TIDMANTO
RNS Number : 8926J
Antofagasta PLC
22 August 2019
NEWS RELEASE, 22 AUGUST 2019
HALF YEARLY FINANCIAL REPORT
FOR THE SIX MONTHSED 30 JUNE 2019
Antofagasta plc CEO Iván Arriagada said: "We have delivered
robust financial results for the first half of the year reflecting
higher production at all of our operations with EBITDA increasing
by 44% to $1.3 billion.
"In line with our plan for the year, copper production during
the half year period increased by 22% and we expect this rate of
production to continue into the second half of 2019, which we
expect to be another year of record copper production.
"With Antofagasta's strategy focused on producing profitable
tonnes, the successful Cost and Competitiveness Programme continues
to deliver benefits and has yielded a cost saving of 7c/lb in the
first half of the year helping us to reduce our net cash costs by
33c/lb to $1.19/lb.
"While the outlook for the copper market remains uncertain with
the protracted negotiations between the USA and China impacting
global trade, Antofagasta continues to be in a strong position
generating solid cash flows and improving returns. We have the
assets, capabilities and disciplined capital allocation strategy
that allow us to deliver long-term value for all our stakeholders
even in a challenging external macro environment."
Financial performance
-- Revenue up 19.1% to $2,525.6 million as higher copper sales
volumes and by-product revenues were partially offset by a 6.3%
lower realised copper price
-- EBITDA(2) for the first six months of the year was $1,305.9
million, 44.0% higher than in the first half of 2018
-- EBITDA margin(3) of 51.7%, increased from 42.6% during same
period last year as unit production costs decreased
-- Cost and Competitiveness Programme achieved savings of $61
million in the first half of 2019, equivalent to 7c/lb of unit cash
costs
-- Cash flow from operations(5) of $1,514.5 million, 70% higher
than in the same period last year predominantly due to higher
EBITDA
-- Capital expenditure of $465.5 million, 38.8% of full year guidance
-- Net debt decreased by $78.9 million to $517.4 million during
the period, representing a Net Debt to EBITDA ratio of 0.20 times
on higher cash flow from operations despite a drawdown of $198.0
million of the Los Pelambres Expansion debt facility, the $131.3
million initial impact of the adoption of IFRS 16, the payment of
an increased final dividend and higher taxes
-- Earnings per share of 30.7 cents, a 55.1% increase on the same period in 2018
-- Interim dividend of 10.7 cents per share, equivalent to a
payout ratio of 35% of Net Earnings(2) . An increase of 57.4% on
last year's interim
Operating performance
-- The Group had no fatalities during the period
-- Group copper production increased by 22.2% to 387,300 tonnes,
with higher production at all of the Group's operations
-- Group cash costs before by-product credits(2) for the half
year were $1.66/lb, down from $1.92/lb in the same period last year
due to gains arising from the Cost and Competiveness Programme,
higher production and a weaker Chilean peso
-- Group net cash costs(2) of $1.19/lb, a decrease of 21.7% from
$1.52/lb in the same period in 2018, on lower cash costs before
by-product credits and higher by-product revenues
-- Construction of the Los Pelambres Expansion project has
started on-site and project completion (engineering, procurement
and construction) was at 22% as of the end of June. Capital
expenditure in the first six months of 2019 was $77.6 million. The
rate of expenditure is expected to accelerate in the second half of
the year as the project advances
Guidance
-- As previously reported, Group copper production guidance for
the full year is unchanged at 750-790,000 tonnes and net cash cost
guidance has been reduced by 5c/lb to $1.25/lb, assuming by-product
prices and the Chilean peso exchange rate remain at similar levels
to the first half of the year
-- Capital expenditure guidance for the full year is unchanged at $1.2 billion
Other
-- It is with great sadness that the Board reports the passing
of Gonzalo Menendez, our longest-serving director, after 34 years
on the Board. Gonzalo has been associated with every major
strategic initiative of the Group and we will greatly miss his
honest, forthright and wise counsel
-- As announced on 12 July, the World Bank's International
Center for Settlement of Investment Disputes ("ICSID") awarded
$5.84 billion in damages to Tethyan Copper Company Pty Limited, a
joint venture held equally by the Company and Barrick Gold
Corporation, in relation to arbitration claims 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
-- Labour negotiations are scheduled with the supervisors at
Zaldívar and Los Pelambres, and the workers at Antucoya and are
expected to conclude in H2 2019
UNAUDITED RESULTS SIX MONTHSED 2019 2018 %
30 JUNE
------- -------- --------
Revenue (1) $m 2,525.6 2,120.7 19.1
EBITDA(2) $m 1,305.9 904.2 44.4
EBITDA margin(3) % 51.7 42.6 21.4
Earnings per share cents 30.7 19.8 55.1
Dividend per share cents 10.7 6.8 57.4
Cash flow from operations(4, 5) $m 1,514.5 890.4 70.1
Group net debt at period end $m 517.4 782.8 (33.9)
Average realised copper price $/lb 2.81 3.00 (6.3)
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Copper sales(6) Kt 354.5 283.3 25.1
Gold sales Koz 148.3 68.1 117.8
Moly sales Kt 6.6 6.1 8.2
Cash costs before by-product credits(2) $/lb 1.66 1.92 (13.5)
Net cash costs(2) $/lb 1.19 1.52 (21.7)
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Note: The financial results are for continuing operations and
are prepared in accordance with IFRS other than as noted in (2)
below.
(1) Figures include both revenue from the sale of products and
the associated income from the provision of shipping services.
(2) Non-IFRS measures. Refer to the alternative performance
measures in Note 22 to the half-year financial report below.
(3) Calculated as EBITDA/Revenue. If Associates and JVs' revenue
is included EBITDA Margin was 47.8% in HY 2019 and 39.3% in HY
2018.
(4) From continuing and discontinued operations.
(5) Includes a VAT tax refund of $274.8 million in the period
that was originally paid in H2 2018.Excluding the refund cash flow
from operations increased by 39.2%.
(6) Does not include 26,900 tonnes of sales by Zaldívar in HY
2019 and 20,600 tonnes in HY 2018, as it is equity accounted.
A recording and copy of the 2019 Half Year Results presentation
is available on the Company's website www.antofagasta.co.uk.
There will be a Q&A telephone conference call at 12.00 BST
(07.00 EST) hosted by Ivan Arriagada and Alfredo Atucha.
Participants can call any of the following numbers: UK 0800 358
6377 (tollfree), UK +44 330 336 9105, USA +1 786-789-4772 and Chile
123 0020 9713 (tollfree). The call title is Antofagasta 2019 Half
Year Results and the Confirmation Code is 5150631.
Investors Media - London
- London
Andrew Lindsay alindsay@antofagasta.co.uk Carole Cable antofagasta@brunswickgroup.com
Andres Vergara avergara@antofagasta.co.uk Will Medvei antofagasta@brunswickgroup.com
Telephone +44 20 7808 0991 Telephone +44 20 7404 5959
Media - Santiago
Pablo Orozco porozco@aminerals.cl
Carolina Pica cpica@aminerals.cl
Telephone +56 2 2798 7000
---------------- --------------------------- ----------------- -------------------------------
DIRECTORS' COMMENTS FOR THE SIX MONTHSED 30 JUNE 2019
FINANCIAL HIGHLIGHTS
Revenue was $2,525.6 million, 19.1% higher than in the same
period last year as copper sales volumes increased by 25.1% and
by-product revenues increased particularly gold revenues at
Centinela. This was partially offset by 6.3% lower realised copper
prices and 5.3% lower realised molybdenum prices.
EBITDA increased by 44.4% to $1,305.9 million reflecting
increased revenue from higher sales volumes and lower cost of
sales. This has increased the EBITDA margin(3) from 42.6% in the
first half of 2018 to 51.7% in the current period.
Cash flow from operations increased by 70.1% to $1,514.5 million
compared to the same period last year reflecting the Group's higher
EBITDA. This increase includes a VAT refund of $274.8 million of a
VAT payment made in December 2018. Excluding the refund cash flow
from continuing operations increased by 39.2% to $1,239.7
million.
The Board has declared an interim ordinary dividend of 10.7
cents per share, which represents a payout ratio of 35%, consistent
with the Group's dividend policy. Any distribution of excess cash,
as defined under the policy, will be made as part of the final
dividend.
PRODUCTION AND CASH COSTS(2)
Group copper production in the first half of 2019 was 387,300
tonnes, 22.2% higher than in the same period last year due to
higher grades and the pipeline blockage at Los Pelambres in the
first half of 2018, which delayed 9,200 tonnes being recorded as
production in that period.
Group gold production for the first six months increased by 107%
to 149,100 ounces on significantly higher grades and recoveries at
Centinela.
Molybdenum production was 6,400 tonnes, compared with 5,900
tonnes in the first six months of 2018, principally due to higher
recoveries at Los Pelambres and 200 tonnes of production from
Centinela following the start-up of the plant in the third quarter
last year.
Group cash costs before by-product credits in the first half of
2019 were $1.66/lb, 26c/lb lower than last year, mainly due to
higher production at all of the operations, 7c/lb of savings
arising from the Cost and Competitiveness Programme and a weaker
local currency.
Net cash costs for the first half of 2019 were $1.19/lb, 21.7%
lower than in the same period last year reflecting the lower cash
costs before by-product credits and higher by-product credits.
COST AND COMPETITIVENESS PROGRAMME
During the first half of the year, the Cost and Competitiveness
Programme achieved savings of $61 million, equivalent to 7c/lb. The
Group is on track to achieve its savings target for the year of
$100 million.
The Cost and Competitiveness Programme and Operating Excellence
teams in each operation work together to embed sustainable business
practices across all processes and activities within the Group to
increase savings and improve productivity.
EXPLORATION AND EVALUATION COSTS
Exploration and evaluation costs increased by $11.0 million to
$52.0 million, with the most significant factors in the increase
being increased drilling at Centinela and Los Pelambres in relation
to the reserve and resource estimates.
Internationally, exploration efforts remain concentrated on the
main copper belts of North and South America, with a focus on
Peru.
TAXATION
The effective tax rate for the period was 35.7%, higher than in
the same period last year with higher withholding tax being paid on
dividends remitted out of Chile. The effective tax rate for the
full year will depend in large part on the size of the final
dividend.
Tax paid during the period includes payments on account based on
the prior year's profit levels and the settlement of the
outstanding balances in respect of the previous year's tax
charge.
CAPITAL EXPITURE AND DEPRECIATION & AMORTISATION
Group capital expenditure on a cash basis was $465.5 million
during the period of which $178.6 million was mine development,
$178.0 million sustaining and $90.3 million was development capital
expenditure. The balance was at the Transport Division and
corporate. Expected capital expenditure for the full year is
unchanged at $1.2 billion, which include expenditure on the Los
Pelambres Expansion project and other minor development capital
expenditure, mine development and sustaining capital expenditure.
The most material sustaining capital expenditure currently under
construction to ensure operational continuity is the Centinela
tailings deposit primary and secondary enclosure walls.
Depreciation and amortisation for the first half of 2019 was
$437.6 million, very similar to the second half of 2018 and $113.4
million higher than in the first half. Depreciation and
amortisation will increase further in the second half of this year
with the increased amortisation of capitalised stripping at
Centinela which will continue into 2020.
NET DEBT
Net debt was $517.4 million at the end of the period, $78.9
million lower than at the end of 2018 and the Net debt/ EBITDA
ratio fell from 0.32 to 0.20.
During the half year Los Pelambres drew down $198.0 million of
its corporate loan for its expansion project and debt was increased
by $131.3 million of additional lease liabilities recognised
following the implementation of IFRS 16 at the beginning of the
year.
Attributable net debt at the period end was $238.8 million,
$36.5 million lower than last year.
DIVIDS
The Board has declared an interim dividend of 10.7 cents per
share, equivalent to $105 million and a payout ratio of 35%,
consistent with the Company's policy of paying out a minimum of 35%
of net earnings(2) from continuing operations.
NON-EXECUTIVE DIRECTOR MR. GONZALO MENEZ
Non-Executive Director Mr. Gonzalo Menendez passed away on 29
June, following a period of illness. Mr. Menendez, aged 70, had
been a Non-Executive Director since 1985. His involvement with the
Group dates back to the beginning of the 1980s, when he was
appointed General Manager of the Group's transport business. Since
then, Mr. Menendez played a key role in the growth and development
of the Group.
LABOUR AGREEMENTS
The next scheduled labour negotiations are with the supervisors
at Los Pelambres and Zaldívar and the workers at Antucoya and are
expected to be completed in H2 2019, with one-off signing bonuses
being accounted for in the quarters in which the respective labour
agreements are signed.
SAFETY & HEALTH
There have been no fatalities in the period and the Group
continues to develop ways to ensure there are no fatal
accidents.
The Group continues its focus on the effective implementation of
critical control management and promoting operational discipline to
build a robust and proactive safety culture. Antofagasta is fully
committed to achieving zero fatalities and, following an extension
of its focus to health, zero occupational diseases.
For the first six months of the year the LTIFR achieved by the
Group decreased to 1.27 from the 1.57 in the full year 2018 with
the Mining Division and Transport Division's LTIFRs both falling,
to 0.97 and 4.62 respectively.
COMMUNITY RELATIONS
Since the introduction of the Group's revised Social Management
Model (SMM) in 2018, which integrated the Group's past experience
and learnings on community relations, the focus has been on the
deployment of the Community Relations Standard and the Social
Initiatives Control Management system. Further standards are being
prepared to harmonise the positive impact of the social initiatives
undertaken by the Group.
The Group has also been developing new programmes to encourage
the recruitment of employees and use of local suppliers close to
its operations, particularly at Los Pelambres and its expansion
project. Training and advice is provided to inform and assist local
individuals and organisations alike, as well as direct
recruitment.
WATER SCARCITY
Parts of Central Chile are experiencing continuing drought. If
this condition persists or becomes permanent this will place
limitations on water availability in the region. To manage this
risk, Los Pelambres is continuing work on several operational
measures to increase water re-use and efficiency. It is also
building a desalination plant as part of the Los Pelambres
Expansion project, which is also intended to serve as a back-up
facility for its current water supply and is scheduled to be ready
by the end of 2021.
REKO DIQ PROJECT - ARBITRATION AWARD
The international arbitration tribunal of the World Bank's
International Centre for Settlement of Investment Disputes
("ICSID") has awarded $5.84 billion in damages to Tethyan Copper
Company Pty Limited ("TCC"), a joint venture held equally by the
Company and Barrick Gold Corporation, in relation to the
arbitration claims 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 TCC just under $62
million in costs incurred in enforcing its rights.
The award is binding on the parties. There are limited grounds
for challenging the award under the ICSID Convention. It is not
expected that proceeds of the award will be recognised in
Antofagasta's financial statements until received. TCC has said
that it remains willing to discuss the potential for a negotiated
settlement with Pakistan while continuing to protect its commercial
interests and legal rights until the conclusion of the dispute.
FUTURE GROWTH
Growth in the medium term will come from completion of the Los
Pelambres Expansion project in the second half of 2021. Before
then, the Zaldívar Chloride Leach and Esperanza Sur projects are
both expected to be completed.
Additionally, the Group is working on the feasibility study for
the second concentrator at Centinela and the preparation of the
Mine Plan of Operations for Twin Metals in Minnesota.
OUTLOOK
Group copper production for the full year is expected to be
between 750-790,000 tonnes as announced in January this year and,
as previously announced, net cash cost guidance has been reduced by
5c/lb to $1.25/lb, assuming the Chilean peso and the molybdenum and
gold prices continue at levels similar to the first half of the
year.
Group copper production is expected to decline in 2020 towards
to the levels achieved in 2018 following a reduction in grades at
Centinela, which will be partially reversed in 2021.
While the copper market continues to be balanced with a small
deficit expected for the year, the uncertainty caused by the
continuing trade negotiations between the USA and China has had a
significant negative impact on market sentiment and the copper
price. This uncertainty is reflected in financial markets and the
current net short speculative position.
Supply and demand fundamentals remain positive and disruptions
during the year to date have been broadly in line with
expectations. However, while the uncertainty arising from trade
negotiations remains, the Group will continue to focus on
controlling its costs through its Cost and Competitiveness
Programme and Operating Excellence efforts in the short and medium
term, and in the longer term the Group's innovation programme is
expected to contribute significantly to improvements in operating
efficiency and enhanced returns.
REVIEW OF OPERATIONS AND PROJECTS
MINING DIVISION
LOS PELAMBRES
Financial performance
EBITDA at Los Pelambres was $706.9 million in the first half of
2019, a 19.0% increase compared with $594.0 million in the first
six months of 2018. This increase was due to higher copper sales
tonnage, partially offset by a lower realised copper price during
the period.
Production
Copper production in the first six months of 2019 increased by
13.4% compared with the same period last year. This increase was
primarily due to the higher throughput and copper grades and the
pipeline blockage at Los Pelambres in the first half of 2018, which
delayed 9,200 tonnes being recorded as production in that
period.
Molybdenum production of 6,200 tonnes and gold production of
29,800 ounces were 5.1% and 8.4% higher respectively than the same
period in 2018.
Costs
For the first six months of the year, cash costs before
by-product credits were $1.44/lb, 13.8% lower than in 2018
primarily due to higher production and a weaker local currency.
By-product credits were 55c/lb, 8c/lb lower than same period last
year primary due to lower molybdenum realised prices, partially
offset by higher molybdenum production.
Net cash costs for the year to date were $0.89/lb, or 14.4%
lower than in the same period last year.
Capital expenditure
Capital expenditure in the first six months of 2019 was $189.2
million in total of which $45.3 million was sustaining capital
expenditure, $61.5 million mine development and $82.4 million was
on the Los Pelambres expansion. The rate of expenditure is expected
to accelerate in the second half of the year as the expansion
project advances.
CENTINELA
Financial performance
EBITDA for the first six months of 2019 was $532.5 million, an
increase of 132% compared with $229.2 million in the first half of
2018. This increase was due to higher copper and gold sales volumes
and lower unit cost of sales as a result of lower production costs.
This was partially offset by the lower realised copper price in the
first half of 2019 compared to same period last year.
Production
During the first six months of the year production at Centinela
was 141,900 tonnes, 36.8% higher than in 2018, primarily as a
result of higher grades at Centinela Concentrates. Copper in
concentrate production for the first six months of the year was
100,100 tonnes, compared with 59,600 tonnes during the same period
last year, mainly reflecting higher throughput, grades and
recoveries. Cathode production was 41,900 tonnes, 5.0% lower than
in the first six months of 2018 on lower grades and recoveries,
partially compensated for by higher throughput than in the same
period last year.
Gold production for the year to date was 119,200 ounces, 168%
higher than in the first six months of 2018 due to higher grades
and recoveries. Molybdenum production during the first half of 2019
was 200 tonnes.
Costs
Cash costs before by-product credits for the first six months of
2019 were $1.74/lb, 21.6% lower than in 2018. This decrease was
mainly due to the impact on unit costs of higher copper production.
Net cash costs were $1.18/lb 39.2% lower than in H1 2018 on lower
cash costs before by-product credits and higher by-product
credits.
Capital expenditure
Capital expenditure in the first six months of 2019 was $226.7
million of which $105.0 million was sustaining capex, $114.5
million was mine development and $7.1 million was development
capex.
ANTUCOYA
Financial performance
For the first half of the year, EBITDA was $41.2 million,
compared with $66.0 million in the same period last year, due to
higher unit costs of sales and lower realised copper prices,
partially compensated for by higher copper sales volumes.
Production
Copper production at Antucoya in the first six months of 2019
was 37,500 tonnes, 14.0% higher than the same period in 2018 due to
higher copper grades and recoveries, partially offset by lower
throughput.
Costs
Cash costs were $2.26/lb, 4.1% higher than the same period in
2018 due to higher acid prices and maintenance costs compared to
the previous year.
Capital expenditure
Capital expenditure in the first six months of 2019 was $30.3
million. Sustaining capital expenditure was $27.7 million and mine
development $2.6 million.
ZALDÍVAR
Financial performance
Attributable EBITDA at Zaldívar was $59.4 million in the first
half of 2019, compared to $49.6 million in the same period last
year mainly as a result of higher copper sales volumes and lower
unit production costs, partially offset by lower realised copper
prices.
Production
Copper production at Zaldívar of 27,500 tonnes was 29.1% higher
compared with the same period last year due to higher throughput
and grades, partially offset by lower recoveries.
Costs
Cash costs for the first six months of 2019 were $1.79/lb
compared with $1.97/lb for the same period in 2018, primarily due
to higher production, partially offset by higher input prices,
particularly acid.
Capital expenditure
In the first six months of 2019, attributable capital
expenditure was $12.0 million of which $5.3 million was sustaining
capital expenditure, $4.7 million mine development and $1.9 million
was development capital expenditure.
GROWTH PROJECTS AND OPPORTUNITIES
Los Pelambres Incremental Expansion
This expansion project has been divided into two phases in order
to simplify the permitting application process.
Phase 1
This phase is designed to optimise throughput within the limits
of the existing operating, environmental and water extraction
permits. Construction started in early 2019 and by the end of June
the project progress to completion was 22%.
Throughput at the plant will increase from the current capacity
of 175,000 tonnes of ore per day to an average of 190,000 tonnes of
ore per day and first production is expected in the second half of
2021. The plant expansion includes an additional SAG mill, ball
mill and the corresponding flotation circuit with six additional
cells.
Annual copper production will be increased by 40,000 tonnes in
the first full year of the expansion, reaching 70,000 tonnes
towards the end of the first 15 years as the hardness of the ore
increases and the benefit of higher milling capacity is fully
realised. Over the full period production will average
approximately 60,000 tonnes per year.
The capital cost of the project is $1.3 billion, which includes
$500 million for a 400-litres per second desalination plant and
water pipeline. The desalination plant will supply water for the
expansion and a potential further growth phase (Phase 2) and will
act as a back-up for the existing operation in extreme dry
conditions, were these to occur. Desalinated water will be pumped
from the coast to the Mauro tailings storage facility, where it
will connect with the existing recycling circuit returning water to
the Los Pelambres concentrator plant.
The EIA for the expansion was approved in February 2018.
Phase 2
In the second phase of expansion, throughput will increase to
205,000 tonnes of ore per day and, using the large resource base of
Los Pelambres, the mine's life will be extended by 15 years beyond
the current 20 years. As part of this development the Group will
submit a new EIA to increase the capacity of the Mauro tailings
storage facility and the mine waste dumps, as well as extend
certain operating permits.
Work began on the environmental baseline study for the new EIA
in 2017 and will be completed in 2020, along with the early stages
of community engagement activities.
Capital expenditure for this phase was estimated in the
pre-feasibility study completed in 2014 at approximately $500
million, the majority being used on mining equipment and increasing
the capacity of the concentrator and the Mauro tailings facilities.
The conveyors from the primary crusher in the pit to the
concentrator plant will also have to be repowered to support the
additional throughput.
Critical studies on tailings and waste storage capacity have
been undertaken and are now progressing towards the feasibility
study stage. However, the project will only proceed once Phase 1 is
significantly advanced and will require the submission of extensive
permit applications, including the new EIA. First production from
this phase is estimated to be in 2025, the exact date depending in
large part on the length of the permitting process. Phase 2 is
expected to increase copper production by 35,000 tonnes per
year.
Centinela Expansion
The construction of a second concentrator and tailings deposit
some 7 km from the existing concentrator is being considered in two
phases. Phase 1 would have an ore throughput capacity of 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 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 would 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 feasibility study for Phase 1 is expected to be completed
during 2020. 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
deposit, water pipeline and other infrastructure, plus the owner's
and other costs. The feasibility study will update these estimates
as well as including an evaluation of the potential disposal of
Centinela's existing water infrastructure and the evaluation of a
new milling and crushing strategy using high pressure rolls rather
than the more traditional SAG mills.
Esperanza Sur pit
The Board has approved the project to open the Esperanza Sur pit
at Centinela. Esperanza Sur is 4km south of the Esperanza pit and
close to Centinela's concentrator plant. The deposit contains 1.4
billion tonnes of reserves with a grade of 0.4% copper, 0.13 g/t of
gold and 0.012% of molybdenum.
Capitalised stripping is expected to start in Q4 2019 and be
completed in 2021 at a capital cost of $175 million. The
capitalised stripping will be carried out by a contractor and the
Company is currently evaluating whether to use autonomous mining
equipment once the stripping is completed.
Opening the Esperanza Sur pit will improve Centinela's
flexibility to supply its concentrator and the higher grade
material over the initial years 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 Project
The feasibility study for the Zaldívar Chloride Leach Project
was completed in 2018 and the project is expected to be brought to
the Board for approval during 2019, following the completion of
detailed engineering and subject to a favourable outcome or
progress on the EIA for the extension of water rights beyond 2025.
The application was submitted during 2018 and is currently being
reviewed by the water regulator, a process which includes
consultation with the relevant communities.
The project will improve copper recoveries from the secondary
sulphides ore by adjusting the leach process through the addition
of chlorides to increase the chlorine content of the leach
solution. This process is based on a proprietary technology called
CuproChlor(R) that was developed by the Group at its Michilla
operation (which closed in 2015) and was based on many years of
experience at the mine, which had similar ore types to those that
are processed at Zaldívar.
The project requires an upgrade of the Solvent Extraction (SX)
plant and the construction of additional washing ponds at an
estimated capital cost of $175 million. If approval is granted this
year, the project completion date is expected to be in 2021.
As the Group equity accounts its interest in Zaldívar, capital
expenditure at the operation is not included in Group total capital
expenditure amounts.
Twin Metals Minnesota (Twin Metals)
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 PGM deposits in north-eastern Minnesota, US. In 2018
an update of the pre-feasibility study was completed on an 18,000
tonnes of ore per day project producing an average of 42,000 tonnes
of copper per year plus nickel and PGM as by-products, the
equivalent of some 65,000 tonnes of copper per year.
After reaffirming Twin Metal's right to renew its two federal
mineral leases, the Department of Interior renewed the two federal
mineral leases to Twin Metals in May. The Group continued the
preparation of the Mine Plan of Operations (MPO), a prerequisite
for permitting applications, and expects to complete it in 2019.
Following a thorough review, it will be ready to be submitted to
the relevant federal and State agencies. While the MPO is being
reviewed the Company will advance the feasibility study.
TRANSPORT DIVISION
Financial performance
EBITDA at the Transport Division was $45.1 million in the first
half of 2019, compared to $45.7 million in the same period last
year, a reduction primarily due to higher input costs.
Transport volumes
Total transport volumes in the first half of 2019 were 3.2
million tonnes, 3.8% higher than first half of 2018 as a new
transport contract with a customer came into effect during the
period.
Capital expenditure
Capital expenditure for the first half of the year was $18.6
million.
FINANCIAL REVIEW FOR THE SIX MONTHSED 30 JUNE 2019
Results (unaudited)
Six months Six Months
ended ended
30.06.2019 30.06.2018
------------ ------------
$m $m
Revenue 2,525.6 2,120.7
--------------------------------------- ------------ ------------
EBITDA (including results from
associates and joint ventures) 1,305.9 904.2
--------------------------------------- ------------ ------------
Total operating costs (1,733.9) (1,600.3)
------------ ------------
Operating profit from subsidiaries 791.7 520.4
Net share of results from associates
and joint ventures 16.9 13.7
------------
Total profit from operations,
associates and joint ventures 808.6 534.1
Net finance expense (45.6) (68.5)
------------
Profit before tax 763.0 465.6
Income tax expense (272.6) (151.4)
------------ ------------
Profit for the period from continuing
operations 490.4 314.2
============ ============
Discontinued operations - 1.5
------------ ------------
Profit for the period 490.4 315.7
============ ============
Attributable to:
------------ ------------
Non-controlling interests 188.0 121.4
Profit for the financial period
attributable to the owners of
the parent 302.4 194.3
------------ ------------
Basic earnings per share US cents US cents
From continuing operations 30.7 19.6
From discontinued operations - 0.2
------------ ------------
Total continuing and discontinued
operations 30.7 19.8
============ ============
The $108.1 million increase in the profit for the financial
period attributable to the owners of the parent from $194.3 million
in the first six months of 2018 to $302.4 million in the current
period reflected the following factors:
$m
Profit for the financial period attributable
to the owners of the parent in H1 2018 194.3
Increase in revenue 404.9
Increase in total operating costs (133.6)
Increase in net share of profit from associates
and joint ventures 3.2
Decrease in net finance expenses 22.9
Increase in income tax expense (121.2)
Decrease in profit from discontinued operations (1.5)
Increase in profit attributable to non-controlling
interests (66.6)
108.1
Profit for the financial period attributable
to the owners of the parent in H1 2019 302.4
========
Revenue
The $404.9 million increase in revenue from $2,120.7 million in
the first half of 2018 to $2,525.6 million in the first half of
2019 reflected the following factors:
$m
Revenue in 2018 2,120.7
Increase in copper sales volumes 470.5
Decrease in realised copper price (147.0)
Increase in treatment and refining charges (23.3)
Decrease in molybdenum revenue (1.0)
Increase in gold revenue 107.0
Increase in silver revenue 4.9
Decrease in transport division revenue (6.2)
404.9
Revenue in 2019 2,525.6
========
Revenue from the mining division
Revenue in the first half of 2019 from the mining division
increased by $411.1 million, or 20.2%, to $2,443.4 million,
compared with $2,032.3 million in 2018. The increase mainly
reflected higher copper sales, reflecting increased sales volumes
partly offset by a lower realised copper price, as well as
increased gold sales.
Revenue from copper sales
Revenue from copper concentrate and copper cathode sales
increased by $300.2 million, or 17.0%, to $2,066.7 million,
compared with $1,766.5 million in first six months of 2018. The
increase reflected the $470.6 million impact of higher sales
volumes, partly offset by the $147.0 million impact of the lower
realised copper price and the $23.3 million impact of higher
treatment and refining charges.
(i) Copper volumes
Copper sales volumes reflected within revenue increased by 25.1%
from 283,300 tonnes in 2018 to 354,500 tonnes in 2019 increasing
revenue by $470.5 million. There were increased sales volumes at
all of the Group's mining subsidiary companies, reflecting their
higher production volumes. The main increase in sales volumes came
from Centinela (40,900 tonne increase) followed by Los Pelambres
(25,500 tonne increase) and Antucoya (4,800 tonne increase).
(ii) Realised copper price
The average realised price decreased by 6.3% to $2.81/lb in the
first six months of 2019 (first half of 2018 - $3.00/lb), resulting
in a $147.0 million decrease in revenue. The LME average market
price decreased by 10.8% in H1 2019 to $2.80/lb (first half of 2018
- $3.14/lb). In the first half of 2019 there was only a marginal
impact from provisional pricing adjustments, with a $5.5 million
positive impact, mainly reflecting the increase in the period-end
copper price to $2.72/lb at 30 June 2019, compared with $2.70/lb at
31 December 2018. Conversely there had been a more significant
negative impact of provisional pricing in the first six months of
2018, with an $87.4 million negative adjustment, which mainly
reflected the decrease in the period-end copper price to $3.01/lb
at 30 June 2018, compared with $3.27/lb at 31 December 2017.
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 four months after delivery to the
customer in the case of concentrate sales).
Further details of provisional pricing adjustments are given in
Note 5 to the half-year financial report.
(iii) Treatment and refining charges
Treatment and refining charges (TC/RCs) for copper concentrate
increased by $23.3 million to $128.6 million in 2019 from $105.3
million in the first six months of 2018, due to the increase in the
copper concentrate sales volumes, partly offset by a reduction in
the average TC/RCs. 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 $110.9 million or
41.7% to $376.7 million in the first half of 2019, compared with
$265.8 million in the first six months of 2018, predominantly due
to higher gold sales.
Revenue from molybdenum sales (net of roasting charges) was
$155.1 million (first half of 2018 - $156.1 million), a decrease of
$1.0 million. The decrease was due to the lower realised price of
$12.1/lb (first half of 2018 - $12.6/lb) and increased roasting
charges, partly offset by higher sales volumes of 6,600 tonnes
(first half of 2018 - 6,100 tonnes).
Revenue from gold sales (net of treatment and refining charges)
was $195.9 million (first half of 2018 - $88.9 million), an
increase of $107.0 million, which reflected an increase in sales
volumes. Gold sales volumes increased by 117.8% from 68,100 ounces
in the first half of 2018 to 148,300 ounces in the first six months
of 2019, mainly due to higher grades at Centinela. The realised
gold price was $1,326/oz in the first half of 2019 compared with
$1,310/oz in the first half of 2018, reflecting the average market
price for 2019 of $1,309/oz (2018 - $1,318/oz), adjusted for a
positive provisional pricing adjustment of $2.0 million (first half
of 2018 - negative adjustment of $1.4 million).
Revenue from silver sales increased by $4.9 million to $25.7
million (first six months of 2018 - $20.8 million). The increase
was due to an increase of sales volumes to 1.7 million ounces
(first half of 2018 - 1.3 million ounces) partly offset by a lower
realised silver price of $15.2/oz (first six months of 2018 -
$16.6/oz).
Revenue from the transport division
Revenue from the transport division (FCAB) decreased by $6.2
million or 7.0% to $82.2 million, reflecting lower sales of
industrial water ($2.2 million impact) and lower tonnages
transported, mainly relating to some Bolivian customers.
Total operating costs
The $133.6 million increase in total operating costs from
$1,600.3 million in the first half of 2018 to $1,733.9 million in
the first six months of 2019 reflected the following factors:
$m
Total operating costs in the first half
of 2018 1,600.3
Increase in mine-site operating costs 17.1
Increase in other mining division costs 2.6
Increase in exploration and evaluation costs 11.0
Decrease in corporate costs (11.5)
Decrease in transport division operating
costs (1.0)
Increase in depreciation, amortisation and
loss on disposals 115.4
133.6
Total operating costs in the first six months
of 2019 1,733.9
========
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 $19.2 million to
$1,241.3 million in the first half of 2019, an increase of 1.6%. Of
this increase, $17.1 million is attributable to higher mine-site
operating costs. This increase in mine-site costs reflected the
increased sales volumes in the period, higher key input prices and
general inflation, partly offset by cost savings from the Group's
Cost and Competitiveness Programme, the weaker Chilean peso and the
implementation of the new IFRS 16 Leases accounting standard as
explained in Note 1 to the half-year financial report. As a result,
weighted average unit cash costs excluding by-product credits
(which are reported as part of revenue) and refining charges for
concentrates (which are deducted from revenue) decreased from
$1.74/lb in the first six months of 2018 to $1.48/lb in the first
half of 2019.
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 2019, the programme achieved
savings of $51 million at the Group's mining subsidiary
companies.
Other mining division costs increased by $2.6 million.
Exploration and evaluation costs increased by $11.0 million to
$52.0 million (first half of 2018 - $41.0 million), with the most
significant factors in the increase being increased drilling work
at Centinela and Los Pelambres in relation to the reserve and
resource estimates. Corporate costs decreased by $11.5 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 decreased by $1.0 million to $52.9
million, mainly due to lower fuel consumption and a slightly lower
diesel price.
Depreciation, amortisation and disposals
The depreciation and amortisation charge increased by $113.4
million in the first half of 2019 to $437.6 million (first half of
2018 - $324.2 million). This mainly reflected increased
depreciation of lease assets as a result of the implementation of
IFRS 16 Leases, higher amortisation of IFRIC 20 stripping costs and
increased depreciation of the Centinela concentrator plant due to
the increased copper concentrate sales volumes. The loss on
disposal of property, plant & equipment was $2.1 million, an
increase of $2.0 million (2017 - $0.1 million).
Operating profit from subsidiaries
As a result of the above factors, operating profit from
subsidiaries increased in 2019 by 52.1% to $791.7 million (first
half of 2018 - $520.4 million).
Share of results from associates and joint ventures
The Group's share of results from associates and joint ventures
was a profit of $16.9 million in the first six months of 2019,
compared with a gain of $13.7 million in the first half of 2018,
with the increase mainly reflecting higher profit from Inversiones
Hornitos S.A. due to the impact of a major maintenance at the
Hornitos power plant in the first half of 2018.
EBITDA
EBITDA (earnings before interest, tax, depreciation,
amortisation) increased by $401.7 million or 44.4% to $1,305.9
million (first half of 2018 - $904.2 million). EBITDA includes the
Group's proportional share of EBITDA from associates and joint
ventures.
EBITDA from the Group's mining division increased by $402.3
million or 46.9% from $858.5 million in the first six months of
2018 to $1,260.8 million this half year, essentially reflecting the
higher revenue explained above.
EBITDA at the transport division decreased by $0.6 million to
$45.1 million in 2019, reflecting the decreased revenue and a
slightly lower operating costs partly offset by a higher EBITDA
from associates due to Inversiones Hornitos S.A..
Commodity price and exchange rate sensitivities
The following sensitivities show the estimated approximate
impact on EBITDA for the first six months of 2019 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 2019, 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 30.06.19 for the six
months ended
30.06.19
$m
Copper price $2.80/lb 235
Molybdenum price $12.0/lb 17
Gold price $1,309/oz 19
US dollar / Chilean peso exchange
rate 675 60
Net finance expense
Net finance expense decreased by $22.9 million to $45.6 million,
compared with $68.5 million in 2018.
Six months Six months
ended ended
30.06.19 30.06.18
$m $m
Investment income 26.0 15.0
Interest expense (61.3) (49.1)
Other finance items (10.3) (34.4)
----------- -----------
Net finance expense (45.6) (68.5)
=========== ===========
Investment income increased from $15.0 million in 2018 to $26.0
million in 2019, mainly due to an increase in average interest
rates.
Interest expense increased from $49.1 million in 2018 to $61.3
million in 2019. This mainly reflected the increase in the average
LIBOR rate and the implementation of the new accounting standard
IFRS 16 Leases as explained in Note 1 to the half-year financial
report.
Other finance items were a net expense of $10.3 million (first
half of 2018 - expense of $34.4 million). This reflected an expense
of $6.7 million for the unwinding of the discounting of provisions
(first half of 2018 - $6.5 million), an expense of $3.5 million in
respect of foreign exchange (first half of 2018 - expense of $27.9
million) and an expense of $0.1 million for preference
dividends.
Profit before tax
As a result of the factors set out above, profit before tax
increased by 63.9% to $763.0 million in the first half of 2019
(first half of 2018 - $465.6 million).
Income tax expense
The tax charge in the first half of 2019 was $272.6 million
(first half of 2018 - $151.4 million) and the effective tax rate
was 35.7% (first half of 2018 - 32.4%).
Six months
Six months ended
ended 30.06.2019 30.06.2018
ITEMS ITEMS
$m % $m %
Profit before tax 763.0 465.6
Tax at the Chilean corporate
rate tax of 27% (206.0) 27.0 (125.7) 27.0
Items not deductible from first
category tax (3.8) 0.5 (4.6) 1.0
Adjustment in respect of prior
years 7.4 (1.0) 2.7 (0.6)
Deduction of mining royalty as
an allowable expense in determination
of
first category tax 11.3 (1.5) 8.2 (1.8)
Mining tax (royalty) (42.6) 5.5 (31.3) 6.7
Withholding taxes (27.1) 3.6 (2.1) 0.4
Tax effect of share of results
of associates and joint ventures 4.8 (0.6) 4.8 (1.0)
Unrecognised tax losses (16.9) 2.2 (4.2) 0.9
Net other items 0.3 - 0.8 (0.2)
----------- ------- -------- ------
Tax expense and effective tax
rate for the year (272.6) 35.7 (151.4) 32.4
----------- ------- ======== ======
The effective tax rate varied from the statutory rate
principally due to the mining tax (impact of $42.6 million / 5.5%),
the withholding tax relating to the remittance of profits from
Chile (impact of $27.1 million / 3.6%), unrecognised tax losses
(impact of $16.9 / 2.2%) and items not deductible for Chilean
corporate tax purposes, principally the funding of expenses outside
of Chile (impact of $3.8 million / 0.5%), partly offset by the
deduction of the mining tax which is an allowable expense when
determining the Chilean corporate tax charge (impact of $11.3
million / 1.5%) 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 $4.8 million / 0.6%).
Profit from discontinued operations
On 11 September 2018 the Group completed the disposal of
Centinela Transmisión S.A., which holds the electricity
transmission line supplying Centinela and other external parties,
for cash consideration of $117.2 million. The net results of
Centinela Transmisión for the comparative period of the first six
months of 2018 are shown in the income statement on the line for
Profit for the period from discontinued operations.
Non-controlling interests
Profit for the first half of year attributable to
non-controlling interests was $188.0 million, compared with $121.4
million in the first half of 2018, an increase of $66.6 million.
This reflected the increase in earnings analysed above.
Earnings per share
Six months Six months
ended ended
30.06.19 30.06.18
$ cents $ cents
Earnings per share from continuing
operations 30.7 19.6
Earnings per share from discontinued
operations - 0.2
----------- -----------
Earnings per share from continuing
and discontinued operations 30.7 19.8
=========== ===========
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 $302.4 million compared with
$194.3 million in the first half of 2018, and total earnings per
share from continuing and discontinued operations was 30.7 cents
per share (first half of 2018 - 19.8 cents per share). Earnings per
share from continuing operations was 30.7 cents per share (first
half of 2018 - 19.6 cents per share).
Dividends
Dividends per share declared in relation to the period are as
follows:
Six months Six months
ended ended
30.06.19 30.06.18
$ cents $ cents
Ordinary dividends:
Interim 10.7 6.8
Total dividends to ordinary shareholders 10.7 6.8
=========== ===========
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
2019 of 10.7 cents per ordinary share, which amounts to $105.5
million and will be paid on 4 October 2019 to shareholders on the
share register at the close of business on 6 September 2019.
The Board declared an interim dividend for the first half of
2018 of 6.8 cents per ordinary share, which amounted to $67.0
million and was paid on 5 October 2018 to shareholders on the share
register at the close of business on 7 September 2018.
Capital expenditure
Capital expenditure increased by $43.5 million from $422.0
million in the first half of 2018 to $465.5 million in the current
period, mainly due to expenditure in respect of the Los Pelambres
Expansion project.
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 2019 the
derivative financial instruments in place had a positive fair value
of $3.0 million.
Cash flows
The key features of the Group cash flow statement are summarised
in the following table.
Six months Six months
ended ended
30.06.19 30.06.18
$m $m
Cash flows from continuing operations 1,514.4 890.4
Income tax paid (208.3) (331.6)
Net interest paid (17.9) (21.4)
Capital contributions and loans to
associates - (4.3)
Disposal of subsidiary and associate - (0.1)
Purchases of property, plant and equipment (465.5) (422.0)
Proceeds from sale of property, plant
and equipment 1.6 0.4
Dividends paid to equity holders of
the Company (364.8) (399.9)
Dividends paid to non-controlling (200.0) -
interests
Dividends from associates 4.0 2.2
Other items (0.7) (1.0)
------------- -------------
Changes in net debt relating to cash
flows 262.8 (287.3)
Other non-cash movements (184.0) (22.2)
Foreign exchange 0.1 (11.2)
------------- -------------
Movement in net debt in the period 78.9 (320.7)
Net debt at the beginning of the year (596.3) (460.5)
------------- -------------
Net debt at the end of the period (517.4) (781.2)
============= =============
Cash flows from continuing operations were $1,514.4 million in
the first half of 2019 compared with $890.4 million in the first
half of 2018. This reflected EBITDA from subsidiaries for the
period of $1,231.4 million (first half of 2018 - $844.7 million),
adjusted for the positive impact of a net working capital decrease
of $301.7 million (first half of 2018 - positive impact of $45.3
million from a net working capital decrease) and the negative
impact of a decrease in provisions of $18.6 million (first half of
2018 - positive impact of an increase in provisions of $0.4
million). The working capital decrease was mainly due to the $275
million refund of the one-off short-term VAT payment which had been
made in December 2018 and was refunded to the Group as expected in
January 2019.
The net cash outflow in respect of tax in the first half of 2019
was $208.3 million (first half of 2018 - $331.6 million). This
amount differs from the current tax charge in the consolidated
income statement of $272.6 million (first half of 2018 - $151.4
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 $279.4 million (first half of
2018 - $207.6 million), in the first half of 2018 withholding tax
due on remittances of profits from Chile of $2.1 million, the
settlement of outstanding balances in respect of the previous
year's tax charge of $0.6 million (first half of 2018 - $147.5
million) and the recovery of $71.8 million in 2019 relating to
prior years (first half of 2018 - recovery of $25.6 million).
There were no contributions and loans to associates and joint
ventures in the first six months of 2018 (first half of 2018 - $4.3
million).
Capital expenditure in the first half of 2019 was $465.5 million
compared with $422.0 million in the first half of 2018. This
included expenditure of $226.7 million at Centinela (first half of
2018 - $237.5 million), $189.2 million at Los Pelambres (first half
of 2018 - $129.7 million), $30.3 million at Antucoya (first half of
2018 - $23.7 million), $0.8 million at Corporate (first half of
2018 - $2.7 million) and $18.5 million at the transport divisions
(first half of 2018 - $27.9 million).
At 30 June 2019 dividends paid to equity holders of the Company
were $364.8 million (first half of 2018 - $399.9 million), related
to the payment of the final dividend declared in respect of
2018.
Dividends paid by subsidiaries to non-controlling shareholders
were $200.0 million (first half of 2018 - nil).
Financial position
At 30.06.19 At 30.06.18
$m $m
Cash, cash equivalents
and liquid investments 2,189.2 1,645.8
Total borrowings (2,706.6) (2,427.0)
------------ ------------
Net debt at the end
of the period (517.4) (781.2)
============ ============
At 30 June 2019 the Group had combined cash, cash equivalents
and liquid investments of $2,189.2 million (30 June 2018 - $1,645.8
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 $1,793.7 million (30
June 2018 - $1,416.8 million).
Total Group borrowings at 30 June 2018 were $2,706.6 million (at
30 June 2018 - $2,427.0 million). The increase reflected $198
million of additional borrowings at Los Pelambres in respect of the
expansion project and $131 million of additional lease liabilities
recognised upon the implementation of IFRS 16 Leases at 1 January
2019 (as explained in Note 1 to the half-year financial report),
partly offset by net repayments including a $75 million repayment
of the senior loan at Centinela.
Of the total borrowings, $2,032.6 million (at 30 June 2018 -
$1,860.9 million) is proportionally attributable to the Group after
excluding the non-controlling interest shareholdings in
partly-owned operations.
This resulted in net debt in the first half of 2019 of $517.4
million (first half of 2018 - $781.2 million). Excluding the
non-controlling interest share in each partly-owned operation, the
Group's attributable net debt was $238.8 million (30 June 2018 -
$444.1 million).
Going concern
The Group's business activities, together with those factors
likely to affect its future performance, are set out in the
Directors' Comments for the Six Months Ended 30 June 2019 and the
Review of Operations and Projects. Details of the cash flows of the
Group during the period, along with its financial position at the
period-end are set out in this Financial Review. The half-year
financial report includes details of the Group's cash, cash
equivalents and liquid investment balances in Note 19, and details
of borrowings are set out in Note 16. When assessing the going
concern status of the Group the Directors have considered in
particular 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. When assessing the prospects of the Group, the Directors
have considered the Group's copper price forecasts, the Group's
expected production levels, operating cost profile, capital
expenditure and financing plans. The Directors have taken into
consideration the Group's key risks which could impact the
prospects of the Group, with the most relevant to this assessment
considered to be risks to the copper price outlook. Robust downside
sensitivity analyses have been performed, assessing the impact of a
significant deterioration in the copper price outlook. These
stress-tests all indicated results which could be managed in the
normal course of business. Based on their assessment of the Group's
prospects and viability, the Directors have 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 financial statements. Having reassessed the
principal risks, the Directors considered it appropriate to adopt
the going concern basis of accounting in preparing its condensed
interim financial statements.
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 Directors do not consider that the principal risks and
uncertainties have changed since the publication of the annual
report for the year ended 31 December 2018. A detailed explanation
of the risks summarised below can be found in the Risk Management
section of that annual report which is available at
www.antofagasta.co.uk. Key headline risks relate to the
following:
-- Talent management and labour relations
-- Safety and health
-- Environmental management
-- Community relations
-- Political, legal and regulatory
-- Corruption
-- Operations
-- Strategic resources
-- Cyber security
-- Liquidity
-- Commodity prices and exchange rates
-- Innovation
-- Growth of mineral resource base and opportunities
-- Project execution
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 Six months Year
ended 30.06.2019 ended 30.06.2018 ended
(Unaudited) (Unaudited) 31.12.2018
(Audited)
Notes $m $m $m
Revenue 2,5 2,525.6 2,120.7 4,733.1
Total operating costs (1,733.9) (1,600.3) (3,388.1)
------------------------------- ----------------------------- ---------------------
Operating profit from
subsidiaries 2,4 791.7 520.4 1,345.0
Net share of profit
from associates
and joint ventures 2,4 16.9 13.7 22.2
------------------------------- ----------------------------- ---------------------
Total profit from
operations,
associates and joint
ventures 808.6 534.1 1,367.2
Investment income 26.0 15.0 30.1
Interest expense (61.3) (49.1) (113.5)
Other finance items (10.3) (34.4) (31.1)
------------------------------- ----------------------------- ---------------------
Net finance expense 7 (45.6) (68.5) (114.5)
------------------------------- ----------------------------- ---------------------
Profit before tax 763.0 465.6 1,252.7
Income tax expense 8 (272.6) (151.4) (423.7)
------------------------------- ----------------------------- ---------------------
Profit for the period
from continuing
operations 490.4 314.2 829.0
=============================== ============================= =====================
Discontinued
operations
Profit for the period
from discontinued
operations - 1.5 51.3
------------------------------- ----------------------------- ---------------------
Profit for the period 490.4 315.7 880.3
=============================== ============================= =====================
Attributable to:
Non-controlling
interests 188.0 121.4 336.6
Profit for the period
attributable
to the owners of the
parent 302.4 194.3 543.7
------------------------------- ----------------------------- ---------------------
Basic earnings per
share
From continuing
operations 10 30.7 19.6 51.5
From discontinued
operations 10 - 0.2 3.6
------------------------------- ----------------------------- ---------------------
Total continuing and
discontinued
operations 30.7 19.8 55.1
Consolidated Statement of Comprehensive Income
Six months Six months Year
ended ended ended
30.06.2019 30.06.2018 31.12.2018
(Unaudited) (Unaudited) (Audited)
Notes $m $m $m
Profit for the financial year 490.4 315.7 880.3
Items that may be or were subsequently reclassified
to profit or loss:
Gains on cash flow hedges - time value 0.9 6.6 6.8
Gains on cash flow hedges - intrinsic value 1.4 0.1 1.4
Deferred tax effects arising on cash flow - - -
hedges deferred in reserves
(Gains)/losses in fair value of cash flow
hedges transferred to the income statement (0.4) 0.4 (0.6)
Deferred tax effects arising on amounts transferred - (0.1) -
to the income statement
Share of other comprehensive losses of equity
accounted units, net of tax 14 - - (0.4)
------------------ ----------------- -----------------
Total items that may be or were subsequently
reclassified to profit or loss 1.9 7.0 7.2
Items that will not be subsequently reclassified
to profit or loss:
Actuarial gains / (losses) on defined benefit
plans 2.1 (2.7) 3.9
Tax on items recognised through OCI which will
not be reclassified to profit or loss in the
future (1.2) 0.6 -
Losses in fair value of equity investments 15 (0.9) (1.3) (1.3)
------------------ ----------------- -----------------
Total Items that will not be subsequently
reclassified to profit or loss - (3.4) 2.6
Total other comprehensive income 1.9 3.6 9.8
Total comprehensive income for the year period 492.3 319.3 890.1
================== ================= =================
Attributable to:
Non-controlling interests 188.4 123.4 339.3
Equity holders of the Company 303.9 195.9 550.8
------------------ ----------------- -----------------
Consolidated Statement of Changes in Equity
Non-
Share Share Other Retained Net controlling
capital premium reserves earnings equity interests Total
$m $m $m $m $m $m $m
Balance at 1
January
2019 89.8 199.2 (14.5) 7,084.9 7,359.4 2,078.7 9,438.1
Profit for the
period - - - 302.4 302.4 188.0 490.4
Other
comprehensive
income
for the year - - 1.0 0.5 1.5 0.4 1.9
Dividends - - - (364.8) (364.8) (320.0) (684.8)
--------------- ------------- ------------------- ---------------- --------- ---------------- ----------------
Balance at 30
June 2019 89.8 199.2 (13.5) 7,023.0 7,298.5 1,947.1 9,245.6
=============== ============= =================== ================ ========= ================ ================
For the six months ended 30 June 2018 (Unaudited)
Non-
Share Share Other Retained Net controlling
capital premium reserves earnings equity interests Total
$m $m $m $m $m $m $m
Balance at 31 December
2017 89.8 199.2 (12.5) 7,041.9 7,318.4 1,823.2 9,141.6
Adoption of new accounting
standards(1) - - (5.8) 1.1 (4.7) (2.0) (6.7)
--------- --------- ---------- ---------- --------- ------------- ---------
Balance at 1 January
2018 89.8 199.2 -18.3 7,043 7,313.7 1,821.2 9,134.9
Profit for the period - - - 194.3 194.3 121.4 315.7
Other comprehensive
income for the year - - 3.4 (1.8) 1.6 2.0 3.6
Dividends - - - (399.9) (399.9) - (399.9)
--------- --------- ---------- ---------- --------- ------------- ---------
Balance at 30 June 2018 89.8 199.2 (14.9) 6,835.6 7,109.7 1,944.6 9,054.3
========= ========= ========== ========== ========= ============= =========
For the year ended 31 December 2018 (Audited)
Other Retained
reserves earnings Non-
Share Share (Note (Note Net controlling
capital premium 22) 22) equity interests Total
$m $m $m $m $m $m $m
Balance at 31 December
2017 89.8 199.2 (12.5) 7,041.9 7,318.4 1,823.2 9,141.6
Adoption of new accounting
standards(1) - - (5.8) 1.1 (4.7) (2.0) (6.7)
--------- --------- ---------- ---------- -------- ------------- --------
Balance at 1 January
2018 89.8 199.2 (18.3) 7,043.0 7,313.7 1,821.2 9,134.9
Profit for the year - - - 543.7 543.7 336.6 880.3
Other comprehensive
income for the year - - 3.8 3.3 7.1 2.7 9.8
Transfer to Non-controlling
interest - - - (38.2) (38.2) 38.2 -
Dividends - - - (466.9) (466.9) (120.0) (586.9)
--------- --------- ---------- ---------- -------- ------------- --------
Balance at 31 December
2018 89.8 199.2 (14.5) 7,084.9 7,359.4 2,078.7 9,438.1
========= ========= ========== ========== ======== ============= ========
(1) Adoption of new accounting standards refers to the adoption
of IFRS 15 and IFRS 9 as of 01 January 2018.
Consolidated Balance Sheet
At 30.06.2019 At 30.06.2018 At 31.12.2018
(Unaudited) (Unaudited) (Audited)
Non-current assets Notes $m $m $m
Intangible asset 12 150.1 150.1 150.1
Property, plant and
equipment 13 9,413.4 9,135.6 9,184.1
Other non-current assets 2.9 3.0 2.6
Inventories 179.8 125.0 172.7
Investment in associates
and
joint ventures 14 1,069.7 1,085.1 1,056.1
Trade and other
receivables 47.2 60.6 56.1
Derivative financial
instruments 0.8 0.3 -
Equity investments 15 3.9 4.8 4.7
Deferred tax assets 7.6 61.4 37.2
------------------------- ------------------------- -------------------------
10,875.4 10,625.9 10,663.6
------------------------- ------------------------- -------------------------
Current assets
Inventories 594.5 562.9 576.3
Trade and other
receivables 486.2 532.7 873.5
Current tax assets 93.8 142.6 90.7
Derivative financial
instruments 6 1.9 0.2 0.8
Liquid investments 19 - 968.9 863.2
Cash and cash equivalents 19 2,189.2 676.9 1,034.4
------------------------- ------------------------- -------------------------
3,365.6 2,884.2 3,438.9
Assets of disposal group
classified
as held for sale 9 - 38.7 -
------------------------- ------------------------- -------------------------
Total assets 14,241.0 13,548.8 14,102.5
========================= ========================= =========================
Current liabilities
Short-term borrowings and
leases 16 (726.5) (562.1) (646.0)
Derivative financial
instruments 6 - (0.2) -
Trade and other payables (699.7) (518.8) (608.3)
Current tax liabilities (31.9) (57.3) (52.8)
------------------------- ------------------------- -------------------------
(1,458.1) (1,138.4) (1,307.1)
------------------------- ------------------------- -------------------------
Non-current liabilities
Medium and long-term
borrowings
and leases 16 (1,980.1) (1,866.5) (1,847.9)
Trade and other payables (10.9) (3.7) (7.7)
Liabilities in relation to
joint
ventures 14 (1.7) (1.7) (1.0)
Post-employment benefit
obligations (112.0) (114.6) (107.4)
Decommissioning &
restoration
provisions (419.6) (435.2) (409.8)
Deferred tax liabilities (1,013.0) (933.5) (983.5)
------------------------- ------------------------- -------------------------
(3,537.3) (3,355.2) (3,357.3)
Liabilities of disposal - (0.9) -
group
classified as held for
sale
------------------------- ------------------------- -------------------------
Total liabilities (4,995.4) (4,494.5) (4,664.4)
========================= ========================= =========================
Net assets 9,245.6 9,054.3 9,438.1
Equity
Share capital 17 89.8 89.8 89.8
Share premium 17 199.2 199.2 199.2
Other reserves (13.5) (14.9) (14.5)
Retained earnings 7,023.0 6,835.6 7,084.9
------------------------- ------------------------- -------------------------
Equity attributable to
equity
holders of the Company 7,298.5 7,109.7 7,359.4
Non-controlling interests 1,947.1 1,944.6 2,078.7
------------------------- ------------------------- -------------------------
Total equity 9,245.6 9,054.3 9,438.1
========================= ========================= =========================
The condensed consolidated interim Financial Statements were
approved for issue on 21 August 2019.
Consolidated Cash Flow Statement
At 30.06.2019 At 30.06.2018 At 31.12.2018
(Unaudited) (Unaudited) (Audited)
Notes $m $m $m
Cash flows from operations 18 1,514.5 890.4 1,877.0
Interest paid (38.9) (29.3) (68.2)
Income tax paid (208.3) (331.6) (498.0)
----------------------- ---------------------- ----------------------
Net cash from operating activities 1,267.3 529.5 1,310.8
----------------------- ---------------------- ----------------------
Investing activities
Capital contributions and loan to
associates and joint ventures 14 - (4.3) (8.1)
Dividends from associates 14 4.0 2.2 16.6
Disposal of subsidiary and joint
ventures - - 145.2
Acquisition of mining properties - (0.1) (0.1)
Cash reclassified as part of
disposal
group - (1.0) (13.2)
Proceeds from sale of property,
plant and equipment 1.6 0.4 0.7
Purchases of property, plant and
equipment (465.5) (422.0) (872.8)
Net decrease in liquid investments 19 863.2 199.8 305.5
Interest received 21.0 7.9 26.4
----------------------- ---------------------- ----------------------
Net cash from / (used) in
investing
activities 424.3 (217.1) (399.8)
----------------------- ---------------------- ----------------------
Financing activities
Dividends paid to equity holders
of the Company (364.8) (399.8) (466.9)
Dividends paid to preference
shareholders
of the Company - (0.1) (0.1)
Dividends paid to non-controlling
interests (200.0) - (120.0)
Proceeds from issue of new
borrowings 19 398.0 218.0 420.0
Repayments of borrowings 19 (325.9) (511.4) (733.8)
Repayments of lease obligations 19 (50.2) (14.6) (33.3)
Net cash used in financing
activities (542.9) (707.9) (934.1)
----------------------- ---------------------- ----------------------
Net increase / (decrease) in cash
and cash equivalents 19 1,148.7 (395.5) (23.1)
======================= ====================== ======================
Cash and cash equivalents at
beginning
of the period 1,034.4 1,083.6 1,083.6
Net increase / (decrease) in cash
and cash equivalents 19 1,148.7 (395.5) (23.1)
Effect of foreign exchange rate
changes 19 6.1 (11.2) (26.0)
Cash and cash equivalents at end
of the period 19 2,189.2 676.9 1,034.5
======================= ====================== ======================
Notes
1. General information and accounting policies
a) General information
These June 2019 interim condensed consolidated financial
statements ("the condensed financial statements") have been
prepared for the six months ended 30 June 2019. The condensed
financial statements are unaudited. The information for the year
ended 31 December 2018 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 2018 have been approved by the Board
and have been delivered to the Registrar of Companies. The auditor
has reported on those accounts and their report was unqualified,
with no matters 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 financial statements have been prepared under
the accounting policies as set out in the statutory accounts for
the year ended 31 December 2018, other than the changes required by
the implementation of new accounting standards as set out
below.
On 11 September 2018 the Group completed the disposal of
Centinela Transmission, which holds the electricity transmission
line supplying Centinela and other external parties, for cash
consideration of $117 million. The net results of Centinela
Transmission for the comparative period of the first six months of
2018 are shown in the income statement on the line for "Profit for
the period from discontinued operations.
b) Adoption of new accounting standards
IFRS 16 Leases
The Group has applied IFRS 16 Leases in the current period. IFRS
16 has resulted in most of the Group's operating leases being
accounted for similarly to finance leases under the previous IAS 17
Leases, resulting in the recognition of additional assets within
property, plant and equipment in respect of the right-of-use lease
assets, and additional lease liabilities. The Group has applied the
optional transitional provisions of IFRS 16 which resulted in the
initial impact of the new standard being recognised as an
adjustment to the balance sheet as at 1 January 2019, with no
restatement of the comparative period. The Group also applied the
transition option to recognise the right-of-use assets as at 1
January 2019 at amounts equal to the corresponding lease
liabilities, with no overall impact on net assets or retained
earnings as at 1 January 2019. For leases previously classified as
finance leases the carrying amounts of the lease assets and lease
liabilities immediately prior to transition on 31 December 2018
have been recognised as the carrying amounts of the right of use
assets and the lease liabilities at the date of initial application
on 1 January 2019.
In applying IFRS 16 for the first time, the group has used the
following practical expedients permitted by the standard:
- the use of a single discount rate to a portfolio of leases
with reasonably similar characteristics
- reliance on previous assessments on whether leases are onerous
- the use of hindsight in determining the lease term where the
contract contains options to extend or terminate the lease; and
- the accounting for operating leases, with a total lease term
of less than 12 months, as short-term leases.
The implementation of IFRS 16 on 1 January 2019 resulted in the
recognition of additional lease assets within property, plant and
equipment and additional lease liabilities as at 1 January 2019 of
$131 million in each case.
The weighted average incremental borrowing rate applied to the
Group's lease liabilities recognised on the balance sheet at 1
January 2019 was 5.1%.
For the six months ended 30 June 2018, operating lease costs of
$117 million were recognised within operating expenses before
depreciation (impacting EBITDA). The adoption of IFRS 16 has
resulted in the first six months of 2019 in a decrease in operating
expenses before depreciation (and therefore an increase in EBITDA)
of $29 million, an increase in depreciation of $32 million, an
increase in finance costs of $5 million and a reduction in profit
before tax of $6 million.
The operating lease commitments as at 31 December 2018 disclosed
in Note 32 of the Group's 2018 Annual Report is reconciled to the
lease liabilities recognised at 1 January 2019 in the table
below:
$m
Total operating lease commitments per Note 32 of
the 2018 Annual Report 142.6
---------------------------------------------------------------- ----------- ----------------
Impact of discounting operating lease commitments to
present value (12.4)
Other adjustments 1.2
-------------------------------------------------------------------------- --- ----------------
Former operating leases recognised on the balance sheet
at 1 January 2019 131.3
Finance leases previously recognised at 31 December
2018 171.9
--------------------------------------------------------------------- ------- ----------------
IFRS 16 lease liabilities at 1 January 2019 303.2
---------------------------------------------------------------- ----------- ----------------
New leases entered into in the six months
ended 30 June 2019 32.2
Repayments of lease liabilities (50.2)
Foreign exchange 6.2
Other movements 0.3
------------------------------------------------------------------------------- ----------------
IFRS 16 lease liabilities at 30 June 2019 291.7
Analysed between:
Current liabilities 80.0
Non-current
liabilities 211.7
The recognised right-of-use assets relate
to the following types of assets:
30 June 1 January
2019 2019
----------- ----------
Mining equipment & Plant 162.3 169.0
Trucks 95.4 109.6
Facilities and infrastructure 3.2 0.3
Pickup trucks 2.0 2.6
Total right-of-use assets 262.9 281.5
=========== ==========
In respect of the presentation in the cash flow statement,
repayments of lease liabilities are separated into a principal
portion (within financing activities) and interest portion (within
operating activities). Until 2018 lease repayments were recognised
within cash flows from operating activities.
Accounting policy for leases
Until 2018 leases were classified as operating leases or finance
leases. Rental costs under operating leases were charged to the
income statement account in equal annual amounts over the term of
the lease. Assets under finance leases are recognised as assets of
the Group at inception of the lease at the lower of fair value or
the present value of the minimum lease payments derived by
discounting at the interest rate implicit in the lease. The
interest element is charged within financing costs so as to produce
a constant periodic rate of interest on the remaining balance of
the liability.
From 1 January 2019, leases are recognised as a right-of-use
asset and a corresponding liability at the date at which the leased
asset is available for use by the group. Each lease payment is
allocated between the liability and finance cost. The finance cost
is charged to profit or loss over the lease period so as to produce
a constant periodic rate of interest on the remaining balance of
the liability for each period. The right-of-use asset is
depreciated over the shorter of the asset's useful life and the
lease term on a straight-line basis.
Assets and liabilities arising from a lease are initially
measured on a present value basis. Lease liabilities include the
net present value of the following lease payments:
- fixed payments (including in-substance fixed payments), less any lease incentives receivable
- variable lease payment that are based on an index or a rate
- amounts expected to be payable by the lessee under residual value guarantees
- the exercise price of a purchase option if the lessee is
reasonably certain to exercise that option, and
- payments of penalties for terminating the lease, if the lease
term reflects the lessee exercising that option.
The lease payments are discounted using the interest rate
implicit in the lease. If that rate cannot be determined, the
lessee's incremental borrowing rate is used, being the rate that
the lessee would have to pay to borrow the funds necessary to
obtain an asset of similar value in a similar economic environment
with similar terms and conditions.
Right-of-use assets are measured at cost comprising the
following:
- the amount of the initial measurement of lease liability
- any lease payments made at or before the commencement date less any lease incentives received
- any initial direct costs, and
- restoration costs
Other 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 financial statements:
-- Prepayment Features with Negative Compensation (Amendments to IFRS 9)
-- Long-term Interests in Associates and Joint Ventures (Amendments to IAS 28)
-- Annual Improvements to IFRS Standards 2015-2017 Cycle
-- IFRIC 23, Uncertainty over Income Tax Treatments
-- Plan Amendment, Curtailment or Settlement (Amendments to IAS 19)
c) 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, 2021
-------------------------------------
Amendments to IFRSs Effective date (Subject to
EU endorsement)
-------------------------------------
Sale or Contribution of Assets between Effective date deferred indefinitely
an Investor and its Associate or Joint
Venture (Amendments to IFRS 10 and IAS
28)
-------------------------------------
Amendments to References to the Conceptual Annual periods beginning on
Framework in IFRS Standards or after January 1, 2020
-------------------------------------
Definition of a Business (Amendments to Annual periods beginning on
IFRS 3) or after January 1, 2020
-------------------------------------
Definition of Material (Amendments to Annual periods beginning on
IAS 1 and IAS 8) or after January 1, 2020
-------------------------------------
The Group is continuing to evaluate the impact of adopting these
new standards and amendments.
2. Total profit from operations, associates and joint ventures
Six months Six months Year
ended 30.06.2019 ended 30.06.2018 ended
(Unaudited) (Unaudited) 31.12.2018
(Audited)
$m $m $m
Revenue 2,525.6 2,120.7 4,733.1
Cost of sales (1,428.2) (1,317.6) (2,826.4)
--------------------------- ------------------------- ----------------------
Gross profit 1,097.4 803.1 1,906.7
Administrative and distribution
expenses (233.8) (213.1) (417.6)
Other operating income 16.3 10.3 21.8
Other operating expenses (88.2) (79.9) (165.9)
--------------------------- ------------------------- ----------------------
Operating profit from subsidiaries 791.7 520.4 1,345.0
--------------------------- ------------------------- ----------------------
Net share of income from associates
and joint ventures 16.9 13.7 22.2
--------------------------- ------------------------- ----------------------
Total profit from operations,
associates
and joint ventures 808.6 534.1 1,367.2
=========================== ========================= ======================
Other operating expenses mainly comprise a net credit of $5.6
million relating to the decommissioning and restoration provisions
(30 June 2018 - $4.1 million expense), $52.0 million of exploration
and evaluation expenditure (30 June 2018 - $41.0 million) and $41.8
million of other expenses (30 June 2018 - $24.7 million).
3. Asset sensitivities
There were no indicators of potential impairment, or reversal of
previous impairments, for the Group's operations at the 2019
half-year, and accordingly no impairment reviews have been
performed. However, in order to provide an indication of the
sensitivities of the recoverable amount of the Group's mining
operations, a valuation and sensitivity analysis has been
performed.
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.
The key assumptions to which the value of the assets are most
sensitive are future commodity prices, 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. The commodity 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. 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.
This 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. As an additional
down-side sensitivity, a valuation was performed with a 5%
reduction in the long-term copper price. Los Pelambres still showed
positive headroom in this alternative down-side scenario, and
Zaldívar indicated a breakeven position, however the Antucoya
valuation indicated a potential deficit of $125 million and the
Centinela valuation indicated a potential deficit of $630 million.
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.
4. Segmental analysis
The Group's reportable segments are as follows:
-- Los Pelambres
-- Centinela
-- Antucoya
-- Zaldivar
-- Exploration and evaluation
-- Corporate and other items
-- Transport and other transport services
For management purposes, the Group is organised into two
business divisions based on their products - Mining and Transport
and other transport services. The mining division is split further
for management reporting purposes to show results by mine and
exploration activity. Los Pelambres produces copper concentrate,
and molybdenum, gold and silver as by-products. Centinela produces
copper concentrate, and copper cathodes, and molybdenum, gold and
silver as by-products. Antucoya and Zaldivar produce copper
cathodes. The transport division provides rail and road cargo
together with a number of ancillary services. All the operations
are based in Chile. The Exploration and evaluation segment includes
exploration and evaluation expenses. "Corporate and other items"
comprises costs incurred by Antofagasta plc ("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 monitors the operating
results of the business segments separately for the purpose of
making decisions about resources to be allocated and of assessing
performance.
a) Segment revenues and results
For the six months ended 30.06.2019 (Unaudited)
Los Pelambres Centinela Antucoya Zaldivar Exploration Corporate Total Transport Total
and and other Mining division
evaluation(2) items
$m $m $m $m $m $m $m $m $m
Revenue 1,177.8 1,040.9 224.7 - - - 2,443.4 82.2 2,525.6
Operating costs
excluding
depreciation (470.9) (508.4) (183.5) - (52.0) (26.5) (1,241.3) (52.9) (1,294.2)
Depreciation and
amortisation (123.4) (256.0) (45.2) - - (3.9) (428.5) (9.1) (437.6)
Loss on
disposals (1.6) (0.5) - - - - (2.1) - (2.1)
-------------- -------------- -------------- ------------- ----------------- -------------- --------------- ------------- ---------------
Operating
profit/(loss) 581.9 276.0 (4.0) - (52.0) (30.4) 771.5 20.2 791.7
Equity
accounting
profit - - - 10.1 - (0.8) 9.3 7.6 16.9
Investment
income 6.0 3.5 0.9 - - 15.2 25.6 0.4 26.0
Interest expense (4.1) (21.1) (23.4) - - (11.4) (60.0) (1.3) (61.3)
Other finance
items (4.4) (4.8) - - - (1.3) (10.5) 0.2 (10.3)
-------------- -------------- -------------- ------------- ----------------- -------------- --------------- ------------- ---------------
Profit/(loss)
before
tax 579.4 253.6 (26.5) 10.1 (52.0) (28.7) 735.9 27.1 763.0
Tax (170.2) (66.3) (0.1) - - (29.5) (266.1) (6.5) (272.6)
-------------- -------------- -------------- ------------- ----------------- -------------- --------------- ------------- ---------------
Profit/(loss)
for
the period from
continuing
operations 409.2 187.3 (26.6) 10.1 (52.0) (58.2) 469.8 20.6 490.4
Profit for the - - - - - - - - -
period from
discontinued
operations
-------------- -------------- -------------- ------------- ----------------- -------------- --------------- ------------- ---------------
Profit/(loss)
for
the period 409.2 187.3 (26.6) 10.1 (52.0) (58.2) 469.8 20.6 490.4
Non-controlling
interests 162.7 44.1 (18.8) - - - 188.0 - 188.0
Profit/(loss)
for
the period
attributable
to owners of
the
parent 246.5 143.2 (7.8) 10.1 (52.0) (58.2) 281.8 20.6 302.4
============== ============== ============== ============= ================= ============== =============== ============= ===============
EBITDA(1) 706.9 532.5 41.2 59.4 (52.0) (27.2) 1,260.8 45.1 1,305.9
Additions to
non-current
assets
Capital
expenditure 242.9 271.9 16.6 - - 0.7 532.1 18.6 550.7
Segment assets and liabilities
Segment assets 4,125.4 5,639.1 1,658.6 - - 1,393.3 12,816.4 354.9 13,171.3
Investment in
associates
and joint
ventures - - - 1,006.5 - (0.1) 1,006.4 63.3 1,069.7
Segment
liabilities (1,555.9) (1,758.4) (925.5) - - (639.6) (4,879.4) (116.0) (4,995.4)
(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 from
exploration and evaluation segment was $50.0 million
For the six months ended 30 June 2018 (Unaudited)
Los Centinela Antucoya Zaldivar Exploration Corporate Total Transport Total
Pelambres and and other Mining division
evaluation(2) items
$m $m $m $m $m $m $m $m $m
Revenue 1,082.6 733.6 216.1 - - - 2,032.3 88.4 2,120.7
Operating costs
excluding
depreciation (488.6) (504.4) (150.1) - (41.0) (38.0) (1,222.1) (53.9) (1,276.0)
Depreciation
and
amortisation (102.5) (176.4) (34.1) - - (3.2) (316.2) (8.0) (324.2)
(Loss)/gains
on disposals - - - - - - - (0.1) (0.1)
----------- ----------- --------- --------- -------------- ---------- ----------- ---------- -----------
Operating
profit/(loss) 491.5 52.8 31.9 - (41,0) (41,2) 494,0 26,4 520,4
Equity
accounting
profit/(loss) - - - 13.7 - (4.6) 9.1 4.6 13.7
Investment
income 2.9 2.1 0.7 - - 8.9 14.6 0.4 15.0
Interest expense (2.8) (16.8) (19.3) - - (9.6) (48.5) (0.6) (49.1)
Other finance
items (20.0) (8.4) (1.1) - - 1.1 (28.4) (6.0) (34.4)
----------- ----------- --------- --------- -------------- ---------- ----------- ---------- -----------
Profit/(loss)
before tax 471.6 29.7 12.2 13.7 (41.0) (45.4) 440.8 24.8 465.6
Tax (148.3) (0.7) 1.1 - - 0.7 (147.2) (4.2) (151.4)
----------- ----------- --------- --------- -------------- ---------- ----------- ---------- -----------
Profit/(loss)
for the period
from continuing
operations 323.3 29.0 13.3 13.7 (41.0) (44.7) 293.6 20.6 314.2
Profit for the
period from
discontinued
operations - - - - - 1.5 1.5 - 1.5
Profit/(loss)
for the period 323.3 29.0 13.3 13.7 (41.0) (43.2) 295.1 20.6 315.7
----------- ----------- --------- --------- -------------- ---------- ----------- ---------- -----------
Non-controlling
interests 129.3 (3.9) (4.4) 0.4 121.4 - 121.4
Profit/(loss)
for the period
attributable
to owners of
the parent 194.0 32.9 17.7 13.7 (41.0) (43.6) 173.7 20.6 194.3
=========== =========== ========= ========= ============== ========== =========== ========== ===========
EBITDA(1) 594.0 229.2 66.0 49.6 (41.0) (39.3) 858.5 45.7 904.2
Additions to non-current
assets
Capital
expenditure 139.4 247.9 26.0 - - 3.1 416.4 27.8 444.2
Segment assets and
liabilities
Segment assets 3,751.8 5,299.0 1,643.9 - - 1,385.0 12,079.7 385.0 12,464.7
Investment in
associates and
joint ventures - - - 995.8 - 21.4 1,017.2 67.9 1,085.1
Segment
liabilities (1,124.6) (1,733.8) (883.4) - - (644.2) (4,386.0) (106.9) (4,492.9)
(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 from
exploration and evaluation segment was $56.0 million
For the year ended 31 December 2018 (Audited)
Los Centinela Antucoya Zaldivar Exploration Corporate Total Transport Total
Pelambres and and other Mining division
evaluation(2) items
$m $m $m $m $m $m $m $m $m
Revenue 2,493.5 1,609.2 457.6 - - - 4,560.3 172.8 4,733.1
Operating costs
excluding
depreciation (1,065.9) (964.2) (316.0) - (97.6) (61.4) (2,505.1) (109.2) (2,614.3)
Depreciation
and
amortisation (243.3) (415.4) (78.7) - - (7.2) (744.6) (15.9) (760.5)
(Loss)/gains
on disposals (10.5) - - - - - (10.5) (2.8) (13.3)
---------- ---------- --------- --------- -------------- ---------- ---------- ---------- ----------
Operating
profit/(loss) 1,173.8 229.6 62.9 - (97.6) (68.6) 1,300.1 44.9 1,345.0
Equity
accounting
profit/(loss) - - - 14.2 - (2.9) 11.3 10.9 22.2
Investment
income 6.0 5.1 1.2 - - 17.0 29.3 0.8 30.1
Interest expense (5.8) (35.5) (49.6) - - (20.5) (111.4) (2.1) (113.5)
Other finance
items (13.2) (7.8) (3.1) - - 0.4 (23.7) (7.4) (31.1)
---------- ---------- --------- --------- -------------- ---------- ---------- ---------- ----------
Profit/(loss)
before tax 1,160.8 191.4 11.4 14.2 (97.6) (74.6) 1,205.6 47.1 1,252.7
Tax (371.8) (18.7) 0.9 - - (20.1) (409.7) (14.0) (423.7)
---------- ---------- --------- --------- -------------- ---------- ---------- ---------- ----------
Profit/(loss)
for the year
from continuing
operations 789.0 172.7 12.3 14.2 (97.6) (94.7) 795.9 33.1 829.0
Profit for the
year from
discontinued
operations - 51.3 - - - - 51.3 - 51.3
---------- ---------- --------- --------- -------------- ---------- ---------- ---------- ----------
Profit/(loss)
for the year 789.0 224.0 12.3 14.2 (97.6) (94.7) 847.2 33.1 880.3
Non-controlling
interests (315.5) (35.8) 14.7 - - - (336.6) - (336.6)
---------- ---------- --------- --------- -------------- ---------- ---------- ---------- ----------
Profit/(loss)
for the year
attributable
to owners of
the parent 473.5 188.2 27.0 14.2 (97.6) (94.7) 510.6 33.1 543.7
========== ========== ========= ========= ============== ========== ========== ========== ==========
EBITDA(1) 1,427.6 645.0 141.6 87.4 (97.6) (64.6) 2,139.4 88.9 2,228.3
Additions to
non-current
assets
Capital
expenditure 364.8 535.2 65.7 - - 4.5 970.2 67.7 1,037.9
Segment assets
and liabilities
Segment assets 4,003.7 5,312.8 1,942.0 - - 1,444.5 12,703.0 343.4 13,046.4
Investment in
associates and
joint ventures - - - 996.4 - - 996.4 59.7 1,056.1
Segment
liabilities (1,218.0) (1,746.1) (948.8) - - (632.2) (4,545.1) (119.3) (4,664.4)
(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) Operating cash outflow in the exploration and evaluation
segment was $81.0 million
b) Entity wide disclosures
Revenue by product(1)
Six months Six months Year ended
ended 30.06.2019 ended 30.06.2018 31.12.2018
$m $m $m
Copper
- Los Pelambres 981.2 879.1 2,040.3
- Centinela concentrates 582.8 355.1 827.9
- Centinela cathodes 278.0 316.2 589.4
- Antucoya 224.7 216.1 457.6
Gold
- Los Pelambres 32.8 32.5 78.6
- Centinela 163.1 56.4 169.4
Molybdenum
- Los Pelambres 150.2 156.1 340.2
- Centinela 4.9 - 7.8
Silver
- Los Pelambres 13.6 14.9 34.4
- Centinela 12.1 5.9 14.7
Total Mining 2,443.4 2,032.3 4,560.3
Railway and transport services 82.2 88.4 172.8
------------------------- ------------------------- -------------------------
2,525.6 2,120.7 4,733.1
========================= ========================= =========================
Revenue by location of customer(1)
Six months Six months Year ended
ended 30.06.2019 ended 30.06.2018 31.12.2018
$m $m $m
Europe
- United Kingdom 88.9 39.6 125.3
- Switzerland 326.1 182.6 587.0
- Spain 86.9 90.4 152.9
- Germany 49.5 72.5 117.3
- Rest of Europe 61.2 62.9 131.7
Latin America
- Chile 122.0 119.2 248.1
- Rest of Latin America 23.6 37.3 73.9
North America
- United States 55.0 88.0 199.4
Asia Pacific
- Japan 779.5 674.4 1,413.0
- China 251.0 303.0 481.2
- Singapore 312.7 194.1 633.9
- South Korea 197.7 148.1 322.0
- Rest of Asia 171.5 108.6 247.4
------------------------- ------------------------- -------------------------
2,525.6 2,120.7 4,733.1
========================= ========================= =========================
(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 2019 the Group's mining revenue included
$375.1 million related to one large customer that individually
accounted for more than 10% of the Group's revenue (six months
ended 30 June 2018 - one large customer representing $315.2
million; year ended 31 December 2018 - one large customer
representing $678.1 million).
Non-current assets by location of asset
Six months Six months Year ended
ended ended 30.06.2018 31.12.2018
30.06.2019
$m $m $m
- Chile 10,703.0 10,388.2 10,449.0
- USA 172.4 172.1 172.6
- Other 0.1 0.1 0.1
------------------ ----------------------- ----------------
10,875.5 10,560.4 10,621.7
================== ======================= ================
Notes to geographical information
The non-current assets balance disclosed by location of assets
excludes financial instruments, equity investments and deferred tax
assets.
5. Revenue
Copper and molybdenum concentrate sale agreements and copper
cathode sale agreements 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 contain provisional pricing
mechanisms the total receivable balance is measured at fair value
through profit or loss. Gains and losses from the marking-to-market
of open sales are recognised through adjustments to revenue in the
income statement and to trade debtors 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 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 Year ended
ended 30.06.2019 ended 30.06.2018 31.12.2018
$m $m $m
Revenue from contracts with
customers
Sale of products 2,399.5 2,076.5 4,660.5
Rendering of transport services 82.2 88.4 172.8
Shipping services 34.5 34.5 74.4
Provisional pricing adjustments in
respect
of copper, gold and molybdenum 9.4 (78.7) (174.6)
Total revenue 2,525.6 2,120.7 4,733.1
========================= ========================= =========================
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 4.
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 below.
Copper and molybdenum concentrate sales are stated net of
deductions for tolling charges, as shown in the tables below.
For the period ended 30 June
2019(1)
$m $m $m $m $m $m $m
Los Centinela Centinela Antucoya Los Pelambres Centinela Los Pelambres
Pelambres
Copper Copper Copper Copper Gold Gold Molybdenum
concentrate concentrate cathodes cathodes in concentrate in concentrate concentrate
1,057.6 621.6 284.3 226.2 34.4 160.2 167.7
Provisionally invoiced
gross sales
Effects of pricing
adjustments
to previous year
invoices
-------------------- ------------------------- ------------------- --------------------- ----------------------- ----------------------- -----------------------
Reversal of
mark-to-market
adjustments at the end
of the previous year 23.6 9.5 1.7 0.7 - (0.7) (0.6)
Settlement of sales
invoiced
in the previous year 0.4 8.3 0.6 (0.9) (1.2) 1.4 (8.4)
-------------------- ------------------------- ------------------- --------------------- ----------------------- ----------------------- -----------------------
Total effect of
adjustments
to previous year
invoices
in the current period 24.0 17.8 2.3 (0.2) (1.2) 0.7 (9.0)
-------------------- ------------------------- ------------------- --------------------- ----------------------- ----------------------- -----------------------
Effects of pricing adjustments
to current period invoices
------------------------- ------------------- --------------------- ----------------------- ----------------------- -----------------------
Settlement of sales
invoiced
in the current period (9.8) 0.6 (7.9) (1.9) (0.3) 1.1 10.7
Mark-to-market
adjustments
at the end of the
current
period (15.6) (3.6) (0.7) 0.5 - 1.7 0.2
-------------------- ------------------------- ------------------- --------------------- ----------------------- ----------------------- -----------------------
Total effect of
adjustments
to current period
invoices (25.4) (3.0) (8.6) (1.4) (0.3) 2.8 10.9
-------------------- ------------------------- ------------------- --------------------- ----------------------- ----------------------- -----------------------
Total pricing
adjustments (1.4) 14.8 (6.3) (1.6) (1.5) 3.5 1.9
Realised losses on - - - 0.1 - - -
commodity
derivatives
Revenue before deducting
tolling charges 1,056.2 636.4 278.0 224.7 32.9 163.7 169.6
Tolling charges (75.0) (53.6) - - (0.1) (0.6) (19.4)
Revenue net of tolling
charges 981.2 582.8 278.0 224.7 32.8 163.1 150.2
==================== ========================= =================== ===================== ======================= ======================= =======================
(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 2018
$
$m $m $m $m $m m $m
Los Pelambres Los Centinela Los Pelambres
Centinela Centinela Antucoya Pelambres
Gold Gold
Copper Copper Copper Copper in in Molybdenum
concentrate concentrate cathodes cathodes concentrate concentrate concentrate
Provisionally
invoiced
gross sales 1,007.6 412.4 320.3 218.9 32.4 58.2 160.7
Effects of
pricing
adjustments
to previous
year invoices
-------------- ------------- ---------- ---------- ------------- -------------- --------------
Reversal of
mark-to-market
adjustments at
the end
of the
previous year (54.1) (20.0) (1.7) (2.7) - (0.2) (4.6)
Settlement of
sales invoiced
in the
previous year 14.2 8.8 0.6 1.6 0.3 (0.2) 18.9
-------------- ------------- ---------- ---------- ------------- -------------- --------------
Total effect of
adjustments
to previous
year invoices
in the current
period (39.9) (11.2) (1.1) (1.1) 0.4 (0.4) 14.3
-------------- -------------
Effects of
pricing
adjustments
to current
period invoices
-------------- -------------
Settlement of
sales invoiced
in the current
period (0.9) 1.7 (0.7) (0.4) (0.1) (0.4) (0.5)
Mark-to-market
adjustments
at the end of
the current
period (18.6) (11.6) (2.3) (1.3) - (0.8) (3.7)
Total effect of
adjustments
to current
period invoices (19.5) (9.9) (3.0) (1.7) (0.1) (1.2) (4.2)
Total pricing
adjustments (59.4) (21.1) (4.1) (2.8) 0.2 (1.6) 10.1
Realised losses - - - - - - -
on commodity
derivatives
Revenue before
deducting
tolling charges 948.2 391.3 316.2 216.1 32.6 56.6 170.8
Tolling charges (69.1) (36.2) - - (0.1) (0.2) (14.7)
Revenue net of
tolling
charges 879.1 355.1 316.2 216.1 32.5 56.4 156.1
For the year ended 31 December 2018(1) $
$m $m $m $m $m m $m
Los Los Centinela Los
Pelambres Centinela Centinela Antucoya Pelambres Pelambres
Gold Gold
Copper Copper Copper Copper in in Molybdenum
concentrate concentrate cathodes cathodes concentrate concentrate concentrate
Provisionally
invoiced
gross sales 2,325.7 957.3 599.1 465.0 79.6 171.1 358.6
Effects of
pricing
adjustments
to previous
year invoices
------------ ------------ ------------ ------------
Reversal of
mark-to-market
adjustments at
the end
of the
previous year (54.1) (20.0) (1.7) (2.7) - (0.2) (4.6)
Settlement of
sales invoiced
in the
previous year 14.2 8.8 0.6 1.6 0.4 (0.2) 18.9
Total effect of
adjustments
to previous
year invoices
in the current
period (39.9) (11.2) (1.1) (1.1) 0.4 (0.4) 14.3
Effects of
pricing
adjustments
to current
period invoices
Settlement of
sales invoiced
in the current
period (59.8) (26.3) (7.9) (6.2) (1.2) (1.3) 0.2
Mark-to-market
adjustments
at the end of
the current
period (23.6) (9.5) (0.7) (0.7) - 0.7 0.7
Total effect of
adjustments
to current
period
invoices (83.4) (35.8) (8.6) (6.9) (1.2) (0.6) 0.9
Total pricing
adjustments (123.3) (47.0) (9.7) (8.0) (0.8) (1.0) 15.2
Realised gains
on commodity
derivatives - - - 0.6 - - -
Revenue before
deducting
tolling
charges 2,202.4 910.3 589.4 457.6 78.8 170.1 373.8
Tolling charges (162.1) (82.4) - - (0.3) (0.6) (33.6)
Revenue net of
tolling
charges 2,040.3 827.9 589.4 457.6 78.5 169.5 340.2
(1) Figures include both revenue from the sale of products and
the associated income from the provision of shipping services.
The revenue from the individual products shown in the above
tables is reconciled to total revenue in Note 4.
(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 30.06.2019 At 30.06.2018 At 31.12.2018
Sales Tonnes 171,000 107,500 177,400
Average mark-to-market price $/lb 2.72 3.01 2.71
Average provisional invoice
price $/lb 2.77 3.14 2.79
(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 30.06.2019 At 30.06.2018 At 31.12.2018
Sales Tonnes 12,400 14,200 14,300
Average mark-to-market price $/lb 2.72 3.01 2.70
Average provisional invoice price $/lb 2.67 3.13 2.75
(iii) Gold in concentrate
The typical period for which sales of gold in concentrate remain
open is approximately one month from shipment date.
At 30.06.2019 At 30.06.2018 At 31.12.2018
Sales Ounces 20,000 14,900 22,100
Average mark-to-market price $/oz 1,413 1,255 1,284
Average provisional invoice price $/oz 1,328 1,305 1,253
(iv) Molybdenum concentrate
The typical period for which sales of molybdenum remain open is
approximately two months from shipment date.
At 30.06.2019 At 30.06.2018 At 31.12.2018
Sales Tonnes 2,500 2,600 3,600
Average mark-to-market price $/lb 12.25 11.10 12.10
Average provisional invoice price $/lb 12.21 11.80 12.10
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 debtors 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 30.06.2019 ended 30.06.2018 ended 31.12.2018
$m $m $m
Los Pelambres - copper concentrate (15.6) (18.6) 54.1
Los Pelambres - molybdenum concentrate 0.2 (3.7) 4.7
Centinela - copper concentrate (3.6) (11.6) 20.1
Centinela - gold in concentrate 1.7 (0.8) 0.2
Centinela - copper cathodes (0.7) (2.3) 1.7
Antucoya - copper cathodes 0.5 (1.3) 2.7
(17.5) (38.3) 83.5
6. Financial instruments
a) Categories of financial instruments
The carrying value of financial assets and financial liabilities
is shown below:
Six months ended 30.06.2019
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 2.7 - - 2.7
Equity investments - 3.9 - 3.9
Loans and receivables 421.8 - 111.6 533.4
Cash and cash equivalents - - 2,189.2 2,189.2
Liquid investments - - - -
424.5 3.9 2,300.8 2,729.2
Financial liabilities
Derivative financial - - - -
liabilities
Trade and other payables (19.9) - (690.7) (710.6)
Borrowings and leases - - (2,706.6) (2,706.6)
(19.9) - (3,397.3) (3,417.2)
Six months ended 30.06.2018
At fair value At fair value Held at Total
through profit through other amortised cost
and loss comprehensive
income
$m $m $m $m
Financial assets
Derivatives financial
assets 0.5 - - 0.5
Equity investments - 4.8 - 4.8
Loans and receivables 395.7 - 197.6 593.3
Cash and cash equivalents - - 676.9 676.9
Liquid investments 968.9 - - 968.9
1,365.1 4.8 874.5 2,244.4
Financial liabilities
Derivatives financial
liabilities (0.2) - - (0.2)
Trade and other payables (38.3) - (484.2) (522.5)
Borrowings and leases - - (2,428.6) (2,428.6)
(38.5) - (2,912.8) (2,951.3)
Year ended 31.12.2018
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 0.8 - - 0.8
Equity investments - 4.7 - 4.7
Loans and receivables 510.2 - 419.4 929.6
Cash and cash equivalents - - 1,034.4 1,034.4
Liquid investments 863.2 - - 863.2
1,374.2 4.7 1,453.8 2,832.7
Financial liabilities
Derivative financial - - - -
liabilities
Trade and other payables (34.5) - (581.5) (616.0)
Borrowings and leases - - (2,493.9) (2,493.9)
(34.5) - (3,075.4) (3,109.9)
The fair value of 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 30.06.2019
Level Level Level Total
1 2 3
$m $m $m $m
Financial assets
Derivatives financial assets (a) - 2.7 - 2.7
Equity investments (b) 3.9 - - 3.9
Loans and receivables (c) - 421.8 - 421.8
Liquid investment (d) - - - -
3.9 424.5 - 428.4
Financial liabilities
Derivatives financial liabilities (a) - - - -
Trade and other payables - (19.9) - (19.9)
- (19.9) - (19.9)
Six months ended 30.06.2018
Level 1 Level Level Total
2 3
$m $m $m $m
Financial assets
Derivatives financial assets (a) - 0.5 - 0.5
Equity investments (b) 4.8 - - 4.8
Loans and receivables (c) - 395.7 - 395.7
Liquid investment (d) 968.9 - - 968.9
973.7 396.2 - 1,369.9
Financial liabilities
Derivatives financial liabilities (a) - (0.2) - (0.2)
Trade and other payables - (38.3) - (38.3)
- (38.5) - (38.5)
Year ended 31.12.2018
Level 1 Level Level Total
2 3
$m $m $m $m
Financial assets
Derivative financial assets (a) - 0.8 - 0.8
Equity investments (b) 4.7 - - 4.7
Loans and receivables (c) - 510.2 510.2
Liquid investment (d) 863.2 - - 863.2
867.9 511.0 - 1,378.9
Financial liabilities
Derivative financial liabilities (a) - - - -
Trade and other payables - (34.5) - (34.5)
- (34.5) - (34.5)
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.
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 debtors 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 period ended 30 June 2019, there were no transfers between
levels in the hierarchy.
b) 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.
The Group has applied the hedge accounting provisions of IFRS 9
"Financial Instruments" changes in the fair value of derivative
financial instruments that are designated and effective as hedges
of future cash flows have been recognised directly in other
comprehensive income, with such amounts subsequently recognised in
the income statement in the period when the hedged item has been
recognised in the income statement or balance sheet. The time value
element of changes in the fair value of derivative options is
recognised in other comprehensive income.
7. Net finance expense
Six months Six months Year
ended 30.06.2019 ended 30.06.2018 ended 31.12.2018
$m $m $m
Investment income
Interest receivable 5.2 5.1 9.9
Gains on fair value through profit or
loss 20.8 9.9 20.2
26.0 15.0 30.1
Interest expense
Interest expense (61.3) (49.1) (113.6)
(61.3) (49.1) (113.6)
Other finance items
Unwinding of discount on provisions (6.7) (6.5) (12.7)
Preference dividends (0.1) - (0.1)
Foreign exchange (3.5) (27.9) (18.2)
(10.3) (34.4) (31.0)
Net finance expense (45.6) (68.5) (114.5)
In the six months ended 30 June 2019, amounts capitalised and
consequently not included within the above table were as follows:
$1.7 million at Centinela (six months ended 30 June 2018 - $2.7
million; year ended 31 December 2018 - $4.5 million) and $1.1
million at Los Pelambres (six months ended 30 June 2018 - $0.4
million; year ended 31 December 2018 - $0.9 million).
8. Taxation
The tax charge for the period comprised the following:
Six months Six months Year
ended ended ended
30.06.2019 30.06.2018 31.12.2018
$m $m $m
Current tax charge
Corporate tax (principally first category
tax in Chile) (145.0) (170.7) (321.2)
Mining tax (royalty) (42.9) (30.6) (78.1)
Withholding tax (1.6) (2.1) (4.5)
Exchange (losses) / gains on corporate
tax balances 0.3 (0.2) (0.7)
(189.2) (203.6) (404.5)
Deferred tax
Corporate tax (principally first category
tax in Chile) (64.7) 54.1 (14.6)
Mining tax (royalty) 6.7 (1.9) (4.6)
Withholding tax (25.4) - -
(83.4) 52.2 (19.2)
Total tax charge (income tax expense) (272.6) (151.4) (423.7)
The rate of first category (i.e. corporate) tax in Chile is
27%.
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. Production from
Centinela Concentrates and the Tesoro Central and Mirador pits is
subject to a rate of 5% of taxable operating profit.
Six months ended Six months ended Year ended
30.06.2019 30.06.2018 31.12.2018
$m % $m % $m %
Profit before tax 763.0 465.6 1,252.7
Tax at the Chilean corporate tax rate of 27% (206.0) 27.0 (125.7) 27.0 (338.2) 27.0
Items not deductible from first category tax (3.8) 0.5 (4.6) 1.0 (10.8) 0.9
Adjustment in respect of prior years 7.4 (1.0) 2.7 (0.6) 2.6 (0.2)
Deduction of mining royalty as an allowable expense in
determination of first category tax 11.3 (1.5) 8.2 (1.8) 21.1 (1.7)
Mining Tax (royalty) (42.6) 5.5 (31.3) 6.7 (82.5) 6.5
Withholding tax (27.1) 3.6 (2.1) 0.4 (4.5) 0.4
Tax effect of share of profit of associates and joint
ventures 4.8 (0.6) 4.8 (1.0) 3.0 (0.2)
Unrecognised tax losses (16.9) 2.2 (4.2) 0.9 (13.8) 1.1
Net other items 0.3 - 0.8 (0.2) (0.6) -
Tax expense and effective tax rate for the period (272.6) 35.7 (151.4) 32.4 (423.7) 33.8
The effective tax rate varied from the statutory rate
principally due to the mining tax (impact of $42.6 million / 5.5%),
the withholding tax relating to the remittance of profits from
Chile (impact of $27.1 million / 3.6%), unrecognised tax losses
(impact of $16.9 / 2.2%) and items not deductible for Chilean
corporate tax purposes, principally the funding of expenses outside
of Chile (impact of $3.8 million / 0.5%), partly offset by the
deduction of the mining tax which is an allowable expense when
determining the Chilean corporate tax charge (impact of $11.3
million / 1.5%) 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 $4.8 million / 0.6%).
The current and deferred tax relating to items that are charged
directly to equity was $1.2 million (30 June 2018 - $0.9
million).
There are no significant tax uncertainties which would require
critical judgements, estimates or potential provisions.
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.
9. Discontinued operation
On 11 September 2018 the Group completed the disposal of
Centinela Transmission, which holds the electricity transmission
line supplying Centinela and other external parties, for cash
consideration of $117 million. The net results of Centinela
Transmission for the comparative period of the first six months of
2018 are shown in the income statement on the line for "Profit for
the period from discontinued operations.
10. Earnings per share
Six months Six months Year
ended ended ended
30.06.2019 30.06.2018 31.12.2018
$m $m $m
Profit for the period attributable
to equity holders of the Company 302.4 194.3 543.7
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 ended ended
30.06.2019 30.06.2018 31.12.2018
US cent US cent US cent
Basic earnings per share
From continuing operations 30.7 19.6 51.5
From discontinued operations - 0.2 3.6
Total continuing and discontinued
operations 30.7 19.8 55.1
Basic earnings per share are calculated as profit after tax and
non-controlling interests, based on 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.
Reconciliation of basic earnings per share from continuing
operations:
Six months Six months Year
ended ended ended
30.06.2019 30.06.2018 31.12.2018
Profit for the year attributable
to equity holders of the Company $m 302.4 194.3 543.7
Less: profit for discontinued
operations $m - (1.5) (35.9)
Profit from continuing operations $m 302.4 192.8 507.8
Ordinary shares Number 985,856,695 985,856,695 985,856,695
Basic earnings per share from US
continuing operations cent 30.7 19.6 51.5
11. Dividends
The Board has recommended an interim dividend of 10.7 cents per
ordinary share for the 2019 half year (2018 half year - 6.8 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 37.0 cents per ordinary share (2018
half year - 40.6 cents per ordinary share), representing the final
dividend declared in respect of the previous year.
The interim dividend will be paid on 4 October 2019 to ordinary
shareholders that are on the register at the close of business on 6
September 2019. Shareholders can elect (on or before 9 September
2019) 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 12 September 2019). 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.
12. Intangible asset
At 30.06.2019 At 30.06.2018 At 31.12.2018
$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. The mining licences will be
amortised once production commences.
13. Property, plant and equipment
Mining Railway At 30.06.2019 At 30.06.2018 At 31.12.2018
and other
transport
$m $m $m $m $m
Balance at the beginning of the
year 8,959.2 224.9 9,184.1 9,064.3 9,064.3
Adoption of new accounting standards 130.1 1.3 131.4 - -
Additions 500.1 18.6 518.7 420.2 989.5
Additions - depreciation capitalized 32.1 - 32.1 24.0 48.4
Reclassifications 4.6 - 4.6 3.1 16.5
Adjustment to capitalised decommissioning
provisions 25.9 - 25.9 - (24.0)
Depreciation (428.5) (9.1) (437.6) (324.6) (761.1)
Depreciation capitalised in PP&E (32.1) - (32.1) (24.0) (48.4)
Depreciation capitalised in inventories (11.3) - (11.3) (26.0) (86.4)
Asset disposals (2.1) (0.3) (2.4) (0.4) (14.0)
Transferred to disposal group
classified as held for sale - - - (1.0) (0.7)
Balance at the end of the period 9,178.0 235.4 9,413.4 9,135.6 9,184.1
At 30 June 2019 $43.4 million (30 June 2018 - $50.0 million; 31
December 2018 - $134.8 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 4(a).
At 30 June 2019 the Group had entered into contractual
commitments for the acquisition of property, plant and equipment
amounting to $941.7 million (30 June 2018 - $400.1 million; 31
December 2018 - $561.4 million).
Depreciation capitalised in property, plant and equipment of
$32.1 million related to the depreciation of assets used in
operational stripping activities.
There are $1,134.2 million of operating stripping costs
capitalised within the above property, plant and equipment balance
as at 30 June 2019 (30 June 2018 - $996.8 million; 31 December 2018
- $1,029.6 million).
14. Investment in associates and joint ventures
Inversiones
Hornitos Minera Tethyan At At At
(i) ATI(iI) Zaldívar(iv) Copper(vi) 30.06.2019 30.06.2018 31.12.2018
$m $m $m $m $m $m $m
Balance at the
beginning
of the year 54.6 5.1 996.4 - 1,056.1 1,069.7 1,069.7
Obligations on
behalf
of JV - - - (1.0) (1.0) (2.0) (2.0)
Capital
contribution - - - - - 4.3 8.1
Disposal (III) - - - - - - (20.3)
Gains in fair
value of
cash flow hedges
deferred
in reserves of
associates - - - - - - (0.4)
Derecognition of
investment
in associate
upon
reclassification
to subsidiary
(V) - - - - - - (0.2)
Share of
profit/(loss)
before tax 9.9 0.5 15.0 (0.7) 24.7 26.7 33.7
Share of tax (2.7) (0.2) (4.9) - (7.8) (13.0) (16.9)
Share of
income/(loss)
from associate 7.2 0.3 10.1 (0.7) 16.9 13.7 16.8
Dividends
received (4.0) - - - (4.0) (2.2) (16.6)
Balance at the
end of
the year 57.8 5.4 1,006.5 - 1,069.7 1,085.1 1,056.1
Obligations on
behalf
of JV - - - (1.7) (1.7) (1.7) (1.0)
Inversiones Minera Tethyan At At At
Hornitos ATI Zaldívar Copper 31.12.2019 30.06.2018 31.12.2018
$m $m $m $m $m $m $m
Share of income/(loss)
from associate 7.2 0.3 10.1 (0.7) 16.9 13.7 16.8
Profit on disposal - - - - - - 5.8
Purchase price adjustment - - - - - - (0.4)
Net share of profit from
associates and joint
ventures 7.2 0.3 10.1 (0.7) 16.9 13.7 22.2
The investments which are included in the $1,068.1 million
balance at 30 June 2019 are set out below:
Investment in associates
(i) The Group's 40% interest in Inversiones Hornitos SA, which
owns the 165MW Hornitos thermoelectric power plant operating in
Mejillones, in Chile's Antofagasta Region. The Group has 16-year
power purchase agreements with Inversiones Hornitos SA for the
provision of up to 40MW of electricity for Centinela.
(ii) The Group's 30% interest in ATI, which operates a
concession to manage installations in the port of Antofagasta.
(iii) The Group's former 30% interest in El Arrayan, which
operates an 115MW wind-farm project. The Group has a 20-year power
purchase agreement with El Arrayan for the provision of up to 40MW
of electricity for Los Pelambres. In August 2018 the Group disposed
of its interest in El Arrayan for cash consideration of $28.0
million.
Investment in joint ventures
(iv) The Group's 50% interest in Minera Zaldívar SpA ("Zaldívar").
(v) During 2018 the Group acquired the remaining 49.9% interest
in Energia Andina from Origin Geothermal Chile Limitada and
accordingly Energia Andina became a subsidiary of the Group during
2018.
(vi) 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 20.
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 2019
is as follows:
Inversiones ATI Total Total Total
Hornitos
30.06.2019 30.06.2019 30.06.2019 30.06.2018 31.12.2018
$m $m $m $m $m
Cash and cash equivalents 17.3 0.5 17.8 17.6 1.0
Current assets 29.5 12.1 41.6 53.2 49.9
Non-current assets 269.5 117.2 386.7 643.5 394.5
Current liabilities (38.4) (20.5) (58.9) (72.8) (65.4)
Non-current liabilities (155.3) (93.2) (248.5) (428.5) (238.8)
Revenue 81.2 25.9 107.1 105.1 197.3
Profit/(loss) from
continuing operations 18.1 1.7 19.8 9.0 27.1
Other comprehensive - - -
income
Total comprehensive
income/(loss) 18.1 1.7 19.8 9.0 27.1
Summarised financial information for the joint ventures at June
2019 is as follows:
Minera Tethyan
Zaldivar Copper Total Total Total
30.06.2019 30.06.2019 30.06.2019 30.06.2018 31.12.2018
$m $m $m $m $m
Cash and cash equivalent 156.7 1.4 158.1 125.1 127.2
Current assets 641.4 - 641.4 670.4 602.6
Non-current assets 1,838.00 0.2 1,838.20 1,595.70 1,921.20
Current liabilities (86.8) (4.8) (91.6) (104.1) (107.6)
Non-current liabilities (533.7) (0.1) (533.8) (152.9) (547.7)
Revenue 334.1 - 334.1 285.5 599.5
Profit/(loss) after
tax 20.4 (1.5) 18.9 19.4 14.3
Total comprehensive
income 20.4 (1.5) 18.9 19.4 14.3
Notes to the summarised financial information
The 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.
15. Equity investments
At 30.06.2019 At 30.06.2018 At 31.12.2018
$m $m $m
Balance at the beginning of the year 4.7 6.5 6.5
Movements in fair value (0.9) (1.3) (1.3)
Foreign currency exchange difference 0.1 (0.4) (0.5)
Balance at the end of the period 3.9 4.8 4.7
Equity investments represent those investments which are not
subsidiaries, associates or joint ventures. The fair value of all
equity investments are based on quoted market prices.
16. Borrowings and leases
At 30.06.2019 At 30.06.2018 At 31.12.2018
$m $m $m
Los Pelambres
Senior loan (197.4) - -
Short-term loan (82.0) (100.0) (100.0)
Leases (143.7) (39.5) (114.1)
Centinela
Senior loan (372.1) (518.5) (445.1)
Subordinated debt (199.2) (200.3) (207.1)
Short-term loan (200.0) (200.0) (200.0)
Leases (95.8) - -
Antucoya
Senior loan (330.8) (357.9) (349.3)
Subordinated debt (380.5) (357.1) (368.3)
Short-term loan (75.0) (30.0) (75.0)
Leases (29.3) (38.9) (35.2)
Corporate and other items
Senior loan (500.8) (498.8) (500.1)
Leases (21.8) (24.3) (22.1)
Railway and other transport services
Senior loan (74.3) (59.7) (74.2)
Leases (1.3) (0.6) (0.4)
Preference shares (2.6) (3.0) (3.0)
Total (2,706.6) (2,428.6) (2,493.9)
At 30 June 2019 $247.5 million (30 June 2018 - $17.2 million; 31
December 2018 - $22.5 million) of the borrowings has fixed rate
interest and $2,459.1 million (30 June 2018 - $2,396.5 million; 31
December 2018 - $2,468.4 million) has floating rate interest. The
Group periodically enters into interest rate derivative contracts
to manage its exposure to interest rates.
17. Share capital and share premium
There was no change in share capital or share premium in the six
months ended 30 June 2019 or the comparative periods. Details are
shown in the Consolidated Statement of Changes in Equity.
18. Reconciliation of profit before tax to net cash inflow from
operating activities
At At 30.06.2018 At
30.06.2019 31.12.2018
$m $m $m
Profit before tax from continuing operations 763.0 465.6 1,252.7
Profit before tax from discontinued operations - 2.1 2.9
Depreciation and amortisation 437.6 324.2 760.5
Net loss on disposals 2.1 0.1 13.3
Profit on disposal of discontinued operation - (2.1) (2.9)
Net finance expense 45.6 68.5 114.5
Share of profit from associates and joint
ventures (16.9) (13.7) (22.2)
Increase in inventories (16.0) (66.8) (81.7)
Decrease/(Increase) in debtors 387.8 210.3 (151.5)
Decrease in creditors (70.2) (98.2) (7.0)
(Decrease)/Increase in provisions (18.5) 0.4 (1.6)
Cash flow from continuing and discontinued
operations 1,514.5 890.4 1,877.0
19. Analysis of changes in net debt
Adoption
of new Fair Amortisation
accounting Cash value New of finance Capitalisation
At 31.12.2018 standards At 01.01.2019 flows gains leases costs of interest Other Reclassification Exchange At 30.06.2019
$m $m $m $m $m $m $m $m $m $m $m
Cash and
cash
equivalents 1,034.4 - 1,034.4 1,148.7 - - - - - - 6.1 2,189.2
Liquid
investments 863.2 - 863.2 (863.8) 0.6 - - - - - - (0.0)
Total 1,897.6 - 1,897.6 284.9 0.6 - - - - - 6.1 2,189.2
Borrowings
due within
one year (607.2) - (607.2) 93.0 - - - - 1.0 (133.2) - (646.4)
Borrowings
due after
one year (1,711.9) - (1,711.9) (165.1) - - (2.9) (19.2) - 133.2 - (1,765.9)
Leases due
within one
year (38.8) (41.8) (80.6) 20.4 - - - - - (19.8) - (80.0)
Leases due
after one
year (133.0) (89.5) (222.5) 29.8 - (32.2) - - - 19.8 (6.6) (211.7)
Preference
shares (3.0) - (3.0) - - - - - 0.1 - 0.3 (2.6)
Total
borrowings (2,493.9) (131.3) (2,625.2) (21.9) - (32.2) (2.9) (19.2) 1.1 - (6.3) (2,706.6)
Net
(debt)/cash (596.3) (131.3) (727.6) 263.0 0.6 (32.2) (2.9) (19.2) 1.1 - (0.2) (517.4)
Net debt
Net debt at the end of each period was as follows:
At At At 31.12.2018
30.06.2019 30.06.2018
$m $m $m
Cash, cash equivalents and liquid investments 2,189.2 1,645.8 1,897.6
Total borrowings (2,706.6) (2,428.6) (2,493.9)
Net debt (517.4) (782.8) (596.3)
20. Tethyan arbitration award
On 12 July 2019 an international arbitration tribunal of the
World Bank's International Centre for Settlement of Investment
Disputes ("ICSID") awarded $5.84 billion in damages to Tethyan
Copper Company Pty Limited ("TCC"), the joint venture held equally
by the Company and Barrick Gold Corporation, in relation to the
arbitration claims 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 TCC 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.
The award is binding on the parties. There are limited grounds
for challenging the award under the ICSID Convention.
It is not expected that proceeds of the award will be recognised
in Antofagasta's financial statements until received.
21. Related party transactions
Transactions between the Company and its subsidiaries, which are
related parties, have been eliminated on consolidation and are not
disclosed in this note. Transactions between the Group and its
associates and joint ventures are disclosed below. The transactions
which Group companies entered into with related parties who are not
members of the Group are set out below. There are no guarantees
given or received and no provisions for doubtful debts related to
the amount of outstanding balances.
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 2019 the Group made a contribution to Tethyan of nil
(six months ended 30 June 2018 - $4.3 million; year ended 31
December 2018 - $8.1 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 2019 the Group has received dividends from Minera
Zaldívar of nil (six months ended 30 June 2018 - nil; year ended 31
December 2018 - nil).
b) Associates
The Group has a 40% interest in Inversiones Hornitos S.A. During
the six months ended 30 June 2019 the Group paid $109.1 million
(six months ended 30 June 2018 - $94.1 million; year ended 31
December 2018 - $162.2 million) to Inversiones Hornitos in relation
to the energy supply contract at Centinela. During the six months
ended 30 June 2019 the Group received dividends from Inversiones
Hornitos S.A. of $4.0 million (six months ended 30 June 2018 - $2.2
million; year ended 31 December 2018 - $16.6 million).
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 the Group
incurred $0.1 million (30 June 2018 - $0.2 million; 31 December
2018 - $0.2 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 Ollie Oliveira
Chairman Director
Independent review report to Antofagasta plc
Report on the interim condensed consolidated financial
statements
Our conclusion
We have reviewed Antofagasta plc's interim condensed
consolidated financial statements (the 'interim financial
statements') in the half yearly financial report of Antofagasta plc
for the 6 month period ended 30 June 2019. 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 International Accounting Standard 34,
'Interim Financial Reporting', as adopted by the European Union 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 2019;
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 have been prepared in accordance with
International Accounting Standard 34, 'Interim Financial
Reporting', as adopted by the European Union and the Disclosure
Guidance and Transparency Rules sourcebook of the United Kingdom's
Financial Conduct Authority.
As disclosed in note 1 to the interim financial statements, the
financial reporting framework that has been applied in the
preparation of the full annual financial statements of the Group is
applicable law and International Financial Reporting Standards as
adopted by the European Union.
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
21 August 2019
22. 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 ongoing 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.
c) Net Earnings
Net Earnings represent profit for the period attributable to the
owners of the parent
For 30 June 2019
Los Centinela Antucoya Zaldívar Exploration Corporate Mining Railway Total
Pelambres and and other and
evaluation items other
transport
services
$m $m $m $m $m $m $m $m $m
Operating
profit/(loss)(1) 581.9 276.0 (4.0) - (52.0) (30.4) 771.5 20.2 791.7
Depreciation and
amortisation 123.4 256.0 45.2 - - 3.9 428.5 9.1 437.6
Profit on
disposals 1.6 0.5 - - - - 2.1 - 2.1
EBITDA from
subsidiaries 706.9 532.5 41.2 - (52.0) (26.5) 1,202.1 29.3 1,231.4
Proportional
share
of the EBITDA
from associates
and JVs - - - 59.4 - (0.7) 58.7 15.8 74.5
Total EBITDA 706.9 532.5 41.2 59.4 (52.0) (27.2) 1,260.8 45.1 1,305.9
For 30 June 2018
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) 491.5 52.8 31.9 - (41.0) (41.2) 494.0 26.4 520.4
Depreciation
and amortisation 102.5 176.4 34.1 - - 3.2 316.2 8.0 324.2
Profit on
disposals - - - - - - - 0.1 0.1
EBITDA from
subsidiaries 594.0 229.2 66.0 - (41.0) (38.0) 810.2 34.5 844.7
Proportional
share of the
EBITDA from
associates
and JVs 49.6 - (1.3) 48.3 11.2 59.5
Total EBITDA 594.0 229.2 66.0 49.6 (41.0) (39.3) 858.5 45.7 904.2
At 31 December 2018
Los Centinela Antucoya Zaldívar Exploration Corporate Mining Transport Total
Pelambres and and other division
evaluation items
$m $m $m $m $m $m $m $m $m
Operating
profit/(loss)
(1) 1,173.8 229.6 62.9 - (97.6) (68.6) 1,300.1 44.9 1,345.0
Depreciation
and
amortisation 243.3 415.4 78.7 - - 7.2 744.6 15.9 760.5
Profit on
disposals 10.5 - - - - - 10.5 2.8 13.3
EBITDA from
subsidiaries 1,427.6 645.0 141.6 - (97.6) (61.4) 2,055.2 63.6 2,118.8
Proportional
share of the
EBITDA from
associates
and JV - - - 87.4 - (3.2) 84.2 25.3 109.5
Total EBITDA 1,427.6 645.0 141.6 87.4 (97.6) (64.6) 2,139.4 88.9 2,228.3
(1) Operating profit and EBITDA has been affected by the
adoption of IFRS 16 as of 1 January 2019. The comparative figures
have not been updated to reflect this. Further information has been
set out in Note 1.
d) Cash costs
Cash costs are a measure of the cost of operational production
expressed in terms of cents per pound of payable copper
produced.
This is considered to be a useful and relevant measure as it is
a standard industry measure applied by most major copper mining
companies which reflects the direct costs involved in producing
each lb of copper. It therefore allows a straightforward comparison
of the unit production cost of different mines, and allows an
assessment of the position of a mine on the industry cost curve. It
also provides a simple indication of the profitability of a mine
when compared against the price of copper (per lb).
At 30.06.2019 At 30.06.2018 At 31.12.2018
Reconciliation of cash
costs excluding tolling
charges and by-product
revenue:
Total Group operating costs
(Note 4) ($m) 1,733.9 1,600.3 3,388.1
Zaldívar operating
costs 108.5 92.4 202.3
Less:
Total - Depreciation and
amortisation (Note
4) ($m) (437.6) (324.2) (760.5)
Total - Loss on disposal
(Note 4) ($m) (2.1) (0.1) (13.3)
Elimination of non-mining
operations
Corporate and other items -
Total operating
cost (Note 4) ($m) (26.5) (38.0) (61.4)
Exploration and evaluation
- Total operating
cost (Note 4) ($m) (52.0) (41.0) (97.6)
Railway and other transport
services - Total
operating cost (Note 4)
($m) (52.9) (53.9) (109.2)
Closure provision and other
expenses not
included within cash costs
($m) (38.6) (35.0) (78.8)
Inventories Variations 28.3 16.8 (0.5)
Total cost relevant to the
mining operations'
cash costs ($m) 1,261.0 1,217.3 2,469.1
Copper production volumes
(tonnes) 387,300 317,000 725,300
Cash costs excluding
tolling charges and
by-product revenue
($/tonne) 3,256 3,840 3,404
Cash costs excluding
tolling charges and
by-product revenue ($/lb) 1.48 1.74 1.55
At 30.06.2019 At 30.06.2018 At 31.12.2018
Reconciliation of cash
costs before deducting
by-products:
Tolling charges - copper -
Los Pelambres
(Note 5) ($m) 75.0 69.1 162.1
Tolling charges - copper -
Centinela (Note
5) ($m) 53.6 36.2 82.4
Tolling charges - copper -
total ($m) 128.6 105.3 244.5
Copper production volumes
(tonnes) 387,300 317,000 725,300
Tolling charges ($/tonne) 332.0 332.0 337.0
Tolling charges ($/lb) 0.18 0.18 0.17
Cash costs excluding
tolling charges and
by-product revenue ($/lb) 1.48 1.74 1.55
Tolling charges ($/b) 0.18 0.18 0.17
Cash costs before deducting
by-products
(S/lb) 1.66 1.92 1.72
d) Cash costs (continued)
Reconciliation of cash
costs (net of by-products):
Gold revenue - Los
Pelambres (Note 4) ($m) 32.8 32.5 78.6
Gold revenue - Centinela
(Note 4) ($m) 163.1 56.4 169.4
Molybdenum revenue - Los
Pelambres (Note
4) ($m) 150.2 156.1 340.2
Molybdenum revenue -
Centinela (Note 4)
($m) 4.9 - 7.8
Silver revenue - Los
Pelambres (Note 4)
($m) 13.6 14.9 34.4
Silver revenue - Centinela
(Note 4) ($m) 12.1 5.9 14.7
Total by-product revenue
($m) 376.7 265.8 645.1
Copper production volumes
(tonnes) 387,300 317,000.0 725,300.0
By-product revenue
($/tonne) 972.7 839.0 889.0
By-product revenue ($/lb) 0.47 0.40 0.43
Cash costs before deducting
by-products
(S/lb) 1.66 1.92 1.72
By-product revenue ($/lb) (0.47) (0.40) (0.43)
Cash costs (net of
by-products) ($/lb) 1.19 1.52 1.29
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 2019 June 2018
Total Attributable Attributable Total Attributable Attributable
amount share amount amount share amount
$m $m $m $m
Cash, cash equivalents
and liquid investments:
Los Pelambres 578.9 60% 347.3 317.1 60% 190.3
Centinela 400.7 70% 280.5 247.2 70% 173.0
Antucoya 145.7 70% 102.0 93.3 70% 65.3
Corporate 1,033.0 100% 1,033.0 948.2 100% 948.2
Railway and other
transport
services 30.9 100% 30.9 40.0 100% 40.0
Total 2,189.2 1,793.7 1,645.8 1,416.8
Borrowings:
Los Pelambres (Note 16) (423.1) 60% (253.9) (138.8) 60% (83.3)
Centinela (Note 16) (867.1) 70% (607.0) (919.9) 70% (643.9)
Antucoya (Note 16) (815.6) 70% (570.9) (783.5) 70% (548.5)
Corporate (Note 16) (525.2) 100% (525.2) (526.1) 100% (526.1)
Railway and other
transport
services (Note 16) (75.6) 100% (75.6) (60.3) 100% (60.3)
Total (Note 16) (2,706.6) (2,032.6) (2,428.6) (1,862.1)
Net debt (517.4) (238.9) (782.8) (445.3)
23. 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 Year ended Six months Six months Year ended
ended ended 31.12.2018 ended ended 31.12.2018
30.06.2019 30.06.2018 30.06.2019 30.06.2018
Copper 000 tonnes 000 tonnes 000 tonnes 000 tonnes 000 tonnes 000 tonnes
Los Pelambres 180.4 159.1 357.8 170.9 145.4 358.9
Centinela 141.9 103.7 248.0 147.2 106.3 240.9
Antucoya 37.5 32.9 72.2 36.4 31.6 71.3
Zaldívar 27.5 21.3 47.3 26.9 20.6 46.5
Group total 387.3 317.0 725.3 381.4 303.9 717.6
Gold 000 ounces 000 ounces 000 ounces 000 ounces 000 ounces 000 ounces
Los Pelambres 29.8 27.5 63.2 24.9 24.5 62.6
Centinela 119.3 44.5 146.9 123.4 43.6 135.5
Group total 149.1 72.0 210.1 148.3 68.1 198.1
Molybdenum 000 tonnes 000 tonnes 000 tonnes 000 tonnes 000 tonnes 000 tonnes
Los Pelambres 6.2 5.9 13.3 6.4 6.1 13.6
Centinela 0.2 - 0.3 0.2 - 0.4
Group total 6.4 5.9 13.6 6.6 6.1 14.0
Silver 000 ounces 000 ounces 000 ounces 000 ounces 000 ounces 000 ounces
Los Pelambres 1,077.80 1,053.10 2,313.10 908.9 909.10 2,265.4
Centinela 838.4 376.1 1,071.20 822.4 375.9 1,002.1
Group total 1,916.2 1,429.2 3,384.3 1,731.3 1,285.0 3,267.5
b) Cash costs per pound of copper produced and realised prices
per pound of copper and molybdenum sold
Cash costs Realised
prices
Six months Six months Year ended Six months Six months Year ended
ended ended 31.12.2018 ended ended 31.12.2018
30.06.2019 30.06.2018 30.06.2019 30.06.2018
$/lb $/lb $/lb $/lb
Copper
Los Pelambres 0.89 1.04 0.91 2.80 2.96 2.78
Centinela 1.18 1.94 1.51 2.82 3.02 2.82
Antucoya 2.26 2.17 1.99 2.80 3.11 2.91
Zaldivar (attributable
basis - 50%) 1.79 1.97 1.94 - - -
Group weighted average
(net of by-products) 1.19 1.52 1.29 2.81 3.00 2.81
Group weighted average
(before deducting
by-products) 1.66 1.92 1.72
Group weighted average
(before deducting
by-products and excluding
tolling charges from
concentrate) 1.48 1.74 1.55
Cash costs at Los
Pelambres comprise:
On-site and shipping
costs 1.20 1.41 1.27
Tolling charges for
concentrates 0.25 0.26 0.25
Cash costs before
deducting by-product
credits 1.44 1.67 1.52
By-product credits
(principally molybdenum) (0.55) (0.63) (0.61)
Cash costs (net of
by-product credits) 0.89 1.04 0.91
Cash costs at Centinela
comprise:
On-site and shipping
costs 1.57 2.06 1.73
Tolling charges for
concentrates 0.17 0.16 0.16
Cash costs before
deducting by-product
credits 1.74 2.22 1.89
By-product credits
(principally gold) (0.56) (0.28) (0.38)
Cash costs (net of
by-product credits) 1.18 1.94 1.51
LME average copper
price 2.80 3.14 2.96
Gold $/oz $/oz $/oz
Los Pelambres 1,322 1,332 1,260
Centinela 1,327 1,298 1,255
Group weighted average 1,326 1,310 1,256
Market average price 1,308 1,318 1,270
Molybdenum $/lb $/lb $/lb
Los Pelambres 12.0 12.7 12.5
Centinela 12.2 - 10.6
Group weighted average 12.1 12.7 12.4
Market average price 12.0 11.9 11.9
Silver $/oz $/oz $/oz
Los Pelambres 15.2 16.6 15.4
Centinela 15.2 16.5 15.1
Group weighted average 15.2 16.6 15.3
Market average price 15.2 16.6 15.7
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 Zaldívar 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 2019, published on 24 July 2019.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
IR ZLLBLKVFXBBE
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