Antofagasta posts 5% H1 Ebitda drop; supported by Esperanza

Chilean copper miner Antofagasta posted a drop in first-half earnings of just 5%, thanks to the contribution of its Esperanza mine. “We delivered a very strong operational performance," cfo Alejandro Rivera (pictured) said.

Chilean copper miner Antofagasta posted a drop in first-half earnings of just 5%, thanks to the contribution of its Esperanza mine.

The company recorded Ebitda of $1.8 billion in the six months ended June 30 this year, compared with $1.9 billion in the same period a year previously.

The relatively minor slip in Ebitda (earnings before interest, taxation, depreciation and amortisation) compares with falls of up to 41% among its peers, which were hit almost universally by falling commodity prices.

After an increase in production, Esperanza now represents 20% of the company’s copper output, and 27% of net income, compared with 10% and 7% respectively in the first half of 2011.

Major gold by-product credits led to net cash costs at Esperanza of 60.1 cents per lb in the first half of 2012, making it the lowest-cost operation within Antofagasta.

“We delivered a very strong operational performance within this first semester, which allowed us to more than offset the decline of 14% in copper prices,” Alejandro Rivera, Antofagasta cfo, said during a presentation on the results.

“We also raised turnover by 3%, despite lower market prices. Earnings per share were down partly due to higher depreciation and an increase in investment in exploration,” he added.

Revenue came to $3.2 billion for the period, while earnings per share were down by 7.2% to 65.5 cents.

Newly appointed ceo Diego Hernandez added that production is up at Esperanza, and further steps are being taken to raise its output.

“There is still work to be done at Esperanza to get to design capacity. We’re addressing two key elements – the installation of two additional tailings thickeners and the capacity of the grinding line,” Hernandez said.

“Net cash costs decreased to 99 cents per lb [overall]. We have a low cost product from Esperanza and we’re also making good progress with our growth projects,” he added.

The company posted a 16% increase in overall copper production for the period, largely thanks to Esperanza, Hernandez said.

Copper production was also up at Los Pelambres, he added, as well as molybdenum production, which rose 35% to 6,500 tonnes for the period.

Excluding by-product cash credits, meanwhile, cash costs were up marginally to 161 cents per lb, from 158 cents per lb in the first half of 2011.

“The main driver of the higher mining costs was the increase in production volumes. Exploration cost also increased by $41 million,” Rivera said.

The company continues to pursue various growth opportunities, Hernandez added, including early-stage exploration projects.

“[This] results in our very substantial resource base. It underpins our existing organic growth pipeline,” he said.

“We’re focused on keeping a tight control on the budgets and time scales for our projects.”

Claire Hack

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