REG - Antofagasta PLC - Q2 2014 PRODUCTION REPORT <Origin Href="QuoteRef">ANTO.L</Origin>

AntofagastaAnnouncement

06/09/2014 22:34

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RNS Number : 6563N
Antofagasta PLC
30 July 2014 
 
NEWS RELEASE, 30 JULY, 2014 
 
Q2 2014 PRODUCTION REPORT 
 
FULL YEAR GUIDANCE REMAINS UNCHANGED 
 
HIGHLIGHTS 
 
PRODUCTION 
 
·     Group copper production in Q2 2014 was 178,800 tonnes, a 5.5% increase
compared with the previous quarter, principally due to higher plant throughput
levels in Q2 following scheduled maintenance at Los Pelambres and Esperanza in
the first quarter 
 
·     Group copper production in H1 2014 was 4.4% lower than in the same
period last year primarily due to anticipated lower grades at Los Pelambres
and Esperanza 
 
·     Group gold production was 67,000 ounces in Q2 2014, an 18.0% increase on
Q1 2014 as a result of higher throughput and marginally higher grade at
Esperanza 
 
·     Molybdenum production at Los Pelambres was 1,600 tonnes in Q2 2014,
compared with 1,700 tonnes in the previous quarter, principally due to lower
grade 
 
CASH COSTS 
 
·     Cash costs before by-product credits in Q2 2014 were $1.90/lb, a 3.8%
increase compared with Q1 2014. This increase mainly related to the one-off
signing bonus between Esperanza and its labour unions 
 
·     Net cash costs of $1.45/lb were in line with the previous quarter,
supported by improved by-product credits from Los Pelambres, despite the
higher group cash costs before by-product credits 
 
·     Net cash costs for the first half of 2014 were $1.46/lb, 15.9% higher
than the same period last year primarily due to the lower by-product credit at
Esperanza, the signing bonuses at Los Pelambres and Esperanza, and ceased
mining activities at the lower cash cost Mirador pit by El Tesoro, however,
ahead of original expectations for the period 
 
GUIDANCE 
 
·     The Group remains on track to meet its full year guidance of 700,000
tonnes of copper, 270,000 ounces of gold and 7,500 tonnes of molybdenum and
net cash costs of $1.45/lb. 
 
OTHER 
 
·     In June, the Group announced the merger of Esperanza and El Tesoro into
one single operation, Minera Centinela 
 
·     New labour agreements were successfully negotiated at Los Pelambres and
Esperanza in the first half of 2014 
 
 GROUP PRODUCTION AND CASH COSTS             Q2     Q1            YTD           
                                             2014   2014   %      2014   2013   %       
 Copper production                     kt    178.8  169.4  5.5    348.2  364.1  (4.4)   
 Gold production                       koz   67.0   56.8   18.0   123.8  162.9  (24.0)  
 Molybdenum production                 kt    1.6    1.7    (5.9)  3.3    4.7    (29.8)  
 Cash costs before by-product credits  $/lb  1.90   1.83   3.8    1.87   1.76   6.3     
 Net cash costs                        $/lb  1.45   1.46   (0.7)  1.46   1.26   15.9    
 
 
MINING OPERATIONS 
 
Los Pelambres 
 
Los Pelambres produced 100,900 tonnes of copper in Q2 2014 compared with
95,700 tonnes in the previous quarter. This increase was mainly due to higher
plant throughput, as scheduled plant maintenance during the first quarter
lowered average plant throughput, partly offset by a drop in grade to 0.67%.
The 3.4% decrease in production to 196,600 tonnes in the first half of 2014
compared with the same period last year was mainly due to lower grade,
partially offset by improved recoveries. 
 
Molybdenum production decreased by 5.9% to 1,600 tonnes in Q2 2014, from 1,700
tonnes in the previous quarter, primarily due to lower grades that were
partially offset by increased plant throughput. Production at 3,300 tonnes was
also lower in the first half of 2014 compared to the same period last year,
again due primarily to lower grade. However, guidance for the full year
remains at 7,500 tonnes with higher grades expected in the second half of the
year. 
 
Cash costs before by-product credits in Q2 2014 were $1.59/lb compared with
$1.64/lb in the previous quarter. This was principally due to reversing out
the impact of the 'one-off' main labour agreement signing bonuses which were
settled in Q1 2014 as well as a higher production base.  Net cash costs were
$0.20/lb lower at $1.11/lb in Q2 2014 compared with the previous quarter
primarily reflecting higher realised molybdenum prices which supported the
by-product credit and lower cash costs before by-product credits as explained
above. 
 
Net cash costs for the first half of 2014 were $1.21/lb, compared with
$1.19/lb in the first half of 2013.  This slight increase in costs was mostly
due to the impact of the one-off labour agreement signed in 2014, partially
offset by a weaker Chilean peso and marginally better by-product credits. 
 
 LOS PELAMBRES                                Q2     Q1             YTD           
                                              2014   2014   %       2014   2013   %       
 Daily ore throughput                   kt    191.0  162.6  17.5    176.9  177.4  (0.3)   
 Copper grade                           %     0.67   0.73   (8.2)   0.70   0.74   (5.4)   
 Copper recovery                        %     89.7   91.7   (2.2)   90.7   89.1   1.8     
 Copper production                      kt    100.9  95.7   5.4     196.6  203.6  (3.4)   
 Copper sales                           kt    94.2   95.8   (1.7)   190.0  195.0  (2.6)   
 Molybdenum grade                       %     0.011  0.014  (21.4)  0.012  0.016  (25.0)  
 Molybdenum recovery                    %     81.5   86.5   (5.8)   84.1   79.9   5.2     
 Molybdenum production                  kt    1.6    1.7    (5.9)   3.3    4.7    (29.8)  
 Molybdenum sales                       kt    1.7    1.5    13      3.2    4.3    (25.6)  
 Gold production                        koz   18.1   15.5   16.7    33.6   24.3   38.3    
 Gold sales                             koz   15.8   15.5   1.9     31.3   24.3   28.8    
 Cash costs before by-product credits*  $/lb  1.59   1.64   (3.0)   1.62   1.58   2.5     
 Net cash costs                         $/lb  1.11   1.31   (15.3)  1.21   1.19   1.7     
 
 
* Includes tolling charges of $0.22/lb in Q2 2014, $0.20/lb in Q1 2014 and
$0.17/lb in H1 2013 
 
Centinela (Esperanza and El Tesoro merger) 
 
In June, the Group announced the merger of Esperanza and El Tesoro into a
single company, Minera Centinela, and expects this to be legally completed
during the fourth quarter of this year.  The merger will not only provide a
greater focus for the Group's activities in the Centinela Mining District, but
will also lead to value creation through operational synergies.  More
information on the merger will be provided within the interim results
announcement on 26 August 2014. 
 
Centinela concentrates (previously Esperanza) 
 
Centinela produced 43,100 tonnes of payable copper in concentrates in Q2 2014,
compared with 39,200 tonnes in the previous quarter, primarily due to higher
plant throughput following a planned maintenance in Q1, partially offset by
lower grade.  The 8.7% decrease in production to 82,300 tonnes in the first
half of 2014 compared to the first half of 2013 was principally due to lower
grade and to a lesser extent, lower recoveries. 
 
Gold production was 48,900 ounces in Q2 2014, 7,600 ounces higher than in the
prior quarter supported by the higher plant throughput and marginally higher
grade.  Gold production in the first half of the year was 34.8% lower than in
the same period last year as a result of significantly lower grades and
recoveries.  Gold production guidance for the full year remains on track with
higher grades expected in the second half of the year. 
 
Cash costs before by-product credits were $2.50/lb in Q2 2014 compared with
$2.20/lb in the previous quarter.   This was mainly due to the payment of a
one-off signing bonus to employees following the successful completion of a
new four-year agreement in May 2014. This one-off payment increased cash costs
for the quarter by approximately $0.32/lb, although on an annualised basis the
impact will be some $0.11/lb.  Net cash costs were 21.5% higher than the
previous quarter reflecting the increase in cash costs before by-product
credits as explained above. 
 
Compared with the first six months of 2013, cash costs before by-product
credits were 10.8% higher, primarily due to labour agreements as explained
above and lower production.  Net cash costs for the first half of 2014 were
$1.60/lb compared with $0.99/lb in the first half of 2013.  This increase is
primarily due to the significant decrease in gold production and realised
price, and the increase in cash costs before by-product credits as explained
above. 
 
 CENTINELA CONCENTRATES                       Q2    Q1           YTD          
 (PREVIOUSLY ESPERANZA)                       2014  2014  %      2014  2013   %       
 Daily ore throughput                   kt    88.4  82.1  7.7    85.3  86.7   (1.6)   
 Copper grade                           %     0.62  0.64  (3.1)  0.63  0.70   (10.0)  
 Copper recovery                        %     88.2  87.6  0.7    87.9  89.4   (1.7)   
 Copper production                      kt    43.1  39.2  9.9    82.3  90.1   (8.7)   
 Copper sales                           kt    46.8  39.0  20     85.9  78.2   9.8     
 Gold grade                             g/t   0.26  0.26  -      0.26  0.35   (25.7)  
 Gold recovery                          %     71.8  70.6  1.7    71.2  84.8   (16.0)  
 Gold production                        koz   48.9  41.3  18.4   90.3  138.6  (34.8)  
 Gold sales                             koz   52.3  41.6  25.7   93.9  116.1  (19.1)  
 Cash costs before by-product credits*  $/lb  2.50  2.20  13.6   2.35  2.12   10.8    
 Net cash costs                         $/lb  1.75  1.44  21.5   1.60  0.99   61.0    
                                                                                          
 
 
* Includes tolling charges of $0.24/lb in Q2 2014, $0.24/lb in Q1 2014 and
$0.20/lb in H1 2013 
 
Centinela cathodes (previously El Tesoro) 
 
Centinela produced 22,300 tonnes of copper cathodes in Q2 2014 compared with
23,700 tonnes in the previous quarter mainly as a result of lower grades,
recoveries and plant throughput.  Production in the first half of 2014 was
11.2% lower than in the same period last year.  This decrease was mainly due
to the drop in grades and recoveries following completion of mining activities
at the higher grade Mirador pit during the last quarter of 2013 and the
resumption of mining at the lower grade and higher cost Tesoro Central and
Tesoro North-East pits. 
 
Cash costs increased by $0.25/lb to $1.93/lb between Q2 2014 and the previous
quarter primarily due to the decrease in production and higher input costs
relating to maintenance in the quarter.  Cash costs in the first half of 2014
were 42.9% higher than in the same period last year primarily reflecting the
lower cost of production from processing the higher grade Mirador ore last
year. 
 
 CENTINELA CATHODES                    Q2    Q1           YTD         
 (PREVIOUSLY EL TESORO)                2014  2014  %      2014  2013  %       
 Daily ore throughput            kt    25.2  25.8  (2.3)  25.5  18.9  34.9    
 Copper grade                    %     1.20  1.28  (6.3)  1.24  1.72  (27.9)  
 Copper recovery                 %     72.7  73.8  (1.5)  73.2  78.1  (6.3)   
 Copper production - heap leach  kt    19.7  21.2  (7.1)  40.9  47.6  (14.1)  
 Copper production - total *     kt    22.3  23.7  (5.9)  46.0  51.8  (11.2)  
 Copper sales                    kt    22.0  23.1  (4.8)  45.2  49.4  (8.5)   
 Cash costs                      $/lb  1.93  1.68  14.9   1.80  1.26  42.9    
 
 
* Includes production from ROM material 
 
Michilla 
 
Copper production at Michilla was 12,400 tonnes during the quarter, 14.8%
higher than in the previous quarter primarily as a result of higher grade and
throughput. The 24.7% increase in production to 23,200 tonnes in the first
half of the year compared with the same period last year was also due to
higher grade and throughput. 
 
Cash costs decreased to $2.28/lb in Q2, some $0.21/lb lower than in the
previous quarter primarily reflecting the impact of increased production. 
Cash costs for the first half of 2014 were $2.38/lb compared with $3.36/lb in
the first half of 2013. This decrease was primarily due to lower stripping
costs, less processing of higher cost, third party ores and the weaker peso. 
 
 MICHILLA                              Q2    Q1           YTD         
                                       2014  2014  %      2014  2013  %       
 Daily ore throughput            kt    12.9  12.0  7.5    12.5  11.7  6.8     
 Copper grade                    %     1.12  1.08  3.7    1.10  0.92  19.6    
 Copper recovery                 %     79.2  80.0  (1.0)  79.6  76.6  3.9     
 Copper production - heap leach  kt    10.8  9.4   14.9   20.2  15.5  30.3    
 Copper production - total *     kt    12.4  10.8  14.8   23.2  18.6  24.7    
 Copper sales                    kt    11.9  10.4  14.4   22.3  18.5  20.5    
 Cash costs                      $/lb  2.28  2.49  (8.4)  2.38  3.36  (28.9)  
 
 
Antucoya 
 
The construction of Antucoya remains on time and on budget with 86% total
progress (including design, engineering, procurement and construction) and 74%
construction progress as at 30 June 2014. 
 
Commodity prices and exchange rates 
 
                        Q2     Q1            YTD           
                        2014   2014   %      2014   2013   %       
 Copper          
 Market price    $/lb   3.08   3.19   (3.4)  3.14   3.42   (8.2)   
 Realised price  $/lb   3.28   2.87   14.3   3.08   3.15   (2.2)   
 Gold            
 Market price    $/oz   1,288  1,293  (0.4)  1,291  1,524  (15.3)  
 Realised price  $/oz   1,315  1,403  (6.3)  1,356  1,447  (6.3)   
 Molybdenum                                                        
 Market price    $/lb   13.6   10.0   36.0   11.8   11.1   6.3     
 Realised price  $/lb   18.5   10.5   76.2   14.8   10.8   37.0    
 Exchange rates                                                    
 Chilean peso    per $  554    551    0.5    553    479    15.4    
 
 
The spot commodity prices for copper, gold and molybdenum as at 30 June 2014
were $3.15/lb, $1,314/oz and $13.3/lb respectively compared with $3.01/lb,
$1,292/oz and $10.6/lb as at 31 March 2014. 
 
The provisional pricing adjustments and hedging effects for the first half of
the year for copper, gold and molybdenum were negative $49.2 million, positive
$2.9 million and positive $18.9 million respectively. 
 
Transport and water 
 
Total volumes transported by the transport division were 1.8 million tonnes in
Q2 2014, 3.5% higher than in the previous quarter and 4.7% lower than in the
same period last year. 
 
The water division sold 12.7 million cubic metres in Q2 2014, 1.6% lower than
in the previous quarter and 0.4% lower than in the same period last year. 
 
                                    Q2     Q1            YTD           
                                    2014   2014   %      2014   2013   %      
 Total tonnage transported  kt      1,790  1,729  3.5    3,519  3,691  (4.7)  
 Water volumes sold         mil m³  12.7   12.9   (1.6)  25.6   25.7   (0.4)  
 
 
Investors - London                                                            
                    Media (Brunswick) 
 
Andrew Lindsay                    alindsay@antofagasta.co.uk                
Carole Cable         antofagasta@brunswickgroup.com 
 
Chris Wilson                         cwilson@antofagasta.co.uk                
   Robin Wrench       antofagasta@brunswickgroup.com 
 
Telephone                               +44 20 7808 0988                      
            Telephone               +44 20 7404 5959 
 
Investors - Santiago 
 
Alejandro Rivera                     arivera@aminerals.cl 
 
Telephone                               +56 2 2798 7000 
 
This information is provided by RNS
The company news service from the London Stock Exchange