REG - Antofagasta PLC - HALF YEARLY FINANCIAL REPORT <Origin Href="QuoteRef">ANTO.L</Origin> - Part 4
29/10/2014 15:04
- Part 4: For the preceding part double click ID:nRSZ9632Pc
average capUS cents Michilla 18,000 3.5 31-12-14 331.7 433.0 - Futures - arbitrageThe Group also has futures for copper production, to buy and sell copper production with the effect of swapping COMEX prices for LME prices without eliminating underlying market
price exposure. At 30.06.14 For instruments held at 30.06.14 Copper production hedged Weighted average remaining period from 1 July 2014 Covering a period up tonnes Months to: Centinela cathodes 5,600 4.0 31-01-15 (iii) 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.- Cross-currency swapThe Group has used
cross-currency swaps to swap Chilean pesos for US dollars. At 30.06.14 For instruments held at 30.06.14 Principal value of cross currency swaps heldUS$'m Weighted average remaining period from 1 July 2014Months Covering a period up to: Weighted average rateCh$/US$ Michilla 48.0 3.6 15-12-14 594.4 Antucoya 153.0 4.5 15-04-15 563.3 - Zero Cost CollarThe Group has used zero cost collar to swap Chilean pesos for US dollars. At 30.06.14 For instruments held at 30.06.14 Principal value of zero cost
collar heldUS$'m Weighted average remaning period from 1 July 2014Months Covering a period up to: Weighted average rate callCh$/US$ Weighted average rate putCh$/US$ Antucoya 153.9 4.1 15-05-15 586.62 547.14 (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 concentrates financing for fixed rate
interest. At 30 June 2014 the Group had entered into the contracts outlined below. Start date Maturity date Actual notional amount Weighted Average Fixed Rate US$'m % Centinela concentrates 15-02-2011 15-08-2018 140.0 3.372 The actual notional amount hedge depends upon the amount of the related debt currently outstanding.
At 30.06.14
At 30.06.13
At 31.12.13
US$'m
US$'m
US$'m
Analysed between:
Current assets
10.8
38.4
12.9
Non-current assets
-
16.7
-
Current liabilities
(3.5)
(3.3)
(3.4)
Non-current liabilities
(4.9)
(5.6)
(6.4)
2.4
46.2
3.1
(ii) Outstanding derivative financial instrumentsCommodity derivativesThe Group periodically uses commodity
derivatives to manage its exposure to commodity price fluctuations.- Min/max instruments
At 30.06.14 For instruments held at 30.06.14
Copper production hedgedtonnes Weighted average remaining period from 1 July 2014months Covering a period up to: Weighted average floorUS cents Weighted average capUS cents
Michilla 18,000 3.5 31-12-14 331.7 433.0
- Futures - arbitrageThe Group also has futures for copper production, to buy and sell copper production with the
effect of swapping COMEX prices for LME prices without eliminating underlying market price exposure.
At 30.06.14 For instruments held at 30.06.14
Copper production hedged Weighted average remaining period from 1 July 2014 Covering a period up
tonnes Months to:
Centinela cathodes 5,600 4.0 31-01-15
(iii) 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.- Cross-currency swapThe Group has used cross-currency swaps to swap Chilean pesos for US dollars.
At 30.06.14 For instruments held at 30.06.14
Principal value of cross currency swaps heldUS$'m Weighted average remaining period from 1 July 2014Months Covering a period up to: Weighted average rateCh$/US$
Michilla 48.0 3.6 15-12-14 594.4
Antucoya 153.0 4.5 15-04-15 563.3
- Zero Cost CollarThe Group has used zero cost collar to swap Chilean pesos for US dollars.
At 30.06.14 For instruments held at 30.06.14
Principal value of zero cost collar heldUS$'m Weighted average remaning period from 1 July 2014Months Covering a period up to: Weighted average rate callCh$/US$ Weighted average rate putCh$/US$
Antucoya 153.9 4.1 15-05-15 586.62 547.14
(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 concentrates financing for fixed rate interest. At 30 June 2014 the Group had entered into the contracts
outlined below.
Start date Maturity date Actual notional amount Weighted Average Fixed Rate
US$'m %
Centinela concentrates 15-02-2011 15-08-2018 140.0 3.372
The actual notional amount hedge depends upon the amount of the related debt currently outstanding.
6. Net finance expense
Six months Six months Year ended 31 December 2013
ended ended
30 June 2014 30 June 2013
US$'m US$'m US$'m
Investment income
Interest receivable 6.4 4.5 9.0
Fair value through profit or loss 2.1 1.6 3.6
8.5 6.1 12.6
Interest expense
Interest payable (27.7) (33.6) (61.8)
Preference dividends (0.2) (0.1) (0.2)
(27.9) (33.7) (62.0)
Other finance items
Time value effect of commodity derivatives (3.3) (8.1) (13.5)
Unwinding of discount on provisions (7.6) (6.5) (14.2)
Foreign exchange 7.5 (2.4) 2.9
(3.4) (17.0) (24.8)
Net finance expense (22.8) (44.6) (74.2)
In the six months ended 30 June 2014, US$9.1 million relating to net interest expense and other finance items at Antucoya
(six months ended 30 June 2013 - US$2.2 million; year ended 31 December 2013 - US$6.4 million) was capitalised during the
period, and is consequently not included within the above table.
7. Taxation
The tax charge for the period comprised the following:
Six months Six months Year ended 31 December 2013
ended ended
30 June 2014 30 June 2013
US$'m US$'m US$'m
Current tax charge
Corporate tax (principally first category tax in Chile) (174.6) (193.5) (382.6)
Mining tax (royalty) (36.2) (46.4) (90.5)
Withholding tax (231.1) (177.8) (208.0)
Exchange gains/(losses) on corporate tax balances 0.3 (0.4) (0.4)
(441.6) (418.1) (681.5)
Deferred tax credit/(charge)
Corporate tax (principally first category tax in Chile) (12.6) (27.7) (72.4)
Mining tax (royalty) (7.2) 1.0 (8.7)
Withholding tax provision 182.3 124.6 (81.1)
162.5 97.9 (162.2)
Total tax charge (income tax expense) (279.1) (320.2) (843.7)
The rate of first category (i.e. corporation) tax in Chile is currently 20%.
The Group's mining operations are also subject to a mining tax (royalty). Production from Los Pelambres, the Tesoro Central
and Mirador pits at Centinela cathodes and Michilla are subject to a rate of 4% of taxable operating profit and Centinela
concentrates of 5%, and production from 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.
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. corporation) tax
already paid in respect of the profits to which the remittances relate.
Six months ended Six months ended Year ended
30 June 2014 30 June 2013 31 December 2013
US$'m % US$'m % US$'m %
Profit before tax 850.7 981.0 2,083.5
Corporation (first category tax) (187.2) 22.0 (221.2) 22.5 (455.0) 21.8
Royalty (43.4) 5.1 (45.4) 4.6 (99.2) 4.8
Withholding taxes provided in period (48.8) 5.7 (53.2) 5.4 (289.1) 13.9
Net other items 0.3 - (0.4) 0.1 (0.4) -
Tax expense and effective tax rate for the period (279.1) 32.8 (320.2) 32.6 (843.7) 40.5
The tax charge for the six months ended 30 June 2014 was US$279.1 million and the effective tax rate was 32.8 %. 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), a withholding tax
charge of US$48.8 million and the effect of the mining tax which resulted in a charge of US$43.4 million.
In April a comprehensive tax reform bill was presented to the Chilean National Congress. The key proposed tax changes set
out in the bill which will impact the Group relate to corporate tax and withholding tax. The bill has been passed by the
Chamber of Deputies, but following a period of deliberation by the Senate a number of changes to the original bill have
been proposed, including an alternative corporate and withholding tax structure. The amended bill was returned to the
Chamber of Deputies where further amendments have been introduced and the bill is expected to re-presented to the Senate
for approval in August or September. As certain parts of the bill are intended to be retrospective to the beginning of
this year the Government is keen that the bill is passed as soon as possible to allow adequate time for their
implementation. It is therefore expected that the bill will be passed by the end of September.
8. Earnings per share
Basic and diluted earnings per share is calculated on profit after tax and non-controlling interests giving net earnings of
US$330.8 million (six months ended 30 June 2013 - US$395.0 million, year ended 31 December 2013 - US$659.6 million) and
amounted to 33.6 cents and based on 985,856,695 ordinary shares. There was no potential dilution of ordinary shares in any
period.
9. Dividends
The Board has declared an interim dividend of 11.7 cents per ordinary share for the 2014 half year (2013 half year - 8.9
cents). Dividends are declared and paid gross. Dividends actually paid in the period and recognised as a deduction from
net equity under IFRS were 86.1 cents per ordinary share (2013 half year - 90.0 cents), representing the final dividend
declared in respect of the previous year.
The interim dividend will be paid on 9 October 2014 to ordinary shareholders that are on the register at the close of
business on 19 September 2014. Shareholders can elect (on or before 22 September 2014) to receive this interim dividend in
US Dollars, Pounds Sterling or Euro, and the exchange rate to be applied to interim dividends to be paid in Pounds Sterling
or Euro will be set as soon as reasonably practicable after that date (which is currently anticipated to be on 25 September
2014). Further details of the currency election timing and process (including the default currency of payment) are
available on the Antofagasta plc website (www.antofagasta.co.uk) or from the Company's registrar, Computershare Investor
Services PLC on +44 870 702 0159.
10. Intangible assets
Six months Six months Year ended 31 December 2013
ended ended
30 June 2014 30 June 2013
US$'m US$'m US$'m
Balance at the beginning of the period 133.0 157.6 157.6
Amortisation (4.9) (7.3) (11.7)
Foreign currency exchange difference (5.2) (8.3) (12.9)
Balance at the end of the period 122.9 142.0 133.0
The balance relates 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 is being amortised on a
straight-line basis over the life of the concession, or the useful life of any component part if less.
11. Property, plant and equipment
Mining Railway and other transport Water Concession Six months Six months Year ended 31 December 2013
ended ended
30 June 2014 30 June 2013
US$'m US$'m US$'m US$'m US$'m US$'m
Balance at the beginning of the period 7,173.8 214.0 37.0 7,424.8 6,513.2 6,513.2
Additions 751.1 8.3 7.9 767.3 540.9 1,458.7
Reclassification 28.4 - - 28.4 (0.5) (4.8)
Decommissioning provisions capitalised 7.5 - - 7.5 - 31.8
Depreciation (233.5) (7.8) (1.3) (242.6) (232.5) (506.0)
Depreciation capitalised (44.7) - - (44.7) (30.9) (39.9)
Asset disposals (0.3) (0.1) - (0.4) (7.0) (23.0)
Foreign currency exchange difference - 0.2 (2.9) (2.7) (2.2) (5.2)
Balance at the end of the period 7,682.3 214.6 40.7 7,937.6 6,781.0 7,424.8
Depreciation of US$44.7 million (30 June 2013 - US$30.9 million; 31 December 2013 - US$39.9 million) has been capitalised
within inventories, and accordingly excluded from the depreciation charge recorded in the income statement.
Future capital commitments at 30 June 2014 were US$589.8 million (30 June 2013 - US$797.9 million; 31 December 2013 -
US$842.8 million) of which US$179.7 million were related to the development of Antucoya project.
12. Available for sale investments
Six months Six months Year ended 31 December 2013
ended ended
30 June 2014 30 June 2013
US$'m US$'m US$'m
Balance at the beginning of the period 16.6 44.5 44.5
Additions 1.5 2.0 2.1
Movements in fair value (2.9) (20.0) (28.2)
Foreign currency exchange difference 0.5 (1.8) (1.8)
Balance at the end of the period 15.7 24.7 16.6
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.
13. Borrowings
At 30.06.14 At 30.06.13 At 31.12.13
US$'m US$'m US$'m
Los Pelambres
Corporate loans (315.0) (290.3) (222.7)
Finance leases (14.4) (26.6) (17.9)
Centinela concentrates
Project financing (senior debt) (881.7) (674.8) (593.2)
Shareholder loan (subordinated debt) (163.3) (186.6) (190.7)
Finance leases - (4.4) (0.7)
Centinela cathodes
Corporate loans (89.7) (173.3) (131.5)
Finance leases (0.1) (0.3) (0.2)
Antucoya
Project financing (senior debt) (436.5) - -
Shareholder loan (subordinated debt) (176.1) (167.2) (171.6)
Finance leases (1.7) - (1.8)
Corporate and other items
Finance leases (33.0) (37.6) (35.6)
Railway and other transport services
Bonds (3.0) (3.2) (3.0)
Short-term loans (1.5) (2.1) (1.7)
Other
Preference shares (3.4) (3.0) (3.3)
Total (see Note 16) (2,119.4) (1,569.4) (1,373.9)
Maturity of borrowings
At 30.06.14 At 30.06.13 At 31.12.13
US$'m US$'m US$'m
Short-term borrowings (327.6) (513.7) (341.0)
Medium and long-term borrowings (1,791.8) (1,055.7) (1,032.9)
Total (see Note 16) (2,119.4) (1,569.4) (1,373.9)
At 30 June 2014 US$47.5 million (30 June 2013 - US$64.5 million; 31 December 2013 - US$60.1 million) of the borrowings has
fixed rate interest and US$2,071.9 million (30 June 2013 - US$1,504.9 million; 31 December 2013 - US$1,313.8 million) has
floating rate interest. At February 2014, refinancing process at Centinela Concentrates (previously Esperanza) resulted in
additional borrowing of US$548m. 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
US$140.0 million of floating rate borrowings into fixed rate borrowings. Details of any derivative instruments held by the
Group are given in Note 5(d).
14. Share capital and share premium
There was no change in share capital or share premium in the six months ended 30 June 2014 or the comparative periods.
15. Reconciliation of profit before tax to net cash inflow from operating activities
Six months Six months Year ended 31 December 2013
ended ended
30 June 2014 30 June 2013
US$'m US$'m US$'m
Profit before tax 850.7 981.0 2,083.5
Depreciation and amortisation 247.5 239.8 517.7
Net (profit) /loss on disposal of property, plant and equipment (0.2) 6.0 12.4
Net finance expense 22.8 44.6 74.2
Share of results from associates and joint ventures 7.5 4.1 14.4
(Increase)/decrease in inventories (17.0) (94.8) 1.8
Decrease/ (Increase) in debtors 6.2 120.4 (149.5)
Increase in creditors and provisions 52.5 72.4 104.7
Cash flows from operations 1,170.0 1,373.5 2,659.2
16. Analysis of changes in net cash
At 1.1.14 Cash flows Other Exchange At 30.06.14
US$'m US$'m US$'m US$'m US$'m
Cash and cash equivalents 613.7 233.5 - (9.6) 837.6
Liquid investments 2,071.4 (644.6) - - 1,426.8
Total cash and cash equivalents and liquid investments 2,685.1 (411.1) - (9.6) 2,264.4
Bank borrowings due within one year (329.4) (48.0) 58.6 - (318.8)
Bank borrowings due after one year (985.0) (706.0) (57.1) - (1,748.1)
Finance leases due within one year (11.6) 6.4 (3.6) - (8.8)
Finance leases due after one year (44.6) - 3.4 0.9 (40.3)
Preference shares (3.3) - - (0.1) (3.4)
Total borrowings (1,373.9) (747.6) 1.3 (0.8) (2,119.4)
Net cash 1,311.2 (1,158.7) 1.3 (8.8) 145.0
Net cash
Net cash at the end of each period was as follows:
At 30.06.14 At 30.06.13 At 31.12.13
US$'m US$'m US$'m
Cash, cash equivalents and liquid investments 2,264.4 3,077.0 2,685.1
Total borrowings (2,119.4) (1,569.4) (1,373.9)
145.0 1,507.6 1,311.2
17. Contingent liabilities
Antofagasta plc or its subsidiaries is subject to various claims which arise in the ordinary course of business. No
provision has been made in the financial statements 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 that time, Los Pelambres has become aware of further legal proceedings which had been
initiated in first instance courts in Santiago and Los Vilos by representatives of certain members of the Caimanes
community located near the Mauro valley. These claims, some of which have already been rejected by the relevant courts,
sought to stop the operation of the Mauro tailings dam. Two of these claims are currently ongoing and Los Pelambres is
continuing to take necessary steps to protect its position.
In the first of these claims, the plaintiffs have argued that the tailings dam affects their alleged water rights and the
environment. This claim was rejected by the Court of first instance of Los Vilos in a judgment issued in November 2012,
which was than affirmed by the Court of Appeals of La Serena in August 2013. An action to vacate this last judgment, based
only on the application of the law (cassation), was later filed by the plaintiffs before the Supreme Court and is currently
pending.
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 Court of 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 case a major earthquake or
natural event occurs. These measures 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, has been appealed by both claimant and the defendant and
these appeals will be heard before the Court of Appeal of La Serena. Any decision of the Court of Appeal may also be
subject to a review of the correct application of law by the Supreme Court of Chile.
18. Post balance sheet events
On 3 July 2014 Antofagasta terminated its option to acquire an additional 25% of Twin Metals Minnesota LLC ("TMM"). As a
result of being provided the option termination notice, Duluth Metals Limited ("Duluth Metals") has a right to purchase,
within 180 days, Antofagasta's 40% of TMM for a price equal to Antofagasta's sunk costs (currently estimated to be
approximately US$220m) plus approximately US$10m currently outstanding (plus accrued and unpaid interest) under a bridge
loan facility. If Duluth Metals does not exercise its buy-back right, Antofagasta will continue to own 40% of TMM and
Duluth Metals will be required to repay the loan facility, at its option, in either cash or Duluth Metals shares. Following
the termination of the option, Duluth Metals controls the management and development of the Twin Metals Project.
19. Litigation
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"). A hearing on
preliminary issues was heard by the ICC tribunal in the week commencing 23 June 2014 and a decision is expected in the
coming months. The ICSID tribunal has scheduled a hearing on jurisdiction and liability to take place over a two-week
period commencing 6 October 2014.
20. Related party transactions
a) Joint ventures
The Group has a 50% interest in Tethyan Copper Company Limited ("Tethyan"), which is a joint venture with Barrick Gold
Corporation over Tethyan's mineral interests in Pakistan. During the six months ended 30 June 2014 the Group contributed
US$2.5 million (six months ended 30 June 2013 - US$3.0 million; year ended 31 December 2013 - $7.0 million) to Tethyan, to
provide funds for Tethyan's legal advisory and administrative costs. The balance due from Tethyan to Group companies at 30
June 2014 was US$nil (30 June 2013 - nil; 31 December 2013 - nil).
The Group has a 60% interest in Energía Andina, which is a joint venture with Origin Energy Geothermal Chile Limitada for
the exploration and exploitation of potential sources of geothermal energy. The balance due from Energía Andina S.A. to the
Group at 30 June 2014 was nil (30 June 2013 - US$0.1 million; 31 December 2013 - less than US$0.1 million). During the six
months ended 30 June 2014 the Group contributed US$5.0 million to Energia Andina (six months ended 30 June 2013 - US$9.0
million; year ended 31 December 2013 - US$21.6 million).
b) Associates
The Group has a 40% interest in Inversiones Hornitos S.A. The Group paid US$68.6 million (six months ended 30 June 2013 -
US$66.6 million; year ended 31 December 2013 - US$167.8 million) to Inversiones Hornitos in relation to the energy supply
contract at Centinela concentrates.During 2014, the Group has received dividends from Inversiones Hornitos S.A. for US$20
million (30 June 2013 - nil; 31 December 2013 - nil).
The Group has a 40% interest in Alto Maipo SpA ("Alto Maipo"). During the period, the Group contribution for a total of nil
(six months ended 30 June 2013 - nil; year ended 31 December 2013 - US$52.6million). The balance due from Alto Maipo to the
Group at 30 June 2014 was US$124.4 million (30 June 2013 -nil; 31 December 2013 -US$47.0 million) representing loan
financing with an interest rate of LIBOR six-months plus 4.25%.
c) Other related parties
The ultimate parent company of the Group is Metalinvest Establishment, which is controlled by the E. Abaroa Foundation, in
which members of the Luksic family are interested. The Company's subsidiaries, in the ordinary course of business, enter
into various sale and purchase transactions with companies also controlled by members of the Luksic family, including Banco
de Chile S.A., Madeco S.A. and Compañía Cervecerías Unidas S.A., which are subsidiaries of Quiñenco S.A., a Chilean
industrial and financial conglomerate the shares of which are traded on the Santiago Stock Exchange. These transactions,
all of which were on normal commercial terms, are in total not considered to be material.
The Group holds a 51% interest in Antomin 2 Limited ("Antomin 2") and Antomin Investors Limited ("Antomin Investors"),
which own a number of copper exploration properties. The Group originally acquired its 51% interest in these properties for
a nominal consideration from Mineralinvest Establishment, a company controlled by the Luksic family, which continues to
hold the remaining 49% of Antomin 2 and Antomin Investors. The Group is responsible for any exploration costs relating to
the properties held by these entities. During the six months ended 30 June 2014 Group incurred US$13.9 million (six months
ended 30 June 2013 - US$11.9 million; year ended 31 December 2013 - US$22.1million) of exploration work at these
properties.
In March 2014 the Group acquired an additional 25.7% interest in Michilla for $30.9 million, increasing the Group's
interest from 74.2% to 99.9%. This included the acquisition of the 7.973% stake held by Minera Cerro Centinela S.A., an
entity ultimately controlled by the Luksic family, for $9.6 million. Prior to this transaction, Michilla paid dividends of
US$1.6 million to Minera Cerro Centinela S.A. (six months ended 30 June 2013 - nil; year ended 31 December 2013 - nil).
RESPONSIBILITY STATEMENT
We confirm to the best of our knowledge:
a) the condensed set of financial statements has been prepared in accordance with IAS 34 Interim Financial
Reporting;
b) the half yearly financial report includes a fair review of the information required by DTR 4.2.7R (being an
indication of important events that have occurred during the first six months of the financial year, and their impact on
the half yearly financial report and a description of the principal risks and uncertainties for the remaining six months of
the financial year); and
c) the half yearly financial report includes a fair review of the information required by DTR 4.2.8R (being
disclosure of related party transactions that have taken place in the first six months of the financial year and that have
materially affected the financial position or the performance of the Group during that period and any changes in the
related party transactions described in the last annual report that could have a material effect on the financial position
or performance of the Group in the first six months of the current financial year).
By order of the Board
J-P Luksic WM Hayes
Chairman Director
25 August 2014
INDEPENDENT REVIEW REPORT TO ANTOFAGASTA PLC
We have been engaged by the company to review the condensed set of financial statements in the half-yearly financial report
for the six months ended 30 June 2014 which comprises the condensed consolidated income statement, the condensed
consolidated balance sheet, the condensed consolidated statement of changes in equity the condensed consolidated cash flow
statement and related notes 1 to 20. We have read the other information contained in the half-yearly financial report and
considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed
set of financial statements.
This report is made solely to the company in accordance with International Standard on Review Engagements (UK and Ireland)
2410 "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing
Practices Board. Our work has been undertaken so that we might state to the company those matters we are required to state
to it in an independent review report and for no other purpose. To the fullest extent permitted by law, we do not accept or
assume responsibility to anyone other than the company, for our review work, for this report, or for the conclusions we
have formed.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and has been approved by, the directors. The directors are
responsible for preparing the half-yearly financial report in accordance with the Disclosure and Transparency Rules of the
United Kingdom's Financial Conduct Authority.
As disclosed in note 1, the annual financial statements of the group are prepared in accordance with IFRSs as adopted by
the European Union. The condensed set of financial statements included in this half-yearly financial report has been
prepared in accordance with International Accounting Standard 34, "Interim Financial Reporting," as adopted by the European
Union.
Our responsibility
Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the
half-yearly financial report based on our review.
Scope of review
We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410 "Review of
Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board
for use in the United Kingdom. A review of interim financial information consists of making inquiries, primarily of persons
responsible for financial and accounting matters, and applying analytical and other review procedures. A review is
substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland)
and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be
identified in an audit. Accordingly, we do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial
statements in the half-yearly financial report for the six months ended 30 June 2014 is not prepared, in all material
respects, in accordance with International Accounting Standard 34 as adopted by the European Union and the Disclosure and
Transparency Rules of the United Kingdom's Financial Conduct Authority.
Deloitte LLP
Chartered Accountants and Statutory Auditor
London, United Kingdom
25 August 2014
21. Production and Sales Statistics (not subject to audit or review)
(See notes following Note 21(b).)
a) Production and sales volumes for copper, gold and molybdenum
Production Sales
Six months Six months Year ended 31 December 2013 Six months Six months Year ended 31 December 2013
ended ended ended ended
30 June 2014 30 June 2013 30 June 2014 30 June 2013
000 tonnes 000 tonnes 000 tonnes 000 tonnes 000 tonnes 000 tonnes
Copper
Los Pelambres 196.6 203.6 405.3 190.0 195.0 414.0
Centinela concentrates 82.3 90.1 174.9 85.9 78.2 168.2
Centinela cathodes 46.0 51.8 102.6 45.2 49.4 101.6
Michilla 23.2 18.6 38.3 22.2 18.5 38.4
Group total 348.2 364.1 721.2 343.3 341.1 722.2
Gold 000 ounces 000 ounces 000 ounces 000 ounces 000 ounces 000 ounces
Los Pelambres 33.6 24.3 56.7 31.3 24.3 56.7
Centinela concentrates 90.3 138.6 237.1 93.9 116.1 226.0
Group total 123.8 162.9 293.8 125.2 140.4 282.7
Molybdenum
Los Pelambres 3.3 4.7 9.0 3.2 4.3 8.8
Silver 000 ounces 000 ounces 000 ounces 000 ounces 000 ounces 000 ounces
Los Pelambres 1,343.7 972.1 2,272.9 1,343.7 972.1 2,272.9
Centinela concentrates 611.1 738.9 1,371.5 611.1 594.9 1,238.2
Group total 1,954.8 1,711.0 3,644.4 1,954.8 1,567.0 3,511.1
b) Cash costs per pound of copper produced and realised prices per pound of copper and molybdenum sold
Cash costs Realised prices
Six months Six months Year ended 31 December 2013 Six months Six months Year ended 31 December 2013
ended ended ended ended
30 June 2014 30 June 2013 30 June 2014 30 June 2013
US$/lb US$/lb US$/lb US$/lb US$/lb US$/lb
Copper
Los Pelambres 1.21 1.19 1.16 3.04 3.08 3.25
Centinela concentrates 1.60 0.99 1.43 3.06 3.09 3.22
Centinela cathodes 1.80 1.26 1.36 3.15 3.37 3.34
Michilla 2.38 3.36 3.22 3.34 3.59 3.64
Group weighted average (net of by-products) 1.46 1.26 1.36 3.08 3.15 3.28
Group weighted average (before deducting by-products) 1.87 1.76 1.79
Group weighted average (before deducting by-products and excluding tolling charges from concentrate) 1.69 1.61 1.65
Cash costs at Los Pelambres comprise:
On-site and shipping costs 1.41 1.41 1.35
Tolling charges for concentrates 0.21 0.17 0,17
Cash costs before deducting by-product credits 1.62 1.58 1.52
By-product credits (principally molybdenum) (0.41) (0.39) (0.36)
Cash costs (net of by-product credits) 1.21 1.19 1.16
Cash costs at Centinela concentrates comprise:
On-site and shipping costs 2.11 1.92 2.16
Tolling charges for concentrates 0.24 0.20 0.20
Cash costs before deducting by-product credits 2.36 2.12 2.36
By-product credits (principally molybdenum) (0.75) (1.13) (0.93)
Cash costs (net of by-product credits) 1.60 0.99 1.43
LME average 3.14 3.42 3.32
US$ US$ US$
Gold
Los Pelambres 1,291 1,482 1,362
Centinela concentrates 1,377 1,440 1,357
Group weighted average 1,355 1,447 1,357
Market average price 1,291 1,524 1,410
US$ US$ US$
Molybdenum
Los Pelambres 14.8 10.8 10.0
Market average price 11.8 11.1 10.3
Silver
Los Pelambres 19.9 25.7 22.8
Centinela concentrates 19.6 25.6 22.4
Group weighted average 19.8 25.7 22.7
Market average price 20.1 26.6 23.8
Notes to the production and sales statistics
(i) The production and sales figures represent the actual amounts produced and sold, not the Group's share of
each mine. The Group owns 60% of Los Pelambres, 70% of Centinela concentrates, 70% of Centinela cathodes and 99.9% of
Michilla (74.2% prior to March 2014).
(ii) Los Pelambres produces copper and molybdenum concentrates and Centinela concentrates produces copper
concentrate. The figures for Los Pelambres and Centinela concentrates are expressed in terms of payable metal contained in
concentrate. Los Pelambres and Centinela concentrates are also credited for the gold and silver contained in the copper
concentrate sold. Centinela cathodes and Michilla 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 and include
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