REG - Antofagasta PLC - HALF YEAR RESULTS
20/08/2024 07:00
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RNS Number : 0106B Antofagasta PLC 20 August 2024
HALF YEAR RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2024
RESILIENT FINANCIAL PERFORMANCE CONTINUES WITH STRONG BALANCE SHEET, CASH FLOW
GENERATION AND EBITDA MARGINS
Antofagasta plc CEO Iván Arriagada said: "Antofagasta demonstrated its
resilience in the first half of the year, maintaining EBITDA margins,
generating savings and productivity improvements of $130 million and advancing
with key projects that provide a strong platform for future growth. In terms
of financial results, revenue rose by 2% and EBITDA increased by 5% during the
first half of 2024.
"Importantly, our growth plan remains on track, with the Centinela Second
Concentrator moving forward ahead of schedule and initial work starting at new
Los Pelambres projects.
"With a strong balance sheet, EBITDA margins and cash flow generation to fund
our expansion plans and sustaining capex, the board of directors has approved
an interim dividend representing 35% of net earnings, in line with the
Company's dividend policy."
UNAUDITED RESULTS SIX MONTHS ENDED 30 JUNE H1 2024 H1 2023 %
Revenue(1) $m 2,955.2 2,890.1 +2.3%
EBITDA $m 1,394.4 1,331.0 +4.8%
EBITDA margin(2) % 47.2 46.1 +1.1pp
Profit before tax (including exceptional items) $m 712.6 764.5 (6.8%)
Cash flow from operations $m 1,483.9 1,296.4 +14.5%
Net debt / EBITDA(1) X 0.46 0.27 +70%
Earnings per share (including exceptional items) cents 26.3 33.5 (21.5%)
Underlying earnings per share (excluding exceptional items)(1) cents 22.4 33.5 (33.1%)
Dividend per share cents 7.9 11.7 (32.5%)
(1)Non-IFRS measures. Refer to the alternative performance measures section on
page 56 in the half-year financial report below.
(2)Calculated as EBITDA/Revenue. If Associates and JVs' revenue is included,
EBITDA Margin was 44.5% in HY 2024 and 43.2% in HY 2023.
HIGHLIGHTS
● Continued strong safety performance recorded in H1 2024, with
no fatalities and an injury frequency rate continuing at a level below 1.0.
● Copper production was 284,700 tonnes, 4% lower year-on-year,
principally representing a balance of lower production at Centinela
concentrates, and higher production at both Centinela Cathodes and Los
Pelambres.
● Cash costs before and after by-product credits were $2.65/lb and
$1.94/lb, 7% and 11% higher than H1 2023, due to lower ore grade and
recoveries at Centinela concentrates and lower grades at Los Pelambres.1
● EBITDA was $1,394.4 million, 5% higher than in H1 2023 on
higher revenues, maintaining our strong EBITDA margin 2 of 47.2%. Cash flow
from operations increased by 14% to $1,483.9 million.
● The balance sheet remained robust with a net debt to EBITDA
ratio of 0.46x, after supporting shareholder distributions and investment in
future production, in line with the Company's capital allocation framework.
● As previously announced, total production for 2024 is
expected to be at the low end of the Company's 670-710,000 tonne guidance
range.
● Given projected production for the full year, cash costs before
by-product credits are expected to be $2.40/lb and net cash costs expected to
be $1.70/lb (based on current spot prices).
● The Competitiveness Programme generated savings and productivity
improvements of $130.0 million in H1 2024, equivalent to 20.7c/lb of unit cash
costs, in line with our plan.
● The Company's growth programme remains on track, with construction
of the Centinela Second Concentrator currently ahead of schedule and initial
groundworks commencing at Los Pelambres' desalination plant expansion,
concentrate pipeline and El Mauro enclosures.
● Interim dividend of 7.9 cents per share announced, equivalent to a
pay-out ratio of 35% of underlying net earnings in line with the Company's
capital allocation framework.
A recording and copy of the 2024 Half Year Results presentation is available
for download from the Company's website www.antofagasta.co.uk
(http://www.antofagasta.co.uk) .
There will be a Q&A video conference call at 2:00pm (UK) today hosted by
Iván Arriagada - Chief Executive Officer, Mauricio Ortiz - Chief Financial
Officer and Alejandra Josefina Vial - Vice President Sustainability.
Participants can join the conference call via the following link:
https://antofagasta-2024-hy-results.open-exchange.net/registration
(https://antofagasta-2024-hy-results.open-exchange.net/registration)
Investors - London
Media - London
Rosario Orchard
rorchard@antofagasta.co.uk Carole Cable
antofagasta@brunswickgroup.com
Robert Simmons
rsimmons@antofagasta.co.uk Telephone
+44 20 7404 5959
Telephone +44 20 7808
0988
Media
- Santiago
Pablo Orozco porozco@aminerals.cl
Carolina Pica cpica@aminerals.cl
Telephone +56 2 2798 7000
Register on our website to receive our email alerts
http://www.antofagasta.co.uk/investors/email-alerts/
(https://www.antofagasta.co.uk/investors/news/email-alerts/)
FINANCIAL AND OPERATING REVIEW
FINANCIAL HIGHLIGHTS
Revenue for the first half of 2024 was $2,955.2 million, 2% higher than in the
same period last year, as a result of realised prices for copper and gold
being higher by 10% and 16% respectively, partially offset by 6% lower copper
and 23% lower gold sales volumes.
The average realised copper price rose by 10% in H1 2024 to $4.40/lb.
EBITDA during the first six months of 2024 was $1,394.4 million, 5% higher
than in the same period in 2023, mainly reflecting the Company's higher
revenue.
EBITDA margin remained robust in H1 2024 at 47.2%, compared with 46.1% in H1
2023.
Profit before tax (excluding exceptional items) was $661.6 million, 13% lower
than the same period in 2023, reflecting the movements described above offset
by higher depreciation and amortisation, mainly as a result of the
commencement of depreciating the assets at the Los Pelambres Phase 1 Expansion
project, which is now in operation.
An exceptional fair value gain of $51.0 million was recognised in H1 2024 in
respect of the agreement to acquire up to an additional 30 million shares in
Compañía de Minas Buenaventura S.A.A. ("Buenaventura"). A deferred tax
expense of $12.7 million has been recognised in respect of this gain,
resulting in a post-tax impact of $38.3 million.
Profit before tax (including exceptional items) was $712.6 million, 7% lower
than in the same period in 2023.
Earnings per share for the year (including exceptional items) were 26.3 cents,
a decrease of 21% compared with H1 2023.
Cash flow from operations was $1,483.9 million, a 14% increase compared with
the same period last year, following a positive movement in creditor balances.
The Board of Directors of the Company has declared an interim ordinary
dividend of 7.9 cents per share, equal to a 35% pay-out of underlying earnings
per share, which represents a level in line with the Company's dividend
policy.
PRODUCTION AND CASH COSTS
Group total ore throughput increased in comparison with H1 2023, resulting
from the Los Pelambres Phase 1 expansion project (44%) and operational
improvements in our copper cathodes plants at Centinela (11%), Antucoya (6%)
and Zaldívar (16%).
Copper production in H1 2024 was 284,700 tonnes, 4% lower year-on-year,
principally representing a balance of lower production from Centinela
concentrates, and higher production at Centinela cathodes and Los Pelambres,
with the latter happening despite the inventory build-up at Los Pelambres in
February 2024.
For the first six months of the year, gold production decreased by 22% to
66,900 ounces, reflecting lower gold grades at Centinela.
Molybdenum production in H1 2024 was 5,200 tonnes, 6% higher than in the same
period last year due to higher ore processing rates at Los Pelambres.
Cash costs in H1 2024 were $2.65/lb, a year-on-year increase of 7% due to
lower ore grades and recoveries at Centinela concentrates and lower grades at
Los Pelambres.
Net cash costs were $1.94/lb for the first half of the year, 11% higher than
the same period in 2023, with this increase driven by the increase in the
underlying cash costs before by-product credits.
COMPETITIVENESS PROGRAMME
The Competitiveness Programme was implemented to reinforce the operational
improvement and reduce the Group's cost base, improving its competitiveness
within the industry. During the first half of 2024, the programme achieved
improvements of $130 million in the mining division, mainly related to
operational efficiencies ($74m), throughput run time ($34 million) and
contract management ($22 million).
EXPLORATION AND EVALUATION COSTS
Exploration and Evaluation costs were $26.8 million. This expenditure is
mainly related to exploration activities in Cachorro and Encierro projects
(Chile) as well as in international pre-feasibility stage explorations at Twin
Metals Minnesota (USA).
TAXATION
The effective tax rate for H1 2024, excluding exceptional items, was 43.3%,
compared to 30.0% in H1 2023, which in turn included a one-off adjustment to
the provision for deferred withholding tax that reduced the effective tax rate
in H1 2023. Including exceptional items (being the fair valuation of the
Company's investment in Buenaventura), the effective tax rate for H1 2024 was
42.0%.
The ad-valorem element of the new royalty was $13.0 million in H1 2024, which
is not included in the Company's effective tax rate.
For more information, please see the Financial Review Section of this report.
The income tax expense for H1 2024 was $299.5 million compared to $229.3
million in H1 2023.
CAPITAL EXPENDITURE AND DEPRECIATION & AMORTISATION
Capital expenditure in H1 2024 was $1,059.5 million (H1 2023: $1,021.9
million), including $340.5 million of sustaining capital expenditure, $202.1
million on mine development, $497.6 million of growth expenditure and $19.3
million within the Transport division.
Group capital expenditure for the full year is expected to be $2.7 billion, in
line with stated guidance.
Depreciation and amortisation increased by $135.9 million to $647.2 million,
primarily driven by higher depreciation at Los Pelambres following completion
of the Phase 1 Expansion project, alongside increased amortisation of IFRIC 20
mine development stripping assets.
CAPITAL ALLOCATION
The Company's capital allocation framework is integral in the process to
allocate investments for sustaining capex, development capex and shareholder
returns. Whilst the Company remains committed to copper production, which
retains a positive long-term outlook, a prudent and consistent approach to
capital allocation is required to generate shareholder returns.
Cash flow from operations increased to $1,483.9 million in H1 2024, compared
with $1,296.4 million in H1 2023.
Net debt at the end of the period was $1,438.6 million (31 December 2023:
$1,159.8 million), with this increase reflecting the operating cash generation
being offset by capital expenditure and dividend. The Net debt to EBITDA ratio
at the end of the period was 0.46 times (31 December 2023: 0.38 times).
The Board has declared an interim dividend of 7.9 cents per share, equivalent
to $77.9 million and a pay-out of 35% of underlying earnings per share,
consistent with the Company's policy and previous interim dividends. Any
distribution of excess cash for the year, as defined under the policy, will be
made as part of the final dividend.
LABOUR
In the Mining division, an early labour negotiation with one of the employees'
unions at Centinela was successfully concluded by the end of May 2024,
resulting in a 3-year contract with a one-off payment fully expensed in Q2
2024. There are no further collective labour contract negotiations scheduled
for the remainder of this year.
The Group is well-placed to move forward with the implementation of changes
that came into force with respect to updated labour legislation in Chile, with
changes pertaining to working hours, work-life balance, and the prevention of
labour and sexual harassment and violence in the workplace.
SUSTAINABILITY
Health and safety
The wellbeing of our workforce is a key aspect of the Company's strategy.
Integrating physical and mental health into our business is pivotal to
maintain our operational excellence. The Company implements a wide range of
control strategies to promote a safety-first production culture, emphasising
the planning and supervision of high-risk tasks as central to the prevention
of occupational injuries and illnesses.
The Company is pleased to report another fatality-free period in H1 2024 (H1
2023: zero), with injury frequency rates continuing in line with the strong
performance recorded in 2023 - including a lost time injury frequency rate of
0.67 in H1 2024 (FY 2023: 0.63) and a total injury frequency rate of 1.85 in
H1 2024 (FY 2023: 1.81).
Reporting and understanding organisational causes of all high potential
incidents (HPIs) is reinforced to capture all lessons learnt and then shared
amongst all operations avoiding repetitions. As a result of an analysis
conducted during H1 2024, all light vehicles and heavy equipment are in the
process of being equipped with fatigue and distraction monitors, to help
reinforce safe-driving behaviours. As a key leading indicator of health and
safety, the Company was pleased to record a further improvement in HPIs in
2024, with 13 incidents recorded during the first half of the year (FY 2023:
34). Accordingly, the incidence rate for HPIs in H1 2024 was 0.08 (FY 2023:
0.10).
The Company's growth and development projects are a key area of focus, with
large numbers of external contractors mobilised to each operation, which
requires careful oversight to ensure the successful integration within the
Company's health and safety procedures. Year-to-date performance at the
Centinela Second Concentrator, and Los Pelambres' desalination plant
expansion, installation of the concentrate pipeline and El Mauro enclosures
has recorded zero lost time injuries, with this result recorded within the
Company's overall safety performance.
Environment
The integration of environmental management with the Company's business model
is key to maintaining the Company's operational excellence. In H1 2024, the
Company strengthened its environmental management model that promotes a
culture of prevention, with a focus on the timely identification, management,
and control of our environmental risks, based on a reliable system and the
leadership of those responsible for each process.
During the first half of 2024, no operational events with serious
environmental consequences have been recorded. In addition, the Company made
progress in H1 2024 in developing the strategy for implementing the necessary
environmental controls to comply with new Chilean regulations on environmental
economic offences.
Communities
As part of its business strategy, the Company is committed to partnering with
local communities on a journey that fosters their development and well-being.
By maintaining proactive engagement through transparent dialogue, the Company
aims to gain a deeper understanding of each communities' needs, enabling
effective collaboration on social projects.
In central Chile, near Los Pelambres, recent community engagement efforts in
the Province of Choapa included the following:
● Somos Choapa: We delivered 155 initiatives jointly with the
community over the first phase of this programme. These initiatives include
the restoration of 550 sqm of public stairways in Los Vilos; the completion of
the In Action Programme, which is focused on strengthening neighbourhood
organisations and Tesoros del Choapa heritage recovery, among other
initiatives.
· Suppliers for a Better Future Programme: In May 2024, the Company
hosted a closing ceremony for the 2023 iteration of this programme, which has
helped to support approximately 100 local suppliers connected to the Company's
accommodation, transportation, logistics, minor works, maintenance, and other
services. The programme has provided training to local suppliers to develop
their own internal business and compliance capabilities as part of becoming
eligible for the Los Pelambres supply chain. At the end of this process, 40%
of the participants were awarded a service contract to work with Los Pelambres
or its contracting companies.
Community engagement highlights in the north of Chile include:
● Social Enablement Strategy at Zaldívar:
§ Heritage Preservation - Ancestral Recipes: Jointly with the Municipality of
San Pedro, and with over 3,000 participants from the indigenous communities of
the Salar, the publication of the "Ancestral Recipe" book was launched. This
initiative seeks to preserve the traditional foods, recipes, and family
histories of Peine, which will later be documented in a film.
§ Education - Salar Scholarships: In May, we hosted the awarding ceremony of
higher education scholarships to indigenous communities of the Salar de
Atacama, which benefited 31 youths from the localities of Camar, Socaire, and
Peine.
· Employability and Supply Strategy - Centinela Second Concentrator
Project: With a focus on local employment, Centinela has hosted a number of
job fairs and information sessions, receiving more than 2,300 resumes from
residents of the local communities of Sierra Gorda, Mejillones, María Elena,
and Tocopilla. In parallel, in conjunction with the Association of
Industrialists of Antofagasta, Centinela organised a Business Roundtable,
bringing together more than 300 regional suppliers.
Diversity and inclusion
The Company continues to promote diversity within its workforce, as it sees
the tangible benefits to leadership and decision-making, increasing female
representation from 8.8% at the point of launching our Diversity and Inclusion
Strategy in 2018, to over 23% at the end of 2023 and 24.5% as of June 2024.
The Company's aim is to achieve a level of 30% female representation within
the workforce by the end of 2025.
Progress in improving diversity and inclusion is achieved by attracting,
recruiting, developing and retaining the right individuals for the role at
hand. Recruitment across the Company in 2023 achieved gender parity, with
women representing 52% of the 1,102 individuals recruited.
The Company's diversity and inclusion programme at Antofagasta includes
attracting and retaining people with disabilities (both seen and unseen)
throughout our business. Across the Group, 1.5% of those working for
Antofagasta have a registered disability, exceeding a regulatory-mandated
minimum in Chile of 1.0%.
Climate change and emissions
Following the publication of the Company's new emissions reduction targets in
February 2024 (shown below) and the Climate Action Plan in March 2024, the
Company is undertaking a series of initiatives to help progress a further
reduction of its emissions footprint.
· Scope 1 and 2 (combined): targeting a 50% reduction by 2035 against a
baseline year of 2020 (on the basis of absolute emissions).
· Scope 3: targeting a 10% reduction by 2030 (relative to a no-action
scenario of projected emissions).
· In addition, the Company maintains its carbon-neutral target for
2050.
Examples of initiatives being advanced at the current time include the trial
of trolley assist technology at Los Pelambres and a fuel efficiency programme
that is being jointly implemented through the Company's innovation,
decarbonisation and advanced analytics teams. Diesel consumption represents
approximately 90% of the Company's Scope 1 emissions and is therefore a key
focal point for decarbonisation efforts.
The Company's Transport division expects to take delivery of a
hydrogen-powered locomotive in H2 2024, which will be an important milestone
in the Company decarbonisation journey and commitment to test and develop
alternatives to fossil fuels.
Water
The effects of climate change are evident in Chile through the changing
availability of water. The Company's operations are located in the Regions of
Antofagasta and Coquimbo, where water consumption is a key consideration.
At Los Pelambres, on 26 July 2024 a new declaration of severe drought
condition was issued, for a new one-year period. Consequently, the water
redistribution agreement approved by the DGA (Chile's water administration
department) in March 2024 took effect again and certain conditions are
required to be completed to enable Los Pelambres to extract up to 400 l/s. Los
Pelambres is working with the JVRCH (Junta de Vigilancia Río Choapa) and the
DGA to expedite this process.
Following the construction of the Company's inaugural desalination plant for
Los Pelambres, approximately half of the water withdrawal at this operation is
now from sea water. Work is already underway to double the capacity of this
facility (from 400 l/s to 800 l/s), which would largely remove Los Pelambres
from continental water sources, and further details of this project are
available on page 12 of this report.
In the north of Chile, Centinela and Antucoya operate on 100% raw seawater.
Zaldívar has submitted an Environmental Impact Assessment Study to undertake
a transition to sea water (or third-party water) sources, which is currently
under evaluation. Details of this application are provided on page 11 of this
report.
With the Los Pelambres desalination plant commissioned, the past year
represented the first year whereby water withdrawals from seawater exceeded
continental water sources, increasing to 60% in 2023 and 64% in H1 2024 (2022:
45%).
Further operational improvement initiatives underway to reduce water use and
increase water recovery, which are included in our annual water usage
efficiency programmes, include pilot projects to increase water recovery from
tailings at Centinela and Los Pelambres, and initiatives to cover operational
water ponds at Centinela and Antucoya.
Suppliers
The Company continues to develop its Suppliers for a Better Future Programme,
launched in December 2022, aiming to align supplier best practices with the
Group's vision and strategic framework. Following this purpose, in June 2024,
the Company signed a collaboration agreement with 20 key suppliers with a
clear focus on promoting gender diversity in its contractor workforce and
enhancing competitiveness and productivity at a supplier level.
To maintain progress in improving suppliers' capabilities, jointly with Alta
Ley Corporation, the Company has implemented a training and guidance programme
on the calculation of greenhouse gas emissions for a group of suppliers, as
part of the copper sector's Scope 3 emissions measurement working group. In
addition, the Company has commenced a second edition of our regional supplier
development sub-programme in partnership with the Universidad Católica del
Norte (UCN), with 60 new participants, with a focus on the promotion of high
standards in sustainability and innovation.
The Company continues to strengthen its relationships with local stakeholders through the organisation of business roundtables, in collaboration with our partner SICEP (Supplier qualification system) of the Antofagasta Industrial Association (AIA). During Exponor 2024, the Company held business roundtables with more than 500 national and international suppliers.
INNOVATION
Cuprochlor-T®
During H1 2024, the Company progressed in trial test work with samples
provided by third-party mine sites, with a view to commercially validating
Cuprochlor-T in the market. In parallel, a pre-feasibility study based on
Cuprochlor-T to extend the life of the Zaldívar mine is currently being
finalised, following the heap-leach heating pilot conducted in 2023.
2024 GUIDANCE (as previously announced)
As previously disclosed in the Q2 2024 Production Report, total production for
2024 is expected to be in the lower end of the Company's 670-710,000 tonne
guidance range. At Los Pelambres, given that the existing concentrate pipeline
is currently operating with enhanced parameters for safety and maintenance,
which are periodically reviewed by the Company, combined with the high
throughput rates that are being achieved at the processing plant, the drawdown
of the inventory accumulated in February 2024 is now expected to be completed
in the next 2-3 quarters. In the case of Centinela, following lower grades in
H1 2024, the clay and fines content in ore fed to the concentrator plant,
which has impacted recoveries, is expected to reduce towards the end of the
year, thereby increasing recoveries over the second half of the year.
Following projected production for the full year, cash cost guidance, both
before and after by-product credits, is expected to be $2.40/lb and $1.70/lb
respectively (based on current spot prices).
Capital expenditure guidance is unchanged at $2.7 billion.
FUTURE OUTLOOK
Rising demand for copper is primarily driven by the energy transition, with
electric vehicles, renewable power and related infrastructure providing
support to global copper prices. Demand is forecast to grow by between 2% and
3% per annum through to 2030. On the supply-side, fundamental technical
challenges are grade decline and rising ore hardness, while increasing
permitting delays, infrastructure challenges and rising mine construction
costs suggest a likely contraction or very measured growth in existing mine
supply in the medium- to long-term. The gradually shifting balance of global
copper demand and supply is therefore supportive of copper's fundamental
value.
The Company has a significant Mineral Resource base of more than 21 billion
tonnes of resources, including more than 6 billion tonnes and 5 billion tonnes
at Los Pelambres and Centinela respectively.
The Company has a range of growth projects being implemented throughout our
portfolio that will provide incremental growth in the medium-term, including
the construction of the Centinela Second Concentrator Project, which is
expected to provide a pathway to grow output to approximately 900,000 tonnes
of copper production. The Company will continue to evaluate opportunities to
accelerate the execution of selected development projects.
REVIEW OF OPERATIONS AND PROJECTS
MINING DIVISION
LOS PELAMBRES
Financial performance
EBITDA at Los Pelambres was $885.1 million in the first half of 2024, a 17%
increase compared with $756.4 million in the first six months of 2023. This
increase was mainly due to higher copper revenue (3% higher sales and 13%
higher price), which was partially offset by higher operating costs during the
period (11% increase).
Production
Copper production in H1 2024 was 132,500 tonnes, representing a year-on-year
increase of 3%. This movement reflects a balance between the higher level of
ore processing in 2024 following the completion of the Phase 1 Expansion
Project, offset by the accumulation of concentrate inventories due to extended
maintenance in Q1 2024 at the concentrate pipeline and lower grades.
As referenced above, pipeline maintenance in Q1 2024 resulted in an inventory
of concentrate being stockpiled at the processing plant. The Company is
seeking to transfer this material to the Company's port at Los Vilos over the
course of the next 2-3 quarters, where it will be recorded as production.
Molybdenum production for the first six months of the year increased by 24% to
4,200 tonnes (from 3,400 in H1 2023), due to higher throughput. Gold
production in H1 2024 decreased by 4% to 18,900 oz (from 19,600 oz H1 2023),
due to lower grades, offset by higher throughput rates.
Costs
Cash costs before by-product credits rose by 6% in H1 2024 on a year-on-year
basis to $2.16/lb, reflecting 17% lower ore grades, compensated by increased
throughput from the Los Pelambres Phase 1 Expansion project, the depreciation
of the Chilean peso and lower unit costs for key consumables, such as diesel,
grinding media and explosives.
Net cash costs in H1 2024 were 3% higher than H1 2023, primarily as a result
of the increase in underlying cash costs, with an increase in the by-product
credit to 95c/lb (H1 2023: 87c/lb) serving to partially mitigate this
increase.
Capital expenditure
Total capital expenditure at Los Pelambres in the first six months of 2024 was
$355.1 million, of which $189.5 million was sustaining capital expenditure,
$80.2 million was mine development and $73.0 million was on the Los Pelambres
Expansion project.
Compared with H1 2023, total capital expenditure decreased by 27%, with this
decrease including a $164.7 million decrease in expenditure on the Los
Pelambres Expansion, a $16.2 million decrease in mine development and a $43.7
million increase in sustaining capital expenditure.
CENTINELA
Financial performance
EBITDA for the first six months of 2024 was $329.9 million, a decrease of 30%
compared with the first half of 2023. This decrease was principally due to
lower copper concentrates sales volumes (44% decrease), partially offset by
higher copper cathodes sales volumes (27% increase) and the higher realised
copper price compared with the same period last year.
Production
Total copper production in H1 2024 was 15% lower on a year-on-year basis at
93,000 tonnes, with this movement primarily driven by lower grades at the
concentrator.
Copper in concentrate production in H1 2024 was 41% below the same period in
2023, with 43,600 tonnes produced. This year-on-year decrease in output
reflects the lower grades and harder ores mined in Q1 2024, in line with the
mine plan, and lower copper grades and lower recoveries in Q2 2024, partially
offset by an increase in ore throughput rates.
Cathode production in H1 2024 of 49,400 tonnes represents a level 41% higher
than the same period in 2023 and reflects an increase in the factors discussed
above for Q2 2024, as well as higher recovery rates.
Gold production in H1 2024 was 48,000 ounces, representing a level 28% lower
than the same period in 2023, and this year-on-year change is primarily the
result of lower gold grades within the ores processed, as well as lower
recoveries.
Molybdenum production in H1 2024 decreased by 33% to 1,000 tonnes (from 1,500
tonnes in H1 2023), due to lower grades.
Costs
Cash costs before by-product credits in H1 2024 were $3.31/lb, 17% higher on a
year-on-year basis due to lower production, driven by lower grades, offset by
depreciation of the Chilean peso.
Net cash costs in H1 2024 were 32% higher at $2.48/lb, with this increase
reflected in movements in the underlying cash cost and lower by-product
credits because of lower gold production.
Capital expenditure
Capital expenditure in the first six months of 2024 was $631.3 million, of
which $118.9 million was sustaining capex, $107.5 million was mine development
and $404.9 million was development capex, of which $345.0 million was on the
Centinela Second Concentrator project (H1 2023: $51.7 million).
Compared with H1 2023, total capital expenditure at Centinela increased by 38%
in H1 2024, as a result of $334.4 million higher expenditure on development
capital expenditure partially offset by a $176.8 million decrease in mine
development.
ANTUCOYA
Financial performance
For the first half of the year, EBITDA was $133.9 million, an increase of 31%
compared with $102.2 million in the same period last year, due to the higher
realised copper price and higher sales volumes.
Production
Copper production in H1 2024 of 40,300 tonnes represents a level 6% above the
same period in 2023, reflecting higher throughput rates.
Costs
Cash costs in H1 2024 of $2.58/lb were 5% lower as a result of depreciation of
the Chilean peso and reduced unit costs for key consumables.
Capital expenditure
Capital expenditure in the first six months of the year was $52.0 million, of
which $37.1 million was sustaining capex, $14.4 million was mine development
and $0.6 million was development capex.
Compared with H1 2023, capital expenditure increased by 26% in H1 2024, which
was due to an increase of $6.3 million in sustaining capital expenditure and
$4.6 million on mine development.
ZALDÍVAR
Financial performance
Attributable EBITDA at Zaldívar was $50.9 million in the first half of 2024,
compared with $42.5 million in the same period last year because of the higher
realised copper price, partially offset by lower sales volumes.
Production
Total attributable copper production of 18,900 tonnes in H1 2024 at Zaldívar
was 5% lower than the same period in 2023, as a result of lower grades and
recoveries, with these factors partially offset by an increase in ore
throughput rates.
Costs
During H1 2024, cash costs of $2.97/lb were in line with the same period in
2023, reflecting a balance of depreciation of the Chilean peso, lower unit
costs for key consumables and a reduction in costs associated with planned
maintenance, offset by an increase in costs associated with the utilisation of
inventory from prior periods and consumption rates.
Capital expenditure
In the first six months of 2024, attributable capital expenditure was $16.5
million, of which $10.3 million was sustaining capital expenditure and $6.3
million was development capital expenditure.
Compared with H1 2023, capital expenditure was 17% lower, mainly due to a
decrease of $4.7 million in sustaining capital expenditure partially offset by
an increase of $1.4 million on growth expenditure.
Other matters
In early 2024, approval was received from the authorities for the DIA
(Declaration of Environmental Impact) to extend the mining permit and,
therefore, align the water and mining permits at Zaldívar. This approval
ensures that the operation has rights to mine ore and extract water until
2025. The mine life after 2025 is, therefore, subject to the approval of and
Environmental Impact Assessment (EIA).
With 9 months to the current permit's expiry date (Sept 2024-May 2025), the
formal process for reviewing the EIA submitted for Zaldívar continues, with
responses to the second round of queries raised by various government agencies
in Chile currently being prepared by the Company for planned submission in Q4
2024. For reference, the Company had responded to the first round of queries
in Q1 2024, and a summary of the EIA submitted and the application process to
date was provided in the Company's Q1 2024 Production Report. The process
envisages up to three rounds of comments and responses.
Under local environmental regulations if the EIA is not favourably resolved by
the current permit expiry date in May 2025, Zaldívar will be required to have
in place at that time an approved temporary closure plan.
Separate to the above permits, and as previously reported, the Company (as
well as other named defendants) submitted a response contradicting the
allegations made by the Consejo de Defensa del Estado (CDE), an independent
governmental agency that represents the interests of the Chilean state, who
previously filed a claim against Minera Escondida, Albemarle and Zaldívar,
alleging that their extraction of water from the Monturaqui-Negrillar-Tilopozo
aquifer over the years has impacted the underground water level. The
evidentiary record is now closed, and a decision from the Court is pending.
However, conversations regarding a potential settlement are continuing.
TRANSPORT DIVISION
Financial performance
EBITDA at the Transport Division was $42.5 million in the first half of 2024,
a 9% improvement on the same period last year due to lower operating costs.
Transport volumes
The total volume transported in H1 2024 result was 3.5 million tonnes
representing a 1% decrease year-on-year. Rail volumes performed ahead of the
prior period as a result of higher demand for the transportation of
concentrates and sulphuric acid. Road volumes in H1 2024 were lower,
predominantly as a result of reduced levels of activity related to customers
producing lithium brines.
Capital expenditure
Capital expenditure for the first half of the year was $19.3 million, a
decrease of 22% compared with the same period in 2023.
OPERATIONS - KEY GROWTH PROJECTS AND OPPORTUNITIES
Operation Description Capex Capex to date(1) Status Comments
(Total)
(Scheduled completion)
Los Pelambres
Phase 1 Expansion Construction of a desalination plant (400 L/S) and additional concentrator $2.3Bn Completed Operational (2024) Operational. Commissioning began in H2 2023, with opening ceremony held in
line, facilitating plant capacity of 210kt per day. March 2024.
Desalination plant expansion Key enabling project for future growth - project to double capacity of Approx. $1Bn $98m Underway (2027) EIA approval received in late 2023. Purchase orders of key filtration
existing desalination plant to 800 L/S and effectively decouple the operation equipment executed.
from continental water sources.
Concentrate pipeline and El Mauro enclosures Key enabling project for future growth - installation of a new concentrate Approx. $1Bn $61m Underway (2027) EIA approval received in late 2023. Construction work commenced H1 2024. 100%
pipeline and development of certain planned enclosures at the El Mauro of the required piping received.
tailings storage facility.
Development options Mine life extension beyond 2035, adding a minimum of 15 additional years by Under study N/A Evaluation phase EIA in preparation.
increasing El Mauro's capacity (1.2bt). The EIA will include the option to
increase throughput to 205ktpd annual average (from 190ktpd) and the option to Approx. $2Bn
enable a modular increase of any water requirement for the enlarged capacity
of this operation up to 800 l/s, after the current expansion.
Centinela
Second Concentrator Project Brownfield development to add 170,000 tonnes of copper-equivalent production $4.4Bn(2 (#_ftn4) ) $400m Underway (2027) Full construction commenced in April 2024. $600m received for the transfer of
and lower Centinela district towards the first quartile of global cash cost water assets.
curve.
Encuentro mine development Mine development work to access sulphide ores below at the existing Encuentro Approx. $1Bn N/A Not commenced (2027-2028)
oxide pit.
(1)Figures provided are estimates and as at 30 June 2024.
(2)Figure quoted here ($4.4Bn) has been reduced by $380m following the
completion of the process to outsource Centinela's existing and planned water
infrastructure.
DEVELOPMENT PROJECTS
Twin Metals Minnesota (USA)
Twin Metals Minnesota (Twin Metals) is a wholly owned copper, nickel, and
platinum group metals (PGM) underground mining project, which holds copper,
nickel/cobalt, and PGM deposits in north-eastern Minnesota, United States
(US). The planned project is over a portion of the total resource and
envisages mining and processing 18,000 tonnes of ore per day for 25 years to
produce three separate concentrates - copper, nickel/cobalt and PGM. However,
further development of the current project, as configured, is on hold whilst
litigation takes place to challenge several actions taken by the US federal
government to deter its development.
In 2022, Twin Metals filed a lawsuit in the US District Court for the District
of Columbia (District Court) challenging the administrative actions resulting
in the rejection of Twin Metals' preference right lease applications (PRLAs),
the cancellation of its federal mining leases 1352 and 1353, the rejection of
its Mine Plan of Operation (MPO), and the dismissal of the administrative
appeal of the MPO rejection. Twin Metals claimed that the government's
actions were arbitrary and capricious, contrary to the law, and in violation
of its rights. In September 2023, the District Court dismissed Twin Metals'
suit on motion by the government. In November 2023, Twin Metals appealed the
District Court's order to the US Court of Appeals for the District of Columbia
Circuit. This action is pending.
FINANCIAL REVIEW FOR THE SIX MONTHS ENDED 30 JUNE 2024
Results (unaudited)
Six months ended Six months ended
30.06.2024 30.06.2023
Before exceptional items
Exceptional Total Total
items
$m $m $m $m
Revenue 2,955.2 - 2,955.2 2,890.1
EBITDA (including share of EBITDA from associates and joint ventures) (1 1,394.4 - 1,394.4 1,331.0
(#_ftn5) )
Total operating costs (2,283.9) - (2,283.9) (2,116.4)
Operating profit from subsidiaries 671.3 - 671.3 773.7
Net share of results from associates and joint ventures 17.2 - 17.2 (0.4)
Total profit from operations, associates and joint ventures 688.5 - 688.5 773.3
Net finance expense (26.9) 51.0 24.1 (8.8)
Profit before tax 661.6 51.0 712.6 764.5
Income tax expense (286.8) (12.7) (299.5) (229.3)
Profit for the year 374.8 38.3 413.1 535.2
Attributable to:
Non-controlling interests 153.5 - 153.5 204.8
Profit attributable to the owners of the parent 221.3 38.3 259.6 330.4
Basic earnings per share cents cents cents cents
Basic earnings per share from continuing operations 22.4 3.9 26.3 33.5
(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.
The $70.8 million decrease in the profit for the financial period attributable
to the owners of the parent (including exceptional items) from $330.4 million
in the first six months of 2023 to $259.6 million in the current period
reflected the following factors:
$m
Profit for the financial period attributable to the owners of the parent in H1 330.4
2023
Increase in revenue 65.1
Increase in total operating costs (167.5)
Increase in net share of results from associates and joint ventures 17.6
Increase in net finance expenses (18.1)
Increase in income tax expense (57.5)
Decrease in non-controlling interests 51.3
(109.1)
Profit attributable to the owners of the parent in 2024 (excluding exceptional 221.3
items)
Exceptional items - 2024 (post tax) 38.3
Profit for the financial period attributable to the owners of the parent in H1 259.6
2024
Revenue
The $65.1 million increase in revenue from $2,890.1 million in the first six
months of 2023 to $2,955.2 million in the current period reflected the
following factors:
$m
Revenue in the first six months of 2023 2,890.1
Increase in realised copper price 232.9
Decrease in copper sales volumes (139.8)
Increase in treatment and refining charges (2.9)
Decrease in gold revenue (15.9)
Decrease in molybdenum revenue (6.2)
Decrease in silver revenue (2.5)
Decrease in transport division revenue (0.5)
65.1
Revenue in the first six months of 2024 2,955.2
Revenue from the Mining division
Revenue in the first half of 2024 from the Mining division increased by $65.6
million, or 2%, to $2,857.2 million, compared with $2,791.6 million in the
first six months of 2023. The increase reflected a $90.2 million increase in
copper sales, partly offset by a $24.6 million decrease in by-product
revenues.
Revenue from copper sales
Revenue from copper concentrate and copper cathode sales increased by $90.2
million, or 3.9%, to $2,423.0 million, compared with $2,332.8 million in the
first six months of 2023. The increase reflected the impact of $232.9 million
from higher realised prices, partly offset by a $139.8 million reduction due
to lower sales volumes and a $2.9 million reduction in revenue from higher
treatment and refining charges.
(i) Realised copper price
The average realised price increased by 10.3% to $4.40/lb in the first six
months of 2024 (first half of 2023 - $3.99/lb), resulting in a $232.9 million
increase in revenue. The LME average market price increased by 4.6% in H1 2024
to $4.13/lb (first half of 2023 - $3.95/lb). In the first half of 2024 there
was a $118.9 million positive impact from provisional pricing adjustments,
mainly as a result of a positive impact in the settlement of sales invoiced in
the current year.
Realised copper prices are determined by comparing revenue (before 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 four months after
delivery to the customer in the case of concentrate sales).
Further details of provisional pricing adjustments are given in Note 6 to the
condensed consolidated interim financial statements.
(ii) Copper volumes
Copper sales volumes reflected within revenue decreased by 5.8% from 275,100
tonnes in 2023 to 259,200 tonnes in 2024, decreasing revenue by $139.8
million. This decrease was mainly due to lower production at Centinela (16,200
tonne decrease), as a result of lower copper grades and harder ores mined.
(iii) Treatment and refining charges
Treatment and refining charges (TC/RCs) for copper concentrate increased by
$2.9 million to $90.7 million in the first half of 2024, compared with $87.8
million in the first six months of 2023, reflecting higher rates, partially
offset by decreased concentrate sales volumes at Centinela.
With sales of concentrates at Los Pelambres and Centinela, which are sold to
smelters and roasting plants for further processing into fully refined metal,
the price of the concentrate invoiced to the customer reflects the market
value of the fully refined metal less a "treatment and refining charge"
deduction, to reflect the lower value of this partially processed material
compared with the fully refined metal. For accounting purposes, the revenue
amount reflects the invoiced price (which reflects the net of the market value
of fully refined metal less the treatment and refining charges). However,
under the standard industry definition of unit cash costs, treatment and
refining charges are regarded as part of cash costs.
Accordingly, the increase in these charges has had a negative impact on
revenue in the year.
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
decreased by $24.6 million or 5.4% to $434.2 million in the first half of
2024, compared with $458.8 million in the first six months of 2023. This
decrease was mainly due to the lower gold sales volumes and molybdenum
realised price, partly offset by an increase in molybdenum sales volumes and a
higher gold realised price.
Revenue from molybdenum sales (net of roasting charges) was $266.0 million
(first half of 2023 - $272.2 million), a decrease of $6.2 million. The
decrease was due to the lower realised price of $22.8/lb (first half of 2023 -
$25.0/lb), partially offset by higher sales volumes of 5,600 tonnes (first
half of 2023 - 5,200 tonnes).
Revenue from gold sales (net of treatment and refining charges) was $140.8
million (first half of 2023 - $156.7 million), a decrease of $15.9 million
which reflected a decrease in gold sales volumes, partially offset by a higher
realised price. Gold sales volumes decreased by 22.7% from 78,900 ounces in
the first half of 2023 to 61,000 ounces in the first six months of 2024,
mainly due to lower production at Centinela, primarily the result of lower
gold grades within the ores processed, as well as lower recoveries. The
realised gold price was $2,313.8/oz in the first half of 2024 compared with
$1,989.4/oz in the first six months of 2023, reflecting the average market
price for 2024 of $2,205.1/oz (first half of 2023 - $1,931.6/oz) and a
positive provisional pricing adjustment of $3.3 million.
Revenue from silver sales decreased by $2.5 million to $27.4 million (first
six months of 2023 - $29.9 million). The decrease was due to lower sales
volumes of 1.0 million ounces (first half of 2023 - 1.2 million ounces),
partially offset by a higher realised silver price of $27.6/oz (first six
months of 2023 - $24.9/oz).
Revenue from the Transport division
Revenue from the Transport division (FCAB) decreased by $0.5 million or 0.5%
to $98.0 million (first six months of 2023 - $98.5 million), mainly due to
lower transport volumes in the truck business.
Total operating costs
The $167.5 million increase in total operating costs from $2,116.4 million in
the first half of 2023 to $2,283.9 million in the first six months of 2024
reflected the following factors:
$m
Total operating costs in the first half of 2023 2,116.4
Increase in mine-site operating costs 20.9
Increase in closure provision and other mining expenses 26.2
Decrease in exploration and evaluation costs (2.5)
Decrease in corporate costs (9.3)
Decrease in Transport division operating costs (3.7)
Increase in depreciation, amortisation and loss on disposals 135.9
167.5
Total operating costs in the first six months of 2024 2,283.9
Operating costs (excluding depreciation, amortisation and loss on disposals)
at the Mining division
Operating costs (excluding depreciation, amortisation, loss on disposals and
impairments) at the Mining division increased by $35.3 million to $1,577.5
million in the first half of 2024, an increase of 2.3%.
Of this increase, $20.9 million was attributable to higher mine-site operating
costs. This increase in mine-site costs reflected higher unit costs mainly due
to lower ore grade and recoveries at Centinela concentrates and lower grades
at Los Pelambres, partially offset by lower key input prices, depreciation of
the Chilean peso, decreased sales volumes in the period and the cost savings
from the Group's Cost and Competitiveness Programme.
On a unit cost basis, weighted average cash costs excluding treatment and
refining charges and by-product revenues increased from $2.32/lb in the first
six months of 2023 to $2.48/lb in the first six months of 2024. As detailed in
the alternative performance measures section on page 56 of the half-year
results announcement, for accounting purposes by-product credits and treatment
and refining charges both impact revenue and do not therefore affect operating
expenses.
The Competitiveness Programme was implemented to reinforce the operational
improvement and reduce the Group's cost base, improving its competitiveness
within the industry. During the first half of 2024, the programme achieved
benefits of $130.0 million in the mining division, of which $49.3 million
reflected cost savings and $80.7 million reflected the value of productivity
improvements. Of the $49.3 million of cost savings, $46.8 million related to
Los Pelambres, Centinela and Antucoya, and therefore impacted the Group's
operating costs, and $2.5 million related to Zaldívar (on a 100% basis) and
therefore impacted the share of results from associates and joint ventures.
Closure provisions and other mining expenses increased by $26.2 million. In
the current period these costs include $13 million in respect of the "ad
valorem" element of the new mining royalty at Los Pelambres. As the ad valorem
element is based on revenue rather than profit it does not meet the IAS 12
Income Taxes definition of a tax expense, and is therefore recorded as an
operating expense. The increase in these expenses also reflected additional
expenditure on project evaluation costs at Los Pelambres.
Exploration and evaluation costs decreased by $2.5 million to $26.8 million
(2023 - $29.3 million), reflecting decreased exploration and evaluation
expenditure principally in respect of Chile exploration.
Operating costs (excluding depreciation, amortisation and loss on disposals)
at the Transport division
Operating costs (excluding depreciation, amortisation and loss on disposals)
at the Transport division decreased by $3.7 million to $59.2 million (first
half of 2023 - $62.9 million), mainly due a weaker Chilean peso and lower
diesel price.
Depreciation, amortisation and disposals
The depreciation and amortisation charge increased by $135.9 million in the
first half of 2024 to $647.2 million (first half of 2023 - $511.3 million).
This increase was mainly due to higher depreciation at Los Pelambres following
completion of the Phase 1 Expansion Project as well as the acquisition of
other additional assets, and also increases at Centinela in respect of the
amortisation of IFRIC 20 stripping costs and the depreciation of additional
leased assets.
Operating profit from subsidiaries
As a result of the above factors, operating profit from subsidiaries decreased
by $102.4 million or 13.2% in 2024 to $671.3 million (first half of 2023 -
$773.7 million).
Share of results from associates and joint ventures
The Group's share of results from associates and joint ventures increased by
$17.6 million to a gain of $17.2 million in the first six months of 2024,
compared with a loss of $0.4 million in the first half of 2023. This reflected
higher earnings from Zaldívar and also the contribution from Compañía de
Minas Buenaventura S.A.A., which has been accounted for as an associate from
March 2024 onwards.
EBITDA
EBITDA (earnings before interest, tax, depreciation and amortisation)
increased by $63.4 million or 4.8% to $1,394.4 million (first half of 2023 -
$1,331.0 million). EBITDA includes the Group's proportional share of EBITDA
from associates and joint ventures.
EBITDA from the Mining division increased by $60.0 million or 4.6% from
$1,291.9 million in the first six months of 2023 to $1,351.9 million this half
year. This reflected the higher revenue explain above and higher EBITDA from
associates and joint ventures, partially offset by higher mine-site costs.
EBITDA at the Transport division increased by $3.4 million to $42.5 million in
2024 ($39.1 million - first half of 2023), mainly due to lower operating
costs.
Commodity price and exchange rate sensitivities
The following sensitivities show the estimated approximate impact on EBITDA
for the first six months of 2024 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 2024,
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 commodity price / average exchange rate during the six months Impact of a 10% movement in the commodity price / exchange rate on EBITDA
ended 30.06.24
for the six months ended 30.06.24
$m
Copper price $4.13/lb 252
Molybdenum price $20.9/lb 26
Gold price $2,205.1/oz 13
US dollar / Chilean peso exchange rate 941 85
Net finance expense (excluding exceptional items)
Net finance expense (excluding exceptional items) of $26.9 million reflected
an increase of $18.1 million compared with the $8.8 million expense in H1
2023.
Six months ended 30.06.24 Six months ended 30.06.23
$m $m
Investment income 73.5 72.1
Interest expense (132.1) (50.9)
Other finance items 31.7 (30.0)
Net finance expense (26.9) (8.8)
Investment income increased marginally from $72.1 million in the first six
months of 2023 to $73.5 million in H1 2024.
Interest expense increased from $50.9 million in 2023 to $132.1 million in
2024, reflecting mainly the start of expensing of the interest on the
borrowing in respect Los Pelambres' Phase 1 Expansion Project following the
completion of the project construction, as well as to a lesser extent, an
increase in the average borrowing balances and an increase in average interest
rates.
Other finance items were a net gain of $31.7 million, compared with a net loss
of $30.0 million in 2023, a variance of $61.7 million. This was mainly due to
the foreign exchange impact of the retranslation of Chilean peso denominated
assets and liabilities, which resulted in a $41.5 million gain in 2024
compared with a $22.0 million loss in 2023. In addition, there was an expense
of $9.7 million in respect of the unwinding of the discounting of provisions
(first half of 2023 - expense of $7.9 million).
Profit before tax (excluding exceptional items)
As a result of the factors set out above, profit before tax decreased by 13.5%
to $661.6 million in the first half of 2024 (first half of 2023 - $764.5
million).
Income tax expense
The tax charge in the first half of 2024 excluding exceptional items increased
by $57.5 million to $286.8 million (first half of 2023 - $229.3 million) and
the effective tax rate for the period was 43.3% (first half of 2023 - 30.0%).
Including exceptional items, the tax charge in the first half of 2024 was
$299.5 million and the effective tax rate was 42.0%.
Six months Six months Six months
ended ended ended
30.06.2024 30.06.2024 30.06.2023
Excluding Including
exceptional exceptional
items items
$m % $m % $m %
Profit before tax 661.6 712.6 764.5
Tax at the Chilean corporate tax rate of 27% (178.7) 27.0 (192.4) 27.0 (206.4) 27.0
Mining Tax (royalty) (117.0) 17.7 (117.0) 16.4 (47.1) 6.2
Deduction of mining royalty as an allowable expense in determination of first 30.6 (4.6) 30.6 (4.3) 13.2 (1.7)
category tax
Withholding tax (13.5) 2.0 (13.5) 1.9 19.7 (2.6)
Items not deductible from first category tax (5.6) 0.8 (5.6) 0.8 (6.9) 0.9
Adjustment in respect of prior years (3.8) 0.6 (3.8) 0.5 (0.9) 0.1
Difference in overseas tax rates - - 1.0 (0.1) - -
Tax effect of share of profit of associates and joint ventures 2.0 (0.3) 2.0 (0.3) (0.1) -
Impact of unrecognised tax losses on current tax (0.8) 0.1 (0.8) 0.1 (0.8) 0.1
Tax expense and effective tax rate for the period (286.8) 43.3 (299.5) 42.0 (229.3) 30.0
The effective tax rate excluding exceptional items for the period was 43.3%,
which compares with 30.0% in 2023 (partly reflecting a one-off adjustment to
the provision for deferred withholding tax). The complete reconciliation
between the effective tax rate and the statutory tax rate reflects the
following points:
The effective tax rate excluding exceptional items of 43.3% varied from the
statutory rate principally due to:
· The mining tax (royalty) (net impact of $86.4 million / 13.1%
including the deduction of the mining tax (royalty) as an allowable expense in
the determination of first category tax);
· The withholding tax relating to the remittance of profits from Chile
(impact of $13.5 million / 2.0%);
· Items not deductible for Chilean corporate tax purposes, principally
the funding of expenses outside of Chile (impact of $5.6 million / 0.8%);
· Adjustments in respect of prior years (impact of $3.8 million /
0.6%), and the impact of previously unrecognized tax losses (impact of $0.8
million / 0.1%);
· An offsetting impact of the recognition of the Group's share of
results from associates and joint ventures, which are included in the Group's
profit before tax net of their respective tax charges (impact of $2.0 million
/ 0.3%).
The new Chilean mining royalty had taken effect from 1 January 2024. The new
royalty terms include a royalty ranging from 8% to 26% applied to the ''Mining
Operating Margin'', depending on each mining operation's level of
profitability, as well as a 1% ad valorem royalty on copper sales. As the ad
valorem element is based on revenue rather than profit it does not meet the
IAS 12 Income Taxes definition of a tax expense, and is therefore recorded as
an operating expense. The new royalty terms have a cap, establishing that
total taxation, which includes corporate income tax, the two components of the
new mining royalty, and theoretical tax on dividends, should not exceed a rate
of 46.5% on Mining Operating Margin less the royalty ad-valorem expense.
Los Pelambres has been subject to the new royalty from 1 January 2024. The
impact of the new royalty for Los Pelambres in the first six months of 2024
included the recognition of a $13 million expenses within operating expenses
in respect of the ad valorem element. Centinela and Antucoya have tax
stability agreements in place, and so the new royalty rates will only impact
their royalty payments from 2030 onwards. Until then, they continue to be
subject to the previous royalty system, applying a rate from 5% to 14% of
taxable operating profit, depending on the level of operating profit margin.
Exceptional items
Exceptional items are material items of income and expense which are
non-regular or non-operating and typically non-cash, including impairments and
profits or losses on disposals. The classification of these types of items as
exceptional is considered to be useful as it provides an indication of the
earnings generated by the ongoing businesses of the Group.
Compañía de Minas Buenaventura S.A.A.
During 2023, the Group entered into an agreement to acquire up to an
additional 30 million shares in Compañía de Minas Buenaventura S.A.A. An
exceptional fair value gain of $51.0 million (six months ended 30 June 2023 -
nil) was recognised during the first six months of 2024 in respect of this
agreement. A deferred tax expense of $12.7 million (six months ended 30 June
2023 - nil) has been recognised in respect of this gain, resulting in a
post-tax impact of $38.3 million (six months ended 30 June 2023 - nil).
Non-controlling interests
Profit for the first half of the year attributable to non-controlling
interests was $153.5 million, compared with $204.8 million in the first half
of 2023, a decrease of $51.3 million. This reflected the decrease in earnings
analysed above.
Earnings per share
Six months ended 30.06.24 Six months ended
30.06.23
$ cents $ cents
Underlying earnings per share (excluding exceptional items) 22.4 33.5
Earnings per share (exceptional items) 3.9 -
Earnings per share (including exceptional items) 26.3 33.5
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 (excluding exceptional items) was $221.3 million,
compared with $330.4 million in the first half of 2023, and underlying
earnings per share (excluding exceptional items) were 22.4 cents for the first
half of 2024 (first half of 2023 - 33.5 cents per share). The profit
attributable to equity shareholders (including exceptional items) was $259.6
million, resulting in earnings per share (including exceptional items) of 26.3
cents per share for the first half of 2024.
Dividends
Dividends per share declared in relation to the period are as follows:
Six months ended 30.06.24 Six months ended
30.06.23
$ cents $ cents
Ordinary dividends:
Interim 7.9 11.7
Total dividends to ordinary shareholders 7.9 11.7
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 2024 of 7.9
cents per ordinary share, which amounts to $77.9 million. The interim dividend
will be paid on 30 September 2024 to ordinary shareholders that are on the
register at the close of business on 6 September 2024.
Capital expenditure
Capital expenditure increased by $37.6 million from $1,021.9 million in the
first half of 2023 to $1,059.5 million in the current period, mainly due to
the start of the Centinela Second Concentrator project and the completion of
the Los Pelambres Phase 1 Expansion project, and increased sustaining capex at
Los Pelambres, partly offset by decreased IFRIC 20 mine development at
Centinela.
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 2024 there were foreign exchange derivative financial
instruments in place in respect of the Centinela Second Concentrator project
capex, with a negative fair value of $15.7 million (2023 - nil).
Cash flows
The key features of the cash flow statement are summarised in the following
table.
Six months ended 30.06.24 Six months ended 30.06.23
$m $m
Cash flows from continuing operations 1,483.9 1,296.4
Income tax paid (316.8) (323.2)
Net interest paid (77.3) (18.2)
Purchases of property, plant and equipment (1,059.5) (1,021.9)
Dividends paid to equity holders of the Company (239,6) (497.9)
Disposal of JV - 944.7
Investment in other financial assets - (290.1)
Dividends from associates and joint ventures 3.5 -
Capital increase from non-controlling interest 39.7 -
Acquisition of equity investments - (8.4)
Other items 0.1 (0.1)
Changes in net (debt)/cash relating to cash flows (166.0) 81.3
Other non-cash movements (124.1) (14.8)
Effects of changes in foreign exchange rates 11.3 (2.0)
Movement in net (debt)/cash in the period (278.8) 64.5
Net (debt)/cash at the beginning of the year (1,159.8) (885.8)
Net (debt) at the end of the period (1,438.6) (821.3)
Cash flows from continuing operations were $1,483.9 million in the first half
of 2024 compared with $1,296.4 million in the first half of 2023. This
reflected EBITDA from subsidiaries for the period of $1,318.5 million (first
half of 2023 - $1,285.0 million) adjusted for the positive impact of a net
working capital decrease of $171.9 million (first half of 2023 - negative
impact of $12.2 million from a net working capital increase), partly offset by
a non-cash decrease in provisions of $6.5 million (first half of 2023 -
positive impact of an increase in provisions of $23.6 million).
The $171.9 million working capital decrease in the first six months of 2024
reflected a decrease in receivables, predominantly due to lower sales volumes
at June 2024 compared with December 2023, and an increase in accounts payable,
partly offset by an increase of work in progress inventories at Los Pelambres.
The net cash outflow in respect of tax in the first half of 2024 was $316.8
million (first half of 2023 - $323.2 million). This amount differs from the
current tax charge in the consolidated income statement (including exceptional
items) of $394.0 million (first half of 2023 - $284.3 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 $218.8
million (first half of 2023 - $311.0 million), withholding tax payments of
$66.5 million (first half of 2023 - $0.1 million), the settlement of
outstanding balances in respect of the previous year's tax charge of $49.3
million (first half of 2023 - $14.6 million), as well as the recovery of $17.8
million relating to prior years (first half of 2023 - recovery of $2.6
million).
Capital expenditure in the first half of 2024 was $1,059.5 million compared
with $1,021.9 million in the first half of 2023. This included expenditure of
$631.3 million at Centinela (first half of 2023 - $459.0 million), $355.1
million at Los Pelambres (first half of 2023 - $486.6 million), $52.1 million
at Antucoya (first half of 2023 - $41.2 million), $19.3 million at the
Transport division (first half of 2023 - $24.6 million) and $1.7 million at
Corporate (first half of 2023 - $10.5 million). The increase in capital
expenditure reflects the start of the Centinela Second Concentrator project
and the completion of the Los Pelambres Phase 1 Expansion project, and
increased sustaining capex at Los Pelambres, partly offset by decreased IFRIC
20 mine development at Centinela.
Dividends paid to equity holders of the Company in the first half of 2024 were
$239.6 million (first half of 2023 - $497.9 million), related to the payment
of the final dividend declared in respect of 2023.
Dividends received from associates and joint ventures of $3.5 million (six
months ended 30 June 2023 - nil) related to a dividend received from
Compañía de Minas Buenaventura S.A.A.
A capital contribution of $39.7 million was received from Marubeni, the
minority partner at Centinela, in respect of financing for the Centinela
Second Concentrator project.
Financial position
At 30.06.24 At 31.12.23
$m $m
Cash, cash equivalents and liquid investments 4,432.2 2,919.4
Total borrowings (5,870.8) (4,079.2)
Net cash/(debt) at the end of the period (1,438.6) (1,159.8)
At 30 June 2024, the Group had combined cash, cash equivalents and liquid
investments of $4,432.2 million (31 December 2023 - $2,919.4). Excluding the
non-controlling interest share in each partly-owned operation, the Group's
attributable share of cash, cash equivalents and liquid investments was
$3,572.2 million (31 December 2023 - $2,490.5 million).
Total Group borrowings and other financial liabilities at 30 June 2024 were
$5,870.8 million, an increase of $1,791.6 million on the prior year (at 31
December 2023 - $4,079.2 million). The increase was mainly due to $742.0
million from the issue of the new corporate bond, $600.0 million from the
other financial liabilities at Centinela, $475.0 million in respect of a
short-term loan at Los Pelambres, $209.8 million in respect of the first
tranche of the project financing at Centinela, partly offset by a $270.3
million repayment of the senior loans at Los Pelambres ($185.3 million),
Centinela ($55.0 million), Antucoya ($25.0 million) and the Transport division
($5.0 million).
In June 2024 the Group announced completion of the process whereby Minera
Centinela ("Centinela") entered into a water transportation agreement,
involving its existing water supply and future water supply to the Centinela
Second Concentrator Project. Under the terms of the agreement, Centinela's
existing water transportation assets and rights have been transferred to an
international consortium for net cash proceeds of $600 million, which was
received as of late June 2024. For accounting purposes, the existing assets
remain in the Group's balance sheet, with the cash receipt resulting in the
recognition of the corresponding other financial liability balance.
Excluding the non-controlling interest share in each partly-owned operation,
the Group's attributable share of the borrowings was $4,394.0 million (31
December 2023 - $2,948.3 million).
This resulted in net debt at 30 June 2024 of $1,438.6 million (31 December
2023 - net debt $1,159.8 million). Excluding the non-controlling interest
share in each partly-owned operation, the Group had an attributable net debt
position of $821.8 million (31 December 2023 - net debt $457.8 million).
Going concern
The financial information contained in this half-year financial report has
been prepared on the going concern basis. Details of the factors which have
been taken into account in assessing the Group's going concern status are set
out in Note 1 to the half-year results announcement.
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 principal risks and uncertainties which
were disclosed in the 2023 Annual Report are as follows:
· Talent management
· Labour relations
· Safety and health
· Environmental management
· Climate change
· Community relations
· Political, legal and regulatory
· Corruption
· Operations
· Tailing storage
· Strategic resources
· Cyber security
· Liquidity
· Commodity prices and exchange rates
· Growth of mineral resource base and opportunities
· Project development and execution
· Innovation and digitisation
· External risks
There have been no changes to the above categories of key risks in the first
six months of 2024.
A detailed explanation of the risks summarised above can be found in the Risk
Management section of the 2023 Annual Report, which is available at
www.antofagasta.co.uk.
Cautionary statement about forward-looking statements
This half-year 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 apply 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: natural events, 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.
Condensed Consolidated Income Statement
Six months ended 30.06.2024 (Unaudited) Six months ended 30.06.2023 (Unaudited)
Excluding exceptional items Exceptional items Total Total
note 3
Notes $m $m $m $m
Revenue 5,6 2,955.2 - 2,955.2 2,890.1
Total operating costs 2 (2,283.9) - (2,283.9) (2,116.4)
Operating profit 2,5 671.3 - 671.3 773.7
Net share of results from associates and joint ventures 2,5 17.2 - 17.2 (0.4)
Operating profit from subsidiaries, and share of total results from associates 688.5 - 688.5 773.3
and joint ventures
Investment income 8 73.5 - 73.5 72.1
Interest expense 8 (132.1) - (132.1) (50.9)
Other finance items 3,8,14 31.7 51.0 82.7 (30.0)
Net finance income/(expense) 8 (26.9) 51.0 24.1 (8.8)
Profit before tax 661.6 51.0 712.6 764.5
Income tax expense 3,9 (286.8) (12.7) (299.5) (229.3)
Profit for the period 374.8 38.3 413.1 535.2
Attributable to:
Non-controlling interests 153.5 - 153.5 204.8
Owners of the parent 221.3 38.3 259.6 330.4
US cents US cents US cents US cents
Basic earnings per share (1) 10 22.4 3.9 26.3 33.5
1. All earnings in all the periods presented are from continuing
operations.
Condensed Consolidated Statement of Comprehensive Income
Notes Six months ended 30.06.2024 (Unaudited) Six months ended 30.06.2023 (Unaudited)
$m $m
Profit for the period 5 413.1 535.2
Items that may be or were subsequently reclassified to profit or loss:
Losses on cash flow hedges (15.9) -
Tax effects arising on cash flow hedges deferred in reserves 4.3 -
Currency translation adjustment (0.8) 0.4
Total items that may be or were subsequently reclassified to profit or loss (12.4) 0.4
Items that will not be subsequently reclassified to profit or loss:
Actuarial (losses)/gains on defined benefit plans (0.3) (1.5)
Gains on fair value of equity investments 14 33.1 0.6
Tax on items recognised directly in equity that will not be reclassified (7.6) 0.2
Share of other comprehensive losses of associates and joint ventures, net of (1.9) (0.9)
tax
Total items that will not be subsequently reclassified to profit or loss 23.3 (1.6)
Total other comprehensive income 10.9 (1.2)
Total comprehensive income for the period 424.0 534.0
Attributable to:
Non-controlling interests 149.9 204.5
Owners of the parent 274.1 329.5
Total comprehensive income for the period - continuing operations 424.0 534.0
424.0 534.0
Condensed Consolidated Statement of Changes in Equity
For the six months ended 30.06.2024 (Unaudited)
Share capital Share premium Other reserves Retained earnings Equity attributable to owners of the parent Non- controlling interests Total equity
$m $m $m $m $m $m $m
Balance at 1 January 2024 89.8 199.2 104.5 8,558.4 8,951.9 3,096.5 12,048.4
Capital increase - - - - - 39.7 39.7
Profit for the period - - - 259.6 259.6 153.5 413.1
Other comprehensive income for the period - - 16.5 (2.0) 14.5 (3.6) 10.9
Total comprehensive income for the period - - 16.5 257.6 274.1 149.9 424.0
Dividends - - - (239.6) (239.6) - (239.6)
Balance at 30 June 2024 89.8 199.2 121.0 8,576.4 8,986.4 3,286.1 12,272.5
For the six months ended 30.06.2023 (Unaudited)
Share capital Share premium Other reserves Retained earnings Equity attributable to equity owners of the parent Non- controlling interests Total
equity
$m $m $m $m $m $m $m
Balance at 1 January 2023 89.8 199.2 5.0 8,333.5 8,627.5 3,016.9 11,644.4
Profit for the period - - - 330.4 330.4 204.8 535.2
Other comprehensive income/(expense) for the period - - 1.0 (1.9) (0.9) (0.3) (1.2)
Total comprehensive income for the period - - 1.0 328.5 329.5 204.5 534.0
Dividends - - - (497.9) (497.9) - (497.9)
Balance at 30 June 2023 89.8 199.2 6.0 8,164.1 8,459.1 3,221.4 11,680.5
Condensed Consolidated Balance Sheet
At 30.06.2024 (Unaudited) At 31.12.2023 (Audited)
Non-current assets Notes $m $m
Property, plant and equipment 12 13,166.0 12,678.7
Inventories 462.4 457.0
Investments in associates and joint ventures 14 1,717.0 891.1
Trade and other receivables 60.4 68.5
Equity investments 14 15.3 288.6
Deferred tax assets 66.0 72.0
15,487.1 14,455.9
Current assets
Inventories 905.1 671.0
Trade and other receivables 904.0 1,117.8
Other financial assets 14 - 457.2
Current tax assets 13.4 25.9
Liquid investments 17 2,923.7 2,274.7
Cash and cash equivalents 17 1,508.5 644.7
6,254.7 5,191.3
Total assets 21,741.8 19,647.2
Current liabilities
Short-term borrowings and other financial liabilities 15 (1,460.8) (901.9)
Trade and other payables (1,268.3) (1,171.5)
Derivative financial instruments 7 (15.7) -
Short-term decommissioning and restoration provisions (11.2) (15.2)
Current tax liabilities (167.3) (100.7)
(2,923.3) (2,189.3)
Non-current liabilities
Medium and long-term borrowings and other financial liabilities 15 (4,410.0) (3,177.3)
Trade and other payables (8.8) (9.8)
Post-employment benefit obligations (135.6) (139.9)
Decommissioning and restoration provisions (427.6) (425.9)
Deferred tax liabilities (1,564.0) (1,656.6)
(6,546.0) (5,409.5)
Total liabilities (9,469.3) (7,598.8)
Net assets 12,272.5 12,048.4
Equity
Share capital 89.8 89.8
Share premium 199.2 199.2
Other reserves 121.0 104.5
Retained earnings 8,576.4 8,558.4
Equity attributable to owners of the parent 8,986.4 8,951.9
Non-controlling interests 3,286.1 3,096.5
Total equity 12,272.5 12,048.4
The condensed consolidated interim financial statements were approved by the
Board of Directors on 19 August 2024
Condensed Consolidated Cash Flow Statement
At 30.06.2024 (Unaudited) At 30.06.2023 (Unaudited)
Notes $m $m
Cash flows from continuing operations 16 1,483.9 1,296.4
Interest paid (129.8) (70.5)
Income tax paid (316.8) (323.2)
Net cash from operating activities 1,037.3 902.7
Investing activities
Dividends from associates and joint ventures 3.5 -
Investments in other financial assets - (290.1)
Acquisition of equity investments - (8.4)
Proceeds from disposal of investment in joint venture 13 - 944.7
Proceeds from sale of property plant and equipment 0.2 -
Purchases of property, plant and equipment (1,059.5) (1,021.9)
Net increase in liquid investments 17 (648.9) (449.6)
Interest received 52.5 52.3
Net cash used in investing activities (1,652.2) (773.0)
Financing activities
Dividends paid to owners of the parent (239.6) (497.9)
Dividends paid to preference shareholders of the Company (0.1) (0.1)
Capital increase from non-controlling interest 39.7 -
Proceeds from other financial liabilities 15 600.0 -
Proceeds from issue of new borrowings 1,564.8 -
Repayment of borrowings (408.3) (110.8)
Principal elements of lease payments (74.5) (35.1)
Net cash from/(used in) financing activities 1,482.0 (643.9)
Net increase/(decrease) in cash and cash equivalents 17 867.1 (514.2)
Cash and cash equivalents at beginning of the period 644.7 810.4
Net increase/(decrease) in cash and cash equivalents 17 867.1 (514.2)
Effect of foreign exchange rate changes 17 (3.3) 7.1
Cash and cash equivalents at end of the period 17 1,508.5 303.3
Notes
1. General information and accounting policies
a) General information
These condensed consolidated interim financial statements ("the interim
financial statements") of the Antofagasta plc Group for the half-year
reporting period ended 30 June 2024 were approved for issue by the Board of
Directors of the Company on 19 August 2024. The interim financial statements
are unaudited.
These interim financial statements have been prepared under the accounting
policies as set out in the statutory accounts for the period ended 31 December
2023.
The interim financial statements have been prepared in accordance with IAS 34
Interim Financial Reporting as issued by the International Accounting Standard
Board IASB and as adopted by the UK International Accounting Standards and
with the requirements of the Companies Act 2006 as applicable to companies
reporting under those standards.
These interim financial statements do not include all of the notes of the type
normally included in annual financial statements. Accordingly, the
consolidated financial information is not in full accordance with UK-adopted
International Accounting Standards. The consolidated financial information has
been prepared on the going concern basis.
The information contained in this announcement for the periods ended 30 June
2023 and 31 December 2023 also does not constitute statutory accounts. A copy
of the statutory accounts for the year ended 31 December 2023 has been
delivered to the Registrar of Companies. The auditors' report on those
accounts was unqualified, with no matters by way of emphasis, and did not
contain statements under sections 498(2) or (3) of the Companies Act 2006.
The Group's total revenue was previously referred to as "Group revenue" on the
face of the income statement; for simplicity and clarity this has now been
changed to "Revenue".
Going concern
The Directors have assessed the going concern status of the Group, considering
the period to 31 December 2025.
The Group's business activities, together with those factors likely to affect
its future performance, are set out in the Financial and Operating Review.
Details of the cash flows of the Group during the period, along with its
financial position at the period-end, are set out in the Financial Review. The
condensed consolidated financial statements include details of the Group's
cash, cash equivalents and liquid investment balances in Note 17, and details
of borrowings are set out in Note 15.
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 terms and
remaining durations of the borrowing facilities in place. The Group had a
strong financial position as at 30 June 2024, with combined cash, cash
equivalents and liquid investments of $4,432.2 million. Total borrowings were
$5,870.8 million, resulting in a net debt position of $1,438.6 million. Of the
total borrowings, only 25% is repayable within one year, and an additional 13%
repayable between one and two years.
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 and capital expenditure. These forecasts are based on
the Group's budgets and life-of-mine models, which are also used when
assessing relevant accounting estimates, including depreciation, deferred
stripping and closure provisions. This analysis has focused on the existing
asset base of the Group, without factoring in potential development projects,
which is considered appropriate for an assessment of the Group's ability to
manage the impact of a depressed economic environment. The analysis has only
included the drawdown of existing committed borrowing facilities, and has not
assumed that any new borrowing facilities will be put in place. The Directors
have assessed the key risks which could impact the prospects of the Group over
the going concern period and consider the most relevant to be risks to the
copper price outlook, as this is the factor most likely to result in
significant volatility in earnings and cash generation. Robust downside
sensitivity analyses have been performed, assessing the standalone impact of
each of:
● A significant deterioration in the future copper price forecasts
by an average of 15% throughout the going concern period,
● An even more pronounced short-term reduction of a further 50
c/lb in the copper price for a period of three months, in addition to the
above deterioration of 15% in the copper price throughout the review period,
● The potential impact of the Group's most significant individual
operational risks, and
● A shutdown of any one of the Group's operations for a period of
three months, or a shut-down of all of the Group's operations for a period of
one month.
The stability of tailings storage facilities represents a potentially
significant operational risk for mining operations globally. The Group's
tailings storage facilities are designed to international standards,
constructed using downstream methods, subject to rigorous monitoring and
reporting, and reviewed regularly by an international panel of independent
experts. Given these standards of design, development, operations and review,
the impact of a potential tailings dam failure has not been included in the
sensitivity analysis.
The above downside sensitivity analyses indicated results which could be
managed in the normal course of business, including the aggregate impact of a
number of the above sensitivities occurring at the same time. The analysis
indicated that the Group is expected to remain in compliance with all of the
covenant requirements of its borrowings throughout the review period and
retain sufficient liquidity. Based on their assessment of the Group's
prospects and viability, the Directors have formed a judgement, at the time of
approving the condensed consolidated interim financial statements, that there
are no material uncertainties that the Directors are aware of that cast doubt
on the Group's going concern status and that there is a reasonable expectation
that the Group has adequate resources to continue in operational existence for
the period to 31 December 2025. The Directors therefore consider it
appropriate to adopt the going concern basis of accounting in preparing the
condensed consolidated interim financial statements.
b) Adoption of new 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 interim financial statements:
Amendments Effective date
Classification of Liabilities as Current or Non-Current (Amendments to IAS 1) Annual periods beginning on or after 1 January 2024.
Lease Liability in a Sale and Leaseback (Amendments to IFRS 16) Annual periods beginning on or after 1 January 2024.
Non-current Liabilities with Covenants (Amendments to IAS 1) Annual periods beginning on or after 1 January 2024.
Supplier Finance Arrangements (Amendments to IAS 7 and IFRS 7) Annual periods beginning on or after 1 January 2024.
c) Accounting standards issued but not yet effective
At the date of authorisation of these financial statements, the following
standards and interpretations, which have not been applied in these financial
statements, were in issue but not yet effective. It is expected that where
applicable, these standards and amendments will be adopted on each respective
effective date. None of these standards are expected to have a significant
impact on the Group.
Standards Effective date
IFRS S1 General Requirements for Disclosure of Sustainability-related No earlier than 1 January 2026.
Financial Information
IFRS S2 Climate-related Disclosures No earlier than 1 January 2026.
Presentation and Disclosures in Financial Statements (IFRS 18)(1) Annual periods beginning on or after 1 January 2027.
IFRS 19 Subsidiaries without Public Accountability: Disclosures (IFRS 19)(1) Annual periods beginning on or after 1 January 2027.
Amendments to IFRS Effective date
Lack of Exchangeability (Amendments to IAS 21)(1) Annual periods beginning on or after 1 January 2025.
Classification and measurement of financial instruments (Amendments IFRS 9 and Annual periods beginning on or after 1 January 2026.
IFRS 7)(1)
(1) These amendments are still subject to UK endorsement.
d) Critical accounting judgements and key sources of
estimation uncertainty
The critical accounting judgements and keys estimate applied in these interim
financial statements (which are consistent with the 2023 year-end, except for
Compañía de Minas Buenaventura S.A.A accounting) are:
Judgements
● Non-financial assets impairment indicators and reversal of
impairment - see Note 4 for relevant details.
● During 2023, the Group entered into an agreement to acquire up
to 30 million shares in Compañía de Minas Buenaventura S.A.A.
(''Buenaventura''), representing approximately 12% of Buenaventura's issued
share capital. In addition, the Group held as of December 31, 2023 an existing
holding of approximately 18.1 million shares in Buenaventura, representing
approximately 7% of Buenaventura's issued share capital. In March 2024, the
transaction pursuant to the agreement completed, resulting in the Group
holding approximately 48.1 million shares in Buenaventura, representing
approximately 19% of Buenaventura's issued share capital. Two Antofagasta
officers were elected to Buenaventura's Board in March 2024. Taking into
account relevant factors including the Group's approximately 19% interest in
Buenaventura's issued share capital and the Group's representation on
Buenaventura's Board, the Group is considered to have significant influence
(in accordance with the IAS 28 Investments in Associates and Joint Ventures
definition) over Buenaventura from March 2024 onwards. Accordingly, the
Group's interest in Buenaventura has been accounted for as an investment in
associate from that point.
Estimates
The Group makes estimates and assumptions concerning the future. The resulting
accounting estimates will, by definition, seldom equal the related actual
results. As at 30 June 2024, there were not considered to be particular
estimates and assumptions that have a significant risk of causing a material
adjustment to the carrying amounts of assets and liabilities within the next
12 months.
2. Operating profit from subsidiaries, and total profit from associates
and joint ventures
Six months ended 30.06.2024 (Unaudited) Six months ended 30.06.2023 (Unaudited)
$m $m
Revenue 2,955.2 2,890.1
Cost of sales (1,852.5) (1,677.2)
Gross profit 1,102.7 1,212.9
Administrative and distribution expenses (299.8) (316.4)
Other operating income 24.5 21.1
Other operating expenses (1) (156.1) (143.9)
Operating profit from subsidiaries 671.3 773.7
Net share of results from associates and joint ventures 17.2 (0.4)
Total operating profit from subsidiaries, and share of total results from 688.5 773.3
associates and joint ventures
(1)Other operating expenses comprise $26.8 million of exploration and
evaluation expenditure for the 2024 half year (six months ended 30 June 2023 -
$29.3 million), $9.0 million in respect of the employee severance provision
for the 2024 half year (six months ended 30 June 2023 - $10.3 million), $0.4
million in respect of the closure provision for the 2024 half year (six months
ended 30 June 2023 - $14.7 million), and $119.9 million of other expenses for
the 2024 half year (including costs of community programmes, project
evaluation costs and the "ad valorem" element of the new mining royalty) (six
months ended 30 June 2023 - $89.6 million).
3. Exceptional items
Exceptional items are material items of income and expense which are
non-regular or non-operating and typically non-cash, including impairments and
profits or losses on disposals. The tax effect of items presented as
exceptional is also classified as exceptional, as are material deferred tax
adjustments that relate to more than one reporting period. The classification
of these types of items as exceptional is considered to be useful as it
provides an indication of the underlying earnings generated by the ongoing
businesses of the Group.
Compañía de Minas Buenaventura S.A.A
During 2023, the Group entered into an agreement to acquire up to an
additional 30 million shares in Compañía de Minas Buenaventura S.A.A. An
exceptional fair value gain of $51.0 million (six months ended 30 June 2023 -
nil) was recognised during the first six months of 2024 in respect of this
agreement. A deferred tax expense of $12.7 million (six months ended 30 June
2023 - nil) has been recognised in respect of this gain, resulting in a
post-tax impact of $38.3 million (six months ended 30 June 2023 - nil).
4. Asset sensitivities
There were no indicators of potential impairment, or reversal of previous
impairments, for the Group's non-current assets associated with its mining
operations as at 30 June 2024, and accordingly no impairment tests have been
performed. The impairment indicator assessment included consideration of the
potential indicators set out in IAS 36, 'Impairment of Assets', which included
quantitative analysis based on the operations' life-of-mine models as adjusted
for certain assumptions (including potential future development opportunities)
("the models"). These models provide indicative valuations and do not
represent, or comply with, a formal impairment assessment prepared in
accordance with IAS 36.
As noted above, no qualitative indicators of potential impairment or potential
reversal of impairment were identified. Similarly, no quantitative indicators
of impairment were identified, with the models used within the impairment
indicator assessment continuing to indicate positive headroom for all of the
Group's mining operations, including the Zaldívar joint venture, with the
indicated value of the assets in excess of their carrying value.
Relevant aspects of this process are detailed below:
Copper price outlook
The assumption to which the value of the assets is most sensitive is the
future long-term copper price. The copper 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 consensus analyst forecasts.
A long-term copper price of $4.00/lb (reflecting 2024 real terms) has been
used in the models for the impairment indicator assessment, which has
increased from $3.70/lb (reflecting 2023 real terms) at the prior year-end.
The US dollar/Chilean peso exchange rate
The value of the assets is also sensitive to movements in the US
dollar/Chilean peso exchange rate. A long-term exchange rate of Ch$850/$1 has
been used in the models considered as part of the impairment indicator
assessment. This compares with the long-term exchange rate of Ch$785/$1 used
at the 2023 year-end.
Discount rate
A real post-tax discount rate of 8% (31 December 2023 - 8%), calculated using
relevant market data, has been used in the impairment indicator assessment.
Climate risks
The assessments reflect the Group's estimates of potential future
climate-related impacts. The Group's Annual Report disclosures are in line
with the recommendations of the Task Force on Climate-related Financial
Disclosures (''TCFD''). This process includes scenario analyses assessing
the potential future impact of transition and physical risks, as well as
potential copper price upside (for example, due to increased demand for the
construction of electric vehicles and renewable power generating capacity). On
the basis that the potential copper price upside is expected to exceed the
downside impact of future risks, no specific adjustments have been reflected
in these assessments in relation to climate-change.
Other relevant assumptions
In addition to the impact of the future copper price, the US dollar/Chilean
peso exchange rate, the discount rate and climate-related impacts, the models
used in the impairment indicator assessment are sensitive to the assumptions
in respect of future production levels, operating costs and sustaining and
development capital expenditure.
In the case of Zaldívar, in addition to the assumptions made in respect of
the factors outlined above, the conclusion that there are no impairment
indicators reflects certain assumptions about future operational consideration
to which the model used as part of the impairment indicator assessment is
sensitive, in particular the following:
· Currently, Zaldívar is permitted to extract water and mine until
May 2025. The mine life after May 2025 is subject to an EIA application which
was filed in June 2023 to extend the mining and water environmental permits to
2051. The EIA application includes a proposal to develop the primary sulphide
ore deposit, extending the current life of mine and requiring investments over
the mine life of $1.2 billion, and a conversion of the water source for
Zaldívar to either seawater or water from third parties, following a
transition period during which the current continental water extraction permit
is extended from 2025 to 2028. The impairment indicator assessment assumes
that the EIA will be granted, to enable the continued operation of the mine
without interruption. However, if this is not the case, this is likely to be
considered an indicator of a potential impairment, requiring an IAS 36
impairment assessment at that point.
· Zaldívar's final pit phase, which represents approximately 20%
of current ore reserves, impacts a portion of Minera Escondida's mine
property, as well as infrastructure owned by third parties. Mining of the
phase will be subject to agreements or easements to access these areas and
relocate the infrastructure, as well as related permits. During 2023,
Zaldívar reached an agreement with Escondida with respect to mining matters
and certain cost sharing arrangements. The impairment indicator assessment
assumes that the necessary agreements, easements and permits will be obtained
to allow the mining of the final pit phase.
The carrying value of the Group's investment in joint venture balance in
respect of Zaldívar as at 30 June 2024 was $886.1 million. (31 December 2023
− $881.3 million).
Indicators of potential reversal of previous impairments
Antucoya recognised impairments totalling $716 million in 2012 and 2016. Of
the original impairment amounts, approximately $470 million remains in effect
unamortised as at 30 June 2024. Based on an assessment of both qualitative and
quantitative factors, there were no indicators of a potential reversal of
these previous impairments as at 30 June 2024. Whilst the indicative valuation
exercise for Antucoya as at 30 June 2024 indicated positive headroom, the
analysis also indicated that this positive headroom reflects the passage of
time since the original impairment assessments, rather a significant increase
in the service potential of the operation, and accordingly is not considered
to be an indicator of a potential impairment reversal.
5. Segmental analysis
The Group's reportable segments, which are the same as its operating segments,
are as follows:
● Los Pelambres
● Centinela
● Antucoya
● Zaldívar
● Exploration and evaluation
● Corporate and other items
● Transport division
For management purposes, the Group is organised into two business divisions
based on their products - Mining and Transport. The mining division is split
further for management reporting purposes to show results by mine and
exploration activity. Los Pelambres produces primarily copper concentrate and
molybdenum as a by-product. Centinela produces copper concentrate containing
gold as a by-product, copper cathodes and molybdenum concentrates. Antucoya
and Zaldívar produce copper cathodes. The transport division provides rail
and road cargo transport together with a number of ancillary services. All the
operations are based in Chile. The Exploration and evaluation segment incurs
exploration and evaluation expenses. "Corporate and other items" comprises
costs incurred by 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 (the Group's Chief Executive Officer)
monitors the operating results of the business segments separately for the
purpose of making decisions about resources to be allocated and assessing
performance. Segment performance is evaluated based on the operating profit of
each of the segments.
a) Segment revenues and results
For the six months ended 30.06.2024 (Unaudited)
Los Pelambres Centinela Antucoya Zaldívar Exploration and evaluation(2) Corporate and other items Total Mining Transport division Total
$m $m $m $m $m $m $m $m $m
Revenue 1,526.7 970.8 359.7 - - - 2,857.2 98.0 2,955.2
Operating costs excluding depreciation (641.6) (640.9) (225.8) - (26.8) (42.4) (1,577.5) (59.2) (1,636.7)
Depreciation (209.5) (359.8) (55.8) - - (4.9) (630.0) (17.2) (647.2)
Operating profit/(loss) 675.6 (29.9) 78.1 - (26.8) (47.3) 649.7 21.6 671.3
Net share of results from associates and joint ventures - - - 6.7 - 10.3 17.0 0.2 17.2
Total operating profit from subsidiaries, and share of total results from 675.6 (29.9) 78.1 6.7 (26.8) (37.0) 666.7 21.8 688.5
associates and joint ventures
Investment income 16.4 15.4 3.7 - - 37.6 73.1 0.4 73.5
Interest expense (59.9) (24.1) (15.5) - - (32.4) (131.9) (0.2) (132.1)
Other finance items (Excluding exceptional items) 10.0 17.4 3.4 - - 2.0 32.8 (1.1) 31.7
Fair value gain on other financial assets - exceptional items (3) - - - - - 51.0 51.0 - 51.0
Profit/(loss) before tax 642.1 (21.2) 69.7 6.7 (26.8) 21.2 691.7 20.9 712.6
Tax (259.0) 3.7 (18.1) - - (9.2) (282.6) (4.2) (286.8)
Tax - exceptional items - - - - - (12.7) (12.7) - (12.7)
Profit/(loss) for the period 383.1 (17.5) 51.6 6.7 (26.8) (0.7) 396.4 16.7 413.1
Non-controlling interests 152.1 (6.9) 9.2 - - (0.9) 153.5 - 153.5
Profit/(losses) attributable to the owners of the parent 231.0 (10.6) 42.4 6.7 (26.8) 0.2 242.9 16.7 259.6
EBITDA(1) 885.1 329.9 133.9 50.9 (26.8) (21.1) 1,351.9 42.5 1,394.4
Capital Expenditure (cash basis)(4) 355.1 631.3 52.1 - - 1.7 1,040.2 19.3 1,059.5
Segment assets and liabilities
Segment assets 8,104.0 7,438.6 1,884.6 - - 2,178.6 19,605.8 419.0 20,024.8
Investments in associates and joint ventures - - - 886.1 - 820.9 1,707.0 10.0 1,717.0
Segment liabilities (4,128.4) (2,764.4) (524.6) - - (1,994.9) (9,412.3) (57.0) (9,469.3)
(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 $24.0
million.
In order to better reflect the Group's internal reporting, the Group has
changed the classification of certain evaluation costs incurred by the
individual mining operations, which were previously included in the
Exploration and evaluation segment and are now included within the individual
mine segments.
(3) An exceptional fair value gain of $51.0 million has been recognised in
respect of an agreement under which the Group has now acquired 30 million
shares in Compañia de Minas Buenaventura S.A.A. (see Note 14).
(4) In order to better reflect the Group's internal reporting, the Group has
changed the basis of its capital expenditure segment measure to be on a cash
basis rather than an accruals basis.
For the six months ended 30.06.2023 (Unaudited)
Los Pelambres Centinela Antucoya Zaldívar Exploration and evaluation(2) Corporate and other items Total Transport division Total
Mining
$m $m $m $m $m $m $m $m $m
Revenue 1,332.4 1,128.7 330.5 - - - 2,791.6 98.5 2,890.1
Operating costs excluding depreciation and amortisation (576.0) (656.9) (228.3) - (29.3) (51.7) (1,542.2) (62.9) (1,605.1)
Depreciation and amortisation (137.5) (300.6) (52.3) - - (7.9) (498.3) (13.0) (511.3)
Operating profit/(loss) 618.9 171.2 49.9 - (29.3) (59.6) 751.1 22.6 773.7
Net share of results from associates and joint ventures - - - (1.7) - - (1.7) 1.3 (0.4)
Total operating profit from subsidiaries, and share of total result from 618.9 171.2 49.9 (1.7) (29.3) (59.6) 749.4 23.9 773.3
associates and joint ventures
Investment income 20.4 6.7 3.2 - - 41.4 71.7 0.4 72.1
Interest expense (2.2) (7.2) (14.8) - - (26.1) (50.3) (0.6) (50.9)
Other finance items (8.7) (14.1) (2.8) - - (5.4) (31.0) 1.0 (30.0)
Profit/(loss) before tax 628.4 156.6 35.5 (1.7) (29.3) (49.7) 739.8 24.7 764.5
Tax (193.6) (47.9) (6.6) - - 28.0 (220.1) (9.2) (229.3)
Profit/(loss) for the period 434.8 108.7 28.9 (1.7) (29.3) (21.7) 519.7 15.5 535.2
Non-controlling interests 172.3 31.6 2.5 - - (1.6) 204.8 - 204.8
Profit/(loss) attributable to the owners of the parent 262.5 77.1 26.4 (1.7) (29.3) (20.1) 314.9 15.5 330.4
EBITDA(1) 756.4 471.8 102.2 42.5 (29.3) (51.7) 1,291.9 39.1 1,331.0
Capital Expenditure (cash basis) (3) 486.6 459.0 41.2 - - 10.5 997.3 24.6 1,021.9
Segment assets and liabilities
Segment assets 7,178.1 5,904.7 1,679.2 - - 1,952.7 16,714.7 411.8 17,126.5
Investments in associates and joint ventures - - - 894.8 - - 894.8 8.5 903.3
Segment liabilities (3,125.8) (1,437.0) (511.4) - - (1,199.9) (6,274.1) (75.2) (6,349.3)
(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 $31.1
million.
In order to better reflect the Group's internal reporting, the Group has
changed the classification of certain evaluation costs incurred by the
individual mining operations, which were previously included in the
Exploration and evaluation segment and are now included within the individual
mine segments. The above comparative figures for the six months ended 30 June
2023 have been restated to be on a consistent basis. This has resulted in an
increase in operating costs excluding depreciation and amortisation of $13.5
million for Los Pelambres, $17.5 million for Centinela and $1.7 million for
Antucoya, and a corresponding decrease of $32.7 million for the Exploration
and evaluation segment.
(3) In order to better reflect the Group's internal reporting, the Group has
changed the basis of its capital expenditure segment measure to be on a cash
basis rather than an accruals basis. The above comparative figures for the six
months ended 30 June 2023 have been restated to be on a consistent basis. The
previously reported figures on an accruals basis were $480.1 million for Los
Pelambres, $458.1 million for Centinela, $48.0 million for Antucoya, $11.8
million for Corporate, $998.0 million in total for the Mining division, $26.3
million for the Transport division and $1,024.3 million in total for the
Group.
b) Entity wide disclosures
Revenue by product
Six months ended 30.06.2024 Six months ended 30.06.2023
$m $m
Copper
- Los Pelambres 1,221.2 1,054.6
- Centinela concentrates 363.9 575.8
- Centinela cathodes 436.0 327.4
- Antucoya 356.5 327.2
Provision of shipping services
- Los Pelambres 28.2 23.0
- Centinela concentrates 10.6 18.3
- Centinela cathodes 3.4 3.2
- Antucoya 3.2 3.3
Gold
- Los Pelambres 39.9 41.5
- Centinela concentrates 100.9 115.2
Molybdenum
- Los Pelambres 217.3 197.6
- Centinela concentrates 48.7 74.6
Silver
- Los Pelambres 20.0 15.7
- Centinela concentrates 7.4 14.2
Total Mining 2,857.2 2,791.6
Transport division 98.0 98.5
2,955.2 2,890.1
( )
Revenue by location of customer
Six months ended 30.06.2024 Six months ended 30.06.2023
$m $m
Europe
- United Kingdom 15.8 6.9
- Switzerland 142.2 188.0
- Spain 46.8 -
- Germany 35.2 82.8
- Rest of Europe 116.7 37.9
Latin America
- Chile 200.9 217.9
- Rest of Latin America 140.4 45.4
North America
- United States 110.4 173.4
Asia Pacific
- Japan 964.7 952.6
- China 640.0 584.8
- Singapore 170.8 244.0
- South Korea 193.0 235.6
- Hong Kong 56.2 75.9
- Rest of Asia 122.1 44.9
2,955.2 2,890.1
Information about major customers
In the first half of 2024, the Group´s mining revenue included $446.6 million
related to one large customer that individually accounted for more than 10% of
the Group's revenue (six months ended 30 June 2023 - one large customer
representing $519.9 million)
6. Revenue
Copper and molybdenum concentrate sale contracts and copper cathode sale
contracts 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 mark-to-market of open sales are recognised through
adjustments to revenue in the income statement and to trade receivables 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.
With sales of concentrates, which are sold to smelters and roasting plants for
further processing into fully refined metal, the price of the concentrate
(which is the amount recorded as revenue) reflects the market value of the
fully refined metal less a "treatment and refining charge" deduction, to
reflect the lower value of this partially processed material compared with the
fully refined metal.
The Group sells a significant proportion of its products on Cost, Insurance
& Freight (CIF) Incoterms, which means that the Group is responsible for
shipping the product to a destination port specified by the customer. The
shipping service represents a separate performance obligation, and is
recognised separately from the sale of the material over time as the shipping
service is provided.
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 ended 30.06.2024 Six months ended 30.06.2023
$m $m
Revenue from contracts with customers
Sale of products 2,662.8 2,747.5
Provision of shipping services associated with the sale of products (1) 45.4 47.8
Transport division (2) 98.0 98.5
Provisional pricing adjustments in respect of copper, gold and molybdenum 149.0 (3.7)
Total revenue 2,955.2 2,890.1
(1)The Group sells a significant proportion of its products on Cost, Insurance
& freight (CIF) incoterms, which means that the Group is responsible for
shipping the product to a destination port specified by the customer.
(2)The transport division provides rail and road cargo transport together with
a number of ancillary services.
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 5(b).
The following tables set out the impact of provisional pricing adjustments,
and treatment and refining charges for the more significant products. The
revenue from these products, which includes, for the sale of copper, revenue
associated with the provision of shipping services, is reconciled to total
revenue in Note 5(b).
For the period ended 30 June 2024
$m $m $m $m $m $m $m $m
Los Pelambres Centinela Centinela Antucoya Los Pelambres Centinela Los Pelambres Centinela
Copper concentrate Copper concentrate Copper cathodes Copper cathodes Gold in concentrate Gold in concentrate Molybdenum concentrate Molybdenum concentrate
Provisionally priced sales of products 1,211.7 355.8 431.8 350.1 39.4 98.3 210.0 45.5
Revenue from freight services 28.2 10.6 3.4 3.2 - - - -
1,239.9 366.4 435.2 353.3 39.4 98.3 210.0 45.5
Effects of pricing adjustments to previous year invoices
Reversal of mark-to-market adjustments at the end of the previous year (45.1) (16.2) (0.3) (0.2) - (2.6) 1.0 0.4
Settlement of sales invoiced in the previous year 62.5 28.2 (1.0) (0.9) (0.4) 1.5 3.3 1.6
Total effect of adjustments to previous year invoices in the current year 17.4 12.0 (1.3) (1.1) (0.4) (1.1) 4.3 2.0
Effects of pricing adjustments to current period invoices
Settlement of sales invoiced in the current period 71.1 25.1 6.6 8.2 1.0 3.7 10.2 3.3
Mark-to-market adjustments at the end of the current period (12.0) (5.4) (1.1) (0.7) - 0.1 5.2 1.8
Total effect of adjustments to current period invoices 59.1 19.7 5.5 7.5 1.0 3.8 15.4 5.1
Total pricing adjustments 76.5 31.7 4.2 6.4 0.6 2.7 19.7 7.1
Revenue before deducting treatment & refining charges 1,316.4 398.1 439.4 359.7 40.0 101.0 229.7 52.6
Treatment and refining charges (67.0) (23.6) - - (0.1) (0.1) (12.4) (3.9)
Revenue net of tolling charges
1,249.4 374.5 439.4 359.7 39.9 100.9 217.3 48.7
For the period ended 30 June 2023
$m $m $m $m $m $m $m $m
Los Pelambres Centinela Centinela Antucoya Los Pelambres Centinela Los Pelambres Centinela
Copper concentrate Copper concentrate Copper cathodes Copper cathodes Gold in concentrate Gold in concentrate Molybdenum concentrate Molybdenum concentrate
Provisionally priced sales of products 1,091.7 598.1 324.2 325.3 38.0 117.2 237.6 91.6
Revenue from freight services 23.0 18.3 3.2 3.3 - - - -
1,114.7 616.4 327.4 328.6 38.0 117.2 237.6 91.6
Effects of pricing adjustments to previous year invoices
Reversal of mark-to-market adjustments at the end of the previous year (38.0) (19.9) (0.8) (0.8) - (2.7) (12.6) (7.6)
Settlement of sales invoiced in the previous year 92.6 52.9 10.3 7.7 2.8 1.1 39.9 14.9
Total effect of adjustments to previous year invoices in the current year 54.6 33.0 9.5 6.9 2.8 (1.6) 27.3 7.3
Effects of pricing adjustments to current period invoices
Settlement of sales invoiced in the current period (29.1) (14.6) (6.4) (4.1) 0.7 0.7 (59.8) (20.6)
Mark-to-market adjustments at the end of the current period (10.1) (5.5) 0.1 (0.9) - (0.8) 4.0 1.6
Total effect of adjustments to current period invoices (39.2) (20.1) (6.3) (5.0) 0.7 (0.1) (55.8) (19.0)
Total pricing adjustments 15.4 12.9 3.2 1.9 3.5 (1.7) (28.5) (11.7)
Revenue before deducting treatment & refining charges 1,130.1 629.3 330.6 330.5 41.5 115.5 209.1 79.9
Treatment and refining charges (52.6) (35.2) - - - (0.3) (11.5) (5.3)
Revenue net of tolling charges
1,077.5 594.1 330.6 330.5 41.5 115.2 197.6 74.6
(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 30.06.2024 At 30.06.2023
Sales provisionally priced at the balance sheet date Tonnes 112,400 141,400
Average mark-to-market price $/lb 4.33 3.77
Average provisional invoice price $/lb 4.42 3.83
(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 30.06.2024 At 30.06.2023
Sales provisionally priced at the balance sheet date Tonnes 14,300 10,600
Average mark-to-market price $/lb 4.30 3.78
Average provisional invoice price $/lb 4.36 3.81
(iii) Gold in concentrate
The typical period for which sales of gold in concentrate remain open until
settlement is approximately one month from shipment date.
At 30.06.2024 At 30.06.2023
Sales provisionally priced at the balance sheet date Ounces 10,500 19,200
Average mark-to-market price $/oz 2,337 1,924
Average provisional invoice price $/oz 2,329 1,967
(iv) Molybdenum concentrate
The typical period for which sales of molybdenum remain open until settlement
is approximately two months from shipment date.
At 30.06.2024 At 30.06.2023
Sales provisionally priced at the balance sheet date Tonnes 2,700 2,900
Average mark-to-market price $/lb 23.20 22.30
Average provisional invoice price $/lb 21.95 21.40
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 receivables in the balance sheet. The effect of
mark-to-market adjustments on the balance sheet at the end of each period are
as follows:
Effect on debtors of period and year end
mark-to-market adjustments
Six months Six months ended 30.06.2023
ended
30.06.2024
$m $m
Los Pelambres - copper concentrate (12.0) (10.1)
Los Pelambres - molybdenum concentrate 5.2 4.0
Centinela - copper concentrate (5.4) (5.5)
Centinela - molybdenum concentrate 1.8 1.6
Centinela - gold in concentrate 0.1 (0.8)
Centinela - copper cathodes (1.1) 0.1
Antucoya - copper cathodes (0.7) (0.9)
(12.1) (11.6)
7. Financial instruments and financial risk management
a) Categories of financial instruments
The carrying value of financial assets and financial liabilities is shown
below:
For the period ended 30.06.2024
At fair value through profit and loss At fair value through other comprehensive income Held at amortised cost Total
$m $m $m $m
Financial assets
Equity investments - 15.3 - 15.3
Trade and other receivables 647.4 - 198.2 845.6
Cash and cash equivalents 124.0 - 1,384.5 1,508.5
Liquid investments 2,923.7 - - 2,923.7
3,695.1 15.3 1,582.7 5,293.1
Financial liabilities
Derivative financial instruments - (15.7) - (15.7)
Trade and other payables - - (1,127.8) (1,127.8)
Other financial liabilities - - (600.0) (600.0)
Borrowings - - (5,270.8) (5,270.8)
- (15.7) (6,998.6) (7,014.3)
For the year ended 31.12.2023
At fair value through profit and loss At fair value through other comprehensive income Held at amortised cost Total
$m $m $m $m
Financial assets
Equity investments - 288.6 - 288.6
Trade and other receivables 916.5 157.1 1,073.6
-
Other financial assets 457.2 - - 457.2
Cash and cash equivalents 1.1 - 643.6 644.7
Liquid investments 2,274.7 - - 2,274.7
3,649.5 288.6 800.7 4,738.8
Financial liabilities
Trade and other payables - - (1,154.3) (1,154.3)
Borrowings - - (4,079.2) (4,079.2)
- (5,233.5) (5,233.5)
-
The fair value of the fixed rate bonds included within the "Borrowings"
category was $1,691.9 million at 30 June 2024 compared with their carrying
value of $1,729.1 million (year ended 31 December 2023 - fair value of
$908.3 million compared with their carrying value of $986.8 million). The fair
value of all other financial assets and financial liabilities carried at
amortised cost approximates the carrying value presented above.
The following tables reconcile between the total trade and other receivables
and trade and other payables balances on the balance sheet with the financial
instrument amounts included in this note:
Six months Year ended
ended 31.12.2023
30.06.2024
Financial assets
Trade and other receivables (non-current) per balance sheet 60.4 68.5
Trade and other receivables (current) per balance sheet 904.0 1,117.8
Total trade and other receivables per balance sheet 964.4 1,186.3
Less: non-financial assets (including prepayments and VAT receivables) (118.8) (112.7)
Total trade and other receivables 845.6 1,073.6
Financial liabilities
Trade and other payables (current) per balance sheet (1,268.3) (1,171.5)
Trade and other payables (non-current) per balance sheet (8.8) (9.8)
Total trade and other payables per balance sheet (1,277.1) (1,181.3)
Less: non-financial liabilities (including VAT payables) 149.3 27.0
Total trade and other payables (1,127.8) (1,154.3)
Fair value of financial instruments
An analysis of financial assets and financial liabilities measured at fair
value is presented below:
For the period ended 30.06.2024
Level 1 Level 2 Level 3 Total
$m $m $m $m
Financial assets
Equity investments (a) 15.3 - - 15.3
Trade and other receivables (b) - 647.4 - 647.4
Cash and cash equivalents (d) 124.0 - - 124.0
Liquid investments (e) - 2,923.7 - 2,923.7
139.3 3,571.1 - 3,710.4
Financial liabilities
Derivatives financial instruments (f) - (15.7) - (15.7)
- (15.7) - (15.7)
For the year ended 31.12.2023
Level 1 Level 2 Level 3 Total
$m $m $m $m
Financial assets
Equity investments (a) 288.6 - - 288.6
Trade and other receivables (b) - 916.5 - 916.5
Other financial assets (c) - 457.2 - 457.2
Cash and cash equivalents (d) 1.1 - - 1.1
Liquid investments (e) - 2,274.7 - 2,274.7
289.7 3,648.4 - 3,938.1
Recurring fair value measurements are those that are required in the balance
sheet at the end of each reporting period.
a) 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.
b) 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 receivables 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.
c) The fair value of the other financial assets has been calculated
using observable market data. These are level 2 inputs.
d) The element of cash and cash equivalents measured at fair value
relates to money market funds, which are valued reflecting market prices at
the period end. These are level 1 inputs as described below.
e) Liquid investments are highly liquid current asset investments that
are valued reflecting market prices at the period end. These are level 2
inputs as described below.
f) 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.
Hedging instruments at 30 June 2024 relate to foreign exchange and commodity
options.
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 six months ended 30 June 2024 and 30 June
2023, there were no transfers between levels in the hierarchy.
b) Derivative financial instruments
The Group periodically uses derivative financial instruments to reduce
exposure to foreign exchange, interest rate and commodity price movements. The
Group does not use such derivative instruments for trading purposes. The Group
has applied the hedge accounting provisions of IFRS 9 Financial Instruments.
The effective portion of changes in the fair value of derivative financial
instruments that are designated and qualify as hedges of future cash flows
have been recognised directly in equity, with such amounts subsequently
recognised in profit or loss in the period when the hedged item affects profit
or loss. Any ineffective portion is recognised immediately in profit or loss.
Realised gains and losses on commodity derivatives recognised in profit or
loss are recorded within revenue. The time value element of changes in the
fair value of derivative options is recognised within other comprehensive
income. Derivatives embedded in other financial instruments or other host
contracts are treated as separate derivatives when their risks and
characteristics are not closely related to those of host contracts and the
host contracts are not carried at fair value. Changes in fair value are
reported in profit or loss for the year.
8. Net finance income/(expense)
Six months Six months
ended ended
30.06.2024 30.06.2023
$m $m
Investment income
Interest income 30.5 28.8
Gains on liquid investments held at fair value through profit or loss 43.0 43.3
73.5 72.1
Interest expense
Interest expense (132.1) (50.9)
(132.1) (50.9)
Other finance items
Unwinding of discount on provisions (9.7) (7.9)
Exceptional fair value gains (see note 3) 51.0 -
Effects of changes in foreign exchange rates 41.5 (22.0)
Preference dividends (0.1) (0.1)
82.7 (30.0)
Net finance income/(expense) 24.1 (8.8)
In the six months ended 30 June 2024, amounts capitalised and consequently not
included within the above table were as follows: $20.7 million at Los
Pelambres (six months ended 30 June 2023 - $46.6 million) and $6.2 million at
Centinela (six months ended 30 June 2023 - $1.7 million).
The interest expense shown above includes $9.6 million in respect of leases
(six months ended 30 June 2023 - $4.1 million).
9. Taxation
The tax charge for the period comprised the following:
Six months Six months
ended ended
30.06.2024 30.06.2023
$m $m
Current tax charge
Corporate tax (principally first category tax in Chile) (211.8) (232.9)
Mining tax (royalty) (113.3) (49.0)
Withholding tax (68.9) (2.2)
Exchange rate - (0.2)
(394.0) (284.3)
Deferred tax
Corporate tax (principally first category tax in Chile) 61.9 33.2
Mining tax (royalty) (10.1) (0.1)
Exceptional items (12.7) -
Withholding tax 55.4 21.9
94.5 55.0
Total tax charge (299.5) (229.3)
The rate of first category (i.e. corporate) tax in Chile is 27.0% (2023 -
27.0%).
In addition to first category 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).
The new Chilean mining royalty has taken effect from 1 January 2024. The new
royalty terms include a royalty ranging from 8% to 26% applied to the ''Mining
Operating Margin'', depending on each mining operation's level of
profitability, as well as a 1% ad valorem royalty on copper sales. As the ad
valorem element is based on revenue rather than profit it does not meet the
IAS 12 Income Taxes definition of a tax expense, and is therefore recorded as
an operating expense. The new royalty terms have a cap, establishing that
total taxation, which includes corporate income tax, the two components of the
new mining royalty, and theoretical tax on dividends, should not exceed a rate
of 46.5% on Mining Operating Margin less the royalty ad-valorem expense.
Los Pelambres has been subject to the new royalty from 1 January 2024. The
impact of the new royalty for Los Pelambres in the half year 2024 included the
recognition of a $13 million expenses within operating expenses in respect of
the ad valorem element. Centinela and Antucoya have tax stability agreements
in place, and so the new royalty rates will only impact their royalty payments
from 2030 onwards. Until then, they continue to be subject to the previous
royalty system, applying a rate of between from 5% to 14% of taxable operating
profit, depending on the level of operating profit margin.
The following table provides a numerical reconciliation between the accounting
profit before tax multiplied by the applicable statutory tax rate and the
total tax expense (including both current and deferred tax).
Six months ended Six months ended Six months ended
30.06.2024 excluding exceptional items 30.06.2024 Including exceptional 30.06.2023
items
$m % $m % $m %
Profit before tax 661.6 712.6 764.5
Profit before tax multiplied by Chilean corporate tax rate of 27% (178.7) 27.0 (192.4) 27 (206.4) 27.0
Mining Tax (royalty) (117.0) 17.7 (117.0) 16.4 (47.1) 6.2
Deduction of mining royalty as an allowable expense in determination of first 30.6 (4.6) 30.6 (4.3) 13.2 (1.7)
category tax
Items not deductible from first category tax (5.6) 0.8 (5.6) 0.8 (6.9) 0.9
Adjustment in respect of prior years (3.8) 0.6 (3.8) 0.5 (0.9) 0.1
Difference in overseas tax rates - - 1.0 (0.1) - -
Withholding tax (13.5) 2.0 (13.5) 1.9 19.7 (2.6)
Tax effect of (loss)/ profit of associates and joint ventures 2.0 (0.3) 2.0 (0.3) (0.1) -
Impact of previously unrecognised tax losses on current tax (0.8) 0.1 (0.8) 0.1 (0.8) 0.1
Tax expense and effective tax rate for the period (286.8) 43.3 (299.5) 42.0 (229.3) 30.0
The effective tax rate (excluding exceptional items) of 43.3% varied from the
statutory rate principally due to:
· The mining tax (royalty) (net impact of $86.4 million/13.1%
including the deduction of the mining tax (royalty) as an allowable expense in
the determination of first category tax);
· The withholding tax relating to the remittance of profits from
Chile (impact of $13.5 million / 2.0%);
· Items not deductible for Chilean corporate tax purposes,
principally the funding of expenses outside of Chile (impact of $5.6 million /
0.8%);
· Adjustments in respect of prior years (impact of $3.8 million /
0.6%);
· The impact of previously unrecognised tax losses (impact of $0.8
million / 0.1%); and
· An offsetting impact of the recognition of the Group's share of
results from associates and joint ventures, which are included in the Group's
profit before tax net of their respective tax charges (impact of $2.0 million
/ 0.3%).
The effective tax rate (including exceptional items) of 42.0% varied from the
statutory rate due to the factors outlined above, and due to the impact of the
difference in the overseas tax rate which applied to the exceptional item (tax
effect of 25% in the UK versus the 27% Chilean rate).
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. When determining whether it is likely that distributions will be made
in the foreseeable future, and what is the appropriate foreseeable future
period for this purpose, the Group considers factors such as the
predictability of the likely future Group dividends, taking into account the
Group's dividend policy and the level of potential volatility of the Group's
future earnings, as well as the current level of distributable reserves at the
Antofagasta plc entity level. The withholding tax charge in the comparative
period reflected a one-off adjustment of $34.7 million to the provision for
deferred withholding tax, as a result of an intra-group restructuring of
intercompany balances. This resulted in a 4.5% reduction in the effective tax
rate for the six months ended 30 June 2023.
· The impact of expenses which are not deductible for Chilean first
category tax. Some of these expenses are 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.
OECD Pillar two model rules
The Group falls within the scope of the OECD Pillar two model rules, which
introduces a minimum effective tax rate of 15% for multinational companies.
The rules were substantively enacted in the UK in 2023 and became effective
from 1 January 2024. Currently, the Antofagasta Group operates in Chile and is
subject to the Chilean first category (corporate) tax rate of 27%, plus
withholding taxes on any profits distributed from Chile.
The Group is evaluating the potential future impact of these rules on its tax
expense. However, based on the Group's current position, it does not
anticipate any effect on its 2024 tax expense. There have not been changes to
the Group's position or results subsequent to that date which would
significantly impact that analysis.
The Group applied the mandatory exception to recognising and disclosing
information about the deferred tax assets and liabilities related to Pillar 2
income taxes in accordance with the amendments to IAS 12 adopted by the UK
Endorsement Board on 19 July 2023.
Minera Centinela tax claims and queries
In the context of an administrative review, the Chilean Internal Revenue
Service (IRS) has raised claims and queries with Minera Centinela in respect
of approximately $85 million of tax deductions recognised in relation to the
amortisation of start-up costs relating to the Encuentro pit. The Group
considers the tax treatment adopted by Minera Centinela to be correct and
appropriate, has robust arguments to support its position, and expects its
position to be upheld by the review processes. If the Group is unsuccessful in
supporting its position, this amount (plus potential interest and penalties)
would fall due.
10. Earnings per share
Six months ended 30.06.2024 Six months
ended 30.06.2023
$m $m
Profit for the period attributable to owners of the parent (excluding 221.3 330.4
exceptional items)
Exceptional Items 38.3 -
Profit for the period attributable to owners of the parent (including 259.6 330.4
exceptional items) from operations
Number Number
Ordinary shares in issue throughout each period 985,856,695 985,856,695
Six months ended 30.06.2024 Six months
ended 30.06.2023
US cent US cent
Basic earnings per share (excluding exceptional items) from operations 22.4 33.5
Basic earnings per share (exceptional items) from operations 3.9 -
Basic earnings per share (including exceptional items) from operations 26.3 33.5
Basic earnings per share are calculated as profit after tax and
non-controlling interests, based on 985,856,695 (2023: 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.
11. Dividends
The Board has declared an interim dividend of 7.9 cents per ordinary share for
the 2024 half year (2023 half year - 11.7 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 24.3 cents per
ordinary share (2023 half year - 50.5 cents per ordinary share), representing
the final dividend declared in respect of the previous year.
The interim dividend will be paid on 30 September 2024 to ordinary
shareholders that are on the register at the close of business on 6 September
2024. Shareholders can elect (on or before 9 September 2024) 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 2024).
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 +44 370 702 0159.
12. Property, plant and equipment
Mining Railway and other transport At At 31.12.2023
30.06.2024
$m $m $m $m
Balance at the beginning of the year 12,363.5 315.2 12,678.7 11,543.5
Additions 1,193.9 22.1 1,216.0 2,307.9
Additions - depreciation capitalised 42.3 - 42.3 90.3
Reclassifications - (0.6) (0.6) (0.4)
Capitalisation of interest 26.9 - 26.9 112.1
Adjustment to capitalised decommissioning provisions - - - (31.9)
Depreciation expensed in the period (630.0) (17.2) (647.2) (1,211.3)
Depreciation capitalised in PP&E (42.3) - (42.3) (90.3)
Depreciation capitalised in inventories (107.7) - (107.7) (41.2)
Asset disposals - (0.1) (0.1) -
Balance at the end of the period 12,846.6 319.4 13,166.0 12,678.7
During the six months ended 30 June 2024, the total effect of depreciation
capitalised within Property, plant and equipment or inventories in respect of
assets relating to Los Pelambres, Centinela and Antucoya is $150.0 million
(year ended 31 December 2023 - $131.5 million), and has accordingly been
excluded from the depreciation charge recorded in the income statement as
shown in Note 5.
At 30 June 2024, the Group had entered into contractual commitments for the
acquisition of property, plant and equipment amounting to $4,216.1 million (31
December 2023 - $978.3 million).
Depreciation capitalised in property, plant and equipment of $42.3 million
related to the depreciation of assets used in mine development (operating
stripping) at Centinela, Los Pelambres and Antucoya (year ended 31 December
2023 - $90.3 million).
13. Disposal of investment in Tethyan joint venture
In May 2023 the Group received the $944.7 million cash proceeds in respect of
its agreement to exit its 50% interest in the Tethyan joint venture, which was
a joint venture with Barrick Gold Corporation ("Barrick") in respect of the
Reko Diq project in Pakistan.
14. Investments in associates and joint ventures
The investments which are included in the $1,717.0 million balance at 30 June
2024 are set out below:
At At
30.06.2024 31.12.2023
$m $m
Buenaventura 820.9 -
ATI 10.0 9.8
Zaldívar 886.1 881.3
Total 1,717.0 891.1
Investments in associates
● Buenaventura - during 2023, the Group entered into an agreement
to acquire up to 30 million shares in Buenaventura, representing approximately
12% of Buenaventura's issued share capital. In addition, the Group held as of
31 December 2023 an existing holding of approximately 18.1 million shares in
Buenaventura, representing approximately 7% of Buenaventura's issued share
capital. In March 2024, the transaction pursuant to the agreement completed,
resulting in the Group holding approximately 48.1 million shares in
Buenaventura, representing approximately 19% of Buenaventura's issued share
capital. Two Antofagasta officers were elected to Buenaventura's Board in
March 2024. Taking into account relevant factors including the Group's
approximately 19% interest in Buenaventura's issued share capital and the
Group's representation on Buenaventura's Board, the Group is considered to
have significant influence (in accordance with the IAS 28 Investments in
Associates and Joint Ventures definition) over Buenaventura from March 2024
onwards. Accordingly, the Group's interest in Buenaventura has been accounted
for as an investment in associate from that point.
Immediately prior to the transaction completing in March 2024, the Group's
existing 7% equity interest was carried at a fair value of $305.9m and the
financial asset relating to the agreement to acquire the 12% interest was
carried at a fair of $508.2m, with both valuations being based on the quoted
share price of Buenaventura on that date. On completion, these two assets were
de-recognised and the investments in associate was initially recognised at an
equivalent value of $814.1m with no gain or loss arising.
The Group has undertaken a provisional exercise to recognise the identifiable
assets and liabilities effectively included within the investments in
associate balance at their acquisition-date fair values and expects to
complete this exercise during the second half of 2024.
· ATI - the Group's 30% interest in Antofagasta Terminal
Internacional ("ATI"), which operates a concession to manage installations in
the port of Antofagasta.
Investments in joint ventures
· Zaldívar - the Group's 50% interest in Minera Zaldívar SpA
("Zaldívar").
15. Borrowings and other financial liabilities
At At
30.06.2024 31.12.2023
$m $m
Borrowings
Los Pelambres
- Senior loan (1,886.4) (2,067.2)
- Other loans (475.0) -
Centinela
- Senior loan (277.3) (166.3)
- Other loans (310.0) (265.0)
Antucoya
- Senior loan (149.3) (174.1)
- Subordinated debt (196.3) (187.6)
Railway and other transport services
- Senior loan - (5.0)
(3,294.3) (2,865.2)
Bonds
Corporate and other items (1,729.1) (986.8)
(1,729.1) (986.8)
Other financial liabilities
Centinela(1) (600.0) -
(600.0) -
Leases
Los Pelambres (38.2) (45.2)
Centinela (171.7) (142.8)
Antucoya (18.7) (17.4)
Corporate and other items (15.1) (18.4)
Railway and other transport services (1.2) (0.9)
(244.9) (224.7)
Preference shares
Corporate and other items (2.5) (2.5)
(2.5) (2.5)
Total (5,870.8) (4,079.2)
At 30 June 2024, $3,361.5 million (December 2023 - $1,219.0 million) of the
borrowings and other financial liabilities has fixed rate interest and
$2,509.3 million (December 2023 - $2,860.2 million) has floating rate
interest.
(1)In June 2024, the Group announced completion of the process whereby Minera
Centinela ("Centinela") entered into a water transportation agreement,
involving its existing water supply and future water supply to the Centinela
Second Concentrator Project. Under the terms of the agreement, Centinela's
existing water transportation assets and rights have been transferred to an
international consortium for net cash proceeds of $600 million, which was
received as of late June 2024. For accounting purposes, the existing assets
remain in the Group's balance sheet, with the cash receipt resulting in the
recognition of a corresponding other financial liability balance.
In March 2024 Centinela put in place $2,500 million of project financing for
its Second Concentrator Project. As of 30 June 2024, Centinela had drawn down
$284 million of this financing, leaving $2,216 million undrawn at that date.
On 30 December 2022, Antofagasta plc agreed a revolving credit facility "RCF"
of US$500 million with a group of six banks and where the Canadian Imperial
Bank of Commerce "CIBC" has the role of Administrative Agent. This revolving
credit facility has a term of three years, which expires on 30 December 2025.
Drawn Undrawn
Facility available
30 June 31 December 30 June 31 December 30 June 31 December
2024 2023 2024 2023 2024 2023
$m $m $m $m $m $m
Revolving credit facility 500.0 500.0 - - 500.0 500.0
16. Reconciliation of profit before tax to net cash flow from operating
activities
At At
30.06.2024 30.06.2023
$m $m
Profit before tax 712.6 764.5
Depreciation and amortisation 647.2 511.3
Net finance expense/(income) - excluding exceptional items 26.9 8.8
Net share of (profit) /loss of associates and joint ventures (17.2) 0.4
Exceptional fair value gain in respect of other financial asset (51.0) -
(Increase) in inventories (131.9) (115.2)
Decrease/(increase) in debtors 247.0 256.8
Increase/(decrease) in creditors 56.8 (153.8)
(Decrease)/increase in provisions (6.5) 23.6
Cash flow generated from operations 1,483.9 1,296.4
17. Analysis of changes in net debt
For the period ended 30 June 2024
At 31.12.2023 Cash flows Fair value gain New leases Amortisation of finance costs Capitalisation of interest Reclassification Exchange At 30.06.2024
$m $m $m $m $m $m $m $m $m
Cash and cash equivalents 644.7 867.1 - - - - - (3.3) 1,508.5
Liquid investments 2,274.7 648.9 0.1 - - - - - 2,923.7
Total cash and cash equivalents and liquid investments 2,919.4 1,516.0 0.1 - - - - (3.3) 4,432.2
Borrowings due within one year (794.1) (204.7) - - - - (318.0) - (1,316.8)
Borrowings due after one year (3,057.9) (951.8) - - (6.2) (8.8) 318.0 - (3,706.7)
Other financial liabilities due within one year - (10.7) - - - - - - (10.7)
Other financial liabilities due after one year - (589.3) - - - - - - (589.3)
Leases due within one year (107.8) 74.5 - - - - (100.0) - (133.3)
Leases due after one year (116.9) - - (109.2) - - 100.0 14.6 (111.5)
Preference shares (2.5) - - - - - - - (2.5)
Total liabilities from financing activities (4,079.2) (1,682.0) - (109.2) (6.2) (8.8) - 14.6 (5,870.8)
Net debt (1,159.8) (166.0) 0.1 (109.2) (6.2) (8.8) - 11.3 (1,438.6)
For the period ended 31 December 2023
At 31.12.2022 Cash flows Fair value gains New leases Amortisation of finance costs Capitalisation of interest Other Reclassification Foreign exchange At 31.12.2023
$m $m $m $m $m $m $m $m $m $m
Cash and cash equivalents 810.4 (162.0) - - - - - - (3.7) 644.7
Liquid investments 1,580.8 674.2 19.7 - - - - - - 2,274.7
Total 2,391.2 512.2 19.7 - - - - - (3.7) 2,919.4
Borrowings due within one year (377.4) 116.7 - - - - - (533.4) - (794.1)
Borrowings due after one year (2,765.4) (797.2) - - (12.7) (16.0) - 533.4 - (3,057.9)
Leases due within one year (55.1) 81.2 - - - - - (133.9) - (107.8)
Leases due after one year (76.6) - - (178.6) - - - 133.9 4.4 (116.9)
Preference shares (2.5) - - - - - - - - (2.5)
Total liabilities from financing activities (3,277.0) (599.3) - (178.6) (12.7) (16.0) - - 4.4 (4,079.2)
Net debt (885.8) (87.1) 19.7 (178.6) (12.7) (16.0) - - 0.7 (1,159.8)
Net debt
Net debt at the end of each period was as follows:
At At
30.06.2024 31.12.2023
$m $m
Cash, cash equivalents and liquid investments 4,432.2 2,919.4
Total liabilities from financing activities (5,870.8) (4,079.2)
Net debt (1,438.6) (1,159.8)
18. Related party transactions
a) Joint ventures
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 2024, the
Group has not received dividends from Minera Zaldívar (six months ended 30
June 2023 - nil).
b) Associates
The Group has a 18.9% interest in Compañía de Minas Buenaventura S.A.A,
which is an associate. During the six months ended 30 June 2024, the Group
has received dividends from Buenaventura of $3.5 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 30 June 2024, the Group incurred $0.1 million (30
June 2023 - $0.1 million) of exploration costs at these properties.
19. Litigation and contingent liabilities
The Group is subject from time to time to legal proceedings, claims,
complaints and investigations arising out of the ordinary course of business.
The Group cannot predict the outcome of individual legal actions or claims or
complaints or investigations. As a result, the Group may become subject to
liabilities that could affect the Group's business, financial position and
reputation. Litigation is inherently unpredictable and large judgments may at
times occur. The Group may incur, in the future, judgments or enter into
settlements of claims that could lead to material cash outflows. The Group
considers that no material loss to the Group is expected to result from the
legal proceedings, claims, complaints and investigations that the Group is
currently subject to. A provision is recognized for legal claims where the
Group has a present obligation as a result of past events, it is probable that
an outflow of resources embodying economic benefits will be required to settle
the obligation, and a reliable estimate can be made of the amount of the
obligation.
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
Francisca Castro
Chairman
Senior Independent Director
Independent Review Report to Antofagasta plc
Conclusion
We have been engaged by the company to review the condensed set of financial
statements in the half-yearly financial report for the six months ended 30
June 2024 which comprises the condensed consolidated income statement, the
condensed consolidated balance sheet, the condensed consolidated statement of
comprehensive income, the condensed consolidated statement of changes in
equity, the condensed consolidated cash flow statement and related notes 1 to
19.
Based on our review, nothing has come to our attention that causes us to
believe that the condensed set of financial statements in the half-yearly
financial report for the six months ended 30 June 2024 is not prepared, in all
material respects, in accordance with United Kingdom adopted International
Accounting Standard 34 and the Disclosure Guidance and Transparency Rules of
the United Kingdom's Financial Conduct Authority.
Basis for Conclusion
We conducted our review in accordance with International Standard on Review
Engagements (UK) 2410 "Review of Interim Financial Information Performed by
the Independent Auditor of the Entity" issued by the Financial Reporting
Council for use in the United Kingdom (ISRE (UK) 2410). A review of interim
financial information consists of making inquiries, 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.
As disclosed in note 1, the annual financial statements of the group are
prepared in accordance with United Kingdom adopted international accounting
standards. The condensed set of financial statements included in this
half-yearly financial report has been prepared in accordance with United
Kingdom adopted International Accounting Standard 34, "Interim Financial
Reporting".
Conclusion Relating to Going Concern
Based on our review procedures, which are less extensive than those performed
in an audit as described in the Basis for Conclusion section of this report,
nothing has come to our attention to suggest that the directors have
inappropriately adopted the going concern basis of accounting or that the
directors have identified material uncertainties relating to going concern
that are not appropriately disclosed.
This Conclusion is based on the review procedures performed in accordance with
ISRE (UK) 2410; however future events or conditions may cause the entity to
cease to continue as a going concern.
Responsibilities of the directors
The directors are responsible for preparing the half-yearly financial report
in accordance with the Disclosure Guidance and Transparency Rules of the
United Kingdom's Financial Conduct Authority.
In preparing the half-yearly financial report, the directors are responsible
for assessing the group's ability to continue as a going concern, disclosing
as applicable, matters related to going concern and using the going concern
basis of accounting unless the directors either intend to liquidate the
company or to cease operations, or have no realistic alternative but to do so.
Auditor's Responsibilities for the review of the financial information
In reviewing the half-yearly financial report, we are responsible for
expressing to the company a conclusion on the condensed set of financial
statements in the half-yearly financial report. Our Conclusion, including our
Conclusion Relating to Going Concern, are based on procedures that are less
extensive than audit procedures, as described in the Basis for Conclusion
paragraph of this report.
Use of our report
This report is made solely to the company in accordance with ISRE (UK) 2410.
Our work has been undertaken so that we might state to the company those
matters we are required to state to it in an independent review report and for
no other purpose. To the fullest extent permitted by law, we do not accept or
assume responsibility to anyone other than the company, for our review work,
for this report, or for the conclusions we have formed.
Deloitte LLP
Statutory Auditor
London, United Kingdom
19 August 2024
Alternative performance measures (not subject to audit or review)
This consolidated financial information includes a number of alternative
performance measures, in addition to amounts in accordance with UK-adopted
International Accounting Standards. 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 irregular or non-operating in nature.
b) EBITDA
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 historical cost of property, plant & equipment or the particular
financing structure adopted by the business.
For the six months ended 30 June 2024
Los Pelambres Centinela Antucoya Zaldívar Exploration and evaluation Corporate and other items Mining Railway and other transport services Total
$m $m $m $m $m $m $m $m $m
Operating profit/(loss) 675.6 (29.9) 78.1 - (26.8) (47.3) 649.7 21.6 671.3
Depreciation and amortisation 209.5 359.8 55.8 - - 4.9 630.0 17.2 647.2
EBITDA from subsidiaries 885.1 329.9 133.9 - (26.8) (42.4) 1,279.7 38.8 1,318.5
Proportional share of the EBITDA from associates and JVs - - - 50.9 - 21.3 72.2 3.7 75.9
Total EBITDA 885.1 329.9 133.9 50.9 (26.8) (21.1) 1,351.9 42.5 1,394.4
For the six months ended 30 June 2023
Los Pelambres Centinela Antucoya Zaldívar Exploration and evaluation Corporate and other items Mining Railway and other transport services Total
$m $m $m $m $m $m $m $m $m
Operating profit/(loss) 618.9 171.2 49.9 - (29.3) (59.6) 751.1 22.6 773.7
Depreciation and amortisation 137.5 300.6 52.3 - - 7.9 498.3 13.0 511.3
EBITDA from subsidiaries 756.4 471.8 102.2 - (29.3) (51.7) 1,249.4 35.6 1,285.0
Proportional share of the EBITDA from associates and JVs - - - 42.5 - - 42.5 3.5 46.0
EBITDA 756.4 471.8 102.2 42.5 (29.3) (51.7) 1,291.9 39.1 1,331.0
c) Cash costs
Cash costs are a measure of the cost of operational production expressed in
terms of cents per pound of payable copper produced.
This is considered to be a useful and relevant measure as it is a standard
industry measure applied by most major copper mining companies which reflects
the direct costs involved in producing each pound of copper. It therefore
allows a straightforward comparison of the unit production cost of different
mines, and allows an assessment of the position of a mine on the industry cost
curve. It also provides a simple indication of the profitability of a mine
when compared against the price of copper (per lb).
With sales of concentrates at Los Pelambres and Centinela, which are sold to
smelters and roasting plants for further processing into fully refined metal,
the price of the concentrate invoiced to the customer reflects the market
value of the fully refined metal less a "treatment and refining charge"
deduction, to reflect the lower value of this partially processed material
compared with the fully refined metal. For accounting purposes, the revenue
amount reflects the invoiced price (which reflects the net of the market value
of fully refined metal less the treatment and refining charges). Under the
standard industry definition of cash costs, treatment and refining charges are
regarded as part of the total cash cost figure.
At 30.06.2024 At 30.06.2023
Reconciliation of cash costs excluding treatment & refining charges and
by-product revenue:
Total Group operating costs (Note 5) ($m) 2,283.9 2,116.4
Zaldívar operating costs (attributable basis - 50%) 123.7 129.0
Less:
Depreciation and amortisation (Note 5) ($m) (647.2) (511.3)
Corporate and other items - Total operating cost (excluding depreciation) (42.4) (51.7)
(Note 5) ($m)
Exploration and evaluation - Total operating cost (excluding depreciation) (26.8) (29.3)
(Note 5) ($m)
Transport division - Total operating cost (excluding depreciation) (Note 5) (59.2) (62.9)
($m)
Closure provision and other expenses not included within cash costs ($m) (75.6) (62.1)
Inventories variation 44.4 21.9
Medium and long-term drilling costs & evaluation (45.4) (32.7)
Total cost relevant to the mining operations' cash costs ($m) 1,555.4 1,517.3
Copper production volumes (tonnes)(1) 284,700 295,500
Cash costs excluding treatment & refining charges and by-product revenue 5,463 5,135
($/tonne)
Cash costs excluding treatment & refining charges and by-product revenue 2.48 2.32
($/lb)
At 30.06.2024 At 30.06.2023
Reconciliation of cash costs before deducting by-products revenue:
Treatment & refining charges - copper and by-products - Los Pelambres ($m) 79.8 64.3
Treatment & refining charges - copper and by-products - Centinela ($m) 27.8 40.8
Treatment & refining charges - copper - total ($m) 107.6 105.1
Copper production volumes (tonnes)(1) 284,700 295,500
Treatment & refining charges ($/tonne) 378.0 355.8
Treatment & refining charges ($/lb) 0.17 0.16
Cash costs excluding treatment & refining charges and by-product revenue 2.48 2.32
($/lb)
Treatment & refining charges ($/lb) 0.17 0.16
Cash costs before deducting by-product revenue (S/lb) 2.65 2.48
(1)The 284,700 tonnes includes 18,900 tonnes of production at Zaldívar on a
50% attributable basis.
c) Cash costs (continued)
At 30.06.2024 At 30.06.2023
Reconciliation of cash costs (net of by-product revenue):
Gold revenue - Los Pelambres ($m) 40.0 41.5
Gold revenue - Centinela ($m) 101.0 115.5
Molybdenum revenue - Los Pelambres ($m) 229.7 209.1
Molybdenum revenue - Centinela ($m) 52.6 79.9
Silver revenue - Los Pelambres ($m) 20.3 15.9
Silver revenue - Centinela ($m) 7.5 14.5
Total by-product revenue ($m) 451.1 476.4
Copper production volumes (tonnes)(2) 284,700 295,500
By-product revenue ($/tonne) 1,585.2 1,612.2
By-product revenue ($/lb) 0.71 0.73
Cash costs before deducting by-product revenue (S/lb) 2.65 2.48
By-product revenue ($/lb) (0.71) (0.73)
Cash costs (net of by-product revenue) ($/lb) 1.94 1.75
(2)The 284,700 tonnes includes 18,900 tonnes of production at Zaldívar on a
50% attributable basis.
The totals in the tables above may include some small apparent differences as
the specific individual figures have not been rounded.
d) 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 2024 December 2023
Total Attributable Attributable Total Attributable share Attributable
amount
share
amount
amount
amount
$m $m $m $m
Cash, cash equivalents and liquid investments:
Los Pelambres 1,148.0 60% 688.8 587.0 60% 352.2
Centinela 1,050.1 70% 735.1 516.9 70% 361.8
Antucoya 286.1 70% 200.3 129.9 70% 90.9
Corporate 1,923.2 100% 1,923.2 1,668.3 100% 1,668.3
Transport division 24.8 100% 24.8 17.3 100% 17.3
Total 4,432.2 3,572.2 2,919.4 2,490.5
Borrowings:
Los Pelambres (Note 15) (2,399.6) 60% (1,439.8) (2,112.4) 60% (1,267.4)
Centinela (Note 15) (1,359.0) 70% (951.3) (574.1) 70% (401.9)
Antucoya (Note 15) (364.3) 70% (255.0) (379.1) 70% (265.4)
Corporate (Note 15) (1,744.2) 100% (1,744.2) (1,007.7) 100% (1,007.7)
Transport division (Note 15) (3.7) 100% (3.7) (5.9) 100% (5.9)
Total (Note 15) (5,870.8) (4,394.0) (4,079.2) (2,948.3)
Net debt (1,438.6) (821.8) (1,159.8) (457.8)
Production and Sales Statistics (not subject to audit or review)
a) Production and sales volumes for copper, gold and molybdenum
Production Sales
Six months ended 30.06.2024 Six months ended 30.06.2023 Six months ended 30.06.2024 Six months ended 30.06.2023
Copper 000 tonnes 000 tonnes 000 tonnes 000 tonnes
Los Pelambres 132.5 128.5 133.4 129.1
Centinela 93.0 109.2 87.4 108.6
Antucoya 40.3 38.0 38.4 37.4
Zaldívar (attributable basis - 50%) 18.9 19.8 18.0 20.3
Group total 284.7 295.5 277.2 295.4
Gold 000 ounces 000 ounces 000 ounces 000 ounces
Los Pelambres 18.9 19.6 17.2 20.5
Centinela 48.0 66.7 43.8 58.4
Group total 66.9 86.2 61.0 78.9
Molybdenum 000 tonnes 000 tonnes 000 tonnes 000 tonnes
Los Pelambres 4.2 3.4 4.5 3.7
Centinela 1.0 1.5 1.1 1.5
Group total 5.2 4.9 5.6 5.2
Silver 000 ounces 000 ounces 000 ounces 000 ounces
Los Pelambres 777.8 670.2 734.5 633.3
Centinela 305.4 633.2 271.3 589.3
Group total 1,083.2 1,303.4 1,005.8 1,222.6
b) Cash costs per pound of copper produced and realised prices per
pound of copper and molybdenum sold
Net Cash costs Realised prices
Six months ended 30.06.2024 Six months ended 30.06.2023 Six months ended 30.06.2024 Six months ended 30.06.2023
$/lb $/lb $/lb $/lb
Copper
Los Pelambres 1.21 1.17 4.48 3.97
Centinela 2.48 1.88 4.35 4.01
Antucoya 2.58 2.72 4.25 4.01
Zaldívar (attributable basis - 50%) 2.97 2.96 - -
Group weighted average (net of by-products) 1.94 1.75 4.40 3.99
Group weighted average (before deducting by-products) 2.65 2.48
Group weighted average (before deducting by-products and excluding treatment 2.48 2.32
& refining charges from concentrate)
Cash costs at Los Pelambres comprise:
On-site and shipping costs 1.89 1.82
Treatment & refining charges for concentrates 0.27 0.22
Cash costs before deducting by-product credits 2.16 2.04
By-product credits (principally molybdenum) (0.95) (0.87)
Cash costs (net of by-product credits) 1.21 1.17
Cash costs at Centinela comprise:
On-site and shipping costs 3.16 2.65
Treatment & refining charges for concentrates 0.15 0.17
Cash costs before deducting by-product credits 3.31 2.82
By-product credits (principally gold) (0.83) (0.94)
Cash costs (net of by-product credits) 2.48 1.88
LME average copper price 4.13 3.95
Gold $/oz $/oz
Los Pelambres 2,331 2,022
Centinela 2,307 1,978
Group weighted average 2,314 1,989
Market average price 2,205 1,932
Molybdenum $/lb $/lb
Los Pelambres 22.9 25.3
Centinela 22.8 24.1
Group weighted average 22.8 25.0
Market average price 20.9 27.1
Silver $/oz $/oz
Los Pelambres 27.6 25.2
Centinela 27.6 24.6
Group weighted average 27.6 24.9
Market average price 26.1 23.4
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. The figures in
the tables above do not include Compañía de Minas Buenaventura S.A.A.
(ii) Los Pelambres produces copper and molybdenum
concentrates, Centinela produces copper concentrate, copper cathodes and
molybdenum concentrate, 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. Cash costs exclude
depreciation, financial income and expenses, hedging gains and losses,
exchange gains and losses and corporate tax for all four operations. With
sales of concentrates at Los Pelambres and Centinela, which are sold to
smelters and roasting plants for further processing into fully refined metal,
the price of the concentrate invoiced to the customer reflects the market
value of the fully refined metal less a "treatment and refining charge"
(TC/RC) deduction, to reflect the lower value of this partially processed
material compared with the fully refined metal. For accounting purposes, the
revenue amount reflects the invoiced price (is which reflects the net of the
market value of fully refined metal less the treatment and refining charges).
However, under the standard industry definition of unit cash costs, treatment
and refining charges are regarded as an expense and part of cash costs.
(iv) Realised copper prices are determined by comparing
revenue from copper sales (after adding back treatment and refining 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 mark-to-market adjustments for sales contracts which contain
provisional pricing mechanisms and 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 2024,
published on 17 July 2024.
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