Hot Features
Premium
Trade like a pro: Leverage real-time discussions and market-moving ideas to outperform.
The Footsie was helped along today as the share price of Antofagasta (LSE:ANTO) gained 23.00 pence to 1,095 by 12:40 UTC. The 2.3% gain this morning may be just about enough to push the stock back above its 90-day average again. The demonstration of investor confidence followed the company’s Production Report for the Second Quarter.
The View from 30,000 Feet
Sometimes it’s good to take a broader look at what’s been happening before focusing on the news of the day. From 30,000 feet we discover that Antofagasta’s share price, despite having dropped nearly 12% since 2 February this year, is nearly more than four times what it was in 2008. The FTSE 100, Chilean, vertically-integrated mining company has doubled its revenues, pre-tax profits, and earnings per share over the past two fiscal years. Its copper production in 2011 was up 20% over the previous year. With control over nearly all aspects of operations from mine to port, the company has a unique flexibility to respond to economic conditions and market demands whilst keeping costs under control.
The View from Q2
The company’s production results continue to impress. Total output for Q2 was up 9.1%. Copper production during the quarter was 173,200 tonnes and a total of 336,000 tonnes for the first half. As the Esperanza mine continues its controlled ramp up after starting production last year, the rate of production gives credence to the directors’ estimate that total copper production for the year will be close to 700,000 tonnes. YTD copper production is 16.5% ahead of last year.
Gold production for Q2 was 72,600 ounces, exceeding the entire first half production of 70,700 ounces in 2011. Q2 molybdenum production grew from 3,100 tonnes in Q1 to 3,400 tonnes, totaling 6,500 tonnes for the half year. That is a 35% increase versus first half 2011.
The View Ahead
Antofagasta continues to broaden its exploration horizons. The company has entered into a memorandum of understanding with a partner regarding the Mallow Copper-Zinc-Lead Project in Ireland. It has also formed a strategic alliance with Laurentian Goldfields Ltd for gold exploration in Quebec. Its transaction with the Marubeni Corporation, giving it a 30% stake in the Antucoya project, is complete.
Company Spotlight
Antofagasta plc is named after the region in northern Chile where the company was founded in 1888 as the Antofagasta and Bolivia Railway Company. It was not until nearly a century later that the company began to diversify into mining, banking, telecommunications, and manufacturing. Today Antofagasta’s main business is copper mining, operating four mines in Chile with a total production of 640,500 tonnes in 2011, an increase of more than 20% over the previous year. Antofagasta continues to operate infrastructure that supports the mining Antofagasta mining region, primarily railways, water delivery, and wastewater treatment plants. The Antofagasta region of Chile accounts for more 50% of the country’s mining output. Mining represents almost 94% of the region’s exports.
