REG - Antofagasta PLC - HALF YEARLY FINANCIAL REPORT
10/08/2023 07:00
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RNS Number : 8610I Antofagasta PLC 10 August 2023
NEWS RELEASE, 10 AUGUST 2023
HALF YEARLY FINANCIAL REPORT
FOR THE SIX MONTHS ENDED 30 JUNE 2023
EARNINGS PER SHARE INCREASE BY 27%
Antofagasta plc CEO Iván Arriagada said: "The first half of the year
delivered another strong safety performance across all our operations. We
continue to operate fatality free, and both leading and lagging indicators of
safety are at a level ahead of last year.
"Our financial metrics over the period were also strong; revenue was 14.3%
higher due to higher copper, gold and molybdenum sales volumes and higher
realised by-product prices, partially offset by a 3.4% decline in copper
prices.
"We are focused on cost control through our Cost and Competitiveness
Programme, which so far this year has delivered $60 million in savings and
productivity improvements (equivalent of 9c/lb), achieving our goal of $60
million of savings for the full year. EBITDA was 7.5% higher and profit before
tax was 12.5% higher than last year. Earnings per share came in at 33.5 cents,
which is an increase of 26.9% compared to last year.
"Looking ahead to the second half of the year, we expect the desalination
plant will continue to ramp-up to its design capacity, which will allow
increased throughput at Los Pelambres, supporting the delivery of our
production and cost guidance.
"Copper is the metal of electrification and therefore an integral part of the
energy transition. We believe the long-term fundamentals for copper are very
strong as demand is forecast to continue to grow over the coming years, and as
incremental supply remains challenged. Our focus remains on growing production
through our pipeline of projects safely and competitively, which will generate
value for all our stakeholders.
"Consistent with our practice of paying 35% of interim net earnings as a
dividend, the Board has declared an interim dividend of 11.7 cents per share."
HIGHLIGHTS
Financial performance
● Revenue for the first half of 2023 was $2,890 million,
14.3% higher than in the same period in 2022, mainly because of higher copper
and by-product sales volumes and higher realised by-product prices.
● EBITDA((1)) was $1,331 million, 7.5% higher than in the
same period last year on higher revenue, partially offset by operating costs
that increased by 14.8%, mainly due to higher sales volumes, inflation and a
stronger Chilean peso.
● EBITDA margin((2)) was 46.1%, compared with 49.0% in H1
2022.
● The Cost and Competitiveness Programme generated savings
and productivity improvements of $60 million in the first half of 2023,
equivalent to 9c/lb of unit cash costs, achieving our full year target of $60
million.
● Profit before tax was $765 million, 12.5% higher than the
same period in 2022.
● Continuing strong balance sheet with a net debt to EBITDA
ratio at the end of the period of 0.27 times. The Company's cash, cash
equivalents and liquid investments balance as at 30 June 2023 was $2,350
million, almost unchanged from the balance of $2,391 million as at the end of
2022.
● Cash flow from operations was $1,296 million, down from
$1,683 million in the first half of 2022, due to a significant positive
working capital variance in H1 2022, which was not repeated in H1 2023.
● Capital expenditure of $1,022 million, which is 54% of
full year guidance.
● Earnings per share of 33.5 cents, 7.1 cents higher than
the same period in 2022.
● Interim dividend of 11.7 cents per share, equivalent to a
pay-out ratio of 35% of underlying net earnings in line with the Company's
capital allocation framework.
Production and cost performance (as previously announced on 19 July 2023)
● Copper production in H1 2023 of 295,500 tonnes, 10.0%
higher year-on-year (H1 2022: 268,600 tonnes), principally reflecting a 23.9%
increase in throughput at Los Pelambres.
● Cash costs before by-product credits in H1 2023 were
$2.48/lb, a year-on-year increase of 4.6% due to higher input costs and the
appreciation of the Chilean peso.
● Net cash costs were $1.75/lb for the first half of the
year, compared to $1.82/lb in the first half of 2022, reflecting the increase
in cash costs before by-product credits being more than offset by higher
by-product credits.
2023 Guidance (as previously announced)
● Guidance has been updated to 640-670,000 tonnes
(previously 670-710,000 tonnes), because of the rescheduling of completion
activities at the desalination plant and concentrator expansion at Los
Pelambres and the reduced availability of water in H1 2023. The expectation is
that output will increase quarter-on-quarter in H2 2023 as both projects near
completion of commissioning.
● The impact of the updated production guidance is partly
offset by strong cost control across the Company's operations with full year
cash costs before by-product credits now expected to be $2.30/lb (previously
$2.20/lb).
● Guidance for cash costs after by-products remains
unchanged at $1.65/lb, assuming no significant changes in current by-product
prices and the Chilean peso exchange rate.
● Capital expenditure guidance is also unchanged at $1.9
billion assuming no further appreciation of the Chilean peso. Opportunities to
accelerate the execution of selected development projects will continue to be
evaluated, considering the return profiles of the individual options.
● The Group has now achieved its full year Cost and
Competitiveness Programme savings and productivity improvement target of at
least $60 million.
Growth projects (as previously announced)
● The desalination plant for Los Pelambres is nearing the
end of its commissioning phase. The plant achieved an average production rate
of 160 litres per second of desalinated water in June 2023, and is expected to
continue to ramp-up production during H2 2023.
● At the concentrator expansion project at Los Pelambres,
pre-operational testing work started during Q2 2023, alongside the
commissioning of some ancillary sections of the project and the connection of
the main facilities to the national grid. Commissioning is expected to be
completed in H2 2023.
● An updated study into the development of the Centinela
Second Concentrator project is expected to be submitted to the Board for
consideration by the end of the year.
● The expansion at Centinela would increase production by an
average of 170,000 tonnes per annum of copper equivalent, taking advantage of
the large resource base in the Centinela district. This expansion is expected
to move Centinela into the first quartile of the net of by-products cost
curve.
Sustainability
● There were no fatalities in H1 2023 (FY 2022: zero), and
safety indicators remain strong, with a year-to-date lost time injury
frequency rate ("LTIFR") of 0.58 (FY 2022: 0.84).
● As previously reported, the Company (as well as other
named defendants) submitted a response contradicting the allegations made by
the Consejo de Defensa del Estado ("CDE"), an independent governmental agency
that represents the interests of the Chilean state, who previously filed a
claim against Minera Escondida, Albemarle and Zaldívar, alleging that their
extraction of water from the Monturaqui-Negrillar-Tilopozo aquifer over the
years has impacted the underground water level. The litigation remains
outstanding as well as conversations among the parties regarding a potential
settlement.
● Currently, Zaldívar is permitted to extract water and
mine until 2025 and 2024 respectively. To ensure the continuity of this
operation, in March 2023 Zaldívar submitted a Declaration of Environmental
Impact ("DIA"), a more limited scope and simplified procedure than an
Environmental Impact Assessment ("EIA"). The DIA submitted requests that the
mining permit be extended from 2024 to 2025, to expire at the same date as the
current water permit. After this, and after withdrawing an earlier EIA
application filed in 2018 which remained unresolved, in June 2023 Zaldívar
submitted an EIA application to extend its mining and water environmental
permits through to 2051. This EIA includes a proposal to develop the primary
sulphide ore deposit, extending the current life of mine and requiring
estimated investments over the mine life of $1.2 billion, and a conversion of
the water source for Zaldívar to either seawater or water from third parties,
following a transition period during which the current continental water
extraction permit is extended from 2025 to 2028.
● With the continuing drought in central Chile and changes
in the Water Code in 2022, discussions were held with stakeholders in the
Choapa Valley about water distribution arrangements in the area and an
agreement has been reached with local communities. The relevant water
authority is now in the process of reviewing this proposal. This ongoing
process involves no material change to the current availability of continental
water at Los Pelambres.
Legislative
● In May 2023, both the Chilean Senate and lower house of
Congress approved the proposed revision to Chile's mining royalty bill, with
Presidential approval confirmed in August 2023. The terms include a 1% ad
valorem royalty on copper sales, and a royalty ranging from 8% to 26% on
operating profits depending on each mining operation's level of profitability,
combined with a provision establishing that total taxation (including
corporate income, the new royalty tax and tax on dividends) should not exceed
46.5% of profitability. This new law will come into effect at the beginning of
2024. Since Centinela and Antucoya have tax stability agreements, the new
royalty rates will only apply from 2030. There will be a one-off non-cash
adjustment to the deferred tax balances of each of the Group's mining
operations reflecting the impact of the change in the 31 December 2023
results.
● The process to approve a new constitution in Chile
continues. In May 2023, the members of the Constitutional Council that will
draft the revised constitution were elected. The Council is expected to agree
a final draft of the revised constitution in Q4 2023, before it is presented
for approval in a national referendum on 17 December 2023.
Other
● As previously announced, following confirmation by the
Australian Tax Office that the proceeds from the sale of the Group's interest
in Reko Diq ($945 million) were not taxable, the funds were distributed to the
Company during H1 2023. The Company will apply its capital allocation model to
determine the final use of the proceeds.
● On 20 July 2023, the Company released its second annual
Tax Payments Report
(https://www.antofagasta.co.uk/media/4573/rep_impuestos2022_tax_14.pdf) . The
report provides detailed information about the nature of the taxes paid by the
Company and the amounts paid and can be found on the Company's website.
● The Company also released its second Social Value Report
(https://www.antofagasta.co.uk/media/4576/230727-social-value-report-2022.pdf)
in July 2023, in which the Company reviews its involvement in the social and
economic development of the areas where it operates.
UNAUDITED RESULTS SIX MONTHS ENDED 30 JUNE 2023 2022 %
Revenue $m 2,890.1 2,528.2 14.3
EBITDA((1)) $m 1,331.0 1,237.7 7.5
EBITDA margin((1, 2)) % 46.1 49.0 (5.9)
Profit before tax $m 764.5 679.6 12.5
Earnings per share cents 33.5 26.4 26.9
Dividend per share cents 11.7 9.2 27.2
Cash flow from operations $m 1,296.4 1,682.5 (22.9)
Capital expenditure((3)) $m 1,021.9 831.0 23.0
Net debt at period end((1)) $m 821.3 491.4 67.1
Average realised copper price $/lb 3.99 4.13 (3.4)
Copper sales((4)) kt 275.1 240.4 14.4
Gold sales koz 78.9 73.6 7.2
Molybdenum sales kt 5.2 3.9 33.3
Cash costs before by-product credits((1)) $/lb 2.48 2.37 4.6
Net cash costs((1)) $/lb 1.75 1.82 (3.8)
Note: The financial results are prepared in accordance with IFRS unless
otherwise noted below.
(1) Non-IFRS measures. Refer to the alternative performance measures
section on page 61 in the half-year financial report below.
(2) Calculated as EBITDA/Revenue. If Associates and JVs' revenue is
included, EBITDA Margin was 43.2% in HY 2023 and 44.9% in HY 2022.
(3) On a cash basis.
(4) Does not include 20,300 tonnes of sales by Zaldívar in H1 2023
and 22,700 tonnes in H1 2022, as it is equity accounted.
A recording and copy of the 2023 Half Year Results presentation is available
for download from the Company's website www.antofagasta.co.uk
(http://www.antofagasta.co.uk) .
There will be a Q&A video conference call at 2:00pm (BST) today hosted by
Iván Arriagada - Chief Executive Officer, Mauricio Ortiz - Chief Financial
Officer and René Aguilar, Vice President - Corporate Affairs and
Sustainability. Participants can join the conference call here
(https://antofagasta-hy-earnings-call-2023.open-exchange.net/) .
Investors - London Media - London
Rosario Orchard rorchard@antofagasta.co.uk Carole Cable antofagasta@brunswickgroup.com
Robert Simmons rsimmons@antofagasta.co.uk Telephone +44 20 7404 5959
Telephone +44 20 7808 0988
Media - Santiago
Pablo Orozco porozco@aminerals.cl
Carolina Pica cpica@aminerals.cl
Telephone +56 2 2798 7000
Register on our website to receive our email alerts
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LinkedIn (https://www.linkedin.com/company/antofagasta-plc)
FINANCIAL AND OPERATING REVIEW
FINANCIAL HIGHLIGHTS
Revenue was $2,890.1 million, 14.3% higher than in the same period last year
mainly as a result of copper, gold and molybdenum sales volumes being higher
by 14.4%, 7.2% and 33.3% respectively, and higher realised by-product prices,
partially offset by the realised copper price decreasing by 3.4%.
EBITDA during the first six months was $1,331.0 million, 7.5% higher than in
the same period in 2022, reflecting higher revenue, partially offset by higher
cost of sales which increased by 14.8% mainly due to higher sales volumes,
inflation and a stronger Chilean peso.
Profit before tax was $764.5 million, 12.5% higher than in the same period in
2022 reflecting the higher EBITDA.
Earnings per share for the year were 33.5 cents, an increase of 26.9% compared
with 2022.
Cash flow from operations was $1,296.4 million, a 22.9% decrease compared with
the same period last year, due to a significant positive working capital
variance in H1 2022 (following a reduction in receivables), which was not
repeated in H1 2023.
The Board has declared an interim ordinary dividend of 11.7 cents per share,
equal to a 35% pay-out ratio and in line with our dividend policy.
SUSTAINABILITY
Safety and health
Antofagasta prioritises the safety, health and wellbeing of its people. The
Company is pleased to report that we continued to perform fatality free in H1
2023 (2022: zero), and a number of leading and lagging safety indicators
improved during the year in comparison with H1 2022.
The Group has a safety management system that prioritises the elimination of
fatalities. To help achieve this objective, the Group maintains a focus on the
occurrence of high potential incidents (HPIs), which are a key leading
indicator of safety performance. During the first half of 2023, the Group
recorded 13 HPIs, which represents a 43% reduction compared to the previous
year, with improvements seen in both the Mining and Transport Divisions.
A lagging indicator of safety is the Lost Time Injury Frequency Rate (LTIFR),
which the Company seeks to keep below 1.0. In H1 2023, the Mining Division's
LTIFR was 0.62, 22% below the same period in 2022. The overall Group LTIFR was
0.58 for H1 2023, a 30% improvement year-on-year.
To help achieve this improvement, the Group has increased its focus on risk
identification and risk management processes, to identify and reduce repeated
safety incidents. The Group also focuses on reducing risk in identified high
risk areas and in H1 2023 we progressed our programme to install collision
detection systems, which are planned to be installed in the haul trucks at all
of our operations during the coming periods.
To further protect the wellbeing of our workforce, we have strengthened our
monitoring programme for detecting and responding to occupational health and
work-place related diseases, such as hearing loss, musculoskeletal conditions
and psychosocial risks.
Communities
For Antofagasta, the success of our business model is directly connected to
the development and well-being of local communities. Through regular dialogue,
we identify social investments relevant to the specific needs of each
community, whilst coordinating with local authorities on the implementation of
each project.
In central Chile, close to Los Pelambres, recent community engagement work in
the Province of Choapa includes the following highlights:
● APRoxima-EnRed Programme: Collaboration agreements were signed in
H1 2023 with the Rural Sanitary Services ("SSRs") of the province for the
implementation of this programme. Through this work, we are aiming to
incorporate technology that will improve the availability, distribution and
systematisation of information between all 80 local SSRs, and to help improve
the management of available water resources.
● The formalisation of dialogue and due diligence agreements with
nine Changas organisations from the Los Vilos commune: Under this framework,
we are creating links and providing spaces for permanent dialogue between any
indigenous peoples present in the Choapa Valley (Changos, Diaguitas and
Mapuches) and Los Pelambres.
● The inauguration of a local healthcare facility, CESFAM, in
Chillepín, which is a community located in the Choapa Valley: This facility
will provide care to more than 6,700 people from rural towns in Valle Alto in
the Salamanca district, with the Company contributing more than $2.5 million
for its construction.
Community engagement highlights in the north of Chile include:
● The launch of the latest phase of "Diálogos para el Desarrollo
María Elena" (Dialogues for Development in María Elena): This programme
between Minera Antucoya and the Municipality of María Elena, aims to build
trust and productivity between companies and communities. For the year 2023,
this programme will help to finance initiatives in areas such as education,
health, the local economy and culture.
● The inauguration of the "Sierra Gorda EnRed: Conectados al mundo"
project (Connected to the World): This initiative aims to improve the
connectivity of Sierra Gorda through high speed internet connections to more
than 250 homes, in addition to providing free Wi-Fi points and enabling the
adoption of new technologies in health, education and training facilities.
● Heritage rescue project with the Peine community: "Let's talk in
Ckunza", which is a partnership with the Cultural Heritage Corporation of
Chile and is sponsored by UNESCO. This project seeks to maintain community
traditions and language, through local art projects and the creation of a
documentary that aims to tell the story of the local language in the Peine
community.
Diversity and inclusion
The Group's Diversity and Inclusion Strategy, launched in 2018, has
transitioned from an awareness-raising phase about unconscious bias and
discrimination to introducing inclusive practices as an integral part of how
we work.
The Company is deepening its inclusive organisational culture that supports
the attraction and retention of all people, including women and those with
disabilities or different cultural origins. As at the end of the first half of
2023, we have a 20.6% participation rate for women at our operations. We
continue to deploy a range of initiatives to further increase this
participation rate, to achieve our goal for women to represent 30% of our
employees by 2025.
In addition to gender diversity, we promote disability inclusion throughout
our business. Across the Group, 1.5% of those working for Antofagasta have a
registered disability, exceeding a government-mandated minimum in Chile of 1%.
Climate change and emissions
During 2022 and 2023, the decarbonisation strategy for the Group has continued
to mature, adding new initiatives and working on our interim goals to achieve
carbon neutrality by 2050.
Regarding progress in our Decarbonisation Plan, we have made progress towards
the implementation of a test to introduce trolley-assist technology at our Los
Pelambres operation.
Water
Climate change continues to impact water availability in Chile, with our
operations located in the Atacama Desert and central Chile, where there has
been a drought for the last 14 years.
In order to reduce water-related risk, Los Pelambres is building a
desalination project that produced an average of 160 litres per second of
desalinated water in June 2023, and is expected to ramp-up production during
H2 2023. Once commissioning is completed, the Group expects to have obtained
the requisite permits to advance the next phase and commence construction to
double the capacity of the plant to 800 litres per second, following which
over 90% of Los Pelambres's water usage will be from desalinated or
recirculated water.
Considering the continuing drought in central Chile and the recent changes in
the Water Code, discussions have been held during the year with stakeholders
in the Choapa Valley about water distribution arrangements in the area and an
agreement has been reached with local communities. The relevant water
authority is now in the process of reviewing this proposal. This ongoing
process involves no material change to the availability of continental water
at Los Pelambres.
Currently, Zaldívar is permitted to extract water and mine until 2025 and
2024 respectively. To ensure the continuity of this operation, in March 2023
Zaldívar submitted a Declaration of Environmental Impact ("DIA"), a more
limited scope and simplified procedure than an Environmental Impact Assessment
("EIA"). The DIA submitted requests that the mining permit be extended from
2024 to 2025, in order to expire at the same date as the current water permit.
After this, and after withdrawing an earlier EIA with a permit extension filed
in 2018 and which remained unresolved, in June 2023 Zaldívar submitted an EIA
application to extend its mining and water environmental permits through to
2051. This EIA includes a proposal to develop the primary ore deposit beyond
the current life of mine plan, requiring investments over the course of the
mine life of $1.2 billion, and a conversion of the water use at Zaldívar to
either seawater or water sourced from third parties, following a transition
period which considers an extension to the current continental water
extraction permit from 2025 to 2028.
Our operations at Centinela and Antucoya already operate solely using raw
seawater, and in 2022 45.4% of the Group's water withdrawals were from sea
water sources. The Group's water usage is expected to increase to 90% from
being either sea water or recirculated water on completion of the expansion of
the desalination plant at Los Pelambres in approximately 2026.
Suppliers
During December 2022, the Group launched its "Suppliers for a Better Future"
programme, with activities commencing during H1 2023. This initiative has a
focus on small and medium-sized local suppliers, to promote high standards in
sustainability, including initiatives in diversity and inclusion, safety,
community relations, local contracting and lowering emissions. This programme
focuses on four key areas: (1) encouraging local development through
employment and procurement, (2) improving working conditions, inclusion,
safety and health, (3) environmental stewardship and (4) a commitment to
innovation and supplier training.
In parallel, we have also created a free training platform for local suppliers
to develop their skills, raise standards and increase the competitiveness of
local industry.
PRODUCTION AND CASH COSTS
Group copper production in the first half of 2023 was 295,500 tonnes, 10.0%
higher than in the same period last year, principally reflecting a 23.9%
increase in throughput rates at Los Pelambres on a year-on-year basis.
Group gold production for the first six months increased by 16.8% to 86,200
ounces.
Molybdenum production was 4,900 tonnes, 22.5% higher than in the same period
last year.
Group cash costs before by-product credits in the first half of 2023 were
$2.48/lb, a year-on-year increase of 4.6% due to higher input costs and the
appreciation of the Chilean peso.
Net cash costs were $1.75/lb for the first half of the year, compared to
$1.82/lb in the first half of 2022, reflecting the increase in cash costs
before by-product credits more than offset by higher by-product credits.
COST AND COMPETITIVENESS PROGRAMME
During the first half of the year, the Cost and Competitiveness Programme
achieved savings and productivity improvements of $60 million, equivalent to
9c/lb as the Group has managed to reduce cash expenditure in some areas by
optimising and negotiating third party services and increasing productivity.
Given progress made in the first half, the Group has now achieved its savings
target of $60 million for the full year. A sustained focus on operational
efficiency remains a priority for the Group.
EXPLORATION AND EVALUATION COSTS
Exploration and evaluation costs were $62 million, $11 million higher than H1
2022, mainly as a result of a higher level of activity at Centinela during the
period.
TAXATION
The effective tax rate for the period was 30.0%, partly reflecting a one-off
adjustment to the provision for deferred withholding tax, which compares with
36.5% in 2022. For more information, please see the Financial Review Section
of this report.
The income tax expense for the H1 2023 was $229 million compared to $248
million in H1 2022.
CAPITAL EXPENDITURE AND DEPRECIATION & AMORTISATION
Capital expenditure in H1 2023 was $1,022 million, including $281 million of
sustaining capital expenditure, $390 million on mine development and $326
million of growth expenditure, of which $238 million was on the Los Pelambres
Expansion project.
Group capital expenditure for the full year is expected to be $1.9 billion, in
line with original guidance, assuming no further appreciation of the Chilean
peso. Opportunities to accelerate the execution of selected development
projects will continue to be evaluated.
Depreciation, amortisation and loss on disposals increased by $22 million to
$511 million.
NET DEBT
Net debt at the end of the period was $821 million, largely reflecting the
payment of the 2022 final dividend. The Net debt to EBITDA ratio at the end of
the period was 0.27 times. Cash flow from operations reduced to $1,296 million
compared with $1,683 million in H1 2022.
DIVIDENDS
The Board has declared an interim dividend of 11.7 cents per share, equivalent
to $115.3 million and a pay-out ratio of 35%, consistent with the Company's
policy and previous interim dividends. Any distribution of excess cash for the
year, as defined under the policy, will be made as part of the final dividend.
LABOUR AGREEMENTS
In the Mining Division, a labour negotiation with the supervisors' union at
Centinela was successfully concluded during May, resulting in a 3 year
contract with a one-off payment fully expensed in the period. In addition,
Zaldívar reached a 3 year agreement with its workforce in July. There are two
other labour agreements that will expire during the year, both of which are
with unions at Centinela (November).
In the Transport Division, a total of five union negotiations are due to take
place during the year, with two already settled during July and the remaining
three due to take place in September.
LEGISLATIVE
Proposed mining royalty
In May 2023, both the Chilean Senate and lower house of Congress approved the
proposed revision to Chile's mining royalty bill, with Presidential approval
confirmed in August 2023. The terms include a 1% ad valorem royalty on copper
sales, and a royalty ranging from 8% to 26% on operating profits depending on
each mining operation's level of profitability, combined with a provision
establishing that total taxation (including corporate income, the new royalty
tax and tax on dividends) should not exceed 46.5% of profitability. This new
law will come into effect at the beginning of 2024. Since Centinela and
Antucoya have tax stability agreements, the new royalty rates will only apply
from 2030. There will be a one-off non-cash adjustment to the deferred tax
balances of each of the Group's mining operations reflecting the impact of the
change in the 31 December 2023 results.
Constitutional convention
The process to approve a new constitution in Chile continues. In May 2023
members of the Constitutional Council that will draft the revised constitution
were elected. The Council is expected to agree a final draft of the revised
constitution in Q4 2023, before it is presented for approval in a national
referendum on 17 December 2023.
INNOVATION
Fleet autonomy / Remote operation
In January 2023, Centinela became the first private mining company in the
country to implement autonomy in 100% of the mining fleet in the Esperanza Sur
pit. Currently, the operation has 17 trucks and 2 autonomous drills that are
controlled centrally at the Company's remote operations centre (see section
below). In addition to this milestone, the Group has advanced work to
implement autonomous drilling operations at Zaldívar and remote operation of
equipment at Antucoya. Both projects will come into operation during the last
quarter of the year
Integrated Remote Operations Centre (IROC)
During H1 2023, Centinela transferred the operation of its autonomous truck
fleet to its IROC in the city of Antofagasta. Los Pelambres has an IROC in
Santiago, and both are improving the integration of their operations.
Cuprochlor-T®
The Company's Cuprochlor-T® technology to leach primary sulphide ores was
made available to each operation within the Group during H1 2023, in order to
evaluate its potential impact at each site. Exploratory tests have been
carried out with Antucoya beginning profile engineering studies, and Zaldívar
continuing the evaluation of its primary sulphides project.
Electromobility
The Group is working on the deployment of electromobility as part of its
long-term decarbonisation plan. In June 2023, Centinela inaugurated 50
electric light vehicles - the largest fleet of its kind in Chile's mining
industry - and other ancillary electric mining equipment such as front-end
loaders, excavators and trucks, with a focus on evaluating the performance of
similar equipment elsewhere in the Group.
REKO DIQ PROJECT
Following confirmation by the Australian Tax Office that the proceeds from the
sale of the Group's interest in Reko Diq (amounting to $945 million) were not
taxable, the funds have been distributed to the Company during H1 2023. The
Company will apply its capital allocation model to determine the final use of
the proceeds.
FUTURE GROWTH
The Group has a pipeline of growth projects to develop our significant 20
billion tonne Mineral Resource base, which we are currently advancing through
a disciplined process of project evaluation.
The desalination plant for Los Pelambres is nearing the end of its
commissioning phase. The plant achieved an average production rate of 160
litres per second of desalinated water in June 2023, and is expected to
continue to ramp-up production during H2 2023.
At the concentrator expansion project at Los Pelambres, pre-operational
testing work started in Q2 2023, alongside the commissioning of some key
sections of the project and the connection of main facilities to the national
grid. The commissioning phase of this growth project is expected to be
completed in H2 2023.
An updated study into the development of the Centinela Second Concentrator
project is expected to be submitted to the Board for consideration by the end
of the year.
OUTLOOK
The rescheduling of marine work at the desalination plant due to sea swell
conditions combined with lack of rainfall in H1 2023, has decreased this
year's expected production at Los Pelambres, and as such, guidance for full
year is adjusted to 640-670,000 tonnes of copper production. Further details
on guidance for the year can be found above.
The Company's average realised copper price was $3.99/lb in H1 2023, 3.4%
below the same period in 2022. Looking forward, the global shift towards clean
electricity has elevated demand for copper at a time when global supply is
facing issues such as declining ore grades, supply disruptions, prolonged
permitting processes for new projects, amongst other factors. Global copper
consumption is estimated to increase by 2.4% per annum between 2021 and 2050,
with total demand rising from approximately 25 million tonnes to 53 million
tonnes during this timeframe, and modelling of net-zero scenarios forecast a
potential shortfall of up to 9.9 million tonnes of refined copper by
2035.((1)) To close this supply gap, it is expected that higher copper prices,
and reduced permitting delays for both greenfields and brownfields expansion
projects will be required to incentivise more projects into development.
In Chile, the proposed mining royalty received approval from the Senate and
lower house of Congress, as well as Presidential approval in August 2023,
following five years of debate within Chile that has created uncertainty for
investors in Chile's mining sector. The process to determine a new
constitution will see a national referendum on 17 December 2023, following the
election of the members of the Constitutional Council in May 2023.
We have a range of growth projects being implemented throughout our portfolio
that will provide incremental growth in the medium term, including ongoing
studies into the potential construction of a second concentrator at Centinela,
which provides a pathway to grow output to 900,000 tonnes of copper
production. The Company will continue to evaluate opportunities to accelerate
the execution of selected development projects.
(( 1 (#_ftnref1) )) Source: S&P Global, "The Future of Copper" Report,
July 2022.
REVIEW OF OPERATIONS AND PROJECTS
MINING DIVISION
LOS PELAMBRES
Financial performance
EBITDA at Los Pelambres was $769.9 million in the first half of 2023, a 50.8%
increase compared with $510.6 million in the first six months of 2022. This
increase was mainly due to higher sales of copper (34.2% increase), molybdenum
(37.0% increase) and gold (34.9% increase), which was partially offset by
higher operating costs during the period. The production of molybdenum and
gold increased by 25.9% and 27.3% respectively.
Production
In the first six months of 2023, copper production increased by 30.6% to
128,500 tonnes compared with the same period last year, mainly driven by a
23.9% increase in throughput. Operations were impacted by the continued lack
of rainfall in H1 2023 and the rescheduled ramp-up of the desalination plant
reducing throughput below the anticipated levels but, as mentioned previously,
these were higher than the prior period.
Molybdenum production for the first six months of the year increased to 3,400
tonnes from 2,700 in H1 2022, due to higher throughput and grades. Gold
production in H1 increased to 19,600 oz from 15,400 oz H1 2022, due to the
higher throughput.
Costs
Cash costs before by-product credits for the first six months of 2023 were
$2.04/lb, 1.0% higher than in the same period last year, as higher production
substantially offset higher input costs.
For the first six months of 2022, by-product credits were $0.87/lb, 25.4%
higher than the same period from 2022.
Net cash costs for the year to date decreased by 11.4% to $1.17/lb, driven by
higher by-product credits in H1 2023.
Capital expenditure
Total capital expenditure at Los Pelambres in the first six months of 2023 was
$486.6 million, of which $145.8 million was sustaining capital expenditure,
$96.4 million was mine development and $237.7 million was on the Los Pelambres
Expansion project.
Compared with H1 2022, total capital expenditure increased by 20.4%, with this
increase including a $30.3 million increase in sustaining capital expenditure,
a $29.4 million increase in mine development and a $19.2 million increase in
expenditure on the Los Pelambres Expansion.
CENTINELA
Financial performance
EBITDA for the first six months of 2023 was $489.3 million, a decrease of 7.1%
compared with the first half of 2022. This decrease was principally due to
lower copper cathode sales volumes, higher operating costs and the lower
realised copper price compared with the same period last year.
Production
Total copper production in H1 2023 was 109,200 tonnes, 1.9% lower than in H1
2022 due to lower throughput and ore grades at Centinela Cathodes, slightly
offset by higher grades at Centinela Concentrates.
Production of copper in concentrates was 74,200 tonnes for the half year,
12.1% higher than in the same period last year, mainly due to the expected
higher copper grade of 0.50% compared with 0.44% in H1 2022. This was
partially offset by decreased throughput.
Copper cathode production for the first six months was 35,000 tonnes, 22.4%
lower than in the same period last year primarily due to lower grades.
Gold production in H1 was 66,700 ounces, 14.2% higher than H1 last year as
grades, which are correlated to copper grades, increased.
Molybdenum production in H1 2023 increased to 1,500 tonnes from 1,300 tonnes
in H1 2022 due to higher grades and recoveries.
Costs
Cash costs before by-product credits for the first six months of 2023 were
$2.82/lb, 5.2% higher than the same period in 2022 primarily due to lower
production, higher input costs and the appreciation of the Chilean peso.
For the first six months of 2023, by-product credits were $0.94/lb, 24c/lb
higher than in the same period last year, reflecting higher input costs for
labour, partially offset by lower pricing for diesel and sulphuric acid. The
appreciation of the Chilean peso during H1 2023 also increased the Company's
cost base on a year-on-year basis.
Net cash costs during the first six months of the year were $1.88/lb, 10.0c/lb
lower than in H1 2022, reflecting strong pricing for molybdenum in early 2023.
Capital expenditure
Capital expenditure in the first six months of 2023 was $459.0 million, of
which $104.2 million was sustaining capex, $284.3 million was mine development
and $70.5 million was development capex, of which $51.7 million was on the
Centinela Second Concentrator project (H1 2022: $44.7 million).
Compared with H1 2022, total capital expenditure at Centinela increased by
18.5% in H1 2023, as a result of $52.7 million higher expenditure on
sustaining capital expenditure and a $50.8 million increase on mine
development.
ANTUCOYA
Financial performance
For the first half of the year, EBITDA was $103.9 million, a decrease of 32.3%
compared with $153.4 million in the same period last year, due to the lower
realised copper price and higher operating costs.
Production
Production in the first six months of 2023 was 38,000 tonnes, 4.4% higher than
the same period last year due to higher throughput and higher grades.
Costs
During the first six months, cash costs were 8.8% higher than in H1 2022 at
$2.72/lb, with key drivers being an increase in the acid consumption rate,
higher input costs and the appreciation of the Chilean peso.
Capital expenditure
Capital expenditure in the first six months of the year was $41.2 million, of
which $30.8 million was sustaining capex, $9.7 million was mine development
and $0.7 million was development capex.
Compared with H1 2022, capital expenditure increased by 88.1% in H1 2023,
which was mainly due to an increase of $9.8 million in sustaining capital
expenditure and $8.8 million on mine development.
ZALDÍVAR
Financial performance
Attributable EBITDA at Zaldívar was $42.5 million in the first half of 2023,
compared with $104.8 million in the same period last year because of lower
sales volumes and higher operating costs.
Production
Attributable copper production at Zaldívar for the year to date was 19,800
tonnes, 12.0% lower than in the same period last year due to lower throughput
and lower copper grades.
Costs
Cash costs during the first six months of 2023 were $2.96/lb compared with
$2.14/lb in the same period in 2022, mainly due to lower production, higher
expenditure on maintenance and spare parts, and the appreciation of the
Chilean peso.
Capital expenditure
In the first six months of 2023, attributable capital expenditure was $19.9
million of which $15.0 million was sustaining capital expenditure and $4.9
million was development capital expenditure.
Compared with H1 2022, capital expenditure was 20.7% lower, mainly due to an
expected decrease of $2.4 million in sustaining capital expenditure and $2.8
million on growth expenditure.
TRANSPORT DIVISION
Financial performance
EBITDA at the Transport Division was $35.6 million in the first half of 2023,
a 3.5% improvement on the same period last year because of higher revenue.
Transport volumes
Total transport volumes in the first half were 0.5% lower compared to H1 2022,
primarily related to operational interruptions following a fire at the port in
2022.
Capital expenditure
Capital expenditure for the first half of the year was $24.7 million, an
increase of 80.3% compared with the same period in 2022, with increased
investment in track maintenance and development projects.
GROWTH PROJECTS AND OPPORTUNITIES
LOS PELAMBRES EXPANSION
The Los Pelambres Expansion project is divided into two phases with Phase 1
expected to be in production in H2 2023 and Phase 2 in 2026.
Phase 1
This phase is designed to optimise throughput within the limits of the
existing operating, environmental and water extraction permits.
As mining progresses at Los Pelambres, ore hardness will increase. The
expansion is designed to compensate for this, increasing plant throughput from
its current capacity of 175,000 tonnes of ore per day to an average of 190,000
tonnes of ore per day. The expansion is divided into two sub-projects, the
construction of a desalination plant and water pipeline from the coast to the
El Mauro tailings storage facility, and the expansion of the concentrator
plant, which includes the installation of an additional SAG mill and ball
mill, and six additional flotation cells. The capital cost estimate for Phase
1 is $2.3 billion.
Compared to the case without project at the time the project was approved,
annual copper production will be increased by an average of 60,000 tonnes per
year over 15 years, starting at approximately 40,000 tonnes per year for the
first four to five years and rising to 70,000 tonnes per year for the rest of
the period as the hardness of the ore increases and the benefit of the higher
milling capacity is fully realised.
In 2020, the decision was made to change the scope of the project and double
the planned capacity of the desalination plant from 400 litres per second to
800 litres per second. However, the additional work on this expansion that can
be carried out during Phase 1 is limited by what is allowed under the permits
that have already been issued so the remaining work will be treated as a
separate project subject to the receipt of the necessary permits. The cost of
the additional work is included in the Phase 1 capital cost.
Work at the desalination plant progressed during H1 2023, and water production
averaged 160 litres per second in June 2023. The plant is expected to ramp-up
production during H2 2023, helping to stabilise water availability.
Pre-operational testing of the fourth concentrator line at Los Pelambres has
now commenced following the connection of this equipment to the national grid.
Commissioning of individual circuits such as the flotation circuit has
commenced, with the commissioning phase expected to be completed in H2 2023.
Phase 2 - Future expansion
Following the decision in 2020 to increase the size of the desalination plant,
Phase 2 of the expansion requires two separate Environmental Impact Assessment
("EIA") applications; one for the expansion of the desalination plant and one
for the extension of the mine life of Los Pelambres through an increase in the
size of the El Mauro tailings storage facility. The latter EIA will also
provide the option to further increase the throughput capacity of the
concentrator plant.
- Desalination plant expansion
This project will protect Los Pelambres from the future impact of climate
change and the deteriorating availability of water in the region. The project
cost will be reported as part of the Group's sustaining capital expenditure.
The project includes the expansion of the desalination plant and the
construction of a new water pipeline from the El Mauro tailings storage
facility to the concentrator plant. In 2021 Los Pelambres submitted the EIA
required for this project, which includes the desalination plant expansion and
two other sustaining capital infrastructure projects, the replacement of the
concentrate pipeline and the construction of certain planned enclosures at the
El Mauro tailings storage facility. EIA approval is expected in time for the
project to be completed in 2026, by which time over 90% of Los Pelambres'
water needs will be fulfilled by desalinated and recirculated water.
- Mine life extension
The current mine life of Los Pelambres is 12 years and is limited by the
capacity of the El Mauro tailings storage facility. The scope of the second
EIA will include increasing the capacity of the tailings storage facility and
the mine waste storage. This will extend the mine's life by a minimum of 15
years, accessing a larger portion of Los Pelambres' six billion tonnes of
mineral resources. The EIA will also provide for the option to increase
throughput to 205,000 tonnes of ore per day, increasing copper production by
an estimated 35,000 tonnes per year, according to the pre-feasibility studies
(2014).
The capital expenditure to extend the mine life was estimated at approximately
$500 million in a 2014 pre-feasibility study, with most of the expenditure on
mining equipment, increasing the capacity of the concentrator and the El Mauro
tailings facility. Key studies on tailings and waste storage capacity have
advanced and community consultations are underway. The relevant environmental
and social studies are being prepared and should be submitted to the
authorities during 2023/2024 as part of the EIA application.
Centinela Second Concentrator
We are currently evaluating the construction of a second concentrator and
tailings deposit some 7 kilometres from the existing concentrator, to take
place in two phases. The EIA for both phases was approved in 2016.
Detailed engineering plans and costings have recently been updated for Phase 1
of the project and key contracts finalised, subject to Board approval of the
project. The Phase 1 capacity of the new concentrator will be 95,000 tonnes of
ore per day, producing on average approximately 170,000 tonnes of copper
equivalent (copper, gold and molybdenum) a year over the first 10 years of
operation. This will move Centinela into the first cost quartile of global
producers.
The Phase 1 capital cost is estimated at $3.7 billion, including a
concentrator plant, Esperanza Sur capitalised stripping, mining equipment for
Esperanza Sur, a new tailings storage facility, a water supply system and
other infrastructure, pre-commercial production operating costs, and owner's
and other costs.
An updated study into the development of the Centinela Second Concentrator
project is expected to be submitted to the Board for consideration by the end
of the year. Work on Phase 2 would only start once construction of Phase 1 is
completed and it is operating successfully.
The second concentrator, and its potential further expansion to 150,000 tonnes
of ore per day, will source ore initially from the recently opened Esperanza
Sur pit and later from the Encuentro pit. The sulphide ore in the Encuentro
pit lies under the Encuentro Oxides reserves, which are expected to be
depleted by 2026. Fully exposing the sulphide ore in the optimal sequence
required to initiate feed to the second concentrator from the Encuentro Pit is
expected to require separate investments in infrastructure, mining equipment
and mine development activities, which would commence half-way through the
construction phase of the second concentrator and will span a period of 3-4
years. If the Company elects to proceed with the Centinela Second Concentrator
project, the combined investment in mine development and sustaining capital
across the Centinela district is expected to increase from an actual average
of $650 million per annum in 2021-2023 to an average of approximately $900
million per annum during 2025-2027, enabling a doubling of ore supply from
Centinela's mining operations.
During H1 2023, the Company continued the tender process inviting third
parties to provide water for Centinela's current and future operations by
acquiring the existing water supply system and building the new water
pipeline. This process is expected to be completed during the year. The
outsourcing of the water supply will only proceed if it improves the net
present value of the project.
Twin Metals Minnesota
Twin Metals Minnesota ("Twin Metals") is a wholly owned copper, nickel and
platinum group metals ("PGM") underground mining project, which holds copper,
nickel/cobalt and PGM deposits in north-eastern Minnesota, US. The planned
project is over a portion of the total resource and envisages mining and
processing 18,000 tonnes of ore per day for 25 years and producing three
separate concentrates - copper, nickel/cobalt and PGM.
In 2019, Twin Metals submitted its Mine Plan of Operations ("MPO") and Scoping
Environmental Assessment Worksheet Data Submittal, to the US Bureau of Land
Management ("BLM", a bureau in the Department of Interior) and the Minnesota
Department of Natural Resources ("DNR"), respectively. However, over the past
three years, while the Twin Metals project was advancing its environmental
review, several actions were taken by the federal government that have changed
the potential outcomes for the project.
In 2021, the BLM rejected advancing Twin Metals' preference right lease
applications ("PRLAs") and prospecting permit applications ("PPAs").
In early 2022, the Department of Interior ("DOI") took an additional action
through a legal opinion issued by the Office of the Solicitor ("M-Opinion").
This action arbitrarily cancelled Twin Metals' federal mining leases 1352 and
1353, citing concerns with the reinstatement and renewal process.
Also in early 2022, the BLM stopped its evaluation of Twin Metals' MPO and an
administrative court dismissed Twin Metals' appeal of that decision.
In August 2022, Twin Metals filed a claim in federal court challenging the
administrative actions resulting in the rejection of the PRLAs, the
cancellation of its federal leases 1352 and 1353, the rejection of its MPO and
the dismissal of the administrative appeal of the MPO rejection. Twin Metals
considers the actions of the Government to be arbitrary and capricious,
contrary to the law and in violation of its rights. This action is pending.
In January 2023, the DOI issued an order effectively banning mining in
approximately 225,000 acres of the Superior National Forest for 20 years,
subject to valid existing rights.
FINANCIAL REVIEW FOR THE SIX MONTHS ENDED 30 JUNE 2023
Results (unaudited)
Six months ended Six months ended
30.06.2023 30.06.2022
$m $m
Revenue 2,890.1 2,528.2
EBITDA (including share of EBITDA from associates and joint ventures) 1,331.0 1,237.7
Total operating costs (2,116.4) (1,886.9)
Operating profit from subsidiaries 773.7 641.3
Net share of results from associates and joint ventures (0.4) 49.1
Total profit from operations, associates and joint ventures 773.3 690.4
Net finance expense (8.8) (10.8)
Profit before tax 764.5 679.6
Income tax expense (229.3) (247.9)
Profit for the year 535.2 431.7
Attributable to:
Non-controlling interests 204.8 171.4
Profit attributable to the owners of the parent 330.4 260.3
Basic earnings per share cents cents
Basic earnings per share from continuing operations 33.5
26.4
The $70.1 million increase in the profit for the financial period attributable
to the owners of the parent from $260.3 million in the first six months of
2022 to $330.4 million in the current period reflected the following factors:
$m
Profit for the financial period attributable to the owners of the parent in H1 260.3
2022
Increase in revenue 361.9
Increase in total operating costs (229.5)
Decrease in net share of results from associates and joint ventures (49.5)
Decrease in net finance expenses 2.0
Decrease in income tax expense 18.6
Increase in non-controlling interests (33.4)
70.1
Profit for the financial period attributable to the owners of the parent in H1 330.4
2023
Revenue
The $361.9 million increase in revenue from $2,528.2 million in the first six
months of 2022 to $2,890.1 million in the current period reflected the
following factors:
$m
Revenue in the first six months of 2022 2,528.2
Increase in copper sales volumes 316.5
Decrease in realised copper price (82.7)
Increase in treatment and refining charges (30.8)
Increase in gold revenue 17.3
Increase in molybdenum revenue 130.3
Increase in silver revenue 4.8
Increase in transport division revenue 6.5
361.9
Revenue in the first six months of 2023 2,890.1
Revenue from the Mining division
Revenue in the first half of 2023 from the Mining division increased by $355.4
million, or 14.6%, to $2,791.6 million, compared with $2,436.2 million in the
first six months of 2022. The increase reflected a $203.0 million increase in
copper sales and a $152.4 million increase in by-product revenue.
Revenue from copper sales
Revenue from copper concentrate and copper cathode sales increased by $203.0
million, or 9.5%, to $2,332.8 million, compared with $2,129.8 million in the
first six months of 2022. The increase reflected the impact of $316.5 million
from higher sales volumes, partly offset by a $82.7 million reduction from
lower realised prices and $30.8 million from higher treatment and refining
charges.
(i) Copper volumes
Copper sales volumes reflected within revenue increased by 14.4% from 240,400
tonnes in 2022 to 275,100 tonnes in 2023, increasing revenue by $316.5
million. This increase was mainly due to higher volumes at Los Pelambres
(32,900 tonne increase), reflecting higher throughput in the current period in
comparison with the low throughout in the first six months of 2022 due to
limited water availability and the concentrate pipeline issue in June 2022.
(ii) Realised copper price
The average realised price decreased by 3.4% to $3.99/lb in the first six
months of 2023 (first half of 2022 - $4.13/lb), resulting in a $82.7 million
decrease in revenue. The LME average market price decreased by 10.8% in H1
2023 to $3.95/lb (first half of 2022 - $4.43/lb). In the first half of 2023
there was a $33.4 million positive impact from provisional pricing
adjustments, mainly as a result of a positive impact in the settlement of
sales invoiced in the previous year partially offset by the slight decrease in
the period end mark to market price to $3.78/lb at 30 June 2023, compared with
$3.80/lb at 31 December 2022. Conversely there had been a $206.8 million
negative impact from provisional pricing adjustments in the first six months
of 2022, which mainly reflected the decrease in the period-end copper price to
$3.75/lb at 30 June 2022, compared with $4.42/lb at 31 December 2021.
Realised copper prices are determined by comparing revenue (before treatment
and refining charges for concentrate sales) with sales volumes in the period.
Realised copper prices differ from market prices mainly because, in line with
industry practice, concentrate and cathode sales agreements generally provide
for provisional pricing at the time of shipment with final pricing based on
the average market price in future periods (normally around one month after
delivery to the customer in the case of cathode sales and four months after
delivery to the customer in the case of concentrate sales).
Further details of provisional pricing adjustments are given in Note 6 to the
condensed consolidated interim financial statements.
(iii) Treatment and refining charges
Treatment and refining charges (TC/RCs) for copper concentrate increased by
$30.8 million to $87.8 million in the first half of 2023, compared with $57.0
million in the first six months of 2022, reflecting higher rates and increased
concentrate sales volumes at Los Pelambres.
With sales of concentrates at Los Pelambres and Centinela, which are sold to
smelters and roasting plants for further processing into fully refined metal,
the price of the concentrate invoiced to the customer reflects the market
value of the fully refined metal less a "treatment and refining charge"
deduction, to reflect the lower value of this partially processed material
compared with the fully refined metal. For accounting purposes, the revenue
amount reflects the invoiced price (which reflects the net of the market value
of fully refined metal less the treatment and refining charges). However,
under the standard industry definition of unit cash costs, treatment and
refining charges are regarded as part of cash costs.
Accordingly, the increase in these charges has had a negative impact on
revenue in the year.
Revenue from molybdenum, gold and other by-product sales
Revenue from by-product sales at Los Pelambres and Centinela relate mainly to
molybdenum and gold and, to a lesser extent, silver. Revenue from by-products
increased by $152.4 million or 49.8% to $458.8 million in the first half of
2023, compared with $306.4 million in the first six months of 2022. This
increase was mainly due to the higher molybdenum realised price and higher
molybdenum sales volumes.
Revenue from molybdenum sales (net of roasting charges) was $272.2 million
(first half of 2022 - $141.9 million), an increase of $130.3 million. The
increase was due to higher sales volumes of 5,200 tonnes (first half of 2022 -
3,900 tonnes) and a 38.9% higher realised price of $25.0/lb (first half of
2022 - $18.0/lb).
Revenue from gold sales (net of treatment and refining charges) was $156.7
million (first half of 2022 - $139.4 million), an increase of $17.3 million
which reflected an increase in volumes and a higher realised price. Gold sales
volumes increased by 7.2% from 73,600 ounces in the first half of 2022 to
78,900 ounces in the first six months of 2023, mainly due to higher production
at Los Pelambres. The realised gold price was $1,989.4/oz in the first half of
2023 compared with $1,899.3/oz in the first six months of 2022, reflecting the
average market price for 2023 of $1,931.6/oz (2022 - $1,873.4/oz) and a
positive provisional pricing adjustment of $1.9 million.
Revenue from silver sales increased by $4.8 million to $29.9 million (first
six months of 2022 - $25.1 million). The increase was due to higher sales
volumes of 1.2 million ounces (first half of 2022 - 1.1 million ounces) and a
6.0% higher realised silver price of $24.9/oz (first six months of 2022 -
$23.5/oz).
Revenue from the Transport division
Revenue from the Transport division (FCAB) increased by $6.5 million or 7.1%
to $98.5 million (first six months of 2022 - $92.0 million), mainly due to
better prices linked to current sales contracts.
Total operating costs
The $229.5 million increase in total operating costs from $1,886.9 million in
the first half of 2022 to $2,116.4 million in the first six months of 2023
reflected the following factors:
$m
Total operating costs in the first half of 2022 1,886.9
Increase in mine-site operating costs 164.5
Increase in closure provision and other mining expenses 18.6
Increase in exploration and evaluation costs 10.6
Increase in corporate costs 8.2
Increase in Transport division operating costs 5.3
Increase in depreciation, amortisation and loss on disposals 22.3
229.5
Total operating costs in the first six months of 2023 2,116.4
Operating costs (excluding depreciation, amortisation and loss on disposals)
at the Mining division
Operating costs (excluding depreciation, amortisation and loss on disposals)
at the Mining division increased by $201.9 million to $1,542.2 million in the
first half of 2023, an increase of 15.1%. Of this increase, $164.5 million was
attributable to higher mine-site operating costs. This increase in mine-site
costs reflected higher general inflation, the stronger Chilean peso and
increased sales volumes in the period partially offset by the cost savings
from the Group's Cost and Competitiveness Programme, lower key input prices
and commercial costs. On a unit cost basis, weighted average cash costs
excluding treatment and refining charges and by-product revenue increased from
$2.25/lb in the first six months of 2022 to $2.32/lb in the first half of
2023. As detailed in the alternative performance measures section on page 61
of the half-year financial report, for accounting purposes by-product credits
and treatment and refining charges both impact revenue and don't therefore
affect operating expenses.
The Cost and Competitiveness Programme was implemented to reduce the Group's
cost base and improve its competitiveness within the industry. During the
first half of 2023, the programme achieved benefits of $60.5 million in the
mining division, of which $37.5 million reflected cost savings and $23 million
reflected the value of productivity improvements. Of the $37.5 million of cost
savings, $36.2 million related to Los Pelambres, Centinela and Antucoya, and
therefore impacted the Group's operating costs, and $1.3 million related to
Zaldívar (on a 100% basis) and therefore impacted the share of results from
associates and joint ventures.
Closure provisions and other mining expenses increased by $18.6 million.
Exploration and evaluation costs increased by $10.6 million to $62.0 million
(2022 - $51.4 million), reflecting increased exploration and evaluation
expenditure principally in respect of geotechnical drilling in Centinela.
Corporate costs increased by $8.2 million.
Operating costs (excluding depreciation, amortisation and loss on disposals)
at the Transport division
Operating costs (excluding depreciation, amortisation and loss on disposals)
at the Transport division increased by $5.3 million to $62.9 million (first
half of 2022 - $57.6 million), mainly due to general inflation and the
stronger Chilean peso.
Depreciation, amortisation and disposals
The depreciation and amortisation charge increased by $22.3 million in the
first half of 2023 to $511.3 million (first half of 2022 - $489.0 million).
This increase is mainly due to higher amortisation of IFRIC 20 stripping costs
at Centinela and Los Pelambres, as well as increased inventory variation,
partially offset by lower amortisation of pre-stripping and start-up costs at
Centinela.
Operating profit from subsidiaries
As a result of the above factors, operating profit from subsidiaries increased
by $132.4 million or 20.6% in 2023 to $773.7 million (first half of 2022 -
$641.3 million).
Share of results from associates and joint ventures
The Group's share of results from associates and joint ventures decreased by
$49.5 million to a loss of $0.4 million in the first six months of 2023,
compared with a profit of $49.1 million in the first half of 2022. Of this
decrease, $49.9 million was due to the lower profit from Zaldívar, reflecting
the decreased copper sales volumes, due to lower throughput and lower copper
grades, a lower realised copper price and higher cash costs.
EBITDA
EBITDA (earnings before interest, tax, depreciation and amortisation)
increased by $93.3 million or 7.5% to $1,331.0 million (first half of 2022 -
$1,237.7 million). EBITDA includes the Group's proportional share of EBITDA
from associates and joint ventures.
EBITDA from the Mining division increased by $91.6 million or 7.6% from
$1,200.3 million in the first six months of 2022 to $1,291.9 million this half
year. This reflected the higher revenue, partially offset by higher mine-site
costs and lower EBITDA from associates and joint ventures.
EBITDA at the Transport division increased by $1.7 million to $39.1 million in
2023 ($37.4 million - first half of 2022), reflecting the higher revenue and
slightly increased EBITDA from associates, offset by the higher operating
costs.
Commodity price and exchange rate sensitivities
The following sensitivities show the estimated approximate impact on EBITDA
for the first six months of 2023 of a 10% movement in the average copper,
molybdenum and gold prices and a 10% movement in the average US dollar /
Chilean peso exchange rate.
The impact of the movement in the average commodity prices reflects the
estimated impact on the relevant revenues during the first six months of 2023,
and the impact of the movement in the average exchange rate reflects the
estimated impact on Chilean peso denominated operating costs during the
period. These estimates do not reflect any impact in respect of provisional
pricing or hedging instruments, any potential inter-relationship between
commodity price and exchange rate movements, or any impact from the
retranslation or changes in valuations of assets or liabilities held on the
balance sheet at the period-end.
Average market commodity price / average exchange rate during the six months Impact of a 10% movement in the commodity price / exchange rate on EBITDA
ended 30.06.23
for the six months ended 30.06.23
$m
Copper price $3.95/lb 257
Molybdenum price $27.1/lb 31
Gold price $1,932/oz 15
US dollar / Chilean peso exchange rate 806 79
Net finance expense
Net finance expense decreased by $2.0 million to $8.8 million, compared with
$10.8 million in 2022.
Six months ended 30.06.23 Six months ended 30.06.22
$m $m
Investment income 72.1 4.3
Interest expense (50.9) (34.8)
Other finance items (30.0) 19.7
Net finance expense (8.8) (10.8)
Investment income increased from $4.3 million in 2022 to $72.1 million in
2023, mainly due to an increase in average interest rates.
Interest expense increased from $34.8 million in 2022 to $50.9 million in
2023, reflecting an increase in the average interest rates.
Other finance items were a net loss of $30.0 million, compared with a net gain
of $19.7 million in 2022, a variance of $49.7 million. This was mainly due to
the foreign exchange impact of the retranslation of Chilean peso denominated
assets and liabilities, which resulted in a $22.0 million loss in 2023
compared with a $26.6 million gain in 2022. In addition, there was an expense
of $7.9 million in respect of the unwinding of the discounting of provisions
(first half of 2022 - expense of $6.8 million).
Profit before tax
As a result of the factors set out above, profit before tax increased by 12.5%
to $764.5 million in the first half of 2023 (first half of 2022 - $679.6
million).
Income tax expense
The tax charge in the first half of 2023 decreased by $18.6 million to $229.3
million (first half of 2022 - $247.9 million) and the effective tax rate was
30.0% (first half of 2022 - 36.5%).
Six months Six months
ended ended
30.06.2023 30.06.2022
items items
$m % $m %
Profit before tax 764.5 679.6
Tax at the Chilean corporate tax rate of 27% (206.4) 27.0 (183.5) 27.0
Mining Tax (royalty) (47.1) 6.2 (41.0) 6.0
Deduction of mining royalty as an allowable expense in determination of first 13.2 (1.7) 11.7 (1.7)
category tax
Withholding tax 19.7 (2.6) (32.0) 4.7
Items not deductible from first category tax (6.9) 0.9 (13.7) 2.0
Adjustment in respect of prior years (0.9) 0.1 (2.5) 0.4
Tax effect of share of profit of associates and joint ventures (0.1) - 13.0 (1.9)
Impact of unrecognised tax losses on current tax (0.8) 0.1 0.1 0.0
Tax expense and effective tax rate for the period (229.3) 30.0 (247.9) 36.5
The effective tax rate for the period was 30.0%, partly reflecting a one-off
adjustment to the provision for deferred withholding tax, which compares with
36.5% in 2022. The complete reconciliation between the effective tax rate and
the statutory tax rate reflects the following points:
The effective tax rate items of 30.0% varied from the statutory rate
principally due to the mining tax (royalty) (net impact of $33.9 million /
4.5% including the deduction of the mining tax (royalty) as an allowable
expense in the determination of first category tax), items not deductible for
Chilean corporate tax purposes, principally the funding of expenses outside of
Chile (impact of $6.9 million / 0.9%), and adjustments in respect of prior
years (impact of $0.9 million / 0.1%), the impact of unrecognised tax losses
(impact of $0.8 million / 0.1%), the recognition of the Group's share of
results from associates and joint ventures, which are included in the Group's
profit before tax net of their respective tax charges (impact of $0.1 million
/ nil), partly offset by the impact of the withholding tax relating to the
remittance of profits from Chile (impact of $19.7 million / 2.6%).
Non-controlling interests
Profit for the first half of the year attributable to non-controlling
interests was $204.8 million, compared with $171.4 million in the first half
of 2022, an increase of $33.4 million. This reflected the increase in earnings
analysed above.
Earnings per share
Six months ended 30.06.23 Six months ended
30.06.22
$ cents $ cents
Basic earnings per share 33.5 26.4
Earnings per share calculations are based on 985,856,695 ordinary shares.
As a result of the factors set out above, profit attributable to equity
shareholders of the Company was $330.4 million, compared with $260.3 million
in the first half of 2022, and total earnings per share were 33.5 cents for
the first half of 2023 (first half of 2022 - 26.4 cents per share).
Dividends
Dividends per share declared in relation to the period are as follows:
Six months ended 30.06.23 Six months ended
30.06.22
$ cents $ cents
Ordinary dividends:
Interim 11.7 9.2
Total dividends to ordinary shareholders 11.7 9.2
The Board determines the appropriate dividend each year based on consideration
of the Group's cash balance, the level of free cash flow and underlying
earnings generated during the year and significant known or expected funding
commitments. It is expected that the total annual dividend for each year would
represent a payout ratio based on underlying net earnings for that year of at
least 35%.
The Board has declared an interim dividend for the first half of 2023 of 11.7
cents per ordinary share, which amounts to $115.3 million. The interim
dividend will be paid on 29 September 2023 to ordinary shareholders that are
on the register at the close of business on 1 September 2023.
Capital expenditure
Capital expenditure increased by $190.9 million from $831.0 million in the
first half of 2022 to $1,021.9 million in the current period, mainly due to
increased sustaining capex at Centinela and Los Pelambres, and increased mine
development principally at Centinela.
Capital expenditure figures quoted in this report are on a cash flow basis,
unless stated otherwise.
Cash flows
The key features of the cash flow statement are summarised in the following
table.
Six months ended 30.06.23 Six months ended 30.06.22
$m $m
Cash flows from continuing operations 1,296.4 1,682.5
Income tax paid (323.2) (620.6)
Net interest paid (18.2) (26.2)
Purchases of property, plant and equipment (1,021.9) (831.0)
Dividends paid to equity holders of the Company (497.9) (1,172.2)
Dividends paid to non-controlling interests - (80.0)
Dividends from associates and joint ventures - 50.0
Disposal of JV 944.7 -
Investment in other financial assets (290.1) -
Acquisition of equity investments (8.4) -
Other items (0.1) (0.1)
Changes in net cash/(debt) relating to cash flows 81.3 (997.6)
Other non-cash movements (14.8) (23.0)
Effects of changes in foreign exchange rates (2.0) (11.3)
Movement in net cash/(debt) in the period 64.5 (1,031.9)
Net (debt)/cash at the beginning of the year (885.8) 540.5
Net (debt) at the end of the period (821.3) (491.4)
Cash flows from continuing operations were $1,296.4 million in the first half
of 2023 compared with $1,682.5 million in the first half of 2022. This
reflected EBITDA from subsidiaries for the period of $1,285.0 million (first
half of 2022 - $1,130.3 million) adjusted for the negative impact of a net
working capital increase of $12.2 million (first half of 2022 - positive
impact of $569.7 million from a net working capital decrease), partly offset
by a non-cash increase in provisions of $23.6 million (first half of 2022 -
negative impact of a decrease in provisions of $17.5 million).
The $12.2 million working capital increase in the first six months of 2023
reflected an increase of work in progress inventories at Los Pelambres and
Centinela, and a decrease in accounts payables, partially offset by a decrease
in receivables, predominantly due to lower sales volumes at June 2023 compared
with December 2022. The $569.7 million working capital decrease in the first
six months of 2022 was mainly due to a decrease in receivables, reflecting
lower sales volumes in June 2022 relative to December 2021, partly as a result
of the concentrate pipeline issue at Los Pelambres in June 2022.
The net cash outflow in respect of tax in the first half of 2023 was $323.2
million (first half of 2022 - $620.6 million). This amount differs from the
current tax charge in the consolidated income statement of $284.3 million
(first half of 2022 - $276.1 million) mainly because cash tax payments for
corporate tax and the mining tax include payments on account for the current
year (based on prior periods' profit levels) of $311.0 million (first half of
2022 - $272.3 million), withholding tax payments of $0.1 million (first half
of 2022 - $21.2 million), the settlement of outstanding balances in respect of
the previous year's tax charge of $14.6 million (first half of 2022 - $332.2
million), as well as the recovery of $2.6 million relating to prior years
(first half of 2022 - recovery of $5.1 million).
Capital expenditure in the first half of 2023 was $1,021.9 million compared
with $831.0 million in the first half of 2022. This included expenditure of
$486.6 million at Los Pelambres (first half of 2022 - $404.0 million), $459.0
million at Centinela (first half of 2022 - $387.2 million), $41.2 million at
Antucoya (first half of 2022 - $21.9 million), $10.5 million at Corporate
(first half of 2022 - $4.1 million) and $24.7 million at the Transport
division (first half of 2022 - $13.8 million). The increase in capital
expenditure reflects higher sustaining capex at Centinela and Los Pelambres,
and increased mine development principally at Centinela.
As detailed in Note 14, in December 2022 Antofagasta completed its disposal of
its 50% interest in the Tethyan joint venture. It was agreed that the disposal
proceeds would be distributed to Antofagasta during 2023. In May 2023 the
disposal proceeds of $944.7 million, plus interest of $11.6 million, were
received by the Group.
There was a cash outflow of $290.1 million in respect of investment in other
financial assets in the first six months of 2023 (2022 - nil).
Dividends paid to equity holders of the Company in the first half of 2023 were
$497.9 million (first half of 2022 - $1,172.2 million), related to the payment
of the final dividend declared in respect of 2022.
Dividends paid by subsidiaries to non-controlling shareholders were nil for
the first half of 2023 (first half of 2022 was $80.0 million).
Financial position
At 30.06.23 At 31.12.22
$m $m
Cash, cash equivalents and liquid investments 2,349.5 2,391.2
Total borrowings (3,170.8) (3,277.0)
Net cash/(debt) at the end of the period (821.3) (885.8)
At 30 June 2023, the Group had combined cash, cash equivalents and liquid
investments of $2,349.5 million (31 December 2022 - $2,391.2). Excluding the
non-controlling interest share in each partly-owned operation, the Group's
attributable share of cash, cash equivalents and liquid investments was
$1,971.5 million (31 December 2022 - $1,991.0 million).
Total Group borrowings at 30 June 2023 were $3,170.8 million (at 31 December
2022 - $3,277.0 million). The decrease of $106.2 million was mainly due to
repayment of part of the senior loans at Centinela ($55.6 million), Los
Pelambres ($25.0 million), Antucoya ($25.0 million) and the Transport division
($5.3 million) partly offset by $18.6 million of new finance leases.
Excluding the non-controlling interest share in each partly-owned operation,
the Group's attributable share of the borrowings was $2,376.0 million (31
December 2022 - $2,449.7 million).
This resulted in net debt at 30 June 2023 of $821.3 million (31 December 2022
- net debt $885.8 million). Excluding the non-controlling interest share in
each partly-owned operation, the Group had an attributable net debt position
of $404.5 million (31 December 2022 - net debt $458.7 million).
Going concern
The financial information contained in this half-year financial report has
been prepared on the going concern basis. Details of the factors which have
been taken into account in assessing the Group's going concern status are set
out in Note 1 to the half-year financial report.
Principal risks and uncertainties
There are a number of potential risks and uncertainties which could have a
material impact on the Group's performance over the remaining six months of
the financial year and could cause actual results to differ materially from
expected and historical results. The principal risks and uncertainties which
were disclosed in the 2022 Annual Report are as follows:
● Talent management
● Labour relations
● Safety and health
● Environmental management
● Climate change
● Community relations
● Political, legal and regulatory
● Corruption
● Operations
● Tailing storage
● Strategic resources
● Cyber security
● Liquidity
● Commodity prices and exchange rates
● Growth of mineral resource base and opportunities
● Project development and execution
● Innovation and digitisation
● External risks
There have been no changes to the above categories of key risks in the first
six months of 2023. A detailed explanation of the risks summarised above can
be found in the Risk Management section of the 2022 Annual Report, which is
available at www.antofagasta.co.uk.
Cautionary statement about forward-looking statements
This half-year results announcement contains certain forward-looking
statements. All statements other than historical facts are forward-looking
statements. Examples of forward-looking statements include those regarding the
Group's strategy, plans, objectives or future operating or financial
performance, reserve and resource estimates, commodity demand and trends in
commodity prices, growth opportunities, and any assumptions underlying or
relating to any of the foregoing. Words such as "intend", "aim", "project",
"anticipate", "estimate", "plan", "believe", "expect", "may", "should",
"will", "continue" and similar expressions identify forward-looking
statements.
Forward-looking statements involve known and unknown risks, uncertainties,
assumptions and other factors that are beyond the Group's control. Given these
risks, uncertainties and assumptions, actual results could differ materially
from any future results expressed or implied by these forward-looking
statements, which apply only as at the date of this report. Important factors
that could cause actual results to differ from those in the forward-looking
statements include: natural events, global economic conditions, demand, supply
and prices for copper and other long-term commodity price assumptions (as they
materially affect the timing and feasibility of future projects and
developments), trends in the copper mining industry and conditions of the
international copper markets, the effect of currency exchange rates on
commodity prices and operating costs, the availability and costs associated
with mining inputs and labour, operating or technical difficulties in
connection with mining or development activities, employee relations,
litigation, and actions and activities of governmental authorities, including
changes in laws, regulations or taxation. Except as required by applicable
law, rule or regulation, the Group does not undertake any obligation to
publicly update or revise any forward-looking statements, whether as a result
of new information, future events or otherwise.
Past performance cannot be relied on as a guide to future performance.
Consolidated Income Statement
Six months ended 30.06.2023 (Unaudited)(1) Six months ended 30.06.2022 (Unaudited) Year ended 31.12.2022 Year ended 31.12.2022 Year ended 31.12.2022 (Audited)
excluding exceptional items
exceptional items
note 3
Total Total Total Total Total
Notes $m $m $m $m $m
Revenue 5,6 2,890.1 2,528.2 5,862.0 - 5,862.0
Total operating costs 2 (2,116.4) (1,886.9) (4,227.7) - (4,227.7)
Operating profit from subsidiaries 2,5 773.7 641.3 1,634.3 - 1,634.3
Net share of results of associates and joint ventures 2,5,14 (0.4) 49.1 48.1 - 48.1
Gain on disposal of investment in joint venture 3,14 - - - 944.7 944.7
Operating profit from subsidiaries, and total profit from associates and joint 773.3 690.4 1,682.4 944.7 2,627.1
ventures
Investment income 72.1 4.3 40.2 - 40.2
Interest expense (50.9) (34.8) (78.6) - (78.6)
Other finance items (30.0) 19.7 (29.8) - (29.8)
Net finance expense 8 (8.8) (10.8) (68.2) - (68.2)
Profit before tax 764.5 679.6 1,614.2 944.7 2,558.9
Income tax expense 9 (229.3) (247.9) (603.6) - (603.6)
Profit for the period 535.2 431.7 1,010.6 944.7 1,955.3
Attributable to:
Non-controlling interests 204.8 171.4 422.3 - 422.3
Owners of the parent 330.4 260.3 588.3 944.7 1,533.0
US cents US cents US cents US cents US cents
Basic earnings per share (1) 10 33.5 26.4 59.7 95.8 155.5
1. All earnings in all the periods presented are from continuing
operations.
Consolidated Statement of Comprehensive Income
Six months Six months Year ended 31.12.2022 (Audited)
ended 30.06.2023 (Unaudited) ended
30.06.2022 (Unaudited)
$m $m $m
Profit for the period 535.2 431.7 1,955.3
Items that may be or were subsequently reclassified to profit or loss:
Currency translation adjustment 0.4 (0.7) (0.4)
Total items that may be or were subsequently reclassified to profit or loss 0.4 (0.7) (0.4)
Items that will not be subsequently reclassified to profit or loss:
Actuarial losses on defined benefit plans (1.5) (1.9) (18.1)
Gains/(losses) on fair value of equity investments 0.6 (2.1) 15.8
Tax relating to these items 0.2 0.7 5.7
Share of other comprehensive losses of associates and joint ventures, net of (0.9) - -
tax
Total Items that will not be subsequently reclassified to profit or loss (1.6) (3.3) 3.4
Total other comprehensive (expense)/income (1.2) (4.0) 3.0
Total comprehensive income for the period 534.0 427.7 1,958.3
Attributable to:
Non-controlling interests 204.5 171.0 418.1
Owners of the parent 329.5 256.7 1,540.2
Total comprehensive income for the period - continuing operations 534.0 427.7 1,958.3
Consolidated Statement of Changes in Equity
For the six months ended 30.06.2023 (Unaudited)
Share capital Share premium Other reserves Retained earnings Equity attributable to equity owners of the parent Non- controlling interests Total
equity
$m $m $m $m $m $m $m
Balance at 1 January 2023 89.8 199.2 5.0 8,333.5 8,627.5 3,016.9 11,644.4
Profit for the period - - - 330.4 330.4 204.8 535.2
Other comprehensive income /(expense) for the period - - 1.0 (1.9) (0.9) (0.3) (1.2)
Total comprehensive income for the period - - 1.0 328.5 329.5 204.5 534.0
Dividends - - - (497.9) (497.9) - (497.9)
Balance at 30 June 2023 89.8 199.2 6.0 8,164.1 8,459.1 3,221.4 11,680.5
For the six months ended 30.06.2022 (Unaudited)
Share capital Share premium Other reserves Retained earnings Equity attributable Non- controlling interests Total
to equity
owners of
the parent
$m $m $m $m $m $m $m
Balance at 1 January 2022 89.8 199.2 (10.4) 8,071.6 8,350.2 2,678.8 11,029.0
Profit for the period - - - 260.3 260.3 171.4 431.7
Other comprehensive expense for period - - (2.8) (0.8) (3.6) (0.4) (4.0)
Total comprehensive income for the year - - (2.8) 259.5 256.7 171.0 427.7
Dividends - - - (1,172.2) (1,172.2) (80.0) (1,252.2)
Balance at 30 June 2022 89.8 199.2 (13.2) 7,158.9 7,434.7 2,769.8 10,204.5
For the year ended 31.12.2022 Audited
Share capital Share premium Other reserves Retained earnings Equity attributable to equity owners of the parent Non- controlling interests Total
equity
$m $m $m $m $m $m $m
Balance at 1 January 2022 89.8 199.2 (10.4) 8,071.6 8,350.2 2,678.8 11,029.0
Profit for the year - - - 1,533.0 1,533.0 422.3 1,955.3
Other comprehensive income/(expense) for the year - - 15.4 (8.2) 7.2 (4.2) 3.0
Total comprehensive income for the year - - 15.4 1,524.8 1,540.2 418.1 1,958.3
Dividends - - - (1,262.9) (1,262.9) (80.0) (1,342.9)
Balance at 31 December 2022 89.8 199.2 5.0 8,333.5 8,627.5 3,016.9 11,644.4
Consolidated Balance Sheet
At 30.06.2023 (Unaudited) At 30.06.2022 (Unaudited) At 31.12.2022 (Audited)
Non-current assets Notes $m $m $m
Property, plant and equipment 13 12,059.1 10,924.0 11,543.5
Other non-current assets - 0.6 1.1
Inventories 407.2 321.0 347.0
Investments in associates and joint ventures 15 903.3 905.2 904.6
Trade and other receivables 61.2 56.2 51.0
Equity investments 99.5 6.4 90.5
Deferred tax assets 99.8 74.3 78.5
13,630.1 12,287.7 13,016.2
Current assets
Inventories 808.8 699.5 708.1
Trade, other receivables and other financial assets 1,166.7 366.5 2,087.2
Current tax assets 74.7 36.0 35.6
Liquid investments 18 2,046.2 2,005.6 1,580.8
Cash and cash equivalents 18 303.3 872.6 810.4
4,399.7 3,980.2 5,222.1
Total assets 18,029.8 16,267.9 18,238.3
Current liabilities
Short-term borrowings and other financial liabilities 16 (596.0) (268.6) (432.5)
Trade and other payables (973.0) (835.1) (1,079.7)
Short-term decommissioning & restoration provisions (23.6) (24.7) (33.2)
Current tax liabilities (53.5) (51.2) (60.4)
(1,646.1) (1,179.6) (1,605.8)
Non-current liabilities
Medium and long-term borrowings and other financial liabilities 16 (2,574.8) (3,101.0) (2,844.5)
Trade and other payables (7.4) (18.5) (8.0)
Liabilities in relation to joint ventures 15 - (0.9) -
Post-employment benefit obligations (154.1) (100.6) (137.3)
Decommissioning and restoration provisions (457.9) (301.7) (455.0)
Deferred tax liabilities (1,509.0) (1,361.1) (1,543.3)
(4,703.2) (4,883.8) (4,988.1)
Total liabilities (6,349.3) (6,063.4) (6,593.9)
Net assets 11,680.5 10,204.5 11,644.4
Equity
Share capital 89.8 89.8 89.8
Share premium 199.2 199.2 199.2
Other reserves 6.0 (13.2) 5.0
Retained earnings 8,164.1 7,158.9 8,333.5
Equity attributable to owners of the parent 8,459.1 7,434.7 8,627.5
Non-controlling interests 3,221.4 2,769.8 3,016.9
Total equity 11,680.5 10,204.5 11,644.4
The condensed consolidated interim financial statements were approved by the
Board of Directors on 9 August 2023
Consolidated Cash Flow Statement
At 30.06.2023 (Unaudited) At 30.06.2022 (Unaudited) At 31.12.2022 (Audited)
Notes $m $m $m
Cash flows from continuing operations 17 1,296.4 1,682.5 2,738.3
Interest paid (70.5) (31.6) (74.3)
Income tax paid (323.2) (620.6) (787.1)
Net cash from operating activities 902.7 1,030.3 1,876.9
Investing activities
Dividends from associates and joint ventures 15 - 50.0 50.0
Investment in other financial assets (290.1) - -
Acquisition of equity investments (8.4) - (66.5)
Disposal of interest in joint venture 14 944.7 - -
Proceeds from sale of property, plant and equipment - 0.1 0.2
Purchases of property, plant and equipment (1,021.9) (831.0) (1,879.2)
Net (increase) /decrease in liquid investments 18 (449.6) 964.1 1,388.9
Interest received 52.3 5.4 29.1
Net cash used in investing activities (773.0) 188.6 (477.5)
Financing activities
Dividends paid to owners of the parent (497.9) (1,172.2) (1,262.9)
Dividends paid to preference shareholders of the Company (0.1) (0.1) (0.1)
Dividends paid to non-controlling interests - (80.0) (80.0)
Proceeds from issue of new borrowings - 866.1 865.9
Repayments of borrowings (110.8) (640.5) (751.3)
Principal elements of lease payments (35.1) (54.6) (105.4)
Net cash used in financing activities (643.9) (1,081.3) (1,333.8)
Net (decrease)/increase in cash and cash equivalents 18 (514.2) 137.6 65.6
Cash and cash equivalents at beginning of the period 810.4 743.4 743.4
Net (decrease)/increase in cash and cash equivalents 18 (514.2) 137.6 65.6
Effect of foreign exchange rate changes 18 7.1 (8.4) 1.4
Cash and cash equivalents at end of the period 18 303.3 872.6 810.4
Notes
1. General information and accounting policies
a) General information
These condensed consolidated interim financial statements ("the interim
financial statements") of the Antofagasta plc Group for the half-year
reporting period ended 30 June 2023 were approved for issue by the Board of
Directors of the Company on 9 August 2023. The interim financial statements
are unaudited.
These interim financial statements have been prepared under the accounting
policies as set out in the statutory accounts for the period ended 31 December
2022.
The interim financial statements have been prepared in accordance with
UK-adopted International Accounting Standards and with the requirements of the
Companies Act 2006 as applicable to companies reporting under those standards.
These interim financial statements do not include all of the notes of the type
normally included in annual financial statements. Accordingly, the
consolidated financial information is not in full accordance with UK-adopted
International Accounting Standards. The consolidated financial information has
been prepared on the going concern basis.
The information contained in this announcement for the periods ended 30 June
2022 and 31 December 2022 also does not constitute statutory accounts. A copy
of the statutory accounts for the year ended 31 December 2022 has been
delivered to the Registrar of Companies. The auditors' report on those
accounts was unqualified, with no matters by way of emphasis, and did not
contain statements under sections 498(2) or (3) of the Companies Act 2006.
The Group's total revenue was previously referred to as "Group revenue" on the
face of the income statement; for simplicity and clarity this has now been
changed to "Revenue".
Going concern
The Directors have assessed the going concern status of the Group, considering
the period to 31 December 2024.
The Group's business activities, together with those factors likely to affect
its future performance, are set out in the Directors' Comments, and in
particular within the Review of Operations. Details of the cash flows of the
Group during the period, along with its financial position at the period-end,
are set out in the Financial Review. The condensed consolidated financial
statements include details of the Group's cash, cash equivalents and liquid
investment balances in Note 18, and details of borrowings are set out in Note
16.
When assessing the going concern status of the Group, the Directors have
considered in particular its financial position, including its significant
balance of cash, cash equivalents and liquid investments and the terms and
remaining durations of the borrowing facilities in place. The Group had a
strong financial position as at 30 June 2023, with combined cash, cash
equivalents and liquid investments of $2,349.5 million. Total borrowings were
$3,170.8 million, resulting in a net debt position of $821.3 million. Of the
total borrowings, only $596.0 million is repayable within one year, and $744.9
million repayable between one and two years.
When assessing the prospects of the Group, the Directors have considered the
Group's copper price forecasts, the Group's expected production levels,
operating cost profile and capital expenditure. These forecasts are based on
the Group's budgets and life-of-mine models, which are also used when
assessing relevant accounting estimates, including depreciation, deferred
stripping and closure provisions. This analysis has focused on the existing
asset base of the Group, without factoring in potential development projects,
which is considered appropriate for an assessment of the Group's ability to
manage the impact of a depressed economic environment. The analysis has only
included the drawdown of existing committed borrowing facilities, and has not
assumed that any new borrowing facilities will be put in place. The analysis
has included the forecast impact of the new Chilean mining royalty. The
Directors have assessed the key risks which could impact the prospects of the
Group over the going concern period and consider the most relevant to be risks
to the copper price outlook, as this is the factor most likely to result in
significant volatility in earnings and cash generation. Robust downside
sensitivity analyses have been performed, assessing the standalone impact of
each of:
● A significant deterioration in the future copper price forecasts
by 20% throughout the going concern period,
● An even more pronounced short-term reduction of a further 50
c/lb in the copper price for a period of 3 months, in addition to the above
deterioration of 20% in the copper price throughout the review period,
● The potential impact of the Group's most significant individual
operational risks, and
● A shutdown of any one of the Group's operations for a period of
three months.
The stability of tailings storage facilities represents a potentially
significant operational risk for mining operations globally. The Group's
tailings storage facilities are designed to international standards,
constructed using downstream methods, subject to rigorous monitoring and
reporting, and reviewed regularly by an international panel of independent
experts. Given these standards of design, development, operations and review,
the impact of a potential tailings dam failure has not been included in the
sensitivity analysis.
The above downside sensitivity analyses indicated results which could be
managed in the normal course of business, including the aggregate impact of a
number of the above sensitivities occurring at the same time. The analysis
indicated that the Group is expected to remain in compliance with all of the
covenant requirements of its borrowings throughout the review period and
retain sufficient liquidity. Based on their assessment of the Group's
prospects and viability, the Directors have formed a judgement, at the time of
approving the condensed consolidated interim financial statements, that there
are no material uncertainties that the Directors are aware of that cast doubt
on the Group's going concern status and that there is a reasonable expectation
that the Group has adequate resources to continue in operational existence for
the period to 31 December 2024. The Directors therefore consider it
appropriate to adopt the going concern basis of accounting in preparing the
condensed consolidated interim financial statements.
b) Adoption of new accounting standards
The following accounting standards, amendments and interpretations became
effective in the current reporting period but the application of these
standards and interpretations had no material impact on the amounts reported
in these interim financial statements:
● IFRS 17 Insurance Contracts,
● Deferred Tax related to Assets and Liabilities arising from a
Single Transaction (Amendments to IAS 12),
● International Tax Reform - Pillar Two Model Rules (Amendments to
IAS 12),
● Disclosure of Accounting Policies - Amendments to IAS 1 and IFRS
Practice Statement 2, and
● Definition of Accounting Estimates - Amendments to IAS 8.
c) Accounting standards issued but not yet effective
At the date of authorisation of these financial statements, the following
standards and interpretations, which have not been applied in these financial
statements, were in issue but not yet effective. It is expected that where
applicable, these standards and amendments will be adopted on each respective
effective date. None of these standards are expected to have a significant
impact on the Group.
Amendments to IFRSs Effective date
Lease Liability in a Sale and Leaseback (Amendments to IFRS 16) Annual periods beginning on or after January 1, 2024
Classification of Liabilities as Current or Non-Current (Amendments to IAS 1) Annual periods beginning on or after January 1, 2024
Non-current Liabilities with Covenants (Amendments to IAS 1) Annual periods beginning on or after January 1, 2024
Supplier Finance Arrangements (Amendments to IAS 7 and IFRS 7)(1) Annual periods beginning on or after January 1, 2024
(1) These amendments are still subject to UK endorsement.
d) Critical accounting judgements and key sources of
estimation uncertainty
The critical accounting judgements and keys estimate applied in these interim
financial statements (which are consistent with the 2022 year-end) are:
Judgements
● Non-financial assets impairment- see Note 4 for relevant details
● Capitalisation of project costs within property, plant and
equipment - the costs of developing mining properties are capitalised as
property, plant and equipment when the mining project is considered to be
commercially viable. Commercial viability is normally considered to be
demonstrable when the project has completed a pre-feasibility study, and the
start of a feasibility study has been approved. Management reviews amounts
capitalised to ensure that the treatment of that expenditure as capital rather
than operating expenditure is reasonable, in particular in respect of the
commercial viability of the project.
Estimates
● Deferred taxation - no deferred tax liability is recognised in
respect of the undistributed earnings of subsidiaries where it is not likely
that those profits will be distributed in the foreseeable future. When
determining whether it is likely that distributions will be made in the
foreseeable future, and what is the appropriate foreseeable future period for
this purpose, the Group considers factors such as the predictability of the
likely future Group dividends, taking into account the Group's dividend policy
and the level of potential volatility of the Group's future earnings, as well
as the current level of distributable reserves at the Antofagasta plc entity
level.
2. Operating profit from subsidiaries, and total profit from associates
and joint ventures
Six months Six months Year ended 31.12.2022 (Audited)
ended ended
30.06.2023 (Unaudited) 30.06.2022 (Unaudited)
$m $m $m
Revenue 2,890.1 2,528.2 5,862.0
Cost of sales (1,677.2) (1,490.6) (3,432.7)
Gross profit 1,212.9 1,037.6 2,429.3
Administrative and distribution expenses (316.4) (294.0) (558.9)
Other operating income 21.1 21.1 37.9
Other operating expenses(1) (143.9) (123.4) (274.0)
Operating profit from subsidiaries 773.7 641.3 1,634.3
Net share of (loss)/profit from associates and joint ventures (0.4) 49.1 48.1
Gain on disposal of investment in joint venture - - 944.7
Total profit from operations, associates and joint ventures 773.3 690.4 2,627.1
(1)Other operating expenses comprise $62.0 million of exploration and
evaluation expenditure for the 2023 half year (six months ended 30 June 2022 -
$51.4 million), $10.3 million in respect of the employee severance provision
for the 2023 half year (six months ended 30 June 2022 - $7.2 million), $14.7
million in respect of the closure provision for the 2023 half year (six months
ended 30 June 2022 - $6.6 million), and $56.9 million of other expenses for
the 2023 half year (six months ended 30 June 2022 - $58.2 million).
3. Exceptional items
Exceptional items are material items of income and expense which are
non-regular or non-operating and typically non-cash, including impairments and
profits or losses on disposals. The tax effect of items presented as
exceptional is also classified as exceptional, as are material deferred tax
adjustments that relate to more than one reporting period. The classification
of these types of items as exceptional is considered to be useful as it
provides an indication of the underlying earnings generated by the ongoing
businesses of the Group.
Six months ended 30 June 2023
There were no exceptional items in the six months ended 30 June 2023.
2022 - Disposal of investment in Tethyan joint venture
On 15 December 2022, Antofagasta entered into definitive agreements to exit
its interest in the Tethyan joint venture. As a result, Antofagasta recognised
a gain on disposal of its investment in the joint venture as at 15 December
2022 of $944.7 million. Further details of the agreements and gain on disposal
are set out in Note 14.
4. Asset sensitivities
There were no indicators of potential impairment, or reversal of previous
impairments, for the Group's non-current assets associated with its mining
operations as at 30 June 2023, and accordingly no impairment tests have been
performed. The impairment indicator assessment included consideration of the
potential indicators set out in IAS 36, 'Impairment of Assets', which included
quantitative analysis based on the operations' life-of-mine models ("the
models"). These models provide indicative valuations and do not represent, or
comply with, a formal impairment assessment prepared in accordance with IAS
36. Sensitivity analyses have been performed on the models to quantify the
impact of changes in assumptions to which the models are most sensitive and to
support the overall impairment indicator assessment.
As noted above, no qualitative indicators of potential impairment or potential
reversal of impairment were identified. Similarly, no quantitative indicators
of impairment were identified, with the models used within the impairment
indicator assessment continuing to indicate positive headroom for all of the
Group's mining operations, including the Zaldívar joint venture, with the
indicated value of the assets in excess of their carrying value.
Relevant aspects of this process are detailed below:
Copper price outlook
The assumption to which the value of the assets is most sensitive is the
future long-term copper price. The copper price forecasts (representing the
Group's estimates of the assumptions that would be used by independent market
participants in valuing the assets) are based on consensus analyst forecasts.
A long-term copper price of $3.70/lb (reflecting 2023 real terms) has been
used in the models for the impairment indicator assessment, which has
increased from $3.50/lb (reflecting 2022 real terms) at the prior year-end. As
an additional down-side sensitivity, an indicative valuation was performed
with a long-term copper price of $3.33/lb, reflecting a 10% reduction in the
long-term price forecast. Los Pelambres and Centinela still showed positive
headroom in their models in this alternative down-side scenario. However, the
Antucoya valuation indicated a potential deficit of $180 million and the
Zaldívar valuation indicated a potential deficit of $150 million (on a 50%
basis). This was a simple sensitivity exercise, looking at an illustrative
change in the forecast long-term copper price in isolation. In reality, a
deterioration in the long-term copper price environment is likely to result in
corresponding improvements in a range of input cost factors. In particular,
given that copper exports account for over 50% of Chile's exports,
historically there has often been a correlation between movements in the
copper price and the US dollar/Chilean peso exchange rate, and a decrease in
the copper price may therefore result in a weakening of the Chilean peso, with
a resulting reduction in the Group's operating costs and capital expenditure
in US$ terms. These likely cost reductions, as well as potential operational
changes which could be made in a weaker copper price environment, could partly
mitigate the impact of the lower copper price modelled in these estimated
potential sensitivities.
The US dollar/Chilean peso exchange rate
The value of the assets is also sensitive to movements in the US
dollar/Chilean peso exchange rate. A long-term exchange rate of Ch$785/$1 has
been used in the models considered as part of the impairment indicator
assessment. This compares with the long-term exchange rate of CH$850/$1 used
at the 2022 year-end. As an additional downside sensitivity an indicative
valuation was prepared with a 10% stronger long-term Chilean peso exchange
rate assumption. All of the Group's mining operations still showed positive
headroom in their models in this alternative down-side scenario. As noted
above, historically there has often been a correlation between movements in
the copper price and the US dollar/Chilean peso exchange rate, and so a
strengthening of the Chilean peso may often reflect a stronger copper price
environment, which could mitigate the impact of a stronger exchange rate.
Climate risks
The models incorporate estimates of potential future climate-related impacts.
In the 2022 Annual Report, the Group disclosed in line with the
recommendations of the Task Force on Climate-related Financial Disclosures
("TCFD"). As part of the preparation of the disclosures for the 2023 Annual
Report, scenario analyses assessing the potential future impact of transition
and physical risks, as well as potential copper price upside due to increased
demand for the construction of electric vehicles and renewable power
generating capacity, are being prepared. The combined estimated impact of
these factors has been incorporated into the models.
Chilean mining royalty
The models include the forecast impact of the new Chilean mining royalty.
Other relevant assumptions
In addition to the impact of the future copper price, the US dollar/Chilean
peso exchange rate, climate-related impacts and the new Chilean mining royalty
regime, the models used in the impairment indicator assessment are sensitive
to the assumptions in respect of future production levels, operating costs,
sustaining and development capital expenditure, and the discount rate used to
determine the present value of the future cash flows.
A real post-tax discount rate of 8% (calculated using relevant market data)
has been used in determining the present value of the changes in forecast
future cash flows from the assets as part of the quantitative analysis
performed for the overall impairment indicator assessment.
In the case of Zaldívar, in addition to the assumptions made in respect of
the factors outlined above, the conclusion that there are no impairment
indicators reflects certain assumptions about future operational factors to
which the model considered as part of the impairment indicator assessment is
sensitive, in particular the following:
● Currently, Zaldívar is permitted to extract water and mine until 2025 and
2024 respectively. To ensure the continuity of this operation, in March 2023
Zaldívar submitted a Declaration of Environmental Impact ("DIA"), a more
limited scope and simplified procedure than an Environmental Impact Assessment
("EIA"). The DIA submitted requests that the mining permit be extended from
2024 to 2025, to expire at the same date as the current water permit. After
this, and after withdrawing an earlier EIA application filed in 2018 which
remained unresolved, in June 2023 Zaldívar submitted an EIA application to
extend its mining and water environmental permits through to 2051. This EIA
includes a proposal to develop the primary sulphide ore deposit, extending the
current life of mine and requiring investments over the mine life of $1.2
billion, and a conversion of the water source for Zaldívar to either seawater
or water from third parties, following a transition period during which the
current continental water extraction permit is extended from 2025 to 2028. The
impairment indicator assessment assumes that the DIA and EIA will be granted,
to enable the continued operation of the mine without interruption. However,
if this is not the case, this is likely to be considered an indicator of a
potential impairment, requiring an IAS 36 impairment assessment at that point.
● Zaldívar's final pit phase, which represents approximately 20% of current
ore reserves, impacts a portion of Minera Escondida's mine property, as well
as infrastructure owned by third parties (a road, railway, power line and
pipelines). Mining of the phase will be subject to agreements or easements to
access these areas and relocate the infrastructure, and related permits. The
impairment indicator assessment assumes that the necessary agreements,
easements and permits will be obtained to allow the mining of the final pit
phase.
5. Segmental analysis
The Group's reportable segments, which are the same as its operating segments,
are as follows:
● Los Pelambres
● Centinela
● Antucoya
● Zaldívar
● Exploration and evaluation
● Corporate and other items
● Transport division
For management purposes, the Group is organised into two business divisions
based on their products - Mining and Transport. The mining division is split
further for management reporting purposes to show results by mine and
exploration activity. Los Pelambres produces primarily copper concentrate and
molybdenum as a by-product. Centinela produces copper concentrate containing
gold as a by-product, copper cathodes and molybdenum concentrates. Antucoya
and Zaldívar produce copper cathodes. The transport division provides rail
and road cargo transport together with a number of ancillary services. All the
operations are based in Chile. The Exploration and evaluation segment incurs
exploration and evaluation expenses. "Corporate and other items" comprises
costs incurred by the Company, Antofagasta Minerals S.A., the Group's mining
corporate centre and other entities, that are not allocated to any individual
business segment. Consistent with its internal management reporting, the
Group's corporate and other items are included within the mining division.
The Chief Operating decision-maker (the Group's Chief Executive Officer)
monitors the operating results of the business segments separately for the
purpose of making decisions about resources to be allocated and assessing
performance. Segment performance is evaluated based on the operating profit of
each of the segments.
a) Segment revenues and results
For the six months ended 30.06.2023 (Unaudited)
Los Pelambres Centinela Antucoya Zaldívar Exploration and evaluation(2) Corporate and other items Total Transport division Total
Mining
$m $m $m $m $m $m $m $m $m
Revenue 1,332.4 1,128.7 330.5 - - - 2,791.6 98.5 2,890.1
Operating costs excluding depreciation and amortisation (562.5) (639.4) (226.6) - (62.0) (51.7) (1,542.2) (62.9) (1,605.1)
Depreciation and amortisation (137.5) (300.6) (52.3) - - (7.9) (498.3) (13.0) (511.3)
Operating profit/(loss) 632.4 188.7 51.6 - (62.0) (59.6) 751.1 22.6 773.7
Net share of results from associates and joint ventures - - - (1.7) - - (1.7) 1.3 (0.4)
Operating profit from subsidiaries, and total profit from associates and joint 632.4 188.7 51.6 (1.7) (62.0) (59.6) 749.4 23.9 773.3
ventures
Investment income 20.4 6.7 3.2 - - 41.4 71.7 0.4 72.1
Interest expense (2.2) (7.2) (14.8) - - (26.1) (50.3) (0.6) (50.9)
Other finance items (8.7) (14.1) (2.8) - - (5.4) (31.0) 1.0 (30.0)
Profit/(loss) before tax 641.9 174.1 37.2 (1.7) (62.0) (49.7) 739.8 24.7 764.5
Tax (193.6) (47.9) (6.6) - - 28.0 (220.1) (9.2) (229.3)
Profit/(loss) for the period 448.3 126.2 30.6 (1.7) (62.0) (21.7) 519.7 15.5 535.2
Non-controlling interests 172.3 31.6 2.5 - - (1.6) 204.8 - 204.8
Profit/(loss) attributable to the owners of the parent 276.0 94.6 28.1 (1.7) (62.0) (20.1) 314.9 15.5 330.4
EBITDA(1) 769.9 489.3 103.9 42.5 (62.0) (51.7) 1,291.9 39.1 1,331.0
Additions to non-current assets
Additions to property, plant and equipment 480.1 458.1 48.0 - - 11.8 998.0 26.3 1,024.3
Segment assets and liabilities
Segment assets 7,178.1 5,904.7 1,679.2 - - 1,952.7 16,714.7 411.8 17,126.5
Investments in associates and joint ventures - - - 894.8 - - 894.8 8.5 903.3
Segment liabilities (3,125.8) (1,437.0) (511.4) - - (1,199.9) (6,274.1) (75.2) (6,349.3)
(1) EBITDA refers to Earnings Before Interest, Tax, Depreciation and
Amortisation. EBITDA is calculated by adding back depreciation, amortisation,
profit or loss on disposals and impairment charges to operating profit. This
comprises 100% of the EBITDA from the Group´s subsidiaries, and the Group´s
proportional share of the EBITDA of its associates and joint ventures.
(2) Operating cash outflow in the exploration and evaluation segment was $58.3
million.
For the six months ended 30.06.2022 (Unaudited)
Los Pelambres Centinela Antucoya Zaldívar Exploration and evaluation(2) Corporate and other items Total Mining Transport division Total
$m $m $m $m $m $m $m $m $m
Revenue 950.9 1,130.3 355.0 - - - 2,436.2 92.0 2,528.2
Operating costs excluding depreciation and amortisation (440.3) (603.4) (201.6) - (51.4) (43.6) (1,340.3) (57.6) (1,397.9)
Depreciation and amortisation (109.2) (307.3) (50.3) - - (7.6) (474.4) (14.6) (489.0)
Operating profit/(loss) 401.4 219.6 103.1 - (51.4) (51.2) 621.5 19.8 641.3
Net share of income/(loss) from associates and joint ventures - - - 48.6 - (0.3) 48.3 0.8 49.1
Investment income 1.3 1.1 0.3 - - 1.4 4.1 0.2 4.3
Interest expense (1.4) (4.5) (8.4) - - (19.0) (33.3) (1.5) (34.8)
Other finance items 4.0 13.4 2.1 - - 1.3 20.8 (1.1) 19.7
Profit/(loss) before tax 405.3 229.6 97.1 48.6 (51.4) (67.8) 661.4 18.2 679.6
Tax (121.5) (69.6) (27.3) - - (25.2) (243.6) (4.3) (247.9)
Profit/(loss) for the period 283.8 160.0 69.8 48.6 (51.4) (93.0) 417.8 13.9 431.7
Non-controlling interests 107.7 45.6 17.7 - - 0.4 171.4 - 171.4
Profit/(loss) for the period attributable to owners of the parent 176.1 114.4 52.1 48.6 (51.4) (93.4) 246.4 13.9 260.3
EBITDA(1) 510.6 526.9 153.4 104.8 (51.4) (44.0) 1,200.3 37.4 1,237.7
Additions to non-current assets
Capital expenditure 475.1 396.6 25.9 - - 4.1 901.7 14.7 916.4
Segment assets and liabilities
Segment assets 5,934.6 5,699.9 1,675.2 - - 1,634.6 14,944.3 418.4 15,362.7
Investments in associates and joint ventures - - - 898.6 - - 898.6 6.6 905.2
Segment liabilities (2,827.4) (1,459.2) (543.7) - - (1,149.7) (5,980.0) (83.4) (6,063.4)
(1) EBITDA refers to Earnings Before Interest, Tax, Depreciation and
Amortisation. EBITDA is calculated by adding back depreciation, amortisation,
profit or loss on disposals and impairment charges to operating profit. This
comprises 100% of the EBITDA from the Group´s subsidiaries, and the Group´s
proportional share of the EBITDA of its associates and joint ventures.
(2) Operating cash outflow in the exploration and evaluation segment was $40.7
million.
For the year ended 31.12.2022 Audited
Los Pelambres Centinela Antucoya Zaldívar Exploration and evaluation(2) Corporate and other items Total Transport division Total
Mining
$m $m $m $m $m $m $m $m $m
Revenue 2,558.9 2,406.2 703.5 - - - 5,668.6 193.4 5,862.0
Operating costs excluding depreciation, amortisation and loss on disposals (1,086.1) (1,249.0) (442.3) - (113.0) (75.0) (2,965.4) (119.1) (3,084.5)
Depreciation and amortisation (276.1) (710.2) (105.6) - - (18.7) (1,110.6) (30.5) (1,141.1)
Loss on disposals (0.5) (1.0) - - - (0.6) (2.1) - (2.1)
Operating profit/(loss) 1,196.2 446.0 155.6 - (113.0) (94.3) 1,590.5 43.8 1,634.3
Net share of results from associates and joint ventures - - - 47.3 - (0.7) 46.6 1.5 48.1
Gain on disposal of investment in joint venture (3) - - - - - 944.7 944.7 - 944.7
Operating profit from subsidiaries, and total profit from associates and joint 1,196.2 446.0 155.6 47.3 (113.0) 849.7 2,581.8 45.3 2,627.1
ventures
Investment income 10.7 6.6 2.4 - - 19.8 39.5 0.7 40.2
Interest expense (3.3) (10.6) (19.9) - - (44.2) (78.0) (0.6) (78.6)
Other finance items (5.2) (11.3) (6.6) - - (5.0) (28.1) (1.7) (29.8)
Profit/(loss) before tax 1,198.4 430.7 131.5 47.3 (113.0) 820.3 2,515.2 43.7 2,558.9
Tax (371.8) (130.8) (34.9) - - (50.8) (588.3) (15.3) (603.6)
Profit/(loss) for the year 826.6 299.9 96.6 47.3 (113.0) 769.5 1,926.9 28.4 1,955.3
Non-controlling interests 319.3 82.9 21.2 - - (1.1) 422.3 - 422.3
Profit/(loss) attributable to owners of the parent 507.3 217.0 75.4 47.3 (113.0) 770.6 1,504.6 28.4 1,533.0
EBITDA(1) 1,472.8 1,157.2 261.2 147.2 (113.0) (75.7) 2,849.7 80.0 2,929.7
Additions to non-current assets
Additions to property, plant and equipment 965.2 889.0 75.1 - 0.5 16.4 1,946.2 55.8 2,002.0
Segment assets and liabilities
Segment assets 6,786.6 5,922.8 1,708.0 - - 2,504.1 16,921.5 412.2 17,333.7
Investments in associates and joint ventures - - - 897.3 - - 897.3 7.3 904.6
Segment liabilities (3,155.0) (1,565.1) (558.1) - - (1,225.8) (6,504.0) (89.9) (6,593.9)
(1) EBITDA refers to Earnings Before Interest, Tax, Depreciation and
Amortisation. EBITDA is calculated by adding back depreciation, amortisation,
profit or loss on disposals and impairment charges to operating profit. This
comprises 100% of the EBITDA from the Group´s subsidiaries, and the Group´s
proportional share of the EBITDA of its associates and joint ventures.
(2) Operating cash outflow in the exploration and evaluation segment was $98.3
million.
(3) An exceptional gain of $944.7 million has been recognised in respect of
the Group's disposal of its investment in the Tethyan joint venture (see notes
3 and 14)
b) Entity wide disclosures
Revenue by product
Six months Six months Year ended 31.12.2022
ended ended 30.06.2022
30.06.2023
$m $m $m
Copper
- Los Pelambres 1,054.6 786.9 2,107.7
- Centinela concentrates 575.8 524.7 1,132.7
- Centinela cathodes 327.4 406.8 844.4
- Antucoya 327.2 352.1 697.5
Provision of shipping services
- Los Pelambres 23.0 21.9 51.9
- Centinela concentrates 18.3 31.3 58.5
- Centinela cathodes 3.2 3.2 6.7
- Antucoya 3.3 2.9 6.0
Gold
- Los Pelambres 41.5 29.3 75.4
- Centinela concentrates 115.2 110.1 238.4
Molybdenum
- Los Pelambres 197.6 100.1 291.4
- Centinela concentrates 74.6 41.8 100.8
Silver
- Los Pelambres 15.7 12.7 32.5
- Centinela concentrates 14.2 12.4 24.7
Total Mining 2,791.6 2,436.2 5,668.6
Transport division 98.5 92.0 193.4
2,890.1 2,528.2 5,862.0
( )
Revenue by location of customer
Six months Six months Year ended 31.12.2022
ended Ended
30.06.2023 30.06.2022
$m $m $m
Europe
- United Kingdom 6.9 37.6 71.0
- Switzerland 188.0 398.8 753.6
- Spain - 0.9 1.0
- Germany 82.8 86.4 140.0
- Rest of Europe 37.9 4.6 96.5
Latin America
- Chile 217.9 157.3 369.1
- Rest of Latin America 45.4 82.6 179.7
North America
- United States 173.4 112.1 312.3
Asia Pacific
- Japan 952.6 663.0 1,668.6
- China 584.8 562.4 1,072.0
- Singapore 244.0 161.3 423.8
- South Korea 235.6 148.6 332.2
- Hong Kong 75.9 25.8 178.2
- Rest of Asia 44.9 86.8 264.0
2,890.1 2,528.2 5,862.0
Information about major customers
In the first half of 2023, the Group´s mining revenue included $519.9 million
related to one large customer that individually accounted for more than 10% of
the Group's revenue (six months ended 30 June 2022 - one large customer
representing $363.4 million; year ended 31 December 2022 - one large customer
representing $785.5 million)
Non-current assets by location of asset
Six months Six months Year ended 31.12.2022
ended ended
30.06.2023 30.06.2022
Restated(1)
$m $m $m
- Chile 13,359.8 12,140.3 12,786.1
- Other 9.8 10.4 10.1
13,369.6 12,150.7 12,796.2
(1) The comparatives have been restated to show a reclassification of $9.5
million for the half year 2022 from the "Chile" to the "Other" category.
The following table reconciles between the total non-current assets on the
balance sheet with the non-current assets relevant to the above geographical
analysis:
Six months Six months Year ended 31.12.2022
ended ended
30.06.2023 30.06.2022
$m $m $m
Non-current assets per the balance sheet 13,630.1 12,287.7 13,016.2
The above amounts reflect non-current assets excluding;
- Deferred tax assets (99.8) (74.3) (78.5)
- Trade and other receivables (61.2) (56.2) (51.0)
- Equity investments (99.5) (6.4) (90.5)
Total excluded non-current assets: (260.5) (136.9) (220.0)
Non-current assets relevant to the above geographical analysis 13,369.6 12,150.8 12,796.2
6. Revenue
Copper and molybdenum concentrate sale contracts and copper cathode sale
contracts generally provide for provisional pricing of sales at the time of
shipment, with final pricing being based on the monthly average London Metal
Exchange copper price or monthly average molybdenum price for specified future
periods. This normally ranges from one to four months after shipment to the
customer. For sales contracts which contain provisional pricing mechanisms,
the total receivable balance is measured at fair value through profit or loss.
Gains and losses from the mark-to-market of open sales are recognised through
adjustments to revenue in the income statement and to trade receivables in the
balance sheet. The Group determines mark-to-market prices using forward prices
at each period-end for copper concentrate and cathode sales, and period-end
month average prices for molybdenum concentrate sales due to the absence of a
futures market in the market price references for that commodity in the
majority of the Group's contracts.
With sales of concentrates, which are sold to smelters and roasting plants for
further processing into fully refined metal, the price of the concentrate
(which is the amount recorded as revenue) reflects the market value of the
fully refined metal less a "treatment and refining charge" deduction, to
reflect the lower value of this partially processed material compared with the
fully refined metal. For accounting purposes, the revenue amount reflects the
invoiced price (which reflects the net of the market value of fully refined
metal less the treatment and refining charges). However, under the standard
industry definition of unit cash costs, treatment and refining charges are
regarded as part of cash costs.
The shipping service represents a separate performance obligation, and is
recognised separately from the sale of the material over time as the shipping
service is provided.
The total revenue from contracts with customers and the impact of provisional
pricing adjustments in respect of concentrate and cathode sales is as follows:
Six months Six months ended 30.06.2022 Year ended 31.12.2022
ended
30.06.2023
$m $m $m
Revenue from contracts with customers
Sale of products 2,747.5 2,593.3 5,671.2
Provision of shipping services associated with the sale of products (1) 47.8 59.3 123.1
Transport division (2) 98.5 92.0 193.4
Provisional pricing adjustments in respect of copper, gold and molybdenum (3.7) (216.4) (125.7)
Total revenue 2,890.1 2,528.2 5,862.0
(1)The Group sells a significant proportion of its products on Cost, Insurance
& freight (CIF) incoterms, which means that the Group is responsible for
shipping the product to a destination port specified by the customer.
(2)The transport division provides rail and road cargo transport together with
a number of ancillary services.
The categories of revenue which are principally affected by different economic
factors are the individual product types. A summary of revenue by product is
set out in Note 5(b).
The following tables set out the impact of provisional pricing adjustments,
and treatment and refining charges for the more significant products. The
revenue from these products, which includes, for the sale of copper, revenue
associated with the provision of shipping services, is reconciled to total
revenue in Note 5(b).
For the period ended 30 June 2023
$m $m $m $m $m $m $m $m
Los Pelambres Centinela Centinela Antucoya Los Pelambres Centinela Los Pelambres Centinela
Copper concentrate Copper concentrate Copper cathodes Copper cathodes Gold in concentrate Gold in concentrate Molybdenum concentrate Molybdenum concentrate
Provisionally priced sales of products 1,091.7 598.1 324.2 325.3 38.0 117.2 237.6 91.6
Revenue from freight services 23.0 18.3 3.2 3.3 - - - -
1,114.7 616.4 327.4 328.6 38.0 117.2 237.6 91.6
Effects of pricing adjustments to previous year invoices
Reversal of mark-to-market adjustments at the end of the previous year (38.0) (19.9) (0.8) (0.8) - (2.7) (12.6) (7.6)
Settlement of sales invoiced in the previous year 92.6 52.9 10.3 7.7 2.8 1.1 39.9 14.9
Total effect of adjustments to previous year invoices in the current year 54.6 33.0 9.5 6.9 2.8 (1.6) 27.3 7.3
Effects of pricing adjustments to current period invoices
Settlement of sales invoiced in the current period (29.1) (14.6) (6.4) (4.1) 0.7 0.7 (59.8) (20.6)
Mark-to-market adjustments at the end of the current period (10.1) (5.5) 0.1 (0.9) - (0.8) 4.0 1.6
Total effect of adjustments to current period invoices (39.2) (20.1) (6.3) (5.0) 0.7 (0.1) (55.8) (19.0)
Total pricing adjustments 15.4 12.9 3.2 1.9 3.5 (1.7) (28.5) (11.7)
Revenue before deducting treatment & refining charges 1,130.1 629.3 330.6 330.5 41.5 115.5 209.1 79.9
Treatment and refining charges (52.6) (35.2) - - - (0.3) (11.5) (5.3)
Revenue net of tolling charges
1,077.5 594.1 330.6 330.5 41.5 115.2 197.6 74.6
For the period ended 30 June 2022 ( )
$m $m $m $m $m $m $m $m
Los Pelambres Centinela Centinela Antucoya Los Pelambres Centinela Los Pelambres Centinela
Copper concentrate Copper concentrate Copper cathodes Copper cathodes Gold in concentrate Gold in concentrate Molybdenum concentrate Molybdenum concentrate
953.5 600.7 417.4 362.8 28.9 107.1 118.7 48.6
Provisionally priced sales of products
Revenue from freight services 21.9 31.3 3.2 2.9 - - - -
975.4 632.0 420.6 365.7 28.9 107.1 118.7 48.6
Effects of pricing adjustments to previous year invoices
Reversal of mark-to-market adjustments at the end of the previous year (12.0) (5.2) (0.3) (0.8) - (0.3) 5.6 0.7
Settlement of sales invoiced in the previous year 10.7 24.3 0.5 1.0 - 3.8 (4.1) (0.6)
Total effect of adjustments to previous year invoices in the current period (1.3) 19.1 0.2 0.2 - 3.5 1.5 0.1
Effects of pricing adjustments to current period invoices
Settlement of sales invoiced in the current period (35.4) (14.5) (6.3) (7.6) 0.5 0.9 (4.6) 1.3
Mark-to-market adjustments at the end of the current period (101.7) (51.8) (4.5) (3.3) - (1.1) (7.8) (3.6)
Total effect of adjustments to current period invoices (137.1) (66.3) (10.8) (10.9) 0.5 (0.2) (12.4) (2.3)
Total pricing adjustments (138.4) (47.2) (10.6) (10.7) 0.5 3.3 (10.9) (2.2)
Treatment and refining charges (28.2) (28.8) - - (0.1) (0.3) (7.7) (4.5)
Revenue 808.8 556.0 410.0 355.0 29.3 110.1 100.1 41.9
For the year ended 31 December 2022
$m $m $m $m $m $m $m $m
Los Pelambres Centinela Centinela Antucoya Los Pelambres Centinela Los Pelambres Centinela
Copper concentrate Copper concentrate Copper cathodes Copper cathodes Gold in concentrate Gold in concentrate Molybdenum concentrate Molybdenum concentrate
Provisionally priced sales of products 2,313.7 1,231.8 851.8 710.6 75.1 235.9 281.3 98.5
Revenue from freight services 51.9 58.5 6.7 6.0 - - - -
2,365.6 1,290.3 858.5 716.6 75.1 235.9 281.3 98.5
Effects of pricing adjustments to previous year invoices
Reversal of mark-to-market adjustments at the end of the previous year (12.0) (5.2) (0.3) (0.8) - (0.3) 5.6 0.7
Settlement of sales invoiced in the previous year 10.7 23.3 0.5 1.0 - 3.6 (4.1) (0.6)
Total effect of adjustments to previous year invoices in the current year (1.3) 18.1 0.2 0.2 - 3.3 1.5 0.1
Effects of pricing adjustments to current year invoices
Settlement of sales invoiced in the current year (155.3) (68.7) (8.4) (14.1) 0.4 (2.9) 16.5 4.0
Mark-to-market adjustments at the end of the current year 38.0 19.9 0.8 0.8 - 2.7 12.6 7.6
Total effect of adjustments to current year invoices (117.3) (48.8) (7.6) (13.3) 0.4 (0.2) 29.1 11.6
Total pricing adjustments (118.6) (30.7) (7.4) (13.1) 0.4 3.1 30.6 11.7
Revenue before deducting treatment & refining charges 2,247.0 1,259.6 851.1 703.5 75.5 239.0 311.9 110.2
Treatment and refining charges (87.4) (68.4) - - (0.1) (0.6) (20.5) (9.4)
Revenue net of tolling charges 2,159.6 1,191.2 851.1 703.5 75.4 238.4 291.4 100.8
(i) Copper concentrate
The typical period for which sales of copper concentrate remain open until
settlement occurs is a range of approximately three to four months from
shipment date.
At 30.06.2023 At 30.06.2022 At 31.12.2022
Sales provisionally priced at the balance sheet date Tonnes 141,400 114,400 179,000
Average mark-to-market price $/lb 3.77 3.75 3.80
Average provisional invoice price $/lb 3.83 4.36 3.65
(ii) Copper cathodes
The typical period for which sales of copper cathodes remain open until
settlement occurs is approximately one month from shipment date.
At 30.06.2023 At 30.06.2022 At 31.12.2022
Sales provisionally priced at the balance sheet date Tonnes 10,600 11,400 22,700
Average mark-to-market price $/lb 3.78 3.75 3.80
Average provisional invoice price $/lb 3.81 4.06 3.77
(iii) Gold in concentrate
The typical period for which sales of gold in concentrate remain open until
settlement is approximately one month from shipment date.
At 30.06.2023 At 30.06.2022 At 31.12.2022
Sales provisionally priced at the balance sheet date Ounces 19,200 22,600 31,000
Average mark-to-market price $/oz 1,924 1,808 1,828
Average provisional invoice price $/oz 1,967 1,859 1,742
(iv) Molybdenum concentrate
The typical period for which sales of molybdenum remain open until settlement
is approximately two months from shipment date.
At 30.06.2023 At 30.06.2022 At 31.12.2022
Sales provisionally priced at the balance sheet date Tonnes 2,900 2,500 2,500
Average mark-to-market price $/lb 22.30 17.30 26.10
Average provisional invoice price $/lb 21.40 19.25 22.20
As detailed above, the effects of gains and losses from the marking-to-market
of open sales are recognised through adjustments to revenue in the income
statement and to trade receivables in the balance sheet. The effect of
mark-to-market adjustments on the balance sheet at the end of each period are
as follows:
Effect on debtors of year end
mar
k
-to
-ma
rke
t
adj
ust
men
ts
Six months Six months ended 30.06.2022 Year ended 31.12.2022
Ended
30.06.2023
$m $m $m
Los Pelambres - copper concentrate (10.1) (101.7) 38.0
Los Pelambres - molybdenum concentrate 4.0 (7.8) 12.6
Centinela - copper concentrate (5.5) (51.8) 19.9
Centinela - molybdenum concentrate 1.6 (3.6) 7.6
Centinela - gold in concentrate (0.8) (1.1) 2.7
Centinela - copper cathodes 0.1 (4.5) 0.8
Antucoya - copper cathodes (0.9) (3.3) 0.8
(11.6) (173.8) 82.4
The trade and other receivables balance at 30 June 2023 was $1,166.7 million
compared with $2,087.2 million at 31 December 2022. The decrease was mainly
due to the Tethyan disposal proceeds of $944.7 million recognised at 31
December 2022 which were received during the current period, as well as a
decrease reflecting lower sales volumes towards the end of the current period
compared with the end of 2022, as well as the impact of the negative
mark-to-market adjustment of $11.6 million at 30 June 2023 compared with a
positive mark-to-market adjustment of $82.4 million at 31 December 2022 as
shown above.
7. Financial instruments and financial risk management
a) Categories of financial instruments
The carrying value of financial assets and financial liabilities is shown
below:
For the period ended 30.06.2023
At fair value through profit and loss At fair value through other comprehensive income Held at amortised cost Total
$m $m $m $m
Financial assets
Equity investments - 99.5 - 99.5
Trade and other receivables 356.0 - 459.4 815.4
Other financial assets 290.1 - - 290.1
Cash and cash equivalents 1.1 - 302.2 303.3
Liquid investments 2,046.2 - - 2,046.2
2,693.4 99.5 761.6 3,554.5
Financial liabilities
Trade and other payables - - (957.7) (957.7)
Borrowings and leases - - (3,170.8) (3,170.8)
- - (4,128.5) (4,128.5)
For the period ended 30.06.2022
At fair value through profit and loss At fair value through other comprehensive income Held at amortised cost Total
$m $m $m $m
Financial assets
Equity investments - 6.4 - 6.4
Trade and other receivables 215.4 - 84.1 299.5
Cash and cash equivalents - - 872.6 872.6
Liquid investments 2,005.6 - - 2,005.6
2,221.0 6.4 956.7 3,184.1
Financial liabilities
Trade and other payables - - (848.2) (848.2)
Borrowings and leases - - (3,369.6) (3,369.6)
- - (4,217.8) (4,217.8)
For the year ended 31.12.2022
At fair value through profit and loss At fair value through other comprehensive income Held at amortised cost Total
$m $m $m $m
Financial assets
Equity investments - 90.5 - 90.5
Trade and other receivables 897.2 - 1,047.5 1,944.7
Cash and cash equivalents 8.5 - 801.9 810.4
Liquid investments 1,580.8 - - 1,580.8
2,486.5 90.5 1,849.4 4,426.4
Financial liabilities
Trade and other payables - - (1,067.3) (1,067.3)
Borrowings and leases - - (3,277.0) (3,277.0)
- - (4,344.3) (4,344.3)
The fair value of the fixed rate bonds included within the "Borrowings and
leases" category was $906.9 million at 30 June 2023 compared with their
carrying value of $986.1 million (six months ended 30 June 2022 - fair value
of $877.8 million compared with their carrying value of $985.1 million; year
ended 31 December 2022 - fair value of $899.4 million compared with their
carrying value of $985.3 million). The fair value of all other financial
assets and financial liabilities carried at amortised cost approximates the
carrying value presented above.
The following tables reconcile between the total trade and other receivables
and trade and other payables balances on the balance sheet with the financial
instrument amounts included in this note:
Six months Six months Year ended 31.12.2022
ended ended
30.06.2023 30.06.2022
Financial assets
Trade and other receivables (non-current) per balance sheet 61.2 56.2 51.0
Trade, other receivables, and other financial assets 1,166.7 366.5 2,087.2
Total trade and other receivables per balance sheet 1,227.9 422.7 2,138.2
Less: non-financial assets (including prepayments and VAT receivables) (122.4) (123.2) (193.5)
Less: Other financial assets (290.1) - -
Total loans and receivables (financial assets) 815.4 299.5 1,944.7
Financial liabilities
Trade and other payables (current) per balance sheet (973.0) (835.1) (1,079.7)
Trade and other payables (non-current) per balance sheet (7.4) (18.5) (8.0)
Total trade and other payables per balance sheet (980.4) (853.6) (1,087.7)
Less: non-financial liabilities (including VAT payables) 22.7 5.4 20.4
Total loans and payables (financial liabilities) (957.7) (848.2) (1,067.3)
Fair value of financial instruments
An analysis of financial assets and financial liabilities measured at fair
value is presented below:
For the period ended 30.06.2023
Level 1 Level 2 Level 3 Total
$m $m $m $m
Financial assets
Equity investments (a) 99.5 - - 99.5
Trade and other receivables (b) - 356.0 - 356.0
Other financial assets (c) - 290.1 - 290.1
Cash and cash equivalents (d) 1.1 - - 1.1
Liquid investments (e) - 2,046.2 - 2,046.2
100.6 2,692.3 - 2,792.9
For the period ended 30.06.2022
Level 1 Level 2 Level 3 Total
$m $m $m $m
Financial assets
Equity investments (a) 6.4 - - 6.4
Trade and other receivables (b) - 215.4 - 215.4
Liquid investments (e) - 2,005.6 - 2,005.6
6.4 2,221.0 - 2,227.4
For the period ended 31.12.2022
Level 1 Level 2 Level 3 Total
$m $m $m $m
Financial assets
Equity investments (a) 90.5 - - 90.5
Trade and other receivables (b) - 897.2 - 897.2
Cash and cash equivalents (d) 8.5 - - 8.5
Liquid investments (e) - 1,580.8 - 1,580.8
99.0 2,478.0 - 2,577.0
Recurring fair value measurements are those that are required in the balance
sheet at the end of each reporting year.
a) Equity investments are investments in shares on active markets and
are valued using unadjusted quoted market values of the shares at the
financial reporting date. These are level 1 inputs as described below.
b) Provisionally priced metal sales for the period are
marked-to-market at the end of the period. Gains and losses from the
marking-to-market of open sales are recognised through adjustments to revenue
in the income statement and trade receivables in the balance sheet. Forward
prices at the end of the period are used for copper sales while period-end
average prices are used for molybdenum concentrate sales. These are level 2
inputs as described below.
c) The fair value of the other financial assets has been calculated
using observable market data. These are level 2 inputs.
d) The element of cash and cash equivalents measured at fair value
relates to money market funds, which are valued reflecting market prices at
the period end. These are level 1 inputs as described below.
e) Liquid investments are highly liquid current asset investments that
are valued reflecting market prices at the period end. These are level 2
inputs as described below.
The inputs to the valuation techniques described above are categorised into
three levels, giving the highest priority to unadjusted quoted prices in
active markets (level 1) and the lowest priority to unobservable inputs (level
3 inputs):
- Level 1 fair value measurement inputs are unadjusted quoted prices
in active markets for identical assets or liabilities.
- Level 2 fair value measurement inputs are derived from inputs other
than quoted market prices included in level 1 that are observable for the
asset or liability, either directly or indirectly.
- Level 3 fair value measurement inputs are unobservable inputs for
the asset or liability.
The degree to which inputs into the valuation techniques used to measure the
financial assets and liabilities are observable and the significance of these
inputs in the valuation are considered in determining whether any transfers
between levels have occurred. In the six months ended 30 June 2023, there were
no transfers between levels in the hierarchy.
b) Derivative financial instruments
The Group periodically uses derivative financial instruments to reduce
exposure to foreign exchange, interest rate and commodity price movements. The
Group does not use such derivative instruments for trading purposes. The Group
has applied the hedge accounting provisions of IFRS 9 Financial Instruments.
The effective portion of changes in the fair value of derivative financial
instruments that are designated and qualify as hedges of future cash flows
have been recognised directly in equity, with such amounts subsequently
recognised in profit or loss in the period when the hedged item affects profit
or loss. Any ineffective portion is recognised immediately in profit or loss.
Realised gains and losses on commodity derivatives recognised in profit or
loss are recorded within revenue. The time value element of changes in the
fair value of derivative options is recognised within other comprehensive
income. Derivatives embedded in other financial instruments or other host
contracts are treated as separate derivatives when their risks and
characteristics are not closely related to those of host contracts and the
host contracts are not carried at fair value. Changes in fair value are
reported in profit or loss for the year. No derivative instruments have been
in place during 2022 or 2023.
8. Net finance expense
Six months Six months Year ended 31.12.2022
ended ended
30.06.2023 30.06.2022
$m $m $m
Investment income
Interest receivable 28.8 5.1 19.8
Gains on liquid investments held at fair value through profit or loss 43.3 (0.8) 20.4
72.1 4.3 40.2
Interest expense
Interest expense (50.9) (34.8) (78.6)
(50.9) (34.8) (78.6)
Other finance items
Unwinding of discount on provisions (7.9) (6.8) (16.9)
Effects of changes in foreign exchange rates (22.0) 26.6 (12.8)
Preference dividends (0.1) (0.1) (0.1)
(30.0) 19.7 (29.8)
Net finance expense (8.8) (10.8) (68.2)
In the six months ended 30 June 2023, amounts capitalised and consequently not
included within the above table were as follows: $46.6 million at Los
Pelambres (six months ended 30 June 2022 - $14.5 million; year ended 31
December 2022 - $47.0 million) and $1.7 million at Centinela (six months ended
30 June 2022 - $0.4 million; year ended 31 December 2022 - $2.0 million).
The interest expense shown above includes $4.1 million in respect of leases
(six months ended 30 June 2022 - $3.1 million; year ended 31 December 2022 -
$7.1 million).
9. Taxation
The tax charge for the period comprised the following:
Six months Six months Year ended 31.12.2022
ended ended
30.06.2023 30.06.2022
$m $m $m
Current tax charge
Corporate tax (principally first category tax in Chile) (232.9) (213.0) (340.4)
Mining tax (royalty) (49.0) (41.9) (83.9)
Withholding tax (2.2) (21.2) (24.5)
Exchange rate (0.2) - -
(284.3) (276.1) (448.8)
Deferred tax
Corporate tax (principally first category tax in Chile) 33.2 36.9 (96.5)
Mining tax (royalty) (0.1) 2.1 (9.8)
Withholding tax 21.9 (10.8) (48.5)
55.0 28.2 (154.8)
Total tax charge (229.3) (247.9) (603.6)
The rate of first category (i.e. corporate) tax in Chile is 27.0% (2022 -
27.0%).
In addition to first category tax and the mining tax, the Group incurs
withholding taxes on any remittance of profits from Chile. Withholding tax is
levied on remittances of profits from Chile at 35% less first category (i.e.
corporation) tax already paid in respect of the profits to which the
remittances relate.
The Group's mining operations are also subject to a mining tax (royalty).
Production from Los Pelambres, Antucoya, Encuentro (oxides), the Tesoro North
East pit and the Run-of-Mine processing at Centinela Cathodes is subject to a
rate of between 5-14%, depending on the level of operating profit margin, and
production from Centinela Concentrates and the Tesoro Central and Mirador pits
at Centinela Cathodes is subject to a rate of 5% of taxable operating profit.
New mining royalty
In May 2023, both the Chilean Senate and lower house of Congress approved the
proposed revision to Chile's mining royalty bill, with final Presidential
approval confirmed in August 2023. This new law is scheduled to take effect
from 1 January 2024, replacing the existing specific mining tax. However,
companies with tax stability agreements will continue to be governed by their
current terms until those agreements expire. The new regime will apply to Los
Pelambres' and Zaldivar's royalty payments from the start of 2024. Centinela
and Antucoya have tax stability agreements which extend beyond that point, and
so the new royalty rates will only impact their royalty payments from 2030
onwards for both companies.
The new royalty terms include a 1% ad valorem royalty on copper sales, as well
as a royalty ranging from 8% to 26% applied to the "Mining Operating Margin",
depending on each mining operation's level of profitability. The new royalty
terms include a cap, establishing that total taxation, which includes
corporate income tax, the two components of the new mining royalty, and
theoretical tax on dividends, should not exceed a rate of 46.5% (relative to
the Mining Operating Margin less the royalty ad-valorem expense).
The impact on the Group's royalty payments starting in 2024 will be subject to
various factors, including future revenue and earnings, which will be
influenced by parameters such as copper prices, production volumes, and
operating costs. A one-off adjustment will also be recognized to the deferred
tax balances of all of the Group's mining operations, recognised in the 2023
year-end balance sheet and the results for the second half of 2023.
Currently, it is estimated that this could increase the Group's deferred tax
liabilities by approximately $40 million as of 31 December 2023, with a
corresponding impact on the Group's deferred tax expense for 2023. The Chilean
tax authority has not yet issued definitive interpretations regarding the
methodologies for determining and calculating the new royalty amounts, and the
level of future royalty payments and the adjustment to the deferred tax
liabilities at 31 December 2023 could be impacted by such guidance.
The following table provides a numerical reconciliation between the accounting
profit before tax multiplied by the applicable statutory tax rate and the
total tax expense (including both current and deferred tax).
Six months ended Six months ended Year ended Year ended
30.06.2023 30.06.2022 31-12-2022 31-12-2022
excluding exceptional items Including exceptional
items
$m % $m % $m % $m %
Profit before tax 764.5 679.6 1,614.2 2,558.9
Tax at the Chilean corporate tax rate of 27% (206.4) 27.0 (183.5) 27.0 (435.9) 27.0 (691.0) 27.0
Mining Tax (royalty) (47.1) 6.2 (41.0) 6.0 (94.5) 5.8 (94.5) 3.7
Deduction of mining royalty as an allowable expense in determination of first 13.2 (1.7) 11.7 (1.7) 23.1 (1.4) 23.1 (0.9)
category tax
Withholding tax (including substitute tax at 30% rate) 19.7 (2.6) (32.0) 4.7 (33.9) 2.1 (33.9) 1.3
Items not deductible from first category tax (6.9) 0.9 (13.7) 2.0 (2.6) 0.1 (2.6) 0.1
Adjustment in respect of prior years (0.9) 0.1 (2.5) 0.4 (73.0) 4.6 (73.0) 2.9
Tax effect of share of profit of associates and joint ventures (0.1) - 13.0 (1.9) 13.0 (0.8) 13.0 (0.5)
Impact of unrecognised tax losses on current tax (0.8) 0.1 0.1 - 0.2 - 0.2 -
Gain on disposal of investment in joint venture - - - - - - 255.1 (10.0)
Tax expense and effective tax rate for the period (229.3) 30.0 (247.9) 36.5 (603.6) 37.4 (603.6) 23.6
The effective tax rate for the period was 30.0%, partly reflecting a one-off
adjustment to the provision for deferred withholding tax, which compares with
36.5% in 2022. The complete reconciliation between the effective tax rate and
the statutory tax rate reflects the following points:
The effective tax rate of 30.0% varied from the statutory rate principally due
to the mining tax (royalty) (net impact of $33.9 million / 4.5% including the
deduction of the mining tax (royalty) as an allowable expense in the
determination of first category tax), items not deductible for Chilean
corporate tax purposes, principally the funding of expenses outside of Chile
(impact of $6.9 million / 0.9%) and adjustments in respect of prior years
(impact of $0.9 million / 0.1%), the impact of unrecognised tax losses (impact
of $0.8 million / 0.1%), the recognition of the Group's share of profit from
associates and joint ventures, which are included in the Group's profit before
tax net of their respective tax charges (impact of $0.1 million / nil), partly
offset by the impact of the withholding tax relating to the remittance of
profits from Chile (impact of $19.7 million / 2.6%).
The main factors which could impact the sustainability of the Group's existing
effective tax rate are:
● The impact of the new Chilean mining royalty which is expected
to be effective from 1 January 2024, as described above.
● The level of future distributions made by the Group's Chilean
subsidiaries out of Chile, which could result in increased withholding tax
charges. When determining whether it is likely that distributions will be made
in the foreseeable future, and what is the appropriate foreseeable future
period for this purpose, the Group considers factors such as the
predictability of the likely future Group dividends, taking into account the
Group's dividend policy and the level of potential volatility of the Group's
future earnings, as well as the current level of distributable reserves at the
Antofagasta plc entity level. As noted above, the withholding tax credit in
the current period reflected a one-off adjustment to the provision for
deferred withholding tax.
● The impact of expenses which are not deductible for Chilean
first category tax. Some of these expenses are fixed costs, and so the
relative impact of these expenses on the Group's effective tax rate will vary
depending on the Group's total profit before tax in a particular year.
The Group is within the scope of the OECD Pillar two model rules. Pillar two
legislation was recently substantively enacted in the UK and will come into
effect from 1 January 2024. At 30 June 2023, none of the Pillar two
legislation is effective and so the Group has no related current tax impact.
Related amendments to IAS 12 clarify that Pillar two related balances are not
within the scope of IAS12 for deferred tax purposes and provide an exception
on this basis, and accordingly no deferred tax impact will be recognised as a
result of the implementation of the Pillar two model rules. The group has
commenced their Pillar two impact analysis but is, as yet, not in a position
to provide quantified analysis of the potential future impact.
10. Earnings per share
Six months ended 30.06.2023 Six months Year ended 31.12.2022
ended 30.06.2022
$m $m $m
Profit for the period attributable to owners of the parent (exc. exceptional 330.4 260.3 588.3
items)
Exceptional Items - - 944.7
Profit for the period attributable to owners of the parent (inc. exceptional 330.4 260.3 1,533.0
items) from operations
Number Number Number
Ordinary shares in issue throughout each period 985,856,695 985,856,695 985,856,695
Six months ended 30.06.2023 Six months ended 30.06.2022 Year ended 31.12.2022
US cent US cent US cent
Basic earnings per share (exc. exceptional items) from operations 33.5 26.4 59.7
Basic earnings per share (exceptional items) from operations - - 95.8
Basic earnings per share (inc. exceptional items) from operations 33.5 26.4 155.5
Basic earnings per share are calculated as profit after tax and
non-controlling interests, based on 985,856,695 (2022: 985,856,695) ordinary
shares.
There was no potential dilution of earnings per share in either year set out
above, and therefore diluted earnings per share did not differ from basic
earnings per share as disclosed above.
11. Dividends
The Board has declared an interim dividend of 11.7 cents per ordinary share
for the 2023 half year (2022 half year - 9.2 cents per ordinary share).
Dividends are declared and paid gross. Dividends actually paid in the period
and recognised as a deduction from net equity under IFRS were 50.5 cents per
ordinary share (2022 half year - 118.9 cents per ordinary share), representing
the final dividend declared in respect of the previous year.
The interim dividend will be paid on 29 September 2023 to ordinary
shareholders that are on the register at the close of business on 1 September
2023. Shareholders can elect (on or before 4 September 2023) 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 7 September 2023).
Further details of the currency election timing and process (including the
default currency of payment) are available on the Antofagasta plc website
(www.antofagasta.co.uk) or from the Company's registrar, Computershare
Investor Services PLC on +44 370 702 0159.
12. Intangible assets
The intangible asset relates to Twin Metals' mining licences assets (included
within the corporate segment). A full impairment provision was recognised in
respect of the $150.1 million cost of this asset as at 31 December 2021, as a
result of the US federal government's cancellation of certain of Twin Metals'
mining leases. Twin Metals believes it has a valid legal right to the mining
leases and a strong case to defend its legal rights. Although the Group is
pursuing validation of those rights, considering the time and uncertainty
related to any legal action to challenge the government decisions, a full
impairment provision has been recognised in respect of the carrying value of
the asset.
Cost Impairment Net book value
$m $m $m
At 1 January 2022, 31 December 2022 and 30 June 2023 150.1 (150.1) -
13. Property, plant and equipment
Mining Railway and other transport At At 30.06.2022 At 31.12.2022
30.06.2023
$m $m $m $m $m
Balance at the beginning of the year 11,247.8 295.7 11,543.5 10,538.5 10,538.5
Additions 998.0 26.3 1,024.3 916.4 2,002.0
Additions - depreciation capitalised 33.8 - 33.8 34.3 73.3
Reclassifications - - - (5.3) -
Capitalisation of interest 48.3 - 48.3 14.9 49.0
Adjustment to capitalised decommissioning provisions - - - 4.6 173.8
Depreciation expensed in the year (498.3) (13.0) (511.3) (489.0) (1,141.1)
Depreciation capitalised in PP&E (33.8) - (33.8) (34.3) (73.3)
Depreciation capitalised in inventories (45.7) - (45.7) (56.0) (71.1)
Asset disposals - - - (0.1) (7.6)
Balance at the end of the year 11,750.1 309.0 12,059.1 10,924.0 11,543.5
During the six months ended 30 June 2023, the net effect of depreciation
capitalised within Property, plant and equipment or inventories in respect of
assets relating to Los Pelambres, Centinela and Antucoya is $79.5 million (
six months ended 30 June 2022 -$90.3 million; year ended 31 December 2022 -
$144.4 million), and has accordingly been excluded from the depreciation
charge recorded in the income statement as shown in Note 5.
At 30 June 2023, the Group had entered into contractual commitments for the
acquisition of property, plant and equipment amounting to $1,059.2 million (30
June 2022 - $915.0 million; 31 December 2022 - $845.1 million).
Depreciation capitalised in property, plant and equipment of $33.8 million
related to the depreciation of assets used in mine development (operating
stripping) at Centinela, Los Pelambres and Antucoya (six months ended 30 June
2022 - $34.3 million; year ended 31 December 2022 - $73.3 million).
14. Disposal of investment in Tethyan joint venture
On 15 December 2022, Antofagasta entered into definitive agreements to exit
its 50% interest in the Tethyan joint venture, which was a joint venture with
Barrick Gold Corporation ("Barrick") in respect of the Reko Diq project in
Pakistan. Antofagasta recognised a gain on disposal of its investment in the
joint venture as at 15 December 2022 of $944.7 million. The joint venture
project was held via the Australian entity Atacama Copper Pty Limited
("Atacama"). The disposal proceeds, which together with accrued interest up to
15 December 2022 totalled US$946.0 million, were held by Atacama in a
segregated interest-bearing account. Antofagasta and Barrick agreed that the
proceeds of this account, including all further interest received, less
working capital and other adjustments, would be distributed to the Antofagasta
Group during 2023, on a date to be determined by Antofagasta. Atacama was
seeking a binding private ruling from the Australian Tax Office to confirm
that the disposal proceeds and their distribution to the Antofagasta Group
would not be subject to Australian tax. In May 2023, Atacama received the
binding private ruling confirming these points. Antofagasta then requested
that the disposal proceeds including interest be distributed to the
Antofagasta Group, resulting in a total distribution of $956.3 million by
Atacama to the Antofagasta Group in May 2023.
15. Investment in associates and joint ventures
ATI(1) Minera Zaldívar(2) At 30.06.2023 At 30.06.2022 At 31.12.2022
$m $m $m $m $m
Balance at the beginning of the year 7.3 897.3 904.6 905.8 905.8
Obligations on behalf of JV and associates at the beginning of the year - - - (0.6) (0.6)
Share of profit/(loss) before tax 1.6 (1.6) - 72.5 70.6
Share of tax (0.3) (0.1) (0.4) (23.4) (22.5)
Share of other comprehensive loss of associates and joint ventures, net of tax (0.1) (0.8) (0.9) - -
Share of profit/(loss) from JV and associates 1.2 (2.5) (1.3) 49.1 48.1
Dividends received - - - (50.0) (50.0)
Disposal of investment in JV - - - - 1.3
Balance at the end of the period 8.5 894.8 903.3 905.2 904.6
Obligations on behalf of JV at the end of the period - - - (0.9) -
The investments which are included in the $903.3 million balance at 30 June
2023 are set out below:
Investment in associates
1. The Group's 30% interest in Antofagasta Terminal
Internacional ("ATI"), which operates a concession to manage installations in
the port of Antofagasta.
Investment in joint ventures
2. The Group's 50% interest in Minera Zaldívar SpA
("Zaldívar").
As the net carrying value of the interest in Tethyan was negative, it was
included within non-current liabilities, as the Group was liable for its share
of the joint venture's obligations.
Summarised financial information for the associates at June 2023 is as
follows:
Total Total Total
30.06.2023 30.06.2022 31.12.2022
$m $m $m
Cash and cash equivalents 3.7 0.6 0.4
Current assets(1) 15.1 12.8 18.2
Non-current assets 88.6 95.9 91.8
Current liabilities (15.5) (13.8) (19.3)
Non-current liabilities (66.3) (76.0) (69.5)
Revenue 33.5 26.2 55.2
Profit from continuing operations 4.2 2.8 5.1
Total comprehensive income 4.2 2.8 5.1
(1) The current assets includes cash and cash equivalents.
Summarised financial information for the joint ventures at June 2023 is as
follows:
Total Total Total
30.06.2023 30.06.2022 31.12.2022
$m $m $m
Cash and cash equivalents 44.6 82.9 70.1
Current assets(1) 652.8 672.2 661.8
Non-current assets 1,640.2 1,637.6 1,658.6
Current financial liabilities (excl. trade, other payables and provisions) (58.2) (52.6) (53.2)
Current liabilities (141.3) (154.4) (159.3)
Non-current financial liabilities (excl. trade, other payables and provisions) (31.8) (99.6) (68.3)
Non-current liabilities (79.4) (173.8) (203.3)
Revenue 360.3 436.4 783.4
Depreciation and amortisation. (78.8) (70.2) (149.2)
Interest income 1.1 0.2 1.5
Interest expense (5.6) (0.2) (0.8)
Income tax expense or income (0.3) (43.8) (43.9)
(Loss)/profit after tax (3.3) 97.0 94.6
Total comprehensive (expense)/income (3.3) 97.0 94.6
(1) The current assets includes cash and cash equivalents.
The above summarised financial information is based on the amounts included in
the IFRS financial statements of the associate or joint venture (100% of the
results or balances of the associate or joint venture, rather than the Group's
proportionate share), after the Group's fair value adjustments and applying
the Group's accounting policies.
16. Borrowings and other financial liabilities
At At At
30.06.2023 30.06.2022 31.12.2022
$m $m $m
Los Pelambres
Senior loan (1,447.9) (1,493.1) (1,470.5)
Leases (55.7) (40.6) (55.3)
Centinela
Senior loan (221.5) (331.8) (276.7)
Leases (31.0) (42.5) (35.2)
Antucoya
Senior loan (198.8) (248.2) (223.5)
Subordinated debt (179.1) (165.9) (171.5)
Leases (14.5) (19.5) (16.5)
Corporate and other items
Bonds (986.1) (985.1) (985.3)
Leases (22.6) (18.2) (23.1)
Railway and other transport services
Senior loan (10.0) (20.5) (15.3)
Leases (1.1) (1.9) (1.6)
Preference shares (2.5) (2.3) (2.5)
Total (3,170.8) (3,369.6) (3,277.0)
At 30 June 2023, $1,120.0 million (30 June 2022 - $1,122.2 million; December
2022 - $1,129.0 million) of the borrowings has fixed rate interest and
$2,050.8 million (30 June 2022 - $2,247.4 million; December 2022 - $2,148.0
million) has floating rate interest.
On 30 December 2022, Antofagasta plc agreed a revolving credit facility "RCF"
of US$500 million with a group of six banks and where the Canadian Imperial
Bank of Commerce "CIBC" has the role of Administrative Agent. This revolving
credit facility has a term of three years, which expires on December 30, 2025.
The facility remained undrawn throughout the period 2023.
Facility available Drawn Undrawn
30 June 31 December 30 June 31 December 30 June 31 December
2023 2022 2023 2022 2023 2022
$m $m $m $m $m $m
Revolving credit facility 500.0 500.0 - - 500.0 500.0
17. Reconciliation of profit before tax to net cash inflow from operating
activities
At At At
30.06.2023 30.06.2022 31.12.2022
$m $m $m
Profit before tax 764.5 679.6 2,558.9
Depreciation and amortisation 511.3 489.0 1,141.1
Net loss on disposals - - 2.1
Net finance expense 8.8 10.8 68.2
Share of loss/(profit) of associates and joint ventures 0.4 (49.1) (48.1)
Gain on disposal of investment in joint venture - - (944.7)
Increase in inventories (115.2) (161.0) (180.7)
Decrease in debtors 256.8 788.8 27.0
(Decrease) /increase in creditors (153.8) (58.1) 141.0
Increase /(decrease) in provisions 23.6 (17.5) (26.5)
Cash flow generated from operations 1,296.4 1,682.5 2,738.3
18. Analysis of changes in net debt
At 31.12.2022 Cash flows New leases Fair value Amortisation of finance costs Capitalisation of interest Other Reclassification Exchange At 30.06.2023
gain
$m $m $m $m $m $m $m $m $m $m
Cash and cash equivalents 810.4 (514.2) - - - - - - 7.1 303.3
Liquid investments 1,580.8 449.6 - 15.8 - - - - - 2,046.2
Total cash and cash equivalents and liquid investments 2,391.2 (64.6) - 15.8 - - - - 7.1 2,349.5
Borrowings due within one year (377.4) 110.8 - - - - - (271.3) - (537.9)
Borrowings due after one year (2,765.4) - - - (3.9) (7.6) - 271.3 - (2,505.6)
Leases due within one year (55.1) 35.1 - - - - - (35.1) (3.0) (58.1)
Leases due after one year (76.6) - (18.6) - - - (0.5) 35.1 (6.1) (66.7)
Preference shares (2.5) - - - - - - - - (2.5)
Total borrowings (3,277.0) 145.9 (18.6) - (3.9) (7.6) (0.5) - (9.1) (3,170.8)
Net (debt)/cash (885.8) 81.3 (18.6) 15.8 (3.9) (7.6) (0.5) - (2.0) (821.3)
Net (debt)/ cash
Net (debt)/cash at the end of each period was as follows:
At At At
30.06.2023 30.06.2022 31.12.2022
$m $m $m
Cash, cash equivalents and liquid investments 2,349.5 2,878.2 2,391.2
Total borrowings and other financial liabilities (3,170.8) (3,369.6) (3,277.0)
Net (debt)/cash (821.3) (491.4) (885.8)
19. Related party transactions
a) Joint ventures
The Group has a 50% interest in Minera Zaldívar, which is a joint venture
with Barrick Gold Corporation. During the six months ended 30 June 2023, the
Group has not received dividends from Minera Zaldívar (six months ended 30
June 2022 - $50.0 million; year ended 31 December 2022 - $50.0 million).
b) 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., BanChile Corredores de Bolsa S.A., ENEX S.A. and Compañía de
Inversiones Adriático S.A. These transactions were all on normal commercial
terms.
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 2023, the Group incurred $0.1 million (30
June 2022 - $0.1 million) of exploration costs at these properties.
20. Litigation and contingent liabilities
The Group is subject from time to time to legal proceedings, claims,
complaints and investigations arising out of the ordinary course of business.
The Group cannot predict the outcome of individual legal actions or claims or
complaints or investigations. As a result, the Group may become subject to
liabilities that could affect the Group's business, financial position and
reputation. Litigation is inherently unpredictable and large judgments may at
times occur. The Group may incur, in the future, judgments or enter into
settlements of claims that could lead to material cash outflows. The Group
considers that no material loss to the Group is expected to result from the
legal proceedings, claims, complaints and investigations that the Group is
currently subject to. Provision is made for all liabilities that are expected
to materialise through legal claims against the Group.
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
Jean-Paul Luksic Tony Jensen
Chairman Chair of Audit & Risk Committee
Independent review report to Antofagasta plc
Report on the condensed consolidated interim financial statements
Our conclusion
We have reviewed Antofagasta plc's condensed consolidated interim financial
statements (the "interim financial statements") in the half yearly financial
report of Antofagasta plc for the six month period ended 30 June 2023 (the
"period").
Based on our review, nothing has come to our attention that causes us to
believe that the interim financial statements are not prepared, in all
material respects, in accordance with UK adopted International Accounting
Standard 34, 'Interim Financial Reporting' and the Disclosure Guidance and
Transparency Rules sourcebook of the United Kingdom's Financial Conduct
Authority.
The interim financial statements comprise:
● the consolidated balance sheet as at 30 June 2023;
● the consolidated income statement and consolidated statement of
comprehensive income for the period then ended;
● the consolidated cash flow statement for the period then ended;
● the consolidated statement of changes in equity for the period then
ended; and
● the explanatory notes to the interim financial statements.
The interim financial statements included in the half yearly financial report
of Antofagasta plc have been prepared in accordance with UK adopted
International Accounting Standard 34, 'Interim Financial Reporting' and the
Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's
Financial Conduct Authority.
Basis for conclusion
We conducted our review in accordance with International Standard on Review
Engagements (UK) 2410, 'Review of Interim Financial Information Performed by
the Independent Auditor of the Entity' issued by the Financial Reporting
Council for use in the United Kingdom ("ISRE (UK) 2410"). A review of interim
financial information consists of making enquiries, 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, 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.
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 interim financial
statements.
Conclusions relating to going concern
Based on our review procedures, which are less extensive than those performed
in an audit as described in the Basis for conclusion section of this report,
nothing has come to our attention to suggest that the directors have
inappropriately adopted the going concern basis of accounting or that the
directors have identified material uncertainties relating to going concern
that are not appropriately disclosed. This conclusion is based on the review
procedures performed in accordance with ISRE (UK) 2410. However, future events
or conditions may cause the group to cease to continue as a going concern.
Responsibilities for the interim financial statements and the review
Our responsibilities and those of the directors
The half yearly financial report, including the interim financial statements,
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 Guidance and Transparency Rules sourcebook of
the United Kingdom's Financial Conduct Authority. In preparing the half yearly
financial report, including the interim financial statements, the directors
are responsible for assessing the group's ability to continue as a going
concern, disclosing, as applicable, matters related to going concern and using
the going concern basis of accounting unless the directors either intend to
liquidate the group or to cease operations, or have no realistic alternative
but to do so.
Our responsibility is to express a conclusion on the interim financial
statements in the half yearly financial report based on our review. Our
conclusion, including our Conclusions relating to going concern, is based on
procedures that are less extensive than audit procedures, as described in the
Basis for conclusion paragraph of this report. This report, including the
conclusion, has been prepared for and only for the company for the purpose of
complying with the Disclosure Guidance and Transparency Rules sourcebook of
the United Kingdom's Financial Conduct Authority and for no other purpose. We
do not, in giving this conclusion, accept or assume responsibility for any
other purpose or to any other person to whom this report is shown or into
whose hands it may come save where expressly agreed by our prior consent in
writing.
PricewaterhouseCoopers LLP
Chartered Accountants
London
9 August 2023
Alternative performance measures (not subject to audit or review)
This consolidated financial information includes a number of alternative
performance measures, in addition to amounts in accordance with UK-adopted
International Accounting Standards. These measures are included because they
are considered to provide relevant and useful additional information to users
of the accounts. Set out below are definitions of these alternative
performance measures, explanations as to why they are considered to be
relevant and useful, and reconciliations to the IFRS figures.
a) Underlying earnings per share
Underlying earnings per share is earnings per share from continuing
operations, excluding exceptional items. This measure is reconciled to
earnings per share from continuing and discontinued operations (including
exceptional items) on the face of the income statement. This measure is
considered to be useful as it provides an indication of the earnings generated
by the ongoing businesses of the Group, excluding the impact of exceptional
items which are irregular or non-operating in nature.
b) EBITDA
EBITDA refers to Earnings Before Interest, Tax, Depreciation and Amortisation.
EBITDA is calculated by adding back depreciation, amortisation, profit or loss
on disposals and impairment charges to operating profit. This comprises 100%
of the EBITDA from the Group´s subsidiaries, and the Group´s proportional
share of the EBITDA of its associates and joint ventures.
EBITDA is considered to provide a useful and comparable indication of the
current operational earnings performance of the business, excluding the impact
of the historical cost of property, plant & equipment or the particular
financing structure adopted by the business.
For the six months ended 30 June 2023
Los Pelambres Centinela Antucoya Zaldívar Exploration and evaluation Corporate and other items Mining Railway and other transport services Total
$m $m $m $m $m $m $m $m $m
Operating profit/(loss) 632.4 188.7 51.6 - (62.0) (59.6) 751.1 22.6 773.7
Depreciation and amortisation 137.5 300.6 52.3 - - 7.9 498.3 13.0 511.3
EBITDA from subsidiaries 769.9 489.3 103.9 - (62.0) (51.7) 1,249.4 35.6 1,285.0
Proportional share of the EBITDA from associates and JVs - - - 42.5 - - 42.5 3.5 46.0
EBITDA 769.9 489.3 103.9 42.5 (62.0) (51.7) 1,291.9 39.1 1,331.0
For the six months ended 30 June 2022
Los Pelambres Centinela Antucoya Zaldívar Exploration and evaluation Corporate and other items Mining Railway and other transport services Total
$m $m $m $m $m $m $m $m $m
Operating profit/(loss) 401.4 219.6 103.1 - (51.4) (51.2) 621.5 19.8 641.3
Depreciation and amortisation 109.2 307.3 50.3 - - 7.6 474.4 14.6 489.0
EBITDA from subsidiaries 510.6 526.9 153.4 - (51.4) (43.6) 1,095.9 34.4 1,130.3
Proportional share of the EBITDA from associates and JVs - - - 104.8 - (0.4) 104.4 3.0 107.4
Total EBITDA 510.6 526.9 153.4 104.8 (51.4) (44.0) 1,200.3 37.4 1,237.7
For the year ended 31 December 2022
Los Pelambres Centinela Antucoya Zaldívar Exploration and evaluation Corporate and other items Mining Railway and other transport services Total
$m $m $m $m $m $m $m $m $m
Operating profit/(loss) 1,196.2 446.0 155.6 - (113.0) (94.3) 1,590.5 43.8 1,634.3
Depreciation and amortisation 276.1 710.2 105.6 - - 18.7 1,110.6 30.5 1,141.1
Loss on disposals 0.5 1.0 - - - 0.6 2.1 - 2.1
EBITDA from subsidiaries 1,472.8 1,157.2 261.2 - (113.0) (75.0) 2,703.2 74.3 2,777.5
Proportional share of the EBITDA from associates and JVs - - - 147.2 - (0.7) 146.5 5.7 152.2
Total EBITDA 1,472.8 1,157.2 261.2 147.2 (113.0) (75.7) 2,849.7 80.0 2,929.7
c) Cash costs
Cash costs are a measure of the cost of operational production expressed in
terms of cents per pound of payable copper produced.
This is considered to be a useful and relevant measure as it is a standard
industry measure applied by most major copper mining companies which reflects
the direct costs involved in producing each pound of copper. It therefore
allows a straightforward comparison of the unit production cost of different
mines, and allows an assessment of the position of a mine on the industry cost
curve. It also provides a simple indication of the profitability of a mine
when compared against the price of copper (per lb).
With sales of concentrates at Los Pelambres and Centinela, which are sold to
smelters and roasting plants for further processing into fully refined metal,
the price of the concentrate invoiced to the customer reflects the market
value of the fully refined metal less a "treatment and refining charge"
deduction, to reflect the lower value of this partially processed material
compared with the fully refined metal. For accounting purposes, the revenue
amount reflects the invoiced price (which reflects the net of the market value
of fully refined metal less the treatment and refining charges). Under the
standard industry definition of cash costs, treatment and refining charges are
regarded as part of the total cash cost figure.
At 30.06.2023 At 30.06.2022 At 31.12.2022
Reconciliation of cash costs excluding treatment & refining charges and
by-product revenue:
Total Group operating costs (Note 5) ($m) 2,116.4 1,886.9 4,227.7
Zaldívar operating costs (attributable basis - 50%) 129.0 106.2 234.4
Less:
Depreciation and amortisation (Note 5) ($m) (511.3) (489.0) (1,141.1)
Loss on disposal (Note 5) ($m) - - (2.1)
Corporate and other items - Total operating cost (excluding depreciation) (51.7) (43.5) (75.0)
(Note 5) ($m)
Exploration and evaluation - Total operating cost (excluding depreciation) (62.0) (51.4) (113.0)
(Note 5) ($m)
Transport division - Total operating cost (excluding depreciation) (Note 5) (62.9) (57.6) (119.1)
($m)
Other costs not included within cash costs ($m) (62.1) (43.5) (97.6)
Inventories Variation 21.9 31.3 (12.0)
Total cost relevant to the mining operations' cash costs ($m) 1,517.3 1,339.4 2,902.2
Copper production volumes (tonnes) 295,500 268,630 646,200
Cash costs excluding treatment & refining charges and by-product revenue 5,135 4,986 4,491
($/tonne)
Cash costs excluding treatment & refining charges and by-product revenue 2.32 2.25 2.05
($/lb)
At 30.06.2023 At 30.06.2022 At 31.12.2022
Reconciliation of cash costs before deducting by-products revenue:
Treatment & refining charges - copper and by-products- Los Pelambres (Note 64.3 36.2 108.5
5)
Treatment & refining charges - copper and by-products- Centinela (Note 5) 40.8 33.8 78.8
Treatment & refining charges - copper - total 105.1 70.0 187.3
Copper production volumes (tonnes) 295,500 268,630 646,200
Treatment & refining charges ($/tonne) 355.8 260.3 289.9
Treatment & refining charges ($/lb) 0.16 0.12 0.14
Cash costs excluding treatment & refining charges and by-product revenue 2.32 2.25 2.05
($/lb)
Treatment & refining charges ($/lb) 0.16 0.12 0.14
Cash costs before deducting by-product revenue (S/lb) 2.48 2.37 2.19
(1)The 295,500 tonnes includes 19,800 tonnes of production at Zaldívar on a
50% attributable basis.
c) Cash costs (continued)
At 30.06.2023 At 30.06.2022 At 31.12.2022
Reconciliation of cash costs (net of by-product revenue):
Gold revenue - Los Pelambres (Note 6) ($m) 41.5 29.4 75.5
Gold revenue - Centinela (Note 6) ($m) 115.5 110.3 239.0
Molybdenum revenue - Los Pelambres (Note 6) ($m) 209.1 107.8 311.9
Molybdenum revenue - Centinela (Note 6) ($m) 79.9 46.5 110.2
Silver revenue - Los Pelambres (Note 5) ($m) 15.9 12.9 33.1
Silver revenue - Centinela (Note 5) ($m) 14.5 12.6 25.1
Total by-product revenue ($m) 476.4 319.5 794.8
Copper production volumes (tonnes) 295,500 268,630 646,200
By-product revenue ($/tonne) 1,612.2 1,189.4 1,230.0
By-product revenue ($/lb) 0.73 0.55 0.58
Cash costs before deducting by-product revenue (S/lb) 2.48 2.37 2.19
By-product revenue ($/lb) (0.73) (0.55) (0.58)
Cash costs (net of by-product revenue) ($/lb) 1.75 1.82 1.61
(1)The 295,500 tonnes includes 19,800 tonnes of production at Zaldívar on a
50% attributable basis.
The totals in the tables above may include some small apparent differences as
the specific individual figures have not been rounded.
d) Attributable cash, cash equivalents & liquid investments, borrowings
and net debt
Attributable cash, cash equivalents & liquid investments, borrowings and
net debt reflects the proportion of those balances which are attributable to
the equity holders of the Company, after deducting the proportion attributable
to the non-controlling interests in the Group's subsidiaries.
This is considered to be a useful and relevant measure as the majority of the
Group's cash tends to be held at the corporate level and therefore 100%
attributable to the equity holders of the Company, whereas the majority of the
Group's borrowings tend to be at the level of the individual operations, and
hence only a proportion is attributable to the equity holders of the Company.
June 2023 June 2022
Total Attributable Attributable Total Attributable share Attributable
amount
share
amount
amount
amount
$m $m $m $m
Cash, cash equivalents and liquid investments:
Los Pelambres 705.0 60% 423.0 784.3 60% 470.6
Centinela 190.4 70% 133.3 447.8 70% 313.5
Antucoya 129.8 70% 90.9 173.4 70% 121.4
Corporate 1,297.7 100% 1,297.7 1,404.4 100% 1,404.4
Transport division 26.6 100% 26.6 68.3 100% 68.3
Total 2,349.5 1,971.5 2,878.2 2,378.2
Borrowings:
Los Pelambres (Note 16) (1,503.6) 60% (902.2) (1,533.7) 60% (920.2)
Centinela (Note 16) (252.5) 70% (176.8) (374.3) 70% (262.0)
Antucoya (Note 16) (392.4) 70% (274.7) (433.6) 70% (303.5)
Corporate (Note 16) (1,011.2) 100% (1,011.2) (1,005.6) 100% (1,005.6)
Transport division (Note 16) (11.1) 100% (11.1) (22.4) 100% (22.4)
Total (Note 16) (3,170.8) (2,376.0) (3,369.6) (2,513.7)
Net (debt)/cash (821.3) (404.5) (491.4) (135.5)
Production and Sales Statistics (not subject to audit or review)
a) Production and sales volumes for copper, gold and molybdenum
Production Sales
Six months ended 30.06.2023 Six months ended 30.06.2022 Year ended 31.12.2022 Six months ended 30.06.2023 Six months ended 30.06.2022 Year ended 31.12.2022
Copper 000 tonnes 000 tonnes 000 tonnes 000 tonnes 000 tonnes 000 tonnes
Los Pelambres 128.5 98.4 275 129.1 96.3 271.2
Centinela 109.2 111.3 247.5 108.6 107 246.1
Antucoya 38.0 36.4 79.2 37.4 37.1 80.8
Zaldívar (attributable basis - 50%) 19.8 22.5 44.5 20.3 22.7 44.4
Group total 295.5 268.6 646.2 295.4 263.1 642.5
Gold 000 ounces 000 ounces 000 ounces 000 ounces 000 ounces 000 ounces
Los Pelambres 19.6 15.4 43.1 20.5 15.2 42.3
Centinela 66.7 58.4 133.7 58.4 58.4 132.3
Group total 86.2 73.8 176.8 78.9 73.6 174.6
Molybdenum 000 tonnes 000 tonnes 000 tonnes 000 tonnes 000 tonnes 000 tonnes
Los Pelambres 3.4 2.7 7.2 3.7 2.7 6.8
Centinela 1.5 1.3 2.4 1.5 1.2 2.4
Group total 4.9 4.0 9.6 5.2 3.9 9.2
Silver 000 ounces 000 ounces 000 ounces 000 ounces 000 ounces 000 ounces
Los Pelambres 670.2 568.2 1,603.8 633.3 548.2 1,562.9
Centinela 633.2 544.6 1,212.1 589.3 537.9 1184.2
Group total 1,303.4 1,112.8 2,815.9 1,222.6 1,086.1 2,747.1
b) Cash costs per pound of copper produced and realised prices per
pound of copper and molybdenum sold
Net Cash costs Realised prices
Six months ended 30.06.2023 Six months ended 30.06.2022 Year ended 31.12.2022 Six months ended 30.06.2023 Six months ended 30.06.2022 Year ended 31.12.2022
$/lb $/lb $/lb $/lb $/lb $/lb
Copper
Los Pelambres 1.17 1.32 1.10 3.97 3.94 3.76
Centinela 1.88 1.98 1.75 4.01 4.22 3.89
Antucoya 2.72 2.50 2.50 4.01 4.34 3.95
Zaldivar (attributable basis - 50%) 2.96 2.14 2.39 - - -
Group weighted average (net of by-products) 1.75 1.82 1.61 3.99 4.13 3.84
Group weighted average (before deducting by-products) 2.48 2.37 2.19
Group weighted average (before deducting by-products and excluding treatment 2.32 2.25 2.05
& refining charges from concentrate)
Cash costs at Los Pelambres comprise:
On-site and shipping costs 1.82 1.85 1.66
Treatment & refining charges for concentrates 0.22 0.17 0.18
Cash costs before deducting by-product credits 2.04 2.02 1.84
By-product credits (principally molybdenum) (0.87) (0.70) (0.74)
Cash costs (net of by-product credits) 1.17 1.32 1.10
Cash costs at Centinela comprise:
On-site and shipping costs 2.65 2.54 2.29
Treatment & refining charges for concentrates 0.17 0.14 0.15
Cash costs before deducting by-product credits 2.82 2.68 2.44
By-product credits (principally gold) (0.94) (0.70) (0.69)
Cash costs (net of by-product credits) 1.88 1.98 1.75
LME average copper price 3.95 4.43 4.23
Gold $/oz $/oz $/oz
Los Pelambres 2,022 1,930 1,785
Centinela 1,978 1,891 1,806
Group weighted average 1,989 1,899 1,801
Market average price 1,932 1,873 1,800
Molybdenum $/lb $/lb $/lb
Los Pelambres 25.3 18.1 20.9
Centinela 24.1 17.7 20.5
Group weighted average 25.0 18.0 20.8
Market average price 27.1 18.7 18.7
Silver $/oz $/oz $/oz
Los Pelambres 25.2 23.5 21.2
Centinela 24.6 23.4 21.1
Group weighted average 24.9 23.5 21.2
Market average price 23.4 23.3 21.8
Notes to the production and sales statistics
(i) For the Group's subsidiaries, the production and
sales figures reflect the total amounts produced and sold by the mine, not the
Group's share of each mine. The Group owns 60% of Los Pelambres, 70% of
Centinela and 70% of Antucoya. For the Zaldívar joint venture, the production
and sales figures reflect the Group's proportional 50% share.
(ii) Los Pelambres produces copper and molybdenum
concentrates, Centinela produces copper concentrate, copper cathodes and
molybdenum concentrate, and Antucoya and Zaldívar produce copper cathodes.
The figures for Los Pelambres and Centinela are expressed in terms of payable
metal contained in concentrate and in cathodes. Los Pelambres and Centinela
are also credited for the gold and silver contained in the copper concentrate
sold. Antucoya and Zaldívar produce cathodes with no by-products.
(iii) Cash costs are a measure of the cost of operational
production expressed in terms of cents per pound of payable copper produced.
Cash costs are stated net of by-product credits. Cash costs exclude
depreciation, financial income and expenses, hedging gains and losses,
exchange gains and losses and corporate tax for all four operations. With
sales of concentrates at Los Pelambres and Centinela, which are sold to
smelters and roasting plants for further processing into fully refined metal,
the price of the concentrate invoiced to the customer reflects the market
value of the fully refined metal less a "treatment and refining charge"
(TC/RC) deduction, to reflect the lower value of this partially processed
material compared with the fully refined metal. For accounting purposes, the
revenue amount reflects the invoiced price (is which reflects the net of the
market value of fully refined metal less the treatment and refining charges).
However, under the standard industry definition of unit cash costs, treatment
and refining charges are regarded as an expense and part of cash costs.
(iv) Realised copper prices are determined by comparing
revenue from copper sales (after adding back treatment and refining charges
for concentrates) with sales volumes for each mine in the period. Realised
molybdenum and gold prices are calculated on a similar basis. Realised prices
reflect mark-to-market adjustments for sales contracts which contain
provisional pricing mechanisms and gains and losses on commodity derivatives,
which are included within revenue.
(v) The totals in the tables above may include some small
apparent differences as the specific individual figures have not been rounded.
(vi) The production information and the cash cost
information is derived from the Group's production report for the second
quarter of 2023, published on 19 July 2023.
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