Antofagasta Expects Billion Dollar Capex in 2018 -- Commodity Comment

By David Hodari 
 
 

Copper mining giant Antofagasta PLC released its 4Q 2017 production report on Wednesday. Here are remarks from the company's report:

On 2017...

"Our disciplined approach to capital allocation has allowed the Group to continue to invest in profitable tonnes throughout the cycle. The new additions to our portfolio at Zaldivar, Antucoya and Encuentro Oxides now account for 25% of Group production, helping offset declines at our mature assets and providing Antofagasta with a platform for growth as copper prices recover."

On copper production...

"Copper production in Q4 was 1.3% less than in the previous quarter. Higher production at Los Pelambres and the ramp-up of the Encuentro Oxides project offset lower production at Centinela Concentrates... copper production for the full year was... in line with guidance and 0.7% lower than in 2016."

On gold production...

Gold production... [decreased] 32.0% on Q3 2017 due to lower grades and recoveries at Centinela. For the full year production was... 21.6% lower than in 2016..."

On molybdenum production...

"Molybdenum production at Los Pelambres was 3,300 tonnes in Q4 2017 and 10,500 tonnes for the full year, 47.9% higher than in the previous year on higher grades."

On 2018 capital expenditure guidance...

"Capital expenditure in 2018 is expected to be $1.0 billion, including expenditure on the Los Pelambres Incremental Expansion project, which will add 55,000 tonnes of copper per annum once in full operation... start-up is expected in 2021. Sustaining capital expenditure increases in 2018 due to the concentration of mine equipment replacement and tailings dam expenditure."

On its mine at Los Pelambres...

"Los Pelambres produced 92,800 tonnes of copper in Q4 2017 compared with 86,800 tonnes in the previous quarter. This increase is mainly... following the completion of maintenance at the end of Q3 2017. As guided, production for the year decreased by 3.3%...due to lower grades. Cash costs before by-product credits fell in Q4 2017... principally a result of... higher utilisation rates, softer ore and slightly higher grades. For the full year, cash costs before by-product credits were 5.9% higher than in 2016..."

On its mine at Centinela...

"...copper production was 15.8% lower than Q3 2017 following a significant decrease in grades... Total production for the full year was 3.3% lower primarily as a result of lower recoveries... partly offset by higher grades in the oxides line and the start of production at Encuentro Oxides. Gold production was 45.6% lower than in the previous quarter primarily due to decreased grades and recovery. For the full year gold production was 26.3% lower than in 2016 mainly due to lower grades. [An] increase in cash costs was mainly due to the payment of a one-off signing bonus following the successful conclusion of the labour negotiations with the three unions (increasing cash costs by 19c/lb) and lower production due to lower sulphide grades."

On its mine at Zaldivar...

Copper production at Zaldivar was in line with the previous quarter, as lower grades were offset by higher recoveries. For the full year Zaldivar copper cathodes [production was] unchanged from 2016 as, although the grade increased, recoveries were lower due to the significantly higher proportion of sulphide ores being processed compared to 2016. Cash costs for 2017 were 5.2% higher than previous year mainly because of the impact of the one-off signing bonuses following the conclusion of the labour negotiations and higher input prices."

Write to David Hodari at [e-mail]

(END) Dow Jones Newswires

January 24, 2018 11:23 ET (16:23 GMT)

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