Antofagasta Copper Output Up But Eyes Lower End of Output Range-Update
27 July 2016 - 8:58PM
Dow Jones News
(Update, adds detail).
By Alex MacDonald
LONDON--Antofagasta PLC (ANTO.LN) said Wednesday that copper
output rose in the second quarter compared with the same period a
year earlier but said its full-year output would now be at the
bottom end of its previous guidance. The FTSE-100 miner said it
produced 166,200 metric tons of copper in the three months ended
June 30, 2016, up 5.9% from the same quarter a year ago due to
higher production from last year's purchase of a 50% stake in the
Zaldivar mine and the ramp up of the new Antucoya mine, which
reached commercial production in the second quarter.
Gold production, on the other hand, fell 4.2% on year to 52,800
troy ounces in the second quarter while molybdenum production
dropped 38% on the year to 1,600 tons during the same period due to
lower grades at Los Pelambres.
Net cash cost also fell 22% on the year to $1.25 a pound of
copper in the second quarter due to higher output, improved cost
performance and the weaker Chilean Peso against the U.S.
dollar.
The company said it now expects to reach the lower end of its
710,000-740,000 tons of copper output guidance this year with
production for the year weighted to the second half.
"Installation of the tailings thickeners at Centinela and the
ramp-up of Antucoya are proceeding within their planned ranges, but
inherent risks will persist until both projects are completed," the
company said.
Net cash cost for the year is now forecast to be lower at $1.30
a pound for the year versus $1.35 a pound previously. This is due
in part to the deferral of waste stripping at its flagship Los
Pelambres mine and accounting changes in how it estimates certain
costs. This will be offset by a $112 million increase in captial
expenditure related to mine development.
At 1011 GMT, Antofagasta's shares were up 0.2% at 488.2 pence a
share. It was "a bit of a mixed quarter," said BMO Capital Markets
in a note. Second quarter output missed the bank's forecast by 9%
while cash costs beat expecation by 5%. Berenberg Mining analyst
Fawzi Hanano said in a note that Antofagasta may find it
challenging to significantly ramp up output in the second half of
the year to beat the bottom end of the 2016 output guidance
range.
"We commend the company's operators for solid cost control, but
we believe that a production guidance downgrade remains on the
cards and we expect this at the Q3 operating results," Mr. Hanano
said.
-Write to Alex MacDonald at alex.macdonald@wsj.com
(END) Dow Jones Newswires
July 27, 2016 06:43 ET (10:43 GMT)
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