REG - Antofagasta PLCBarrick Gold Corp - Half Yearly Financial Report <Origin Href="QuoteRef">ANTO.L</Origin> - Part 4
25/08/2015 07:00
- Part 4: For the preceding part double click ID:nRSY9494Wc
Antucoya 0.2 - 0.2 3.8 -
Interest Derivatives
Centinela (1.9) - (1.9) 1.4 (4.6)
Railway and other transport services (0.7) - (0.7) (0.1) (1.1)
(2.5) - (2.5) 5.0 (5.6)
For the six months ended 30 June 2014
Impact on income statement for six months ended 30.06.14 Impact on reserves for six months ended at 30.06.14 Fair value recorded on balance sheet 30.06.14
Realised gains/(losses) Losses resulting from mark-to-market adjustments on hedging instruments Total net gain/(loss) Gains/(losses) resulting from mark-to-market adjustments on hedging instruments Net financial Asset/(Liability)
$m $m $m $m $m
Commodity Derivatives
Centinela (0.2) - (0.2) 0.4 -
Michilla 8.4 (4.3) 4.1 1.4 8.4
Foreign exchange derivatives
Michilla (1.0) - (1.0) (2.4) (0.7)
Antucoya - 1.0 1.0 1.5 2.4
Interest Derivatives
Centinela (2.5) - (2.5) 1.7 (7.7)
-- 4.7 (3.3) 1.4 2.6 2.4
For the year ended 31 December 2014
Impact on income statement for the year ended 31.12.14 Impact on reserves for the year ended at 31.12.14 Fair value recorded on balance sheet 31.12.14
Realised (losses)/gains Losses resulting from mark-to-market adjustments on hedging instruments Total net (loss)/gain (Losses)/gains resulting from mark-to-market adjustments on hedging instruments Net financial (liability)/ asset
$m $m $m $m $m
Commodity Derivatives
Centinela 0.1 - 0.1 0.6 0.2
Michilla 18.3 (5.0) 13.3 (6.2) -
Foreign exchange derivatives
Michilla (4.1) - (4.1) (1.7) -
Antucoya - (0.1) (0.1) (3.8) (4.0)
Interest Derivatives
Centinela (4.8) - (4.8) 3.4 (6.0)
Railway and other transport services (1.0) - (1.0) (1.0) (1.0)
8.5 (5.1) 3.4 (8.7) (10.8)
The gains/(losses) recognised in reserves are disclosed before non-controlling interests and tax.
The net financial asset/(liability) resulting from the balance sheet mark-to-market adjustments is analysed as follows: At 30.06.15 At 30.06.14 At 31.12.14 $m $m $m Analysed between: Current assets 0.1 10.8 0.2 Current liabilities (2.9) (3.5) (7.5) Non-current liabilities (2.8) (4.9) (3.5) (5.6) 2.4 (10.8) (ii) Outstanding derivative financial instrumentsCommodity derivativesThe Group periodically uses commodity derivatives to manage its exposure to commodity price fluctuations. -
Futures - arbitrageThe Group has futures for copper production, to swap COMEX price exposure according to the Group´s pricing policy. At 30.06.15 For instruments held at 30.06.15 Copper production hedged Weighted average remaining period from 1 July 2015 Covering a period up tonnes Months to: Centinela 2,400 0.5 31-01-2016 (iii) Foreign exchange derivativesThe Group periodically uses foreign exchange derivatives to reduce its exposure to fluctuations in the exchange rates influencing operating
costs and the fair value of non-US dollar denominated assets or liabilities. (iv) Interest derivativesThe Group periodically uses interest derivatives to reduce its exposure to interest rate movements.- Interest rate swapsThe Group has used interest rate swaps to swap the floating rate interest relating to the Centinela project financing and long-term loans at the Railway for fixed rate interest. At 30 June 2015 the Group had entered into the contracts outlined below. Start date Maturity
date Actual notional amount Weighted Average Fixed Rate $m % Centinela 15-02-2011 15-08-2018 122.5 3.372 Railway and other transport services 12-08-2014 12-08-2019 150.0 1.634 The actual notional amount hedge depends upon the amount of the related debt currently outstanding.
At 30.06.15 At 30.06.14 At 31.12.14
$m $m $m
Analysed between:
Current assets 0.1 10.8 0.2
Current liabilities (2.9) (3.5) (7.5)
Non-current liabilities (2.8) (4.9) (3.5)
(5.6) 2.4 (10.8)
(ii) Outstanding derivative financial instrumentsCommodity derivativesThe Group periodically uses commodity
derivatives to manage its exposure to commodity price fluctuations. - Futures - arbitrageThe Group has futures for
copper production, to swap COMEX price exposure according to the Group´s pricing policy.
At 30.06.15 For instruments held at 30.06.15
Copper production hedged Weighted average remaining period from 1 July 2015 Covering a period up
tonnes Months to:
Centinela 2,400 0.5 31-01-2016
(iii) Foreign exchange derivativesThe Group periodically uses foreign exchange derivatives to reduce its exposure
to fluctuations in the exchange rates influencing operating costs and the fair value of non-US dollar denominated assets or
liabilities. (iv) Interest derivativesThe Group periodically uses interest derivatives to reduce its exposure to
interest rate movements.- Interest rate swapsThe Group has used interest rate swaps to swap the floating rate interest
relating to the Centinela project financing and long-term loans at the Railway for fixed rate interest. At 30 June 2015 the
Group had entered into the contracts outlined below.
Start date Maturity date Actual notional amount Weighted Average Fixed Rate
$m %
Centinela 15-02-2011 15-08-2018 122.5 3.372
Railway and other transport services 12-08-2014 12-08-2019 150.0 1.634
The actual notional amount hedge depends upon the amount of the related debt currently outstanding.
6. Net finance expense
Six months Six months Year ended 31 December 2014
ended ended
30 June 2015 30 June 2014
$m $m $m
Investment income
Interest receivable 6.8 6.2 14.2
Fair value through profit or loss 2.0 2.1 2.6
8.8 8.3 16.8
Interest expense
Interest expense (15.6) (27.7) (44.4)
Preference dividends (0.1) (0.2) (0.2)
(15.7) (27.9) (44.6)
Other finance items
Time value effect of derivatives 0.1 (3.3) (5.1)
Unwinding of discount on provisions (4.8) (7.4) (9.0)
Impairment of available-for-sale investments - (26.3)
Foreign exchange 0.5 6.7 4.0
(4.2) (4.0) (36.4)
Net finance expense (11.1) (23.6) (64.2)
In the six months ended 30 June 2015, $24.0 million relating to net interest expense and other finance items at Antucoya
(six months ended 30 June 2014 - $9.1 million; year ended 31 December 2014 - $27.4 million), Centinela at June 2015 $12.7
million (six months ended 30 June 2014 - $23.7 million; year ended 31 December 2014 - $36.6 million) and Los Pelambres at
June 2015 $0.6 million (six months ended 30 June 2014 - $2.5 million; year ended 31 December 2014 - $3.8 million) was
capitalised during the period, and is consequently not included within the above table.
7. Taxation
The tax charge for the period comprised the following:
Six months Six months Year ended 31 December 2014
ended ended
30 June 2015 30 June 2014
$m $m $m
Current tax charge
Corporate tax (principally first category tax in Chile) (65.3) (167.4) (361.5)
Mining tax (royalty) (12.3) (36.2) (71.9)
Withholding tax (12.9) (231.1) (279.3)
Exchange gains/(losses) on corporate tax balances (0.3) (0.1) (0.6)
(90.8) (434.8) (713.3)
Deferred tax credit/(charge)
Corporate tax (principally first category tax in Chile) (18.0) (12.9) 10.2
Adjustment to deferred tax attributable to changes in tax rates - - (215.1)
Mining tax (royalty) (11.0) (7.2) (7.2)
Withholding tax provision (1.9) 182.3 222.5
(30.9) 162.2 10.4
Total tax charge (income tax expense) (121.7) (272.6) (702.9)
The rate of first category (i.e. corporate) tax in Chile is currently 22.5% (six months ended 30 June 2014 - 20%; year
ended 31 December 2014 - 21%).
On 29 September 2014 a significant reform of the Chilean system was enacted into law. The corporate tax rates which now
apply in the period from 2014 to 2016 are: 2014 - 21%; 2015 - 22.5%; 2016 - 24%. The 21% rate for 2014 applied
retrospectively with effect from 1 January 2014.
From 2017 two alternative taxation systems will apply - either the partially-integrated system or the attributable system.
The default position for the Group's operating companies is the partially-integrated system. The companies can each elect
to apply the attributable system, provided there is unanimous agreement from that company's shareholders.
Under the partially-integrated system the corporate tax rate will be 25.5% in 2017 and 27% from 2018 onwards. The company's
shareholders will pay withholding tax based on the cash distributions made by the company, as with the current tax system.
If the company's shareholders are not tax resident in countries with applicable tax treaties with Chile the withholding tax
rate will be 17.45%, and so if the company distributes all of its earnings the total corporate and withholding tax burden
will be 44.45%. If the company's shareholders are tax resident in countries with applicable tax treaties with Chile the
withholding tax will be 8%, and so if the company distributes all of its earnings the total corporate and withholding tax
burden will be 35%.
Under the attributable system the corporate tax rate will be 25% from 2017 onwards. The company's shareholders must pay
withholding based on the profits earned by the company in the period, rather than based on cash distributions, at a rate of
10%. The total tax burden will therefore be 35%.
In order for any of the Group's operating companies to apply the attributable system rather than the default
partially-integrated system, that company's shareholders must make a unanimous election to the Chilean Revenue Service by
November 2016. The attributable system will then apply to that company for 5 years before it is possible to make a further
election to move to the partially-integrated system if the company does not wish to continue with the attributable system
at that point.
The Group's deferred tax balances were recalculated in 2014 using the new tax rates which are expected to apply in the
future periods when the temporary differences are expected to reverse. Given that the partially integrated system is the
default system for the Group's operating companies, and is the system which will apply unless the companies' shareholders
make a unanimous election to adopt the attributable system, the partially integrated system rates were used when
recalculating the deferred tax balances. This resulted in an increase in the net deferred tax liabilities during 2014 of
$220.6 million, which was reflected via a deferred tax charge in the income statement. This resulted in a total effective
tax rate for the Group in 2014 of 45.9%. Excluding this deferred tax charge, the effective tax rate for the Group in 2014
would have been 31.9%. The impact on net earnings of this deferred tax charge was $142.2 million and the impact on 2014
earnings per share was 14.4 cents per share.
The Group's mining operations are also subject to a mining tax (royalty). From 1 January 2013 production from Los
Pelambres, the Tesoro Central and Mirador pits at Centinela Cathodes and Michilla have been subject to the mining tax at a
rate of 4% applied to taxable operating profit, and Centinela has been subject to a rate of 5%. Production from the Tesoro
North-East pit and the run-of-mine processing at Centinela Cathodes has been subject to a rate of 5%-14% of taxable
operating profit based on a sliding scale with minimum rate of 5% applying to operations with an operating profit margin of
below 35% and maximum rate of 14% applied to operations with an operating profit margin above 85%.
In addition to first category tax and the mining tax, the Group incurs withholding taxes on any remittance of profits from
Chile and deferred tax is provided on undistributed earnings to the extent that remittance is probable in the foreseeable
future. Withholding tax is levied on remittances of profits from Chile at 35% less first category (i.e. corporate) tax
already paid in respect of the profits to which the remittances relate.
Six months ended Six months ended Year ended
30 June 2015 30 June 2014 31 December 2014
$m % $m % $m %
Profit before tax 297.3 820.8 1,509.9
Tax at the Chilean corporate tax rate of 22.5% (2014 - 21%) (66.9) 22.5 (164.2) 20.0 (317.1) 21.0
Tax effect of share of results of associates and joint ventures - (1.6) 0.2 (0.9) 0.1
Effect of increase in future first category tax rates on deferred tax balances (11.5) 3.9 - - (215.1) 14.3
Items not subject to or deductible from first category tax (1.0) 0.3 (14.8) 1.8 (33.5) 2.2
Royalty (23.3) 7.8 (43.4) 5.3 (79.1) 5.2
Withholding tax (14.8) 5.0 (48.8) 5.9 (56.8) 3.8
Exchange differences (0.3) 0.1 0.2 - (0.4) -
Tax expense and effective tax rate for the period (117.8) 39.6 (272.6) 33.2 (702.9) 46.6
The tax charge for the six months ended 30 June 2015 was $117.8 million and the effective tax rate was 39.6%. This rate
varied from the standard rate (comprising first category tax) principally due to the effect of items not deductible from
first category tax (mainly corporate items which principally comprise exploration and evaluation costs), the effect of the
increase in future first category tax rates on deferred tax balances, a withholding tax charge of $14.8 million and the
effect of the mining tax which resulted in a charge of $23.3 million.
8. Discontinued operations
(i) On 24 April, 2015 the Group entered into a sale agreement to dispose of Aguas de Antofagasta S.A. ("ADASA"), which
carried out of the group´s water operations. The disposal was completed on 2 June 2015.The results of ADASA for the period
prior to disposal as well as the profit on disposal have been presented on the "Profit for the period from discontinued
operations" line in the income statement, reflecting the following amounts:
Six months Six months Year ended
ended ended 31 December
30 June 2015 30 June 2014 2014
$m $m $m
Turnover 53.9 59.6 124.9
Total operating costs (34.9) (30.5) (63.4)
Net finance income (0.1) 0.8 2.1
Profit before tax 18.9 29.9 63.6
Attributable tax expense (3.9) (6.5) (19.9)
Profit of discontinued operations 15.0 23.4 43.7
Profit on disposal of discontinued operations1 857.6 - -
Attributable tax expense2 (253.1) - -
Net profit attributable to discontinued operations (attributable to owners of the Company) 619.5 23.4 43.7
1 Profit on disposal included a loss of $3.9 million related to the accumulated currency translation adjustment relating to
ADASA which has been reclassified from translation reserves in other comprehensive income to the income statement upon
disposal.
2 Tax expense includes $133.0 million related to withholding tax.
During the period, Aguas de Antofagasta S.A., contributed $21.7 million to the Group´s net cash flow from operating
activities, $19.2 million in respect to net cash used in investing activities and paid $2.0 million in net cash provided in
financing activities.
(ii) Disposal of Aguas de Antofagasta S.A.
On 2 June 2015, the Group disposed of its 100% interest in Aguas de Antofagasta S.A. ("ADASA").The proceeds on disposal of
$967.2 million were received in cash. The gain on disposal of ADASA is analysed below. No investment was retained in the
former subsidiary.
The net assets of Aguas de Antofagasta S.A. at the date of disposal were as follows:
At 31 May 2015
$m
Intangibles 113.7
Property, plant and equipment 66.9
Inventories 2.0
Current tax asset 2.5
Trade receivables 20.9
Cash and cash equivalents 19.9
Trade payables (18.3)
Borrowings (80.2)
Retirement benefit obligation (2.8)
Long-term provision (1.6)
Deferred tax liabilities (13.4)
Total carrying amount disposed 109.6
Satisfied by:
Cash and cash equivalents 967.2
Net cash inflow arising on disposal:
Consideration received in cash and cash equivalents 967.2
Less: Cash and cash equivalents disposed of (19.9)
947.3
9. Earnings per share
Basic and diluted earnings per share is calculated on profit after tax and non-controlling interests giving net earnings of
$705.8 million (six months ended 30 June 2014 - $330.8 million, year ended 31 December 2014 - $459.8 million) and amounted
to 9.8 cents and based on 985,856,695 ordinary shares. There was no potential dilution of ordinary shares in any period.
10. Dividends
The Board has declared an interim dividend of 3.1 cents per ordinary share for the 2015 half year (2014 half year - 11.7
cents). Dividends are declared and paid gross. Dividends actually paid in the period and recognised as a deduction from
net equity under IFRS were 9.8 cents per ordinary share (2014 half year - 86.1 cents), representing the final dividend
declared in respect of the previous year.
The interim dividend will be paid on 8 October 2015 to ordinary shareholders that are on the register at the close of
business on 18 September 2015. Shareholders can elect (on or before 21 September 2015) to receive this interim dividend in
US Dollars, Pounds Sterling or Euro, and the exchange rate to be applied to interim dividends to be paid in Pounds Sterling
or Euro will be set as soon as reasonably practicable after that date (which is currently anticipated to be on 24 September
2015). Further details of the currency election timing and process (including the default currency of payment) are
available on the Antofagasta plc website (www.antofagasta.co.uk) or from the Company's registrar, Computershare Investor
Services PLC on +44 870 702 0159.
11. Intangible assets
Six months Six months Year ended 31 December 2014
ended ended
30 June 2015 30 June 2014
$m $m $m
Balance at the beginning of the period 118.6 133.0 133.0
Additions - - 14.1
Acquisition 150.1 - -
Disposal (113.7) - -
Amortisation (2.4) (4.9) (10.9)
Foreign currency exchange difference (2.5) (5.2) (17.6)
Balance at the end of the period 150.1 122.9 118.6
The opening balance related to a 30 year concession to operate the water rights and facilities in the Antofagasta Region of
Chile which the Group's wholly-owned subsidiary, Aguas de Antofagasta S.A., acquired in December 2003 and any other
subsequent additions or acquisitions subject to the terms of the concession. This intangible asset was being amortised on a
straight-line basis over the life of the concession, or the useful life of any component part if less.
On 2 June 2015, the Group sold the 100% of the wholly-owned subsidiary, Aguas de Antofagasta S.A. to Empresas Públicas de
Medellin and the Group derecognised all the asset of its subsidiary at the date of the sale (See Note 14).
12. Property, plant and equipment
Mining Railway and other transport Water Concession Six months Six months Year ended 31 December 2014
ended ended
30 June 2015 30 June 2014
$m $m $m $m $m $m
Balance at the beginning of the period 7,963.4 198.3 52.2 8,213.9 7,424.8 7,424.8
Additions 572.3 7.2 16.4 595.9 767.3 1,581.0
Reclassification 66.6 - - 66.6 28.4 (0.8)
Acquisition 20.8 - - 20.8 - -
Adjustment to capitalised decommissioning provisions - - - - 7.5 (48.1)
Depreciation (238.7) (13.8) - (252.5) (242.6) (595.1)
Depreciation capitalised (40.4) - - (40.4) (44.7) (26.4)
Assets derecognized due to loss of control of subsidiary - - - - - (94.4)
Asset disposals (0.7) (0.2) (66.9) (67.8) (0.4) (6.3)
Foreign currency exchange difference - 0.3 (1.7) (1.4) (2.7) (7.6)
Balance at the end of the period 8,343.3 191.8 - 8,535.1 7,937.6 8,227.1
Depreciation of 40.4 million (30 June 2014 - $44.7 million; 31 December 2014 - $26.4 million) has been capitalised within
property, plant and equipment or inventories, and accordingly is excluded from the depreciation charge recorded in the
income statement.
Future capital commitments at 30 June 2015 were $401.7 million (30 June 2014 - $589.8 million; 31 December 2014 - $253.2
million) of which $157.4 million were related to the development of Oxides Encuentro project.
Additions include $167.4 million related to property plant and equipment of Twin Metals as part of the Duluth acquisition.
13. Available-for-sale investments
Six months Six months Year ended 31 December 2014
ended ended
30 June 2015 30 June 2014
$m $m $m
Balance at the beginning of the period 15.6 16.6 16.6
Additions - 1.5 5.9
Reclassification (9.4) - -
Movements in fair value (1.3) (2.9) (6.1)
Foreign currency exchange difference (0.4) 0.5 (0.8)
Balance at the end of the period 4.5 15.7 15.6
Available-for-sale investments represent those investments which are not subsidiaries, associates or joint ventures and are
not held for trading purposes. The fair value of all equity investments are based on quoted market prices.
The reclassification of $9.4 million is related with the acquisition of Duluth Metals Limited ("Duluth"). As at 31 December
2014 the Group held 17.2% of Duluth's share capital, with a fair value of US$9.4 million, accounted for as an available for
sale investment. As explained in Note 14, in January 2015 the Group completed its acquisition of 100% of Duluth. Duluth
holds a 60% stake in Twin Metals Minnesota Limited ("Twin Metals"), a company in which the Group held a 40% stake as at
December 2014. Accordingly, as a consequence of the acquisition of Duluth the Group has a 100% interest in Duluth and as a
result of this a 100% interest in Twin Metals. From January 2015 Twin Metals has therefore been consolidated as a 100%
subsidiary of the Group, with this $9.4 million balance forming part of the total consideration reflected in the accounting
for the acquisition of the subsidiary.
14. Duluth Metals Limited transaction
In January 2015 the Group completed its acquisition of 100% of Duluth Metals Limited ("Duluth"). The principal asset of
Duluth was its 60% stake in Twin Metals Minnesota Limited ("Twin Metals"), a company in which the Group held the remaining
40% stake as at December 2014. The principal asset of Twin Metals is its copper-nickel-PGM deposit in north-eastern
Minnesota, and the transaction has accordingly been accounted for as the acquisition by the Group of the remaining 60%
interest in that asset.
Immediately prior to the completion of the transaction the Group held 17.2% of Duluth's share capital. The fair value of
the consideration transferred to acquire the remaining 82.8% of the share capital of Duluth in January 2015 was $44.3
million, reflecting the agreed acquisition price of C$0.45 per share. In addition, transaction costs of $6.3 million have
been included as part of the cost of the asset acquisition. The carrying value of the Group's existing investment in
associate balance relating to its 40% interest in Twin Metals at the date of the transaction in January 2015 was $67.4
million, and the carrying value of the Group's existing available for sale investment balance relating to its 17.2% holding
of Duluth's share capital at that date was $9.4 million. As part of the acquisition agreement the Group also agreed to
redeem convertible debentures previously issued by Duluth at a cash cost of $31.7 million, and has also acquired the other
sundry net liabilities of Duluth.
This has resulted in the Group consolidating 100% of the assets and liabilities relating to Twin Metals with effect from
January 2015. The principal assets recognised at that date were an intangible asset balance of $150.1 million reflecting
the value of the mining property assets, and a property, plant & equipment balance of $20.8 million relating to land and
buildings. In addition, a liability of $31.7 million was recognised in respect of the Duluth convertible debentures which
were subsequently redeemed by the Group, along with $11.8 million of other sundry net liabilities of Duluth and Twin
Metals.
15. Borrowings
At 30.06.15 At 30.06.14 At 31.12.14
$m $m $m
Los Pelambres
Corporate loans (69.8) (315.0) (87.2)
Short-term loan (246.0) - (206.0)
Finance leases (10.1) (14.4) (12.5)
Centinela
Project financing (senior debt) (887.3) (881.7) (884.1)
Shareholder loan (subordinated debt) (170.6) (163.3) (167.0)
Corporate loans - (89.7) -
Finance leases - (0.1) (0.1)
Antucoya
Project financing (senior debt) (623.3) (436.5) (572.7)
Shareholder loan (subordinated debt) (282.2) (176.1) (241.7)
Finance leases (0.6) (1.7) (1.1)
Corporate and other items
Finance leases (27.8) (33.0) (29.7)
Railway and other transport services
Long-term loans (148.6) - (148.6)
Finance leases (2.5) - (3.2)
Water concession
Long-term loan - - (14.6)
Andino
Bonds (3.0) (3.0) (3.0)
Short-term loans (1.5) (1.5) (1.5)
Preference shares (3.1) (3.4) (3.1)
Total (see Note 17) (2,476.4) (2,119.4) (2,376.1)
At 30 June 2015 $48.0 million (30 June 2014 - $47.5 million; 31 December 2014 - $67.5 million) of the borrowings has fixed
rate interest and $2,428.4 million (30 June 2014 - $2,071.9 million; 31 December 2014 - $2,308.6 million) has floating rate
interest. The Group periodically enters into interest rate derivative contracts to manage its exposure to interest rates.
As explained in Note 5, these include interest rate swaps which have the effect of converting $272.5 million of floating
rate borrowings into fixed rate borrowings. Details of any derivative instruments held by the Group are given in Note
6(c).
16. Share capital and share premium
There was no change in share capital or share premium in the six months ended 30 June 2015 or the comparative periods.
17. Reconciliation of profit before tax to net cash inflow from operating activities
Six months Six months Year ended 31 December 2014
ended ended
30 June 2015 30 June 2014
$m $m $m
Profit before tax from continuing and discontinued operations 1,173.8 850.7 1,573.5
Depreciation and amortisation 252.5 247.5 606.0
Net profit on disposals 1.3 (0.2) (24.1)
Profit on disposal of discontinued operation (857.6) - -
Net finance expense 11.1 22.8 62.1
Share of results from associates and joint ventures 0.2 7.5 4.1
(Increase)/decrease in inventories (46.0) (17.0) 32.1
Decrease in debtors 251.9 6.2 124.8
Increase in creditors and provisions 20.5 52.5 129.3
Cash flows from continuing and discontinued operations 807.7 1,170.0 2,507.8
18. Analysis of changes in net (debt)/cash
At 01.1.15 Cash flows Other Exchange At 30.06.15
$m $m $m $m $m
Cash and cash equivalents 845.4 1,014.4 - (6.6) 1,853.2
Liquid investments 1,529.1 (162.3) - - 1,366.8
Total cash and cash equivalents and liquid investments 2,374.5 852.1 - (6.6) 3,220.0
Bank borrowings due within one year (276.0) (28.6) (154.6) 0.2 (459.0)
Bank borrowings due after one year (2,050.5) (145.8) 221.4 1.5 (1,973.4)
Finance leases due within one year (8.5) 5.7 (3.8) (0.1) (6.7)
Finance leases due after one year (38.0) - 2.8 1.0 (34.2)
Preference shares (3.1) - - - (3.1)
Total borrowings (2,376.1) (168.7) 65.8 2.6 (2,476.4)
Net (debt)/cash (1.6) 683.4 65.8 (4.0) 743.6
At 30 June 2015 other category mainly reflects derecognition of $80.2 million loan borrowing at Aguas Antofagasta S.A.
Net cash
Net cash at the end of each period was as follows:
At 30.06.15 At 30.06.14 At 31.12.14
$m $m $m
Cash, cash equivalents and liquid investments 3,220.0 2,264.4 2,374.5
Total borrowings (2,476.4) (2,119.4) (2,376.1)
743.6 145.0 (1.6)
19. Litigation and Contingent liabilities
Antofagasta plc or its subsidiaries are subject to various claims which arise in the ordinary course of business. No
provision has been made in the half-yearly financial report and none of these claims are currently expected to result in
any material loss to the Group. Details of the principal claims in existence either during, or at the end of, the period
and the current status of these claims are set out below:
Los Pelambres - Mauro tailings dam
As previously announced, during 2008 Los Pelambres entered into binding settlements in respect of litigation relating to
the Mauro tailings dam. Since then, there have been a series of civil claims filed by some members of the Caimanes
community (which is located near the Mauro tailings dam) seeking to stop the operation of the dam. Many of these claims
have been rejected by the relevant courts.
Two of these claims are currently ongoing and Los Pelambres is continuing to take necessary steps to protect its position.
In the first claim, the plaintiffs have argued that the tailings dam affects their alleged water rights and the
environment. This allegation is based on assertions that the dam interferes with the flow and quality of the water in the
Pupío stream, a stream that passes through the Caimanes community. This claim was rejected by the Civil Court in Los Vilos
in a judgment issued in November 2012, which was then affirmed by the Court of Appeals of La Serena in August 2013. In
October 2014, the Supreme Court, by split decision, upheld the appeal and ordered Los Pelambres to submit back to the Civil
Court in Los Vilos, within one month, an implementation plan for works that would ensure that the operation of the dam does
not affect the normal flow and quality of the waters of the Pupío stream. Los Pelambres believes that the requirements of
this order have already been met as Los Pelambres has undertaken significant works to ensure that the flow of the Pupío
stream is not altered and that the operation of the tailings dam does not affect the quantity or quality of these waters -
something that has been confirmed by accredited independent assessors and other public services in Chile and confirmed by
the Supreme Court in a parallel decision. Nevertheless, on 21 November 2014, Los Pelambres submitted this plan to the Civil
Court in Los Vilos. On 6 March 2015 that Court found that the plan submitted by Los Pelambres was not sufficient to
address the requirements of the Supreme Court order, and as a consequence Los Pelambres must destroy part, or all, of the
tailings dam wall. Los Pelambres considers the ruling to be flawed, has appealed the Court's decision and is considering
the exercise of all available legal measures that may be required to overturn this decision and address its potential
consequences.
In the second claim, the plaintiffs are seeking demolition of the dam on the basis of the risk that its collapse would pose
to the community. The Civil Court in Los Vilos issued a decision in May 2014 denying the demolition request but ordering
Minera Los Pelambres to undertake some additional measures to ensure protection of the community, in the event of a major
earthquake or similar natural event. These measures would need to be reviewed and agreed with the technically competent
bodies responsible for supervision of the dam. The decision of the Court of Los Vilos was appealed by both the plaintiffs
and Los Pelambres to the Court of Appeal of La Serena. In April 2015 the Court of Appeal of La Serena upheld Los
Pelambres's appeal, overturning the decision of the Court of Los Vilos and rejecting completely the plaintiff's claim. The
decision of the Court of Appeal has been appealed by the plaintiffs to the Supreme Court.
Los Pelambres - Cerro Amarillo Waste Dump
In 2004, Los Pelambres received all of the required authorisations from the Chilean government to deposit a waste-rock dump
("Cerro Amarillo Waste Dump") in its current location which, according to the then official Chilean maps (1996), was
located within Chile. In 2007 Chile modified the official maps in this area without making the changes public. Los
Pelambres stopped using the relevant area of the Cerro Amarillo Waste Dump in 2011.
In February 2012, a binational border commission, established to clarify the exact position of the Chile/Argentina border,
determined accurately the location of the border in the area of the Cerro Amarillo Waste Dump, which showed that part of
the Cerro Amarillo Waste Dump was now located in Argentina.
In May 2014 Xstrata Pachón S.A. ("Xstrata Pachón"), a subsidiary of Glencore and the holder of the mining properties on the
Argentinian side of the border, filed a claim against Los Pelambres before the Federal Court of San Juan, Argentina,
alleging that Los Pelambres had unlawfully deposited waste-rock on its property. Xstrata Pachón is seeking the removal of
the waste-rock that is on the Argentinian side of the border to Chile and compensation for any other alleged damage.
Xstrata Pachón has also filed a criminal complaint before a different Federal Court of San Juan alleging that Los Pelambres
has violated several Argentinian laws relating to the misappropriation of land, unlawful appropriation of water bodies and
that people's health is in jeopardy from the alleged contamination that the Cerro Amarillo Waste Dump might generate.
In both cases, Los Pelambres has submitted preliminary objections to the Argentinian courts, which are still pending. Once
they are resolved, each party may appeal to higher courts. The whole court process to final judgement could take several
years.
In March 2015, the Federal Court of San Juan issued an interim ruling ordering certain specific measures aimed at the
environmental closure of the portion of the waste dump in Argentina, once the relevant permits have been granted. Los
Pelambres has filed an appeal before the Court of Appeals of Mendoza seeking to lift the order of the Court of San Juan.
As the Cerro Amarillo Waste Dump is a pile of inert waste rock, any potential future environmental impact could be easily
prevented with the implementation of an appropriate environmental closure plan, which is the accepted and recommended
practice, but this solution requires the willingness of all the parties. To date there has been no adverse environmental
impact.
Los Pelambres has offered to implement a comprehensive closure plan for the whole dump (both in Argentina and Chile) to
settle the dispute, in line with the requirements of the Provincial Authorities of San Juan, but Xstrata Pachón has
rejected this proposal outright, even though this solution would address all of the alleged environmental concerns.
Los Pelambres will exercise all available legal avenues to defend its position and will also seek to reach an understanding
with the relevant authorities in Argentina to allow for the environmental closure of the Cerro Amarillo Waste Dump.
Tethyan Copper Company Pty Limited
The Group holds a 50% interest in Tethyan Copper Company Pty Limited ("Tethyan"), its joint venture with Barrick Gold
Corporation ("Barrick"). In February 2011, Tethyan submitted an application for a mining lease to the Government of
Balochistan which was subsequently rejected in November 2011. Tethyan is pursuing two international arbitrations in order
to protect its legal rights: one against the Government of Pakistan under the auspices of the International Centre for
Settlement of Investment Disputes ("ICSID"), and another against the Government of Balochistan under the auspices of the
International Chamber of Commerce ("ICC"). Tethyan is seeking monetary damages only and is no longer seeking the grant of a
mining lease at Reko Diq. During 2014, Tethyan presented arguments on preliminary issues before the ICC tribunal (including
as to the jurisdiction of the ICC tribunal) and on jurisdiction and merits before the ICSID tribunal. Both arbitrations
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