REG - Antofagasta PLC - HALF YEARLY FINANCIAL REPORT JUNE 2017 <Origin Href="QuoteRef">ANTO.L</Origin> - Part 4
22/08/2017 07:06
- Part 4: For the preceding part double click ID:nRSV5934Oc
The balance sheet mark-to-market adjustments in respect of derivatives at the end of each period, and the total effect on
the income statement and reserves for each period are as follows. The impact on reserves is shown before tax and
non-controlling interests.
For the six months ended 30 June 2017
Impact on income statement Impact on reserves Fair value recorded on balance sheet
Realised losses Losses resulting from mark-to-market adjustments on hedging instruments Total net loss Gains resulting from mark-to-market adjustments on hedging instruments Net financial liability
$m $m $m $m $m
Commodity Derivatives
Centinela - (4.2) (4.2) - (3.1)
Antucoya - (0.4) (0.4) - (0.4)
Interest Derivatives
Centinela (0.6) - (0.6) 0.5 (0.6)
Railway and other transport services (0.2) - (0.2) - -
(0.8) (4.6) (5.4) 0.5 (4.1)
For the six months ended 30 June 2016
Impact on income statement Impact on reserves Fair value recorded on balance sheet
Realised gains/(losses) Losses resulting from mark-to-market adjustments on hedging instruments Total net loss Gains/(losses) resulting from mark-to-market adjustments on hedging instruments Net financial asset/(liability)
$m $m $m $m $m
Commodity Derivatives
Centinela 0.1 (0.3) (0.2) 0.4 0.4
Interest Derivatives
Centinela (2.7) - (2.7) 0.6 (2.4)
Railway and other transport services (1.0) - (1.0) (0.7) (1.6)
-- (3.6) (0.3) (3.9) 0.3 (3.6)
For the year ended 31 December 2016
Impact on income statement Impact on reserves Fair value recorded on balance sheet
Realised losses Losses resulting from mark-to-market adjustments on hedging instruments Total net loss Gains resulting from mark-to-market adjustments on hedging instruments Net financial asset/(liability)
$m $m $m $m $m
Commodity Derivatives
Centinela (2.2) 1.0 (1.2) - 1.0
Interest Derivatives
Centinela (2.6) - (2.6) 1.8 (1.2)
Railway and other transport services (1.0) - (1.0) 0.5 -
(5.8) 1.0 (4.8) 2.3 (0.2)
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 30.06.2017 At 30.06.2016 At 31.12.2016 $m $m $m Analysed between: Current assets 0.1 0.4 2.2 Non-current assets 0.1 - 0.2 Current liabilities (4.2) (1.9) (2.0) Non-current liabilities (0.1) (2.1) (0.5) (4.1) (3.6) (0.1) (ii) Outstanding derivative financial instrumentsa) Commodity derivativesThe Group periodically uses commodity derivatives to manage its exposure
to commodity price fluctuations. As at the end of the period the open instruments details are: - Min/max instruments At 30.06.2017 For instruments held at 30.06.2017 Copper production hedgedtonnes Weighted average remaining period from 1 July 2017months Covering a period up to: Weighted average floor$/lb Weighted average cap$/lb Centinela 36,000 3.5 31.12.2017 2.27 2.82 Antucoya 20,400 3.5 31.12.2017 2.40 2.98 b) Interest derivativesThe Group periodically uses interest derivatives to
reduce its exposure to interest rate movements. As at the end of the period the open instruments details are:- 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 2016 the Group had entered into the contracts outlined below. Start date Maturity date Actual notional amount Weighted Average Fixed Rate $m % Centinela 15.02.2011 15.08.2018 52.5
3.372 Railway and other transport services 12.08.2014 12.08.2019 90.0 1.634 The actual notional amount hedged depends upon the amount of the related debt currently outstanding.
At 30.06.2017 At 30.06.2016 At 31.12.2016
$m $m $m
Analysed between:
Current assets 0.1 0.4 2.2
Non-current assets 0.1 - 0.2
Current liabilities (4.2) (1.9) (2.0)
Non-current liabilities (0.1) (2.1) (0.5)
(4.1) (3.6) (0.1)
(ii) Outstanding derivative financial instrumentsa) Commodity derivativesThe Group periodically uses
commodity derivatives to manage its exposure to commodity price fluctuations. As at the end of the period the open
instruments details are: - Min/max instruments
At 30.06.2017 For instruments held at 30.06.2017
Copper production hedgedtonnes Weighted average remaining period from 1 July 2017months Covering a period up to: Weighted average floor$/lb Weighted average cap$/lb
Centinela 36,000 3.5 31.12.2017 2.27 2.82
Antucoya 20,400 3.5 31.12.2017 2.40 2.98
b) Interest derivativesThe Group periodically uses interest derivatives to reduce its exposure to interest rate
movements. As at the end of the period the open instruments details are:- 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 2016 the Group had entered into the contracts outlined below.
Start date Maturity date Actual notional amount Weighted Average Fixed Rate
$m %
Centinela 15.02.2011 15.08.2018 52.5 3.372
Railway and other transport services 12.08.2014 12.08.2019 90.0 1.634
The actual notional amount hedged depends upon the amount of the related debt currently outstanding.
7. Net finance expense
Six months Six months Year ended 31.12.2016
ended ended
30.06.2017 30.06.2016
$m $m $m
Investment income
Interest receivable 4.7 9.4 20.4
Gains on fair value through profit or loss 5.5 3.7 6.5
10.2 13.1 26.9
Interest expense
Interest expense (48.6) (31.9) (86.0)
Preference dividends - (0.1) (0.1)
(50.5) (32.0) (86.1)
Other finance items
Time value element of changes in the fair value of derivatives options (4.6) (0.3) 1.0
Unwinding of discount on provisions (5.4) (4.9) (10.0)
Impairment of available-for-sale investments - - -
Foreign exchange (5.4) 3.3 (2.9)
(15.4) (1.9) (11.9)
Net finance expense (53.8) (20.8) (71.1)
In the six months ended 30 June 2017, amounts capitalised and consequently not included within the above table were as
follows: Antucoya of nil (six months ended 30 June 2016 - $8.9 million; year ended 31 December 2016 - $9.2 million), $3.3
million at Centinela (six months ended 30 June 2016 - $19.0 million; year ended 31 December 2016 - $2.3 million) and $0.5
million at Los Pelambres (six months ended 30 June 2016 - $2.0 million; year ended 31 December 2016 - $0.5 million).
8. Taxation
The tax charge for the period comprised the following:
Six months Six months Year ended 31.12.2016
ended ended
30.06.2017 30.06.2016
$m $m $m
Current tax charge
Corporate tax (principally first category tax in Chile) (96.1) (57.1) (222.1)
Mining tax (royalty) (28.4) (13.2) (35.3)
Withholding tax (20.1) (8.3) (3.8)
Exchange gain/(losses) on corporate tax balances 0.3 5.3 -
(144.3) (73.3) (261.2)
Deferred tax credit/(charge)
Corporate tax (principally first category tax in Chile) (93.8) (25.1) (27.5)
Exceptional items - - 204.9
Mining tax (royalty) 3.6 (19.6) (24.8)
(90.2) (44.7) 152.6
Total tax charge (income tax expense) (234.5) (118.0) (108.6)
The rate of first category (i.e. corporate) tax in Chile is currently 25.5% (2016 - 24%).
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, El Tesoro Central
and Mirador pits at Centinela cathodes and Antucoya are currently subject to a rate of 4% of taxable operating profit and
Centinela concentrates of 5%, and production from El 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.
Six months ended30.06.2017 Six months ended30.06.2016 Year ended31.12.2016 (Before Exceptional Items) Year ended31.12.2016 (After Exceptional Items)
$m % $m % $m % $m %
Profit before tax 687.2 276.5 875.9 - 284.6
Tax at the Chilean corporate tax rate of 25.5% (2016 - 24%) (175.5) 25.5 (66.3) 24.0 (210.2) 24.0 (68.3) 24.0
Provision against carrying value of assets (exceptional items) - - - - - - 63.0 (22.1)
Effect of increase in future first category tax rates on deferred tax balances (0.4) 0.1 2.3 (0.8) (24.6) 2.8 (24.6) 8.6
Adjustment in respect of prior years (9.9) 1.4 - - - - - -
Items not deductible from first category tax (15.6) 2.3 (8.7) 3.1 (23.7) 2.7 (23.7) 8.3
Items not subject to first category tax 7.0 (1.0) - - 8.5 (1.0) 8.5 (2.9)
Carry-back tax losses resulting in credits at historic tax rates - - (11.8) 4.3 (5.4) 0.6 (5.4) 1.8
Mining Tax (royalty) (24.8) 3.6 (32.8) 11.9 (60.1) 6.9 (60.1) 21.1
Withholding tax (20.1) 2.9 (8.3) 3.0 - - - -
Withholding tax - adjustment to previous year - - - - (3.8) 0.4 (3.8) 1.3
Tax effect of share of profit of associates and joint ventures 5.5 (0.8) 2.3 (0.8) 5.6 (0.6) 5.6 (1.9)
Net other items (0.5) 0.0 5.9 (1.9) 0.2 - 0.2 -
Tax expense and effective tax rate for the period (234.5) 34.0 (118.0) 42.7 (313.5) 35.8 (108.6) 38.2
The tax charge for 2017 was $234.5 million and the effective tax rate was 34.0%. This effective tax rate varied from the
statutory rate principally due to the effect of expenses not deductible for Chilean corporate tax purposes (principally the
funding of expenses outside of Chile) and items not subject to first category tax (total impact of $8.6 million or 1.3%),
the mining tax (impact of $24.8 million or 3.6%) and the withholding tax paid mainly due to on remittances of profits from
Chile (impact of $20.1 million or 2.9%). The exceptional impairment provisions at end 2016 impacted on the overall tax
charge and the reconciliation of the effective tax rate, and accordingly the tax reconciliation above has been presented
both including and excluding the impact of the exceptional items.
The current and deferred tax relating to items that are charged directly to equity was $1.5 million (30 June 2016 - $1.5
million credit).
The main factor which is expected to impact the sustainability of the Group's existing effective tax rate (excluding
exceptional items) is the increase in the rate of first category (i.e. corporate) tax in Chile from the 2017 rate of 25.5%
to 27% in 2018.
There are no significant tax uncertainties which would require critical judgements, estimates or potential provisions.
9. Earnings per share
Basic and diluted earnings per share is calculated on profit after tax and non-controlling interests giving profit for the
period attributable to the owners of the parent of $290.5 million (six months ended 30 June 2016 - $88.1 million, year
ended 31 December 2016 - $158 million) and amounted to 29.7 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 10.3 cents per ordinary share for the 2017 half year (2016 half year - 3.1
cents). Dividends are declared and paid gross. Dividends actually paid in the period and recognised as a deduction from
net equity under IFRS were 3.1 cent per ordinary share (2016 half year - nil), representing the final dividend declared in
respect of the previous year.
The interim dividend will be paid on 6 October 2017 to ordinary shareholders that are on the register at the close of
business on 8 September 2017. Shareholders can elect (on or before 11 September 2017) 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 14 September
2017). 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 asset
At 30.06.2017 At 30.06.2016 At 31.12.2016
$m $m $m
Balance at the beginning of the period 150.1 150.1 150.1
Additions - - -
Amortisation - - -
Balance at the end of the period 150.1 150.1 150.1
The $150.1 million intangible asset reflects the value of Twin Metals' mining property assets. The mining properties will
be amortised once production commences.
12. Property, plant and equipment
Mining Railway and other transport At 30.06.2017 At 30.06.2016 At 31.12.2016
$m $m $m $m $m
Balance at the beginning of the period 8,576.1 161.4 8,737.5 8,601.1 8,601.1
Additions 437.0 12.4 449.4 445.3 921.7
Additions - depreciation capitalised 27.0 - 27.0 43.2 87.6
Reclassifications 2.2 - 2.2 - 3.7
Adjustment to capitalised decommissioning provisions - - - - 16.9
Depreciation (282.2) (7.8) (290.0) (247.3) (578.4)
Depreciation capitalised in PP&E (27.0) - (27.0) (43.2) (87.6)
Depreciation capitalised in inventories (30.5) - (30.5) 0.4 8.4
Provision against the carrying value of assets - - - - (215.6)
Asset disposals/write off - (0.1) (0.1) (0.4) (20.3)
Balance at the end of the period 8,702.6 165.9 8,868.5 8,799.1 8,737.5
At 30 June 2017 $57.5 million (30 June 2016 - $42.8 million; 31 December 2016 - $79.2 million) of depreciation in respect
of assets relating to Los Pelambres, Centinela and Antucoya has been capitalised within property, plant and equipment or
inventories, and accordingly is excluded from the depreciation charge recorded in the income statement as shown in Note
3(a).
At 30 June 2017 the Group had entered into contractual commitments for the acquisition of property, plant and equipment
amounting to $312.5 million (30 June 2016 - $975.1 million; 31 December 2016 - $196.1 million).
There have been no indicators of potential impairments during the first six months of 2017, and accordingly no impairment
reviews have been performed as at 30 June 2017. The Group performed impairment reviews in respect of the Centinela and
Antucoya operations at the 2016 year-end.
13. Investment in associates and joint ventures
Inversiones Hornitos ATI El Arrayan MineraZaldívar Energía Andina Tethyan Copper Six months ended Year ended
30.06.2017 31.12.2016
$m $m $m $m $m $m $m $m
Balance at the beginning of the year 71.3 6.5 21.9 983.7 3.2 - 1,086.6 1,149.1
Obligations on behalf of JV - - - - - (3.1) (3.1) (2.5)
Capital contribution - - - - 0.2 3.5 3.7 47.0
Capital decrease and others - - - - - - - (0.6)
Adjustment to Purchase price - - - - - - - (45.0)
Disposal - - - - (3.2) - (3.2) -
Losses in fair value of cash flow hedges deferred in reserves of associates - - (0.1) - - - (0.1) 4.4
Provision against carrying value of assets - - - - - - - (82.1)
Share of profit/(loss) before tax 8.4 (0.6) (0.4) 29.4 - (4.0) 32.8 36.4
Share of tax (2.1) 0.1 0.2 (9.4) - - (11.2) (13.0)
Share of income/(loss) from associate 6.3 (0.5) (0.2) 20.0 - (4.0) 21.6 23.4
Dividends received (8.4) - - - - - (8.4) (10.2)
Balance at the end of the year 69.2 6.0 21.6 1,003.7 0.2 - 1,100.7 1,086.6
Obligations on behalf of JV - - - - - (3.6) (3.6) (3.1)
The investments which are included in the $1,097.1 million balance at 30 June 2017 are set out below:
Investment in associates
(i) The Group's 40% interest in Inversiones Hornitos SA, which owns the 165MW Hornitos thermoelectric power
plant operating in Mejillones, in Chile's Antofagasta Region. The Group has a 16-year power purchase agreements with
Inversiones Hornitos SA for the provision of up to 40MW of electricity for Centinela.
(ii) The Group's 30% interest in ATI, which operates a concession to manage installations in the port of
Antofagasta.
(iii) The Group´s 30% interest in El Arrayan, which operates an 115MW wind-farm project. The Group has a 20-year
power purchase agreements with El Arrayan for the provision of up to 40MW of electricity for Los Pelambres.
Investment in joint ventures
(iv) The Group's 50% interest in Minera Zaldívar SpA ("Zaldívar"), an open-pit, heap-leach copper mine located in
Northern Chile, which produces approximately 100,000 tonnes of copper cathodes annually.
(v) The Group's 50.1% interest in Energia Andina, which is a joint venture with Origin Geothermal Chile Limitada
for the evaluation and development of potential sources of geothermal and solar energy.
In February 2017 the disposal of the interest in Javiera was agreed. The terms of the sale agreement indicated a
recoverable value for the interest in Javiera which was $8.1 million below the carrying value, and accordingly an
impairment provision for this amount was recognised in the 2016 year-end results. The disposal completed in May of 2017.
(vi) The Group's 50% interest in Tethyan Copper Company Limited ("Tethyan"), which is a joint venture with Barrick
Gold Corporation over Tethyan's mineral interest in Pakistan, which is now subject to international arbitration. As the net
carrying value of the interest in Tethyan is negative it is included within non-current liabilities, as the Group is liable
for its share for the joint ventures obligations.
Summarised financial information for the associates at June 2017 is as follows:
InversionesHornitos ATI El Arrayan Total Total
30.06.2017 30.06.2017 30.06.2017 30.06.2017 30.06.2016
$m $m $m $m $m
Cash and cash equivalents 22.5 1.1 5.0 28.6 225.1
Currentassets 36.6 9.4 11.8 57.8 113.0
Non-currentassets 288.3 133.9 244.1 666.3 1,708.8
Currentliabilities (32.3) (23.6) (12.2) (68.1) (177.6)
Non-currentliabilities (162.5) (103.2) (188.2) (453.9) (1,607.0)
Revenue 80.1 21.3 15.0 116.4 95.2
Profit/(loss) from continuing operations 15.5 (1.7) (0.5) 13.3 4.0
Othercomprehensiveincome - - (0.3) (0.3) (21.5)
Total comprehensiveincome/(loss) 15.5 (1.7) (0.8) 13.0 (17.5)
Summarised financial information for the joint ventures at June 2017 is as follows:
MineraZaldivar EnergíaAndina TethyanCopper Total Total
30.06.2017 30.06.2017 30.06.2017 30.06.2017 30.06.2016
$m $m $m $m $m
Cash and cash equivalent 128.0 0.5 3.4 131.9 49.1
Currentassets 522.6 0.1 0.2 522.9 333.5
Non-currentassets 1,559.0 - 0.2 1,559.2 1,847.0
Currentliabilities (89.2) - (10.7) (99.9) (95.6)
Non-currentliabilities (112.9) - (0.1) (113.0) (193.1)
Revenue 284.2 - - 284.2 243.8
Profit/(loss) aftertax 39.9 - (8.0) 31.9 64.7
Othercomprehensiveincome - - - - -
Total comprehensiveincome 39.9 - (8.0) 31.9 64.7
Notes to the summarised financial information
(i) The summarised financial information is based on the amounts included in the IFRS Financial Statements of the
associate or joint venture (ie. 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.
14. Available-for-sale investments
At 30.06.2017 At 30.06.2016 At 31.12.2016
$m $m $m
Balance at the beginning of the period 4.6 2.7 2.7
Additions - - -
Reclassification (0.4) - -
Movements in fair value - 1.2 1.7
Foreign currency exchange difference 0.2 0.2 0.2
Balance at the end of the period 4.4 4.1 4.6
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.
15. Borrowings and leases
At 30.06.2017 At 30.06.2016 At 31.12.2016
$m $m $m
Los Pelambres
Corporate loans - (34.6) (17.5)
Short-term loan (312.0) (272.1) (312.0)
Finance leases (51.3) (74.4) (62.2)
Centinela
Project financing (senior debt) (670.1) (817.5) (743.8)
Shareholder loan (subordinated debt) (188.7) (178.5) (183.6)
Short-term loan (200.0) (200.0) (200.0)
Antucoya
Project financing (senior debt) (573.0) (567.0) (608.7)
Shareholder loan (subordinated debt) (338.8) (322.7) (330.4)
Short-term loan (30.0) (104.9) (30.0)
Finance leases (46.3) - (16.2)
Corporate and other items
Long-term loan (497.7) (496.9) (497.2)
Finance leases (24.7) (26.3) (25.1)
Railway and other transport services
Long-term loans (89.6) (119.2) (89.4)
Finance leases (0.7) (2.5) (1.6)
Preference shares (2.8) (3.1) (2.5)
Total (3,025.7) (3,219.7) (3,120.2)
At 30 June 2017 $28.3 million (30 June 2016 - $100.7 million; 31 December 2016 - $29.1 million) of the borrowings has fixed
rate interest and $2,997.4 million (30 June 2016 - $3,119.1 million; 31 December 2016 - $3,091.1 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 $278.4 million of floating
rate borrowings into fixed rate borrowings. Details of any derivative instruments held by the Group are given in Note
5(c).
16. Share capital and share premium
There was no change in share capital or share premium in the six months ended 30 June 2017 or the comparative periods.
Details are shown in the Consolidated Statement of Changes in Equity.
17. Other reserves and retained earnings
At At At
30.06.2017 30.06.2016 31.12.2016
$m $m $m
Hedging reserves (1)
At 1 January (8.8) (44.1) (44.1)
Parent and subsidiaries net cash flow hedge fair value gains/(losses) (0.2) (3.6) (2.4)
Parent and subsidiaries net cash flow hedge gains/(losses) transferred to the income statement 0.6 3.6 4.1
Share of other comprehensive losses of equity accounted units, net of tax (0.1) (17.5) 3.1
Share of other comprehensive gains of equity accounted units, net of tax transferred to the income statement - - 31.6
Reclassification(6) 8.2 - -
Tax on the above (0.1) 0.7 (1.1)
At 30 June (0.4) (60.9) (8.8)
Available for sale revaluation reserves (2)
At 1 January (11.2) (12.9) (12.9)
Losses on available for sale investment (0.4) 1.2 1.7
At 30 June (11.6) (11.7) (11.2)
Foreign currency translation reserves (3)
At 1 January (2.3) (2.3) (2.3)
Parent and subsidiaries currency translation and exchange adjustments - - -
Tax on the above - - -
At 30 June (2.3) (2.3) (2.3)
Total other reserves per balance sheet (14.3) (74.9) (22.3)
Retained earnings (4)
At 1 January 6,548.6 6,416.4 6,416.4
Parent and subsidiaries profit for the period 268.9 78.4 269.3
Equity accounted units' loss after tax for the period 21.6 9.7 (111.3)
Actuarial gains/(losses) (5) 2.3 (1.5) 5.1
Reclassification (6) (8.2) - -
Tax relating to components of other comprehensive income (1.4) - (0.3)
Total comprehensive income for the period 6,831.8 6,503.0 6,579.2
Dividends paid (150.8) - (30.6)
At 30 June 6,681.0 6,503.0 6,548.6
(1) The hedging reserve records gains or losses on cash flow hedges that are recognised initially in equity, as described
in Note 5.
(2) The available for sale revaluation reserves record fair value gains or losses relating to available for sale
investment, as described in Note 14.
(3) Exchange differences arising on the translation of the Group's net investment in foreign controlled companies are taken
to the foreign currency translation reserve. The cumulative differences relating to an investment are transferred to the
income statement when the investment is disposed of.
(4) Retained earnings and movements in reserves of subsidiaries include those arising from the Group's share of joint
operations.
(5) Actuarial gains or losses relating long - term employee benefits.
(6) During the period $8.2 million was reclassified between the hedging reserve and retained earnings
18. Reconciliation of profit before tax to net cash inflow from operating activities
Six months Six months Year ended 31.12.2016
ended ended
30.06.2017 30.06.2016
$m $m $m
Profit before tax from continuing operations 689.1 276.5 284.6
Profit before tax from discontinued operations - (0.4) 35.1
Depreciation and amortisation 290.0 247.3 578.4
Net (profit)/loss on disposals (0.1) 0.2 19.7
Provision against carrying value of assets - - 456.6
Profit on disposal of discontinued operation - - (35.1)
Net finance expense 53.8 17.7 71.1
Share of (loss)/profit from associates and joint ventures (21.6) (9.7) 111.3
(Increase)/decrease in inventories (43.5) (13.8) 3.9
Decrease/(increase) in debtors 280.8 254.4 (124.9)
(Decrease)/increase in creditors and provisions (101.4) 1.9 56.6
Cash flows from continuing and discontinued operations 1,147.1 774.1 1,457.3
19. Analysis of changes in net (debt)/cash
At 01.01.2017 Cash flows Other Exchange At 30.06.2017
$m $m $m $m $m
Cash and cash equivalents 716.3 32.6 - (3.9) 745.0
Liquid investments 1,332.2 88.9 - - 1,421.1
Total cash and cash equivalents and liquid investments 2,048.5 121.5 - (3.9) 2,166.1
Bank borrowings due within one year (814.2) 92.5 (76.2) - (797.9)
Bank borrowings due after one year (2,198.4) 38.8 57.7 - (2,101.9)
Finance leases due within one year (22.6) 0.8 (3.0) 0.1 (24.7)
Finance leases due after one year (82.6) 16.6 (32.0) (0.4) (98.4)
Preference shares (2.4) - - (0.4) (2.8)
Total borrowings (3,120.2) 148.7 (53.5) (0.7) (3,025.7)
Net (debt)/cash (1,071.7) 270.2 (53.5) (4.6) (859.6)
Net debt
Net debt at the end of each period was as follows:
Six months Six months Year ended 31.12.2016
ended ended
30.06.2017 30.06.2016
$m $m $m
Cash, cash equivalents and liquid investments 2,166.1 2,180.1 2,048.5
Total borrowings (3,025.7) (3,219.7) (3,120.2)
Net debt (859.6) (1,039.6) (1,071.7)
20. Litigation and Contingent liabilities
Antofagasta plc or its subsidiaries are subject to various claims which arise in the ordinary course of business. None of
these claims are currently expected to result in any material loss to the Group. Details of the principal claims in
existence either during, or at the end of, the period and the current status of these claims are set out below:
Los Pelambres - Cerro Amarillo Waste Dump
In 2004, Los Pelambres received all of the required authorisations from the Chilean government to deposit waste-rock from
its mining activities in its current location (the "Cerro Amarillo Waste Dump"). According to the then official Chilean
maps (1996), this area was located entirely within Chile. In 2007, Chile modified the official maps in the area without
making the changes public. Based on the permits granted by the Chilean government, Los Pelambres used this area as a mining
waste dump from 2006 until 2011.
In February 2012, a binational border commission, established to clarify the exact position of the Chile/Argentina border,
installed some signposts indicating the border in the area which confirmed that part of the Cerro Amarillo Waste Dump was
located in Argentina.
In May 2014, Xstrata Pachón S.A. ("Xstrata Pachón"), a subsidiary of Glencore plc and the holder of the mining properties
on the Argentinian side of the border, filed a claim against Los Pelambres before the Federal Court of San Juan, Argentina,
alleging that Los Pelambres had unlawfully deposited waste-rock on its property. In this civil claim, Xstrata Pachón has
asked the Court to order Los Pelambres to remove the rocks and to compensate Xstrata Pachón for any and all damage suffered
(but without specifying the nature of this damage).
Xstrata Pachón also filed a criminal complaint before a separate division of the Federal Court of San Juan alleging that,
when Los Pelambres was depositing rock on the Cerro Amarillo Waste Dump, it violated several Argentinian laws relating to
the misappropriation of land, unlawful appropriation of water bodies and that peoples' health was in jeopardy from the
alleged contamination that the Cerro Amarillo Waste Dump might generate.
In both cases, Los Pelambres submitted preliminary objections to the Argentinian courts.
In the civil case, the Court of Appeals dismissed these preliminary objections; however, Los Pelambres has filed an
extraordinary appeal against this decision before the Federal Supreme Court which is currently pending. Notwithstanding so,
this appeal does not suspend proceedings in relation to the substantive arguments, which were submitted to the Federal
Court of San Juan in July 2017.
In April 2016 Los Pelambres and the Province of San Juan executed an agreement by means of which Los Pelambres had
committed itself to close the Cerro Amarillo Waste Dump, perform regular monitoring of underground and surface waters, and
perform other additional actions requested by the Province. In November 2016 the Province of San Juan unilaterally revoked
this Agreement. Notwithstanding, between November 2016 and January 2017 and with the support of the Chilean and Argentine
governments, Los Pelambres completed the removal of pneumatic tyres previously placed at the Cerro Amarillo Waste Dump. In
2017, at the Province of San Juan's request, Los Pelambres filed before the Federal Court N° 1 of San Juan two alternative
environmental provisional action plans for the Cerro Amarillo Waste Dump aimed at preventing any potential contamination
arising out from it, which are currently subject to review by the parties to the proceedings and the judges.
In the criminal proceeding, in March 2016, the Federal Court of Appeals of Mendoza held that the Argentinian courts had
jurisdiction to hear this matter. At the end of 2016 and beginning of 2017, some managers and the Chairman of Los Pelambres
were submitted to inquiry before the court. In March 2017 a visual inspection was carried out at Cerro Amarillo Waste Dump,
during which rock and water samples were extracted. Subsequently, an independent environmental expert's report was made
concluding that the rocks of the Cerro Amarillo Waste Rock Dump have the potential to generate acid drainage and have
affected the quality of the waters of a pond near to the Cerro Amarillo Waste Rock Dump, but that there is no evidence of
any impact on the waters of the Carnicería river, a river that provides potable water to the city of San Juan in
Argentina.
In July 2017, the Province of San Juan applied to the court to intervene as a complainant, seeking to extend the criminal
investigation to include Xstrata Pachón's executives, on the grounds that Xstrata Pachón had tenure of the mining titles in
the relevant area and therefore was accountable for any act or omission on it, regardless of who it was caused by. On 9
July 2017 the court issued a ruling (a) adding the Province of San Juan as complainants in the case; (b) adding as yet
unnamed officers of Xstrata Pachón as defendants in the case; (c) requiring that
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