REG - Antofagasta PLC - Q4 2021 PRODUCTION REPORT

AntofagastaAnnouncement

19/01/2022 07:05

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RNS Number : 8788Y  Antofagasta PLC  19 January 2022

NEWS RELEASE, 19 JANUARY 2022

Q4 2021 PRODUCTION REPORT

FULL YEAR GUIDANCE ACHIEVED

 

Antofagasta plc CEO, Iván Arriagada said: "Despite external pressures, such
as the ongoing drought in Chile, higher input costs and global supply chain
challenges, the Company has successfully achieved its production and cost
guidance for the year with copper production at 721,500 tonnes and net cash
costs of $1.20/lb.

"In 2022 we expect copper production to be 660-690,000 tonnes at a net cash
cost of $1.55/lb as grades decrease at Centinela Concentrates and the drought
continues to impact Los Pelambres. However, we have a long-term solution to
the water shortage which will come in the second half of the year when our
desalination plant is commissioned.

"Our unit costs will be temporarily affected by the decrease in production in
2022 combined with increases in input prices, particularly acid. However,
through our Cost and Competitiveness Programme, improving operational
effectiveness and innovation we will continue to control costs tightly in the
short-, medium- and long-term.

"In the meantime, the demand picture for copper continues to be strong as
copper is essential to economic activity and green investment initiatives such
as electric vehicles, infrastructure and renewable energy."

 

HIGHLIGHTS

PRODUCTION

·    Group copper production for the full year was 721,500 tonnes, within
the guidance range and 1.7% lower than last year mainly on expected higher
grades at Centinela Concentrates, offset by expected lower grades and lower
throughput at Los Pelambres

·    Group copper production in Q4 2021 was 178,900 tonnes, 1.2% lower
than in the previous quarter as lower water availability impacted throughput
at Los Pelambres by 13.6%, mainly as a result of the previously advised
drought

·    Gold production for the full year was 252,200 ounces, 23.6% higher
than in 2020 on higher grades at Centinela. Quarterly production decreased by
2.8% to 64,900 ounces on lower throughput at Los Pelambres

·    Molybdenum production in the quarter was 2,100 tonnes, 500 tonnes
lower than in the previous quarter on lower throughput at Los Pelambres. For
the full year, production was 10,500 tonnes, 16.7% lower than in 2020 on lower
grades at Los Pelambres and Centinela

CASH COSTS

·    Cash costs before by-product credits in 2021 were $1.79/lb, 14.7%
higher than last year due the stronger Chilean peso (4%), higher energy and
diesel prices, and lower production

·    Cash costs before by-product credits in Q4 2021 were $1.92/lb, 13c/lb
higher than in Q3 2021 due to higher input prices and the lower production at
Los Pelambres

·    Net cash costs for the full year were $1.20/lb, below guidance and
5.3% higher than in 2020 due to higher cash costs before by-product credits
partially offset by the 17c/lb increase in by-products credits on increased
gold production and realised molybdenum price

·    Net cash costs in Q4 2021 were $1.35/lb, 19c/lb higher than in the
previous quarter, reflecting the higher cash costs before by-products credits
and the decrease in by-products credits

 

2022 GUIDANCE

·    Group production in 2022 is expected to be 660-690,000 tonnes of
copper (as previously announced), 170-190,000 ounces of gold and 8,500-10,000
tonnes of molybdenum. The copper and gold production reflect lower expected
grades at Centinela Concentrates and the temporarily reduced throughput at Los
Pelambres because of the continued drought. It assumes there is no
precipitation until the rainy season and the desalination plant starts
operating in H2 2022. Copper production is expected to increase quarter on
quarter throughout the year

·    Group cash costs in 2022 before and after by-product credits are
expected to be $2.00/lb and $1.55/lb respectively, reflecting increased input
costs, especially sulphuric acid (up 125%) at our cathode operations, and
lower production at the Group's two lowest cost operations, namely Los
Pelambres and Centinela Concentrates. By-product credits are also expected to
decrease as gold and molybdenum production falls

·   Capital expenditure in 2022 is expected to be $1.7-1.9 billion, as
sustaining and mine development expenditure increase for the year to
approximately $1.0 billion, and development expenditure continues on the Los
Pelambres Expansion project and at Centinela, including the ongoing study and
review work on the second concentrator. The final estimated capital
expenditure to complete the Los Pelambres Expansion remains under review due
primarily to COVID-19 impacts.

GROWTH PROJECTS UPDATE

·   As at the end of 2021 the Los Pelambres Expansion project was 68%
complete (design, procurement and construction). The final estimated project
costs are under review, considering the impact of COVID-19, higher input and
logistics costs and project workers absenteeism. The completion schedule for
the water supply system remains unchanged and is expected in H2 2022. For the
concentrator plant expansion, which has the highest number of workers and was
most affected by absenteeism, completion is now planned for the beginning of
2023

·   At Zaldívar construction of the Chloride Leach project was completed
during January 2022 and is now being commissioned

SUSTAINABILITY

·   In December, the Company released its inaugural Climate Change Report
(https://www.antofagasta.co.uk/media/4221/antofagasta-climate-change-report-2021.pdf)
which set out its progress and plans for fulfilling its Climate Change
Strategy. This included its approach to achieving the previously announced
emission reduction targets, as well as the Group's adaption initiatives, the
evaluation of the physical risks of climate change, transition risks and the
management of critical resources such as water and energy, all with full
regard of the impact on the Group's stakeholders. Climate change
considerations are integrated into the Group's business decision making
processes including using an internal carbon price

·   The Company also released a Social Management Report
(https://www.antofagasta.co.uk/media/4212/reporte_social_eng.pdf) in December

OTHER

·   A three-year labour agreement was agreed with one of the workers unions
at Centinela in December, six months earlier than originally scheduled. During
2022 negotiations are scheduled with the supervisors' unions at Zaldívar
(August), Los Pelambres (October) and Antucoya (November), and with the
workers' union at Antucoya (September).

 

 GROUP PRODUCTION AND CASH COSTS                               Year to Date          Q4     Q3
                                                               2021   2020   %       2021   2021   %
 Copper production                           kt                721.5  733.9  (1.7)   178.9  181.1  (1.2)
 Copper sales                                kt                725.6  738.5  (1.7)   197.2  182.3  8.2
 Gold production                             koz               252.2  204.1  23.6    64.9   66.8   (2.8)
 Molybdenum production                       kt                10.5   12.6   (16.7)  2.1    2.6    (19.2)
 Cash costs before by-product credits ((1))  $/lb              1.79   1.56   14.7    1.92   1.79   7.3
 Net cash costs ((1))                        $/lb              1.20   1.14   5.3     1.35   1.16   16.4

(1) Cash cost is a non-GAAP measure used by the mining industry to express the
cost of production in US dollars per pound of copper produced.

 

 

 Investors - London                                                                  Media - London
 Andrew Lindsay      alindsay@antofagasta.co.uk (mailto:alindsay@antofagasta.co.uk)  Carole Cable      antofagasta@brunswickgroup.com (mailto:antofagasta@brunswickgroup.com)
 Telephone           +44 20 7808 0988                                                Telephone         +44 20 7404 5959
 Rosario Orchard     rorchard@antofagasta.co.uk (mailto:rorchard@antofagasta.co.uk)
 Telephone           +44 20 7808 0988                                                Media - Santiago
                                                                                     Pablo Orozco      porozco@aminerals.cl (mailto:porozco@aminerals.cl)
                                                                                     Carolina Pica     cpica@aminerals.cl (mailto:cpica@aminerals.cl)
                                                                                     Telephone         +56 2 2798 7000

 

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MINING OPERATIONS

Los Pelambres

Copper production at Los Pelambres during the quarter was 74,300 tonnes, 8.4%
lower than in the previous quarter as throughput reduced by 13.6%. This was
primarily due to decreased plant run-time because of operational measures
taken to optimise the use of water and major maintenance during the quarter.

For the full year, copper production was 324,700 tonnes, 9.7% lower than last
year. This decrease was mainly due to the lower throughput due to water
optimisation and expected lower copper grade.

Molybdenum production was 1,800 tonnes in Q4 2021, 600 tonnes lower than in
the previous quarter, and for the full year was 9,200 tonnes, 15.6% lower than
in 2020 because of lower throughput, grades and recoveries.

Cash costs before by-product credits in Q4 were $1.74/lb, 8.7% higher than in
previous quarter. For the full year cash costs before by-product credits were
$1.59/lb, 25.2% higher than 2020. This was due to the lower production due to
water restrictions, the stronger Chilean peso, higher input prices and the
payment of a one-off signing bonus following the successful completion of a
new 3-year labour agreement.

Net cash costs for the quarter were $1.12/lb, 31c/lb higher that Q3 as
molybdenum production fell by 25.0%. For the full year net cash costs were
$0.89/lb, 8c/lb higher than in 2020, due to higher by-product credits driven
by higher realised prices offset by higher cash costs before by-product
credits.

The labour agreement with the supervisors' union expires in October 2022.

Major maintenance scheduled in Q1 and Q2 2022 is included in full year
guidance.

 LOS PELAMBRES                                        Year to Date          Q4     Q3
                                                      2021   2020   %       2021   2021   %
 Daily ore throughput                        kt       155.5  161.9  (3.9)   136.6  158.0  (13.6)
 Copper grade                                %        0.66   0.70   (5.9)   0.67   0.64   4.1
 Copper recovery                             %        90.3   90.0   0.3     91.8   90.3   1.6
 Copper production                           kt       324.7  359.6  (9.7)   74.3   81.1   (8.4)
 Copper sales                                kt       324.5  366.0  (11.3)  89.9   69.1   30.1
 Molybdenum grade                            %        0.019  0.021  (7.9)   0.018  0.018  0.8
 Molybdenum recovery                         %        84.5   85.6   (1.3)   85.1   83.9   1.5
 Molybdenum production                       kt       9.2    10.9   (15.6)  1.8    2.4    (25.0)
 Molybdenum sales                            kt       9.2    10.8   (14.8)  2.2    2.1    4.8
 Gold grade                                  g/t      0.044  0.047  (7.0)   0.043  0.037  15.0
 Gold recovery                               %        71.8   73.0   (1.7)   74.5   83.0   (10.2)
 Gold production                             koz      53.2   60.3   (11.8)  11.8   13.4   (11.9)
 Gold sales                                  koz      51.1   58.4   (12.5)  14.2   11.1   27.9
 Cash costs before by-product credits ((1))  $/lb     1.59   1.27   25.2    1.74   1.60   8.7
 Net cash costs ((1))                        $/lb     0.89   0.81   9.9     1.12   0.81   38.3

(1) Includes tolling charges of $0.15/lb in Q4 2021, $0.17/lb in Q3 2021,
$0.15/lb FY 2021 and $0.18/lb FY 2020

 

Centinela

Centinela had a solid year in 2021 with increased production and lower costs
with higher sulphide grades and increased throughput.

Production for 2021 was 274,200 tonnes, 11.1% higher than in 2020, due to
higher grades and increased throughput at Centinela Concentrates which
operated at design capacity for the full year. During Q4 Centinela produced
71,400 tonnes of copper, 1.0% higher than in the previous quarter.

For the full year, copper in concentrate production was 185,400 tonnes, 20.7%
higher than in 2020, reflecting expected higher ore grades and throughput over
105 ktpd. Production for the quarter was 47,400 tonnes, 0.4% lower than in Q3.

Full year copper cathode production was 88,800 tonnes, 4.8% lower than in 2020
mainly due to expected lower grades and recoveries, despite higher throughput.
Cathode production during the quarter was 24,000 tonnes, 3.6% higher than Q3
2021 primarily on higher ore grades partially offset by lower throughput.

Gold production for the full year was 199,000 ounces, 38.5% higher than in
2020, due to higher throughput and grades. For the quarter, production was
53,100 ounces, 0.6% lower than the previous quarter on lower grades.

Cash costs before by-product credits for the full year were $1.87/lb, 2c/lb
higher than in 2020 as the impact of higher copper production was offset by
the stronger Chilean peso and higher input costs. Cash costs before by-product
credits were $2.00/lb in Q4 2021, 7.5% higher than in the previous quarter.

For the full year, by-product credits were $0.74/lb, 16c/lb higher than in
2020 due to higher gold production and the improved molybdenum price. In Q4
by-product credits increased by 5c/lb compared with Q3 as molybdenum
production increased, although the price declined.

During the full year net cash costs were $1.13/lb, 14c/lb lower than 2020 due
to higher by-product credits driven by higher gold production offset by higher
cash costs before by-product credits. Net cash costs in Q4 were $1.23/lb, 7.9%
higher than in the previous quarter.

In 2022 the average mined grade and recoveries at Centinela Concentrates will
decline, partly offset by higher grades at Centinela Cathodes. Total
production is expected to be 245-255,000 tonnes.

A labour negotiation with the largest of the workers' unions was successfully
concluded during the quarter, before the deadline in May 2022. There will be
no further negotiations at Centinela during 2022.

Major maintenance scheduled in Q1 and Q3 2022 is included in full year
guidance.

 CENTINELA                                          Year to Date          Q4     Q3
                                                    2021   2020   %       2021   2021   %
 CONCENTRATES
 Daily ore throughput                        kt     105.1  97.0   8.4     110.8  100.3  10.4
 Copper grade                                %      0.60   0.53   12.0    0.59   0.62   (4.7)
 Copper recovery                             %      84.8   84.5   0.3     84.9   84.9   (0.0)
 Copper production                           kt     185.4  153.5  20.7    47.4   47.6   (0.4)
 Copper sales                                kt     187.7  152.7  23.0    50.6   56.3   (10.0)
 Molybdenum grade                            %      0.009  0.012  (21.2)  0.010  0.008  27.2
 Molybdenum recovery                         %      47.9   38.6   24.0    46.2   43.8   5.5
 Molybdenum production                       kt     1.3    1.7    (23.5)  0.4    0.2    100.0
 Molybdenum sales                            kt     1.2    1.7    (29.4)  0.2    0.2    0.0
 Gold grade                                  g/t    0.24   0.19   28.5    0.25   0.26   (7.1)
 Gold recovery                               %      71.0   70.6   0.5     70.4   69.1   1.8
 Gold production                             koz    199.0  143.7  38.5    53.1   53.4   (0.6)
 Gold sales                                  koz    193.5  141.2  37.0    54.2   61.4   (11.7)
 CATHODES
 Daily ore throughput                        kt     57.8   56.9   1.6     57.8   60.7   (4.9)
 Copper grade                                %      0.62   0.64   (3.6)   0.64   0.61   5.8
 Copper recovery                             %      65.6   67.6   (2.9)   67.4   64.9   3.9
 Copper production - heap leach              kt     85.3   89.0   (4.2)   23.3   22.2   4.7
 Copper production - total ((1))             kt     88.8   93.3   (4.8)   24.0   23.2   3.6
 Copper sales                                kt     88.4   95.0   (7.0)   24.8   25.0   (0.9)
 Total copper production                     kt     274.2  246.8  11.1    71.4   70.7   1.0
 Cash costs before by-product credits ((2))  $/lb   1.87   1.85   1.1     2.00   1.86   7.5
 Net cash costs ((2))                        $/lb   1.13   1.27   (11.0)  1.23   1.14   7.9

(1) Includes production from ROM material

(2) Includes tolling charges of $0.13/lb in Q4 2021, $0.10/lb in Q3 2021,
$0.12/lb FY 2021 and $0.14/lb FY 2020

 

 

Antucoya

Production for the full year was 78,600 tonnes, 0.9% lower than last year due
to higher throughput, offset by expected lower grades and resulting lower
recoveries. During Q4 production was 20,900 tonnes, 14.2% higher than the
previous quarter as throughput, grades and recoveries increased.

During the quarter, cash costs were $2.02/lb compared to $2.06/lb in Q3. For
the full year cash costs were $2.04/lb, 12.1% higher than in 2020 due to a
stronger Chilean peso, and higher input costs and maintenance expenditure.

In 2022, the labour agreement with the supervisor's union expires in November.

Major maintenance scheduled in Q1 and Q3 2022 is included in full year
guidance.

 ANTUCOYA                     Year to Date          Q4    Q3
                              2021   2020   %       2021  2021  %
 Daily ore throughput  kt     85.5   76.0   12.5    91.1  82.9  9.9
 Copper grade          %      0.34   0.38   (10.2)  0.35  0.33  4.1
 Copper recovery       %      69.1   73.7   (6.3)   71.3  67.9  5.0
 Copper production     kt     78.6   79.3   (0.9)   20.9  18.3  14.2
 Copper sales          kt     80.4   76.5   5.1     19.9  20.3  (2.0)
 Cash costs            $/lb   2.04   1.82   12.1    2.02  2.06  (1.9)

 

Zaldívar

Attributable copper production for the year was 44,000 tonnes, 8.7% lower than
in 2020 mainly due to expected lower grades, partially offset by higher
throughput. During the quarter Zaldívar produced 12,400 tonnes of copper,
12.7% higher than in the previous quarter on higher grades, recoveries and
throughput.

Cash costs during the quarter were $2.31/lb and for the full year were
$2.39/lb, compared with $1.80/lb in 2020, mainly due to lower grades, higher
maintenance costs and the stronger Chilean peso.

In 2022, the labour agreement with the supervisor's union expires in August.

Major maintenance scheduled in Q1 and Q3 2022 is included in full year
guidance.

 ZALDÍVAR                                     Year to Date          Q4    Q3
                                              2021   2020   %       2021  2021  %
 Daily ore throughput                  kt     44.4   39.3   12.9    48.6  48.0  1.3
 Copper grade                          %      0.74   1.02   (27.5)  0.77  0.65  17.6
 Copper recovery ((1))                 %      53.5   50.1   6.8     53.5  52.9  1.2
 Copper production - heap leach ((2))  kt     32.0   36.6   (12.4)  9.1   7.7   17.8
 Copper production - total ((2,3))     kt     44.0   48.2   (8.7)   12.4  11.0  12.7
 Copper sales ((2))                    kt     44.6   48.3   (7.7)   12.0  11.6  3.4
 Cash costs                            $/lb   2.39   1.80   32.8    2.31  2.34  (1.3)

(1) 12-month rolling recoveries

(2) Group's 50% share

(3) Includes production from secondary leaching

 

Transport Division

Total transport volumes in Q4 were 1.8 million tonnes, 0.5% higher than the
previous quarter. For the full year, transport volumes increased by 4.0% to
6.7 million tonnes as a new transport contract started.

 TRANSPORT                         Year to Date         Q4     Q3
                                   2021   2020   %      2021   2021   %
 Rail                       kt     5,222  4,847  7.7    1,338  1,370  (2.3)
 Road                       kt     1,481  1,597  (7.3)  422    381    10.8
 Total tonnage transported  kt     6,702  6,444  4.0    1,760  1,751  0.5

 

Commodity prices and exchange rates

                        Year to Date         Q4     Q3
                        2021   2020   %      2021   2021   %
 Copper
 Market price    $/lb   4.23   2.80   51.1   4.40   4.25   3.5
 Realised price  $/lb   4.37   2.98   46.6   4.65   3.99   16.5
 Gold
 Market price    $/oz   1,799  1,770  1.6    1,795  1,790  0.3
 Realised price  $/oz   1,788  1,797  (0.5)  1,812  1,781  1.7
 Molybdenum
 Market price    $/lb   15.9   8.7    82.8   18.9   19.0   (0.5)
 Realised price  $/lb   17.4   8.8    97.7   18.1   20.2   (10.4)
 Exchange rates
 Chilean peso    per $  760    792    (4.0)  826    773    6.9

 

Spot commodity prices for copper, gold and molybdenum as at 31 December 2021
were $4.40/lb, $1,820/oz and $18.7/lb respectively, compared with $4.10/lb,
$1,737/oz and $18.5/lb as at 30 September 2021 and $3.51/lb, $1,891/oz and
$10.0/lb as at 31 December 2020.

The provisional pricing adjustments for copper, gold and molybdenum for the
full year were positive $352.5 million, negative $10.8 million and positive
$37.6 million respectively.

The provisional pricing adjustments for copper, gold and molybdenum for the
quarter were positive $150.9 million, negative $0.5 million and negative $9.4
million respectively.

 

Exceptional item

During 2021 there was an exceptional item of $91 million which reflects the
recognition of a deferred tax asset at Antucoya, due to the increased
consensus copper price forecasts resulting in higher forecast taxable profits.

 

2022 Guidance

                                 Los Pelambres  Centinela  Antucoya  Zaldívar   Group
 Production
 Copper                    kt    290 - 300      245 - 255  75 - 80   50 - 55    660 - 690
 Gold                      koz   40 - 50        130 - 140  -         -          170 - 190
 Molybdenum                kt    6.5 - 7.5      2.0 - 2.5  -         -          8.5 - 10.0
 Grade
 Copper                    %     0.64%          0.57%      0.36%     0.75%      -
 Cash costs
 Cash costs before         $/lb  1.75           2.30       2.30      2.20       2.00

 by-product credits((1))
 Net cash costs ((1, 2))   $/lb  1.25           1.60       2.30      2.20       1.55

(1) Assumed CLP/USD exchange rate of 810

(2) Includes by-product credits at a gold price of $1,800/oz and a molybdenum
price of $15.0/lb

 

As previously announced, copper production for 2022 is expected to be
660-690,000 tonnes as grades decrease at Centinela Concentrates and the
temporarily reduced throughput at Los Pelambres because of the drought. It
assumes there is no precipitation until the rainy season and the desalination
plant starts operating in H2 2022. Copper production is expected to increase
quarter on quarter throughout the year.

Gold production for 2022 is expected to be 170-190,000 ounces, as grades
decrease at Centinela Concentrates.

Molybdenum production is expected to be 8,500-10,000 tonnes, as a result of
lower grades at Los Pelambres.

Group cash costs in 2022 before and after by-product credits are expected to
increase to $2.00/lb and $1.55/lb, respectively reflecting increased input
costs, especially sulphuric acid (up 125%) at our cathode operations, and
lower production at the Group's two lowest cost operations, namely Los
Pelambres and Centinela Concentrates. By-product credits are also expected to
decrease as gold and molybdenum production falls.

In 2022 consolidated Group capital expenditure, which excludes Zaldívar, is
expected to be $1.7-1.9 billion, as sustaining and mine development
expenditure for the year increase to approximately $1.0 billion, and
development expenditure continues on the Los Pelambres Expansion project and
at Centinela, including the ongoing study and review work on the second
concentrator. The final estimated capital expenditure to complete the Los
Pelambres Expansion remains under review due primarily to COVID-19 impacts.

 

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