ANTO Antofagasta Plc

By Jaime Llinares Taboada

Antofagasta PLC on Wednesday downgraded copper production and cost guidance for 2022 after operational issues at Los Pelambres and amid cost inflation for diesel and sulphuric acid. Here's what the FTSE 100 copper miner had to say:

On production:

"Group copper production in Q2 2022 was 129,800 tonnes, a decrease of 6.5% compared to the previous quarter, mainly due to the previously announced concentrate pipeline incident at Los Pelambres which reduced reported production during the period by approximately 23,000 tonnes. Operation of the pipeline resumed by the end of the period and 12,000 tonnes of copper in concentrates stockpiled at the concentrator plant will be moved to the port by October"

"Group copper production in the first six months of the year was 268,600 tonnes, 25.7% lower than in the same period last year mainly due to the expected temporary reduction in throughput at Los Pelambres as a result of the drought and the concentrate pipeline incident, and expected lower grades at Centinela Concentrates. Throughput at Los Pelambres was 36.2% lower than in H1 2021, and the grades at Centinela Concentrates were 25.4% lower"

"Gold production for the quarter decreased by 7.8% to 35,400 ounces compared with Q1 mainly due to the concentrate pipeline incident, and for the first six months decreased by 38.8% to 73,800 ounces mainly due to expected lower grades at Centinela"

"Molybdenum production was 2,000 tonnes, the same as the previous quarter. For the year to date, production was 4,000 tonnes, 31.0% lower than in the same period last year due to lower throughput and grades at Los Pelambres"

On costs:

"Cash costs before by-product credits in the quarter were $2.40/lb, 6c/lb higher than in the first quarter and for the first half of the year were $2.37/lb, 37.0% higher than in the same period last year mainly due to the temporary decrease in production and higher input prices, particularly for diesel and sulphuric acid. General inflation was largely offset by the weaker Chilean peso"

"Net cash costs were $1.90/lb in Q2 2022 and $1.82/lb for the first half of the year, compared to $1.75/lb in the previous quarter and $1.14/lb in the first half of 2021, reflecting the increase in cash costs before by-product credits and slightly lower by-product credits due to lower by-product production, partially offset by higher realised prices"

On outlook:

"Full year copper production for the Group is revised downwards to 640-660,000 tonnes. This revision mainly reflects the impact of the pipeline incident and the continued uncertainty arising from the water shortage at Los Pelambres"

"The drought has continued at Los Pelambres during the period although there has been heavier precipitation in July. The revised guidance range incorporates a low probability negative outlook for water availability for the rest of the year. Strict water management protocols remain in place to optimise water usage and mitigate the impact of low water availability"

"With increases in diesel and other input prices, net cash cost guidance is increased to $1.65/lb, assuming market consensus estimates of by-product prices and the Chilean Peso exchange rate are achieved for the rest of the year"

"As announced in April, Group capital expenditure for the year is expected to be $1.9 billion"

Write to Jaime Llinares Taboada at jaime.llinares@wsj.com; @JaimeLlinaresT

(END) Dow Jones Newswires

July 20, 2022 03:12 ET (07:12 GMT)

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