TIDMANTO
RNS Number : 1024J
Antofagasta PLC
19 August 2021
NEWS RELEASE, 19 AUGUST 2021
HALF YEARLY FINANCIAL REPORT
FOR THE SIX MONTHSED 30 JUNE 2021
Strong Financial Performance
Antofagasta plc CEO Iván Arriagada said : "We have seen strong
copper demand and prices at multi-year highs over the first half of
this year which has contributed to the robust financial performance
of the Group, generating revenues of $3.6 billion and increasing
EBITDA by 133% to a record $2.4 billion and our EBITDA margin to
66%.
"The half year was not without challenges as we continued to
manage our operations and projects under COVID-19 conditions,
although the resilience and agility of the Group has resulted in
costs below guidance. COVID-19 continues to impact our communities
as well, which is why we have extended our community COVID Fund
into 2021, totalling now $12 million since the outbreak of the
pandemic.
"The weather in central Chile during H1 saw unprecedentedly dry
conditions, with almost no rainfall. We have now had 12 years of
drought, and the precipitation in 2021 has so far been less than in
2019, which itself was one of the driest years on record. As a
result, assuming there is only minimal precipitation during the
rest of H2, we are adjusting our full year copper production
guidance to 710-740,000 tonnes as the winter rainy season is now
coming to an end. However, we are maintaining net cost guidance at
$1.25/lb.
"Following our strong performance in H1, the Board has declared
an interim dividend of 23.6 cents per share, in line with our
normal pay-out ratio for interims of 35% of net earnings.
"Our key growth projects are on track and we remain focused on
operating discipline and cost control, while producing copper
responsibly and sustainably for all our stakeholders."
HIGHLIGHTS
Safety
-- Sadly, after 33 months without a fatality a contractor
suffered a fatal accident at Los Pelambres in July. Our condolences
go to the family of our colleague, and a full investigation is
underway, following which actions identified during the review will
be implemented under the direct oversight of senior management.
Safety remains the Group's top priority
Financial performance
-- Revenue for the first half of 2021 was $3,591 million , 67.9%
higher than the same period in 2020 mainly as a result of higher
realised copper prices, partially offset by a decrease in the
volume of copper sales
-- EBITDA(1) was a record $2,357 million , 132.7% higher than in
the same period last year on higher revenue partially offset by
higher operating costs due to the stronger Chilean peso, and higher
energy and diesel prices
-- EBITDA margin(2) was 65.6% , compared to 47.4% in H1 2020 and 53.4% for the full year 2020
-- The Cost and Competitiveness Programme generated savings of
$43 million in the first half of 2021, equivalent to 5c/lb of unit
cash costs
-- Profit before tax was $1,784 million, a $1,396 million increase on the same period in 2020
-- Strong balance sheet with net cash of $701 million at 30
June, an improvement of $783 million from the net debt position at
the end of 2020 . Cash flow from operations was $2,461 million
compared with $907 million in the first half of 2020
-- Capital expenditure of $782 million was 49% of full year guidance
-- Earnings per share of 67.5 cents, 53.8 cents higher than the same period in 2020
-- Interim dividend of 23.6 cents per share, an increase of
280.6% on last year's interim. Dividends for both periods were
equivalent to a payout ratio of 35% of underlying net earnings
Production and cost performance (as previously announced)
-- Group copper production in the first six months of the year
was 361,500 tonnes , in line with expectations and 2.8% lower than
in the same period last year mainly because of lower grades
-- Cash costs before by-product credits for the first half of
the year were $1.73/lb , 14.6% higher than in the same period last
year primarily because of the stronger Chilean peso (11%), higher
energy and diesel prices, and the lower copper production
-- Net cash costs were $1.14/lb for the first half of the year ,
1.8% higher than in the first half of 2020. This was mainly due to
higher cash costs before by-product credits, offset by higher
by-product credits on higher realised prices
2021 Guidance
-- This year has been the driest of a 12-year drought in Chile.
S ince the Company released its Quarterly Production Report on 21
July there has been no precipitation at Los Pelambres and
temperatures have been unseasonably high. Given the traditional
rainy season runs from June to September, it is looking
increasingly likely that the low levels of precipitation will
continue until at least the Southern Hemisphere winter next year.
As water is essential to the operation of Los Pelambres's
concentrator plant, if there is only minimal precipitation during
the balance of winter full year Group copper production would be
impacted. Guidance has therefore been revised from 730-760,000
tonnes to 710-740,000 tonnes
-- Net cash cost guidance for the full year is maintained at
$1.25/lb, assuming by-product prices and the Chilean Peso exchange
rate remain at similar levels as in the first half of the year
-- Next year's mine plans are being prepared and Group
production guidance will be released, as usual, in the Q3
Production Report. Different weather and associated operating
scenarios are being evaluated. However, if there is no
precipitation until the next rainy season and when the desalination
plant comes into operation in H2 2022, preliminary estimates are
that up to approximately 50,000 tonnes of production could be at
risk at Los Pelambres in 2022
-- Capital expenditure during H1 was in line with annual
guidance of $1.6 billion. As COVID-19 infection rates continue to
fall in Chile, opportunities to accelerate the execution of
selected capital expenditure programmes are being considered
Growth projects in execution
-- As previously announced, at the end of H1 the Los Pelambres
Expansion project was 52% complete and is expected to be completed
in H2 2022 in line with guidance
-- The desalination plant and related marine works have been minimally impacted by COVID-19
-- At the concentrator expansion site, managing health risks and
higher absenteeism during the recent peak of infections in the
neighbouring communities has required adjustments to manpower
numbers and shift patterns. However, these are returning to normal
with more than 70% of the project workforce fully vaccinated and
the number of cases in local communities decreasing
-- On completion of the desalination plant, the Group's exposure
to water scarcity risk will be very substantially removed. An
application to further expand the plant is underway
-- At Zaldívar construction of the Chloride Leach project at the
end of H1 was 76% complete and is expected to be completed in H1
2022 in line with guidance
Sustainability
-- In line with the UN Sustainable Development Goals and after a
voluntary evaluation process, Centinela obtained the international
Copper Mark in July. The Copper Mark certifies that the company's
operations comply with strict internationally recognised
sustainable production standards
-- Having achieved the Company's first targeted reduction of
300,000 tonnes of CO2e in 2020, the Company announced a new target
to further reduce its direct (Scope 1) and indirect (Scope 2) GHG
emissions by 30%, or 730,000 tonnes of CO2e by 2025, relative to
2020
Other
-- On track to achieve savings target of $100 million for the full year
-- The proposed new mining royalty is currently being considered
by the Senate. A revision to the proposed draft is expected to be
presented to the Senate in the coming weeks
UNAUDITED RESULTS SIX MONTHSED 2021 2020 %
30 JUNE
------- -------- --------
Revenue $m 3,591.0 2,138.8 67.9
EBITDA(1) $m 2,357.1 1,012.8 132.7
EBITDA margin(1, 2) % 65.6 47.4 38.5
Underlying earnings per share(1) cents 67.5 17.8 279.2
Earnings per share cents 67.5 13.7 392.7
Dividend per share cents 23.6 6.2 280.6
Cash flow from operations $m 2,460.5 906.9 171.3
Capital expenditure(3) $m 781.9 548.6 42.5
Net (cash)/debt at period end $m (701.3) 319.5 -
Realised copper price $/lb 4.42 2.46 79.5
------
Copper sales(4) kt 325.1 346.8 (6.3)
Gold sales koz 103.7 108.4 (4.3)
Molybdenum sales kt 5.7 4.7 20.6
Cash costs before by-product credits(1) $/lb 1.73 1.51 14.6
Net cash costs(1) $/lb 1.14 1.12 1.8
----------------------------------------- ------- -------- -------- ------
Note : The financial results are for continuing operations and
are prepared in accordance with IFRS unless otherwise noted
below.
(1) Non-IFRS measures. Refer to the alternative performance
measures section on page 59 in the half-year financial report
below.
(2) Calculated as EBITDA/Revenue. If Associates and JVs' revenue
is included EBITDA Margin was 62.1% in HY 2021 and 44.1% in HY
2020.
(3) On a cash basis.
(4) Does not include 21,100 tonnes of sales by Zaldívar in HY
2021 and 27,400 tonnes in HY 2020, as it is equity accounted.
A recording and copy of the 2021 Half Year Results presentation
is available for download from the Company's website
www.antofagasta.co.uk .
There will be a Q&A video conference call on 19 August 2021
at 1:00pm BST hosted by Iván Arriagada-Chief Executive Officer,
Mauricio Ortiz-Chief Financial Officer and René Aguilar, Vice
President-Corporate Affairs and Sustainability. Participants can
join the conference call here .
Investors - London Media - London
Andrew Lindsay alindsay@antofagasta.co.uk Carole Cable antofagasta@brunswickgroup.com
Telephone +44 20 7808 0988 Telephone
+44 20 7404 5959
Rosario Orchard rorchard@antofagasta.co.uk
Telephone +44 20 7808 0988
Media - Santiago
Pablo Orozco porozco@aminerals.cl
Carolina Pica cpica@aminerals.cl
Telephone +56 2 2798 7000
Register on our website to receive our email alerts at
https://www.antofagasta.co.uk/investors/news/email-alerts/
DIRECTORS' COMMENTS FOR THE SIX MONTHSED 30 JUNE 2021
FINANCIAL HIGHLIGHTS
Group revenue was $3,591.0 million, 67.9% higher than in the
same period last year as the realised copper price increased by
79.5%, and as by-product revenues increased by 45.0%, mainly due to
higher molybdenum prices. These increases were partially offset by
copper sales volumes falling by 6.3% or 21,700 tonnes of which some
15,000 tonnes was due to shipments delayed over the period end by
adverse weather conditions.
EBITDA during the first six months was a record $2,357.1
million, 132.7% higher than in the same period in 2020, reflecting
higher revenue partially offset by higher cost of sales.
Cash flow from operations was $2,460.5 million, a 171.3%
increase compared to the same period last year reflecting the
Group's higher EBITDA.
The Board has declared an interim ordinary interim dividend of
23.6 cents per share, an increase of 280.6% compared with last
year's interim.
PRODUCTION AND CASH COSTS
Group copper production in the first half of 2021 was 361,500
tonnes, 2.8% lower than in the same period last year, mainly
because of lower grades.
Group gold production for the first six months increased by 8.5%
to 120,500 ounces.
Molybdenum production was 5,800 tonnes, 5.5% higher than in the
same period last year.
Group cash costs before by-product credits in the first half of
2021 were $1.73/lb, 22c/lb higher than last year, a result of the
stronger Chilean peso, higher energy and diesel prices, and the
lower copper production .
Net cash costs for the first half of 2021 were $1.14/lb, 2c/lb
higher than in the same period last year reflecting the higher cash
costs before by-product credits, offset by higher by-product
credits.
COST AND COMPETITIVENESS PROGRAMME
During the first half of the year, the Cost and Competitiveness
Programme achieved savings of $43 million, equivalent to 5 c/lb.
Even though cost pressures have risen throughout the industry, the
Group has managed to build a portfolio of initiatives focused on
reducing cash expenditure by optimising and negotiating third party
services and increasing productivity in terms of greater
throughputs and recoveries. The benefit of the initiatives is
weighted to the second half of the year and is on track to achieve
the savings target for the year of $100 million.
More generally, t he inflationary pressure on costs has to date
been moderate and mainly arisen from higher commodity prices, such
as for diesel, acid and energy, and the strengthening of the
Chilean peso, but there is no evidence of wage inflation or other
permanent price effects on local goods and services.
EXPLORATION AND EVALUATION COSTS
Exploration and evaluation costs increased by $8.1 million to
$52.3 million, mainly as a result of a higher level of
activity.
TAXATION
The effective tax rate for the period was 37.1%, which compares
with 34.6% before exceptional items and 36.7% after exceptional
items during the same period in 2020.
CAPITAL EXPITURE AND DEPRECIATION & AMORTISATION
Group capital expenditure on a cash basis was $781.9 million
during the period of which $235.6 million was on mine development,
$131.6 million was on sustaining (mining) and $398.2 million was on
development, of which $239.2 million was on the Los Pelambres
Expansion project. The balance was at the Transport Division and at
the corporate centre. Expected capital expenditure for the full
year is in line with original guidance at $1.6 billion, although as
COVID-19 infection rates continue to fall in Chile, opportunities
to accelerate the execution of selected capital expenditure
programmes will continue to be evaluated.
Depreciation and amortisation for the first half of 2021 was
$482.5 million, a decrease of $12.8 million compared to same period
in 2020 as amortisation of capitalised stripping decreased at
Centinela. Depreciation and amortisation for the full year is
expected to be approximately $1 billion.
NET DEBT
Net cash was $701.3 million at the end of the period, $783.4
million higher than at the end of 2020 as a result of the higher
EBITDA. Cash flow from operations was $2,460.5 million compared
with $906.9 million in the first half of 2020.
DIVIDS
The Board has declared an interim dividend of 23.6 cents per
share, equivalent to $232.7 million and a payout ratio of 35%,
consistent with the Company's policy and previous interim
dividends. Any distribution of excess cash for the year, as defined
under the policy, will be made as part of the final dividend.
LABOUR AGREEMENTS
Labour negotiations were successfully concluded at Los Pelambres
during the period and no further negotiations are scheduled in the
Mining division until next year.
PROPOSED MINING ROYALTY
Having been approved by the lower house of Congress in May, the
proposed new mining royalty is now being debated in the Senate. The
Senate is not restricted to the specific terms of the proposal
presented by the lower house and has received evidence from a much
broader base of interested parties including academics and mining
industry representatives. It is now assessing these representations
before proposing amendments to the draft legislation.
SUSTAINABILITY
Safety and health
Sadly, after 33 months without a fatality, a contractor suffered
a fatal accident at Los Pelambres in July. Our condolences go to
the family of our colleague, and we continue to investigate the
accident to ensure zero fatalities in the future. Continuous
improvement in safety risk management remains central to the
Group's culture and activities.
For the first six months of the year, with the increased amount
of project construction activity, the Group's Mining division's
Lost Time Injury Frequency Rate (LTIFR) increased to 1.05 from 0.73
in the full year 2020, and the Transport division's LTIFR increased
to 4.33 from 2.37. The Group's LTIFR for the half year was
1.28.
The Group also measures its safety performance through the
number of High Potential Incidents (HPIs) which are a useful
indicator of potentially fatal risks. For the first half of 2021
the number of HPIs in the Group was 29 compared with 43 in the
first half of 2020 following a significant improvement in light
vehicle incidents.
COVID-19
The second wave of COVID-19 cases in Chile, which began in late
February, fell back to pre-wave levels by the end of the half year
period and has continued to decline since then. The impact on the
Company was mainly limited to the work on the concentrator plant
expansion at Los Pelambres, resulting in project activity delays
and, in addition, some scheduled maintenance at the operations has
been delayed until later in the year.
The COVID-19 restrictions introduced last year are still in
force and are expected to continue for the rest of the year.
As at the end of July 82% of employees were fully vaccinated and
13% have had a single injection. Infection rates are low.
Environment
During May the Company announced two new greenhouse gas (GHG)
reduction targets as part of its Climate Change Strategy and its
wider commitment to operate sustainably as a leading copper
producer. The first target is to reduce the Company's direct (Scope
1) and indirect (Scope 2) GHG emissions by 30%, or 730,000 tonnes
of CO2e by 2025, relative to 2020. The second, longer-term, target
is to achieve carbon neutrality by 2050, in line with Chile's own
national target, or earlier if suitable technologies are developed
over the coming years that allow this goal to be achieved
sooner.
Zaldívar converted to using only renewable power last year, and
at the beginning of next year Centinela and Antucoya will do the
same. Los Pelambres's full conversion to renewable power is
expected by the end of 2022, the exact date depending on the
completion of a hydro-electric plant being built by a third
party.
The Company became the first mining company to join the Chilean
Hydrogen Association, which promotes the development of green
hydrogen and aims to accelerate the transition of its mining fleet
from diesel to hydrogen.
The Company joined a group of leading mining companies in the
Charge On Innovation Challenge, to develop solutions for
large-scale haul truck electrification systems to reduce
consumption of diesel and cut emissions.
Water
So far this year precipitation at Los Pelambres has been
significantly less than in 2019, which was the driest year of the
current 12-year drought, and temperatures have been unseasonably
high. The outlook for the rest of the winter remains uncertain but
the potential for continued exceptionally low levels of
precipitation is increasing as the normal rainy season comes to an
end in September. Strict water management protocols are in place
and various actions to mitigate the impact of the reduced rainfall
and higher temperatures continue to be evaluated. However, if there
is minimal further precipitation in H2 2021, production at Los
Pelambres could be impacted and if this continues up to
approximately 50,000 tonnes could be at risk in 2022. The next
rainy season should start in June 2022 and the desalination plant
is expected to be completed in H2 next year, which will mitigate
any prolonged water shortage.
In 2018 Zaldívar submitted an Environmental Impact Assessment
(EIA), which included an application to extend its water permit
from 2025 to 2031. So far approval has been received from five
government agencies. However, an indigenous community consultation
process, which is led by the environmental authority, is currently
underway and progress has been slower than was expected when the
EIA was first submitted. We have been working with our indigenous
partners and we continue to support this important process. The
schedule has also been impacted by COVID-19 restrictions and a
growing opposition by some communities in the north of Chile to the
use of continental water for industrial purposes. We expect the
application to be resolved early in 2022, but this timing is
conditional on the evolution of COVID-19 restrictions and the
progress of the indigenous consultation.
Zaldívar's updated mine life now extends to 2036. Looking beyond
this date, field work and studies are underway on further extending
the life of the mine by exploiting the primary sulphide ore body
that lies below the current ore reserves. Water planning beyond the
extension to 2031 is being evaluated as part of these studies.
Task Force on Climate-related Financial Disclosures (TCFD )
Following the launch of the Company's climate change strategy
last year and the introduction of climate change as a specific key
risk, the Company has recently set itself a new five-year emissions
reduction target and a carbon neutrality goal. These are steps
towards the Company strengthening its resilience to future physical
and transition climate impacts and fully implementing the TCFD
recommendations. A comprehensive progress report aligned with the
four reporting pillars of the TCFD recommendations will be released
shortly.
Copper Mark
In line with the UN Sustainable Development Goals and after a
voluntary evaluation process, Centinela obtained the international
Copper Mark in July. The Copper Mark certifies that the company's
operations comply with strict internationally recognised
sustainable production standards.
Communities
Antofagasta seeks to build sustainable long-term relations with
the communities near its operations, anchored in proactive and
transparent dialogue. The benefits of this engagement for both the
communities and the Group are measured to assess its impact.
The Group has identified the improvement of community digital
integration in all the regions where its operations are present as
a pillar of its social management programme and is providing
support in these areas. This requires improved connectivity and the
development of the necessary digital skills in the areas of
education and health, and the participation of the communities. The
programme is currently underway in mainly rural areas and includes
the provision of tablets to schools and teachers in the Antofagasta
Region and the Province of Choapa.
In response to the continuing effects of the pandemic, during
H1, the Company increased its COVID-19 fund to $12 million. The
fund provides health, economic and general support to local
communities.
FUTURE GROWTH
The Group has a pipeline of growth projects which it is
currently advancing through a disciplined process of project
evaluation.
Growth in copper production in the medium term will come from
completion of the Los Pelambres Expansion, Zaldívar Chloride Leach
and Esperanza Sur projects in 2022, which will increase production
by an average of 80-90,000 tonnes per year.
Work on completing an optimised feasibility study for the
Centinela Second Concentrator project continues together with the
evaluation of third parties investing in Centinela's water supply
infrastructure. It is expected that the project will be taken to
the Board for an investment decision in 2022.
OUTLOOK
Considering the risk of continued low levels of precipitation at
Los Pelambres, which impacts the operation's ability to optimise
processing at the concentrator plant, Group copper production
guidance for the full year has been revised from 730-760,000 tonnes
to 710-740,000 tonnes with the bottom end of the range based on the
assumption that there is minimal precipitation for the rest of the
year. However, net cash cost guidance for the full year remains at
$1.25/lb, assuming by-product prices and the Chilean Peso exchange
rate are at similar levels as in the first half of the year .
The copper, gold and molybdenum markets have been strong
throughout the first half of the year, with copper trading
two-thirds higher than last year at well over $4.00/lb and this
strength has continued into the second half of the year. As
vaccination levels increase around the world, the global economy is
expected to continue to recover strongly from the pandemic
providing further support for the copper market.
REVIEW OF OPERATIONS AND PROJECTS
MINING DIVISION
LOS PELAMBRES
Financial performance
EBITDA at Los Pelambres was $1,346.9 million in the first half
of 2021, a 110.7% increase compared with $639.1 million in the
first six months of 2020. This increase was mainly due to the
higher realised copper price, which was partially offset by a lower
copper sales tonnage (11.4%) and higher operating costs during the
period.
Production
In the first six months of 2021, copper production decreased by
7.6% to 169,300 tonnes compared with the same period last year.
This decrease was primarily due to the expected lower copper grade,
offset partly by higher throughput.
Molybdenum production was 5,100 tonnes, 100 tonnes lower than
the same period last year.
Costs
Cash costs before by-product credits for the first six months
were $1.51/lb, 25.8% higher than the same period last year. This
was due to the decrease in production, the stronger Chilean peso,
higher input prices and the payment of a one-off signing bonus in
Q1 following the successful completion of labour negotiations.
For the first six months of 2021, by-product credits were
$0.68/lb, $0.28/lb higher than the same period last year on higher
realised prices.
Net cash costs for the year to date were $0.83/lb, or 3.8%
higher than in the same period last year.
Capital expenditure
Capital expenditure in the first six months of 2021 was $386.7
million in total of which $94.0 million was sustaining capital
expenditure, $49.0 million mine development and $239.2 million was
on the Los Pelambres Expansion project.
CENTINELA
Financial performance
EBITDA for the first six months of 2021 was $831.5 million, an
increase of 168.6% compared to the first half of 2020. This
increase was due to the higher copper realised price compared to
same period last year. Sales during the period were 12,700 tonnes
less than production with shipments delayed over the period end by
adverse weather conditions.
Production
Total copper production in H1 2021 was 132,100 tonnes, 8.6%
higher than in H1 2020 due to higher ore grades and throughput at
Centinela Concentrates.
Production of copper in concentrate was 90,400 tonnes for the
half year, 20.9% higher than in the same period last year, mainly
reflecting higher ore grades and throughput.
Copper cathode production for the first six months was 41,700
tonnes, 10.9% lower than in the first half of 2020 primarily due to
expected lower grades and recoveries, despite higher
throughput.
Gold production in H1 it was 92,500 ounces, 12.8% higher than H1
last year, primarily due to higher throughput and grades.
Molybdenum production in H1 2021 increased to 700 tonnes from
300 tonnes in H1 2020, due to higher grades.
Costs
Cash costs before by-product credits for the first six months of
2021 were $1.80/lb, 2.2% lower than the same period in 2020 due to
higher copper production, partially offset by the stronger Chilean
peso, higher input prices and higher maintenance costs as a result
of bringing forward some scheduled work.
For the first six months of 2021, by-product credits were
$0.72/lb, 14c/lb higher than in the same period last year due to
higher production and improved realised prices.
Net cash costs during the first six months of the year were
$1.08/lb, 14.3% lower than in H1 2020 due to lower cash costs
before by-product credits and higher by-product credits.
Capital expenditure
Capital expenditure in the first six months of 2021 was $347.9
million of which $23.6 million was sustaining capex, $169.6 million
was mine development and $154.7 million was development capex , of
which $139.4 million was on the Esperanza Sur pit project.
ANTUCOYA
Financial performance
For the first half of the year, EBITDA was $159.0 million, an
increase of 145.7% compared to $64.7 million in the same period
last year, due to higher copper realised prices, partially offset
by higher operating costs.
Production
Antucoya produced 39,500 tonnes of copper in the first six
months of 2021, 2.2% lower than the same period last year due to
expected lower grades and consequentially lower recoveries, partly
offset by a 7.7% increase in throughput.
Costs
During the first six months, cash costs were 17.9% higher than
in H1 2020 at $2.04/lb due to lower production, the unfavourable
local exchange rate and higher expenditure on maintenance.
Capital expenditure
Capital expenditure in the first six months of the year was $31
million. Sustaining capital expenditure was $14 million and mine
development $17 million.
ZALDÍVAR
Financial performance
Attributable EBITDA at Zaldívar was $76.4 million in the first
half of 2021, compared to $42.8 million in the same period last
year largely because of higher realised copper prices, despite
lower sales volumes and higher operating costs.
Production
The Group's share of production for the year to date was 20,600
tonnes, 22.3% lower than the same period last year due to lower
copper grades and throughput.
Costs
Cash costs for the first six months of 2021 were $2.46/lb
compared with $1.72/lb in the same period in 2020, mainly due to
lower grades, higher maintenance costs and the stronger Chilean
peso.
Capital expenditure
In the first six months of 2021, attributable capital
expenditure was $34.8 million of which $3.2 million was sustaining
capital expenditure, $4.2 million mine development and $27.4
million was development capital expenditure, mainly on the Chloride
Leach project.
TRANSPORT DIVISION
Financial performance
EBITDA at the Transport Division was $36.0 million in the first
half of 2021, compared to $28.6 million in the same period last
year, as a result of higher revenues.
Transport volumes
For the first six months of the year, transport volumes
decreased by 0.8% mainly due to customers' lower copper production
and sulphuric acid consumption, and the impact of sea swells
affecting port access at the beginning of the year, partly offset
by a new transport contract that came into effect during the
period.
Capital expenditure
Capital expenditure for the first half of the year was $10.4
million.
GROWTH PROJECTS AND OPPORTUNITIES
Los Pelambres Expansion
This expansion project is divided into two phases.
Phase 1
This phase is designed to optimise throughput within the limits
of the existing operating, environmental and water extraction
permits.
As mining progresses at Los Pelambres ore hardness will
increase. The expansion is designed to compensate for this,
increasing plant throughput from the current capacity of 175,000
tonnes of ore per day to an average of 190,000 tonnes of ore per
day. The plant expansion includes a desalination plant and pumping
infrastructure, as well as an additional SAG mill, ball mill and
six additional cells in the concentrator plant.
Annual copper production will be increased by an average of
60,000 tonnes per year over 15 years, starting at approximately
40,000 tonnes per year for the first four to five years and 70,000
tonnes for the rest of the period as the hardness of the ore
increases and the benefit of the higher milling capacity is fully
realised.
During 2020 the decision was made to change the scope of the
project and double the planned capacity of the desalination plant
that is part of Phase 1 of the project, from 400 l/s to 800 l/s.
However, the amount of work that can be done on the expansion of
the desalination plant during Phase 1 is limited by what is allowed
under the permits that have already been issued. The inclusion of
these additional works and some changes to the marine works
increased the capital expenditure estimate for Phase 1 to $1.7
billion.
As at the end of H1 the Los Pelambres Expansion project was
52.0% complete and is expected to be completed in H2 2022 in line
with guidance. The desalination plant and related marine works have
been minimally impacted by COVID-19 during the half year given the
dispersed nature of the site and small construction teams
involved.
At the concentrator expansion site, the bulk earthworks and most
of the foundations have been completed, and the key milling and
flotation equipment is being installed. Managing health risks and
higher absenteeism during the recent peak of infections in the
neighbouring communities has required adjustments to manpower
numbers and shift patterns at the concentrator plant expansion
site. However, these are gradually returning to normal with more
than 70% of the project workforce fully vaccinated and the number
of cases in local communities decreasing.
Phase 2 - Further expansion
Following the decision in 2020 to increase the size of the
desalination plant, Phase 2 of the expansion now requires two
separate Environmental Impact Assessment (EIA) applications:
Desalination plant expansion
This project is to protect Los Pelambres from the future impact
of climate change and the deteriorating availability of water in
the region.
The additional works required, beyond those being completed as
part of Phase 1, include the expansion of the desalination plant
and the construction of a new water pipeline from the Mauro
tailings storage facility to the concentrator plant. During April
Los Pelambres submitted the EIA required for this project, which
includes the desalination plant expansion and two sustaining
capital infrastructure projects, the replacement of the concentrate
pipeline, which is approaching the end of its useful life, and the
construction of certain planned enclosures at the Mauro tailings
storage facility. The EIA is expected to be approved within
approximately two years with the project being completed by 2025 at
which time over 95% of Los Pelambres's water needs will be from
either desalinated or recycled water.
Mine life extension
The current mine life of Los Pelambres is 14 years and is
limited by the capacity of the Mauro tailings storage facility. The
scope of the second EIA will include increasing the capacity of the
tailings storage facility and the mine waste dumps. This will
extend the mine's life by a minimum of 15 years, accessing a larger
portion of Los Pelambres's six billion tonnes of mineral resources.
The EIA will also include the option to increase throughput to
205,000 tonnes of ore per day, increasing copper production by
35,000 tonnes per year.
Critical studies on tailings and waste storage capacity have
been completed and are now progressing towards the feasibility
study stage. The study will also include repowering the conveyor
that runs from the primary crusher in the pit to the concentrator
plant to support the additional throughput.
The capital expenditure to extend the mine life was estimated in
a pre-feasibility study in 2014 at approximately $500 million, with
most of the expenditure on mining equipment and increasing the
capacity of the concentrator and the Mauro tailings facility.
Community consultation is in its early stages and the EIA
application is expected to be submitted to the authorities during
2022.
Esperanza Sur pit
Esperanza Sur pit is 4 km south of the Esperanza pit and is
close to Centinela's concentrator plant. The deposit contains 1.4
billion tonnes of reserves with a grade of 0.4% copper, 0.13g/t of
gold and 0.012% of molybdenum. Stripping started in Q2 2020 and the
project is expected to be completed in the first half of 2022. The
capital cost estimate for the project is $175 million.
The stripping is being carried out by a contractor and the cost
is being capitalised. Once it is completed, autonomous trucks
operated by Centinela will be used to mine the deposit.
Opening the Esperanza Sur pit will improve Centinela's
flexibility to supply its concentrator and, over the initial years,
the higher-grade material from the pit will increase production by
some 10-15,000 tonnes of copper per year, compared to how much
would be produced if material was solely supplied from the
Esperanza pit. This greater flexibility will allow Centinela to
smooth and optimise its year-on-year production profile, which has
in the past been variable.
Zaldívar Chloride Leach
The project is expected to increase copper recoveries by
approximately 10 percentage points with further upside in
recoveries possible, depending on the type of ore being processed.
This will increase copper production at Zaldívar by approximately
10-15,000 tonnes per annum over the remaining life of the mine.
The project requires an upgrade of the Solvent Extraction (SX)
plant, new reagents facilities and the construction of additional
washing ponds for controlling the chlorine levels, at an estimated
capital cost of $190 million.
As the Group equity accounts for its interest in Zaldívar,
capital expenditure at the operation is not included in Group total
capital expenditure amounts.
Construction of the project at the end of H1 was 76% complete
and is expected to be completed in H1 2022 in line with
guidance.
Centinela Second Concentrator
We are currently evaluating the construction of a second
concentrator and tailings deposit some 7 km from the existing
concentrator at Centinela in two phases.
Phase 1 would have an ore throughput capacity of approximately
90,000 tonnes per day, producing copper, and gold and molybdenum as
by-products, with an annual production of approximately 180,000
tonnes of copper equivalent. Once Phase 1 has been completed and is
operating successfully, a further expansion (Phase 2) is possible
and would involve increasing the capacity of the concentrator to
150,000 tonnes of ore per day with annual production increasing to
250,000 tonnes of copper equivalent, maximising the potential of
Centinela's large resource base.
Ore for the second concentrator will be sourced initially from
the Esperanza Sur deposit and later from Encuentro Sulphides. The
latter lies under the Encuentro Oxides reserves, which are expected
to be depleted by 2026.
The EIA for both phases of the project was approved in 2016 and
the initial feasibility study for Phase 1 was completed during 2020
with further detailed and supplier engineering progressing during
2021 ahead of an expected decision by the Board in 2022. The
capital cost estimated in the 2015 pre-feasibility study for Phase
1 was $2.7 billion, which included capitalised stripping, mining
equipment, a concentrator plant, a new tailings storage facility, a
water pipeline and other infrastructure, plus the owner's and other
costs.
In late 2020 a tender process was started to invite third
parties to provide water for Centinela's current and future
operations, by acquiring the existing water supply system, and
building the new water pipeline. It is expected this process will
be completed during 2021.
Twin Metals Minnesota (TMM)
In late 2019, Twin Metals Minnesota presented its Mine Plan of
Operations (MPO) to the US Bureau of Land Management (BLM) and a
Scoping Environmental Assessment Worksheet Data Submittal was also
issued to the Minnesota Department of Natural Resources (DNR).
These submissions started a multi-year scoping and environmental
review process that will thoroughly evaluate the proposed
project.
In June 2020, the BLM issued its Notice of Intent (NOI) to begin
its environmental review, a process that is likely to take several
years. The review process will include additional baseline data
collection, impact analyses and multiple opportunities for public
input. Permitting for the project will follow the environmental
review. In 2021, BLM and DNR continued to advance the initial
phases of the environmental review, and TMM submitted baseline data
and supporting documentation to the agencies.
Twin Metals Minnesota is a wholly owned copper, nickel and
platinum group metals (PGM) underground mining project, which holds
the Maturi, Maturi Southwest, Birch Lake and Spruce Road copper,
nickel, cobalt-PGM deposits in north-eastern Minnesota, US. The MPO
design is based on mining and processing 18,000 tonnes of ore per
day for 25 years. The concentrator will produce three saleable
concentrates - copper, nickel and cobalt/PGMs.
FINANCIAL REVIEW FOR THE SIX MONTHSED 30 JUNE 2021
Results (unaudited)
Six Months Six Months
ended Ended
30.06.2021 30.06.2020
--------------------------------------- ------------ ------------- ------------ ------------
Before Exceptional
exceptional items
Total items Total
--------------------------------------- ------------ ------------- ------------ ------------
$m $m $m $m
Revenue 3,591.0 2.138.8 - 2,138.8
--------------------------------------- ------------ ------------- ------------ ------------
EBITDA (including share of EBITDA
from associates and joint ventures) 2,357.1 1,012.8 - 1,012.8
--------------------------------------- ------------ ------------- ------------ ------------
Total operating costs (1,790.4) (1,665.5) - (1,665.5)
------------ ------------- ------------ ------------
Operating profit from subsidiaries 1,800.6 473.3 - 473.3
Net share of results from associates
and joint ventures 19.4 (2.3) - (2.3)
Impairment of investment in associate - - (80.8) (80.8)
------------
Total profit from operations,
associates and joint ventures 1,820.0 471.0 (80.8) 390.2
Net finance expense (36.5) (2.7) - (2.7)
------------
Profit before tax 1,783.5 468.3 (80.8) 387.5
Income tax expense (661.9) (162.1) 19.7 (142.4)
------------ ------------- ------------ ------------
Profit for the period 1,121.6 306.2 (61.1) 245.1
============ ============= ============ ============
Attributable to:
------------ ------------- ------------ ------------
Non-controlling interests 456.3 130.8 (20.9) 109.9
Profit for the financial period
attributable to the owners of
the parent 665.3 175.4 (40.2) 135.2
------------ ------------- ------------ ------------
cents cents cents cents
Basic earnings per share from
continuing operations 67.5 17.8 (4.1) 13.7
============ ============= ============ ============
The $489.9 million increase in the profit for the financial
period attributable to the owners of the parent from $175.4 million
in the first six months of 2020 (excluding exceptional items) to
$665.3 million in the current period reflected the following
factors:
$m
Profit for the financial period attributable to the
owners of the parent in H1 2020 (before exceptional
items) 175.4
Increase in revenue 1,452.2
Increase in total operating costs (124.9)
Increase in net share of results from associates and
joint ventures 21.7
Increase in net finance expenses (33.8)
Increase in income tax expense (499.8)
Increase in profit attributable to non-controlling
interests (325.5)
--------
489.9
--------
Profit for the financial period attributable to the
owners of the parent in H1 2021 665.3
========
COVID-19
The Group has continued to proactively manage the risks of
COVID-19 on its operations and projects, a llowing its operations
to continue to operate without interruption throughout the period.
The Group incurred $31 million of operational expenses (including
the 50% attributable share of Zaldívar's expenditure) during the
first six months of 2021 in respect of COVID-19 measures, including
costs relating to testing, additional travel expenses for its
employees travelling to and from the mine sites, hygiene supplies
and additional costs for third-party services. This compares with
$40 million incurred during the 2020 full-year.
During 2020 the Group established a $6 million fund to provide
COVID-19 related support to local communities, and during the first
six months of 2021 the fund was extended by a further $6
million.
The Group has capitalised $15m of additional project costs
during H1 2021 which are linked to the impact of the COVID-19
situation, mainly relating to additional costs for the third-party
contractors, testing costs, increased travel costs for employees
and project contractors travelling to the sites and the purchase of
hygiene supplies. This compares with $31 million capitalised during
the 2020 full-year.
Revenue
The $1,452.2 million increase in revenue from $2,138.8 million
in the first half of 2020 to $3,591.0 million in the first half of
2021 reflected the following factors:
$m
Revenue in the first six months of 2020 2,138.8
Increase in realised copper price 1,401.4
Decrease in copper sales volumes (117.6)
Decrease in treatment and refining charges 24.0
Increase in molybdenum revenue 108.8
Increase in gold revenue 2.2
Increase in silver revenue 16.7
Increase in Transport division revenue 16.7
1,452.2
Revenue in the first six months of 2021 3,591.0
========
Revenue from the Mining division
Revenue in the first half of 2021 from the Mining division
increased by $1,435.5 million, or 69.4%, to $3,504.7 million,
compared with $2,069.2 million in the first six months of 2020. The
increase mainly reflected higher copper sales due to the higher
realised copper price, partly offset by reduced sales volumes.
Revenue from copper sales
Revenue from copper concentrate and copper cathode sales
increased by $1,307.8 million, or 73.2%, to $3,094.3 million,
compared with $1,786.5 million in the first six months of 2020. The
increase reflected the $1,401.4 million impact of the higher
realised copper price and $24.0 million positive impact of lower
treatment and refining charges, partly offset by the $117.6 million
impact of lower sales volumes.
(i) Realised copper price
The average realised price increased by 79.7% to $4.42/lb in the
first six months of 2021 (first half of 2020 - $2.46/lb), resulting
in a $1,401.4 million increase in revenue. The LME average market
price increased by 65.9% in H1 2021 to $4.13/lb (first half of 2020
- $2.49/lb). In the first half of 2021 there was a $282.1 million
positive impact from provisional pricing adjustments, mainly
reflecting the increase in the period-end copper price to $4.26/lb
at 30 June 2021, compared with $3.52/lb at 31 December 2020.
Conversely there had been a $27.3 million negative impact from
provisional pricing adjustments in the first six months of 2020,
which mainly reflected the decrease in the period-end copper price
to $2.74/lb at 30 June 2020, compared with $2.80/lb at 31 December
2020. In addition, during the first six months of 2021 there was a
negative impact of $84.7 million in respect of realised losses from
commodity hedging instruments which matured during the period
(first six months of 2020 - nil impact).
Realised copper prices are determined by comparing revenue
(gross of treatment and refining charges for concentrate sales)
with sales volumes in the period. Realised copper prices differ
from market prices mainly because, in line with industry practice,
concentrate and cathode sales agreements generally provide for
provisional pricing at the time of shipment with final pricing
based on the average market price in future periods (normally
around one month after delivery to the customer in the case of
cathode sales and normally three to four months after delivery to
the customer in the case of concentrate sales). Further details of
provisional pricing adjustments are given in Note 6 to the
half-year financial report.
(ii) Copper volumes
Copper sales volumes reflected within revenue decreased by 6.3%
from 346,800 tonnes in 2020 to 325,100 tonnes in 2021, resulting in
a decrease in revenue of $117.6 million. The volume decrease was
mainly due to lower production at Los Pelambres as a result of the
expected lower ore grades, and approximately 14,000 tonnes of
shipments delayed over the period end by bad weather conditions at
the ports.
(iii) Treatment and refining charges
Treatment and refining charges (TC/RCs) for copper concentrate
decreased by $24.0 million to $69.6 million in the first half of
2021 from $93.6 million in the first six months of 2020, mainly due
to a reduction in the average TC/RC rates, as well as the decrease
in the copper concentrate sales volumes. Treatment and refining
charges are deducted from concentrate sales when reporting revenue
and hence the decrease in these charges has had a positive impact
on revenue.
Revenue from molybdenum, gold and other by-product sales
Revenue from by-product sales at Los Pelambres and Centinela
relate mainly to molybdenum and gold and, to a lesser extent,
silver. Revenue from by-products increased by $127.7 million or
45.2% to $410.4 million in the first half of 2021, compared with
$282.7 million in the first six months of 2020, mainly due to the
higher molybdenum price.
Revenue from molybdenum sales (net of roasting charges) was
$184.7 million (first half of 2020 - $76.0 million), an increase of
$108.7 million. The increase was due to the higher realised price
of $16.1/lb (first half of 2020 - $8.6/lb) as well as the slightly
higher sales volumes of 4,900 tonnes (first half of 2020 - 4,700
tonnes).
Revenue from gold sales (net of treatment and refining charges)
was $183.8 million (first half of 2020 - $181.6 million), an
increase of $2.2 million due to the higher realised price of
$1,776/oz (first six months of 2020 - $1,680/oz), partly offset by
the decrease in sales volumes by 4.3% from 108,400 ounces in the
first half of 2020 to 103,700 ounces in the first six months of
2021, mainly due to lower recoveries at Los Pelambres and shipment
delays due to bad weather conditions at Centinela's port.
Revenue from silver sales increased by $16.8 million to $41.9
million (first six months of 2020 - $25.1 million). The increase
was due to the higher realised silver price of $26.9/oz (first six
months of 2020 - $16.2/oz).
Revenue from the Transport division
Revenue from the Transport division (FCAB) increased by $16.7
million or 24.0% to $86.3 million, as a result of the impact of the
stronger Chilean peso on sales denominated in local currency,
revenues from sales of industrial water and higher sales to certain
clients.
Total operating costs
The $124.9 million increase in total operating costs from
$1,665.5 million in the first half of 2020 to $1,790.4 million in
the first six months of 2021 reflected the following factors:
$m
Total operating costs in the first half
of 2020 1,665.5
Increase in mine-site operating costs 95.3
Increase in other mining division costs 16.4
Increase in exploration and evaluation costs 8.1
Increase in corporate costs 9.5
Increase in transport division operating
costs 9.1
Decrease in depreciation, amortisation and
loss on disposals (13.5)
124.9
Total operating costs in the first six months
of 2021 1,790.4
========
Operating costs (excluding depreciation, amortisation and loss
on disposals) at the Mining division
Operating costs (excluding depreciation, loss on disposals and
impairments) at the Mining division increased by $129.3 million to
$1,254.8 million in the first half of 2021, an increase of 11.5%.
Of this increase, $95.3 million is attributable to higher mine-site
operating costs. This increase in mine-site costs reflected the
stronger Chilean peso, higher key input prices, and the cost impact
of the expected lower ore grades at Los Pelambres, partly offset by
the decreased sales volumes in the period and the cost savings from
the Group's Cost and Competitiveness Programme. As a result,
weighted average unit cash costs excluding by-product credits
(which are reported as part of revenue) and TC/RCs for concentrates
(which are deducted from revenue) increased from $1.37/lb in the
first six months of 2020 to $1.61/lb in the first half of 2021.
The Cost and Competitiveness Programme has been implemented to
reduce the Group's cost base and improve its competitiveness within
the industry. During the first half of 2021 the programme achieved
savings of $30.0 million at the Group's mining subsidiary
companies.
Other Mining division costs increased by $16.4 million, mainly
due to the impact of inventory adjustments. Exploration and
evaluation costs increased by $8.1 million to $52.3 million (first
half of 2020 - $44.2 million), mainly due to higher expenditure at
Twin Metals and increased project evaluation costs at Centinela.
Corporate costs increased by $9.5 million.
Operating costs (excluding depreciation and loss on disposals)
at the Transport division
Operating costs (excluding depreciation and loss on disposals)
at the Transport division increased by $9.1 million to $52.5
million (first half of 2020 - $43.4 million), mainly due the effect
of the stronger Chilean peso, higher diesel prices and increased
maintenance expenditure in respect of wagons, locomotives and
railway tracks.
Depreciation, amortisation and disposals
The depreciation and amortisation charge decreased by $12.8
million in the first half of 2021 to $482.5 million (first half of
2020 - $495.3 million), mainly reflecting lower amortisation of
IFRIC 20 stripping costs at Centinela, partly offset by higher
depreciation and inventory variation impacts, also at Centinela.
The loss on disposal of property, plant & equipment was $0.6
million, a decrease of $0.7 million (2020 - $1.3 million).
Operating profit from subsidiaries
As a result of the above factors, operating profit from
subsidiaries increased in 2021 by 280.4% to $1,800.6 million (first
half of 2020 - $473.3 million).
Share of results from associates and joint ventures
The Group's share of results from associates and joint ventures
was a profit of $19.4 million in the first six months of 2021,
compared with a loss of $2.3 million in the first half of 2020
(excluding exceptional items). Of this increase, $24.7 million was
due to the higher profit from Zaldívar.
EBITDA
EBITDA (earnings before interest, tax, depreciation,
amortisation) increased by $1,344.3 million or 132.7% to $2,357.1
million (first half of 2020 - $1,012.8 million). EBITDA includes
the Group's proportional share of EBITDA from associates and joint
ventures.
EBITDA from the Group's Mining division increased by $1,336.9
million or 135.8% from $984.2 million in the first six months of
2020 to $2,321.1 million this half year, reflecting the higher
revenue explained above partly offset by the higher mine-site
operating costs.
EBITDA at the Transport division increased by $7.4 million to
$36.0 million in 2021 ($28.6 million - first half of 2020),
reflecting its increased revenue partly offset by the higher
operating cost.
Commodity price and exchange rate sensitivities
The following sensitivities show the estimated approximate
impact on EBITDA for the first six months of 2021 of a 10% movement
in the average copper, molybdenum and gold prices and a 10%
movement in the average US dollar / Chilean peso exchange rate.
The impact of the movement in the average commodity prices
reflects the estimated impact on the relevant revenues during the
first six months of 2021, and the impact of the movement in the
average exchange rate reflects the estimated impact on Chilean peso
denominated operating costs during the period. These estimates do
not reflect any impact in respect of provisional pricing or hedging
instruments, any potential inter-relationship between commodity
price and exchange rate movements, or any impact from the
retranslation or changes in valuations of assets or liabilities
held on the balance sheet at the period-end.
Average market Impact of a
commodity price 10% movement
/ average exchange in the commodity
rate during price / exchange
the six months rate on EBITDA
ended 30.06.21 for the six
months ended
30.06.21
$m
Copper price $4.13/lb 315
Molybdenum price $12.7/lb 16
Gold price $1,808/oz 19
US dollar / Chilean peso exchange
rate 720 72
Net finance expense
Net finance expense increased by $33.8 million to $36.5 million,
compared with $2.7 million in 2020.
Six months Six months
ended ended
30.06.21 30.06.20
$m $m
Investment income 2.9 16.7
Interest expense (33.5) (44.6)
Other finance items (5.9) 25.2
----------- -----------
Net finance expense (36.5) (2.7)
=========== ===========
Investment income decreased from $16.7 million in 2020 to $2.9
million in 2021, mainly due to a decrease in average interest rates
partially offset by higher average cash and liquid investment
balances.
Interest expense decreased from $44.6 million in 2020 to $33.5
million in 2021, reflecting the decrease in the average interest
rates and also a reduction in the average relevant borrowing
balances.
Other finance items were a net expense of $5.9 million (first
half of 2020 - income of $25.2 million). This reflected an expense
of $2.4 million in respect of foreign exchange (first half of 2020
- gain of $29.0 million) and an expense of $3.4 million in respect
of the unwinding of the discounting of provisions (first half of
2020 - expense of $3.7 million).
Profit before tax
As a result of the factors set out above, profit before tax
increased by 360.3% to $1,783.5 million in the first half of 2021
(first half of 2020 - $468.3 million excluding exceptional
items).
Income tax expense
The tax charge in the first half of 2021 was $661.9 million
(first half of 2020 - $162.1 million excluding exceptional items
and $142.4 million including exceptional items). The effective tax
rate was 37.1% (first half of 2020 - 34.6% excluding exceptional
items and 36.7% including exceptional items).
Six months Six months Six months
ended ended ended
30.06.2021 30.06.2020 30.06.2020
Excluding Including
exceptional exceptional
ítems ítems items
$m % $m % $m %
Profit before tax 1,783.5 468.3 387.5
Tax at the Chilean corporate
rate tax of 27% (481.6) 27.0 (126.5) 27.0 (104.6) 27.0
Exceptional items - impairment
of investment in associate - - - - (2.2) 0.6
Mining tax (royalty) (128.5) 7.2 (28.3) 6.0 (28.3) 7.2
Deduction of mining royalty as
an allowable expense in determination
of first category tax 36.0 (2.0) 7.6 (1.6) 7.6 (1.9)
Items not deductible from first
category tax (7.2) 0.4 (7.2) 1.5 (7.2) 1.8
Adjustment in respect of prior
years 0.8 - (2.0) 0.4 (2.0) 0.5
Withholding taxes (111.3) 6.2 (1.3) 0.3 (1.3) 0.3
Tax effect of share of results
of associates and joint ventures 5.2 (0.3) 0.7 (0.1) 0.7 (0.2)
Reversal of previously unrecognised
tax losses/ (unrecognised tax
losses) 24.7 (1.4) (5.1) 1.1 (5.1) 1.3
Tax expense and effective tax
rate for the period (661.9) 37.1 (162.1) 34.6 (142.4) 36.7
============ ====== ======== ====== ======== ======
The effective tax rate varied from the statutory rate
principally due to the mining tax (royalty) (net impact of $92.5
million / 5.2% including the deduction of the mining tax (royalty)
as an allowable expense in the determination of first category
tax), the withholding tax relating to the remittance of profits
from Chile (impact of $111.3 million / 6.2%), items not deductible
for Chilean corporate tax purposes, principally the funding of
expenses outside of Chile (impact of $7.2 million / 0.4%), partly
offset by unrecognised tax gains (impact of $24.7 million / 1.4%)
and the impact of the recognition of the Group's share of profit
from associates and joint ventures, which are included in the
Group's profit before tax net of their respective tax charges
(impact of $5.2 million / 0.3%).
Exceptional items
There were no exceptional items in the six months ended
2021.
On 31 March 2020 the Group agreed to dispose of its 40% interest
in the Hornitos coal-fired power station to ENGIE Energía Chile
S.A. ("ENGIE"), the owner of the remaining 60% interest. This was
part of the value accretive renegotiation of Centinela's power
purchase agreement which as a result will be wholly supplied from
lower cost renewable sources from 2022. Under the terms of the
agreement the Group agreed to dispose of its investment to Engie in
2021 for a nominal consideration and was not entitled to any
further dividend income from Hornitos from the date of the
agreement. Accordingly, the Group no longer had any effective
economic interest in Hornitos from 31 March 2020 onwards and
therefore recognised an impairment of $80.8 million in respect of
its investment in associate balance in the first half of 2020, and
no longer recognises any share of Hornitos' results. The post-tax
impact of the impairment was $61.1 million, of which $40.2 million
was attributable to the equity owners of the Company.
Non-controlling interests
Profit for the first half of year attributable to
non-controlling interests was $456.3 million, compared with $130.8
million in the first half of 2020 (excluding exceptional items), an
increase of $325.5 million. This reflected the increase in earnings
analysed above.
Earnings per share
Six months Six months
ended ended
30.06.21 30.06.20
$ cents $ cents
Basic earnings per share (excluding
exceptional items) 67.5 17.8
Basic earnings per share (exceptional
items) - (4.1)
----------- -----------
Basic earnings per share (including
exceptional items) 67.5 13.7
=========== ===========
Earnings per share calculations are based on 985,856,695
ordinary shares.
As a result of the factors set out above, profit attributable to
equity shareholders of the Company was $665.3 million compared with
$175.4 million in the first half of 2020 (excluding exceptional
items), and total earnings per share were 67.5 cents for first half
of 2021 (first half of 2020 - 17.8 cents per share excluding
exceptional items).
Dividends
Dividends per share declared in relation to the period are as
follows:
Six months Six months
ended ended
30.06.21 30.06.20
$ cents $ cents
Ordinary dividends:
Interim 23.6 6.2
Total dividends to ordinary shareholders 23.6 6.2
=========== ===========
The Board determines the appropriate dividend each year based on
consideration of the Group's cash balance, the level of free cash
flow and underlying earnings generated during the year and
significant known or expected funding commitments. It is expected
that the total annual dividend for each year would represent a
payout ratio based on underlying net earnings for that year of at
least 35%.
The Board has declared an interim dividend for the first half of
2021 of 23.6 cents per ordinary share, which amounts to $232.7
million. The interim dividend will be paid on 1 October 2021 to
ordinary shareholders that are on the register at the close of
business on 3 September 2021.
Capital expenditure
Capital expenditure increased by $231.8 million from $550.1
million in the first half of 2020 to $781.9 million in the current
period. The capital expenditure in the first six months of 2021
included $239.2 million in respect of the construction costs at the
Los Pelambres Expansion project, $235.6 million of IFRIC 20
stripping costs and $139.4 million in respect of the Esperanza Sur
pit project at Centinela.
NB: capital expenditure figures quoted in this report are on a
cash flow basis, unless stated otherwise.
Derivative financial instruments
The Group periodically uses derivative financial instruments to
reduce its exposure to commodity price, foreign exchange and
interest rate movements. The Group does not use such derivative
instruments for speculative trading purposes. At 30 June 2021 the
derivative financial instruments in place had a negative fair value
of $51.1 million (30 June 2020 - negative fair value of $16.8
million).
Cash flows
The key features of the Group cash flow statement are summarised
in the following table.
Six months Six months
ended ended
30.06.21 30.06.20
$m $m
Cash flows from continuing operations 2,460.5 906.9
Income tax paid (348.1) (203.8)
Net interest paid (26.5) (14.5)
Capital contributions and loans to
associates (5.5) (1.4)
Purchases of property, plant and equipment (781.9) (550.1)
Dividends paid to equity holders of
the Company (478.1) (70.0)
Dividends paid to non-controlling (40.0) -
interests
Capital increase from non-controlling
interest - 210.0
Dividends from associates 65.0 -
Other items 1.7 (2.4)
------------- -------------
Changes in net debt relating to cash
flows 847.1 274.7
Other non-cash movements (59.3) (37.5)
Foreign exchange (4.5) 6.7
------------- -------------
Movement in net debt in the period 783.3 243.9
Net debt at the beginning of the year (82.0) (563.4)
------------- -------------
Net cash/(debt) at the end of the
period 701.3 (319.5)
============= =============
Cash flows from continuing operations were $2,460.5 million in
the first half of 2021 compared with $906.9 million in the first
half of 2020. This reflected EBITDA from subsidiaries for the
period of $2,283.7 million (first half of 2020 - $969.9 million),
adjusted for the positive impact of a net working capital decrease
of $187.6 million (first half of 2020 - negative impact of $53.5
million from a net working capital increase) and the negative
impact of a decrease in provisions of $10.8 million (first half of
2020 - negative impact of a decrease in provisions of $9.5
million).
The working capital decrease in the first six months of 2021 was
mainly due to a decrease in receivables, reflecting lower sales
volumes towards the end of the current period compared with the end
of 2020, as well as the impact of a negative mark-to-market
adjustment of $53.9 million at 30 June 2021 compared with a
positive mark-to-market adjustment of $86.9 million at 31 December
2020.
The net cash outflow in respect of tax in the first half of 2021
was $348.1 million (first half of 2020 - $203.8 million). This
amount differs from the current tax charge in the consolidated
income statement of $543.4 million (first half of 2020 - $196.9
million) mainly because cash tax payments for corporate tax and the
mining tax include payments on account for the current year (based
on prior periods' profit levels) of $286.4 million (first half of
2020 - $179.0 million), withholding tax payments of $50.9 million,
the settlement of outstanding balances in respect of the previous
year's tax charge of $30.8 million (first half of 2020 - $0.6
million), as well as the recovery of $20.0 million in 2021 relating
to prior years (first half of 2020 - recovery of $8.5 million).
There were contributions and loans to associates and joint
ventures in the first six months of 2021 of $5.5 million (first
half of 2020 - $1.4 million).
Capital expenditure in the first half of 2021 was $781.9 million
compared with $550.1 million in the first half of 2020. This
included expenditure of $386.7 million at Los Pelambres (first half
of 2020 - $321.0 million), $347.9 million at Centinela (first half
of 2020 - $181.0 million), $30.8 million at Antucoya (first half of
2020 - $22.0 million), $6.1 million at Corporate (first half of
2020 - $3.3 million) and $10.4 million at the transport division
(first half of 2020 - $22.8 million).
Dividends paid to equity holders of the Company in the first
half of 2021 were $478.1 million (first half of 2020 - $70.0
million), related to the payment of the final dividend declared in
respect of 2020.
Dividends paid by subsidiaries to non-controlling shareholders
were $40.0 million for first half of 2021 (first half of 2020 was
nil).
Financial position
At 30.06.21 At 31.12.20
$m $m
Cash, cash equivalents
and liquid investments 4,239.9 3,672.8
Total borrowings (3,538.6) (3,754.8)
------------ ------------
Net cash/(debt) at the
end of the period 701.3 (82.0)
============ ============
At 30 June 2021 the Group had combined cash, cash equivalents
and liquid investments of $4,239.9 million (31 December 2020 -
$3,672.8 million). Excluding the non-controlling interest share in
each partly-owned operation, the Group's attributable share of
cash, cash equivalents and liquid investments was $3,264.9 million
(31 December 2020 - $3,046.9 million).
Total Group borrowings at 30 June 2021 were $3,538.6 million (at
31 December 2020 - $3,754.8 million). The decrease of $216.2
million mainly reflected a repayment of $104.6 million of the
senior loan at Los Pelambres being used to fund the Expansion
project, a $55.6 million repayment of the senior loan at Centinela,
a $33.0 million repayment of Antucoya's senior loan and a $30.0
million repayment of the subordinated loan at Centinela, partly
offset by $12.7million of new finance leases.
Of the total borrowings, $2,666.0 million (at 31 December 2020 -
$2,805.5 million) is proportionally attributable to the Group after
excluding the non-controlling interest shareholdings in
partly-owned operations.
This resulted in net cash at 30 June 2021 of $701.3 million (at
31 December 2020 - net debt $82 million). Excluding the
non-controlling interest share in each partly-owned operation, the
Group's attributable net cash was $598.9 million (31 December 2020
- attributable net cash of $241.4 million).
Going concern
The financial information contained in this half-year financial
report has been prepared on the going concern basis. Details of the
factors which have been taken into account in assessing the Group's
going concern status are set out in Note 1 to the half-year
financial report.
Principal risks and uncertainties
There are a number of potential risks and uncertainties which
could have a material impact on the Group's performance over the
remaining six months of the financial year and could cause actual
results to differ materially from expected and historical results.
The risks and uncertainties which were analysed in the 2020 Annual
Report are as follows:
-- Talent management and labour relations
-- Safety and health
-- Environmental management
-- Climate change
-- Community relations
-- Political, legal and regulatory
-- Corruption
-- Operations
-- Tailing storage
-- Strategic resources
-- Cyber security
-- Liquidity
-- Commodity prices and exchange rates
-- Growth of mineral resource base and opportunities
-- Project execution
-- Innovation and digitisation
There have been no changes to the above categories of key risks
in the first six months of 2021.
A detailed explanation of the risks summarised above can be
found in the Risk Management section of the 2020 annual report,
which is available at www.antofagasta.co.uk.
Cautionary statement about forward-looking statements
This preliminary results announcement contains certain
forward-looking statements. All statements other than historical
facts are forward-looking statements. Examples of forward-looking
statements include those regarding the Group's strategy, plans,
objectives or future operating or financial performance, reserve
and resource estimates, commodity demand and trends in commodity
prices, growth opportunities, and any assumptions underlying or
relating to any of the foregoing. Words such as "intend", "aim",
"project", "anticipate", "estimate", "plan", "believe", "expect",
"may", "should", "will", "continue" and similar expressions
identify forward-looking statements.
Forward-looking statements involve known and unknown risks,
uncertainties, assumptions and other factors that are beyond the
Group's control. Given these risks, uncertainties and assumptions,
actual results could differ materially from any future results
expressed or implied by these forward-looking statements, which
speak only as at the date of this report. Important factors that
could cause actual results to differ from those in the
forward-looking statements include: global economic conditions,
demand, supply and prices for copper and other long-term commodity
price assumptions (as they materially affect the timing and
feasibility of future projects and developments), trends in the
copper mining industry and conditions of the international copper
markets, the effect of currency exchange rates on commodity prices
and operating costs, the availability and costs associated with
mining inputs and labour, operating or technical difficulties in
connection with mining or development activities, employee
relations, litigation, and actions and activities of governmental
authorities, including changes in laws, regulations or taxation.
Except as required by applicable law, rule or regulation, the Group
does not undertake any obligation to publicly update or revise any
forward-looking statements, whether as a result of new information,
future events or otherwise.
Past performance cannot be relied on as a guide to future
performance.
Consolidated Income Statement
Six months Year
Six months ended ended
ended 30.06.2021 30.06.2020 31.12.2020
(Unaudited)(1) (Unaudited) (Audited)
---------------------- -------------- ------------------- ----------------- -------------- -------------------- ------------
Exceptional Exceptional
Excluding items Excluding items
exceptional Note exceptional Note
Total items 3 Total items 3 Total
Notes $m $m $m $m $m $m $m
Revenue 5,6 3,591.0 2,138.8 - 2,138.8 5,129.3 - 5,129.3
Total operating
costs 2 (1,790.4) (1,665.5) - (1,665.5) (3,537.1) - (3,537.1)
---------------------- -------------- ------------------- ----------------- -------------- -------------------- ------------
Operating profit
from
subsidiaries 2,5 1,800.6 473.3 - 473.3 1,592.2 - 1,592.2
Net share of
results from
associates and
joint ventures 2,5,15 19.4 (2.3) - (2.3) 5.1 - 5.1
Impairment of
investment
in associate 3 - - (80.8) (80.8) - (80.8) (80.8)
---------------------- -------------- ------------------- ----------------- -------------- -------------------- ------------
Total profit
from
operations,
associates and
joint ventures 1,820.0 471.0 (80.8) 390.2 1,597.3 (80.8) 1,516.5
--------------
Investment
income 2.9 16.7 - 16.7 18.9 - 18.9
Interest expense (33.5) (44.6) - (44.6) (77.1) - (77.1)
Other finance
items (5.9) 25.2 - 25.2 (45.2) - (45.2)
-------------- ------------------- ----------------- -------------- -------------------- ------------
Net finance
expense 8 (36.5) (2.7) - (2.7) (103.4) - (103.4)
---------------------- -------------- ------------------- ----------------- -------------- -------------------- ------------
Profit before
tax 1,783.5 468.3 (80.8) 387.5 1,493.9 (80.8) 1,413.1
Income tax
expense 9 (661.9) (162.1) 19.7 (142.4) (546.2) 19.7 (526.5)
---------------------- -------------- ------------------- ----------------- -------------- -------------------- ------------
Profit for the
period 1,121.6 306.2 (61.1) 245.1 947.7 (61.1) 886.6
====================== ============== =================== ================= ============== ==================== ============
Discontinued
operations
Profit for the
period
from
discontinued
operations 10 - - - - 7.3 - 7.3
---------------------- -------------- ------------------- ----------------- -------------- -------------------- ------------
Profit for the
period 1,121.6 306.2 (61.1) 245.1 955.0 (61.1) 893.9
====================== ============== =================== ================= ============== ==================== ============
Attributable to:
Non-controlling
interests 456.3 130.8 (20.9) 109.9 408.4 (20.9) 387.5
Profit for the period
attributable
to the equity holders of
the Company 665.3 175.4 (40.2) 135.2 546.6 (40.2) 506.4
-------------- ------------------- ----------------- -------------- -------------------- ------------
Basic earnings
per share
from continuing
operations 11 67.5 17.8 (4.1) 13.7 54.7 (4.1) 50.6
From
discontinued
operations 11 - - - - 0.7 - 0.7
---------------------- -------------- ------------------- ----------------- -------------- -------------------- ------------
Total continuing
and
discontinued
operations 67.5 17.8 (4.1) 13.7 55.4 (4.1) 51.3
(1) There were no exceptional items in the six months ended
2021.
Consolidated Statement of Comprehensive Income
Six months Six months Year
ended ended ended
30.06.2021 30.06.2020 31.12.2020
(Unaudited) (Unaudited) (Audited)
Notes $m $m $m
Profit for the period 1,121.6 245.1 893.9
Items that may be or were
subsequently reclassified
to profit or loss:
Losses on cash flow hedges (88.7) (9.5) (32.1)
Losses in fair value of cash flow hedges
transferred to the income statement 73.5 - 3.4
Currency translation adjustment 0.1 (0.8) 0.9
Income tax relating to these items 2.7 2.6 2.4
----------------------- ------------------------ ----------------------
Total items that may be or were
subsequently
reclassified to profit or loss (12.4) (7.7) (25.4)
Items that will not be
subsequently reclassified
to profit or loss:
Actuarial (losses)/gains on defined
benefit
plans (2.7) (1.2) 9.8
Tax on items recognised through OCI which
will not be reclassified to profit or
loss
in the future 0.5 0.2 (2.6)
(Losses)/gains in fair value of equity
investments (1.3) 5.5 5.5
----------------------- ------------------------ ----------------------
Total Items that will not be subsequently
reclassified to profit or loss (3.5) 4.5 12.7
Total other comprehensive loss (15.9) (3.2) (12.7)
Total comprehensive income for the period 1,105.7 241.9 881.2
======================= ======================== ======================
Attributable to:
----------------------- ------------------------ ----------------------
Non-controlling interests 451.9 107.1 383.2
Equity holders of the Company 653.8 134.8 498.0
----------------------- ------------------------ ----------------------
Six months Six months Year
ended ended ended
30.06.2021 30.06.2020 31.12.2020
(Unaudited) (Unaudited) (Audited)
$m $m $m
Total comprehensive income for the period
- continuing operations 1,105.7 241.9 873.9
Total comprehensive income for the period
- discontinued operations - - 7.3
----------------------- ------------------------ ----------------------
1,105.7 241.9 881.2
======================= ======================== ======================
Consolidated Statement of Changes in Equity
For the six months ended 30.06.2021
(Unaudited)
Share Share Other Retained Net equity Non- Total
capital premium reserves earnings controlling
interests
$m $m $m $m $m $m $m
Balance at 1
January
2021 89.8 199.2 (30.6) 7,492.2 7,750.6 2,330.5 10,081.1
Profit for the
period - - - 665.3 665.3 456.3 1,121.6
Other
comprehensive
loss for
period - - (10.0) (1.5) (11.5) (4.4) (15.9)
Dividends - - - (478.1) (478.1) (240.0) (718.1)
------------------ ----------------- ------------------ ---------------- ---------------- -------------------- ---------
Balance at 30
June 2021 89.8 199.2 (40.6) 7,677.9 7,926.3 2,542.4 10,468.7
================== ================= ================== ================ ================ ==================== =========
For the six months ended 30 June 2020 (Unaudited)
Share Share Other Retained Net Non- controlling Total
capital premium reserves earnings equity interests
$m $m $m $m $m $m $m
Balance at 1
January
2020 89.8 199.2 (18.1) 7,112.8 7,383.7 2,017.3 9,401.0
Capital
increases from
non-controlling
interest
(1) - - - - - 210.0 210.0
Profit for the
period - - - 135.2 135.2 109.9 245.1
Other
comprehensive
income/(loss)
for the year - - 0.5 (0.9) (0.4) (2.8) (3.2)
Dividends - - - (70.0) (70.0) - (70.0)
-------- ------------- --------- ------------------- -------- ------------------- ----------------
Balance at 30
June 2020 89.8 199.2 (17.6) 7,177.1 7,448.5 2,334.4 9,782.9
======== ============= ========= =================== ======== =================== ================
For the year ended 31 December 2020 (Audited)
Other Retained
reserves earnings Non-
Share Share (Note (Note Net controlling
capital premium 23) 23) equity interests Total
$m $m $m $m $m $m $m
Balance at 1 January
2020 89.8 199.2 (18.1) 7,112.8 7,383.7 2,017.3 9,401.0
Capital increases from
non-controlling interest
(1) - - - - - 210.0 210.0
Profit for the year - - - 506.4 506.4 387.5 893.9
Other comprehensive
expense for the year - - (12.5) 4.1 (8.4) (4.3) (12.7)
Dividends - - - (131.1) (131.1) (280.0) (411.1)
--------- --------- ---------- ---------- --------- ------------- ----------
Balance at 31 December
2020 89.8 199.2 (30.6) 7,492.2 7,750.6 2,330.5 10,081.1
========= ========= ========== ========== ========= ============= ==========
1. During the six months ended 30 June 2020 a capital
contribution of $210 million was received from Marubeni, the
minority partner at Antucoya, in order to replace part of
Antucoya's subordinated debt financing with equity (see Note
16).
Consolidated Balance Sheet
At 30.06.2021 At 30.06.2020 At 31.12.2020
(Unaudited) (Unaudited) (Audited)
Non-current Notes $m $m $m
assets
Intangible
assets 13 150.1 150.1 150.1
Property, plant
and equipment 14 10,217.4 9,593.3 9,851.9
Other
non-current
assets 2.4 1.4 2.6
Inventories 248.2 294.2 278.1
Investments in
associates and
joint ventures 15 939.1 967.9 914.6
Trade and other
receivables 67.5 47.8 55.9
Derivative
financial
instruments 7 - - 0.3
Equity
investments 9.8 10.2 11.1
Deferred tax
assets 7.2 7.7 6.4
------------------------------------ ----------------------------- -------------------------
11,641.7 11,072.6 11,271.0
------------------------------------ ----------------------------- -------------------------
Current assets
Inventories 650.9 536.5 592.7
Trade and other
receivables 646.8 563.7 1,016.9
Current tax
assets 50.4 143.9 49.8
Derivative
financial
instruments 7 0.3 - 1.1
Liquid
investments 18 2,979.9 1,571.6 2,426.0
Cash and cash
equivalents 18 1,260.0 796.0 1,246.8
------------------------------------ ----------------------------- -------------------------
5,588.3 3,611.7 5,333.3
------------------------------------ ----------------------------- -------------------------
Total assets 17,230.0 14,684.3 16,604.3
==================================== ============================= =========================
Current
liabilities
Short-term
borrowings and
leases 16 (547.7) (879.5) (603.4)
Derivative
financial
instruments 7 (51.4) (16.8) (37.4)
Trade and other
payables (994.7) (595.2) (808.8)
Short-term
decommissioning
& restoration
provisions (16.1) (20.2) (22.2)
Current tax
liabilities (341.6) (32.3) (153.9)
------------------------------------ ----------------------------- -------------------------
(1,951.5) (1,544.0) (1,625.7)
------------------------------------ ----------------------------- -------------------------
Non-current
liabilities
Medium and
long-term
borrowings
and leases 16 (2,990.9) (1,807.6) (3,151.4)
Trade and other
payables (13.5) (7.0) (11.0)
Liabilities in
relation to
joint ventures 15 (0.7) (2.7) (1.1)
Post-employment
benefit
obligations (125.8) (112.5) (123.2)
Decommissioning
& restoration
provisions (447.3) (383.6) (498.0)
Deferred tax
liabilities (1,231.6) (1,044.0) (1,112.8)
------------------------------------ ----------------------------- -------------------------
(4,809.8) (3,357.4) (4,897.5)
------------------------------------ ----------------------------- -------------------------
Total
liabilities (6,761.3) (4,901.4) (6,523.2)
==================================== ============================= =========================
Net assets 10,468.7 9,782.9 10,081.1
Equity
Share capital 89.8 89.8 89.8
Share premium 199.2 199.2 199.2
Other reserves (40.6) (17.6) (30.6)
Retained
earnings 7,677.9 7,177.1 7,492.2
------------------------------------ ----------------------------- -------------------------
Equity
attributable to
equity
holders of the
Company 7,926.3 7,448.5 7,750.6
Non-controlling
interests 2,542.4 2,334.4 2,330.5
------------------------------------ ----------------------------- -------------------------
Total equity 10,468.7 9,782.9 10,081.1
==================================== ============================= =========================
The condensed consolidated interim financial statements were
approved by the Board of Directors on 18 August 2021.
Consolidated Cash Flow Statement
At 30.06.2021 At 30.06.2020 At 31.12.2020
(Unaudited) (Unaudited) (Audited)
Notes $m $m $m
Cash flows from
operations 17 2,460.5 906.9 2,431.1
Interest paid (30.9) (32.5) (52.7)
Income tax paid (348.1) (203.8) (319.7)
----------------------------- -------------------------- -----------------------------
Net cash from
operating
activities 2,081.5 670.6 2,058.7
----------------------------- -------------------------- -----------------------------
Investing
activities
Capital
contributions
and loans to
associates and
joint ventures 15 (5.5) (1.4) (7.2)
Dividends from
associates and
joint
ventures 15 65.0 - -
Acquisition of
mining
properties - (1.5) (1.5)
Proceeds from
sale of
property, plant
and equipment 0.3 0.1 0.8
Purchases of
property, plant
and
equipment (781.9) (548.6) (1,305.9)
Net increase in
liquid
investments 18 (553.9) (31.9) (886.3)
Interest received 4.4 18.0 12.6
----------------------------- -------------------------- -----------------------------
Net cash used in
investing
activities (1,271.6) (565.3) (2,187.5)
----------------------------- -------------------------- -----------------------------
Financing
activities
Dividends paid to
equity holders
of the Company (478.1) (70.0) (131.1)
Dividends paid to
preference
shareholders
of the Company (0.1) (0.1) (0.1)
Dividends paid to
non-controlling
interests (40.0) - (280.0)
Capital increase
from
non-controlling
interest (1) - 210.0 210.0
Proceeds from
issue of new
borrowings 16 - 713.6 2,398.6
Repayments of
borrowings 16 (228.5) (765.5) (1,393.8)
Repayments of
lease
obligations 16 (42.7) (42.9) (86.5)
Net cash (used
in) / generated
from
financing
activities (789.4) 45.1 717.1
----------------------------- -------------------------- -----------------------------
Net increase in
cash and cash
equivalents 18 20.5 150.4 588.3
============================= ========================== =============================
Cash and cash
equivalents at
beginning
of the period 1,246.8 653.7 653.7
Net increase in
cash and cash
equivalents 18 20.5 150.4 588.3
Effect of foreign
exchange rate
changes 18 (7.3) (8.1) 4.8
Cash and cash
equivalents at
end
of the period 18 1,260.0 796.0 1,246.8
============================= ========================== =============================
(1.) During the six months ended 30 June 2020 a capital
contribution of $210 million was received from Marubeni, the
minority partner at Antucoya, in order to replace part of
Antucoya's subordinated debt financing with equity (see Note
16).
Notes
1. General information and accounting policies
a) General information
This condensed consolidated interim financial statements for the
half-year reporting period ended 30 June 2021 have been prepared in
accordance with UK-adopted International Accounting Standard 34,
'Interim Financial Reporting' and the Disclosure Guidance and
Transparency Rules sourcebook of the United Kingdom's Financial
Conduct Authority.
The condensed consolidated interim financial statements are
unaudited. They should be read in conjunction with the Group's 2020
Annual Report and Financial Statements. The information for the
year ended 31 December 2020 does not constitute the Group's
statutory accounts as defined in section 434 of the Companies Act
2006 (the "Act") but is derived from those accounts. The statutory
accounts for the year ended 31 December 2020 have been approved by
the Board and have been delivered to the Registrar of Companies.
The auditors have reported on those accounts and their report was
unqualified, with no matters included by way of emphasis, and did
not contain statements under section 498(2) of the Act (regarding
adequacy of accounting records and returns) or under section 498(3)
(regarding provision of necessary information and
explanations).
These condensed consolidated interim financial statements have
been prepared under the accounting policies as set out in the
statutory accounts for the year ended 31 December 2020, other than
the changes required by the implementation of new accounting
standards as set out below.
On 31 December 2020, IFRS as adopted by the European Union at
that date was brought into UK law and became UK-adopted
International Accounting Standards, with future changes being
subject to endorsement by the UK Endorsement Board. Antofagasta plc
transitioned to UK-adopted International Accounting Standards in
its condensed consolidated interim financial statements on 1
January 2021. This change constitutes a change in accounting
framework. However, there is no impact on recognition, measurement
or disclosure in the period reported as a result of the change in
framework.
The condensed consolidated interim financial statements do not
include all of the notes of the type normally included in annual
financial statements. Accordingly, they are to be read in
conjunction with the annual report for the year ended 31 December
2020, which was prepared in accordance with both International
Accounting Standards in conformity with the requirements of the
Companies Act 2006 and International Financial Reporting Standards
adopted pursuant to Regulation (EC) No 1606/2002 as it applies in
the European Union.
The financial information contained in these condensed
consolidated interim financial statements has been prepared on the
going concern basis.
Going concern
The Directors have assessed the going concern status of the
Group, considering the period to 31 December 2022.
The Group's business activities, together with those factors
likely to affect its future performance, are set out in the
Directors' Comments, and in particular within the Review of
Operations. Details of the cash flows of the Group during the
period, along with its financial position at the period-end, are
set out in the Financial Review. The financial statements include
details of the Group's cash, cash equivalents and liquid investment
balances in Note 18, and details of borrowings are set out in Note
16.
When assessing the going concern status of the Group the
Directors have considered its financial position, including its
significant balance of cash, cash equivalents and liquid
investments and the borrowing facilities in place, including their
terms and remaining durations. The Group had a strong financial
position as at 30 June 2021, with combined cash, cash equivalents
and liquid investments of $4,239.9 million. Total borrowings were
$3,538.6 million, resulting in a positive net cash position of
$701.3 million. When evaluating the prospects of the Group the
Directors have assessed the Group's copper price forecasts, the
Group's expected production levels, operating cost profile and
capital expenditure. This analysis has focused on the existing
asset base of the Group, without factoring in potential development
projects, which is considered appropriate for an assessment of the
Group's ability to manage the impact of a depressed economic
environment. The analysis has only included the draw-down of
existing committed borrowing facilities, and has not assumed that
any new borrowing facilities will be put in place. The Directors
have assessed the principal risks which could impact the prospects
of the Group over the going concern period and consider the most
relevant to be risks to the copper price outlook. Robust down-side
sensitivity analyses have been performed, assessing the impact
of:
-- A significant deterioration in the future copper price
forecasts throughout the going concern period
-- In addition to the above deterioration in the copper price
throughout the review period, an even more pronounced short-term
reduction in the copper price
-- Plant throughput restrictions at Los Pelambres due to water scarcity
-- The Group's most significant individual operational risks,
including risks relating to the Group's tailings dams and mine-site
infrastructure
-- A shut-down of the Group's operations for a period of three
months as the result of COVID-19 or other issues
-- The proposed new Chilean mining royalty
These stress-tests all indicated results which could be managed
in the normal course of business. The analysis indicated that the
Group is expected to remain in compliance with all of the covenant
requirements of its borrowings throughout the review period and
retain sufficient liquidity. Based on their assessment of the
Group's prospects and viability, the Directors have formed a
judgement, at the time of approving the condensed consolidated
interim financial statements , that there are no material
uncertainties that cast doubt on the Group's going concern status
and that there is a reasonable expectation that the Group has
adequate resources to continue in operational existence for at
least twelve months from the date of approval of the condensed
consolidated interim financial statements . The Directors,
therefore, consider it appropriate to adopt the going concern basis
of accounting in preparing its condensed consolidated interim
financial statements .
b) Critical accounting judgements and key sources of estimation uncertainty
The Group's critical accounting judgements and key sources of
estimation uncertainty are detailed in Note 3 to the 2020 annual
report which is available at www.antofagasta.co.uk.
The critical judgements relate to:
-- capitalisation of project costs within property, plant and equipment
-- deferred taxation
The key sources of estimation uncertainty relate to:
-- non-financial assets impairment
-- inventory valuation
-- useful economic lives of property, plant and equipment and ore reserves estimates
-- provisions for decommissioning and site restoration costs
There has been no significant change to these judgements and
uncertainties during the first six months of 2021. In particular,
the Group has considered whether the COVID-19 situation has had a
significant impact on these aspects, including the estimates
relating to non-financial asset impairment and inventory valuation,
and concluded this has not been the case. The COVID-19 situation in
Chile has not had a significant negative impact on the Group's
operational performance during the first six months of 2021, with
all of its sites continuing to operate throughout the period. The
market demand for copper has been strong during the current period,
reflected in the average LME market price during the first six
months of 2021 of $4.13/lb, compared with $2.49/lb in the first six
months of 2021.
c) Adoption of new accounting standards
The following accounting standards, amendments and
interpretations became effective in the current reporting period
but the application of these standards and interpretations had no
material impact on the amounts reported in these condensed
consolidated interim financial statements :
-- Interest Rate Benchmark Reform - Phase 2 (Amendments to IFRS
9, IAS 39, IFRS 7, IFRS 4 and IFRS 16)
-- Covid-19-Related Rent Concessions beyond 30 June 2021 (Amendment to IFRS 16)
d) Accounting standards issued but not yet effective
The following accounting standards, interpretations and
amendments have been issued by the IASB, but are not yet
effective:
New Standards Effective date (Subject to
EU endorsement)
IFRS 17, Insurance Contracts Annual periods beginning on
or after January 1, 2023
----------------------------
Amendments to IFRSs Effective date (Subject to
EU endorsement)
----------------------------
Classification of Liabilities as Current Annual periods beginning on
or Non-Current (Amendments to IAS 1) or after January 1, 2023
----------------------------
Reference to the Conceptual Framework Annual periods beginning on
(Amendments to IFRS 3) or after January 1, 2022
----------------------------
Property, Plant and Equipment - Proceeds Annual periods beginning on
before Intended Use (Amendments to IAS or after January 1, 2022
16)
----------------------------
Onerous Contract - Cost of Fulfilling Annual periods beginning on
a Contract (Amendments to IAS 37) or after January 1, 2022
----------------------------
Annual Improvements to IFRS Standards Annual periods beginning on
2018-2020 (Amendments to IFRS 1, IFRS or after January 1, 2022
9, IFRS 16 and IAS 41)
----------------------------
The item which is expected to have most relevance to the Group
is the amendment to IAS 16 Property, Plant and Equipment - Proceeds
before intended use. Currently the Group deducts amounts received
from the sale of products during the initial ramp-up of new
projects, before commercial production is achieved, from the
capital cost of the project. Under the amendment to IAS 16 such
amounts will instead be recognised as revenue in the income
statement along with a corresponding allocation of related
operating expenses, which is likely to result in increased revenue
and operating expenses and a higher initial capitalised amount.
2. Total profit from operations, associates and joint ventures
Six months Six months Year
ended ended ended
30.06.2021 30.06.2020 31.12.2020
(Unaudited) (Unaudited) (Audited)
$m $m $m
Revenue 3,591.0 2,138.8 5,129.3
Cost of sales (1,417.2) (1,364.9) (2,856.9)
--------------------------- ----------------------- ----------------------
Gross profit 2,173.8 773.9 2,272.4
Administrative and distribution
expenses (269.6) (204.9) (484.6)
Other operating income 18.5 10.0 27.0
Other operating expenses (122.1) (105.7) (222.6)
--------------------------- ----------------------- ----------------------
Operating profit from subsidiaries 1,800.6 473.3 1,592.2
--------------------------- ----------------------- ----------------------
Net share of income/(loss)
from associates and joint ventures 19.4 (2.3) 5.1
Impairment of investment in
associate - (80.8) (80.8)
--------------------------- ----------------------- ----------------------
Total profit from operations,
associates and joint ventures 1,820.0 390.2 1,516.5
=========================== ======================= ======================
Other operating expenses comprise $52.3 million of exploration
and evaluation expenditure (30 June 2020 - $44.2 million), $8.1
million in respect of the employee severance provision (30 June
2020 - $8.6 million), $4.6 million in respect of the closure
provision (30 June 2020 - $3.8 million credit) and $57.1 million of
other expenses (30 June 2020 - $49.1 million).
3. Exceptional items
Exceptional items are material items of income and expense which
are non-regular or non-operating and typically non-cash.
There were no exceptional items in the six months ended 30(th)
June 2021.
On 31 March 2020 the Group agreed to dispose of its 40% interest
in Hornitos coal-fired power station to ENGIE Energía Chile S.A.
("ENGIE"), the owner of the remaining 60% interest. This was part
of the value accretive renegotiation of Centinela's power purchase
agreement which as a result will be wholly supplied from lower cost
renewable sources from 2022. Under the terms of the agreement the
Group will dispose of its investment to Engie at the end of 2021
for a nominal consideration, and has not been be entitled to
receive any further dividend income from Hornitos from the date of
the agreement. Accordingly, the Group no longer had any effective
economic interest in the results or assets of Hornitos from 31
March 2020 onwards, and therefore recognised an impairment of $80.8
million in respect of its investment in associate balance during
2020, and no longer recognises any share of Hornitos' results. The
post-tax impact of the impairment was $61.1 million, of which $40.2
million was attributable to the equity owners of the Company.
4. Asset sensitivities
Based on an assessment of both qualitative and quantitative
factors, there were no indicators of potential impairment, or
reversal of previous impairments, for the Group's non-current
assets associated with its mining operations as at 30 June 2021,
and accordingly no impairment reviews have been performed. The
quantitative element of the trigger assessment provides an
indication of what the approximate recoverable amount of the
Group's operations would be, were a full impairment test under IAS
36 to be performed. In order to provide an indication of the
sensitivities of the approximate recoverable amount of the Group's
mining operations, a sensitivity analysis has been performed on the
preliminary valuation, prepared as part of the Group's impairment
indicator analysis.
The COVID-19 situation is not expected to have a material
negative impact on the future production, operating expenses or
capital projects of the Group's mining operations.
If a full IAS 36 impairment test were to be prepared, which was
not the case as at 30 June 2021, the recoverable amount is the
higher of fair value less costs of disposal and value in use. Fair
value less costs of disposal reflects the net amount the Group
would receive from the sale of the asset in an orderly transaction
between market participants. For mining assets this would generally
be determined based on the present value of the estimated future
cash flows arising from the continued use, further development or
eventual disposal of the asset. Value in use reflects the expected
present value of the future cash flows which the Group would
generate through the operation of the asset in its current
condition, without taking into account potential enhancements or
further development of the asset. The fair value less costs of
disposal valuation will normally be higher than the value in use
valuation, and accordingly the Group typically applies this
valuation estimate in its impairment or valuation assessments.
This impairment indicator valuation exercise demonstrated
positive headroom for all of the Group's mining operations, with
the recoverable amount of the assets in excess of their carrying
value.
The individual assumption to which the value of the assets is
most sensitive is the future copper price. The copper price
forecasts (representing the Group's estimates of the assumptions
that would be used by independent market participants in valuing
the assets) are based on the forward curve for the short term and
consensus analyst forecasts including both investment banks and
commodity consultants for the longer term. A long-term copper price
of $3.10/lb has been used in the base valuations used in the
impairment indicator assessment. As an additional down-side
sensitivity an indicative valuation was performed with a long-term
copper price of $2.95/lb, which was below the lower quartile price
in the consensus of analyst forecasts used when assessing the
appropriate long-term price. All of the Group's mining operations
still showed positive headroom in this alternative down-side
scenario This was a simple sensitivity exercise, looking at an
illustrative change in the forecast long-term copper price in
isolation. In reality, a deterioration in the long-term copper
price environment is likely to result in corresponding improvements
in a range of input cost factors. In particular, given that copper
exports account for over 50% of Chile's exports, movements in the
US dollar/Chilean peso exchange rate are highly correlated to the
copper price, and a decrease in the copper price is likely to
result in a weakening of the Chilean peso, with a resulting
reduction in the Group's operating costs and capital expenditure.
These likely cost reductions, as well as potential operational
changes which could be made in a weaker copper price environment,
could partly mitigate the impact of the lower copper price modelled
in these estimated potential sensitivities.
In addition to the future copper price, the valuations are
sensitive to the assumptions in respect of the discount rate used
to determine the present value of the future cash flows, future
operating costs, sustaining and development capital expenditure,
and the US dollar/Chilean peso exchange rate. As an additional
down-side sensitivity an indicative valuation was performed with a
10% stronger long-term Chilean peso exchange rate assumption. All
of the Group's mining operations still showed positive headroom in
this alternative down-side scenario.
A real post-tax discount rate of 8% has been used in determining
the present value of the forecast future cash flow from the assets
as part of the impairment indicator assessment.
Antucoya recognised impairments totalling $716 million in 2012
and 2016. If there is a future significant improvement in the
performance and value of Antucoya, for example due to operational
changes or a significant increase in the copper price outlook, this
could trigger a full or partial reversal of these impairments.
Climate change aspects relevant to asset sensitivities
The Group is undertaking on-going work to assess and reduce the
Group's exposure to climate risks, in line with the TCFD framework.
During 2020 the Group conducted an initial qualitative assessment
of the potential risks and opportunities and likely business
impacts under two climate change scenarios, and during 2021 will
select the most material risks and opportunities to undergo a
quantitative scenario analysis in order to estimate in more detail
the potential operational and financial impact to our operations.
The following section provides a high-level summary of the way in
which climate change related factors could be relevant to the
sensitivities of the values of the Group's mining operations, based
on the Group's existing analysis.
Relevant aspects of the Group's operations
The following aspects of the Group's mining operations are
particularly relevant when looking at the potential impacts of
climate change on the operational performance and value of the
Group's mining operations:
-- The Group's mining business is focused on copper. The
transition to a low-carbon economy requires many carbon reduction
measures with two major drivers being the increased demand for
renewable energy and the electrification of transportation systems.
As copper is a primary component in these technologies, this is
expected to have a positive impact on copper demand in the medium-
to long-term.
-- The Group has been working to eliminate its involvement with
coal-fired electricity generation. The Group has electricity supply
contracts in place which mean that from 2022 all of the mining
operations' electricity supply will be from renewable sources.
-- The Group's sensitivity analysis has identified an increased
risk of drought in the Coquimbo region where Los Pelambres is
situated as one of the principal potential climate related physical
risks for the Group. In the Atacama region where Antucoya,
Centinela and Zaldívar are situated, water scarcity has always been
acute and is expected to remain so. The Group has been focused on
reducing its use of continental fresh water for a number of years,
through the use of sea water and maximising the level of recycling
of water in its operations. Centinela and Antucoya were designed to
operate entirely with raw (i.e. non-desalinated) sea water. Los
Pelambres is currently constructing a desalination plant, and by
2025 this will result in 95% of its water usage coming from
desalinated sea water or recycled water. Zaldívar has submitted an
Environmental Impact Assessment for an extension of its mine life
to 2031 and this includes an application to extend the mine's water
extraction rights from 2025, when they currently expire.
Relevant aspects of the asset sensitivity and valuation
analysis
The nature of the asset sensitivity and valuation analysis
described above means that some level of assessment of potential
future climate-related risks should effectively already be
incorporated into a number of the key assumptions used in this
analysis. As explained above, the Group typically uses a "fair
value less cost to dispose" methodology when performing this
analysis, which reflects the price the Group could expect to
receive from the sale of the asset to an external market
participant. Accordingly, the Group uses assumptions which an
external market participant could reasonably be expected to use
when valuing the asset. Therefore, where possible the Group uses
assumptions which are supported by external market data - in
particular, in respect of the forecasts for the future copper
price, the future US dollar / Chilean peso exchange rate and the
discount rate. This market data should reflect the market's current
best estimate of the risks and opportunities impacting, for
example, the future copper price or comparable mining assets etc -
including within those overall risks and opportunities the market's
current assessment of the probable impact of climate-related
factors.
5. Segmental analysis
The Group's reportable segments are as follows:
-- Los Pelambres
-- Centinela
-- Antucoya
-- Zaldívar
-- Exploration and evaluation
-- Corporate and other items
-- Transport division
For management purposes, the Group is organised into two
business divisions based on their products - Mining and Transport.
The mining division is split further for management reporting
purposes to show results by mine and exploration activity. Los
Pelambres produces primarily copper concentrate and molybdenum as a
by-product. Centinela produces copper concentrate containing gold
as a by-product, molybdenum concentrates and copper cathodes.
Antucoya and Zaldívar produce copper cathodes. The transport
division provides rail and road cargo transport together with a
number of ancillary services. All the operations are based in
Chile. The Exploration and evaluation segment incurs exploration
and evaluation expenses. "Corporate and other items" comprises
costs incurred by the Company, Antofagasta Minerals S.A., the
Group's mining corporate centre and other entities, that are not
allocated to any individual business segment. Consistent with its
internal management reporting, the Group's corporate and other
items are included within the mining division.
The Chief Operating decision-maker (the Group's Chief Executive
Officer) monitors the operating results of the business segments
separately for the purpose of making decisions about resources to
be allocated and assessing performance. Segment performance is
evaluated based on the operating profit of each of the
segments.
a) Segment revenues and results
For the six months ended 30.06.2021
(Unaudited)
Los Pelambres Centinela Antucoya Zaldívar Exploration Corporate Total Transport Total
and evaluation(2) and other Mining division
items
$m $m $m $m $m $m $m $m $m
Revenue 1,878.7 1,289.6 336.4 - - - 3,504.7 86.3 3,591.0
Operating costs
excluding
depreciation (531.8) (458.1) (177.4) - (52.3) (35.2) (1,254.8) (52.5) (1,307.3)
Depreciation
and
amortisation (132.5) (282.5) (46.9) - - (5.6) (467.5) (15.0) (482.5)
Loss on
disposals - - - - - - - (0.6) (0.6)
-------------------- ------------------ ------------------ ---------------- --------------------- -------------------- ------------------- ----------------- -----------------
Operating
profit/(loss) 1,214.4 549.0 112.1 - (52.3) (40.8) 1,782.4 18.2 1,800.6
Net share of
income/(loss)
from associates
and joint
ventures - - - 24.5 - (5.1) 19.4 - 19.4
Investment
income 0.9 0.8 0.2 - - 1.0 2.9 - 2.9
Interest expense (1.9) (9.2) (7.4) - - (14.5) (33.0) (0.5) (33.5)
Other finance
items (2.7) (2.3) (0.4) - - (0.1) (5.5) (0.4) (5.9)
-------------------- ------------------ ------------------ ---------------- --------------------- -------------------- ------------------- ----------------- -----------------
Profit/(loss)
before tax 1,210.7 538.3 104.5 24.5 (52.3) (59.5) 1,766.2 17.3 1,783.5
Tax (395.1) (157.6) (3.2) - - (96.9) (652.8) (9.1) (661.9)
-------------------- ------------------ ------------------ ---------------- --------------------- -------------------- ------------------- ----------------- -----------------
Profit/(loss)
for the period 815.6 380.7 101.3 24.5 (52.3) (156.4) 1,113.4 8.2 1,121.6
Non-controlling
interests 322.9 106.8 26.5 - - 0.1 456.3 - 456.3
Profit/(loss)
for the period
attributable
to owners of
the parent 492.7 273.9 74.8 24.5 (52.3) (156.5) 657.1 8.2 665.3
==================== ================== ================== ================ ===================== ==================== =================== ================= =================
EBITDA(1) 1,346.9 831.5 159.0 76.4 (52.3) (40.4) 2,321.1 36.0 2,357.1
Additions to
non-current
assets
Capital
expenditure
(3) 460.7 346.6 25.5 - - 6.2 839.0 10.4 849.4
Segment assets
and liabilities
Segment assets 6,171.1 6,236.6 1,704.4 - - 1,794.9 15,907.0 383.9 16,290.9
Investments
in associates
and joint
ventures - - - 933.5 - - 933.5 5.6 939.1
Segment
liabilities (2,873.6) (1,875.5) (673.2) - - (1,246.3) (6,668.6) (92.7) (6,761.3)
(1) EBITDA refers to Earnings Before Interest, Tax, Depreciation
and Amortisation. EBITDA is calculated by adding back depreciation,
amortisation, profit or loss on disposals and impairment charges to
operating profit. This comprises 100% of the EBITDA from the
Group's subsidiaries, and the Group's proportional share of the
EBITDA of its associates and joint ventures.
(2) Operating cash outflow in the exploration and evaluation
segment was $40.0 million.
(3) The capital expenditure shown above excludes $46.3 million
in respect of leases.
For the six months ended 30.06.2020 (Unaudited)
Los Pelambres Centinela Antucoya Zaldívar Exploration Corporate Total Mining Transport division Total
and and other
evaluation(2) items
$m $m $m $m $m $m $m $m $m
Revenue 1,086.9 759.4 222.9 - - - 2,069.2 69.6 2,138.8
Operating costs
excluding
depreciation (447.8) (449.8) (158.2) - (44.2) (25.5) (1,125.5) (43.4) (1,168.9)
Depreciation and
amortisation (126.2) (301.4) (48.6) - - (3.8) (480.0) (15.3) (495.3)
Loss on
disposals (0.6) - - - - - (0.6) (0.7) (1.3)
-------------- ---------------------- --------- --------------- -------------- ---------- ------------------- --------------------- -------------------
Operating
profit/(loss) 512.3 8.2 16.1 - (44.2) (29.3) 463.1 10.2 473.3
Net share of
(loss)/income
from associates
and joint
ventures - - - (0.2) - (2.3) (2.5) 0.2 (2.3)
Impairment of
investment in
associate(3) - (95.6) - - - - (95.6) 14.8 (80.8)
-------------- ---------------------- --------- --------------- -------------- ---------- ------------------- --------------------- -------------------
(Loss)/profit
from associates
and joint
ventures - (95.6) - (0.2) - (2.3) (98.1) 15.0 (83.1)
Investment
income 3.8 3.7 0.6 - - 8.5 16.6 0.1 16.7
Interest expense (2.3) (14.8) (17.0) - - (9.4) (43.5) (1.1) (44.6)
Other finance
items 11.9 10.2 (0.2) - - 1.8 23.7 1.5 25.2
-------------- ---------------------- --------- --------------- -------------- ---------- ------------------- --------------------- -------------------
Profit/(loss)
before tax 525.7 (88.3) (0.5) (0.2) (44.2) (30.7) 361.8 25.7 387.5
Tax (161.3) 26.4 (0.3) - - 1.0 (134.2) (8.2) (142.4)
-------------- ---------------------- --------- --------------- -------------- ---------- ------------------- --------------------- -------------------
Profit/(loss)
for the period 364.4 (61.9) (0.8) (0.2) (44.2) (29.7) 227.6 17.5 245.1
Non-controlling
interests 141.3 (25.7) (5.7) - - - 109.9 - 109.9
Profit/(loss)
for the period
attributable to
owners of the
parent 223.1 (36.2) 4.9 (0.2) (44.2) (29.7) 117.7 17.5 135.2
============== ====================== ========= =============== ============== ========== =================== ===================== ===================
EBITDA(1) 639.1 309.6 64.7 42.8 (44.2) (27.8) 984.2 28.6 1,012.8
Additions to
non-current
assets
Capital
expenditure 348.3 191.0 23.3 - - 2.3 564.9 15.8 580.7
Segment assets
and liabilities
Segment assets 4,716.5 5,670.7 1,597.6 - - 1,363.1 13,347.9 368.5 13,716.4
Investments in
associates and
joint ventures - - - 961.5 - - 961.5 6.4 967.9
Segment
liabilities (1,813.5) (1,684.6) (685.7) - - (624.8) (4,808.6) (92.8) (4,901.4)
(1) EBITDA refers to Earnings Before Interest, Tax, Depreciation
and Amortisation. EBITDA is calculated by adding back depreciation,
amortisation, profit or loss on disposals and impairment charges to
operating profit. This comprises 100% of the EBITDA from the
Group's subsidiaries, and the Group's proportional share of the
EBITDA of its associates and joint ventures.
(2) During the period, operating cash outflow used in the
exploration and evaluation segment was $41.0 million.
(3) On 31 March 2020 the Group agreed to dispose of its 40%
interest in Hornitos coal-fired power station to ENGIE Energía
Chile S.A. ("ENGIE"), the owner of the remaining 60% interest. This
has resulted in a $80.8 million impairment in respect of the
Group's investment in associate balance.
For the year ended 31.12.2020 (Audited)
Los Pelambres Centinela Antucoya Zaldívar Exploration Corporate Total Transport Total
and evaluation(2) and other Mining division
items
$m $m $m $m $m $m $m $m $m
Revenue 2,655.1 1,844.5 480.3 - - - 4,979.9 149.4 5,129.3
Operating costs
excluding
depreciation (992.1) (932.8) (314.5) - (85.1) (66.2) (2,390.7) (91.4) (2,482.1)
Depreciation and
amortisation (252.6) (662.9) (94.6) - - (7.8) (1,017.9) (30.8) (1,048.7)
Loss on
disposals (2.5) (1.8) - - - - (4.3) (2.0) (6.3)
------------------------ --------------------- --------------------- ------------- ------------------ ----------------- ------------------ -------------------- ------------------
Operating
profit/(loss) 1,407.9 247.0 71.2 - (85.1) (74.0) 1,567.0 25.2 1,592.2
Equity
accounting
profit /(loss) - - - 12.2 - (6.5) 5.7 (0.6) 5.1
Impairment of
investment
in associate(3) - (95.6) - - - - (95.6) 14.8 (80.8)
------------------------ --------------------- --------------------- ------------- ------------------ ----------------- ------------------ -------------------- ------------------
Net share of
results
from associates
and joint
ventures - (95.6) - 12.2 - (6.5) (89.9) 14.2 (75.7)
Investment
income 4.7 4.3 0.8 - - 9.0 18.8 0.1 18.9
Interest expense (4.3) (24.9) (25.5) - - (20.7) (75.4) (1.7) (77.1)
Other finance
items (26.0) (13.7) (4.0) - - (5.5) (49.2) 4.0 (45.2)
------------------------ --------------------- --------------------- ------------- ------------------ ----------------- ------------------ -------------------- ------------------
Profit/(loss)
before
tax 1,382.3 117.1 42.5 12.2 (85.1) (97.7) 1,371.3 41.8 1,413.1
Tax (435.8) (23.0) (0.3) - - (59.2) (518.3) (8.2) (526.5)
------------------------ --------------------- --------------------- ------------- ------------------ ----------------- ------------------ -------------------- ------------------
Profit/(loss)
for
the year from
continuing
operations 946.5 94.1 42.2 12.2 (85.1) (156.9) 853.0 33.6 886.6
Profit for the
period
from
discontinued
operations - - - - - 7.3 7.3 - 7.3
------------------------ --------------------- --------------------- ------------- ------------------ ----------------- ------------------ -------------------- ------------------
Profit/(loss)
for
the year 946.5 94.1 42.2 12.2 (85.1) (149.6) 860.3 33.6 893.9
Non-controlling
interests 371.5 12.9 3.1 - - - 387.5 - 387.5
Profit/(loss)
for
the period
attributable
to owners of
the
parent 575.0 81.2 39.1 12.2 (85.1) (149.6) 472.8 33.6 506.4
======================== ===================== ===================== ============= ================== ================= ================== ==================== ==================
EBITDA(1) 1,663.0 911.7 165.8 95.5 (85.1) (72.7) 2,678.2 61.0 2,739.2
Additions to
non-current
assets
Capital
expenditure 827.3 441.8 44.6 - - 8.4 1,322.1 26.2 1,348.3
Segment assets
and
liabilities
Segment assets 5,475.9 5,898.8 1,641.5 - - 2,286.9 15,303.1 386.6 15,689.7
Investments in
associates
and joint
ventures - - - 909.0 - - 909.0 5.6 914.6
Segment
liabilities (2,700.1) (1,823.2) (702.5) - - (1,202.6) (6,428.4) (94.8) (6,523.2)
(1) EBITDA refers to Earnings Before Interest, Tax, Depreciation
and Amortisation. EBITDA is calculated by adding back depreciation,
amortisation, profit or loss on disposals and impairment charges to
operating profit. This comprises 100% of the EBITDA from the
Group's subsidiaries, and the Group's proportional share of the
EBITDA of its associates and joint ventures.
(2) Operating cash outflow in the exploration and evaluation
segment was $43.1 million
(3) On 31 March 2020 the Group agreed to dispose of its 40%
interest in Hornitos coal-fired power station to ENGIE Energía
Chile S.A. ("ENGIE"), the owner of the remaining 60% interest. This
has resulted in a $80.8 million impairment in respect of the
Group's investment in associate balance.
b) Entity wide disclosures
Revenue by product(1)
Six months Year
Ended Six months ended
30.06.2021 ended 30.06.2020 31.12.2020
$m $m $m
Copper
- Los Pelambres 1,646.2 950.1 2,323.6
- Centinela concentrates 785.9 350.1 940.4
- Centinela cathodes 325.8 263.4 603.9
- Antucoya 336.4 222.9 480.3
Gold
- Los Pelambres 45.5 46.8 106.4
- Centinela 138.3 134.8 251.3
Molybdenum
- Los Pelambres 161.2 74.7 181.8
- Centinela 23.5 1.3 27.7
Silver
- Los Pelambres 25.8 15.3 43.3
- Centinela 16.1 9.8 21.2
Total Mining 3,504.7 2,069.2 4,979.9
Transport division 86.3 69.6 149.4
---------------------------------- --------------------------- ---------------------
3,591.0 2,138.8 5,129.3
================================== =========================== =====================
Revenue by location of customer(1)
Six months Year
ended Six months ended
30.06.2021 ended 30.06.2020 31.12.2020
$m $m $m
Europe
- United Kingdom 37.5 45.4 123.3
- Switzerland 778.2 185.5 593.5
- Spain 33.2 7.7 29.3
- Germany 62.6 32.5 116.4
- Rest of Europe 104.4 34.0 92.3
Latin America
- Chile 139.2 86.4 224.4
- Rest of Latin America 110.9 120.3 182.0
North America
- United States 350.5 110.7 216.5
Asia Pacific
- Japan 811.6 560.3 1,631.1
- China 466.2 310.5 531.4
- Singapore 419.7 324.9 667.5
- South Korea 115.3 128.7 353.4
- Hong Kong 52.1 68.3 235.7
- Rest of Asia 109.6 123.6 132.5
---------------------------------- --------------------------- ---------------------
3,591.0 2,138.8 5,129.3
================================== =========================== =====================
(1) Figures include both revenue from the sale of products and
the associated income from the provision of shipping services.
Information about major customers
In the first half of 2021 the Group's mining revenue included
$458.1 million related to one large customer that individually
accounted for more than 10% of the Group's revenue (six months
ended 30 June 2020 - one large customer representing $294.2
million; year ended 31 December 2020 - one large customer
representing $763.4 million).
Non-current assets by location of asset
Six months Year
Ended Six months ended
30.06.2021 ended 30.06.2020 31.12.2020
$m $m $m
- Chile 11,503.1 10,887.1 11,092.7
- USA 178.2 177.7 178.3
- Other - 0.1 -
11,681.3 11,064.9 11,271.0
==================================== ================== =======================
The above amounts reflect non-current assets excluding financial
assets (in particular, derivative financial instruments) and
deferred tax assets.
6. Revenue
Copper and molybdenum concentrate sale contracts and copper
cathode sale contracts generally provide for provisional pricing of
sales at the time of shipment, with final pricing being based on
the monthly average London Metal Exchange copper price or monthly
average molybdenum price for specified future periods. This
normally ranges from one to four months after shipment to the
customer. For sales contracts which contains provisional pricing
mechanisms the total receivable balance is measured at fair value
through profit or loss. Gains and losses from the mark-to-market of
open sales are recognised through adjustments to revenue in the
income statement and to trade receivables in the balance sheet. The
Group determines mark-to-market prices using forward prices at each
period end for copper concentrate and cathode sales, and period-end
month average prices for molybdenum concentrate sales due to the
absence of a futures market in the market price references for that
commodity in the majority of the Group's contracts.
The Group sells a significant proportion of its products on
Cost, Insurance & Freight (CIF) Incoterms, which means that the
Group is responsible for shipping the product to a destination port
specified by the customer. The shipping service represents a
separate performance obligation, and is recognised separately from
the sale of the material over time as the shipping service is
provided.
The total revenue from contracts with customers and the impact
of provisional pricing adjustments in respect of concentrate and
cathode sales is as follows:
Six months Six months
Ended ended Year
30.06.2021 30.06.2020 ended 31.12.2020
$m $m $m
Revenue from contracts with customers
Sale of products 3,136.3 2,041.7 4,617.3
Provision of shipping services associated
with the sale of products 50.6 54.8 95.4
Transport services 86.3 69.6 149.4
Provisional pricing adjustments in respect
of copper, gold and molybdenum 317.8 (27.3) 267.2
Total revenue 3,591.0 2,138.8 5,129.3
============ ============ ==================
The categories of revenue which are principally affected by
different economic factors are the individual product types. A
summary of revenue by product is set out in Note 5.
In addition to mark-to-market and final pricing adjustments,
revenue also includes realised gains and losses relating to
derivative commodity instruments. Details of these realised gains
or losses are shown in the tables that follow.
Copper, gold and molybdenum concentrate sales are stated net of
deductions for tolling charges, as shown in the tables that
follow.
For the period
ended
30 June 2021
(1)
$m $m $m $m $m $m $m $m
Los Centinela Centinela Antucoya Los Pelambres Centinela Los Pelambres Centinela
Pelambres
Copper Copper Copper Copper Gold Gold Molybdenum Molybdenum
concentrate concentrate cathodes cathodes in concentrate in concentrate concentrate
concentrate
Provisionally
invoiced
gross sales 1,510.3 726.5 351.2 367.3 47.6 144.6 136.7 20.9
Effects of
pricing
adjustments
to previous
year invoices
Reversal of
mark-to-market
adjustments at
the end
of the
previous year (58.7) (26.8) 0.1 (0.5) - (0.9) 0.2 (0.3)
Settlement of
sales invoiced
in the
previous year 175.1 74.7 1.8 1.5 (1.0) (4.0) 6.4 1.2
------------ ------------- ---------- ---------- ---------------------- ------------- -------------- ------------
Total effect of
adjustments
to previous
year invoices
in the current
period 116.4 47.9 1.9 1.0 (1.0) (4.9) 6.6 0.9
------------ ------------- ---------- ---------- ---------------------- ------------- -------------- ------------
Effects of
pricing
adjustments
to current
period invoices
Settlement of
sales invoiced
in the current
period 107.5 59.3 8.8 7.0 (1.0) (0.9) 19.9 2.4
Mark-to-market
adjustments
at the end of
the current
period (45.0) (21.2) (0.6) (0.9) - (0.2) 10.8 3.1
------------ ------------- ---------- ---------- ---------------------- ------------- -------------- ------------
Total effect of
adjustments
to current
period
invoices 62.5 38.1 8.2 6.1 (1.0) (1.1) 30.7 5.5
------------ ------------- ---------- ---------- ---------------------- ------------- -------------- ------------
Total pricing
adjustments 178.9 86.0 10.1 7.1 (2.0) (6.0) 37.3 6.4
Realised losses
on commodity
derivatives - - (35.5) (38.0) - - - -
Revenue before
deducting
tolling
charges 1,689.2 812.5 325.8 336.4 45.6 138.6 174.0 27.3
Tolling charges (43.0) (26.6) - - (0.1) (0.3) (12.8) (3.8)
Revenue net of
tolling
charges 1,646.2 785.9 325.8 336.4 45.5 138.3 161.2 23.5
============ ============= ========== ========== ====================== ============= ============== ============
The revenue from the individual products shown in the above
table is reconciled to total revenue in Note 5.
(1) Figures include both revenue from the sale of products and
the associated income from the provision of shipping services.
For the period ended 30 June 2020 (1)
$m $m $m $m $m $m $m $m
Los Pelambres Centinela Centinela Antucoya Los Pelambres Centinela Los Pelambres Centinela
Copper Copper Copper Copper Gold in concentrate Gold in Molybdenum concentrate Molybdenum
concentrate concentrate cathodes cathodes concentrate concentrate
Provisionally
invoiced
gross sales 1,019.8 398.9 263.6 225.1 45.9 130.1 94.0 2.5
Effects of
pricing
adjustments to
previous year
invoices
Reversal of
mark-to-market
adjustments at
the end of the
previous year (29.1) (15.2) (0.4) (0.4) - (1.2) 0.4 -
Settlement of
sales invoiced
in the
previous year (43.6) (18.7) (0.3) (0.4) 0.2 3.7 (1.5) -
----------------------- ----------------------- ------------------- --------- ----------------------- ----------------------- ------------------------- ------------
Total effect of
adjustments to
previous year
invoices in
the current
period (72.7) (33.9) (0.7) (0.8) 0.2 2.5 (1.1) -
----------------------- ----------------------- ------------------- --------- ----------------------- ----------------------- ------------------------- ------------
Effects of
pricing
adjustments to
current period
invoices
Settlement of
sales invoiced
in the current
period (1.2) (9.2) (0.7) (2.7) 0.8 1.5 (1.7) (0.2)
Mark-to-market
adjustments at
the end of the
current period 66.5 25.6 1.2 1.3 - 1.1 (3.3) -
----------------------- ----------------------- ------------------- --------- ----------------------- ----------------------- ------------------------- ------------
Total effect of
adjustments to
current period
invoices 65.3 16.4 0.5 (1.4) 0.8 2.6 (5.0) (0.2)
----------------------- ----------------------- ------------------- --------- ----------------------- ----------------------- ------------------------- ------------
Total pricing
adjustments (7.4) (17.5) (0.2) (2.2) 1.0 5.1 (6.1) (0.2)
Revenue before
deducting
tolling
charges 1,012.4 381.4 263.4 222.9 46.9 135.2 87.9 2.3
Tolling charges (62.3) (31.3) - - (0.1) (0.4) (13.2) (1.0)
Revenue net of
tolling
charges 950.1 350.1 263.4 222.9 46.8 134.8 74.7 1.3
======================= ======================= =================== ========= ======================= ======================= ========================= ============
The revenue from the individual products shown in the above
table is reconciled to total revenue in Note 5.
(1) Figures include both revenue from the sale of products and
the associated income from the provision of shipping services.
For the year ended 31 December 2020(1)
$m $m $m $m $m $m $m $m
Los Centinela Centinela Antucoya Los Pelambres Centinela Los Pelambres Centinela
Pelambres
Copper Copper Copper Copper Gold Gold Molybdenum Molybdenum
concentrate concentrate cathodes cathodes in in concentrate concentrate
concentrate concentrate
Provisionally
invoiced
gross sales 2,256.7 949.3 594.8 474.8 104.9 250.6 205.0 31.6
Effects of
pricing
adjustments to
previous
year invoices
Reversal of
mark-to-market
adjustments at
the
end of the
previous
year (29.1) (15.2) (0.4) (0.4) - (1.2) 0.4 -
Settlement of
sales
invoiced in
the previous
year (43.6) (18.7) (0.3) (0.3) 0.2 3.7 (1.5) (0.2)
------------ ------------- ---------- ---------- -------------- -------------- -------------- -------------
Total effect of
adjustments
to previous
year invoices
in the current
period (72.7) (33.9) (0.7) (0.7) 0.2 2.5 (1.1) (0.2)
------------ ------------- ---------- ---------- -------------- -------------- -------------- -------------
Effects of
pricing
adjustments to
current
period invoices
Settlement of
sales
invoiced in
the current
period 194.5 67.0 11.2 7.8 1.5 (2.0) 4.6 2.1
Mark-to-market
adjustments
at the end of
the current
period 58.7 26.8 (0.1) 0.5 - 0.9 (0.2) 0.3
------------ ------------- ---------- ---------- -------------- -------------- -------------- -------------
Total effect of
adjustments
to current
period
invoices 253.2 93.8 11.1 8.3 1.5 (1.1) 4.4 2.4
------------ ------------- ---------- ---------- -------------- -------------- -------------- -------------
Total pricing
adjustments 180.5 59.9 10.4 7.6 1.7 1.4 3.3 2.2
Realised losses
on
commodity
derivatives - - (1.3) (2.1) - - - -
Revenue before
deducting
tolling
charges 2,437.2 1,009.2 603.9 480.3 106.6 252.0 208.3 33.8
Tolling charges (113.6) (68.8) - - (0.2) (0.7) (26.5) (6.1)
Revenue net of
tolling
charges 2,323.6 940.4 603.9 480.3 106.4 251.3 181.8 27.7
The revenue from the individual products shown in the above
table is reconciled to total revenue in Note 5.
(1) Figures include both revenue from the sale of products and
the associated income from the provision of shipping services.
(i) Copper concentrate
The typical period for which sales of copper concentrate remain
open until settlement occurs is a range of approximately three to
four months from shipment date.
At 30.06.2021 At 30.06.2020 At 31.12.2020
Sales Tonnes 166,000 153,400 162,300
Average mark-to-market price $/lb 4.25 2.73 3.52
Average provisional invoice
price $/lb 4.43 2.44 3.28
(ii) Copper cathodes
The typical period for which sales of copper cathodes remain
open until settlement occurs is approximately one month from
shipment date.
At 30.06.2021 At 30.06.2020 At 31.12.2020
Sales Tonnes 12,000 15,400 13,800
Average mark-to-market price $/lb 4.25 2.73 3.52
Average provisional invoice
price $/lb 4.31 2.65 3.50
(iii) Gold in concentrate
The typical period for which sales of gold in concentrate remain
open until settlement is approximately one month from shipment
date.
At 30.06.2021 At 30.06.2020 At 31.12.2020
Sales Ounces 19,200 11,500 16,300
Average mark-to-market price $/oz 1,781 1,776 1,917
Average provisional invoice
price $/oz 1,791 1,677 1,861
(iv) Molybdenum concentrate
The typical period for which sales of molybdenum remain open
until settlement is approximately two months from shipment
date.
At 30.06.2021 At 30.06.2020 At 31.12.2020
Open Sales Tonnes 1,700 2,000 2,000
Average mark-to-market price $/lb 18.14 8.01 9.34
Average provisional invoice
price $/lb 14.31 8.76 9.38
As detailed above, the effects of gains and losses from the
marking-to-market of open sales are recognised through adjustments
to revenue in the income statement and to trade receivables in the
balance sheet. The effect of mark-to-market adjustments on the
balance sheet at the end of each period are as follows:
Gain/(loss) on debtors of period
end
mark-to-market adjustments
Six months Six months Year ended
ended 30.06.2021 ended 30.06.2020 31.12.2020
$m $m $m
Los Pelambres - copper
concentrate (45.0) 66.5 58.7
Los Pelambres - molybdenum
concentrate 10.8 (3.3) (0.2)
Centinela - copper concentrate (21.2) 25.6 26.8
Centinela - molybdenum
concentrate 3.1 - 0.3
Centinela - gold in
concentrate (0.2) 1.1 0.9
Centinela - copper cathodes (0.6) 1.2 (0.1)
Antucoya - copper cathodes (0.9) 1.3 0.5
(54.0) 92.4 86.9
7. Financial instruments
a) Categories of financial instruments
The carrying value of financial assets and financial liabilities
is shown below:
Six months ended 30.06.2021
At fair value At fair value Held at amortised Total
through profit through other cost
and loss comprehensive
income
$m $m $m $m
Financial assets
Derivative financial
assets 0.3 - - 0.3
Equity investments - 9.8 - 9.8
Loans and receivables 541.9 - 107.4 649.3
Cash and cash equivalents - - 1,260.0 1,260.0
Liquid investments 2,979.9 - - 2,979.9
3,522.1 9.8 1,367.4 4,899.3
Financial liabilities
Derivative financial
liabilities (51.4) - - (51.4)
Trade and other payables - - (1,018.4) (1,018.4)
Borrowings and leases - - (3,538.6) (3,538.6)
(51.4) - (4,557.0) (4,608.4)
Six months ended 30.06.2020
At fair value At fair value Held at Total
through through other amortised cost
profit and comprehensive
loss income
$m $m $m $m
Financial
assets
Equity
investments - 10.2 - 10.2
Loans and
receivables 468.5 - 80.9 549.4
Cash and cash
equivalents - - 796.0 796.0
Liquid
investments 1,571.6 - - 1,571.6
2,040.1 10.2 876.9 2,927.2
Financial
liabilities
Derivative
financial
liabilities (16.8) - - (16.8)
Trade and
other
payables (3.3) - (615.3) (618.6)
Borrowings and
leases - - (2,687.1) (2,687.1)
(20.1) - (3,302.4) (3,322.5)
For the year ended 31.12.2020
At fair value At fair value Held at amortised Total
through profit through other cost
and loss comprehensive
income
$m $m $m $m
Financial assets
Derivative financial
assets 1.4 - - 1.4
Equity investments - 11.1 - 11.1
Loans and receivables 808.0 - 184.6 992.6
Cash and cash equivalents - - 1,246.8 1,246.8
Liquid investments 2,426.0 - - 2,426.0
3,235.4 11.1 1,431.4 4,677.9
Financial liabilities
Derivative financial
liabilities (37.4) - - (37.4)
Trade and other payables (0.3) - (815.8) (816.1)
Borrowings and leases - - (3,754.8) (3,754.8)
(37.7) - (4,570.6) (4,608.3)
The fair value of the fixed rate bond included within the
"Borrowings and leases" category was $483.6 million at 30 June 2021
(six months ended 30 June 2020 - nil; year ended 31 December 2020 -
$503.5 million) compared with its carrying value of $495.7 million
(six months ended 30 June 2020 - nil; year ended 31 December 2020 -
$495.6 million) . The fair value of all other financial assets and
financial liabilities carried at amortised cost is not materially
different from the carrying value presented above.
Fair value of financial instruments
An analysis of financial assets and financial liabilities
measured at fair value is presented below:
Six months ended 30.06.2021
Level 1 Level Level Total
2 3
$m $m $m $m
Financial assets
Derivatives financial assets (a) - 0.3 - 0.3
Equity investments (b) 9.8 - - 9.8
Loans and receivables (c) - 541.9 - 541.9
Liquid investment (d) 2,979.9 - - 2,979.9
2,989.7 542.2 - 3,531.9
Financial liabilities
Derivatives financial liabilities (a) - (51.4) - (51.4)
Trade and other payables - - - -
- (51.4) - (51.4)
Six months ended 30.06.2020
Level 1 Level Level Total
2 3
$m $m $m $m
Financial assets
Equity investments (b) 10.2 - - 10.2
Loans and receivables (c) - 468.5 - 468.5
Liquid investment (d) 1,571.6 - - 1,571.6
1,581.8 468.5 - 2,050.3
Financial liabilities
Derivatives financial liabilities (a) - (16.8) - (16.8)
Trade and other payables - (3.3) - (3.3)
- (20.1) - (20.1)
For the year ended 31.12.2020
Level 1 Level Level Total
2 3
$m $m $m $m
Financial assets
Derivatives financial assets (a) - 1.4 - 1.4
Equity investments (b) 11.1 - - 11.1
Loans and receivables (c) - 808.0 - 808.0
Liquid investment (d) 2,426.0 - - 2,426.0
2,437.1 809.4 - 3,246.5
Financial liabilities
Derivatives financial liabilities (a) - (37.4) - (37.4)
Trade and other payables - (0.3) - (0.3)
- (37.7) - (37.7)
Recurring fair value measurements are those that are required in
the balance sheet at the end of each reporting year.
a) Derivatives in designated hedge accounting relationships are
valued using a discounted cash flow analysis valuation model, which
includes observable credit spreads and using the applicable yield
curve for the duration of the instruments for non-optional
derivatives, and option pricing models for optional derivatives.
These are level 2 inputs as described below. Hedging instruments at
30 June 2021 relate to commodity options.
b) Equity investments are investments in shares on active
markets and are valued using unadjusted quoted market values of the
shares at the financial reporting date. These are level 1 inputs as
described below.
c) Provisionally priced metal sales for the period are
marked-to-market at the end of the period. Gains and losses from
the marking-to-market of open sales are recognised through
adjustments to revenue in the income statement and trade
receivables in the balance sheet. Forward prices at the end of the
period are used for copper sales while period-end average prices
are used for molybdenum concentrate sales. These are level 2 inputs
as described below.
d) Liquid investments are highly liquid current asset
investments that are valued using market prices at the period end.
These are level 1 inputs as described below.
The inputs to the valuation techniques described above are
categorised into three levels, giving the highest priority to
unadjusted quoted prices in active markets (level 1) and the lowest
priority to unobservable inputs (level 3 inputs):
- Level 1 fair value measurement inputs are unadjusted quoted
prices in active markets for identical assets or liabilities.
- Level 2 fair value measurement inputs are derived from inputs
other than quoted market prices included in level 1 that are
observable for the asset or liability, either directly or
indirectly.
- Level 3 fair value measurement inputs are unobservable inputs for the asset or liability.
The degree to which inputs into the valuation techniques used to
measure the financial assets and liabilities are observable and the
significance of these inputs in the valuation are considered in
determining whether any transfers between levels have occurred. In
the six months ended 30 June 2021, there were no transfers between
levels in the hierarchy.
b) Derivative financial instruments
The Group periodically uses derivative financial instruments to
reduce exposure to foreign exchange, interest rate and commodity
price movements. The Group does not use such derivative instruments
for trading purposes. The Group has applied the hedge accounting
provisions of IFRS 9 Financial Instruments. The effective portion
of changes in the fair value of derivative financial instruments
that are designated and qualify as hedges of future cash flows have
been recognised directly in equity, with such amounts subsequently
recognised in profit or loss in the period when the hedged item
affects profit or loss. Any ineffective portion is recognised
immediately in profit or loss. Realised gains and losses on
commodity derivatives recognised in profit or loss are recorded
within revenue. The time value element of changes in the fair value
of derivative options is recognised within other comprehensive
income. Derivatives embedded in other financial instruments or
other host contracts are treated as separate derivatives when their
risks and characteristics are not closely related to those of host
contracts and the host contracts are not carried at fair value.
Changes in fair value are reported in profit or loss for the
year.
8. Net finance expense
Six months Year
Six months ended ended
ended 30.06.2021 30.06.2020 31.12.2020
$m $m $m
Investment income
Interest receivable 1.5 2.5 3.4
Gains on fair value
through profit
or loss 1.4 14.2 15.5
2.9 16.7 18.9
Interest expense
Interest expense (33.5) (44.6) (77.1)
(33.5) (44.6) (77.1)
Other finance items
Unwinding of discount on
provisions (3.4) (3.7) (16.7)
Preference dividends (0.1) (0.1) (0.1)
Foreign exchange (2.4) 29.0 (28.4)
(5.9) 25.2 (45.2)
Net finance expense (36.5) (2.7) (103.4)
In the six months ended 30 June 2021 amounts capitalised and
consequently not included within the above table were as follows:
$10.0 million at Los Pelambres (six months ended 30 June 2020 -
$7.4 million; year ended 31 December 2020 - $21.0 million) and $0.9
million at Centinela (six months ended 30 June 2020 - $2.9 million;
year ended 31 December 2020 - $5.7 million). The interest expense
shown above includes $4.2 million in respect of leases (six months
ended 30 June 2020 - $5.1 million; year ended 31 December 2020 -
$9.7 million).
9. Taxation
The tax charge for the period comprised the following:
Six months Six months Year
ended ended ended
30.06.2021 30.06.2020 31.12.2020
$m $m $m
Current tax charge
Corporate tax (principally first category
tax in Chile) (352.8) (132.7) (353.5)
Mining tax (royalty) (135.5) (30.2) (106.1)
Withholding tax (55.1) (34.0) (55.8)
Exchange gains on corporate tax balances - - 0.1
(543.4) (196.9) (515.3)
Deferred tax
Corporate tax (principally first category
tax in Chile) (70.1) 24.2 (1.1)
Mining tax (royalty) 7.9 (2.4) 4.2
Withholding tax (56.3) 32.7 (14.3)
(118.5) 54.5 (11.2)
Total tax charge (income tax expense) (661.9) (142.4) (526.5)
The rate of first category (i.e. corporate) tax in Chile is
27.0% (2020 - 27.0%).
In addition to first category tax and the mining tax, the Group
incurs withholding taxes on any remittance of profits from Chile.
Withholding tax is levied on remittances of profits from Chile at
35% less first category (i.e. corporation) tax already paid in
respect of the profits to which the remittances relate.
The Group's mining operations are also subject to a mining tax
(royalty). Production from Los Pelambres, Antucoya, Encuentro
(oxides), the Tesoro North East pit and the Run-of-Mine processing
at Centinela Cathodes is subject to a rate of between 5-14%,
depending on the level of operating profit margin, and production
from Centinela Concentrates and the Tesoro Central and Mirador pits
is subject to a rate of 5% of taxable operating profit.
Year Year
Six months ended Six months ended ended ended
Excluding Including Excluding Including
Six months ended exceptional items exceptional items exceptional items exceptional items
30.06.2021 30.06.2020 30.06.2020 31.12.2020 31.12.2020
$m % $m % $m % $m % $m %
Profit before tax 1,783.5 - 468.3 - 387.5 - 1,493.9 - 1,413.1
Tax at the Chilean
corporate tax rate of
27% (481.6) 27.0 (126.5) 27.0 (104.6) 27.0 (403.4) 27.0 (381.5) 27.0
Impairment of
investment in
associate - - - - (2.2) 0.6 - - (2.2) 0.2
Mining Tax (royalty) (128.5) 7.2 (28.3) 6.0 (28.3) 7.2 (101.3) 6.8 (101.3) 7.2
Deduction of mining
royalty as an
allowable expense in
determination of
first category tax 36.0 (2.0) 7.6 (1.6) 7.6 (1.9) 28.1 (1.9) 28.1 (2.0)
Items not deductible
from first category
tax (7.2) 0.4 (7.2) 1.5 (7.2) 1.8 (9.8) 0.7 (9.8) 0.6
Adjustment in respect
of prior years 0.8 - (2.0) 0.4 (2.0) 0.5 (1.6) 0.1 (1.6) 0.1
Withholding tax (111.3) 6.2 (1.3) 0.3 (1.3) 0.3 (70.0) 4.7 (70.0) 5.0
Tax effect of share of
profit of associates
and joint ventures 5.2 (0.3) 0.7 (0.1) 0.7 (0.1) 1.4 (0.1) 1.4 (0.1)
Reversal of previously
unrecognised tax
losses/(unrecognised
tax losses 24.7 (1.4) (5.1) 1.1 (5.1) 1.3 10.5 (0.7) 10.5 (0.7)
Net other items - - - - - - (0.1) - (0.1) -
Tax expense and
effective tax rate
for the period (661.9) 37.1 (162.1) 34.6 (142.4) 36.7 (546.2) 36.6 (526.5) 37.3
The tax charge in the first half of 2021 was $661.9 million
(first half of 2020 - $162.1 million excluding exceptional items
and $142.4 million including exceptional items). The effective tax
rate was 37.1% (first half of 2020 - 34.6% excluding exceptional
items and 36.7% including exceptional items).
The effective tax rate varied from the statutory rate
principally due to the mining tax (royalty) (net impact of $92.5
million / 5.2% including the deduction of the mining tax (royalty)
as an allowable expense in the determination of first category
tax), the withholding tax relating to the remittance of profits
from Chile (impact of $111.3 million / 6.2%), items not deductible
for Chilean corporate tax purposes, principally the funding of
expenses outside of Chile (impact of $7.2 million / 0.4%), partly
offset by unrecognised tax gains (impact of $24.7 million / 1.4%)
and the impact of the recognition of the Group's share of profit
from associates and joint ventures, which are included in the
Group's profit before tax net of their respective tax charges
(impact of $5.2 million / 0.3%).
The main factors which could impact the sustainability of the
Group's existing effective tax rate are:
-- The level of future distributions made by the Group's Chilean
subsidiaries out of Chile, which could result in increased
withholding tax charges.
-- The impact of expenses which are not deductible for Chilean
first category tax. Some of these expenses are relatively fixed
costs, and so the relative impact of these expenses on the Group's
effective tax rate will vary depending on the Group's total profit
before tax in a particular year.
There are no significant tax uncertainties which would require
critical judgements, estimates or potential provisions.
10. Discontinued operations
There were no profits from discontinued operations in the six
months ended 2021.
In 2016 the Group disposed of Minera Michilla SA, with the
profit on disposal, along with the results for that year, being
presented on the "Profit for the period from discontinued
operations" line in the income statement. The Group retained
certain residual options over the Michilla operation, and in
December 2020 the current owner of Michilla paid the Group $10.0
million in order to extinguish those options, resulting in a
post-tax gain for the Group of $7.3 million. Consistent with the
original presentation in 2016, this gain was reflected on the
"Profit for the period from discontinued operations" line in the
income statement for the year ended 2020.
11. Earnings per share
Six months Six months Year
ended 30.06.2021 ended 30.06.2020 ended 31.12.2020
$m $m $m
Profit for the period attributable
to equity holders of the Company (exc.
exceptional items) 665.3 175.4 546.6
Exceptional Items - (40.2) (40.2)
Less profit from discontinuing operations (7.3)
Profit for the period attributable
to equity holders of the Company (inc.
exceptional items) 665.3 135.2 499.1
Number Number Number
Ordinary shares in issue throughout
each period 985,856,695 985,856,695 985,856,695
Six months Six months Year
ended 30.06.2021 ended 30.06.2020 ended 31.12.2020
US cent US cent US cent
Basic earnings per share (exc. exceptional
items) 67.5 17.8 54.7
Basic earnings per share (exceptional
items) - (4.1) (4.1)
Basic earnings per share (inc. exceptional
items) from continuing operations 67.5 13.7 50.6
Basic earnings per share from discontinued
operations - - 0.7
Total continuing and discontinued
operations 67.5 13.7 51.3
Basic earnings per share are calculated as profit after tax and
non-controlling interests, based on 985,856,695 (2020: 985,856,695)
ordinary shares.
There was no potential dilution of earnings per share in either
year set out above, and therefore diluted earnings per share did
not differ from basic earnings per share as disclosed above.
12. Dividends
The Board has declared an interim dividend of 23.6 cents per
ordinary share for the 2021 half year (2020 half year - 6.2 cents
per ordinary share). Dividends are declared and paid gross.
Dividends actually paid in the period and recognised as a deduction
from net equity under IFRS were 48.5 cents per ordinary share (2020
half year - 7.1 cents per ordinary share), representing the final
dividend declared in respect of the previous year.
The interim dividend will be paid on 1 October 2021 to ordinary
shareholders that are on the register at the close of business on 3
September 2021. Shareholders can elect (on or before 6 September
2021) to receive this interim dividend in US Dollars, Pounds
Sterling or Euro, and the exchange rate to be applied to interim
dividends to be paid in Pounds Sterling or Euro will be set as soon
as reasonably practicable after that date (which is currently
anticipated to be on 9 September 2021). Further details of the
currency election timing and process (including the default
currency of payment) are available on the Antofagasta plc website
(www.antofagasta.co.uk) or from the Company's registrar,
Computershare Investor Services PLC on +44 870 702 0159.
13. Intangible asset
At 30.06.2021 At 30.06.2020 At 31.12.2020
$m $m $m
Balance at the beginning
of the year 150.1 150.1 150.1
Balance at the end
of the period 150.1 150.1 150.1
The $150.1 million intangible asset reflects the value of Twin
Metals' mining licences assets included within the corporate
segment. These assets are classified as intangible assets as
construction of the related mining operation has not yet commenced.
When construction commences the licences will be transferred from
intangible assets to the mining properties category within
property, plant and equipment. Depreciation of these mining
licences, along with the construction costs of the related mining
operation, will commence when the operation is capable of
commercial production.
14. Property, plant and equipment
Railway
and other At
Mining transport 30.06.2021 At 30.06.2020 At 31.12.2020
$m $m $m $m $m
Balance at the beginning of
the year 9,582.7 269.2 9,851.9 9,556.7 9,556.7
Additions 885.1 10.6 895.7 574.2 1,348.3
Additions - depreciation capitalised 37.8 - 37.8 33.9 67.8
Capitalisation of critical
spare parts - 0.4 0.4 - 10.2
Capitalisation of interest 10.9 - 10.9 - 8.0
Adjustment to capitalised
decommissioning provisions (46.4) - (46.4) - 59.4
Depreciation (467.5) (15.0) (482.5) (495.3) (1,048.7)
Depreciation capitalised in
PP&E (37.8) - (37.8) (33.9) (67.8)
Depreciation capitalised in
inventories (9.8) - (9.8) (40.9) (74.8)
Asset disposals (1.8) (1.0) (2.8) (1.4) (7.2)
Balance at the end of the
period 9,953.2 264.2 10,217.4 9,593.3 9,851.9
During the six months ended 30 June 2021 $47.6 million of
depreciation in respect of assets relating to Los Pelambres,
Centinela and Antucoya has been capitalised within property, plant
and equipment or inventories, and accordingly is excluded from the
depreciation charge recorded in the income statement as shown in
Note 5(a) (six
months ended 30 June 2020- $74.8 million; year ended 31 December 2020 - $142.6 million).
At 30 June 2021 the Group had entered into contractual
commitments for the acquisition of property, plant and equipment
amounting to $1,170.4 million (30 June 2020 - $924.4 million; 31
December 2020 - $849.5 million).
There have been no indicators of potential impairments during
the period to 30 June 2021, and accordingly no impairment reviews
have been performed as at 30 June 2021.
Depreciation capitalised in property, plant and equipment of
$37.8 million related to the depreciation of assets used in mine
development (operating stripping) at Centinela, Los Pelambres and
Antucoya (30 June 2020 - $33.9 million; 31 December 2020 - $67.8
million).
15. Investment in associates and joint ventures
Minera Tethyan At At At
ATI(ii) Zaldívar(iii) Copper(iv) 30.06.2021 30.06.2020 31.12.2020
$m $m $m $m $m $m
Balance at the
beginning
of the year 5.6 909.0 - 914.6 1,024.8 1,024.8
Obligations on behalf
of JV - - (1.1) (1.1) (1.8) (1.8)
Capital contributions - - 5.5 5.5 25.3 31.1
Impairment of
investment
in associate (I) - - - - (80.8) (80.8)
Share of profit/(loss)
before tax - 35.7 (5.1) 30.6 (0.8) 12.4
Share of tax - (11.2) - (11.2) (1.5) (7.2)
Share of income/(loss)
from associate - 24.5 (5.1) 19.4 (2.3) 5.2
Dividends received - - - - - (65.0)
Balance at the end of
the period 5.6 933.5 - 939.1 967.9 914.6
Obligations on behalf
of JV - - (0.7) (0.7) (2.7) (1.1)
Minera Tethyan At At At
ATI Zaldívar Copper 30.06.2021 30.06.2020 31.12.2020
$m $m $m $m $m $m
Net share of profit
from associates and
joint ventures - 24.5 (5.1) 19.4 (2.3) 5.1
The investments which are included in the $938.4 million balance
at 30 June 2021 are set out below:
Investment in associates
(i) On 31 March 2020 the Group agreed to dispose of its 40%
interest in Hornitos coal-fired power station to ENGIE Energía
Chile S.A. ("ENGIE"), the owner of the remaining 60% interest. This
was part of the value accretive renegotiation of Centinela's power
purchase agreement which as a result will be wholly supplied from
lower cost renewable sources from 2022. Under the terms of the
agreement the Group will dispose of its investment to Engie at the
end of 2021 for a nominal consideration, and has not been entitled
to receive any further dividend income from Hornitos from the date
of the agreement. Accordingly, the Group no longer had any
effective economic interest in the results or assets of Hornitos
from 31 March 2020 onwards, and therefore recognised an impairment
of $80.8 million in respect of its investment in associate balance
during 2020, and no longer recognises any share of Hornitos'
results. The post-tax impact of the provision was $61.1 million, of
which $40.2 million was attributable to the equity owners of the
Company.
(ii) The Group's 30% interest in ATI, which operates a
concession to manage installations in the port of Antofagasta.
Investment in joint ventures
(iii) The Group's 50% interest in Minera Zaldívar SpA
("Zaldívar"). During 2020 the Group has received dividends of $65.0
million from Zaldívar and fully paid at January 2021.
(iv) The Group's 50% interest in Tethyan Copper Company Limited
("Tethyan"), which is a joint venture with Barrick Gold Corporation
in respect of the Reko Diq project in Pakistan. Tethyan has been
pursuing arbitration claims against the Islamic Republic of
Pakistan ("Pakistan") following the unlawful denial of a mining
lease for the project in 2011. Details in respect of the
arbitration are set out in Note 22.
As the net carrying value of the interest in Tethyan is negative
it is included within non-current liabilities, as the Group is
liable for its share of the joint venture's obligations.
Summarised financial information for the associates at June 2021
is as follows:
ATI Total Total Total
30.06.2021 30.06.2021 30.06.2020 31.12.2020
$m $m $m $m
Cash and cash equivalents 1.1 1.1 1.1 0.2
Current assets 11.2 11.2 13.6 11.3
Non-current assets 104.0 104.0 112.2 108.2
Current liabilities (18.2) (18.2) (16.1) (19.9)
Non-current liabilities 82.0 82.0 (91.8) (83.5)
Revenue 23.3 23.3 23.4 40.4
Profit/(loss) from
continuing operations - - 0.7 (1.9)
Summarised financial information for the joint ventures at June
2021 is as follows:
Minera Tethyan Total Total Total
Zaldívar Copper
30.06.2021 30.06.2021 30.06.2021 30.06.2020 31.12.2020
$m $m $m $m $m
Cash and cash equivalents 272.1 7.2 279.3 170.8 285.2
Current assets 702.6 0.1 702.7 603 677.2
Non-current assets 1,834.8 - 1,834.8 1,814.9 1,856.3
Current liabilities (200.9) (9.0) (209.9) (105.2) (296.2)
Non-current liabilities (707.2) (0.2) (707.4) (534.4) (670.5)
Revenue 394.6 - 394.6 302.3 599.3
Profit/(loss) after
tax 48.9 (10.3) 38.6 (5.1) 11.4
Other comprehensive - - -
expense - -
Total comprehensive
income/(expense) 48.9 (10.3) 38.6 (5.1) 11.4
The above summarised financial information is based on the
amounts included in the IFRS Financial Statements of the associate
or joint venture (ie. 100% of the results or balances of the
associate or joint venture, rather than the Group's proportionate
share), after the Group's fair value adjustments.
16. Borrowings and leases
At 30.06.2021 At 30.06.2020 At 31.12.2020
$m $m $m
Los Pelambres
Senior loan (1,185.2) (666.4) (1,288.1)
Leases (77.5) (95.2) (91.4)
Centinela
Senior loan (441.7) (495.9) (496.5)
Subordinated debt (177.2) (212.4) (203.0)
Leases (79.6) (76.3) (78.0)
Antucoya
Senior loan (228.7) (293.5) (261.1)
Subordinated debt (195.3) (187.5) (191.5)
Short-term loan (75.0) (75.0) (75.0)
Leases (27.8) (23.9) (19.9)
Corporate and other items
Senior loan (497.0) (499.6) (496.6)
Bond (495.7) - (495.6)
Leases (23.6) (16.9) (18.6)
Railway and other transport
services
Senior loan (31.2) (41.4) (36.5)
Leases (0.1) (0.6) (0.3)
Preference shares (3.0) (2.5) (2.7)
Total (3,538.6) (2,687.1) (3,754.8)
At 30 June 2021 $682.3 million (30 June 2020 - $178.5 million;
31 December 2020 - $673.1 million) of the borrowings has fixed rate
interest and $2,856.3 million (30 June 2020 - $2,508.6 million; 31
December 2020 - $2,554.9 million) has floating rate interest. The
Group periodically enters into interest rate derivative contracts
to manage its exposure to interest rates.
During the six months ended 30 June 2020 Antucoya made a $210
million repayment of the subordinated debt due to Marubeni which
was replaced with equity.
17. Reconciliation of profit before tax to net cash inflow from
operating activities
At At 30.06.2020 At
30.06.2021 31.12.2020
$m $m $m
Profit before tax 1,783.5 387.5 1,413.1
Depreciation and amortisation 482.5 495.3 1,048.7
Net loss on disposals 0.6 1.3 6.3
Net finance expense 36.5 2.7 103.4
Net share of results from associates
and joint ventures (exc. exceptional
items) (19.4) 2.3 (5.1)
Impairment of investment in associate - 80.8 80.8
(Increase)/decrease in inventories (19.0) 5.4 (13.6)
Decrease/(Increase) in debtors 292.5 106.2 (259.9)
(Decrease)/increase in creditors (85.9) (165.1) 31.0
(Decrease)/Increase in provisions (10.8) (9.5) 26.4
Cash flow from operations 2,460.5 906.9 2,431.1
18. Analysis of changes in net cash
Fair Amortisation
Cash value New of finance Capitalisation
At 31.12.2020 flows losses leases costs of interest Other Reclassification Exchange At 30.06.2021
$m $m $m $m $m $m $m $m $m $m
Cash and
cash
equivalents 1,246.8 20.5 - - - - - - (7.3) 1,260.0
Liquid
investments 2,426.0 555.4 (1.5) - - - - - - 2,979.9
Total 3,672.8 575.9 (1.5) - - - - - (7.3) 4,239.9
Borrowings
due within
one year (529.8) 228.5 - - - - (2.1) (164.3) - (467.7)
Borrowings
due after
one year (3,013.8) - - - (0.9) (8.8) (0.1) 164.3 - (2,859.3)
Leases due
within one
year (73.6) 9.0 - - - - (0.8) (14.6) - (80.0)
Leases due
after one
year (134.9) 33.7 - (46.3) - - 1.2 14.6 3.1 (128.6)
Preference
shares (2.7) - - - - - - - (0.3) (3.0)
Total
borrowings (3,754.8) 271.2 - (46.3) (0.9) (8.8) (1.8) - 2.8 (3,538.6)
Net
(debt)/cash (82.0) 847.1 (1.5) (46.3) (0.9) (8.8) (1.8) - (4.5) 701.3
Net cash / (debt)
Net debt at the end of each period was as follows:
At 30.06.2021 At 30.06.2020 At 31.12.2020
$m $m $m
Cash, cash equivalents and liquid
investments 4,239.9 2,367.6 3,672.8
Total borrowings (3,538.6) (2,687.1) (3,754.8)
Net cash / (debt) 701.3 (319.5) (82.0)
19. Litigation and contingent liabilities
The Group is subject from time to time to legal proceedings,
claims, complaints and investigations arising out of the ordinary
course of business. The Group cannot predict the outcome of
individual legal actions or claims or complaints or investigations.
As a result, the Group may become subject to liabilities that could
affect our business, financial position and reputation. Litigation
is inherently unpredictable and large judgments may at times occur.
The Group may incur, in the future, judgments or enter into
settlements of claims that could lead to material cash outflows.
The Group considers that no material loss to the Group is expected
to result from the legal proceedings, claims, complaints and
investigations that the Group is currently subject to. Provision is
made for all liabilities that are expected to materialise through
legal claims against the Group.
20. Tethyan arbitration award
In July 2019 the World Bank Group's International Centre for
Settlement of Investment Disputes ("ICSID") awarded $5.84 billion
in damages (compensation and accumulated interest as at the date of
the award) to Tethyan Copper Company Pty Limited ("Tethyan"), the
joint venture held equally by the Company and Barrick Gold
Corporation, in relation to an arbitration claim filed against the
Islamic Republic of Pakistan ("Pakistan") following the unlawful
denial of a mining lease for the Reko Diq project in Pakistan in
2011.
Damages include compensation of $4.087 billion by reference to
the fair market value of the Reko Diq project at the time of the
mining lease denial, and interest until the date of the award of
$1.753 billion. The Tribunal also awarded Tethyan just under $62
million in costs incurred in enforcing its rights. Compound
interest applies to the compensation and cost awards from 12 July
2019 at a rate of US Prime +1% per annum until the award is
paid.
Later in 2019, Pakistan requested ICSID to annul the award,
triggering a provisional stay of enforcement of the award under the
ICSID Convention. In March 2020, ICSID appointed a committee to
consider Pakistan's request for annulment and whether the
provisional stay of enforcement should continue for the duration of
the annulment proceedings. The Committee issued a decision
partially terminating the stay of enforcement in October,
permitting Tethyan to enforce 50% of the award plus accrued
interest on the condition that any amounts collected through
enforcement of the award must be put into escrow and returned if
the award is annulled. Tethyan has resumed proceedings to enforce
the award in accordance with the conditions set by the Committee.
The Committee is expected to issue a decision on Pakistan's
annulment application within the next one to two years.
On 14 March 2021, Pakistan applied to ICSID for revision of the
award, triggering another provisional stay of enforcement of the
award under the ICSID Convention. On 5 April 2021, the ICSID
tribunal that issued the award was reconstituted to consider
Pakistan's revision application. Tethyan has filed an application
to dismiss Pakistan's revision application as manifestly meritless.
Whether the provisional stay of enforcement remains in place for
the duration of the revision proceedings is being litigated before
the ICSID tribunal.
As at 12 July 2021, the outstanding award amount was
approximately $6.36 billion.
It is expected that the proceeds of the award will only be
recognised in Antofagasta's financial statements once they are
received by the Company.
21. Related party transactions
a) Joint ventures
The Group has a 50% interest in Tethyan Copper Company Limited
("Tethyan"), which is a joint venture with Barrick Gold Corporation
over Tethyan's mineral interests in Pakistan. During the six months
ended 30 June 2021 the Group made a contribution to Tethyan of $5.5
million (six months ended 30 June 2020 - $1.4 million; year ended
31 December 2020 - $7.2 million).
The Group has a 50% interest in Minera Zaldívar, which is a
joint venture with Barrick Gold Corporation. During the six months
ended 30 June 2021 the Group has received dividends from Minera
Zaldívar of nil (six months ended 30 June 2020 - nil; year ended 31
December 2020 - $65.0 million).
b) Associates
As explained in Note 3, on 31 March 2020 the Group agreed to
dispose of its 40% interest in Hornitos coal-fired power station to
ENGIE Energía Chile S.A. ("ENGIE"), the owner of the remaining 60%
interest. During 2020 the Group paid $128.2 million (2019 - $187.7
million) to Inversiones Hornitos in relation to the energy supply
contract at Centinela.
c) Other related parties
The ultimate parent company of the Group is Metalinvest
Establishment, which is controlled by the E. Abaroa Foundation, in
which members of the Luksic family are interested. The Company's
subsidiaries, in the ordinary course of business, enter into
various sale and purchase transactions with companies also
controlled by members of the Luksic family, including Banco de
Chile S.A., BanChile Corredores de Bolsa S.A., ENEX S.A. and
Compañía de Inversiones Adriático S.A.. These transactions were all
on normal commercial terms.
The Group holds a 51% interest in Antomin 2 Limited ("Antomin
2") and Antomin Investors Limited ("Antomin Investors"), which own
a number of copper exploration properties. The Group originally
acquired its 51% interest in these properties for a nominal
consideration from Mineralinvest Establishment, a company
controlled by the Luksic family, which continues to hold the
remaining 49% of Antomin 2 and Antomin Investors. The Group is
responsible for any exploration costs relating to the properties
held by these entities. During the six months ended t he Group
incurred $0.1 million (30 June 2020 - $0.1 million; 31 December
2020 - $0.1 million) of exploration costs at these properties.
RESPONSIBILITY STATEMENT
We confirm to the best of our knowledge:
a) the condensed set of financial statements has been prepared
in accordance with IAS 34 Interim Financial Reporting;
b) the half yearly financial report includes a fair review of
the information required by DTR 4.2.7R (being an indication of
important events that have occurred during the first six months of
the financial year, and their impact on the half yearly financial
report and a description of the principal risks and uncertainties
for the remaining six months of the financial year); and
c) the half yearly financial report includes a fair review of
the information required by DTR 4.2.8R (being disclosure of related
party transactions that have taken place in the first six months of
the financial year and that have materially affected the financial
position or the performance of the Group during that period and any
changes in the related party transactions described in the last
annual report that could have a material effect on the financial
position or performance of the Group in the first six months of the
current financial year).
By order of the Board
Jean-Paul Luksic Tony Jensen
Chairman Director
Independent review report to Antofagasta plc
Report on the condensed consolidated interim financial
statements
Our conclusion
We have reviewed Antofagasta plc's condensed consolidated
interim financial statements (the "interim financial statements")
in the half yearly financial report of Antofagasta plc for the six
month period ended 30 June 2021 (the "period").
Based on our review, nothing has come to our attention that
causes us to believe that the interim financial statements are not
prepared, in all material respects, in accordance with UK adopted
International Accounting Standard 34, 'Interim Financial Reporting'
and the Disclosure Guidance and Transparency Rules sourcebook of
the United Kingdom's Financial Conduct Authority.
What we have reviewed
The interim financial statements comprise:
-- the consolidated balance sheet as at 30 June 2021;
-- the consolidated income statement and consolidated statement
of comprehensive income for the period then ended;
-- the consolidated cash flow statement for the period then ended;
-- the consolidated statement of changes in equity for the period then ended; and
-- the explanatory notes to the interim financial statements.
The interim financial statements included in the half yearly
financial report of Antofagasta plc have been prepared in
accordance with UK adopted International Accounting Standard 34,
'Interim Financial Reporting' and the Disclosure Guidance and
Transparency Rules sourcebook of the United Kingdom's Financial
Conduct Authority.
Responsibilities for the interim financial statements and the
review
Our responsibilities and those of the directors
The half yearly financial report, including the interim
financial statements, is the responsibility of, and has been
approved by the directors. The directors are responsible for
preparing the half yearly financial report in accordance with the
Disclosure Guidance and Transparency Rules sourcebook of the United
Kingdom's Financial Conduct Authority.
Our responsibility is to express a conclusion on the interim
financial statements in the half yearly financial report based on
our review. This report, including the conclusion, has been
prepared for and only for the company for the purpose of complying
with the Disclosure Guidance and Transparency Rules sourcebook of
the United Kingdom's Financial Conduct Authority and for no other
purpose. We do not, in giving this conclusion, accept or assume
responsibility for any other purpose or to any other person to whom
this report is shown or into whose hands it may come save where
expressly agreed by our prior consent in writing.
What a review of interim financial statements involves
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410, 'Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity' issued by the Auditing Practices Board for use in
the United Kingdom. A review of interim financial information
consists of making enquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other
review procedures.
A review is substantially less in scope than an audit conducted
in accordance with International Standards on Auditing (UK) and,
consequently, does not enable us to obtain assurance that we would
become aware of all significant matters that might be identified in
an audit. Accordingly, we do not express an audit opinion.
We have read the other information contained in the half yearly
financial report and considered whether it contains any apparent
misstatements or material inconsistencies with the information in
the interim financial statements.
PricewaterhouseCoopers LLP
Chartered Accountants
London
18 August 2021
Alternative performance measures (not subject to audit or
review)
This preliminary results announcement includes a number of
alternative performance measures, in addition to IFRS amounts.
These measures are included because they are considered to provide
relevant and useful additional information to users of the
accounts. Set out below are definitions of these alternative
performance measures, explanations as to why they are considered to
be relevant and useful, and reconciliations to the IFRS
figures.
a) Underlying earnings per share
Underlying earnings per share is earnings per share from
continuing operations, excluding exceptional items. This measure is
reconciled to earnings per share from continuing and discontinued
operations (including exceptional items) on the face of the income
statement. This measure is considered to be useful as it provides
an indication of the earnings generated by the on-going businesses
of the Group, excluding the impact of exceptional items which are
non-regular or non-operating in nature.
b) EBITDA
EBITDA refers to Earnings Before Interest, Tax, Depreciation and
Amortisation. EBITDA is calculated by adding back depreciation,
amortisation, profit or loss on disposals and impairment charges to
operating profit. This comprises 100% of the EBITDA from the
Group's subsidiaries, and the Group's proportional share of the
EBITDA of its associates and joint ventures.
EBITDA is considered to provide a useful and comparable
indication of the current operational earnings performance of the
business, excluding the impact of the historic cost of property,
plant & equipment or the particular financing structure adopted
by the business.
For the six months ended 30 June 2021
Los Centinela Antucoya Zaldívar Exploration Corporate Mining Railway Total
Pelambres and and other and other
evaluation items transport
services
$m $m $m $m $m $m $m $m $m
Operating
profit/(loss) 1,214.4 549.0 112.1 - (52.3) (40.8) 1,782.4 18.2 1,800.6
Depreciation
and
amortisation 132.5 282.5 46.9 - - 5.6 467.5 15.0 482.5
Profit on
disposals - - - - - - - 0.6 0.6
EBITDA from
subsidiaries 1,346.9 831.5 159.0 - (52.3) (35.2) 2,249.9 33.8 2,283.7
Proportional
share
of the EBITDA
from
associates
and JVs - - - 76.4 - (5.2) 71.2 2.2 73.4
Total EBITDA 1,346.9 831.5 159.0 76.4 (52.3) (40.4) 2,321.1 36.0 2,357.1
For the six months ended 30 June 2020
Los Centinela Antucoya Zaldívar Exploration Corporate Mining Railway Total
Pelambres and and other and other
evaluation items transport
services
$m $m $m $m $m $m $m $m $m
Operating
profit/(loss) 512.3 8.2 16.1 - (44.2) (29.3) 463.1 10.2 473.3
Depreciation
and
amortisation 126.2 301.4 48.6 - - 3.8 480.0 15.3 495.3
Profit on
disposals 0.6 - - - - - 0.6 0.7 1.3
EBITDA from
subsidiaries 639.1 309.6 64.7 - (44.2) (25.5) 943.7 26.2 969.9
Proportional
share of the
EBITDA from
associates
and JVs - - - 42.8 - (2.3) 40.5 2.4 42.9
Total EBITDA 639.1 309.6 64.7 42.8 (44.2) (27.8) 984.2 28.6 1,012.8
For the year ended 31 December 2020
Los Centinela Antucoya Zaldívar Exploration Corporate Mining Railway Total
Pelambres and and and other
evaluation other transport
items services
$m $m $m $m $m $m $m $m $m
Operating
profit/(loss) 1,407.9 247.0 71.2 - (85.1) (74.0) 1,567.0 25.2 1,592.2
Depreciation
and
amortisation 252.6 662.9 94.6 - - 7.8 1,017.9 30.8 1,048.7
Profit on
disposals 2.5 1.8 - - - - 4.3 2.0 6.3
EBITDA from
subsidiaries 1,663.0 911.7 165.8 - (85.1) (66.2) 2,589.2 58.0 2,647.2
Proportional
share
of the EBITDA
from
associates
and JVs - - - 95.5 - (6.5) 89.0 3.0 92.0
Total EBITDA 1,663.0 911.7 165.8 95.5 (85.1) (72.7) 2,678.2 61.0 2,739.2
c) Net Earnings
Net Earnings represent profit for the period attributable to the
owners of the parent.
d) Cash costs
Cash costs are a measure of the cost of operational production
expressed in terms of cents per pound of payable copper
produced.
This is considered to be a useful and relevant measure as it is
a standard industry measure applied by most major copper mining
companies which reflects the direct costs involved in producing
each pound of copper. It therefore allows a straightforward
comparison of the unit production cost of different mines, and
allows an assessment of the position of a mine on the industry cost
curve. It also provides a simple indication of the profitability of
a mine when compared against the price of copper (per lb).
At 30.06.2021 At 30.06.2020 At 31.12.2020
Reconciliation of cash costs excluding tolling
charges and by-product revenue:
Total Group operating costs (Note 5) ($m) 1,790.4 1,665.5 3,537.1
Zaldívar operating costs 112.1 100.6 190.9
Less:
Total - Depreciation and amortisation (Note
5) ($m) (482.5) (495.3) (1,048.7)
Total - Loss on disposal (Note 5) ($m) (0.6) (1.3) (6.3)
Elimination of non-mining operations
Corporate and other items - Total operating
cost (Note 5) ($m) (35.0) (25.5) (64.3)
Exploration and evaluation - Total operating
cost (Note 5) ($m) (52.3) (44.2) (85.1)
Railway and other transport services - Total
operating cost (Note 5) ($m) (52.5) (43.4) (91.4)
Closure provision and other expenses not
included within cash costs ($m) (47.6) (31.2) (105.8)
Inventories Variations 50.8 (0.6) 11.1
Total cost relevant to the mining operations'
cash costs ($m) 1,282.8 1,124.6 2,337.5
Copper production volumes (tonnes) 361,480 371,730 733,920
Cash costs excluding tolling charges and
by-product revenue ($/tonne) 3,549 3,025 3,185
Cash costs excluding tolling charges and
by-product revenue ($/lb) 1.61 1.37 1.43
d) Cash costs (continued)
At 30.06.2021 At 30.06.2020 At 31.12.2020
Reconciliation of cash costs before deducting
by-products:
Tolling charges - copper and subproducts-
Los Pelambres (Note 5) 56.2 62.3 113.6
Tolling charges - copper and subproducts-
Centinela (Note 5) 30.9 31.3 68.8
Tolling charges - copper - total 87.1 93.6 182.4
Copper production volumes (tonnes) 361,480 371,730 733,920
Tolling charges ($/tonne) 241.0 251.8 248.5
Tolling charges ($/lb) 0.12 0.14 0.13
Cash costs excluding tolling charges and
by-product revenue ($/lb) 1.61 1.37 1.43
Tolling charges ($/lb) 0.12 0.13 0.13
Cash costs before deducting by-products ($/lb) 1.73 1.50 1.56
At 30.06.2021 At 30.06.2020 At 31.12.2020
Reconciliation of cash costs (net of by-product
credits):
Gold revenue - Los Pelambres (Note 5) ($m) 45.6 46.8 106.4
Gold revenue - Centinela (Note 5) ($m) 138.6 134.8 251.3
Molybdenum revenue - Los Pelambres (Note
5) ($m) 174.2 74.7 181.8
Molybdenum revenue - Centinela (Note 5) ($m) 27.2 1.3 27.7
Silver revenue - Los Pelambres (Note 5) ($m) 25.9 15.3 43.3
Silver revenue - Centinela (Note 5) ($m) 16.3 9.8 21.2
Total by-product revenue ($m) 427.8 282.7 631.7
Copper production volumes (tonnes) 361,480 371,730 733,920
By-product revenue ($/tonne) 1,183.5 760.5 860.7
By-product revenue ($/lb) 0.59 0.38 0.42
Cash costs before deducting by-products (S/lb) 1.73 1.50 1.56
By-product revenue ($/lb) (0.59) (0.38) (0.42)
Cash costs (net of by-products) ($/lb) 1.14 1.12 1.14
The totals in the tables above may include some small apparent
differences as the specific individual figures have not been
rounded.
e) Attributable cash, cash equivalents & liquid investments, borrowings and net debt
Attributable cash, cash equivalents & liquid investments,
borrowings and net debt reflects the proportion of those balances
which are attributable to the equity holders of the Company, after
deducting the proportion attributable to the non-controlling
interests in the Group's subsidiaries.
This is considered to be a useful and relevant measure as the
majority of the Group's cash tends to be held at the corporate
level and therefore 100% attributable to the equity holders of the
Company, whereas the majority of the Group's borrowings tend to be
at the level of the individual operations, and hence only a
proportion is attributable to the equity holders of the
Company.
June June
2021 2020
Total Attributable Attributable Total Attributable Attributable
amount share amount amount share amount
$m $m $m $m
Cash, cash equivalents
and liquid investments:
Los Pelambres 1,381.1 60% 828.7 677.2 60% 406.3
Centinela 1,176.0 70% 823.2 572.7 70% 400.9
Antucoya 232.8 70% 163.0 108.3 70% 75.8
Corporate 1,400.1 100% 1,400.1 985.8 100% 985.8
Railway and other transport
services 49.9 100% 49.9 23.6 100% 23.6
Total 4,239.9 3,264.9 2,367.6 1,892.4
Borrowings:
Los Pelambres (Note 17) (1,262.7) 60% (757.6) (761.6) 60% (456.9)
Centinela (Note 17) (698.5) 70% (489.0) (784.6) 70% (549.3)
Antucoya (Note 17) (526.8) 70% (368.8) (579.9) 70% (405.9)
Corporate (Note 17) (1,019.3) 100% (1,019.3) (519.0) 100% (519.0)
Railway and other transport
services (Note 17) (31.3) 100% (31.3) (42.0) 100% (42.0)
Total (Note 17) (3,538.6) (2,666.0) (2,687.1) (1,973.1)
Net debt 701.3 598.9 (319.5) (80.7)
22. Production and Sales Statistics (not subject to audit or
review)
a) Production and sales volumes for copper, gold and molybdenum
Production Sales
Six months Six months
Six months ended Year Six months ended Year
ended 30.06.2021 30.06.2020 ended 31.12.2020 ended 30.06.2021 30.06.2020 ended 31.12.2020
Copper 000 tonnes 000 tonnes 000 tonnes 000 tonnes 000 tonnes 000 tonnes
Los Pelambres 169.3 183.2 359.6 165.5 186.8 366.0
Centinela 132.1 121.6 246.8 119.4 119.5 247.7
Antucoya 39.5 40.4 79.3 40.1 40.5 76.5
Zaldívar 20.6 26.5 48.2 21.1 27.4 48.3
Group total 361.5 371.7 733.9 346.1 374.2 738.5
Gold 000 ounces 000 ounces 000 ounces 000 ounces 000 ounces 000 ounces
Los Pelambres 28.0 29.1 60.4 25.8 27.7 58.4
Centinela 92.5 82.0 143.7 77.9 80.7 141.2
Group total 120.5 111.1 204.1 103.7 108.4 199.6
Molybdenum 000 tonnes 000 tonnes 000 tonnes 000 tonnes 000 tonnes 000 tonnes
Los Pelambres 5.1 5.2 10.9 4.9 4.6 10.8
Centinela 0.7 0.3 1.7 0.8 0.1 1.7
Group total 5.8 5.5 12.6 5.7 4.7 12.5
Silver 000 ounces 000 ounces 000 ounces 000 ounces 000 ounces 000 ounces
Los Pelambres 1,006.0 997.4 2,073.9 960.8 962.8 2,020.3
Centinela 693.0 655.5 1,118.4 609.2 624.4 1,064.3
Group total 1,699.0 1,652.9 3,192.3 1,570.0 1,587.2 3,084.6
b) Cash costs per pound of copper produced and realised prices
per pound of copper and molybdenum sold
Cash costs Realised prices
Six Six
Six months months Year Six months months Year
ended ended ended ended ended ended
30.06.2021 30.06.2020 31.12.2020 30.06.2021 30.06.2020 31.12.2020
$/lb $/lb $/lb $/lb $/lb $/lb
Copper
Los Pelambres 0.83 0.80 0.81 4.63 2.46 3.02
Centinela 1.08 1.26 1.27 4.33 2.45 2.95
Antucoya 2.04 1.73 1.82 3.80 2.49 2.85
Zaldivar (attributable
basis - 50%) 2.46 1.72 1.80 - - -
Group weighted average
(net of by-products) 1.14 1.12 1.14 4.42 2.46 2.98
Group weighted average
(before deducting by-products) 1.73 1.51 1.57
Group weighted average
(before deducting by-products
and excluding tolling
charges from concentrate) 1.61 1.37 1.43
Cash costs at Los Pelambres
comprise:
On-site and shipping
costs 1.36 1.01 1.10
Tolling charges for concentrates 0.15 0.19 0.18
Cash costs before deducting
by-product credits 1.51 1.20 1.27
By-product credits (principally
molybdenum) (0.69) (0.41) (0.46)
Cash costs (net of by-product
credits) 0.83 0.80 0.81
Cash costs at Centinela
comprise:
On-site and shipping
costs 1.68 1.70 1.71
Tolling charges for concentrates 0.12 0.14 0.14
Cash costs before deducting
by-product credits 1.80 1.84 1.85
By-product credits (principally
gold) (0.72) (0.57) (0.58)
Cash costs (net of by-product
credits) 1.08 1.26 1.27
LME average copper price 4.13 2.49 2.80
Gold $/oz $/oz $/oz
Los Pelambres 1,769 1,693 1,827
Centinela 1,779 1,675 1,784
Group weighted average 1,776 1,680 1,797
Market average price 1,808 1,647 1,770
Molybdenum $/lb $/lb $/lb
Los Pelambres 16.0 8.7 8.8
Centinela 16.2 8.4 8.9
Group weighted average 16.1 8.6 8.8
Market average price 12.7 9.0 8.7
Silver $/oz $/oz $/oz
Los Pelambres 27.0 16.2 21.7
Centinela 26.8 16.2 20.4
Group weighted average 26.9 16.2 21.3
Market average price 26.5 16.6 20.5
Notes to the production and sales statistics
(i) For the Group's subsidiaries the production and sales
figures reflect the total amounts produced and sold by the mine,
not the Group's share of each mine. The Group owns 60% of Los
Pelambres, 70% of Centinela and 70% of Antucoya. For the Zaldívar
joint venture the production and sales figures reflect the Group's
proportional 50% share.
(ii) Los Pelambres produces copper and molybdenum concentrates,
Centinela produces copper concentrate and copper cathodes and
Antucoya and Zaldívar produce copper cathodes. The figures for Los
Pelambres and Centinela are expressed in terms of payable metal
contained in concentrate and in cathodes. Los Pelambres and
Centinela are also credited for the gold and silver contained in
the copper concentrate sold. Antucoya and Z aldívar produce
cathodes with no by-products.
(iii) Cash costs are a measure of the cost of operational
production expressed in terms of cents per pound of payable copper
produced. Cash costs are stated net of by-product credits and
include tolling charges for concentrates at Los Pelambres and
Centinela. Cash costs exclude depreciation, financial income and
expenses, hedging gains and losses, exchange gains and losses and
corporate tax for all four operations .
(iv) Realised copper prices are determined by comparing revenue
from copper sales (grossing up for tolling charges for
concentrates) with sales volumes for each mine in the period.
Realised molybdenum and gold prices are calculated on a similar
basis. Realised prices reflect gains and losses on commodity
derivatives, which are included within revenue.
(v) The totals in the tables above may include some small
apparent differences as the specific individual figures have not
been rounded.
(vi) The production information and the cash cost information is
derived from the Group's production report for the second quarter
of 2021, published on 21 July 2021.
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