credits
(which for accounting purposes are part of revenue) and treatment and refining
charges for concentrates (which are also part of revenue for accounting
purposes), increased from $1.68/lb in 2021 to $2.05/lb in 2022.
The Cost and Competitiveness Programme was implemented to reduce the Group's
cost base and improve its competitiveness within the industry. During 2022 the
programme achieved benefits of $124.0 million in the Mining division, of which
$88.0 million reflected cost savings and $36.0 million reflected the value of
productivity improvements. Of the $88.0 million of cost savings, $55.9 million
related to Los Pelambres, Centinela and Antucoya, and therefore impacted the
Group's operating costs, and $32.1 million related to Zaldívar (on a 100%
basis) and therefore impacted the share of results from associates and joint
ventures.
Closure provisions and other mining expenses increased by $6.4 million.
Exploration and evaluation costs increased by $9.8 million to $113.0 million
(2021 - $103.2 million), reflecting increased exploration expenditure
principally in respect of the Cachorro and Encierro projects, and also
increased expenditure on geotechnical drilling at Los Pelambres, partly offset
by lower costs at Twin Metals.
Corporate costs decreased by $0.5 million.
Operating costs (excluding depreciation, amortisation and loss on disposals)
at the Transport division
Operating costs (excluding depreciation, amortisation and loss on disposals)
at the Transport division increased by $12.8 million to $119.1 million (2021 -
$106.3 million), mainly due to an increase in the price of diesel used for
locomotives and trucks as well as the impact of the higher inflation rate on
labour, material and contractor costs.
Depreciation, amortisation and disposals (excluding impairments)
The expense for depreciation, amortisation and loss on disposals increased by
$55.3 million from $1,087.9 million in 2021 to $1,143.2 million. This increase
is mainly due to higher amortisation of IFRIC 20 stripping costs at Centinela,
offset by the impact of depreciation deferred in inventory, also largely at
Centinela.
Operating profit from subsidiaries
As a result of the above factors, operating profit from subsidiaries decreased
by $1,935.7 million or 54.1% in 2022 to $1,634.3 million (2021 - $3,579.0
million).
Share of results from associates and joint ventures
The Group's share of results from associates and joint ventures was a profit
of $48.1 million in 2022, compared with $59.7 million in 2021. Of this
decrease, $21.3 million was due to lower profits at Zaldívar.
EBITDA
EBITDA (earnings before interest, tax, depreciation and amortisation, and
impairments) decreased by $1,906.5 million or 39.4% to $2,929.7 million (2021
- $4,836.2 million). EBITDA includes the Group's proportional share of EBITDA
from associates and joint ventures.
EBITDA from the Mining division decreased by 40.2% from $4,768.0 million in
2021 to $2,849.7 million this year.
This reflected the lower revenue and higher mine-site costs explained above,
and to a lesser extent a lower EBITDA from associates and joint ventures.
EBITDA at the Transport division increased by $11.8 million to $80.0 million
in 2022 ($68.2 million - 2021), reflecting the higher revenue and slightly
increased EBITDA from associates and joint ventures, offset by higher
operating costs, mainly due to inflation and the increased price of diesel.
Commodity price and exchange rate sensitivities
The following sensitivities show the estimated approximate impact on EBITDA
for 2022 of a 10% movement in the average copper, molybdenum and gold prices
and a 10% movement in the average US dollar / Chilean peso exchange rate.
The impact of the movement in the average commodity prices reflects the
estimated impact on the relevant revenues during 2022, and the impact of the
movement in the average exchange rate reflects the estimated impact on Chilean
peso denominated operating costs during the year. These estimates do not
reflect any impact in respect of provisional pricing or hedging instruments,
any potential inter-relationship between commodity price and exchange rate
movements, or any impact from the retranslation or changes in valuations of
assets or liabilities held on the balance sheet at the year-end.
Average market commodity price / average exchange rate during the year ended Impact of a 10% movement in the commodity price / exchange rate on EBITDA
31.12.22
for the year ended 31.12.22
$m
Copper price $4.00/lb 566
Molybdenum price $18.7/lb 38
Gold price $1,800/oz 31
US dollar / Chilean peso exchange rate 872 153
Net finance (expense)/income
Net finance expense of $68.2 million reflected a variance of $84.2 million
compared with the $16.0 million gain in 2021.
Year ended 31.12.22 Year ended 31.12.21
$m $m
Interest income 40.2 5.0
Interest expense (78.6) (63.4)
Other finance items (29.8) 74.4
Net finance expense (68.2) 16.0
Interest income increased from $5.0 million in 2021 to $40.2 million in 2022,
mainly due to an increase in average interest rates.
Interest expense increased from $63.4 million in 2021 to $78.6 million in
2022, again mainly reflecting an increase in average interest rates, partially
offset by the decrease in the average relevant borrowing balances (after
taking account of borrowings where the interest is capitalised).
Other finance items were a net loss of $29.8 million, compared with a net gain
of $74.4 million in 2021, a variance of $104.2 million. This was largely due
to the foreign exchange impact of the retranslation of Chilean peso
denominated assets and liabilities, which resulted in a $12.8 million loss in
2022 compared with a $49.7 million gain in 2021. In addition, there was a
negative year-on-year variance of $41.7 million related to the discounting of
long-term provisions, largely driven by the increase in discount rates in 2021
resulting in a decrease in the provision balances and a corresponding credit
recognised in other finance items in the prior year.
Profit before tax
As a result of the factors set out above, profit before tax decreased by 26.4%
to $2,558.9 million (2021 - $3,477.1 million).
Income tax expense
The tax charge for 2022 excluding exceptional items decreased by $729.3
million to $603.6 million (2021 - $1,332.9 million) and the effective tax rate
for the year was 37.4% (2021 - 36.5%). Including exceptional items, the tax
charge for 2022 was $603.6 million and the effective tax rate was 23.6%.
The following table provides a numerical reconciliation between the accounting
profit before tax multiplied by the applicable statutory tax rate and the
total tax expense (including both current and deferred tax).
Year ended Year ended Year ended Year ended
Excluding exceptional items Including exceptional items Excluding exceptional items Including exceptional items
31.12.2022
31.12.2022
31.12.2021
31.12.2021
$m % $m % $m % $m %
Profit before tax 1,614.2 2,558.9 3,654.7 3,477.1
Profit before tax multiplied by Chilean corporate tax rate of 27% (435.9) 27.0 (691.0) 27.0 (986.8) 27.0 (938.8) 27.0
Mining Tax (royalty) (94.5) 5.8 (94.5) 3.7 (243.8) 6.7 (243.8) 7.0
Deduction of mining royalty as an allowable expense in determination of first 23.1 (1.4) 23.1 (0.9) 67.8 (1.9) 67.8 (1.9)
category tax
Items not deductible from first category tax (33.9) 2.1 (33.9) 1.3 (31.6) 0.9 (31.6) 0.9
Adjustment in respect of prior years (2.6) 0.1 (2.6) 0.1 (12.1) 0.3 (12.1) 0.3
Withholding tax (73.0) 4.6 (73.0) 2.9 (195.0) 5.3 (195.0) 5.6
Tax effect of share of profit of associates and joint ventures 13.0 (0.8) 13.0 (0.5) 16.1 (0.4) 16.1 (0.5)
Impact of unrecognised tax losses on current tax 0.2 - 0.2 - 52.5 (1.4) 52.5 (1.5)
Recognition of previously unrecognised tax losses on deferred tax - - - - - - 90.6 (2.6)
Provision against carrying value of assets - - - - - - (48.0) 1.4
Gain on disposal of investment in joint venture - - 255.1 (10.0) - - - -
Tax expense and effective tax rate for the Year ended (603.6) 37.4 (603.6) 23.6 (1,332.9) 36.5 (1.242.3) 35.7
The effective tax rate excluding exceptional items of 37.4% varied from the
statutory rate principally due to the mining tax (royalty) (net impact of
$71.4 million / 4.4% including the deduction of the mining tax (royalty) as an
allowable expense in the determination of first category tax), the withholding
tax relating to the remittance of profits from Chile (impact of $73.0 million
/ 4.6%), items not deductible for Chilean corporate tax purposes, principally
the funding of expenses outside of Chile (impact of $33.9 million / 2.1%) and
adjustments in respect of prior years (impact of $2.6 million / 0.1%), partly
offset by the impact of the recognition of the Group's share of profit from
associates and joint ventures, which are included in the Group's profit before
tax net of their respective tax charges (impact of $13.0 million / 0.8%).
The impact of the exceptional items on the effective tax rate including
exceptional items was $255.1 million / 10.0%. Further details of the
exceptional gain on the disposal of the Group's investment in the Tethyan
joint venture, including relevant tax aspects, are set out in Note 14 to the
Full-year results announcement.
Exceptional items
Exceptional items are material items of income and expense which are
non-regular or non-operating and typically non-cash, including impairments and
profits or losses on disposals. The tax effect of items presented as
exceptional is also classified as exceptional, as are material deferred tax
adjustments that relate to more than one reporting period. The classification
of these types of items as exceptional is considered to be useful as it
provides an indication of the underlying earnings generated by the on-going
businesses of the Group.
Disposal of investment in Tethyan joint venture
On 15 December 2022 Antofagasta entered into definitive agreements to exit its
interest in the Tethyan joint venture. As a result, Antofagasta has recognised
a gain on disposal of its investment in the joint venture as at 15 December
2022 of $944.7 million. Full details of the agreements and gain on disposal
are set out in Note 14 to the Full-year results announcement.
2021 - Impairment of Twin Metals' assets
In 2021 an impairment was recognised in respect of the $177.6 million of
intangible assets and property, plant and equipment relating to the Twin
Metals project.
2021 - Recognition of previously unrecognised deferred tax assets
At 31 December 2021, the Group recognised $90.6 million of previously
unrecognised deferred tax assets relating to tax losses available for offset
against future profits, reflecting the improved actual and forecast
profitability of the relevant Group entity (Antucoya).
Non-controlling interests
Profit for 2022 attributable to non-controlling interests (excluding
exceptional items) was $422.3 million, compared with $917.4 million in 2021, a
decrease of $495.1 million. This reflected the decrease in earnings analysed
above.
Earnings per share
Year ended 31.12.22 Year ended
31.12.21
$ cents $ cents
Underlying earnings per share (excluding exceptional items) 59.7 142.5
Earnings per share (exceptional items) 95.8 (11.6)
Earnings per share (including exceptional items) 155.5 130.9
Earnings per share calculations are based on 985,856,695 ordinary shares.
As a result of the factors set out above, the underlying profit attributable
to equity shareholders of the Company (excluding exceptional items) was $588.3
million compared with $1,404.4 million in 2021, giving underlying earnings per
share of 59.7 cents per share (2021 - 142.5 cents per share). The profit
attributable to equity shareholders (including exceptional items) was $1,533.0
million, resulting in earnings per share of 155.5 cents per share (2021 -
130.9 cents per share).
Dividends
Dividends per share proposed in relation to the period are as follows:
Year ended 31.12.22 Year ended
31.12.21
$ cents $ cents
Ordinary dividends:
Interim 9.2 23.6
Final 50.5 118.9
Total dividends to ordinary shareholders 59.7 142.5
The Board determines the appropriate dividend each year based on consideration
of the Group's cash balance, the level of free cash flow and underlying
earnings generated during the year and significant known or expected funding
commitments. It is expected that the total annual dividend for each year would
represent a payout ratio based on underlying net earnings for that year of at
least 35%.
The Board has recommended a final dividend for 2022 of 50.5 cents per ordinary
share, which amounts to $497.6 million and will be paid on 12 May 2023 to
shareholders on the share register at the close of business on 21 April 2023.
The Board declared an interim dividend for the first half of 2022 of 9.2 cents
per ordinary share, which amounted to $90.7 million.
This gives total dividends proposed in relation to 2022 (including the interim
dividend) of 59.7 cents per share or $588.3 million in total (2021 - 142.5
cents per ordinary share or $1,404.8 million in total) equivalent to a payout
ratio of 100% of underlying earnings.
Capital expenditure
Capital expenditure increased by $101.7 million from $1,777.5 million in 2021
to $1,879.2 million in the current year, mainly due to increased sustaining
capex at Centinela, Los Pelambres and Antucoya, increased mine development at
Los Pelambres and Centinela, offset by lower expenditure on the Esperanza Sur
pit at Centinela and the Los Pelambres Expansion project.
NB: capital expenditure figures quoted in this report are on a cash flow
basis, unless stated otherwise.
Derivative financial instruments
The Group periodically uses derivative financial instruments to reduce its
exposure to commodity price, foreign exchange and interest rate movements. The
Group does not use such derivative instruments for speculative trading
purposes. At 31 December 2022 there were no derivative financial instruments
in place (2021 - nil).
Cash flows
The key features of the cash flow statement are summarised in the following
table.
Year ended 31.12.22 Year ended 31.12.21
$m $m
Cash flows from continuing operations 2,738.3 4,507.7
Income tax paid (787.1) (776.9)
Net interest paid (45.2) (53.3)
Capital contributions and loans to associates - (33.5)
Purchases of property, plant and equipment (1,879.2) (1,773.0)
Acquisition of mining properties - (4.5)
Acquisition of equity investments (66.5) -
Dividends paid to equity holders of the Company (1,262.9) (710.8)
Dividends paid to non-controlling interests (80.0) (604.5)
Dividends from associates and joint ventures 50.0 142.5
Other items 0.1 1.4
Changes in net debt relating to cash flows (1,332.5) 695.1
Other non-cash movements (70.4) (73.8)
Effects of changes in foreign exchange rates (23.4) 1.2
Movement in net debt in the period (1,426.3) 622.5
Net cash/(net debt) at the beginning of the year 540.5 (82.0)
(Net debt)/net cash at the end of the year (885.8) 540.5
Cash flows from continuing operations were $2,738.3 million in 2022 compared
with $4,507.7 million in 2021. This reflected EBITDA from subsidiaries for
the year of $2,777.5 million (2021 - $4,666.9 million) adjusted for the
negative impact of a net working capital increase of $12.7 million (2021 -
working capital increase of $140.2 million) and a non-cash decrease in
provisions of $26.5 million (2021 - decrease of $19.0 million).
The working capital increase in 2022 was mainly due to the increase of work in
progress inventories in the Mining division and an increase in finished goods
inventories at Centinela, partially offset by a decrease in receivables,
reflecting the lower average mark-to-market price at 31 December 2022 of
$3.80/lb (31 December 2021 - $4.42/lb) and lower sales volumes towards the end
of the current period compared with the end of 2021, and an increase in
creditors.
The net cash outflow in respect of tax in 2022 was $787.1 million (2021 -
$776.9 million). This amount differs from the current tax charge in the
consolidated income statement (including exceptional items) of $448.8 million
(2021 - $1,035.5 million) mainly because cash tax payments for corporate tax
and the mining tax include the settlement of outstanding balances in respect
of the previous year's tax charge of $332.2 million (2021 - $30.9 million),
withholding tax payments of $24.5 million, payments on account for the current
year based on the prior year's profit levels of $435.6 million, as well as the
recovery of $5.1 million relating to prior years.
Contributions and loans to associates and joint ventures were nil (2021 -
$33.5 million, relating to Hornitos and Tethyan).
Capital expenditure in 2022 was $1,879.2 million compared with $1,777.5
million in 2021. This included expenditure of $889.7 million at Los Pelambres
(2021 - $880.4 million), $857.0 million at Centinela (2021 - $791.8 million),
$66.9 million at Antucoya (2021 - $49.6 million), $10.8 million at the
corporate centre (2021 - $24.4 million) and $54.8 million at the Transport
division (2021 - $31.3 million). The increase in sustaining capex at Centinela
and Los Pelambres, and increased mine development at Los Pelambres and
Centinela, was partially offset by less expenditure on the Esperanza Sur pit
at Centinela.
Dividends paid to equity holders of the Company were $1,262.9 million (2021 -
$710.8 million) of which $1,172.1 million related to the payment of the
previous year's final dividend and $90.7 million to the interim dividend
declared in respect of the current year.
Dividends paid by subsidiaries to non-controlling shareholders were $80.0
million (2021 - $604.5 million).
Dividends received from associates and joint ventures was $50.0 million for
2022 (2021 - $142.5 million).
Financial position
At 31.12.22 At 31.12.21
$m $m
Cash, cash equivalents and liquid investments 2,391.2 3,713.1
Total borrowings (3,277.0) (3,172.6)
(Net debt)/ net cash at the end of the period (885.8) 540.5
At 31 December 2022 the Group had combined cash, cash equivalents and liquid
investments of $2,391.2 million (31 December 2021 - $3,713.1 million).
Excluding the non-controlling interest share in each partly-owned operation,
the Group's attributable share of cash, cash equivalents and liquid
investments was $1,990.9 million (31 December 2021 - $3,299.9 million).
Total Group borrowings at 31 December 2022 were $3,277.0 million, an increase
of $104.4 million on the prior year (31 December 2021 - $3,172.6 million). The
increase was mainly due to the $488.5 million from the issue of the new
corporate bond, $327.4 million of additional draw-down for the Los Pelambres
Expansion project, a $50.0 million refinancing of the senior loan at Antucoya
and $51.3 million of new finance leases, partly offset by a $686.1 million
repayment of the senior loans at Corporate ($500.0 million), Centinela ($111.1
million), Los Pelambres ($50.0 million) and Antucoya ($25.0 million), $35.0
million repayment of Antucoya's short term loan and $19.6 million of
subordinated debt repayment by Antucoya.
Excluding the non-controlling interest share in each partly-owned operation,
the Group's attributable share of the borrowings was $2,449.7 million (31
December 2021 - $2,409.6 million).
These movements resulted in net debt at 31 December 2022 of $885.8 million (31
December 2021 - net cash $540.5 million). Excluding the non-controlling
interest share in each partly-owned operation, the Group had an attributable
net debt position of $458.7 million (31 December 2021 - net cash $890.3
million).
Going concern
The consolidated financial information contained in this unaudited Full-year
results announcement has been prepared on the going concern basis. Details of
the factors which have been taken into account in assessing the Group's going
concern status are set out in Note 1 to the financial report.
Cautionary statement about forward-looking statements
This Full-year results announcement contains certain forward-looking
statements. All statements other than historical facts are forward-looking
statements. Examples of forward-looking statements include those regarding the
Group's strategy, plans, objectives or future operating or financial
performance, reserve and resource estimates, commodity demand and trends in
commodity prices, growth opportunities, and any assumptions underlying or
relating to any of the foregoing. Words such as "intend", "aim", "project",
"anticipate", "estimate", "plan", "believe", "expect", "may", "should",
"will", "continue" and similar expressions identify forward-looking
statements.
Forward-looking statements involve known and unknown risks, uncertainties,
assumptions and other factors that are beyond the Group's control. Given these
risks, uncertainties and assumptions, actual results could differ materially
from any future results expressed or implied by these forward-looking
statements, which apply only as at the date of this report. Important factors
that could cause actual results to differ from those in the forward-looking
statements include: global economic conditions, demand, supply and prices for
copper and other long-term commodity price assumptions (as they materially
affect the timing and feasibility of future projects and developments), trends
in the copper mining industry and conditions of the international copper
markets, the effect of currency exchange rates on commodity prices and
operating costs, the availability and costs associated with mining inputs and
labour, operating or technical difficulties in connection with mining or
development activities, employee relations, litigation, and actions and
activities of governmental authorities, including changes in laws, regulations
or taxation. Except as required by applicable law, rule or regulation, the
Group does not undertake any obligation to publicly update or revise any
forward-looking statements, whether as a result of new information, future
events or otherwise.
Past performance cannot be relied on as a guide to future performance.
Consolidated Income Statement
Year ended 31.12.2022 (Unaudited) Year ended 31.12.2021 (Audited)
Excluding exceptional items Exceptional items Total Excluding exceptional items Exceptional items Total
note 3
note 3
Notes $m $m $m $m $m $m
Group revenue 5 5,862.0 - 5,862.0 7,470.1 - 7,470.1
Total operating costs 2 (4,227.7) - (4,227.7) (3,891.1) (177.6) (4,068.7)
Operating profit from subsidiaries 2 1,634.3 - 1,634.3 3,579.0 (177.6) 3,401.4
Net share of results of associates and joint ventures 2 48.1 - 48.1 59.7 - 59.7
Gain on disposal of investment in joint venture 3 - 944.7 944.7 - - -
Operating profit from subsidiaries, and total profit from associates and joint 1,682.4 944.7 2,627.1 3,638.7 (177.6) 3,461.1
ventures
Investment income 40.2 - 40.2 5.0 - 5.0
Interest expense (78.6) - (78.6) (63.4) - (63.4)
Other finance items (29.8) - (29.8) 74.4 - 74.4
Net finance (expense)/income 8 (68.2) - (68.2) 16.0 - 16.0
Profit before tax 1,614.2 944.7 2,558.9 3,654.7 (177.6) 3,477.1
Income tax expense 9 (603.6) - (603.6) (1,332.9) 90.6 (1,242.3)
Profit from continuing operations 1,010.6 944.7 1,955.3 2,321.8 (87.0) 2,234.8
Profit for the year 1,010.6 944.7 1,955.3 2,321.8 (87.0) 2,234.8
Attributable to:
Non-controlling interests 422.3 - 422.3 917.4 27.2 944.6
Owners of the parent 588.3 944.7 1,533.0 1,404.4 (114.2) 1,290.2
US cents US cents US cents US cents US cents US cents
Basic earnings per share
From continuing operations 10 59.7 95.8 155.5 142.5 (11.6) 130.9
Consolidated Statement of Comprehensive Income
Notes Year ended 31.12.2022 (Unaudited) Year ended 31.12.2021 (Audited)
$m $m
Profit for the year 5 1,955.3 2,234.8
Items that may be or were subsequently reclassified to profit or loss:
Losses on cash flow hedges - (90.9)
Losses on fair value of cash flow hedges transferred to the income statement - 126.8
Currency translation adjustment (0.4) (1.6)
Income tax relating to these items - (4.4)
Total items that may be or were subsequently reclassified to profit or loss (0.4) 29.9
Items that will not be subsequently reclassified to profit or loss:
Actuarial (losses)/gains on defined benefit plans 19 (18.1) 3.1
Gains/(losses) on fair value of equity investments 16 15.8 (2.1)
Tax relating to these items 5.7 (2.5)
Total Items that will not be subsequently reclassified to profit or loss 3.4 (1.5)
Total other comprehensive income 3.0 28.4
Total comprehensive income for the year 1,958.3 2,263.2
Attributable to:
Non-controlling interests 418.1 952.8
Equity holders of the Company 1,540.2 1,310.4
Total comprehensive income for the year - continuing operations 1,958.3 2,263.2
1,958.3 2,263.2
Consolidated Statement of Changes in Equity
For the year ended 31.12.2022 (Unaudited)
Share capital Share premium Other reserves Retained earnings Equity attributable to equity owners of the parent Non- controlling interests Total equity
(Note 23) (Note 23)
$m $m $m $m $m $m $m
Balance at 1 January 2022 89.8 199.2 (10.4) 8,071.6 8,350.2 2,678.8 11,029.0
Profit for the year - - - 1,533.0 1,533.0 422.3 1,955.3
Other comprehensive income/(expense) for the year - - 15.4 (8.2) 7.2 (4.2) 3.0
Total comprehensive income for the year - - 15.4 1,524.8 1,540.2 418.1 1,958.3
Dividends - - - (1,262.9) (1,262.9) (80.0) (1,342.9)
Balance at 31 December 2022 89.8 199.2 5.0 8,333.5 8,627.5 3,016.9 11,644.4
For the year ended 31 December 2021 (Audited)
Share capital Share premium Other reserves (Note 23) Retained earnings (Note 23) Equity attributable to equity owners of the parent Non- controlling interests Total equity
$m $m $m $m $m $m $m
Balance at 1 January 2021 89.8 199.2 (30.6) 7,492.2 7,750.6 2,330.5 10,081.1
Profit for the year - - - 1,290.2 1,290.2 944.6 2,234.8
Other comprehensive income for year - - 20.2 - 20.2 8.2 28.4
Total comprehensive income for the year - - 20.2 1,290.2 1,310.4 952.8 2,263.2
Dividends - - - (710.8) (710.8) (604.5) (1,315.3)
Balance at 31 December 2021 89.8 199.2 (10.4) 8,071.6 8,350.2 2,678.8 11,029.0
Consolidated Balance Sheet
At 31.12.2022 (Unaudited) At 31.12.2021 (Audited)
Non-current assets Notes $m $m
Intangible assets 12 - -
Property, plant and equipment 13 11,543.5 10,538.5
Other non-current assets 1.1 1.3
Inventories 17 347.0 270.4
Investments in associates and joint ventures 15 904.6 905.8
Trade and other receivables 51.0 51.2
Equity investments 16 90.5 8.7
Deferred tax assets 21 78.5 96.8
13,016.2 11,872.7
Current assets
Inventories 17 708.1 532.8
Trade and other receivables 2,087.2 1,146.1
Current tax assets 35.6 13.7
Liquid investments 25 1,580.8 2,969.7
Cash and cash equivalents 25 810.4 743.4
5,222.1 5,405.7
Total assets 18,238.3 17,278.4
Current liabilities
Short-term borrowings and other financial liabilities 18 (432.5) (337.1)
Trade and other payables (1,079.7) (829.1)
Short-term decommissioning and restoration provisions 20 (33.2) (33.8)
Current tax liabilities (60.4) (374.2)
(1,605.8) (1,574.2)
Non-current liabilities
Medium and long-term borrowings and other financial liabilities 18 (2,844.5) (2,835.5)
Trade and other payables (8.0) (16.8)
Liabilities in relation to joint ventures 15 - (0.6)
Post-employment benefit obligations 19 (137.3) (107.5)
Decommissioning and restoration provisions 20 (455.0) (302.3)
Deferred tax liabilities 21 (1,543.3) (1,412.5)
(4,988.1) (4,675.2)
Total liabilities (6,593.9) (6,249.4)
Net assets 11,644.4 11,029.0
Equity
Share capital 22 89.8 89.8
Share premium 22 199.2 199.2
Other reserves 23 5.0 (10.4)
Retained earnings 23 8,333.5 8,071.6
Equity attributable to equity owners of the parent 8,627.5 8,350.2
Non-controlling interests 3,016.9 2,678.8
Total equity 11,644.4 11,029.0
The consolidated financial information was approved by the Board of Directors
on 20 February 2023.
Consolidated Cash Flow Statement
At 31.12.2022 (Unaudited) At 31.12.2021 (Audited)
Notes $m $m
Cash flows from continuing operations 24 2,738.3 4,507.7
Interest paid (74.3) (60.7)
Income tax paid (787.1) (776.9)
Net cash from operating activities 1,876.9 3,670.1
Investing activities
Capital contributions to associates and joint ventures 15 - (33.5)
Dividends from associates and joint ventures 15 50.0 142.5
Acquisition of mining properties - (4.5)
Acquisition of equity investments 16 (66.5) -
Proceeds from sale of property, plant and equipment 0.2 1.5
Purchases of property, plant and equipment (1,879.2) (1,773.0)
Net decrease/(increase) in liquid investments 25 1,388.9 (543.7)
Interest received 29.1 7.4
Net cash used in investing activities (477.5) (2,203.3)
Financing activities
Dividends paid to equity holders of the Company (1,262.9) (710.8)
Dividends paid to preference shareholders of the Company (0.1) (0.1)
Dividends paid to non-controlling interests (80.0) (604.5)
Proceeds from issue of new borrowings 25 865.9 149.1
Repayments of borrowings 25 (751.3) (694.7)
Principal elements of lease payments 25 (105.4) (88.9)
Net cash used in financing activities (1,333.8) (1,949.9)
Net increase/(decrease) in cash and cash equivalents 25 65.6 (483.1)
Cash and cash equivalents at beginning of the year 743.4 1,246.8
Net increase/(decrease) in cash and cash equivalents 25 65.6 (483.1)
Effect of foreign exchange rate changes 25 1.4 (20.3)
Cash and cash equivalents at end of the year 25 810.4 743.4
Notes
1. General information and accounting policies
a) General information
The consolidated financial information for the year ended 31 December 2022 was
approved for issue by the Board of Directors of the Company on 20 February
2023. The consolidated financial information is unaudited but is derived from
the Group's full financial accounts, which are in the final stages of being
prepared.
This consolidated financial information has been prepared under the accounting
policies as set out in the statutory accounts for the year ended 31 December
2021.
The consolidated financial statements of the Antofagasta plc Group for the
year ended 31 December 2022 are being prepared in accordance with UK-adopted
International Accounting Standards and with the requirements of the Companies
Act 2006 as applicable to companies reporting under those standards.
The consolidated financial information does not include all of the notes of
the type normally included in annual financial statements. Accordingly, the
consolidated financial information is not in full accordance with UK-adopted
International Accounting standards. The consolidated financial information has
been prepared on the going concern basis.
The information contained in this announcement for the year ended 31 December
2021 also does not constitute statutory accounts. A copy of the statutory
accounts for that year has been delivered to the Registrar of Companies. The
auditors' report on those accounts was unqualified, with no matters by way of
emphasis, and did not contain statements under sections 498(2) or (3) of the
Companies Act 2006.
The information contained in the Alternative performance measures and
Production and Sales Statistics section of this consolidated financial
information is not derived from the statutory accounts for the years ended 31
December 2022 and 2021 and is accordingly not covered/will not be covered by
the auditor's reports.
Going concern
The Directors have assessed the going concern status of the Group, considering
the period to 31 December 2024.
The Group's business activities, together with those factors likely to affect
its future performance, are set out in the Directors' Comments, and in
particular within the Review of Operations. Details of the cash flows of the
Group during the period, along with its financial position at the period-end,
are set out in the Financial Review. The condensed consolidated financial
statements include details of the Group's cash, cash equivalents and liquid
investment balances in Note 25, and details of borrowings are set out in Note
18.
When assessing the going concern status of the Group, the Directors have
considered in particular its financial position, including its significant
balance of cash, cash equivalents and liquid investments and the terms and
remaining durations of the borrowing facilities in place. The Group had a
strong financial position as at 31 December 2022, with combined cash, cash
equivalents and liquid investments of $2,391.2 million. Total borrowings were
$3,277.0 million, resulting in a net debt position of $885.8 million. Of the
total borrowings, only 14% is repayable within one year, and 18% repayable
between one and two years.
When assessing the prospects of the Group, the Directors have considered the
Group's copper price forecasts, the Group's expected production levels,
operating cost profile and capital expenditure. These forecasts are based on
the Group's budgets and life-of-mine models, which are also used when
assessing relevant accounting estimates, including depreciation, deferred
stripping and closure provisions. This analysis has focused on the existing
asset base of the Group, without factoring in potential development projects,
which is considered appropriate for an assessment of the Group's ability to
manage the impact of a depressed economic environment. The analysis has only
included the drawdown of existing committed borrowing facilities, and has not
assumed that any new borrowing facilities will be put in place. The Directors
have assessed the key risks which could impact the prospects of the Group over
the going concern period and consider the most relevant to be risks to the
copper price outlook, as this is the factor most likely to result in
significant volatility in earnings and cash generation. Robust downside
sensitivity analyses have been performed, assessing the standalone impact of
each of:
· A significant deterioration in the future copper price forecasts
by 20% throughout the going concern period.
· An even more pronounced short-term reduction of 50 c/lb in the
copper price for a period of 3 months, in addition to the above deterioration
of 20% in the copper price throughout the review period.
· The potential impact of the Group's most significant individual
operational risks.
· A shutdown of any one of the Group's operations for a period of
three months.
· Potential changes to the Chilean mining royalty, taking into
account the Group's existing tax stability agreements.
The stability of tailings storage facilities represents a potentially
significant operational risk for mining operations globally. The Group's
tailings storage facilities are designed to international standards,
constructed using downstream methods, subject to rigorous monitoring and
reporting, and reviewed regularly by an international panel of independent
experts. Given these standards of design, development, operations and review,
the impact of a potential tailings dam failure has not been included in the
sensitivity analysis.
The above downside sensitivity analyses indicated results which could be
managed in the normal course of business, including the aggregate impact of a
number of the above sensitivities occurring at the same time. The analysis
indicated that the Group is expected to remain in compliance with all of the
covenant requirements of its borrowings throughout the review period and
retain sufficient liquidity. Based on their assessment of the Group's
prospects and viability, the Directors have formed a judgement, at the time of
approving the financial statements, that there are no material uncertainties
that the Directors are aware of that cast doubt on the Group's going concern
status and that there is a reasonable expectation that the Group has adequate
resources to continue in operational existence for the period to 31 December
2024. The Directors therefore consider it appropriate to adopt the going
concern basis of accounting in preparing the financial statements.
b) Adoption of new accounting standards
Other accounting standards
The following accounting standards, amendments and interpretations became
effective in the current reporting period but the application of these
standards and interpretations had no material impact on the amounts reported
in these condensed consolidated financial statements:
The following accounting standards, amendments and interpretations became
effective in the current reporting period:
· Property, Plant and Equipment - Proceeds before Intended Use
(Amendments to IAS 16)
· Onerous Contracts - Cost of Fulfilling a Contract (Amendments to
IAS 37)
· Annual Improvements to IFRS Standards 2018-2020 (Amendments to
IFRS 1, IFRS 9, IFRS 16 and IAS 41)
· Reference to the Conceptual Framework (Amendments to IFRS 3)
The amendment to IAS 16 Property, Plant and Equipment - Proceeds before
intended use may have significant impacts for the Group in future periods.
Previously, the Group has deducted amounts received from the sale of products
during the initial ramp-up of new projects, before commercial production is
achieved, from the capital cost of the project. Under the amendment to IAS 16,
such amounts will now instead be recognised as revenue in the income statement
along with a corresponding allocation of related operating expenses, which is
likely to result in increased revenue and operating expenses and a higher
initial capitalised amount. There were no relevant projects impacted by the
amendment during 2022. The amendment would have applied retrospectively only
to relevant projects in progress at 1 January 2021 which were generating
proceeds, and there were no such projects at 1 January 2021.
The application of these standards and interpretations effective for the first
time in the current year has had no significant impact on the amounts reported
in these financial statements.
c) Accounting standards issued but not yet effective
At the date of authorisation of these financial statements, the following
standards and interpretations, which have not been applied in these financial
statements, were in issue but not yet effective. It is expected that where
applicable, these standards and amendments will be adopted on each respective
effective date. None of these standards are expected to have a significant
impact on the Group.
New Standards Effective date
IFRS 17, Insurance Contracts Annual periods beginning on or after January 1, 2023
Amendments to IFRSs Effective date
Deferred Tax related to Assets and Liabilities arising from a Single Annual periods beginning on or after January 1, 2023
Transaction (Amendments to IAS 12)
Disclosure of Accounting Policies - Amendments to IAS 1 and IFRS Practice Annual periods beginning on or after January 1, 2023
Statement 2
Definition of Accounting Estimates - Amendments to IAS 8 Annual periods beginning on or after January 1, 2023
Lease Liability in a Sale and Leaseback (Amendments to IFRS 16)(1) Annual periods beginning on or after January 1, 2024
Classification of Liabilities as Current or Non-Current (Amendments to IAS Annual periods beginning on or after January 1, 2024
1)(1)
Non-current Liabilities with Covenants (Amendments to IAS 1)(1) Annual periods beginning on or after January 1, 2024
(1) These amendments are still subject to UK endorsement.
d) Critical accounting judgements and key sources of
estimation uncertainty
The critical accounting judgements and keys estimate applied in this
consolidated financial information are:
Judgements
· Non-financial assets impairment- see Note 4 for relevant details
· Capitalisation of project costs within property, plant and
equipment
Estimates
· Deferred taxation - see Note 21 for relevant details
· Disposal of investment in the Tethyan joint venture - see Note 14
for relevant details
2. Operating profit from subsidiaries, and total profit from associates
and joint ventures
Year ended 31.12.2022 (Unaudited) Year ended 31.12.2021 (Audited)
$m $m
Revenue 5,862.0 7,470.1
Cost of sales (3,432.7) (3,120.2)
Gross profit 2,429.3 4,349.9
Administrative and distribution expenses (558.9) (550.4)
Other operating income 37.9 31.8
Other operating expenses(1) (274.0) (429.9)
Operating profit from subsidiaries 1,634.3 3,401.4
Net share of profit from associates and joint ventures 48.1 59.7
Gain on disposal of investment in joint venture 944.7 -
Total profit from operations, associates and joint ventures 2,627.1 3,461.1
(1)Other operating expenses comprise $113.0 million of exploration and
evaluation expenditure (2021 - $103.2 million), $19.1 million in respect of
the employee severance provision (2021 - $19.8 million), $16.9 million in
respect of the closure provision (2021 - $11.3 million), nil in respect of the
provision against the carrying value of assets relating to the Twin Metals
project (2021 - $177.6 million) and $125.0 million of other expenses (2021 -
$118.0 million).
3. Exceptional items
Exceptional items are material items of income and expense which are
non-regular or non-operating and typically non-cash, including impairments and
profits or losses on disposals. The tax effect of items presented as
exceptional is also classified as exceptional, as are material deferred tax
adjustments that relate to more than one reporting period. The classification
of these types of items as exceptional is considered to be useful as it
provides an indication of the underlying earnings generated by the on-going
businesses of the Group.
2022 - Disposal of investment in Tethyan joint venture
On 15 December 2022, Antofagasta entered into definitive agreements to exit
its interest in the Tethyan joint venture. As a result, Antofagasta has
recognised a gain on disposal of its investment in the joint venture as at 15
December 2022 of $944.7 million. Full details of the agreements and gain on
disposal are set out in Note 14.
2021 - Impairment of Twin Metals' assets
Twin Metals Minnesota ("Twin Metals") is a wholly owned copper, nickel and
platinum group metals (PGM) underground mining project, which holds copper,
nickel, cobalt-PGM deposits in north-eastern Minnesota, US. In recent years,
Twin Metals has been progressing its Mine Plan of Operations (MPO) and Scoping
Environmental Assessment Worksheet Data Submittal, submitted in December 2019
to the US Bureau of Land Management (BLM) and Minnesota Department of Natural
Resources (DNR), respectively. However, while the Twin Metals project was
advancing through environmental review, several actions were taken by the
federal government that have changed the potential scenarios for the project.
In September 2021, the United States Forest Service (USFS) submitted an
application to withdraw approximately 225,000 acres of land in the Superior
National Forest from the scope of federal mineral leasing laws, subject to
valid existing rights. In October 2021, the United States Bureau of Land
Management (BLM) rejected Twin Metals' Preference Right Lease Applications
(PRLAs) and Prospecting Permit Applications (PPAs). In January 2022, the
United States Department of the Interior cancelled Twin Metals' MNES-1352
and MNES-1353 federal mineral leases. The PRLAs and federal mineral leases
form a significant proportion of the mineral resources contained within Twin
Metals' current project plan and, accordingly, it was determined that these
events collectively represented an impairment trigger as at the 2021 balance
sheet date.
Prior to the resulting impairment assessment being performed, as at 31
December 2021, the Group had recognised an intangible asset of $150.1 million
and property, plant and equipment of $27.5 million relating to the Twin Metals
project. The intangible asset arose upon the acquisition in 2015 of Duluth
Metals, which owned a 60% stake in the Twin Metals project, with the carrying
value of the intangible asset reflecting the consideration paid for that
acquisition. The property, plant and equipment balances reflected the
historical cost of acquiring those assets. These carrying values prior to the
impairment did not, therefore, reflect an estimate of the commercial potential
of the project as at 31 December 2021.
The Group believes that Twin Metals has a valid legal right to the mining
leases and a strong case to defend its legal rights. Although the Group
intends to pursue validation of those rights, considering the time and
uncertainty related to any legal action to challenge the government decisions,
an impairment was recognised as at 31 December 2021 in respect of the $177.6
million of intangible assets and property, plant and equipment relating to the
Twin Metals project.
2021 - Recognition of previously unrecognised deferred tax assets
At 31 December 2021, the Group recognised $90.6 million of previously
unrecognised deferred tax assets relating to tax losses available for offset
against future profits, reflecting the improved actual and forecast
profitability of the relevant Group entity (Antucoya).
4. Asset sensitivities
There were no indicators of potential impairment, or reversal of previous
impairments, for the Group's non-current assets associated with its mining
operations at the 2022 year-end, and accordingly no impairment tests have been
performed. The impairment indicator assessment included consideration of the
potential indicators set out in IAS 36, 'Impairment of Assets', which included
quantitative analysis based on the operations' life-of-mine models ("the
models"). These models provide indicative valuations and do not represent, or
comply with, a formal impairment assessment prepared in accordance with IAS
36. Sensitivity analyses have been performed on the models to quantify the
impact of changes in assumptions to which the models are most sensitive and to
support the overall impairment indicator assessment.
As noted above, no qualitative indicators of potential impairment or potential
reversal of impairment were identified. Similarly, no quantitative
indicators of impairment were identified, with the models used within the
impairment indicator assessment continuing to indicate positive headroom for
all of the Group's mining operations, including the Zaldívar joint venture,
with the indicated value of the assets in excess of their carrying value.
Relevant aspects of this process are detailed below:
Copper price outlook
The assumption to which the value of the assets is most sensitive is the
future long term copper price. The copper price forecasts (representing the
Group's estimates of the assumptions that would be used by independent market
participants in valuing the assets) are based on the forward curve for the
short term and consensus analyst forecasts for the longer term. A long-term
copper price of $3.50/lb (reflecting 2022 real terms) has been used in the
models used in the impairment indicator assessment, which has increased from
$3.30/lb (reflecting 2021 real terms) at the prior year-end. As an additional
down-side sensitivity an indicative valuation (based on the models) was
performed with a long-term copper price of $3.15/lb, reflecting a 10%
reduction in the long-term price forecast. Los Pelambres and Centinela still
showed positive headroom in their models in this alternative down-side
scenario. However, the Antucoya valuation indicated a potential deficit of
$400 million and the Zaldívar valuation indicated a potential deficit of $170
million (on a 50% basis). This was a simple sensitivity exercise, looking at
an illustrative change in the forecast long-term copper price in isolation. In
reality, a deterioration in the long-term copper price environment is likely
to result in corresponding improvements in a range of input cost factors. In
particular, given that copper exports account for over 50% of Chile's exports,
historically there has often been a correlation between movements in the
copper price and the US dollar/Chilean peso exchange rate, and a decrease in
the copper price may therefore result in a weakening of the Chilean peso, with
a resulting reduction in the Group's operating costs and capital expenditure
in US$ terms. These likely cost reductions, as well as potential operational
changes which could be made in a weaker copper price environment, could partly
mitigate the impact of the lower copper price modelled in these estimated
potential sensitivities.
The US dollar/Chilean peso exchange rate
The value of the assets is also sensitive to movements in the US
dollar/Chilean peso exchange rate. A long-term exchange rate of Ch$850/$1 has
been used in the models considered as part of the impairment indicator
assessment. This compares with the long-term exchange rate of CH$770/$1 used
in 2021. As an additional downside sensitivity an indicative valuation was
prepared with a 10% stronger long-term Chilean peso exchange rate assumption.
Los Pelambres and Centinela still showed positive headroom in this alternative
downside scenario. However, the Antucoya valuation indicated a potential
deficit of $140 million and the Zaldívar valuation indicated a potential
deficit of $100 million (on a 50% basis). As noted above, historically there
has often been a correlation between movements in the copper price and the US
dollar/Chilean peso exchange rate, and so a strengthening of the Chilean peso
may often reflect a stronger copper price environment, which could mitigate
the impact of a stronger exchange rate.
Climate risks
The models incorporate estimates of the potential future costs relating to
climate risks. The Group discloses in line with the recommendations of the
Task Force on Climate-related Financial Disclosures ("TCFD"). This process
includes scenario analyses assessing the potential future impact of transition
and physical risks. The combined estimate of the potential costs of the
transition risk and physical risk scenarios, have been incorporated into the
models.
Chilean mining royalty
We have considered potential changes to the Chilean mining royalty (taking
into account the Group's existing tax stability agreements) as part of the
impairment indicator assessment
Other relevant assumptions
In addition to the impact of the future copper price, the US dollar/Chilean
peso exchange rate, climate risks and the potential changes in the Chilean
mining royalty regime, the models used in the impairment indicator assessment
are sensitive to the assumptions in respect of future production levels,
operating costs, sustaining and development capital expenditure, and the
discount rate used to determine the present value of the future cash flows.
A real post-tax discount rate of 8% (calculated using relevant market data)
has been used in determining the present value of the changes in forecast
future cash flows from the assets as part of the quantitative analysis
performed as part of the overall impairment indicator assessment.
In the case of Zaldívar, in addition to the assumptions made in respect of
the factors outlined above, the conclusion that there are no impairment
indicators reflects certain assumptions about future operational
considerations to which the model considered as part of the impairment
indicator assessment is sensitive, in particular the following:
● Zaldívar submitted an Environmental Impact Assessment (EIA) in 2018
which included an application to extend its water extraction and mining
permits to 2029 (with decreasing activity levels in 2030-2031). Currently,
Zaldívar is permitted to extract water and mine into 2025 and 2024,
respectively. The 2018 application is still pending approval. To ensure the
continuity of the operation, Zaldívar plans to submit a DIA (Declaration of
Environmental Impact), a limited scope and less detailed procedure than an
EIA, requesting that the mining permit be extended from 2024 to 2025 so as to
expire at the same date as the current water permit. Zaldívar is also
evaluating alternatives to the 2018 EIA application. These include the
transition from the current continental water source after completion of an
extension to the current water permit, to either procuring water from a third
party or using raw seawater. Alternatives could be contingent on the potential
life of mine extension arising from the development of the large primary
sulphide resource at the mine which is beyond the scope of the 2018 EIA
application. The impairment indicator assessment assumes that the mining
permit will be extended to cover the full period of the model, and the water
permit can be extended, or reasonable alternative arrangements for securing
water to enable the continued operation of the mine without interruption can
be implemented. However, if this is not the case, this is likely to be
considered an indicator of a potential impairment, requiring an IAS 36
impairment assessment at that point.
● Zaldívar's final pit phase, which represents approximately 20% of
current ore reserves, impacts a portion of Minera Escondida's mine property,
as well as infrastructure owned by third parties (a road, railway, power line
and pipelines). The impairment indicator assessment assumes that mining of the
final pit phase, which is subject to agreements or easements to access these
areas and relocate this infrastructure, will be possible.
5. Segmental analysis
The Group's reportable segments, which are the same as its operating segments,
are as follows:
· Los Pelambres
· Centinela
· Antucoya
· Zaldívar
· Exploration and evaluation
· Corporate and other items
· Transport division
For management purposes, the Group is organised into two business divisions
based on their products - Mining and Transport. The mining division is split
further for management reporting purposes to show results by mine and
exploration activity. Los Pelambres produces primarily copper concentrate and
molybdenum as a by-product. Centinela produces copper concentrate containing
gold as a by-product, copper cathodes and molybdenum concentrates. Antucoya
and Zaldívar produce copper cathodes. The transport division provides rail
and road cargo transport together with a number of ancillary services. All the
operations are based in Chile. The Exploration and evaluation segment incurs
exploration and evaluation expenses. "Corporate and other items" comprises
costs incurred by the Company, Antofagasta Minerals S.A., the Group's mining
corporate centre and other entities, that are not allocated to any individual
business segment. Consistent with its internal management reporting, the
Group's corporate and other items are included within the mining division.
The Chief Operating decision-maker (the Group's Chief Executive Officer)
monitors the operating results of the business segments separately for the
purpose of making decisions about resources to be allocated and assessing
performance. Segment performance is evaluated based on the operating profit of
each of the segments.
a) Segment revenues and results
For the year ended 31.12.2022 (Unaudited)
Los Pelambres Centinela Antucoya Zaldívar Exploration and evaluation(2) Corporate and other items Total Mining Transport division Total
$m $m $m $m $m $m $m $m $m
Revenue 2,558.9 2,406.2 703.5 - - - 5,668.6 193.4 5,862.0
Operating costs excluding depreciation (1,086.1) (1,249.0) (442.3) - (113.0) (75.0) (2,965.4) (119.1) (3,084.5)
Depreciation (276.1) (710.2) (105.6) - - (18.7) (1,110.6) (30.5) (1,141.1)
Loss on disposals (0.5) (1.0) - - (0.6) (2.1) - (2.1)
Operating profit/(loss) 1,196.2 446.0 155.6 - (113.0) (94.3) 1,590.5 43.8 1,634.3
Net share of results from associates and joint ventures - - - 47.3 - (0.7) 46.6 1.5 48.1
Gain on disposal of investment in joint venture (3) - - - - - 944.7 944.7 - 944.7
Operating profit from subsidiaries, and total profit from associates and joint 1,196.2 446.0 155.6 47.3 (113.0) 849.7 2,581.8 45.3 2,627.1
ventures
Investment income 10.7 6.6 2.4 - - 19.8 39.5 0.7 40.2
Interest expense (3.3) (10.6) (19.9) - - (44.2) (78.0) (0.6) (78.6)
Other finance items (5.2) (11.3) (6.6) - - (5.0) (28.1) (1.7) (29.8)
Profit/(loss) before tax 1,198.4 430.7 131.5 47.3 (113.0) 820.3 2,515.2 43.7 2,558.9
Tax (371.8) (130.8) (34.9) - - (50.8) (588.3) (15.3) (603.6)
Profit/(loss) for the year 826.6 299.9 96.6 47.3 (113.0) 769.5 1,926.9 28.4 1,955.3
Non-controlling interests 319.3 82.9 21.2 - - (1.1) 422.3 - 422.3
Profit/(loss) attributable to owners of the parent 507.3 217.0 75.4 47.3 (113.0) 770.6 1,504.6 28.4 1,533.0
EBITDA(1) 1,472.8 1,157.2 261.2 147.2 (113.0) (75.7) 2,849.7 80.0 2,929.7
Additions to non-current assets
Additions to property, plant and equipment 965.2 889.0 75.1 - 0.5 16.4 1,946.2 55.8 2,002.0
Segment assets and liabilities
Segment assets 6,786.6 5,922.8 1,708.0 - - 2,504.1 16,921.5 412.2 17,333.7
Investments in associates and joint ventures - - - 897.3 - - 897.3 7.3 904.6
Segment liabilities (3,155.0) (1,565.1) (558.1) - - (1,225.8) (6,504.0) (89.9) (6,593.9)
(1) 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.
(2) Operating cash outflow in the exploration and evaluation segment was $98.3
million.
(3) An exceptional gain of $944.7 million has been recognised in respect of
the Group's disposal of its investment in the Tethyan joint venture (see notes
3 and 14)
For the year ended 31 December 2021 (Audited)
Los Pelambres Centinela Antucoya Zaldívar Exploration and evaluation(2) Corporate and other items Total Mining Transport division Total
$m $m $m $m $m $m $m $m $m
Revenue 3,621.0 2,981.3 697.8 - - - 7,300.1 170.0 7,470.1
Operating costs excluding depreciation (1,095.0) (1,062.0) (360.7) - (103.2) (76.0) (2,696.9) (106.3) (2,803.2)
Depreciation (281.8) (654.7) (98.3) - - (13.0) (1,047.8) (30.9) (1,078.7)
Loss on disposals (3.7) (4.0) (0.5) - - - (8.2) (1.0) (9.2)
Provision against the carrying value of assets(4) - - - - (177.6) - (177.6) - (177.6)
Operating profit/(loss) 2,240.5 1,260.6 238.3 - (280.8) (89.0) 3,369.6 31.8 3,401.4
Net share of income/(loss) from associates and joint ventures - - - 68.5 - (9.0) 59.5 0.2 59.7
Investment income 1.4 1.5 0.3 - - 1.7 4.9 0.1 5.0
Interest expense (3.5) (16.4) (15.5) - - (27.2) (62.6) (0.8) (63.4)
Other finance items 41.1 26.1 4.9 - - 5.1 77.2 (2.8) 74.4
Profit/(loss) before tax 2,279.5 1,271.8 228.0 68.5 (280.8) (118.4) 3,448.6 28.5 3,477.1
Tax (743.7) (382.0) (7.1) - - (188.3) (1,321.1) (11.8) (1,332.9)
Tax - exceptional items(3) - - 90.6 - - - 90.6 - 90.6
Profit/(loss) for the year 1,535.8 889.8 311.5 68.5 (280.8) (306.7) 2,218.1 16.7 2,234.8
Non-controlling interests 607.5 252.2 84.4 - - 0.5 944.6 - 944.6
Profit/(losses) attributable to owners of the parent 928.3 637.6 227.1 68.5 (280.8) (307.2) 1,273.5 16.7 1,290.2
EBITDA(1) 2,526.0 1,919.3 337.1 172.8 (103.2) (84.0) 4,768.0 68.2 4,836.2
Additions to non-current assets
Additions to property, plant and equipment 903.1 826.4 62.7 - 0.6 30.4 1,823.2 32.7 1,855.9
Segment assets and liabilities
Segment assets 5,667.1 5,924.2 1,735.9 - - 2,661.1 15,988.3 384.3 16,372.6
Investments in associates and joint ventures - - - 900.0 - - 900.0 5.8 905.8
Segment liabilities (2,642.0) (1,797.0) (548.7) - - (1,174.5) (6,162.2) (87.2) (6,249.4)
(1) 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.
(2) Operating cash outflow in the exploration and evaluation segment was $98.0
million.
(3) During 2021, there was an exceptional item of $90.6 million which
reflected the recognition of a deferred tax asset at Antucoya (see Note 3).
(4) An impairment was recognised as at 31 December 2021 in respect of the
$177.6 million of intangible assets and property, plant and equipment relating
to the Twin Metals project, presented as an exceptional item (see Note 3).
b) Entity wide disclosures
Revenue by product
Year ended 31.12.2022 Year ended 31.12.2021
$m $m
Copper
- Los Pelambres 2,107.7 3,097.0
- Centinela concentrates 1,132.7 1,735.4
- Centinela cathodes 844.4 774.1
- Antucoya 697.5 693.3
Provision of shipping services
- Los Pelambres 51.9 57.8
- Centinela concentrates 58.5 46.8
- Centinela cathodes 6.7 4.3
- Antucoya 6.0 4.5
Gold
- Los Pelambres 75.4 91.0
- Centinela concentrates 238.4 345.4
Molybdenum
- Los Pelambres 291.4 329.2
- Centinela concentrates 100.8 37.2
Silver
- Los Pelambres 32.5 46.0
- Centinela concentrates 24.7 38.1
Total Mining 5,668.6 7,300.1
Transport division 193.4 170.0
5,862.0 7,470.1
( )
Revenue by location of customer
( )
Year ended 31.12.2022 Year ended 31.12.2021
$m $m
Europe
- United Kingdom 71.0 54.4
- Switzerland 753.6 1,303.7
- Spain 1.0 67.6
- Germany 140.0 121.5
- Rest of Europe 96.5 177.4
Latin America
- Chile 369.1 282.0
- Rest of Latin America 179.7 214.7
North America
- United States 312.3 666.5
Asia Pacific
- Japan 1,668.6 1,842.3
- China 1,072.0 1,236.9
- Singapore 423.8 726.1
- South Korea 332.2 322.6
- Hong Kong 178.2 217.1
- Rest of Asia 264.0 237.3
5,862.0 7,470.1
Information about major customers
In the year ended 31 December 2022, the Group´s mining revenue included
$1,630.5 million related to one large customer that individually accounted for
more than 10% of the Group's revenue (year ended 31 December 2021 - one large
customer representing $1,015.1 million).
Non-current assets by location of asset
Year ended 31.12.2022 Year ended 31.12.2021
Restated
$m $m
- Chile 12,786.1 11,705.1
- Other(1) 10.1 10.9
12,796.2 11,716.0
(1) The comparatives have been restated to show a reclassification of $9.9
million from the "Chile" to the "Other" category.
Year ended 31.12.2022 Year ended 31.12.2021
$m $m
Non-current assets per the balance sheet 13,016.2 11,872.7
The above amounts reflect non-current assets excluding;
- Deferred tax assets (78.5) (96.8)
- Trade and other receivables (51.0) (51.2)
- Equity investments (90.5) (8.7)
Total non-current assets excluding the above (220.0) (156.7)
Non-current assets by location of asset 12,796.2 11,716.0
6. Group Revenue
Copper and molybdenum concentrate sale contracts and copper cathode sale
contracts generally provide for provisional pricing of sales at the time of
shipment, with final pricing being based on the monthly average London Metal
Exchange copper price or monthly average molybdenum price for specified future
periods. This normally ranges from one to four months after shipment to the
customer. For sales contracts which contain provisional pricing mechanisms,
the total receivable balance is measured at fair value through profit or loss.
Gains and losses from the mark-to-market of open sales are recognised through
adjustments to revenue in the income statement and to trade receivables in the
balance sheet. The Group determines mark-to-market prices using forward prices
at each period-end for copper concentrate and cathode sales, and period-end
month average prices for molybdenum concentrate sales due to the absence of a
futures market in the market price references for that commodity in the
majority of the Group's contracts.
With sales of concentrates, which are sold to smelters and roasting plants for
further processing into fully refined metal, the price of the concentrate
(which is the amount recorded as revenue) reflects the market value of the
fully refined metal less a "treatment and refining charge" deduction, to
reflect the lower value of this partially processed material compared with the
fully refined metal.
The shipping service represents a separate performance obligation, and is
recognised separately from the sale of the material over time as the shipping
service is provided.
The total revenue from contracts with customers and the impact of provisional
pricing adjustments in respect of concentrate and cathode sales is as follows:
Year ended 31.12.2022 Year ended 31.12.2021
$m $m
Revenue from contracts with customers
Sale of products 5,671.2 6,809.0
Provision of shipping services associated with the sale of products (1) 123.1 113.4
Transport division (2) 193.4 170.0
-
Provisional pricing adjustments in respect of copper, gold and molybdenum (125.7) 377.7
Total revenue 5,862.0 7,470.1
(1)The Group sells a significant proportion of its products on Cost, Insurance
& freight (CIF) incoterms, which means that the Group is responsible for
shipping the product to a destination port specified by the customer
(2)The transport division provides rail and road cargo transport together with
a number of ancillary services.
The categories of revenue which are principally affected by different economic
factors are the individual product types. A summary of revenue by product is
set out in Note 5(b).
The following tables set out the impact of provisional pricing adjustments,
derivative commodity instruments and treatment and refining charges for the
more significant products. The revenue from these products, along with the
revenue from other products and services, is reconciled to total revenue in
Note 5(b).
For the year ended 31 December 2022
$m $m $m $m $m $m $m $m
Los Pelambres Centinela Centinela Antucoya Los Pelambres Centinela Los Pelambres Centinela
Copper concentrate Copper concentrate Copper cathodes Copper cathodes Gold in concentrate Gold in concentrate Molybdenum concentrate Molybdenum concentrate
Provisionally priced sales of products 2,313.7 1,231.8 851.8 710.6 75.1 235.9 281.3 98.5
Revenue from freight services 51.9 58.5 6.7 6.0 - - - -
2,365.6 1,290.3 858.5 716.6 75.1 235.9 281.3 98.5
Effects of pricing adjustments to previous year invoices
Reversal of mark-to-market adjustments at the end of the previous year (12.0) (5.2) (0.3) (0.8) - (0.3) 5.6 0.7
Settlement of sales invoiced in the previous year 10.7 23.3 0.5 1.0 - 3.6 (4.1) (0.6)
Total effect of adjustments to previous year invoices in the current year (1.3) 18.1 0.2 0.2 - 3.3 1.5 0.1
Effects of pricing adjustments to current year invoices
Settlement of sales invoiced in the current year (155.3) (68.7) (8.4) (14.1) 0.4 (2.9) 16.5 4.0
Mark-to-market adjustments at the end of the current year 38.0 19.9 0.8 0.8 - 2.7 12.6 7.6
Total effect of adjustments to current year invoices (117.3) (48.8) (7.6) (13.3) 0.4 (0.2) 29.1 11.6
Total pricing adjustments (118.6) (30.7) (7.4) (13.1) 0.4 3.1 30.6 11.7
Realised losses on commodity derivatives - - - - - - - -
Revenue before deducting treatment & refining charges 2,247.0 1,259.6 851.1 703.5 75.5 239.0 311.9 110.2
Treatment and refining charges (87.4) (68.4) - - (0.1) (0.6) (20.5) (9.4)
Revenue net of tolling charges
2,159.6 1,191.2 851.1 703.5 75.4 238.4 291.4 100.8
The revenue from the individual products shown in the above table excludes
revenue from sales of silver and the transport division, which are presented
in the revenue by product table in note 5 to reconcile to Group Revenue.
With sales of concentrates at Los Pelambres and Centinela, which are sold to
smelters and roasting plants for further processing into fully refined metal,
the price of the concentrate invoiced to the customer reflects the market
value of the fully refined metal less a "treatment and refining charge"
deduction, to reflect the lower value of this partially processed material
compared with the fully refined metal. For accounting purposes, the revenue
amount is the net of the market value of fully refined metal less the
treatment and refining charges. Under the standard industry definition of cash
costs, treatment and refining charges are regarded as an expense and part of
the total cash cost figure.
For the year ended 31 December 2021
$m $m $m $m $m $m $m $m
Los Pelambres Centinela Centinela Antucoya Los Pelambres Centinela Los Pelambres Centinela
Copper concentrate Copper concentrate Copper cathodes Copper cathodes Gold in concentrate Gold in concentrate Molybdenum concentrate Molybdenum concentrate
2,966.6 1,685.3 824.3 749.7 93.3 354.8 322.1 38.4
Provisionally priced sales of products
Revenue from freight services 57.8 46.8 4.3 4.5 - - - -
3,024.4 1,732.1 828.6 754.2 93.3 354.8 322.1 38.4
Effects of pricing adjustments to previous year invoices
Reversal of mark-to-market adjustments at the end of the previous year (58.7) (26.8) 0.1 (0.5) - (0.9) 0.2 (0.3)
Settlement of sales invoiced in the previous year 175.1 74.7 1.8 1.5 (1.0) (4.0) 6.4 1.2
Total effect of adjustments to previous year invoices in the current year 116.4 47.9 1.9 1.0 (1.0) (4.9) 6.6 0.9
Effects of pricing adjustments to current year invoices
Settlement of sales invoiced in the current year 92.2 58.8 10.2 6.0 (1.1) (4.1) 30.6 5.8
Mark-to-market adjustments at the end of the current year 12.0 5.2 0.3 0.8 - 0.4 (5.7) (0.7)
Total effect of adjustments to current year invoices 104.2 64.0 10.5 6.8 (1.1) (3.7) 24.9 5.1
Total pricing adjustments 220.6 111.9 12.4 7.8 (2.1) (8.6) 31.5 6.0
Realised losses on commodity derivatives - - (62.6) (64.2) - - - -
Revenue before deducting treatment and refining charges 3,245.0 1,844.0 778.4 697.8 91.2 346.2 353.6 44.4
Treatment and refining charges (90.2) (61.8) - - (0.2) (0.8) (24.4) (7.2)
Revenue net of tolling charges
3,154.8 1,782.2 778.4 697.8 91.0 345.4 329.2 37.2
( )
The revenue from the individual products shown in the above table excludes
revenue from sales of silver and the transport division, which are presented
in the revenue by product table in note 5 to reconcile to Group Revenue.
With sales of concentrates at Los Pelambres and Centinela, which are sold to
smelters and roasting plants for further processing into fully refined metal,
the price of the concentrate invoiced to the customer reflects the market
value of the fully refined metal less a "treatment and refining charge"
deduction, to reflect the lower value of this partially processed material
compared with the fully refined metal. For accounting purposes, the revenue
amount is the net of the market value of fully refined metal less the
treatment and refining charges. Under the standard industry definition of cash
costs, treatment and refining charges are regarded as an expense and part of
the total cash cost figure.
(i) Copper concentrate
The typical period for which sales of copper concentrate remain open until
settlement occurs is a range of approximately three to four months from
shipment date.
At 31.12.2022 At 31.12.2021
Sales provisionally priced at the balance sheet date Tonnes 179,000 177,900
Average mark-to-market price $/lb 3.80 4.41
Average provisional invoice price $/lb 3.65 4.37
(ii) Copper cathodes
The typical period for which sales of copper cathodes remain open until
settlement occurs is approximately one month from shipment date.
At 31.12.2022 At 31.12.2021
Sales provisionally priced at the balance sheet date Tonnes 22,700 15,000
Average mark-to-market price $/lb 3.80 4.42
Average provisional invoice price $/lb 3.77 4.39
(iii) Gold in concentrate
The typical period for which sales of gold in concentrate remain open until
settlement is approximately one month from shipment date.
At 31.12.2022 At 31.12.2021
Sales provisionally priced at the balance sheet date Ounces 31,000 32,300
Average mark-to-market price $/oz 1,828 1,801
Average provisional invoice price $/oz 1,742 1,791
(iv) Molybdenum concentrate
The typical period for which sales of molybdenum remain open until settlement
is approximately two months from shipment date.
At 31.12.2022 At 31.12.2021
Sales provisionally priced at the balance sheet date Tonnes 2,500 2,400
Average mark-to-market price $/lb 26.10 18.60
Average provisional invoice price $/lb 22.20 19.65
As detailed above, the effects of gains and losses from the marking-to-market
of open sales are recognised through adjustments to revenue in the income
statement and to trade receivables in the balance sheet. The effect of
mark-to-market adjustments on the balance sheet at the end of each period are
as follows:
Effect on debtors of year end
mark-to-market adjustments
Year ended 31.12.2022 Year ended 31.12.2021
$m $m
Los Pelambres - copper concentrate 38.0 12.0
Los Pelambres - molybdenum concentrate 12.6 (5.7)
Centinela - copper concentrate 19.9 5.2
Centinela - molybdenum concentrate 7.6 (0.7)
Centinela - gold in concentrate 2.7 0.4
Centinela - copper cathodes 0.8 0.3
Antucoya - copper cathodes 0.8 0.8
82.4 12.3
7. Financial instruments and financial risk management
a) Categories of financial instruments
The carrying value of financial assets and financial liabilities is shown
below:
For the year ended 31.12.2022
At fair value through profit and loss At fair value through other comprehensive income Held at amortised cost Total
$m $m $m $m
Financial assets
Equity investments - 90.5 - 90.5
Trade and other receivables 897.2 - 1,047.5 1,944.7
Cash and cash equivalents 8.5 - 801.9 810.4
Liquid investments 1,580.8 - - 1,580.8
2,486.5 90.5 1,849.4 4,426.4
Financial liabilities
Trade and other payables - - (1,067.3) (1,067.3)
Borrowings and leases - - (3,277.0) (3,277.0)
- - (4,344.3) (4,344.3)
For the year ended 31.12.2021
At fair value through profit and loss At fair value through other comprehensive income Held at amortised cost Total
Financial assets
Equity investments - 8.7 - 8.7
Trade and other receivables 1,011.7 - 83.3 1,095.0
Cash and cash equivalents - - 743.4 743.4
Liquid investments 2,969.7 - - 2,969.7
3,981.4 8.7 826.7 4,816.8
Financial liabilities
Trade and other payables - - (835.6) (835.6)
Borrowings and leases - - (3,172.6) (3,172.6)
- - (4,008.2) (4,008.2)
The fair value of the fixed rate bonds included within the "Borrowings and
leases" category was $899.4 million at 31 December 2022 compared with its
carrying value of $985.3 million. The fair value of all other financial assets
and financial liabilities carried at amortised cost approximates the carrying
value presented above.
The Group has the following financial instruments:
Year ended 31.12.2022 Year ended 31.12.2021
Financial assets
Trade and other receivables (non-current) per balance sheet 51.0 51.2
Trade and other receivables (current) per balance sheet 2,087.2 1,146.1
Total trade and other receivables per balance sheet 2,138.2 1,197.3
Less: non-financial assets (including prepayments and VAT receivables) (193.5) (102.3)
Total trade and other receivables (financial assets) 1,944.7 1,095.0
Financial liabilities
Trade and other payables (current) per balance sheet (1,079.7) (829.1)
Trade and other payables (non-current) per balance sheet (8.0) (16.8)
Total trade and other payables per balance sheet (1,087.7) (845.9)
Less: non-financial liabilities (including VAT payables) 20.4 10.3
Total trade and other payables (financial liabilities) (1,067.3) (835.6)
Fair value of financial instruments
An analysis of financial assets and financial liabilities measured at fair
value is presented below:
For the year ended 31.12.2022
Level 1 Level 2 Level 3 Total
$m $m $m $m
Financial assets
Equity investments (b) 90.5 - - 90.5
Trade and other receivables (c) - 897.2 - 897.2
Cash and cash equivalents (d) 8.5 - - 8.5
Liquid investments (e) - 1,580.8 - 1,580.8
99.0 2,478.0 - 2,577.0
For the year ended 31.12.2021
Level 1 Level 2 Level 3 Total
$m $m $m $m
Financial assets
Equity investments (b) 8.7 - - 8.7
Trade and other receivables (c) - 1,011.7 - 1,011.7
Liquid investment (e) - 2,969.7 - 2,969.7
8.7 3,981.4 - 3,990.1
Recurring fair value measurements are those that are required in the balance
sheet at the end of each reporting year.
a) Derivatives in designated hedge accounting relationships are valued
using a discounted cash flow analysis valuation model, which includes
observable credit spreads and using the applicable yield curve for the
duration of the instruments for non-optional derivatives, and option pricing
models for optional derivatives. These are level 2 inputs as described below.
In 2022 nil was hedging instruments in place; and while that in 2021 if had
hedging instruments related to commodity and foreign exchange options.
b) Equity investments are investments in shares on active markets and
are valued using unadjusted quoted market values of the shares at the
financial reporting date. These are level 1 inputs as described below.
c) Provisionally priced metal sales for the period are
marked-to-market at the end of the period. Gains and losses from the
marking-to-market of open sales are recognised through adjustments to revenue
in the income statement and trade receivables in the balance sheet. Forward
prices at the end of the period are used for copper sales while period-end
average prices are used for molybdenum concentrate sales. These are level 2
inputs as described below.
d) The element of cash & cash equivalents measured at fair value
relates to money market funds, which are valued reflecting market prices at
the period end. These are level 1 inputs as described below.
e) Liquid investments are highly liquid current asset investments that
are valued reflecting market prices at the period end. These are level 2
inputs as described below.
The inputs to the valuation techniques described above are categorised into
three levels, giving the highest priority to unadjusted quoted prices in
active markets (level 1) and the lowest priority to unobservable inputs (level
3 inputs):
- Level 1 fair value measurement inputs are unadjusted quoted prices
in active markets for identical assets or liabilities.
- Level 2 fair value measurement inputs are derived from inputs other
than quoted market prices included in level 1 that are observable for the
asset or liability, either directly or indirectly.
- Level 3 fair value measurement inputs are unobservable inputs for
the asset or liability.
The degree to which inputs into the valuation techniques used to measure the
financial assets and liabilities are observable and the significance of these
inputs in the valuation are considered in determining whether any transfers
between levels have occurred. In the year ended 31 December 2022, there were
no transfers between levels in the hierarchy.
b) Derivative financial instruments
The Group periodically uses derivative financial instruments to reduce
exposure to foreign exchange, interest rate and commodity price movements. The
Group does not use such derivative instruments for trading purposes. The Group
has applied the hedge accounting provisions of IFRS 9 Financial Instruments.
The effective portion of changes in the fair value of derivative financial
instruments that are designated and qualify as hedges of future cash flows
have been recognised directly in equity, with such amounts subsequently
recognised in profit or loss in the period when the hedged item affects profit
or loss. Any ineffective portion is recognised immediately in profit or loss.
Realised gains and losses on commodity derivatives recognised in profit or
loss are recorded within revenue. The time value element of changes in the
fair value of derivative options is recognised within other comprehensive
income. Derivatives embedded in other financial instruments or other host
contracts are treated as separate derivatives when their risks and
characteristics are not closely related to those of host contracts and the
host contracts are not carried at fair value. Changes in fair value are
reported in profit or loss for the year. All derivatives were closed in 2021
and there are none entered into in 2022.
8. Net finance (expense)/income
Year ended 31.12.2022 Year ended 31.12.2021
$m $m
Investment income
Interest receivable 19.8 3.4
Gains on liquid investments held at fair value through profit or loss 20.4 1.6
40.2 5.0
Interest expense
Interest expense (78.6) (63.4)
(78.6) (63.4)
Other finance items
Unwinding of discount on provisions (16.9) (6.2)
Adjustment to provision discount rates - 30.8
Effects of changes in foreign exchange rates (12.8) 49.9
Preference dividends (0.1) (0.1)
(29.8) 74.4
Net finance (expense)/income (68.2) 16.0
During 2022, amounts capitalised and consequently not included within the
above table were as follows: $2.0 million at Centinela (year ended 31 December
2021 - $2.1 million) and $47.0 million at Los Pelambres (year ended 31
December 2021 - $12.1 million).
The interest expense shown above includes $7.1 million in respect of leases
(2021 - $7.9 million).
9. Taxation
The tax charge for the period comprised the following:
Year ended 31.12.2022 Year ended 31.12.2021
$m $m
Current tax charge
Corporate tax (principally first category tax in Chile) (340.4) (560.8)
Mining tax (royalty) (83.9) (250.0)
Withholding tax (24.5) (224.7)
(448.8) (1,035.5)
Deferred tax
Corporate tax (principally first category tax in Chile) (96.5) (237.4)
Mining tax (royalty) (9.8) 0.9
Withholding tax (48.5) 29.7
(154.8) (206.8)
Total tax charge (income tax expense) (603.6) (1,242.3)
The rate of first category (i.e. corporate) tax in Chile is 27.0% (2021 -
27.0%).
In addition to first category tax and the mining tax, the Group incurs
withholding taxes on any 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, Antucoya, Encuentro (oxides), 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, and
production from Centinela Concentrates and the Tesoro Central and Mirador pits
at Centinela Cathodes is subject to a rate of 5% of taxable operating profit.
The following table provides a numerical reconciliation between the accounting
profit before tax multiplied by the applicable statutory tax rate and the
total tax expense (including both current and deferred tax).
Year ended Year ended Year ended Year ended
Excluding exceptional items Including exceptional items Excluding exceptional items Including exceptional items
31.12.2022
31.12.2022
31.12.2021
31.12.2021
$m % $m % $m % $m %
Profit before tax 1,614.2 2,558.9 3,654.7 3,477.1
Profit before tax multiplied by Chilean corporate tax rate of 27% (435.9) 27.0 (691.0) 27.0 (986.8) 27.0 (938.8) 27.0
Mining Tax (royalty) (94.5) 5.8 (94.5) 3.7 (243.8) 6.7 (243.8) 7.0
Deduction of mining royalty as an allowable expense in determination of first 23.1 (1.4) 23.1 (0.9) 67.8 (1.9) 67.8 (1.9)
category tax
Items not deductible from first category tax (33.9) 2.1 (33.9) 1.3 (31.6) 0.9 (31.6) 0.9
Adjustment in respect of prior years (2.6) 0.1 (2.6) 0.1 (12.1) 0.3 (12.1) 0.3
Withholding tax (73.0) 4.6 (73.0) 2.9 (195.0) 5.3 (195.0) 5.6
Tax effect of share of profit of associates and joint ventures 13.0 (0.8) 13.0 (0.5) 16.1 (0.4) 16.1 (0.5)
Impact of previously unrecognised tax losses on current tax 0.2 - 0.2 0 52.5 (1.4) 52.5 (1.5)
Impact of recognition of previously unrecognised tax losses on deferred tax - - - - - - 90.6 (2.6)
Provision against carrying value of assets - - - - - - (48.0) 1.4
Gain on disposal of investment in joint venture - - 255.1 (10.0) - - - -
Tax expense and effective tax rate for the Year ended (603.6) 37.4 (603.6) 23.6 (1,332.9) 36.5 (1,242.3) 35.7
The effective tax rate excluding exceptional items of 37.4% varied from the
statutory rate principally due to the mining tax (royalty) (net impact of
$71.4 million / 4.4% including the deduction of the mining tax (royalty) as an
allowable expense in the determination of first category tax), the withholding
tax relating to the remittance of profits from Chile (impact of $73.0 million
/ 4.6%), items not deductible for Chilean corporate tax purposes, principally
the funding of expenses outside of Chile (impact of $33.9 million / 2.1%),
adjustments in respect of prior years (impact of $2.6 million / 0.1%) and the
impact of previously unrecognised tax losses (impact of $0.2 million / 0%),
partly offset by the impact of the recognition of the Group's share of profit
from associates and joint ventures, which are included in the Group's profit
before tax net of their respective tax charges (impact of $13.0 million /
0.8%).
The impact of the exceptional items on the effective tax rate including
exceptional items was $255.1 million / 10%. Further details of the exceptional
gain on the disposal of the Group's investment in the Tethyan joint venture,
including relevant tax aspects, are set out in Note 14.
The main factors which could impact the sustainability of the Group's existing
effective tax rate are:
· In October 2022, the Chilean government announced its updated
proposals for a comprehensive reform of the tax system, including proposed
changes to the mining royalty. These proposals are subject to review and
approval by the Chilean Congress, and so there is no certainty as to the exact
nature of changes which may finally be enacted into law.
· The level of future distributions made by the Group's Chilean
subsidiaries out of Chile, which could result in increased withholding tax
charges. When determining whether it is likely that distributions will be made
in the foreseeable future, and what is the appropriate foreseeable future
period for this purpose, the Group considers factors such as the
predictability of the likely future Group dividends, taking into account the
Group's dividend policy and the level of potential volatility of the Group's
future earnings, as well as the current level of distributable reserves at the
Antofagasta plc entity level.
· The impact of expenses which are not deductible for Chilean first
category tax. Some of these expenses are fixed costs, and so the relative
impact of these expenses on the Group's effective tax rate will vary depending
on the Group's total profit before tax in a particular year.
The implementation of the OECD BEPS Pillar 2, which would introduce a minimum
effective tax rate of 15% for multinational companies, will be applicable to
the Group when brought into relevant legislation. The Group's operations are
based in Chile and therefore currently subject to the Chilean first category
(corporate) tax rate of 27%, plus withholding taxes on any remittance of
profits from Chile. The Group has been assessing the potential impact of the
draft UK legislation, and will complete that assessment when the legislation
has been finalised.
There are no significant tax uncertainties which would require critical
judgements, estimates or potential provisions.
10. Earnings per share
Year ended 31.12.2022 Year ended 31.12.2021
$m $m
Profit for the period attributable to equity holders of the Company (exc. 588.3 1,404.4
exceptional items)
Exceptional Items 944.7 (114.2)
Profit for the period attributable to equity holders of the Company (inc. 1,533.0 1,290.2
exceptional items) from continuing operations
Number Number
Ordinary shares in issue throughout each year 985,856,695 985,856,695
Year ended 31.12.2022 Year ended 31.12.2021
US cent US cent
Basic earnings per share (exc. exceptional items) from continuing operations 59.7 142.5
Basic earnings per share (exceptional items) from continuing operations 95.8 (11.6)
Basic earnings per share (inc. exceptional items) from continuing operations 155.5 130.9
Basic earnings per share are calculated as profit after tax and
non-controlling interests, based on 985,856,695 (2021: 985,856,695) ordinary
shares.
There was no potential dilution of earnings per share in either year set out
above, and therefore diluted earnings per share did not differ from basic
earnings per share as disclosed above.
Reconciliation of basic earnings per share from continuing operations:
Year ended 31.12.2022 Year ended 31.12.2021
Profit for the year attributable to equity holders of the Company $m 1,533.0 1,290.2
Profit from continuing operations attributable to equity holders of the 1,533.0 1,290.2
Company
Ordinary shares number 985,856,695 985,856,695
Basic earnings per share from continuing operations 155.5 130.9
11. Dividends
The Board has recommended a final dividend of 50.5 cents per ordinary share or
$497.6 million in total (2021 - 118.9 cents per ordinary share or $1,172.1
million in total). The interim dividend of 9.2 cents per ordinary share or
$90.7 million in total was paid on 30 September 2022 (2021 interim dividend of
23.6 cents per ordinary share or $232.7 million in total). This gives total
dividends proposed in relation to 2022 (including the interim dividend) of
59.7 cents per share or $588,3 million in total (2021 - 142.5 cents per share
or $1,404.8 million in total).
Dividends per share actually paid in the year and recognised as a deduction
from net equity under IFRS were 128.1 cents per ordinary share or $1,262.9
million in total (2021 - 72.1 cents per ordinary share or $710.8 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 +44 370 702 0159.
12. Intangible asset
The intangible asset relates to Twin Metals' mining licences assets (included
within the corporate segment). As explained in note 3, a full impairment
provision was recognised in respect of the $150.1 million cost of this asset
as at 31 December 2021, as a result of the US federal government's
cancellation of certain of Twin Metals' mining leases. Twin Metals believes it
has a valid legal right to the mining leases and a strong case to defend its
legal rights. Although the Group is pursuing validation of those rights,
considering the time and uncertainty related to any legal action to challenge
the government decisions, a full impairment provision has been recognised in
respect of the carrying value of the asset.
Cost Accumulated depreciation and impairment Net book value
$m $m $m
At 1 January 2021 150.1 - 150.1
Provision against carrying value - (150.1) (150.1)
At 31 December 2021 150.1 (150.1) -
At 31 December 2022 150.1 (150.1) -
13. Property, plant and equipment
Mining Railway and other transport At 31.12.2022 At 31.12.2021
$m $m $m $m
Balance at the beginning of the year(1) 10,268.0 270.5 10,538.5 9,851.9
Additions 1,946.2 55.8 2,002.0 1,855.9
Additions - depreciation capitalised 73.3 - 73.3 72.0
Reclassifications - - - (1.6)
Capitalisation of critical spare parts - - - 0.9
Capitalisation of interest 49.0 - 49.0 14.2
Adjustment to capitalised decommissioning provisions (Note 20) 173.8 - 173.8 (119.9)
Depreciation expensed in the year (1,110.6) (30.5) (1,141.1) (1,078.7)
Depreciation capitalised in PP&E (73.3) - (73.3) (72.0)
Net effect of depreciation capitalised in inventories (71.1) - (71.1) 54.1
Asset disposals (7.5) (0.1) (7.6) (10.8)
Provision against carrying value of assets - - - (27.5)
Balance at the end of the year 11,247.8 295.7 11,543.5 10,538.5
(1) The opening balances have been restated to reflect a $301.3 million
reclassification between Railway and other transport and Mining
During the year ended 31 December 2022, the net effect of depreciation
capitalised within property, plant and equipment or inventories in respect of
assets relating to Los Pelambres, Centinela and Antucoya is $144.4 million (31
December 2021 - $17.9 million), and has accordingly been excluded from the
depreciation charge recorded in the income statement as shown in Note 5.
At 31 December 2022, the Group had entered into contractual commitments for
the acquisition of property, plant and equipment amounting to $845.1 million
(31 December 2021 - $599.3 million).
Depreciation capitalised in property, plant and equipment of $73.3 million
related to the depreciation of assets used in mine development (operating
stripping) at Centinela, Los Pelambres and Antucoya (at 31 December 2021 -
$72.0 million).
14. Disposal of investment in Tethyan joint venture
On 15 December 2022 Antofagasta entered into definitive agreements to exit its
interest in the Tethyan joint venture. As a result of those agreements:
• the Reko Diq project in Pakistan (the "Project") was reconstituted
in Reko Diq Mining Company (Private Limited) ("RDMC"). RDMC is the Pakistani
registered subsidiary of Tethyan Copper Company Pty Limited ("TCC"), which is
itself the Australian registered subsidiary of Atacama Copper Pty Limited
("Atacama"), the joint venture company registered in Australia and owned
equally by the Company and Barrick Gold Corporation ("Barrick");
• a consortium of various Pakistani state-owned enterprises acquired
shares in RDMC which holds the Project (the "Sale"); and
• as the International Centre for Settlement of Investment Disputes
("ICSID") award (to TCC) was resolved by reconstituting the Project, TCC no
longer has any rights or claims against the Governments of Pakistan and
Balochistan arising from the suspension of the Project in 2011.
The proceeds of the Sale which, together with accrued interest up to 15
December 2022 totalled US$946.0 million, are currently held by Atacama in a
segregated interest-bearing account. Antofagasta and Barrick have agreed that
the proceeds of this account, including all further interest received, less
any Australian tax arising, will be distributed to the Antofagasta Group
during 2023, on a date to be determined by Antofagasta. Atacama is seeking a
binding private ruling to confirm that the Sale proceeds and their
distribution to the Antofagasta Group will not be subject to Australian tax.
The Australian corporate tax rate is 30%. Although Antofagasta will retain its
shareholding in Atacama until the proceeds have been distributed, it no longer
has any appointees on the board of the joint venture, is not entitled to
exercise voting rights in Atacama, and is not required to provide any funding
to, or permitted to receive any distributions from, Atacama other than the
Sale proceeds. Antofagasta has therefore ceased to have an economic interest
in Atacama and its subsidiaries as of 15 December 2022 other than being
entitled from that date to receive an amount equal to the Sale proceeds and
related interest less any Australian tax arising (whether before or after the
distribution). Accordingly, Antofagasta has recognised a gain on disposal of
its investment in the joint venture as at 15 December 2022 of $944.7 million,
reflecting the Sale proceeds and related interest, working capital and other
adjustments and the carrying value of the investment at that date. The
proceeds due to Antofagasta have been recognised within Trade and other
receivables in the balance sheet.
15. Investment in associates and joint ventures
ATI((i)) Minera Zaldívar((ii)) Tethyan Copper((iii)) At 31.12.2022 At 31.12.2021
$m $m $m $m $m
Balance at the beginning of the year 5.8 900.0 - 905.8 914.6
Obligations on behalf of JV and associates at the beginning of the year - - (0.6) (0.6) (1.1)
Capital contribution - - - - 9.5
Share of profit/(loss) before tax 2.0 69.3 (0.7) 70.6 90.2
Share of tax (0.5) (22.0) - (22.5) (30.5)
Share of profit/(loss) from JV and associates 1.5 47.3 (0.7) 48.1 59.7
Dividends received - (50.0) - (50.0) (77.5)
Disposal of investment in JV - - 1.3 1.3 -
Balance at the end of the year 7.3 897.3 - 904.6 905.8
Obligations on behalf of JV at the end of the year - - - - (0.6)
ATI((i)) Minera Zaldívar(ii) Tethyan Copper((iii)) At 31.12.2022 At 31.12.2021
$m $m $m $m $m
Net share of profit from associates and joint ventures 1.5 47.3 (0.7) 48.1 59.7
The investments which are included in the $904.6 million balance at 31
December 2022 are set out below:
Investment in associates
(i) The Group's 30% interest in Antofagasta Terminal
Internacional ("ATI"), which operates a concession to manage installations in
the port of Antofagasta..
Investment in joint ventures
(ii) The Group's 50% interest in Minera Zaldívar SpA
("Zaldívar").
(iii) The Group had a 50% interest in Tethyan Copper Company
Limited ("Tethyan"), which was a joint venture with Barrick Gold Corporation
in respect of the Reko Diq project in the Islamic Republic of Pakistan
("Pakistan"). As explained in Note 14, on 15 December 2022 Antofagasta entered
into definitive agreements to exit its interest in the Tethyan joint venture
and is therefore no longer recognised as a joint venture by the Group.
As the net carrying value of the interest in Tethyan was negative, it was
included within non-current liabilities, as the Group is liable for its share
of the joint venture's obligations.
Summarised financial information for the associates at December 2022 is as
follows:
ATI ATI
31.12.2022 31.12.2021
$m $m
Cash and cash equivalents 0.4 1.2
Current assets 18.2 13.7
Non-current assets 91.8 99.3
Current liabilities (19.3) (22.5)
Non-current liabilities (69.5) (75.0)
Revenue 55.2 47.2
Profit from continuing operations 5.1 1.3
Total comprehensive income 5.1 1.3
Summarised financial information for the joint ventures at December 2022 is as
follows(2):
Total Total
31.12.2022 31.12.2021
$m $m
Cash and cash equivalents 70.1 50.0
Current assets(1) 661.8 667.6
Non-current assets 1,658.6 1,675.1
Current financial liabilities (excl. trade, other payables and provisions) (53.2) (54.3)
Current liabilities (159.3) (175.3)
Non-current financial liabilities (excl. Trade, other payables and provisions) (68.3) (124.4)
Non-current liabilities (203.3) (155.2)
Revenue 783.4 849.2
Depreciation and amortisation. (149.2) (163.4)
Interest income 1.5 2.3
Interest expense (0.8) (0.5)
Income tax expense or income (43.9) (62.1)
Profit/(loss) after tax from continuing and discontinued operations 94.6 119.1
Total comprehensive income/(expense) 94.6 119.1
(1) The current assets includes cash and cash equivalents.
(2) 2022 includes Minera Zaldívar, comparatives includes Minera Zaldívar and
Tethyan Copper. ( )
The above summarised financial information is based on the amounts included in
the IFRS financial statements of the associate or joint venture (100% of the
results or balances of the associate or joint venture, rather than the Group's
proportionate share), after the Group's fair value adjustments and applying
the Group's accounting policies.
16. Equity investments
At 31.12.2022 At 31.12.2021
$m $m
Balance at the beginning of the year 8.7 11.1
Acquisition 66.5 -
Movements in fair value 15.8 (2.1)
Foreign currency exchange difference (0.5) (0.3)
Balance at the end of the year 90.5 8.7
Equity 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.
17. Inventories
At 31.12.2022 At 31.12.2021
$m $m
Current:
Raw materials and consumables 221.4 155.6
Work in progress 404.9 316.5
Finished goods 81.8 60.7
708.1 532.8
Non-current:
Work in progress 347.0 270.4
Total current and non-current inventories 1,055.1 803.2
During 2022, no net realisable value ("NRV") adjustment has been recognised
(2021 - nil). Non-current work-in-progress represents inventory expected to be
processed more than 12 months after the balance sheet date.
18. Borrowings and other financial liabilities
At 31.12.2022 At 31.12.2021
$m $m
Los Pelambres
Senior loan (i) (1,470.5) (1,188.3)
Leases (55.3) (54.8)
Centinela
Senior loan (ii) (276.7) (386.8)
Leases (35.2) (59.8)
Antucoya
Senior loan (iii) (223.5) (196.3)
Subordinated debt (iv) (171.5) (184.5)
Short-term loan - (35.0)
Leases (v) (16.5) (23.4)
Corporate and other items
Senior loan (vi) - (497.3)
Bonds (vii) (985.3) (496.1)
Leases (viii) (23.1) (20.4)
Railway and other transport services
Senior loan (ix) (15.3) (25.8)
Leases (1.6) (1.4)
Preference shares (x) (2.5) (2.7)
Total (3,277.0) (3,172.6)
(i) The senior loan at Los Pelambres represents a $1,491 million US dollar
denominated syndicated loan divided in three tranches. The first tranche has a
remaining duration of 3 years and an interest rate of US LIBOR six-month rate
plus 1.05%. The second tranche has a remaining duration of 6 years and an
interest rate of US LIBOR six-month rate plus 0.85%. The third tranche has a
remaining duration of 5.5 years and an interest rate of US LIBOR six-month
rate plus 1.10%. The loans are subject to financial covenants which require
that specified net debt to EBITDA and EBITDA to finance expense ratios are
maintained.
(ii) The senior loan at Centinela represents a US dollar denominated
syndicated loan with an amount outstanding of $278 million with a duration of
3 years and an interest rate of US LIBOR six-month rate plus 0.95%. The loan
is subject to financial covenants which require that specified net debt to
EBITDA and EBITDA to finance expense ratios are maintained.
(iii) The senior loan at Antucoya represents a US dollar denominated
syndicated loan with an amount outstanding of $225 million. This loan has a
remaining duration of 4 years and has an interest rate of Term SOFR six-month
rate plus 1.40%. The loan is subject to financial covenants which require that
specified net debt to EBITDA and EBITDA to finance expense ratios are
maintained.
(iv) The subordinated debt at Antucoya is US dollar denominated, provided to
Antucoya by Marubeni Corporate with a remaining duration of 4 years and an
interest rate of US LIBOR six-month rate plus 3.65%. Subordinated debt
provided by Group companies to Antucoya has been eliminated on consolidation.
(v) The finance leases at Antucoya are denominated in US dollars with an
average interest rate of US LIBOR six-month rate plus 2.0% and a remaining
duration of 1.5 years.
(vi) During the year ended 31 December 2022 Antofagasta plc made a $500
million repayment of the senior loan.
(vii) The bonds at Corporate reflect two corporate bonds - a $500 million
2.375% corporate bond due in 2030 and a $500 million 5.625% corporate bond due
in 2032.
(viii) The 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 4 years and are at fixed rates with an average interest rate of
5.2%.
(ix) The long-term loans at the Transport division are US dollar denominated,
with an outstanding amount of $15 million and a remaining duration of 1 year
and an interest rate of US LIBOR six-month rate plus 1.06%.
(x) The preference shares are Sterling-denominated and issued by Antofagasta
plc. There are 2 million shares of £1 each authorised, issued and fully paid.
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.
At 31.12.2022 At 31.12.2021
$m $m
Short-term borrowings (432.5) (337.1)
Medium and long-term borrowings (2,844.5) (2,835.5)
Total (3,277.0) (3,172.6)
At 31 December 2022, $1,129.0 million (31 December 2021 - $642.7 million) of
the borrowings has fixed rate interest and $2,148.0 million (December 2021 -
$2,529.9 million) has floating rate interest.
On December 30, 2022, Antofagasta plc agreed a revolving credit facility "RCF"
of US$500 million with a group of six banks and where the Canadian Imperial
Bank of Commerce "CIBC" has the role of Administrative Agent. This revolving
credit facility has a term of three years, which expires on December 30, 2025.
The facility remained undrawn throughout the year 2022.
Facility available Drawn Undrawn
2022 2021 2022 2021 2022 2021
$m $m $m $m $m $m
Revolving credit facility (500.0) - - - - -
19. Post-employment benefit obligation
At 31.12.2022 At 31.12.2021
$m $m
Balance at the beginning of the year (107.5) (123.2)
Current service cost (19.1) (19.8)
Unwinding of discount on provisions (6.8) (3.6)
Actuarial (losses)/gains (18.1) 3.1
Paid in the year 12.7 16.4
Foreign currency exchange difference 1.5 19.6
Balance at the end of the year (137.3) (107.5)
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 and restoration and other long-term provisions
At 31.12.2022 At 31.12.2021
$m $m
Balance at the beginning of the year (336.1) (520.2)
Charge to operating profit in the year (15.4) (11.3)
Unwinding of discount to net interest in the year (10.1) (2.6)
Adjustment to provision discount rates (1.6) 30.8
Capitalised adjustment to provision (173.8) 119.9
Utilised in the year 49.7 33.8
Foreign currency exchange difference (0.9) 13.5
Balance at the end of the year (488.2) (336.1)
At 31.12.2022 At 31.12.2021
$m $m
Short-term provisions (33.2) (33.8)
Long-term provisions (455.0) (302.3)
Total (488.2) (336.1)
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 by Sernageomin, the Chilean government
agency which regulates the mining industry in Chile. During 2022, the
Centinela and Antucoya provisions were updated to reflect new plans approved
by Sernageomin during the year. The provision balance reflects the present
value of the forecast future cash flows expected to be incurred in line with
the closure plans, discounted using Chilean real interest rates with durations
corresponding with the timings of the closure activities. At 31 December 2022,
the real discount rates ranged from 1.67% to 1.73% (31 December 2021: 2.3% to
2.5%).
It is estimated that the provision will be utilised from 2023 until 2066 based
on current mine plans, with approximately 15% of the total provision balance
expected to be utilised between 2023 and 2031, approximately 49% between 2032
and 2041, approximately 10% between 2042 and 2051 and approximately 26%
between 2052 and 2066.
Given the long-term nature of these balances, it is possible that future
climate risks could impact the appropriate amount of these provisions, both in
terms of the nature of the decommissioning and site rehabilitation activities
that are required, or the costs of undertaking those activities. The Group
discloses in line with the recommendations of the Task Force on
Climate-related Financial Disclosures ("TCFD"). This process included scenario
analyses assessing the impact of transition and physical risks. As a simple
high-level sensitivity, we have considered whether the level of estimated
costs relating to the potential future risks identified under the scenario
analysis could indicate a general level of future cost increases as a
consequence of climate risks which could indicate a significant potential
impact on these provision balances. This analysis did not indicate a
significant potential impact on the decommissioning and restoration provision
balances. However, more detailed specific analysis of the potential impacts of
climate risks in future periods could result in adjustments to these provision
balances. When future updates to the closure plans are prepared and submitted
to Sernageomin for review and approval, it is possible that additional
consideration of potential climate risk impacts may need to be incorporated
into the plan assumptions. In addition, Sernageomin may introduce new
regulations or guidance in respect of climate risks which may need to be
addressed in future updates to the Group's closure plans.
21. Deferred tax assets and liabilities
At 31.12.2022 At 31.12.2021
$m $m
Net deferred tax position at the beginning of the year (1,315.7) (1,106.4)
Charge to tax on profit in year (154.8) (297.4)
Exceptional items - 90.6
Deferred tax recognised directly in equity 5.7 (2.5)
Net deferred tax position at the end of the year (1,464.8) (1,315.7)
Analysed between:
Net deferred tax assets 78.5 96.8
Net deferred tax liabilities (1,543.3) (1,412.5)
Net deferred tax position (1,464.8) (1,315.7)
At 31 December 2022, the Group had unused tax losses associated with Chilean
entities (predominantly Antucoya) of $460.3 million (2021 - $472.5 million)
available for offset against future profits. Generally under Chilean tax law
most tax losses can be carried forward indefinitely. A deferred tax asset of
$124.5 million has been recognised in respect of 100% of these losses as at 31
December 2022 (31 December 2021 - $127.6 million). In addition, at 31 December
2022, the Group had unused tax losses associated with entities outside of
Chile (predominantly in respect of the Twin Metals project) of $427.0 million
(2021 - $428.0 million). A portion of the Twin Metals tax losses expire in the
period from 2030 - 2037, and the remainder can be carried forward
indefinitely.
At 31 December 2021, the Group recognised $90.6 million of previously
unrecognised deferred tax assets relating to tax losses available for offset
against future profits, reflecting the improved actual and forecast
profitability of the relevant Group entity (Antucoya). That entity has
continued to generate taxable profits during 2022, utilising $10.9 million of
the deferred tax asset during the year.
At 31 December 2022, deferred withholding tax liabilities of $49.5 million
have been recognised (31 December 2021 - $23.1 million) which relate to
undistributed earnings of subsidiaries where it is considered likely that the
corresponding profits will be distributed in the foreseeable future. The value
of the remaining undistributed earnings of subsidiaries, for which deferred
tax liabilities have not been recognised, because the Group is in a position
to control the timing of the distributions and it is likely that distributions
will not be made in the foreseeable future, was $6,430.4 million (31 December
2021 - $6,483 million). If deferred withholding tax liabilities were
recognised in respect of all of these remaining undistributed earnings of
subsidiaries this would result in an additional deferred tax liability and
expense of approximately $1,076.5 million (31 December 2021 - $1,232.1
million).
Temporary differences arising in connection with interests in associates are
insignificant.
The deferred tax balance of $1,464.8 million (2021 - $1,315.7 million)
includes $1,404.7 million (2021 - $1,272.6 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 Income Taxes.
22. Share capital and share premium
There was no change in share capital or share premium in the year ended 2022
or 2021. Details are shown in the Consolidated Statement of Changes in Equity.
23. Other reserves and retained earnings
At 31.12.2022 At 31.12.2021
$m $m
Hedging reserve ((1))
At 1 January - (23.9)
Parent and subsidiaries' net cash flow hedge fair value losses - (100.4)
Parent and subsidiaries' net cash flow hedge losses transferred to the income - 126.8
statement
Tax on the above - (2.5)
At 31 December - -
Equity investment revaluation reserve ((2))
At 1 January (7.4) (5.3)
Gains/(losses) on equity investment 15.8 (2.1)
At 31 December 8.4 (7.4)
Foreign currency translation reserve ((3))
At 1 January (3.0) (1.4)
Currency translation adjustment (0.4) (1.6)
At 31 December (3.4) (3.0)
Total other reserves per balance sheet 5.0 (10.4)
Retained earnings
At 1 January 8,071.6 7,492.2
Parent and subsidiaries' profit for the year 1,484.9 1,230.5
Equity accounted units' profit after tax for the year 48.1 59.7
Actuarial (losses)/gains ((4)) (8.2) -
Total comprehensive income for the year 1,524.8 1,290.2
Dividends paid (1,262.9) (710.8)
At 31 December 8,333.5 8,071.6
(1) The hedging reserve records gains or losses on cash flow hedges that are
recognised initially in equity, as described in Note 7.
(2) The equity investment revaluation reserves record fair value gains or
losses relating to equity investments, as described in Note 16.
(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.
(4) Actuarial gains or losses relate to long-term employee benefits, as
described in Note 19.
24. Reconciliation of profit before tax to net cash inflow from operating
activities
At 31.12.2022 At 31.12.2021
$m $m
Profit before tax 2,558.9 3,477.1
Depreciation and amortisation 1,141.1 1,078.7
Net loss on disposals 2.1 9.2
Net finance expense/(income) 68.2 (16.0)
Share of profit of associates and joint ventures (48.1) (59.7)
Gain on disposal of investment in joint venture (944.7) -
Provision against carrying value of assets - 177.6
(Increase)/decrease in inventories (180.7) 10.9
Decrease /(increase) in debtors 27.0 (206.8)
Increase in creditors 141.0 55.7
Decrease in provisions (26.5) (19.0)
Cash flow from operations 2,738.3 4,507.7
25. Analysis of changes in net debt
At 31.12.2021 Cash flows Fair value gains New leases Amortisation of finance costs Capitalisation of interest Other Reclassification Foreign exchange At 31.12.2022
$m $m $m $m $m $m $m $m $m $m
Cash and cash equivalents 743.4 65.6 - - - - - - 1.4 810.4
Liquid investments 2,969.7 (1,388.9) - - - - - - - 1,580.8
Total 3,713.1 (1,323.3) - - - - - - 1.4 2,391.2
Borrowings due within one year (268.0) 373.9 - - - - - (483.3) - (377.4)
Borrowings due after one year (2,742.1) (488.5) - - (11.7) (6.3) (0.1) 483.3 - (2,765.4)
Leases due within one year (69.1) 105.4 - - - - - (80.7) (10.7) (55.1)
Leases due after one year (90.7) - - (51.3) - - (1.0) 80.7 (14.3) (76.6)
Preference shares (2.7) - - - - - - - 0.2 (2.5)
Total borrowings (3,172.6) (9.2) - (51.3) (11.7) (6.3) (1.1) - (24.8) (3,277.0)
Net cash/(debt) 540.5 (1,332.5) - (51.3) (11.7) (6.3) (1.1) - (23.4) (885.8)
Net (debt)/ cash
Net (debt)/cash at the end of each period was as follows:
At 31.12.2022 At 31.12.2021
$m $m
Cash, cash equivalents and liquid investments 2,391.2 3,713.1
Total borrowings and other financial liabilities (3,277.0) (3,172.6)
Net (debt)/cash (885.8) 540.5
26. Related party transactions
Transactions between the Company and its subsidiaries, which are related
parties, have been eliminated on consolidation and are not disclosed in this
note. Transactions between the Group and its associates and joint ventures are
disclosed below.
The transactions which Group companies entered into with related parties who
are not members of the Group are set out below. There are no guarantees given
or received and no provisions for doubtful debts related to the amount of
outstanding balances.
a) Quiñenco SA
Quiñenco SA ("Quiñenco") is a Chilean financial and industrial conglomerate,
the shares of which are traded on the Santiago Stock Exchange. The Group and
Quiñenco are both under the control of the Luksic family, and two Directors
of the Company, Jean-Paul Luksic and Andronico Luksic, who are also directors
of Quiñenco.
The following transactions took place between the Group and the Quiñenco
group of companies, all of which were on normal commercial terms at market
rates:
- the Group earned interest income of $0.8 million (2021 - $0.1
million) during the year on investments with BanChile Corredores de Bolsa SA,
a subsidiary of Quiñenco. Investment balances at the end of the year were nil
(2021 - $2.2 million);
- the Group made purchases of fuel from ENEX SA, a subsidiary of
Quiñenco, of $309.9 million (2021 - $263.9 million). The balance due to ENEX
SA at the end of the year was $28.6 million (2021 - $20.4 million).
- the Group purchased shipping services from Hapag Lloyd, an
associate of Quiñenco, for $ 12.7 million (2021 - $8.9 million). The balance
due to Hapag Lloyd at the end of the year was $ 0.3 million (2021 -$0.4
million).
- the Group made purchases of technology services from ARTIKOS CHILE
SA, a subsidiary of Quiñenco, of $0.2 million (2021 - $0.2 million). The
balance due to ARTIKOS CHILE SA at the end of the year was nil (2021 - nil).
b) Compañía de Inversiones Adriático SA
In 2022, the Group leased office space on normal commercial terms from
Compañía de Inversiones Adriático SA, a company in which members of the
Luksic family have an interest, at a cost of $0.4 million (2021 - $0.8
million)
c) Antomin 2 Limited and Antomin Investors Limited
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,
which continues to hold the remaining 49% of Antomin 2 and Antomin Investors.
Mineralinvest is owned by the E. Abaroa Foundation, in which members of the
Luksic family have an interest. During 2022, the Group incurred $0.1 million
(2021 - $0.1 million) of exploration costs at these properties.
d) Tethyan Copper Company Limited
On 15 December 2022 Antofagasta entered into definitive agreements to exit its
interest in the Tethyan joint venture, which is therefore no longer recognised
as a joint venture by the Group. The group contributed nil (2021 - $9.5
million) to Tethyan during 2022.
e) Compañía Minera Zaldívar SpA
The Group has a 50% interest in Zaldívar, which is a joint venture with
Barrick Gold Corporation. Antofagasta is the operator of Zaldívar. The
balance due from Zaldívar to group companies at the end of the year was $6.7
million (2021 - $2.5 million). During 2022, Zaldívar declared dividends of
$50.0 million to the Group (2021 - $77.5 million).
27. Litigation and contingent liabilities
The Group is subject from time to time to legal proceedings, claims,
complaints and investigations arising out of the ordinary course of business.
The Group cannot predict the outcome of individual legal actions or claims or
complaints or investigations. As a result, the Group may become subject to
liabilities that could affect the Group's business, financial position and
reputation. Litigation is inherently unpredictable and large judgments may at
times occur. The Group may incur, in the future, judgments or enter into
settlements of claims that could lead to material cash outflows. The Group
considers that no material loss to the Group is expected to result from the
legal proceedings, claims, complaints and investigations that the Group is
currently subject to. Provision is made for all liabilities that are expected
to materialise through legal claims against the Group.
28. Currency translation
Assets and liabilities denominated in foreign currencies are translated into
US dollars and sterling at the year-end rates of exchange. Results denominated
in foreign currencies have been translated into US dollars at the average rate
for each year.
2022 2021
Year-end rate $1 $1.208=£1; $1 = Ch$855.9h$844.7 $1.349=£1; $1 = Ch$844.7
Average rates h$7$1.234=£1; $1 = Ch$872.48 $1.375=£1; $1 = Ch$759.8
29. Distribution
The Annual Report and Financial Statements for the year ended 31 December
2022, together with the Notice of the 2022 Annual General Meeting, will be
posted to all shareholders in April 2023.
Alternative performance measures (not subject to audit or review)
This consolidated financial information includes a number of alternative
performance measures, in addition to amounts in accordance with UK-adopted
International Accounting Standards. 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) Underlying earnings per share
Underlying earnings per share is earnings per share from continuing
operations, excluding exceptional items. This measure is reconciled to
earnings per share from continuing and discontinued operations (including
exceptional items) on the face of the income statement. This measure is
considered to be useful as it provides an indication of the earnings generated
by the ongoing businesses of the Group, excluding the impact of exceptional
items which are irregular or non-operating in nature.
b) EBITDA
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 historical cost of property, plant & equipment or the particular
financing structure adopted by the business.
For the year ended 31 December 2022
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) 1,196.2 446.0 155.6 - (113.0) (94.3) 1,590.5 43.8 1,634.3
Depreciation 276.1 710.2 105.6 - - 18.7 1,110.6 30.5 1,141.1
Loss on disposals 0.5 1.0 - - - 0.6 2.1 - 2.1
EBITDA from subsidiaries 1,472.8 1,157.2 261.2 - (113.0) (75.0) 2,703.2 74.3 2,777.5
Proportional share of the EBITDA from associates and JVs - - - 147.2 - (0.7) 146.5 5.7 152.2
Total EBITDA 1,472.8 1,157.2 261.2 147.2 (113.0) (75.7) 2,849.7 80.0 2,929.7
For the year ended 31 December 2021
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) 2,240.5 1,260.6 238.3 - (280.8) (89.0) 3,369.6 31.8 3,401.4
Depreciation 281.8 654.7 98.3 - - 13.0 1,047.8 30.9 1,078.7
Loss on disposals 3.7 4.0 0.5 - - - 8.2 1.0 9.2
Provision against the carrying value of assets(1) - - - - 177.6 - 177.6 - 177.6
EBITDA from subsidiaries 2,526.0 1,919.3 337.1 - (103.2) (76.0) 4,603.2 63.7 4,666.9
Proportional share of the EBITDA from associates and JVs - - - 172.8 - (8.0) 164.8 4.5 169.3
Total EBITDA 2,526.0 1,919.3 337.1 172.8 (103.2) (84.0) 4,768.0 68.2 4,836.2
1. An impairment has been recognised as at 31 December 2021 in respect of the
$177.6 million of intangible assets and property, plant and equipment relating
to the Twin Metals project, presented as an exceptional item.
c) Cash costs
Cash costs are a measure of the cost of operational production expressed in
terms of cents per pound of payable copper produced.
This is considered to be a useful and relevant measure as it is a standard
industry measure applied by most major copper mining companies which reflects
the direct costs involved in producing each pound of copper. It therefore
allows a straightforward comparison of the unit production cost of different
mines, and allows an assessment of the position of a mine on the industry cost
curve. It also provides a simple indication of the profitability of a mine
when compared against the price of copper (per lb).
With sales of concentrates at Los Pelambres and Centinela, which are sold to
smelters and roasting plants for further processing into fully refined metal,
the price of the concentrate invoiced to the customer reflects the market
value of the fully refined metal less a "treatment and refining charge"
deduction, to reflect the lower value of this partially processed material
compared with the fully refined metal. For accounting purposes, the revenue
amount is the net of the market value of fully refined metal less the
treatment and refining charges. Under the standard industry definition of cash
costs, treatment and refining charges are regarded as an expense and part of
the total cash cost figure.
At 31.12.2022 At 31.12.2021
Reconciliation of cash costs excluding treatment & refining charges and
by-product revenue:
Total Group operating costs (Note 5) ($m) 4,227.7 4,068.7
Zaldívar operating costs (attributable basis - 50%) 234.4 231.7
Less:
Depreciation and amortisation (Note 5) ($m) (1,141.1) (1,078.7)
Loss on disposal (Note 5) ($m) (2.1) (9.2)
Provision against the carrying value of assets - (177.6)
Elimination of non-mining operations
Corporate and other items - Total operating cost (Note 5) ($m) (75.0) (76.0)
Exploration and evaluation - Total operating cost (Note 5) ($m) (113.0) (103.2)
Transport division - Total operating cost (Note 5) ($m) (119.1) (106.3)
Closure provision and other expenses not included within cash costs ($m) (97.6) (90.7)
Inventories variations (12.0) 2.1
Total cost relevant to the mining operations' cash costs ($m) 2,902.2 2,660.8
Copper production volumes (tonnes)(1) 646,200 721,450
Cash costs excluding treatment & refining charges and by-product revenue 4,491 3,688
($/tonne)
Cash costs excluding treatment & refining charges and by-product revenue 2.05 1.68
($/lb)
At 31.12.2022 At 31.12.2021
Reconciliation of cash costs before deducting by-products revenue:
Treatment & refining charges - copper and by-products- Los Pelambres 108.5 115.4
Treatment & refining charges - copper and by-products- Centinela 78.8 70.4
Treatment & refining charges - copper - total 187.3 185.8
Copper production volumes (tonnes)(1) 646,200 721,450
Treatment & refining charges ($/tonne) 289.9 257.6
Treatment & refining charges ($/lb) 0.14 0.11
Cash costs excluding treatment & refining charges and by-product revenue 2.05 1.68
($/lb)
Treatment & refining charges ($/lb) 0.14 0.11
Cash costs before deducting by-products (S/lb) 2.19 1.79
(1)The 646,200 tonnes includes 44,500 tonnes of production at Zaldívar on a
50% attributable basis.
c) Cash costs (continued)
At 31.12.2022 At 31.12.2021
Reconciliation of cash costs (net of by-product revenue):
Gold revenue - Los Pelambres (Note 5) ($m) 75.5 91.2
Gold revenue - Centinela (Note 5) ($m) 239.0 346.2
Molybdenum revenue - Los Pelambres (Note 5) ($m) 311.9 353.6
Molybdenum revenue - Centinela (Note 5) ($m) 110.2 44.4
Silver revenue - Los Pelambres (Note 5) ($m) 33.1 46.6
Silver revenue - Centinela (Note 5) ($m) 25.1 38.7
Total by-product revenue ($m) 794.8 920.7
Copper production volumes (tonnes) (1) 646,200 721,450
By-product revenue ($/tonne) 1,230.0 1,276.0
By-product revenue ($/lb) 0.58 0.59
Cash costs before deducting by-products (S/lb) 2.19 1.79
By-product revenue ($/lb) (0.58) (0.59)
Cash costs (net of by-product revenue) ($/lb) 1.61 1.20
(1)The 646,200 tonnes includes 44,500 tonnes of production at Zaldívar on a
50% attributable basis.
The totals in the tables above may include some small apparent differences as
the specific individual figures have not been rounded.
d) 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.
December 2022 December 2021
Total Attributable Attributable Total Attributable share Attributable
amount
share
amount
amount
amount
$m $m $m $m
Cash, cash equivalents and liquid investments:
Los Pelambres 655.4 60% 393.2 427.9 60% 256.7
Centinela 348.5 70% 244.0 625.3 70% 437.7
Antucoya 111.8 70% 78.3 181.5 70% 127.1
Corporate 1,247.0 100% 1,247.0 2,436.5 100% 2,436.5
Railway and other transport services 28.5 100% 28.5 41.9 100% 41.9
Total 2,391.2 1,991.0 3,713.1 3,299.9
Borrowings:
Los Pelambres (Note 18) (1,525.8) 60% (915.5) (1,243.1) 60% (745.9)
Centinela (Note 18) (311.9) 70% (218.3) (446.6) 70% (312.6)
Antucoya (Note 18) (411.5) 70% (288.1) (439.2) 70% (307.5)
Corporate (Note 18) (1,010.9) 100% (1,010.9) (1,016.5) 100% (1,016.4)
Railway and other transport services (Note 18) (16.9) 100% (16.9) (27.2) 100% (27.2)
Total (Note 18) (3,277.0) (2,449.7) (3,172.6) (2,409.6)
Net (debt)/cash (885.8) (458.7) 540.5 890.3
Production and Sales Statistics (not subject to audit or review)
a) Production and sales volumes for copper, gold and
molybdenum
Production Sales
Year ended 31.12.2022 Year ended 31.12.2021 Year ended 31.12.2022 Year ended 31.12.2021
Copper ´000 tonnes ´000 tonnes ´000 tonnes ´000 tonnes
Los Pelambres 275.0 324.7 271.2 324.5
Centinela 247.5 274.2 246.1 276.1
Antucoya 79.2 78.6 80.8 80.4
Zaldívar (attributable basis - 50%) 44.5 44 44.4 44.6
Group total 646.2 721.5 642.5 725.6
Gold 000 ounces 000 ounces 000 ounces 000 ounces
Los Pelambres 43.1 53.2 42.3 51.1
Centinela 133.7 199.0 132.3 193.5
Group total 176.8 252.2 174.6 244.6
Molybdenum 000 tonnes 000 tonnes 000 tonnes 000 tonnes
Los Pelambres 7.2 9.2 6.8 9.2
Centinela 2.4 1.3 2.4 1.2
Group total 9.6 10.5 9.2 10.4
Silver 000 ounces 000 ounces 000 ounces 000 ounces
Los Pelambres 1,603.8 1,927.5 1,562.9 1,856.8
Centinela 1,212.1 1,578.3 1,184.2 1565.7
Group total 2,815.9 3,505.8 2,747.1 3,422.5
b) Cash costs per pound of copper produced and realised
prices per pound of copper and molybdenum sold
Cash costs Realised prices
Year ended 31.12.2022 Year ended 31.12.2021 Year ended 31.12.2022 Year ended 31.12.2021
$/lb $/lb $/lb $/lb
Copper
Los Pelambres 1.10 0.89 3.76 4.54
Centinela 1.75 1.13 3.89 4.31
Antucoya 2.50 2.04 3.95 3.94
Zaldívar (attributable basis - 50%) 2.39 2.39 - -
Group weighted average (net of by-products) 1.61 1.20 3.84 4.37
Group weighted average (before deducting by-products) 2.19 1.79
Group weighted average (before deducting by-products and excluding treatment 2.05 1.68
& refining charges from concentrate)
Cash costs at Los Pelambres comprise:
On-site and shipping costs 1.66 1.43
Treatment & refining charges for concentrates 0.18 0.15
Cash costs before deducting by-product credits 1.84 1.59
By-product credits (principally molybdenum) (0.74) (0.70)
Cash costs (net of by-product credits) 1.10 0.89
Cash costs at Centinela comprise:
On-site and shipping costs 2.29 1.75
Treatment & refining charges for concentrates 0.15 0.12
Cash costs before deducting by-product credits 2.44 1.87
By-product credits (principally gold) (0.69) (0.74)
Cash costs (net of by-product credits) 1.75 1.13
LME average copper price 4.00 4.23
Gold $/oz $/oz
Los Pelambres 1,785 1,783
Centinela 1,806 1,789
Group weighted average 1,801 1,788
Market average price 1,800 1,799
Molybdenum $/lb $/lb
Los Pelambres 20.9 17.5
Centinela 20.5 17.2
Group weighted average 20.8 17.4
Market average price 18.7 15.9
Silver $/oz $/oz
Los Pelambres 21.2 25.1
Centinela 21.1 24.7
Group weighted average 21.2 24.9
Market average price 21.8 25.2
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 and 70% of Antucoya. For the Zaldívar 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, copper cathodes and
molybdenum concentrate, and Antucoya and Zaldívar 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 and Zaldívar 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. Cash costs exclude
depreciation, financial income and expenses, hedging gains and losses,
exchange gains and losses and corporate tax for all four operations. With
sales of concentrates at Los Pelambres and Centinela, which are sold to
smelters and roasting plants for further processing into fully refined metal,
the price of the concentrate invoiced to the customer reflects the market
value of the fully refined metal less a "treatment and refining charge"
(TC/RC) deduction, to reflect the lower value of this partially processed
material compared with the fully refined metal. For accounting purposes,
revenue reflects the invoiced amount reflecting the value of the concentrate,
and so the TC/RCs form part of this revenue amount. However, under the
standard industry definition of cash costs, TC/RCs are regarded as an expense
and part of cash costs.
(iv) Realised copper prices are determined by comparing
revenue from copper sales (after adding back treatment and refining 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 mark-to-market adjustments for sales contracts which contain
provisional pricing mechanisms and 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 fourth
quarter of 2022, published on 18 January 2023.
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