Chile-focused copper Miner Antofagasta PLC (LON:ANTO) reported strong interim results and said that while markets are likely to remain volatile, especially in the near-term, it remains confident that copper fundamentals will remain supportive of a strong pricing environment.
In the six months ended June 30 2011, the group increased turnover 73.4 percent from the same period a year earlier to US$3.05 billion, while net profit rose 54.3 percent to US$696.2 million, reflecting both higher average commodity prices and also the increase in production volumes.
Antofagasta has doubled the interim dividend to 8 cents a share. This reflects the rebasing of the ordinary dividend which began with the 2010 final dividend, which was increased from to 12 cents from 6 cents in 2009.
It said it is making good progress with the ramp-up at Esperanza in Chile, which is currently planned to complete by the end of the year. Full year copper production is expected to be in the range of 80,000 to 100,000 tonnes.
The feasibility study for the Antucoya project in northern Chile close to the Michilla operation is substantially complete. The study considers average production of approximately 80,000 tonnes of copper cathodes per annum over a mine life of more than 20 years, with average cash costs of approximately 145 cents per pound over the first five years and 155 cents over the mine life.
Development of Antucoya is expected to take about two years, mainly during 2012 and 2013, followed-by a ramp-up of production during 2014. The capital cost is currently estimated at US$1.35 billion.
Antofagasta said first half copper production rose 14.1 percent year-on-year to 288,500 tonnes, and it is forecasting full-year production in the range of 620,000 to 640,000 tonnes of copper, compared with 521,100 tonnes in 2010, mainly due to the contribution of Esperanza.
Gold production in 2011 is expected to be in the range of 200,000 to 215,000 ounces compared with 35,100 ounces in 2010 also as a result of Esperanza, while molybdenum production at Los Pelambres is expected to be 10,600 tonnes, ahead of the original forecast for the year and compared with 8,800 tonnes in 2010.
Over the period from 2012 to 2015 average annual group copper production is expected to be approximately 720,000 tonnes, reflecting the full-year impact of Esperanza from 2012, but before including any potential production from Antucoya.
In this period, annual group gold production is expected to be over 250,000 ounces and molybdenum production at Los Pelambres is expected to average over 8,000 tonnes.
Chief executive of Antofagasta Minerals, Marcelo Awad, said: "The first half of 2011 has been a very significant period for the Antofagasta Group, with the first production and shipments from Esperanza taking place at the start of the year.
"Recent events have shown the volatility of commodity prices, and the industry is also continuing to see relatively strong cost pressures. However, I believe that Antofagasta, with its low average net cost position, is well placed to deal with these challenges. While markets are likely to remain volatile, especially in the near-term, we remain confident that copper fundamentals will remain supportive of a strong pricing environment."
