Antofagasta : Quarterly Production Report – Q2 2016

STEADY IMPROVEMENT

Antofagasta plc CEO, Iván Arriagada said:

'Our decision to concentrate the Group's efforts in 2016 on operational and capital cost control, improved productivity and enhanced operational efficiencies has begun to bear fruit. For the first half of the year, cash costs before by-product credits and net cash costs were $1.60/lb and $1.26/lb respectively, below the respective levels of the previous year.

'Although we now expect production for the full year to be at the lower end of the range announced in January, we remain confident that we will continue to deliver on our cost control and operational efficiency objectives for the full year.'

HIGHLIGHTS

PRODUCTION

• Copper production in Q2 2016 was 166,200 tonnes, a 5.8% increase on Q1 2016 as production increased at Los Pelambres, Zaldivar and Antucoya compared to Q1 2016
• Integration of Zaldívar into the Group is complete with improvements in recoveries achieved during the quarter
• Commercial production at Antucoya achieved at the beginning of the quarter
• Group copper production for the first six months of the year was 323,300 tonnes, 6.6% higher than in the same period last year
• Gold production was 52,800 ounces in Q2 2016, a 6.9% decrease on Q1 2016 largely due to lower production at Centinela
• Molybdenum production at Los Pelambres was 1,600 tonnes in Q2 2016, compared to 1,700 tonnes in Q1 2016 principally due to lower grades, partially offset by higher recoveries and throughput

CASH COSTS

• Cash costs before by-product credits in Q2 2016 were $1.57/lb, 3.7% lower than in Q1 2016. This decrease is mainly related to lower cash costs across the operations as cost efficiencies and productivity improvements have been delivered
• Cash costs before by-product credits for the first six months of the year were $1.60/lb, $0.28/lb lower than the same period last year due primarily to higher production, improved cost performance and the weaker Chilean Peso.
• Net cash costs were $1.25/lb in Q2 2016, a 2.3% decrease compared with the previous quarter primarily due to lower cash costs before by-product credits, supported by a significantly higher realised molybdenum price

GUIDANCE

• Group copper production for the full year is expected to be at the lower end of the 710-740,000 tonnes guided in January, with production for the year weighted to the second half. Installation of the tailings thickeners at Centinela and the ramp-up of Antucoya are proceeding within their planned ranges, but inherent risks will persist until both projects are completed
• The Group has revised its estimation of deferred stripping costs at Los Pelambres in 2016 compared with that used in the original guidance announced in January 2016. Changes introduced in the estimation method impacted Los Pelambres accounting for $0.08/lb of the reduction in costs for the Group for the first six months of the year compared with the same period of the prior year
• Group cash costs before by-product credits and net cash costs for the full year are now expected to be $1.60/lb and $1.30/lb respectively
• The corresponding increase in Group capital expenditure, as mine development, for the year is equal to the reduction in operating costs so total cash expenditure for the year, operating and capital, is expected to be unchanged

OTHER

• Regrettably there was a fatal accident at Antucoya during the quarter and another in the Transport Division in July. A full investigation has now been completed at Antucoya and actions identified during the review are being implemented with direct oversight by senior management. An investigation of the causes and lessons learned is underway at the Transport Division. Safety remains the top priority for the Group.

Download PDF (491KB)