Antofagasta Copper Output Up But Eyes Lower End of Output Range-Update

(Update, adds detail).

By Alex MacDonald

LONDON--Antofagasta PLC (ANTO.LN) said Wednesday that copper output rose in the second quarter compared with the same period a year earlier but said its full-year output would now be at the bottom end of its previous guidance. The FTSE-100 miner said it produced 166,200 metric tons of copper in the three months ended June 30, 2016, up 5.9% from the same quarter a year ago due to higher production from last year's purchase of a 50% stake in the Zaldivar mine and the ramp up of the new Antucoya mine, which reached commercial production in the second quarter.

Gold production, on the other hand, fell 4.2% on year to 52,800 troy ounces in the second quarter while molybdenum production dropped 38% on the year to 1,600 tons during the same period due to lower grades at Los Pelambres.

Net cash cost also fell 22% on the year to $1.25 a pound of copper in the second quarter due to higher output, improved cost performance and the weaker Chilean Peso against the U.S. dollar.

The company said it now expects to reach the lower end of its 710,000-740,000 tons of copper output guidance this year with production for the year weighted to the second half.

"Installation of the tailings thickeners at Centinela and the ramp-up of Antucoya are proceeding within their planned ranges, but inherent risks will persist until both projects are completed," the company said.

Net cash cost for the year is now forecast to be lower at $1.30 a pound for the year versus $1.35 a pound previously. This is due in part to the deferral of waste stripping at its flagship Los Pelambres mine and accounting changes in how it estimates certain costs. This will be offset by a $112 million increase in captial expenditure related to mine development.

At 1011 GMT, Antofagasta's shares were up 0.2% at 488.2 pence a share. It was "a bit of a mixed quarter," said BMO Capital Markets in a note. Second quarter output missed the bank's forecast by 9% while cash costs beat expecation by 5%. Berenberg Mining analyst Fawzi Hanano said in a note that Antofagasta may find it challenging to significantly ramp up output in the second half of the year to beat the bottom end of the 2016 output guidance range.

"We commend the company's operators for solid cost control, but we believe that a production guidance downgrade remains on the cards and we expect this at the Q3 operating results," Mr. Hanano said.

-Write to Alex MacDonald at [e-mail]

(END) Dow Jones Newswires

July 27, 2016 06:43 ET (10:43 GMT)

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