Antofagasta PLC ANTO Quarterly Production Report

  Antofagasta PLC (ANTO) - Quarterly Production Report

RNS Number : 9004P
Antofagasta PLC
31 October 2012






                               Antofagasta plc

                                      

                     Quarterly Production Report Q3 2012









Highlights



· Group copper production was 179,800 tonnes in Q3 2012 and 515,800 tonnes
in the first nine months of 2012, a 3.8% increase compared with the previous
quarter and an 11.5% increase compared with the first nine months of 2011.
This was mainly due to higher production at Esperanza as a result of steadily
increasing throughput levels following the start of operations in 2011.

· Copper production for the 2012 full year is still expected to be
approximately 700,000 tonnes.

· Gold production was 77,400 ounces in Q2 2012 and 213,500 ounces in the
first nine months of 2012 compared with 72,600 ounces in the previous quarter
and 125,000 ounces in the first nine months of 2011 also reflecting the higher
throughput at Esperanza.

· Molybdenum production at Los Pelambres was 3,000 tonnes in Q3 2012 and
9,500 tonnes in the first nine months of 2012. The 30.1% increase in
production in the first nine months of 2012 compared to 2011 reflects the
particularly high molybdenum grades in the current year.

· Group cash costs (net of by-product credits) in Q3 were 99.3 cents per
pound, in line with the previous quarter's costs. Cash costs excluding
by-product credits decreased slightly to 157.1 cents per pound in Q3 2012
compared with 158.2 cents in the previous quarter.

· Group cash costs (net of by-product credits) in the first nine months of
2012 were 99.0 cents per pound, a 4.7 cent decrease compared with 103.7 cents
per pound in the first nine months of 2011. This decrease mainly reflected an
increase in by-product credits as a result of the higher gold production at
Esperanza as well as to a lesser extent increased molybdenum production at Los
Pelambres.



                                                                  Full

                                      Q1    Q2    Q3    Q4   Acc   Acc  Year

Group Total                           2012  2012  2012  2012 2012  2011  2012


Total production of payable copper                                      

('000 tonnes)                         162.9 173.2 179.8      515.8 453.5 640.5


Total production of payable moly                                        
('000
                                        3.1   3.4   3.0        9.5   7.3   9.9
tonnes)


Total production of payable gold                                        
('000
                                       63.5  72.6  77.4      213.5 125.0 196.8
ounces)


Weighted average cash cost before                                       

by-product credits (cents per pound)  163.6 158.2 157.1      159.5 156.8 155.2


Weighted average cash costs (cents                                      

per pound)                             98.1  99.3  99.3       99.0 103.7 101.9







Mining operations





Los Pelambres



Los Pelambres produced 98,800 tonnes of payable copper in Q3 2012 compared
with 101,300 tonnes in Q2, reflecting a decrease in ore grades from 0.71% in
Q2 to 0.67% in Q3, partly offset by a slight increase in plant throughput.
Copper production in the first nine months of 2012 was 296,000 tonnes compared
with 297,400 tonnes in the comparable period in 2011, due to a decrease in ore
grades, partly offset by an increase in plant throughput and higher
recoveries.



Molybdenum production decreased to 3,000 tonnes in Q3 2012 compared with 3,400
tonnes in Q2 2012 mainly due to the impact of in-process inventory movements
and a decrease in molybdenum recoveries. Molybdenum production increased by
30.1% to 9,500 tonnes in the first nine months of 2012 compared with the first
nine months of 2011, mainly reflecting the increase in grades from 0.018% to
0.023%.



Gold production was 12,500 ounces in Q3 2012 compared with 14,500 ounces in
the previous quarter. Gold production was 38,800 ounces in the first nine
months of 2012 compared with 26,800 ounces in the comparable period of 2011.



Cash costs were 89 cents per pound in Q3 2012 compared with 78 cents per pound
in the previous quarter. This 11 cent increase was due to lower by-product
credits and an increase in on-site and shipping costs, partially offset by
lower tolling charges. By-product credits decreased approximately 7 cents from
56 cents per pound in Q2 2012 to 49 cents per pound in Q3 2012 reflecting a
decrease in the realised molybdenum price and a decrease in production
volumes. The approximately 5 cent per pound increase in on-site and shipping
costs mainly reflects the impact of the lower copper production on unit costs.



Cash costs for the first nine months of 2012 were 81 cents per pound, compared
with 78 cents per pound in the first nine months of 2011 as a result of a 10
cent increase in on-site and shipping costs partially offset by a 3 cent
decrease in tolling charges and a 4 cent increase in by-product credits. The
increase in on-site and shipping costs reflects a range of minor cost
increases including maintenance and general inflation. The increase in
by-product credits was due to the higher gold production volumes and a higher
average gold price; the increase in molybdenum volumes was offset by lower
average molybdenum prices.



Two claims have recently been filed with the Court of Appeals of La Serena in
respect of Los Pelambres' Mauro tailings dam. These claims have been made by
many of the same individuals involved in the existing litigation against the
tailings dam which dates from 2008. The first claim alleges that the tailings
dam is affecting the quality of the water of the Caimanes community located
near the Mauro valley. In a hearing before the Court, Los Pelambres made
submissions strongly refuting the allegation. In particular, Los Pelambres
submitted evidence that all previous measurements of the water quality at
Caimanes undertaken by Los Pelambres and the competent authorities who
permanently supervise the quality of the water at the same point have shown
that the quality of the water is well within the stringent legal limits. The
second claim alleges that the Mauro tailings dam poses a danger to the
population of Caimanes because it would not resist an earthquake of certain
magnitudes, and there are indications of leaks that threaten the dam's
stability.Los Pelambres will strongly refute these claims. Antofagasta is
confident that both claims are without merit and will be rejected. The
claimants have unsuccessfully made similar, related claims in several
different courts more than ten times in the past four years.





Esperanza



Esperanza produced 45,600 tonnes of payable copper in Q3 2012, a 21.0%
increase compared with 37,700 tonnes in the previous quarter. This was due to
a 12.5% increase in ore grades as well as a 6.8% increase in average plant
throughput from 79,700 tonnes per day in Q2 2012 to 85,100 tonnes per day in
the current quarter. The increase in average throughput reflects on-going
improvements in the reliability of the operation following further
optimisation of the plant. Production in the first nine months of 2012 was
113,700 tonnes, more than doubling production in the comparable period in
2011. This reflects both a 61% increase in plant throughput levels compared
with the prior year when Esperanza was ramping-up, as well as a 22.2% increase
in copper grades.



Gold production was 64,900 ounces in Q3, 11.7% higher than in the previous
quarter due to the increase in daily throughput as well as higher recoveries.
The production in the first nine months of 2012 was 174,600 ounces compared
with 98,200 ounces in the comparable period of 2011 as a result of the higher
plant throughput.



Cash costs were 46 cents per pound in Q3 compared with 59 cents per pound in
the previous quarter, reflecting a 12 cent decrease in on-site and shipping
costs and a marginal increase in by-product credits. On-site and shipping
costs decreased from 162 cents per pound in Q2 to 150 cents in Q3; this
decrease is due to an adjustment of 7 cents per pound relating to Q2 costs
which was made subsequent to the previous quarterly release, and which has
therefore been reflected in the Q3 figures. Excluding the impact of this
adjustment results in a marginal increase in underlying costs from Q2 to Q3.
On-site and shipping costs are expected to increase in Q4 to over 200 cents
per pound mainly due to maintenance relating to mine equipment as well as
increased waste movement.



Cash costs for the first nine months of 2012 were 54.2 cents per pound,
compared with 99.0 cents per pound in the comparable period in 2011, mainly
due to a decrease in on-site and shipping costs reflecting the high level of
costs in 2011 associated with the ramp-up process, and the impact on unit
costs of the plant operating at significantly below capacity during that
process. The decrease in on-site and shipping costs has been partially offset
by lower by-product credits in cents per pound of copper produced mainly
reflecting the lower ratio of gold to copper production in 2012 to date
compared with 2011.





El Tesoro



El Tesoro achieved production of 25,500 tonnes in Q3 compared to 24,500 tonnes
in Q2 as a result of increased throughput and recoveries, partially offset by
a decrease in ore grades. Production was 78,200 tonnes in the first nine
months of 2012 compared with production of 69,700 tonnes in the same period of
2011 due to the processing of higher grade ore from the Mirador pit, which
entered into production during Q3 of 2011.



Cash costs were 152 cents per pound in Q3, a 10% decrease compared with 167
cents per pound in Q2, mainly due to planned maintenance in Q2 which resulted
in higher input costs in that quarter as well as lower acid costs in Q3. Cash
costs for the first nine months of 2012 were 155 cents, compared with 176
cents per pound in the comparable period in 2011, due to the higher grade
Mirador ore as well as lower acid and energy costs.





Michilla



Michilla produced 9,900 tonnes of copper in Q3 compared with 9,700 tonnes in
Q2, reflecting an increase in throughput and recoveries partially offset by a
reduction in ore grade. Production was 27,800 tonnes in the first nine months
of 2012 compared with 32,000 tonnes in the first nine months of 2011. This
decrease was mainly due to lower grades reflecting a reduction in ore feed
from the higher grade Estefanía underground mine, as well as lower plant
throughput reflecting a reduction in ore feed from third parties, partly
offset by increased production from the secondary leaching process.



Cash costs in Q3 were 316 cents per pound compared with 306 cents per pound in
the previous quarter. This increase was mainly due to the impact of [lower
production on unit costs and the processing of lower grade ore]. Cash costs in
the first nine months of 2012 were 315 cents per pound compared with 197 cents
per pound in the comparative period in 2011 reflecting an increase in costs
related to processing lower grade ore, the purchase of higher volumes of ore
from ENAMI, and costs associated with processing ore from the spent ore piles.
Given that Michilla represented approximately 5% of total Group copper
production in the first nine months of 2012 this increase in cash costs had a
minor impact on Group weighted average cash costs.



Exploration



In September 2012 the Group has entered into a strategic alliance with Lara
Exploration Ltd in relation to exploration in Brazil.



Commodity prices and exchange rates



The LME copper price averaged 349.5 cents per pound in Q3 2012, compared with
356.9 cents per pound in Q2 2012. The LME copper price for the first nine
months of 2012 averaged 361.2 cents per pound, compared with 419.8 cents per
pound for the first nine months of 2011. The LME spot copper price at the end
of Q3 2012 was 375.0 cents per pound.



The market molybdenum price averaged US$11.9 per pound in Q3 2012, compared
with US$13.8 per pound in Q2 2012. The market molybdenum price for the first
nine months of 2012 averaged US$13.3 per pound, compared with US$16.2 per
pound for the first nine months of 2011. The average market molybdenum price
for September 2012 was US$11.8 per pound.



The market gold price averaged US$1,651 per ounce in Q3 2012, compared with
US$1,609 per ounce in Q2 2012. The market gold price for the first nine months
of 2012 averaged US$1,651 per ounce, compared with US$1,534 per ounce for the
first nine months of 2011. The spot gold price at the end of Q3 2012 was
US$1,779 per ounce.



The realised copper, molybdenum and gold prices which the Group will recognise
for its sales in the year 2012 will differ from the average market prices
shown above because, in line with industry practice, sales agreements
generally provide for provisional pricing at the time of shipment with final
pricing based on the average market price for the month in which settlement
takes place. The typical period for which sales remain open until settlement
occurs for copper concentrate sales is approximately three to four months from
shipment date, for copper cathode sales approximately one month from shipment,
for molybdenum sales approximately two months from shipment and for gold
content of copper concentrate sales approximately one month from shipment.
Additionally, under IFRS open sales are marked to market at the end of each
period through adjustments to turnover in the income statements using forward
prices in the case of copper concentrate (including the gold content) and
copper cathode, and period-end prices for molybdenum sales.



The provisional pricing and hedging adjustments with respect to copper sales
have resulted in a total positive provisional pricing adjustment of US$137.9
million for the first nine months of 2012 and an average realised price of
374.1 cents per pound. The provisional pricing adjustments with respect to
molybdenum sales have resulted in a total negative provisional pricing
adjustment of US$24.6 million for the first nine months of 2012 and an average
realised price of US$12.3 per pound. The provisional pricing adjustments with
respect to gold sales have resulted in a total positive provisional pricing
adjustment of US$4.1 million for the first nine months of 2012 and an average
realised price of US$1,668 per ounce.



The Chilean peso / US dollar exchange rate averaged Ch$483.0 / US$1 in Q3
2012, compared with Ch$496.5 / US$1 in Q2 2012. The Chilean peso / US dollar
exchange rate averaged Ch$489.7 / US$1 for the first nine months of 2012,
compared with Ch$474.1 / US$1 for the first nine months of 2011. The exchange
rate at 28 September 2012 was Ch$470.5 / US$1.



Transport



The transport division maintained a solid operational performance in Q3 2012
with total volumes transported of 1.9 million tonnes, in line with volumes in
Q2 2012. Total volumes for the first nine months of 2012 were 5.7 million
tonnes compared with 6.2 million tonnes in the first nine months of 2011.





Water



The water business continued to perform well, with Q3 2012 volumes of 12.3
million cubic metres compared with 12.7 million cubic metres in the previous
quarter. Total volumes for the first nine months of 2012 were 38.0 million
cubic metres compared with 35.8 million cubic metres in the first nine months
of 2011.





Interim Management Statement



This report represents the Interim Management Statement for the purposes of
the UK Listing Authority's Disclosure and Transparency Rules. Other than as
set out above, there have been no significant changes in the financial
position of the Group in the quarter ended 30 September 2012 since the release
of the Group's Half Yearly Financial Report on 29 August 2012.





Enquiries



Investor relations - Antofagasta plc: Media enquiries - Bankside Consultants:

                                     

Hussein Barma                Simon Rothschild

hbarma@antofagasta.co.uk              simon.rothschild@bankside.com

London: (44-20) 7808 0988             London: (44-20) 7367 8871

                                     


Philip Holden

pholden@antofagasta.co.uk

London: (44-20) 7808 0988


Alejandro Rivera

arivera@aminerals.cl

Santiago: (56-2) 798 7145











The totals in the tables below may include some small apparent differences as
the specific individual figures have not been rounded.



                                                                       Full
                                             Q4                        Year
Los Pelambres        Q1 2012 Q2 2012 Q3 2012 2012  Acc 2012  Acc 2011  2011
Production
statistics
Daily average  ore
treated              171.5   179.4   180.0         177.0     173.8     176.6
('000 tonnes)
Copper concentrate
produced             298.5   319.7   315.0         933.2     901.3     1,228.0
('000 tonnes)
Average copper ore
grade                0.71    0.71    0.67          0.70      0.72      0.74
(%)
Average copper
recovery             89.6    90.9    91.0          90.5      89.4      89.7
(%)
Payable copper in
concentrate -        95.9    101.3   98.8          296.0     297.4     411.8
production volumes
('000 tonnes)
Payable copper in
concentrate - sales  92.5    98.5    97.2          288.2     287.0     415.5
volumes
('000 tonnes)
Average moly ore
grade                0.024   0.023   0.023         0.023     0.018     0.019
(%)
Average moly
recovery             81.6    84.6    82.3          82.8      82.6      82.3
(%)
Payable moly -
production volumes   3.1     3.4     3.0           9.5       7.3       9.9
('000 tonnes)
Payable moly -
sales volumes        2.9     3.9     3.0           9.8       7.2       9.4
('000 tonnes)
Payable gold -
production volumes   11.9    14.5    12.5          38.8      26.8      39.8
('000 ounces)
Payable gold -
sales volumes        11.9    14.5    12.5          38.8      26.8      39.8
('000 ounces)
Cash costs
statistics
On-site and
shipping costs       125.1   117.2   121.8         121.3     110.7     110.0
(cents per pound)
Tolling charges for
concentrates         15.9    16.3    15.6          15.9      19.0      18.0
(cents per pound)
By - product
credits              (65.4)  (55.5)  (48.5)        (56.1)    (51.9)    (49.7)
(cents per pound)
^(1)
Cash costs           75.6    78.0    88.9          81.2      77.8      78.3
(cents per pound)



^(1)  By-products credits do not include any costs attributable to the
production of molybdenum concentrate.





                     Q1      Q2      Q3      Q4    Acc      Acc      Full Year
Esperanza            2012    2012    2012    2012  2012     2011     2011
Production
statistics
Daily average  ore
treated              70.4    79.7    85.1          78.5     48.7     55.7
('000 tonnes)
Copper concentrate
produced             137.7   157.8   205.0         500.5    228.2    367.2
('000 tonnes)
Average copper ore
grade                0.60    0.64    0.72          0.66     0.54     0.56
(%)
Average copper
recovery             85.6    87.0    88.3          87.1     84.6     85.3
(%)
Payable copper in
concentrate -        30.5    37.7    45.6          113.7    54.4     90.1
production volumes
('000 tonnes)
Payable copper in
concentrate - sales  30.0    29.7    45.0          104.8    44.8     86.3
volumes
('000 tonnes)
Average gold ore
grade                0.39    0.34    0.34          0.36     0.35     0.36
(g/t)
Average gold
recovery             70.4    75.5    82.0          76.1     72.5     72.8
(%)
Payable gold -
production volumes   51.7    58.1    64.9          174.6    98.2     157.1
('000 ounces)
Payable gold -
sales volumes        51.5    49.7    62.6          163.8    79.6     153.4
('000 ounces)
Cash costs
statistics
On-site and
shipping costs       189.4   162.0   150.4         164.7    241.7    219.4
(cents per pound)
Tolling charges for
concentrates (cents  16.7    18.2    17.9          17.7     15.4     15.5
per pound)
By - product
credits              (144.4) (121.4) (122.8)       (128.1)  (158.1)  (151.7)
(cents per pound)
Cash costs           61.7    58.9    45.5          54.2     99.0     83.2
(cents per pound)



^



                                                               Full

El Tesoro                           Q1    Q2    Q3    Q4   Acc   Acc  Year

                                   2012  2012  2012  2012 2012  2011  2011
                                                                    

Daily average ore treated ^(3)      22.5  18.7  19.1       20.1  25.0  23.8

('000 tonnes)
                                                                    

Average ore grade ^(3)              1.59  1.76  1.71       1.68  1.12  1.26

(%)
                                                                    

Average recovery ^(3)               74.4  73.9  76.6       75.0  70.9  71.0

(%)
                                                                   

Copper cathodes from the heap-                                      

leach process ^(3)                  24.7  22.0  23.2       69.9  53.1  75.9

('000 tonnes)                                                       
                                                                    

Copper cathodes from ROM             3.5   2.5   2.4        8.3  16.6  21.1

('000 tonnes)
                                                                   

Total copper cathodes - production                                  

volumes                             28.2  24.5  25.5       78.2  69.7  97.1

('000 tonnes)
                                                                    

Total copper cathodes - sales                                        

volumes                             27.8  25.4  21.3       74.5  68.8  96.0

('000 tonnes)                                                       
                                                                    

Cash costs                         147.8 167.4 151.6      155.2 175.6 171.6

(cents per pound)



^

^(3) The average daily throughput, ore grade and recovery figures, relate
to the heap leach process and do not include amounts relating to the ROM
material.



                               Q1    Q2    Q3    Q4    Acc    Acc    Full Year
Michilla                       2012  2012  2012  2012  2012   2011   2011
Daily average  ore treated     11.3  10.6  11.2        11.0   12.6   12.5
('000 tonnes)
Average ore grade              0.99  1.26  1.06        1.10   1.21   1.18
(%)
Average recovery               76.4  71.7  73.4        73.7   75.4   75.6
(%)
Copper cathodes from the
heap-leach process             7.9   8.7   8.2         24.9   31.2   40.5
('000 tonnes)
Copper cathodes from
secondary leaching of          0.3   1.0   1.6         3.0    0.8    1.1
spent ore ('000 tonnes)
Total Copper Cathodes -
production volumes             8.3   9.7   9.9         27.8   32.0   41.6
('000 tonnes)
Total Copper Cathodes - sales
volumes                        8.4   9.8   9.4         27.5   32.6   42.2
('000 tonnes)
Cash costs                     323.2 306.0 315.8       314.6  196.7  213.3
(cents per pound)







                          Q1    Q2    Q3    Q4    Acc    Acc
Transport                 2012  2012  2012  2012  2012   2011   Full Year 2011
Rail tonnage transported  1,490 1,538 1,516       4,544  4,792  6,419
('000 tonnes) ^(4)
Road tonnage transported  442   380   362         1,184  1,415  1,896
('000 tonnes) ^(4)



^(4)  Rail tonnages are the aggregate of the volumes of the FCAB rail
network in Chile and the Andino rail network in Bolivia. Shipments from
customers which are carried on both networks are included in both the FCAB and
Andino volumes which are combined to calculate the total rail tonnages shown
above. Similarly, shipments which are carried by rail and by road are included
in both the rail and road volumes shown above.

                          Q1     Q2     Q3     Q4    Acc     Acc     Full Year
Water                     2012   2012   2012   2012  2012    2011    2011
Water volume sold -
potable & untreated       12,960 12,695 12,297       37,952  35,751  48,296
('000 m^3)





^



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           The company news service from the London Stock Exchange

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