TIDMANTO
RNS Number : 8179I
Antofagasta PLC
21 April 2022
NEWS RELEASE, 21 APRIL 2022
Q1 2022 PRODUCTION REPORT
PRODUCTION AND COSTS IN LINE WITH GUIDANCE
Antofagasta plc CEO, Iván Arriagada said: "Antofagasta's copper
production of 138,800 tonnes and net cash costs of $1.75/lb in the
first quarter was in line with plan for the period and is
consistent with annual guidance as copper production is expected to
increase quarter-on-quarter during the year. Production reflected
the impact of the ongoing drought at Los Pelambres and the expected
lower grades at Centinela Concentrates.
"The copper, gold and molybdenum markets have been strong
throughout the quarter, and we expect this to continue as
structural supply and demand dynamics support a tight physical
market. In the meantime, we maintain our focus on the safety and
health of our employees and contractors, and on cost control and
disciplined capital allocation.
"With completion of the Los Pelambres desalination plant
expected in H2 2022 and no precipitation until the rainy season,
full year guidance is retained at 660-690,000 tonnes of copper at a
net cash cost of $1.55/lb. Following the completion of the review
of the Los Pelambres Expansion project, total capital expenditure
for the full year is expected to be $1.9 billion, at the top end of
the previously guided range of $1.7-1.9 billion."
HIGHLIGHTS
PRODUCTION
-- Copper production in Q1 2022 at 138,800 tonnes was in line
with guidance and is expected to increase quarter-on-quarter during
the year. Production was 24.2% lower than in the same quarter in
2021 and 22.4% lower than in Q4 2021 mainly due to the expected
temporary reduction in throughput at Los Pelambres because of the
drought and lower grades at Centinela Concentrates. Throughput at
Los Pelambres was 39.9% lower than in Q1 2021 and 27.7% lower than
in Q4 2021, and the grades at Centinela Concentrates were 26.7% and
25.4% lower respectively
-- Gold production was 38,400 ounces in Q1 2022, 35.0% lower
than in the same period in 2021 and 40.8% lower than in 4Q 2021,
mainly due to expected lower grades at Centinela
-- Molybdenum production in the quarter was 2,000 tonnes, a
decrease of 1,000 tonnes compared to the same period in 2021 due to
lower grades and throughput at Los Pelambres, and 100 tonnes lower
than in Q4 2021
CASH COSTS
-- Cash costs before by-product credits in Q1 2022 were
$2.34/lb, in line with expectations and 66c/lb higher than in the
same period last year mainly due to the temporary decrease in
production. Higher input prices, particularly for diesel and
sulphuric acid, and general inflation were largely offset by the
weaker Chilean peso. Compared to the previous quarter, costs
increased by 21.9% on lower copper production due to lower grades
and throughput
-- Net cash costs were $1.75/lb in Q1 2022, compared to $1.16/lb
in Q1 2021 and $1.35/lb in the previous quarter, reflecting the
increase in cash costs before by-product credits, slightly offset
by higher by-product credits
GUIDANCE 2022
-- Guidance for the year is unchanged. Group copper production
for the full year is expected to be 660-690,000 tonnes, reflecting
lower expected grades at Centinela Concentrates and the temporarily
reduced throughput at Los Pelambres. Guidance assumes there is no
precipitation until the rainy season and the desalination plant at
Los Pelambres starts operating in H2 2022. As previously announced,
copper production during the year is expected to be lowest in Q1
and to increase quarter-on-quarter thereafter
-- The drought has continued at Los Pelambres with no
precipitation during the quarter. Strict water management protocols
are in place to optimise water usage and mitigate the impact of low
water availability
-- Cash cost guidance before and after by-product credits is
also unchanged at $2.00/lb and $1.55/lb respectively
-- The review of the Los Pelambres Expansion project has been
completed and Group capital expenditure for the year is expected to
be $1.9 billion. This is at the top end of the original guidance
range of $1.7-1.9 billion
GROWTH PROJECTS UPDATE
-- The Company is making progress on unlocking the embedded
growth options in its portfolio with identified key brownfield
developments and incremental growth within its asset portfolio
-- The Los Pelambres Expansion project was 73% complete as at the end of the quarter
-- A detailed review of the project schedule and costs has
recently been completed. The revised capital cost estimate
resulting from the review is $2.2 billion (up from $1.7 billion).
Of this increase, approximately $220 million is related to the
impact of COVID-19 on costs and the construction schedule, $170
million to general inflation, including increased input prices,
wages, labour incentives and logistics costs, with the balance
reflecting other adjustments to implementation plans and an updated
contingency provision
-- The completion schedule remains unchanged with the
desalination plant expected to be completed in H2 2022 and the
expanded concentrator plant in early 2023
-- The Zaldívar Chloride Leach project was completed in January
2022, on schedule and on budget and is now being commissioned
OTHER
-- As announced on 20 March, the Company, Barrick Gold and the
Governments of Pakistan and Balochistan have reached an agreement
in principle on a framework that provides for the reconstitution of
the Reko Diq project, and a pathway for the Company to exit the
Project. If definitive agreements are executed and the conditions
to closing are satisfied, the project will be reconstituted under
Tethyan Copper Company Pty Limited ("TCC"), a joint venture held
equally by the Company and Barrick, and a consortium comprising
various Pakistani state-owned enterprises will acquire shares in
TCC's subsidiary, which will hold the project, for a consideration
of approximately $900 million and the proceeds will be distributed
to the Company in return for its exit from the TCC holding
structure. If the conditions to closing are satisfied during 2022,
the Company would expect to receive those proceeds during 2023
-- Sales volumes during the quarter were affected by poor
weather conditions at the loading ports at the period end, which
delayed shipments into early April
-- The Company has been informed that the Consejo de Defensa del
Estado (CDE), an independent governmental agency responsible for
the defence of the interests of the State of Chile, has filed a
claim against Minera Escondida, the lithium producer Albermarle and
Zaldívar, alleging that their extraction of water from the
Monturaqui-Negrillar-Tilopozo aquifer over the years has impacted
the underground water level. The Company is currently reviewing the
claim
-- The Constitutional Convention is currently debating the
proposed clauses for the new constitution and the final
constitution must be completed by 4 July. The new constitution will
then be voted on in a national referendum on 4 September
-- The draft mining royalty bill is being reviewed by the
Finance Committee of the Senate. However, the new Government is
developing a proposal for broader tax reform and this may impact or
supersede the progress of the royalty bill
GROUP PRODUCTION AND CASH COSTS Year to Date Q1 Q4
----------------------- ------ ------
2022 2021 % 2022 2021 %
------------------------------ ------ ------ ------ ------- ------ ------ -------
Copper production kt 138.8 183.0 (24.2) 138.8 178.9 (22.4)
Copper sales kt 115.9 182.8 (36.6) 115.9 197.2 (41.2)
Gold production koz 38.4 59.1 (35.0) 38.4 64.9 (40.8)
Molybdenum production kt 2.0 3.0 (33.3) 2.0 2.1 (4.8)
------------------------------ ------ ------ ------ ------- ------ ------ -------
Cash costs before by-product
credits (1) $/lb 2.34 1.68 39.3 2.34 1.92 21.9
Net cash costs (1) $/lb 1.75 1.16 50.9 1.75 1.35 29.6
------------------------------ ------ ------ ------ ------- ------ ------ -------
(1) Cash cost is a non-GAAP measure used by the mining industry
to express the cost of production in US dollars per pound of copper
produced.
There will be a Q&A video conference call today at 2:00 pm
(BST) hosted by Iván Arriagada - Chief Executive Officer, Mauricio
Ortiz - Chief Financial Officer and René Aguilar - Vice President
of Corporate Affairs and Sustainability. Participants can register
for the conference call here .
Investors - Media - London
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
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MINING OPERATIONS
Los Pelambres
As expected, Los Pelambres produced 54,100 tonnes of copper in
Q1 2022, 36.3% lower than in the same quarter last year and 27.2%
lower than the previous quarter, mainly driven by the reduced
throughput, which was down 39.9% compared with prior year and 27.7%
with the previous quarter due to water restrictions arising from
the drought. Major maintenance was completed during the quarter and
mine movement and development has remained in line with capacity
which will allow added feed flexibility as throughput recovers with
increased water availability following the start-up of the
desalination plant.
Molybdenum production in Q1 2022 decreased to 1,400 tonnes from
2,600 in Q1 2021, due to lower throughput and molybdenum
grades.
Gold production for the quarter was 8,600 ounces, 5,700 ounces
lower than in the same period last year.
Cash costs before by-product credits in Q1 2022 at $1.98/lb were
35.6% higher than in the same quarter in 2021 due to the decrease
in production and higher input prices, mainly energy and diesel.
Compared to the previous quarter, costs increased by 13.8%, also
due to the decrease in production and higher input prices.
Net cash costs in Q1 2022 increased by 43c/lb to $1.27/lb
compared to Q1 2021 reflecting higher cash costs before by-product
credits partially offset by by-product credits increasing from
62c/lb to 71c/lb on higher molybdenum realised prices partially
offset by lower production. Compared to the previous quarter net
cash costs increased by 13.4%.
The Los Pelambres Expansion project was 73% complete
(engineering, procurement and construction) as at the end of the
quarter.
LOS PELAMBRES Year to Date Q1 Q4
----------------------- ------ ------
2022 2021 % 2022 2021 %
------------------------------ ------ ------ ------ ------- ------ ------ -------
Daily ore throughput kt 98.8 164.5 (39.9) 98.8 136.6 (27.7)
Copper grade % 0.68 0.67 1.5 0.68 0.67 1.5
Copper recovery % 92.3 89.1 3.6 92.3 91.8 0.5
Copper production kt 54.1 84.9 (36.3) 54.1 74.3 (27.2)
Copper sales kt 41.9 80.7 (48.1) 41.9 89.9 (53.4)
------------------------------ ------ ------ ------ ------- ------ ------ -------
Molybdenum grade % 0.016 0.021 (23.8) 0.016 0.018 (11.1)
Molybdenum recovery % 86.5 85.3 1.4 86.5 85.1 1.6
Molybdenum production kt 1.4 2.6 (46.2) 1.4 1.8 (22.2)
Molybdenum sales kt 1.2 2.6 (53.8) 1.2 2.2 (45.5)
Gold grade g/t 0.044 0.048 (8.3) 0.044 0.043 2.3
Gold recovery % 73.5 68.1 7.9 73.5 74.5 (1.3)
Gold production koz 8.6 14.3 (39.9) 8.6 11.8 (27.1)
Gold sales koz 6.4 12.9 (50.4) 6.4 14.2 (54.9)
------------------------------ ------ ------ ------ ------- ------ ------ -------
Cash costs before by-product
credits (1) $/lb 1.98 1.46 35.6 1.98 1.74 13.8
Net cash costs (1) $/lb 1.27 0.84 51.2 1.27 1.12 13.4
------------------------------ ------ ------ ------ ------- ------ ------ -------
(1) Includes tolling charges of $0.16/lb in Q1 2022, $0.15/lb in
Q4 2021, and $0.14/lb Q1 2021
Centinela
Total copper production in Q1 2022 at Centinela was 55,800
tonnes, 16.5% lower than in the same quarter in 2021. Compared to
the previous quarter, copper production decreased by 21.8% on
expected lower grades at Centinela Concentrates and lower
throughput at both Centinela Concentrates and Centinela
Cathodes.
Major maintenance was completed at Centinela Concentrates during
the quarter.
Copper in concentrates production was 32,900 tonnes in Q1 2022,
27.4% lower than in Q1 2021 and 30.6% lower than in the previous
quarter. This decrease was mainly due to expected lower copper
grades of 0.44% compared to 0.60% in Q1 2021, and slightly lower
throughput.
Production of copper in cathodes rose 6.5% compared to Q1 2021.
This was primarily due to expected higher grades and recoveries,
partially offset by lower throughput.
Gold production was 29,800 ounces in Q1 2022, 33.6% lower than
in the same period last year and 43.9% lower than in Q4 2021 as
grades, which are correlated to copper grades, and recoveries
decreased.
Cash costs before by-product credits in Q1 2022 were $2.70/lb,
51.7% higher than in Q1 2021 primarily due to lower production and
higher input costs, particularly for diesel and sulphuric acid.
Compared to the previous quarter costs increased by 35.0% also due
to lower production.
Net cash costs in Q1 2022 were $1.93/lb, 81c/lb higher than in
the same quarter last year reflecting the increase in cash costs
before by-product credits, partly offset by higher by-product
credits of 11c/lb related to increased moly production and higher
realised prices. Compared to the previous quarter net cash costs
increased by 56.9% with by-product credits unchanged.
CENTINELA Year to Date Q1 Q4
----------------------- ------ ------
2022 2021 % 2022 2021 %
------------------------------ ------ ------ ------ ------- ------ ------ -------
CONCENTRATES
Daily ore throughput kt 104.0 106.4 (2.3) 104.0 110.8 (6.1)
Copper grade % 0.44 0.60 (26.7) 0.44 0.59 (25.4)
Copper recovery % 81.4 84.2 (3.3) 81.4 84.9 (4.1)
Copper production kt 32.9 45.3 (27.4) 32.9 47.4 (30.6)
Copper sales kt 22.5 45.1 (50.1) 22.5 50.6 (55.5)
------------------------------ ------ ------ ------ ------- ------ ------ -------
Molybdenum grade % 0.013 0.010 30.0 0.013 0.010 30.0
Molybdenum recovery % 59.7 39.5 51.1 59.7 46.2 29.2
Molybdenum production kt 0.6 0.4 50.0 0.6 0.4 50.0
Molybdenum sales kt 0.4 0.4 0.0 0.4 0.2 100.0
Gold grade g/t 0.15 0.22 (31.8) 0.15 0.25 (40.0)
Gold recovery % 66.7 71.9 (7.2) 66.7 70.4 (5.3)
Gold production koz 29.8 44.9 (33.6) 29.8 53.1 (43.9)
Gold sales koz 22.2 42.6 (47.9) 22.2 54.2 (59.0)
------ ------ ------- ------ ------ -------
CATHODES
Daily ore throughput kt 55.4 56.9 (2.6) 55.4 57.8 (4.2)
Copper grade % 0.65 0.59 10.2 0.65 0.64 1.6
Copper recovery % 67.8 66.4 2.1 67.8 67.4 0.6
Copper production - heap
leach kt 22.1 20.4 8.3 22.1 23.3 (5.2)
Copper production - total
(1) kt 22.9 21.5 6.5 22.9 24.0 (4.6)
Copper sales kt 22.6 21.8 3.7 22.6 24.8 (8.9)
------------------------------ ------ ------ ------ ------- ------ ------ -------
Total copper production kt 55.8 66.8 (16.5) 55.8 71.4 (21.8)
Cash costs before by-product
credits (2) $/lb 2.70 1.78 51.7 2.70 2.00 35.0
Net cash costs (2) $/lb 1.93 1.12 72.3 1.93 1.23 56.9
------------------------------ ------ ------ ------ ------- ------ ------ -------
(1) Includes production from ROM material
(2) Includes tolling charges of $0.14/lb in Q1 2022, $0.13/lb in
Q4 2021, and $0.12/lb Q1 2021
Antucoya
Antucoya produced 17,400 tonnes of copper in Q1 2022, 13.9%
lower than in the same quarter last year on expected lower grades,
partially offset by higher throughput. Production decreased by
16.7% compared to Q4 2021 on lower grades and throughput, due to
lower plant run time related to maintenance.
During the quarter, the cash costs were $2.40/lb, a 22.4%
increase compared to the $1.96/lb in Q1 2021. This was mainly due
to lower production and increased input costs, particularly for
sulphuric acid, diesel and explosives. This was partially offset by
lower energy prices as the operation has been solely using
renewable power since the beginning of the year.
ANTUCOYA Year to Date Q1 Q4
--------------------- ----- -----
2022 2021 % 2022 2021 %
---------------------- ------ ----- ----- ------- ----- ----- -------
Daily ore throughput kt 82.2 80.6 2.0 82.2 91.1 (9.8)
Copper grade % 0.31 0.35 (11.4) 0.31 0.35 (11.4)
Copper recovery % 69.4 69.1 0.4 69.4 71.3 (2.7)
Copper production kt 17.4 20.2 (13.9) 17.4 20.9 (16.7)
Copper sales kt 17.4 22.9 (24.0) 17.4 19.9 (12.6)
---------------------- ------ ----- ----- ------- ----- ----- -------
Cash costs $/lb 2.40 1.96 22.4 2.40 2.02 18.8
---------------------- ------ ----- ----- ------- ----- ----- -------
Zaldívar
Copper production at Zaldívar was 11,500 tonnes in Q1 2022, a
3.6% increase compared with the same period last year on higher
recoveries. Production decreased by 7.3% compared to Q4 2021 due to
lower throughput partially offset by higher grades and
recoveries.
Cash costs at $2.10/lb in Q1 2022 fell by 8.7% compared to Q1
2021 primarily due to maintenance activities scheduled for Q1
postponed for Q2. Compared to the previous quarter costs decreased
by 21c/lb.
ZALDÍVAR Year to Date Q1 Q4
-------------------- ----- -----
2022 2021 % 2022 2021 %
--------------------------- ------ ----- ----- ------ ----- ----- -------
Daily ore throughput kt 39.5 42.2 (6.4) 39.5 48.6 (18.7)
Copper grade % 0.84 0.88 (4.5) 0.84 0.77 9.1
Copper recovery (1) % 56.5 48.8 15.8 56.4 53.5 5.4
Copper production - heap
leach (2) kt 8.2 9.0 (8.9) 8.2 9.1 (9.9)
Copper production - total
(2,3) kt 11.5 11.1 3.6 11.5 12.4 (7.3)
Copper sales (2) kt 11.6 12.4 (6.5) 11.6 12.0 (3.3)
Cash costs $/lb 2.10 2.30 (8.7) 2.10 2.31 (9.1)
----- ----- ----- -----
(1) Restated from average over full leach cycle to 12-month
rolling recoveries
(2) Group's 50% share
(3) Includes production from secondary leaching
Transport Division
Total transport volumes in Q1 2022 were 1.7 million tonnes,
12.7% higher than in the same quarter last year mainly as new rail
transport contracts were in place for the full quarter. Total
transport volumes decreased by 2.3% compared to Q4 2021 mainly due
to customers' lower production and poor weather conditions.
TRANSPORT Year to Date Q1 Q4
--------------------- ------ ------
2022 2021 % 2022 2021 %
--------------------------- ---- ------ ------ ----- ------ ------ ------
Rail kt 1,310 1,216 7.7 1,310 1,338 (2.1)
Road kt 410 309 32.7 410 422 (2.8)
Total tonnage transported kt 1,720 1,526 12.7 1,720 1,760 (2.3)
------ ------ ------ ------
Commodity prices and exchange rates
Year to Date Q1 Q4
--------------------- ------ ------
2022 2021 % 2022 2021 %
------ ------ ----- ------ ------
Copper
Market price $/lb 4.53 3.85 17.7 4.53 4.40 3.0
Realised price $/lb 5.05 4.26 18.5 5.05 4.65 8.6
---------------- ------ ------ ------ ----- ------ ------ ------
Gold
Market price $/oz 1,877 1,800 4.3 1,877 1,795 4.6
Realised price $/oz 2,021 1,708 18.3 2,021 1,812 11.5
---------------- ------ ------ ------ ----- ------ ------ ------
Molybdenum
Market price $/lb 19.1 11.3 69.0 19.1 18.9 1.1
Realised price $/lb 19.9 13.3 49.6 19.9 18.1 9.9
---------------- ------ ------ ------ ----- ------ ------ ------
Exchange rates
per
Chilean peso $ 808 724 11.6 808 826 (2.2)
---------------- ------ ------ ------ ----- ------ ------ ------
Spot commodity prices for copper, gold and molybdenum as at 31
March 2022 were $4.69/lb, $1,933/oz and $19.3/lb respectively,
compared with $4.40/lb, $1,820/oz and $18.7/lb as at 31 December
2021 and $4.01/lb, $1,688/oz and $11.1/lb as at 31 March 2021.
The provisional pricing adjustments for copper, gold and
molybdenum for the quarter were positive $105.9 million, positive
$5.8 million and positive $0.9 million respectively.
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