TIDMANTO
RNS Number : 8610I
Antofagasta PLC
10 August 2023
NEWS RELEASE, 10 AUGUST 2023
HALF YEARLY FINANCIAL REPORT
FOR THE SIX MONTHSED 30 JUNE 2023
EARNINGS PER SHARE INCREASE BY 27%
Antofagasta plc CEO Iván Arriagada said : "The first half of the
year delivered another strong safety performance across all our
operations. We continue to operate fatality free, and both leading
and lagging indicators of safety are at a level ahead of last
year.
"Our financial metrics over the period were also strong; revenue
was 14.3% higher due to higher copper, gold and molybdenum sales
volumes and higher realised by-product prices, partially offset by
a 3.4% decline in copper prices.
"We are focused on cost control through our Cost and
Competitiveness Programme, which so far this year has delivered $60
million in savings and productivity improvements (equivalent of
9c/lb), achieving our goal of $60 million of savings for the full
year. EBITDA was 7.5% higher and profit before tax was 12.5% higher
than last year. Earnings per share came in at 33.5 cents, which is
an increase of 26.9% compared to last year.
"Looking ahead to the second half of the year, we expect the
desalination plant will continue to ramp-up to its design capacity,
which will allow increased throughput at Los Pelambres, supporting
the delivery of our production and cost guidance.
"Copper is the metal of electrification and therefore an
integral part of the energy transition. We believe the long-term
fundamentals for copper are very strong as demand is forecast to
continue to grow over the coming years, and as incremental supply
remains challenged. Our focus remains on growing production through
our pipeline of projects safely and competitively, which will
generate value for all our stakeholders.
"Consistent with our practice of paying 35% of interim net
earnings as a dividend, the Board has declared an interim dividend
of 11.7 cents per share."
HIGHLIGHTS
Financial performance
-- Revenue for the first half of 2023 was $2,890 million , 14.3%
higher than in the same period in 2022, mainly because of higher
copper and by-product sales volumes and higher realised by-product
prices.
-- EBITDA(1) was $1,331 million , 7.5% higher than in the same
period last year on higher revenue, partially offset by operating
costs that increased by 14.8%, mainly due to higher sales volumes,
inflation and a stronger Chilean peso.
-- EBITDA margin(2) was 46.1% , compared with 49.0% in H1 2022.
-- The Cost and Competitiveness Programme generated savings and
productivity improvements of $60 million in the first half of 2023,
equivalent to 9c/lb of unit cash costs, achieving our full year
target of $60 million.
-- Profit before tax was $765 million, 12.5% higher than the same period in 2022.
-- Continuing strong balance sheet with a net debt to EBITDA
ratio at the end of the period of 0.27 times. The Company's cash,
cash equivalents and liquid investments balance as at 30 June 2023
was $2,350 million, almost unchanged from the balance of $2,391
million as at the end of 2022.
-- Cash flow from operations was $1,296 million, down from
$1,683 million in the first half of 2022, due to a significant
positive working capital variance in H1 2022, which was not
repeated in H1 2023.
-- Capital expenditure of $1,022 million, which is 54% of full year guidance.
-- Earnings per share of 33.5 cents, 7.1 cents higher than the same period in 2022.
-- Interim dividend of 11.7 cents per share, equivalent to a
pay-out ratio of 35% of underlying net earnings in line with the
Company's capital allocation framework.
Production and cost performance (as previously announced on 19
July 2023)
-- Copper production in H1 2023 of 295,500 tonnes , 10.0% higher
year-on-year (H1 2022: 268,600 tonnes), principally reflecting a
23.9% increase in throughput at Los Pelambres.
-- Cash costs before by-product credits in H1 2023 were $2.48/lb
, a year-on-year increase of 4.6% due to higher input costs and the
appreciation of the Chilean peso.
-- Net cash costs were $1.75/lb for the first half of the year ,
compared to $1.82/lb in the first half of 2022, reflecting the
increase in cash costs before by-product credits being more than
offset by higher by-product credits.
2023 Guidance (as previously announced)
-- Guidance has been updated to 640-670,000 tonnes (previously
670-710,000 tonnes), because of the rescheduling of completion
activities at the desalination plant and concentrator expansion at
Los Pelambres and the reduced availability of water in H1 2023. The
expectation is that output will increase quarter-on-quarter in H2
2023 as both projects near completion of commissioning.
-- The impact of the updated production guidance is partly
offset by strong cost control across the Company's operations with
full year cash costs before by-product credits now expected to be
$2.30/lb (previously $2.20/lb).
-- Guidance for cash costs after by-products remains unchanged
at $1.65/lb, assuming no significant changes in current by-product
prices and the Chilean peso exchange rate.
-- Capital expenditure guidance is also unchanged at $1.9
billion assuming no further appreciation of the Chilean peso.
Opportunities to accelerate the execution of selected development
projects will continue to be evaluated, considering the return
profiles of the individual options.
-- The Group has now achieved its full year Cost and
Competitiveness Programme savings and productivity improvement
target of at least $60 million.
Growth projects (as previously announced)
-- The desalination plant for Los Pelambres is nearing the end
of its commissioning phase. The plant achieved an average
production rate of 160 litres per second of desalinated water in
June 2023, and is expected to continue to ramp-up production during
H2 2023.
-- At the concentrator expansion project at Los Pelambres,
pre-operational testing work started during Q2 2023, alongside the
commissioning of some ancillary sections of the project and the
connection of the main facilities to the national grid.
Commissioning is expected to be completed in H2 2023.
-- An updated study into the development of the Centinela Second
Concentrator project is expected to be submitted to the Board for
consideration by the end of the year.
-- The expansion at Centinela would increase production by an
average of 170,000 tonnes per annum of copper equivalent, taking
advantage of the large resource base in the Centinela district.
This expansion is expected to move Centinela into the first
quartile of the net of by-products cost curve.
Sustainability
-- There were no fatalities in H1 2023 (FY 2022: zero), and
safety indicators remain strong, with a year-to-date lost time
injury frequency rate ("LTIFR") of 0.58 (FY 2022: 0.84).
-- 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 litigation remains
outstanding as well as conversations among the parties regarding a
potential settlement.
-- Currently, Zaldívar is permitted to extract water and mine
until 2025 and 2024 respectively. To ensure the continuity of this
operation, in March 2023 Zaldívar submitted a Declaration of
Environmental Impact ("DIA"), a more limited scope and simplified
procedure than an Environmental Impact Assessment ("EIA"). The DIA
submitted requests that the mining permit be extended from 2024 to
2025, to expire at the same date as the current water permit. After
this, and after withdrawing an earlier EIA application filed in
2018 which remained unresolved, in June 2023 Zaldívar submitted an
EIA application to extend its mining and water environmental
permits through to 2051. This EIA includes a proposal to develop
the primary sulphide ore deposit, extending the current life of
mine and requiring estimated 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.
-- With the continuing drought in central Chile and changes in
the Water Code in 2022, discussions were held with stakeholders in
the Choapa Valley about water distribution arrangements in the area
and an agreement has been reached with local communities. The
relevant water authority is now in the process of reviewing this
proposal. This ongoing process involves no material change to the
current availability of continental water at Los Pelambres.
Legislative
-- In May 2023, both the Chilean Senate and lower house of
Congress approved the proposed revision to Chile's mining royalty
bill, with Presidential approval confirmed in August 2023. The
terms include a 1% ad valorem royalty on copper sales, and a
royalty ranging from 8% to 26% on operating profits depending on
each mining operation's level of profitability, combined with a
provision establishing that total taxation (including corporate
income, the new royalty tax and tax on dividends) should not exceed
46.5% of profitability. This new law will come into effect at the
beginning of 2024. Since Centinela and Antucoya have tax stability
agreements, the new royalty rates will only apply from 2030. There
will be a one-off non-cash adjustment to the deferred tax balances
of each of the Group's mining operations reflecting the impact of
the change in the 31 December 2023 results.
-- The process to approve a new constitution in Chile continues.
In May 2023, the members of the Constitutional Council that will
draft the revised constitution were elected. The Council is
expected to agree a final draft of the revised constitution in Q4
2023, before it is presented for approval in a national referendum
on 17 December 2023.
Other
-- As previously announced, following confirmation by the
Australian Tax Office that the proceeds from the sale of the
Group's interest in Reko Diq ($945 million) were not taxable, the
funds were distributed to the Company during H1 2023. The Company
will apply its capital allocation model to determine the final use
of the proceeds.
-- On 20 July 2023, the Company released its second annual Tax
Payments Report . The report provides detailed information about
the nature of the taxes paid by the Company and the amounts paid
and can be found on the Company's website.
-- The Company also released its second Social Value Report in
July 2023, in which the Company reviews its involvement in the
social and economic development of the areas where it operates
.
UNAUDITED RESULTS SIX MONTHSED 30
JUNE 2023 2022 %
-------- --------
Revenue $m 2,890.1 2,528.2 14.3
EBITDA(1) $m 1,331.0 1,237.7 7.5
EBITDA margin(1, 2) % 46.1 49.0 (5.9)
Profit before tax $m 764.5 679.6 12.5
Earnings per share cents 33.5 26.4 26.9
Dividend per share cents 11.7 9.2 27.2
Cash flow from operations $m 1,296.4 1,682.5 (22.9)
Capital expenditure(3) $m 1,021.9 831.0 23.0
Net debt at period end(1) $m 821.3 491.4 67.1
Average realised copper price $/lb 3.99 4.13 (3.4)
-------
Copper sales(4) kt 275.1 240.4 14.4
Gold sales koz 78.9 73.6 7.2
Molybdenum sales kt 5.2 3.9 33.3
Cash costs before by-product credits(1) $/lb 2.48 2.37 4.6
Net cash costs(1) $/lb 1.75 1.82 (3.8)
----------------------------------------- ------- -------- -------- -------
Note : The financial results are prepared in accordance with
IFRS unless otherwise noted below.
(1) Non-IFRS measures. Refer to the alternative performance
measures section on page 61 in the half-year financial report
below.
(2) Calculated as EBITDA/Revenue. If Associates and JVs' revenue
is included, EBITDA Margin was 43.2% in HY 2023 and 44.9% in HY
2022.
(3) On a cash basis.
(4) Does not include 20,300 tonnes of sales by Zaldívar in H1
2023 and 22,700 tonnes in H1 2022, as it is equity accounted.
A recording and copy of the 2023 Half Year Results presentation
is available for download from the Company's website
www.antofagasta.co.uk .
There will be a Q&A video conference call at 2:00pm (BST)
today hosted by Iván Arriagada - Chief Executive Officer, Mauricio
Ortiz - Chief Financial Officer and René Aguilar, Vice President -
Corporate Affairs and Sustainability. Participants can join the
conference call here .
Investors Media - London
- 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 cpica@aminerals.cl
Pica
Telephone +56 2 2798 7000
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FINANCIAL AND OPERATING REVIEW
FINANCIAL HIGHLIGHTS
Revenue was $2,890.1 million, 14.3% higher than in the same
period last year mainly as a result of copper, gold and molybdenum
sales volumes being higher by 14.4%, 7.2% and 33.3% respectively,
and higher realised by-product prices, partially offset by the
realised copper price decreasing by 3.4%.
EBITDA during the first six months was $1,331.0 million, 7.5%
higher than in the same period in 2022, reflecting higher revenue,
partially offset by higher cost of sales which increased by 14.8%
mainly due to higher sales volumes, inflation and a stronger
Chilean peso.
Profit before tax was $764.5 million, 12.5% higher than in the
same period in 2022 reflecting the higher EBITDA.
Earnings per share for the year were 33.5 cents, an increase of
26.9% compared with 2022.
Cash flow from operations was $1,296.4 million, a 22.9% decrease
compared with the same period last year, due to a significant
positive working capital variance in H1 2022 (following a reduction
in receivables), which was not repeated in H1 2023 .
The Board has declared an interim ordinary dividend of 11.7
cents per share, equal to a 35% pay-out ratio and in line with our
dividend policy.
SUSTAINABILITY
Safety and health
Antofagasta prioritises the safety, health and wellbeing of its
people. The Company is pleased to report that we continued to
perform fatality free in H1 2023 (2022: zero), and a number of
leading and lagging safety indicators improved during the year in
comparison with H1 2022.
The Group has a safety management system that prioritises the
elimination of fatalities. To help achieve this objective, the
Group maintains a focus on the occurrence of high potential
incidents (HPIs), which are a key leading indicator of safety
performance. During the first half of 2023, the Group recorded 13
HPIs, which represents a 43% reduction compared to the previous
year, with improvements seen in both the Mining and Transport
Divisions.
A lagging indicator of safety is the Lost Time Injury Frequency
Rate (LTIFR), which the Company seeks to keep below 1.0. In H1
2023, the Mining Division's LTIFR was 0.62, 22% below the same
period in 2022. The overall Group LTIFR was 0.58 for H1 2023, a 30%
improvement year-on-year.
To help achieve this improvement, the Group has increased its
focus on risk identification and risk management processes, to
identify and reduce repeated safety incidents. The Group also
focuses on reducing risk in identified high risk areas and in H1
2023 we progressed our programme to install collision detection
systems, which are planned to be installed in the haul trucks at
all of our operations during the coming periods.
To further protect the wellbeing of our workforce, we have
strengthened our monitoring programme for detecting and responding
to occupational health and work-place related diseases, such as
hearing loss, musculoskeletal conditions and psychosocial
risks.
Communities
For Antofagasta, the success of our business model is directly
connected to the development and well-being of local communities.
Through regular dialogue, we identify social investments relevant
to the specific needs of each community, whilst coordinating with
local authorities on the implementation of each project.
In central Chile, close to Los Pelambres, recent community
engagement work in the Province of Choapa includes the following
highlights:
-- APRoxima-EnRed Programme: Collaboration agreements were
signed in H1 2023 with the Rural Sanitary Services ("SSRs") of the
province for the implementation of this programme. Through this
work, we are aiming to incorporate technology that will improve the
availability, distribution and systematisation of information
between all 80 local SSRs, and to help improve the management of
available water resources.
-- The formalisation of dialogue and due diligence agreements
with nine Changas organisations from the Los Vilos commune: Under
this framework, we are creating links and providing spaces for
permanent dialogue between any indigenous peoples present in the
Choapa Valley (Changos, Diaguitas and Mapuches) and Los
Pelambres.
-- The inauguration of a local healthcare facility, CESFAM, in
Chillepín, which is a community located in the Choapa Valley: This
facility will provide care to more than 6,700 people from rural
towns in Valle Alto in the Salamanca district, with the Company
contributing more than $2.5 million for its construction.
Community engagement highlights in the north of Chile
include:
-- The launch of the latest phase of "Diálogos para el
Desarrollo María Elena" (Dialogues for Development in María Elena):
This programme between Minera Antucoya and the Municipality of
María Elena, aims to build trust and productivity between companies
and communities. For the year 2023, this programme will help to
finance initiatives in areas such as education, health, the local
economy and culture.
-- The inauguration of the "Sierra Gorda EnRed: Conectados al
mundo" project (Connected to the World): This initiative aims to
improve the connectivity of Sierra Gorda through high speed
internet connections to more than 250 homes, in addition to
providing free Wi-Fi points and enabling the adoption of new
technologies in health, education and training facilities.
-- Heritage rescue project with the Peine community: "Let's talk
in Ckunza", which is a partnership with the Cultural Heritage
Corporation of Chile and is sponsored by UNESCO. This project seeks
to maintain community traditions and language, through local art
projects and the creation of a documentary that aims to tell the
story of the local language in the Peine community.
Diversity and inclusion
The Group's Diversity and Inclusion Strategy, launched in 2018,
has transitioned from an awareness-raising phase about unconscious
bias and discrimination to introducing inclusive practices as an
integral part of how we work.
The Company is deepening its inclusive organisational culture
that supports the attraction and retention of all people, including
women and those with disabilities or different cultural origins. As
at the end of the first half of 2023, we have a 20.6% participation
rate for women at our operations. We continue to deploy a range of
initiatives to further increase this participation rate, to achieve
our goal for women to represent 30% of our employees by 2025.
In addition to gender diversity, we promote disability inclusion
throughout our business. Across the Group, 1.5% of those working
for Antofagasta have a registered disability, exceeding a
government-mandated minimum in Chile of 1%.
Climate change and emissions
During 2022 and 2023, the decarbonisation strategy for the Group
has continued to mature, adding new initiatives and working on our
interim goals to achieve carbon neutrality by 2050.
Regarding progress in our Decarbonisation Plan, we have made
progress towards the implementation of a test to introduce
trolley-assist technology at our Los Pelambres operation.
Water
Climate change continues to impact water availability in Chile,
with our operations located in the Atacama Desert and central
Chile, where there has been a drought for the last 14 years.
In order to reduce water-related risk, Los Pelambres is building
a desalination project that produced an average of 160 litres per
second of desalinated water in June 2023, and is expected to
ramp-up production during H2 2023. Once commissioning is completed,
the Group expects to have obtained the requisite permits to advance
the next phase and commence construction to double the capacity of
the plant to 800 litres per second, following which over 90% of Los
Pelambres's water usage will be from desalinated or recirculated
water.
Considering the continuing drought in central Chile and the
recent changes in the Water Code, discussions have been held during
the year with stakeholders in the Choapa Valley about water
distribution arrangements in the area and an agreement has been
reached with local communities. The relevant water authority is now
in the process of reviewing this proposal. This ongoing process
involves no material change to the availability of continental
water at Los Pelambres.
Currently, Zaldívar is permitted to extract water and mine until
2025 and 2024 respectively. To ensure the continuity of this
operation, in March 2023 Zaldívar submitted a Declaration of
Environmental Impact ("DIA"), a more limited scope and simplified
procedure than an Environmental Impact Assessment ("EIA"). The DIA
submitted requests that the mining permit be extended from 2024 to
2025, in order to expire at the same date as the current water
permit. After this, and after withdrawing an earlier EIA with a
permit extension filed in 2018 and which remained unresolved, in
June 2023 Zaldívar submitted an EIA application to extend its
mining and water environmental permits through to 2051. This EIA
includes a proposal to develop the primary ore deposit beyond the
current life of mine plan, requiring investments over the course of
the mine life of $1.2 billion, and a conversion of the water use at
Zaldívar to either seawater or water sourced from third parties,
following a transition period which considers an extension to the
current continental water extraction permit from 2025 to 2028.
Our operations at Centinela and Antucoya already operate solely
using raw seawater, and in 2022 45.4% of the Group's water
withdrawals were from sea water sources. The Group's water usage is
expected to increase to 90% from being either sea water or
recirculated water on completion of the expansion of the
desalination plant at Los Pelambres in approximately 2026.
Suppliers
During December 2022, the Group launched its "Suppliers for a
Better Future" programme, with activities commencing during H1
2023. This initiative has a focus on small and medium-sized local
suppliers, to promote high standards in sustainability, including
initiatives in diversity and inclusion, safety, community
relations, local contracting and lowering emissions. This programme
focuses on four key areas: (1) encouraging local development
through employment and procurement, (2) improving working
conditions, inclusion, safety and health, (3) environmental
stewardship and (4) a commitment to innovation and supplier
training.
In parallel, we have also created a free training platform for
local suppliers to develop their skills, raise standards and
increase the competitiveness of local industry.
PRODUCTION AND CASH COSTS
Group copper production in the first half of 2023 was 295,500
tonnes, 10.0% higher than in the same period last year, principally
reflecting a 23.9% increase in throughput rates at Los Pelambres on
a year-on-year basis.
Group gold production for the first six months increased by
16.8% to 86,200 ounces.
Molybdenum production was 4,900 tonnes, 22.5% higher than in the
same period last year.
Group cash costs before by-product credits in the first half of
2023 were $2.48/lb, a year-on-year increase of 4.6% due to higher
input costs and the appreciation of the Chilean peso.
Net cash costs were $1.75/lb for the first half of the year,
compared to $1.82/lb in the first half of 2022, reflecting the
increase in cash costs before by-product credits more than offset
by higher by-product credits.
COST AND COMPETITIVENESS PROGRAMME
During the first half of the year, the Cost and Competitiveness
Programme achieved savings and productivity improvements of $60
million, equivalent to 9c/lb as the Group has managed to reduce
cash expenditure in some areas by optimising and negotiating third
party services and increasing productivity. Given progress made in
the first half, the Group has now achieved its savings target of
$60 million for the full year. A sustained focus on operational
efficiency remains a priority for the Group.
EXPLORATION AND EVALUATION COSTS
Exploration and evaluation costs were $62 million, $11 million
higher than H1 2022, mainly as a result of a higher level of
activity at Centinela during the period.
TAXATION
The effective tax rate for the period was 30.0%, partly
reflecting a one-off adjustment to the provision for deferred
withholding tax, which compares with 36.5% in 2022. For more
information, please see the Financial Review Section of this
report.
The income tax expense for the H1 2023 was $229 million compared
to $248 million in H1 2022.
CAPITAL EXPITURE AND DEPRECIATION & AMORTISATION
Capital expenditure in H1 2023 was $1,022 million, including
$281 million of sustaining capital expenditure, $390 million on
mine development and $326 million of growth expenditure, of which
$238 million was on the Los Pelambres Expansion project.
Group capital expenditure for the full year is expected to be
$1.9 billion, in line with original guidance, assuming no further
appreciation of the Chilean peso. Opportunities to accelerate the
execution of selected development projects will continue to be
evaluated.
Depreciation, amortisation and loss on disposals increased by
$22 million to $511 million.
NET DEBT
Net debt at the end of the period was $821 million, largely
reflecting the payment of the 2022 final dividend. The Net debt to
EBITDA ratio at the end of the period was 0.27 times. Cash flow
from operations reduced to $1,296 million compared with $1,683
million in H1 2022.
DIVIDS
The Board has declared an interim dividend of 11.7 cents per
share, equivalent to $115.3 million and a pay-out ratio of 35%,
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 AGREEMENTS
In the Mining Division, a labour negotiation with the
supervisors' union at Centinela was successfully concluded during
May, resulting in a 3 year contract with a one-off payment fully
expensed in the period. In addition, Zaldívar reached a 3 year
agreement with its workforce in July. There are two other labour
agreements that will expire during the year, both of which are with
unions at Centinela (November).
In the Transport Division, a total of five union negotiations
are due to take place during the year, with two already settled
during July and the remaining three due to take place in
September.
LEGISLATIVE
Proposed mining royalty
In May 2023, both the Chilean Senate and lower house of Congress
approved the proposed revision to Chile's mining royalty bill, with
Presidential approval confirmed in August 2023. The terms include a
1% ad valorem royalty on copper sales, and a royalty ranging from
8% to 26% on operating profits depending on each mining operation's
level of profitability, combined with a provision establishing that
total taxation (including corporate income, the new royalty tax and
tax on dividends) should not exceed 46.5% of profitability. This
new law will come into effect at the beginning of 2024. Since
Centinela and Antucoya have tax stability agreements, the new
royalty rates will only apply from 2030. There will be a one-off
non-cash adjustment to the deferred tax balances of each of the
Group's mining operations reflecting the impact of the change in
the 31 December 2023 results.
Constitutional convention
The process to approve a new constitution in Chile continues. In
May 2023 members of the Constitutional Council that will draft the
revised constitution were elected. The Council is expected to agree
a final draft of the revised constitution in Q4 2023, before it is
presented for approval in a national referendum on 17 December
2023.
INNOVATION
Fleet autonomy / Remote operation
In January 2023, Centinela became the first private mining
company in the country to implement autonomy in 100% of the mining
fleet in the Esperanza Sur pit. Currently, the operation has 17
trucks and 2 autonomous drills that are controlled centrally at the
Company's remote operations centre (see section below). In addition
to this milestone, the Group has advanced work to implement
autonomous drilling operations at Zaldívar and remote operation of
equipment at Antucoya. Both projects will come into operation
during the last quarter of the year
Integrated Remote Operations Centre (IROC)
During H1 2023, Centinela transferred the operation of its
autonomous truck fleet to its IROC in the city of Antofagasta. Los
Pelambres has an IROC in Santiago, and both are improving the
integration of their operations.
Cuprochlor-T(R)
The Company's Cuprochlor-T(R) technology to leach primary
sulphide ores was made available to each operation within the Group
during H1 2023, in order to evaluate its potential impact at each
site. Exploratory tests have been carried out with Antucoya
beginning profile engineering studies, and Zaldívar continuing the
evaluation of its primary sulphides project.
Electromobility
The Group is working on the deployment of electromobility as
part of its long-term decarbonisation plan. In June 2023, Centinela
inaugurated 50 electric light vehicles - the largest fleet of its
kind in Chile's mining industry - and other ancillary electric
mining equipment such as front-end loaders, excavators and trucks,
with a focus on evaluating the performance of similar equipment
elsewhere in the Group.
REKO DIQ PROJECT
Following confirmation by the Australian Tax Office that the
proceeds from the sale of the Group's interest in Reko Diq
(amounting to $945 million) were not taxable, the funds have been
distributed to the Company during H1 2023. The Company will apply
its capital allocation model to determine the final use of the
proceeds.
FUTURE GROWTH
The Group has a pipeline of growth projects to develop our
significant 20 billion tonne Mineral Resource base, which we are
currently advancing through a disciplined process of project
evaluation.
The desalination plant for Los Pelambres is nearing the end of
its commissioning phase. The plant achieved an average production
rate of 160 litres per second of desalinated water in June 2023,
and is expected to continue to ramp-up production during H2
2023.
At the concentrator expansion project at Los Pelambres,
pre-operational testing work started in Q2 2023, alongside the
commissioning of some key sections of the project and the
connection of main facilities to the national grid. The
commissioning phase of this growth project is expected to be
completed in H2 2023.
An updated study into the development of the Centinela Second
Concentrator project is expected to be submitted to the Board for
consideration by the end of the year.
OUTLOOK
The rescheduling of marine work at the desalination plant due to
sea swell conditions combined with lack of rainfall in H1 2023, has
decreased this year's expected production at Los Pelambres, and as
such, guidance for full year is adjusted to 640-670,000 tonnes of
copper production. Further details on guidance for the year can be
found above.
The Company's average realised copper price was $3.99/lb in H1
2023, 3.4% below the same period in 2022. Looking forward, the
global shift towards clean electricity has elevated demand for
copper at a time when global supply is facing issues such as
declining ore grades, supply disruptions, prolonged permitting
processes for new projects, amongst other factors. Global copper
consumption is estimated to increase by 2.4% per annum between 2021
and 2050, with total demand rising from approximately 25 million
tonnes to 53 million tonnes during this timeframe, and modelling of
net-zero scenarios forecast a potential shortfall of up to 9.9
million tonnes of refined copper by 2035. (1) To close this supply
gap, it is expected that higher copper prices, and reduced
permitting delays for both greenfields and brownfields expansion
projects will be required to incentivise more projects into
development.
In Chile, the proposed mining royalty received approval from the
Senate and lower house of Congress, as well as Presidential
approval in August 2023, following five years of debate within
Chile that has created uncertainty for investors in Chile's mining
sector. The process to determine a new constitution will see a
national referendum on 17 December 2023, following the election of
the members of the Constitutional Council in May 2023.
We have a range of growth projects being implemented throughout
our portfolio that will provide incremental growth in the medium
term, including ongoing studies into the potential construction of
a second concentrator at Centinela, which provides a pathway to
grow output to 900,000 tonnes of copper production. The Company
will continue to evaluate opportunities to accelerate the execution
of selected development projects.
([1]) Source: S&P Global, "The Future of Copper" Report,
July 2022.
REVIEW OF OPERATIONS AND PROJECTS
MINING DIVISION
LOS PELAMBRES
Financial performance
EBITDA at Los Pelambres was $769. 9 million in the first half of
2023, a 50. 8 % increase compared with $510.6 million in the first
six months of 2022. This increase was mainly due to higher sales of
copper (34.2% increase), molybdenum (37.0% increase) and gold
(34.9% increase), which was partially offset by higher operating
costs during the period. The production of molybdenum and gold
increased by 25.9% and 27.3% respectively.
Production
In the first six months of 2023, copper production increased by
30.6% to 128,500 tonnes compared with the same period last year,
mainly driven by a 23.9% increase in throughput. Operations were
impacted by the continued lack of rainfall in H1 2023 and the
rescheduled ramp-up of the desalination plant reducing throughput
below the anticipated levels but, as mentioned previously, these
were high er than the prior period.
Molybdenum production for the first six months of the year
increased to 3,400 tonnes from 2,700 in H1 2022, due to higher
throughput and grades. Gold production in H1 increased to 19,600 oz
from 15,400 oz H1 2022, due to the higher throughput.
Costs
Cash costs before by-product credits for the first six months of
2023 were $2.04/lb, 1.0% higher than in the same period last year,
as higher production substantially offset higher input costs.
For the first six months of 2022, by-product credits were
$0.87/lb, 25.4% higher than the same period from 2022.
Net cash costs for the year to date decreased by 11.4% to
$1.17/lb, driven by higher by-product credits in H1 2023.
Capital expenditure
Total capital expenditure at Los Pelambres in the first six
months of 2023 was $486.6 million, of which $145.8 million was
sustaining capital expenditure, $96.4 million was mine development
and $237.7 million was on the Los Pelambres Expansion project.
Compared with H1 2022, total capital expenditure increased by
20.4%, with this increase including a $30. 3 million increase in
sustaining capital expenditure, a $29.4 million increase in mine
development and a $19. 2 million increase in expenditure on the Los
Pelambres Expansion.
CENTINELA
Financial performance
EBITDA for the first six months of 2023 was $489.3 million, a
decrease of 7.1% compared with the first half of 2022. This
decrease was principally due to lower copper cathode sales volumes,
higher operating costs and the lower realised copper price compared
with the same period last year.
Production
Total copper production in H1 2023 was 109,200 tonnes, 1.9%
lower than in H1 2022 due to lower throughput and ore grades at
Centinela Cathodes, slightly offset by higher grades at Centinela
Concentrates.
Production of copper in concentrates was 74,200 tonnes for the
half year, 12.1% higher than in the same period last year, mainly
due to the expected higher copper grade of 0.50% compared with
0.44% in H1 2022. This was partially offset by decreased
throughput.
Copper cathode production for the first six months was 35,000
tonnes, 22.4% lower than in the same period last year primarily due
to lower grades.
Gold production in H1 was 66,700 ounces, 14.2% higher than H1
last year as grades, which are correlated to copper grades,
increased.
Molybdenum production in H1 2023 increased to 1,500 tonnes from
1,300 tonnes in H1 2022 due to higher grades and recoveries.
Costs
Cash costs before by-product credits for the first six months of
2023 were $2.82/lb, 5.2% higher than the same period in 2022
primarily due to lower production, higher input costs and the
appreciation of the Chilean peso.
For the first six months of 2023, by-product credits were
$0.94/lb, 24c/lb higher than in the same period last year,
reflecting higher input costs for labour, partially offset by lower
pricing for diesel and sulphuric acid. The appreciation of the
Chilean peso during H1 2023 also increased the Company's cost base
on a year-on-year basis.
Net cash costs during the first six months of the year were
$1.88/lb, 10.0c/lb lower than in H1 2022, reflecting strong pricing
for molybdenum in early 2023.
Capital expenditure
Capital expenditure in the first six months of 2023 was $459.0
million, of which $104.2 million was sustaining capex, $284.3
million was mine development and $70.5 million was development
capex, of which $51.7 million was on the Centinela Second
Concentrator project (H1 2022: $44.7 million).
Compared with H1 2022, total capital expenditure at Centinela
increased by 18.5% in H1 2023, as a result of $52.7 million higher
expenditure on sustaining capital expenditure and a $50.8 million
increase on mine development.
ANTUCOYA
Financial performance
For the first half of the year, EBITDA was $103.9 million, a
decrease of 32.3% compared with $153.4 million in the same period
last year, due to the lower realised copper price and higher
operating costs.
Production
Production in the first six months of 2023 was 38,000 tonnes,
4.4% higher than the same period last year due to higher throughput
and higher grades.
Costs
During the first six months, cash costs were 8.8% higher than in
H1 2022 at $2.72/lb , with key drivers being an increase in the
acid consumption rate, higher input costs and the appreciation of
the Chilean peso.
Capital expenditure
Capital expenditure in the first six months of the year was
$41.2 million, of which $30.8 million was sustaining capex, $9.7
million was mine development and $0.7 million was development
capex.
Compared with H1 2022, capital expenditure increased by 88.1 %
in H1 2023, which was mainly due to an increase of $9.8 million in
sustaining capital expenditure and $8.8 million on mine
development.
ZALDÍVAR
Financial performance
Attributable EBITDA at Zaldívar was $42.5 million in the first
half of 2023, compared with $104.8 million in the same period last
year because of lower sales volumes and higher operating costs.
Production
Attributable copper production at Zaldívar for the year to date
was 19,800 tonnes, 12.0% lower than in the same period last year
due to lower throughput and lower copper grades.
Costs
Cash costs during the first six months of 2023 were $2.96/lb
compared with $2.14/lb in the same period in 2022, mainly due to
lower production, higher expenditure on maintenance and spare
parts, and the appreciation of the Chilean peso.
Capital expenditure
In the first six months of 2023, attributable capital
expenditure was $19.9 million of which $15.0 million was sustaining
capital expenditure and $4.9 million was development capital
expenditure.
Compar ed with H1 2022, capital expenditure was 20. 7 % lower,
mainly due to an expected decrease of $2.4 million in sustaining
capital expenditure and $2.8 million on growth expenditure.
TRANSPORT DIVISION
Financial performance
EBITDA at the Transport Division was $35.6 million in the first
half of 2023, a 3.5% improvement on the sam e period last year
because of higher revenue.
Transport volumes
Total transport volumes in the first half were 0.5% lower
compared to H1 2022, primarily related to operational interruptions
following a fire at the port in 2022.
Capital expenditure
Capital expenditure for the first half of the year was $24.7
million, an increase of 80. 3 % compared with the same period in
2022 , with increased investment in track maintenance and
development projects .
GROWTH PROJECTS AND OPPORTUNITIES
LOS PELAMBRES EXPANSION
The Los Pelambres Expansion project is divided into two phases
with Phase 1 expected to be in production in H2 2023 and Phase 2 in
2026.
Phase 1
This phase is designed to optimise throughput within the limits
of the existing operating, environmental and water extraction
permits.
As mining progresses at Los Pelambres, ore hardness will
increase. The expansion is designed to compensate for this,
increasing plant throughput from its current capacity of 175,000
tonnes of ore per day to an average of 190,000 tonnes of ore per
day. The expansion is divided into two sub-projects, the
construction of a desalination plant and water pipeline from the
coast to the El Mauro tailings storage facility, and the expansion
of the concentrator plant, which includes the installation of an
additional SAG mill and ball mill, and six additional flotation
cells. The capital cost estimate for Phase 1 is $2.3 billion.
Compared to the case without project at the time the project was
approved, annual copper production will be increased by an average
of 60,000 tonnes per year over 15 years, starting at approximately
40,000 tonnes per year for the first four to five years and rising
to 70,000 tonnes per year for the rest of the period as the
hardness of the ore increases and the benefit of the higher milling
capacity is fully realised.
In 2020, the decision was made to change the scope of the
project and double the planned capacity of the desalination plant
from 400 litres per second to 800 litres per second. However, the
additional work on this expansion that can be carried out during
Phase 1 is limited by what is allowed under the permits that have
already been issued so the remaining work will be treated as a
separate project subject to the receipt of the necessary permits.
The cost of the additional work is included in the Phase 1 capital
cost.
Work at the desalination plant progressed during H1 2023, and
water production averaged 160 litres per second in June 2023. The
plant is expected to ramp-up production during H2 2023, helping to
stabilise water availability.
Pre-operational testing of the fourth concentrator line at Los
Pelambres has now commenced following the connection of this
equipment to the national grid. Commissioning of individual
circuits such as the flotation circuit has commenced, with the
commissioning phase expected to be completed in H2 2023.
Phase 2 - Future expansion
Following the decision in 2020 to increase the size of the
desalination plant, Phase 2 of the expansion requires two separate
Environmental Impact Assessment ("EIA") applications; one for the
expansion of the desalination plant and one for the extension of
the mine life of Los Pelambres through an increase in the size of
the El Mauro tailings storage facility. The latter EIA will also
provide the option to further increase the throughput capacity of
the concentrator plant.
- Desalination plant expansion
This project will protect Los Pelambres from the future impact
of climate change and the deteriorating availability of water in
the region. The project cost will be reported as part of the
Group's sustaining capital expenditure.
The project includes the expansion of the desalination plant and
the construction of a new water pipeline from the El Mauro tailings
storage facility to the concentrator plant. In 2021 Los Pelambres
submitted the EIA required for this project, which includes the
desalination plant expansion and two other sustaining capital
infrastructure projects, the replacement of the concentrate
pipeline and the construction of certain planned enclosures at the
El Mauro tailings storage facility. EIA approval is expected in
time for the project to be completed in 2026, by which time over
90% of Los Pelambres' water needs will be fulfilled by desalinated
and recirculated water.
- Mine life extension
The current mine life of Los Pelambres is 12 years and is
limited by the capacity of the El Mauro tailings storage facility.
The scope of the second EIA will include increasing the capacity of
the tailings storage facility and the mine waste storage. This will
extend the mine's life by a minimum of 15 years, accessing a larger
portion of Los Pelambres' six billion tonnes of mineral resources.
The EIA will also provide for the option to increase throughput to
205,000 tonnes of ore per day, increasing copper production by an
estimated 35,000 tonnes per year, according to the pre-feasibility
studies (2014).
The capital expenditure to extend the mine life was estimated at
approximately $500 million in a 2014 pre-feasibility study, with
most of the expenditure on mining equipment, increasing the
capacity of the concentrator and the El Mauro tailings facility.
Key studies on tailings and waste storage capacity have advanced
and community consultations are underway. The relevant
environmental and social studies are being prepared and should be
submitted to the authorities during 2023/2024 as part of the EIA
application.
Centinela Second Concentrator
We are currently evaluating the construction of a second
concentrator and tailings deposit some 7 kilometres from the
existing concentrator, to take place in two phases. The EIA for
both phases was approved in 2016.
Detailed engineering plans and costings have recently been
updated for Phase 1 of the project and key contracts finalised,
subject to Board approval of the project. The Phase 1 capacity of
the new concentrator will be 95,000 tonnes of ore per day,
producing on average approximately 170,000 tonnes of copper
equivalent (copper, gold and molybdenum) a year over the first 10
years of operation. This will move Centinela into the first cost
quartile of global producers.
The Phase 1 capital cost is estimated at $3.7 billion, including
a concentrator plant, Esperanza Sur capitalised stripping, mining
equipment for Esperanza Sur, a new tailings storage facility, a
water supply system and other infrastructure, pre-commercial
production operating costs, and owner's and other costs.
An updated study into the development of the Centinela Second
Concentrator project is expected to be submitted to the Board for
consideration by the end of the year. Work on Phase 2 would only
start once construction of Phase 1 is completed and it is operating
successfully.
The second concentrator, and its potential further expansion to
150,000 tonnes of ore per day, will source ore initially from the
recently opened Esperanza Sur pit and later from the Encuentro pit.
The sulphide ore in the Encuentro pit lies under the Encuentro
Oxides reserves, which are expected to be depleted by 2026. Fully
exposing the sulphide ore in the optimal sequence required to
initiate feed to the second concentrator from the Encuentro Pit is
expected to require separate investments in infrastructure, mining
equipment and mine development activities, which would commence
half-way through the construction phase of the second concentrator
and will span a period of 3-4 years. If the Company elects to
proceed with the Centinela Second Concentrator project, the
combined investment in mine development and sustaining capital
across the Centinela district is expected to increase from an
actual average of $650 million per annum in 2021-2023 to an average
of approximately $900 million per annum during 2025-2027, enabling
a doubling of ore supply from Centinela's mining operations.
During H1 2023, the Company continued the tender process
inviting third parties to provide water for Centinela's current and
future operations by acquiring the existing water supply system and
building the new water pipeline. This process is expected to be
completed during the year. The outsourcing of the water supply will
only proceed if it improves the net present value of the
project.
Twin Metals Minnesota
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, 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 and producing three separate
concentrates - copper, nickel/cobalt and PGM.
In 2019, Twin Metals submitted its Mine Plan of Operations
("MPO") and Scoping Environmental Assessment Worksheet Data
Submittal, to the US Bureau of Land Management ("BLM", a bureau in
the Department of Interior) and the Minnesota Department of Natural
Resources ("DNR"), respectively. However, over the past three
years, while the Twin Metals project was advancing its
environmental review, several actions were taken by the federal
government that have changed the potential outcomes for the
project.
In 2021, the BLM rejected advancing Twin Metals' preference
right lease applications ("PRLAs") and prospecting permit
applications ("PPAs").
In early 2022, the Department of Interior ("DOI") took an
additional action through a legal opinion issued by the Office of
the Solicitor ("M-Opinion"). This action arbitrarily cancelled Twin
Metals' federal mining leases 1352 and 1353, citing concerns with
the reinstatement and renewal process.
Also in early 2022, the BLM stopped its evaluation of Twin
Metals' MPO and an administrative court dismissed Twin Metals'
appeal of that decision.
In August 2022, Twin Metals filed a claim in federal court
challenging the administrative actions resulting in the rejection
of the PRLAs, the cancellation of its federal leases 1352 and 1353,
the rejection of its MPO and the dismissal of the administrative
appeal of the MPO rejection. Twin Metals considers the actions of
the Government to be arbitrary and capricious, contrary to the law
and in violation of its rights. This action is pending.
In January 2023, the DOI issued an order effectively banning
mining in approximately 225,000 acres of the Superior National
Forest for 20 years, subject to valid existing rights.
FINANCIAL REVIEW FOR THE SIX MONTHSED 30 JUNE 2023
Results (unaudited)
Six months Six months
ended ended
30.06.2023 30.06.2022
------------------------------------------ ------------ ------------
$m $m
Revenue 2,890.1 2,528.2
EBITDA (including share of EBITDA
from associates and joint ventures) 1,331.0 1,237.7
------------------------------------------ ------------ ------------
Total operating costs (2,116.4) (1,886.9)
------------ ------------
Operating profit from subsidiaries 773.7 641.3
Net share of results from associates
and joint ventures (0.4) 49.1
Total profit from operations, associates
and joint ventures 773.3 690.4
Net finance expense (8.8) (10.8)
------------
Profit before tax 764.5 679.6
Income tax expense (229.3) (247.9)
------------ ------------
Profit for the year 535.2 431.7
Attributable to:
------------ ------------
Non-controlling interests 204.8 171.4
Profit attributable to the owners
of the parent 330.4 260.3
------------ ------------
Basic earnings per share cents cents
Basic earnings per share from continuing
operations 33.5 26.4
------------ ------------
The $70.1 million increase in the profit for the financial
period attributable to the owners of the parent from $260.3 million
in the first six months of 2022 to $330.4 million in the current
period reflected the following factors:
$m
Profit for the financial period attributable to the
owners of the parent in H1 2022 260.3
Increase in revenue 361.9
Increase in total operating costs (229.5)
Decrease in net share of results from associates and
joint ventures (49.5)
Decrease in net finance expenses 2.0
Decrease in income tax expense 18.6
Increase in non-controlling interests (33.4)
70.1
Profit for the financial period attributable to the
owners of the parent in H1 2023 330.4
--------
Revenue
The $361.9 million increase in revenue from $2,528.2 million in
the first six months of 2022 to $2,890.1 million in the current
period reflected the following factors:
$m
Revenue in the first six months of 2022 2,528.2
Increase in copper sales volumes 316.5
Decrease in realised copper price (82.7)
Increase in treatment and refining charges (30.8)
Increase in gold revenue 17.3
Increase in molybdenum revenue 130.3
Increase in silver revenue 4.8
Increase in transport division revenue 6.5
--------
361.9
--------
Revenue in the first six months of 2023 2,890.1
--------
Revenue from the Mining division
Revenue in the first half of 2023 from the Mining division
increased by $355.4 million, or 14.6%, to $2,791.6 million,
compared with $2,436.2 million in the first six months of 2022. The
increase reflected a $203.0 million increase in copper sales and a
$152.4 million increase in by-product revenue.
Revenue from copper sales
Revenue from copper concentrate and copper cathode sales
increased by $203.0 million, or 9.5%, to $2,332.8 million, compared
with $2,129.8 million in the first six months of 2022. The increase
reflected the impact of $316.5 million from higher sales volumes,
partly offset by a $82.7 million reduction from lower realised
prices and $30.8 million from higher treatment and refining
charges.
(i) Copper volumes
Copper sales volumes reflected within revenue increased by 14.4%
from 240,400 tonnes in 2022 to 275,100 tonnes in 2023, increasing
revenue by $316.5 million. This increase was mainly due to higher
volumes at Los Pelambres (32,900 tonne increase), reflecting higher
throughput in the current period in comparison with the low
throughout in the first six months of 2022 due to limited water
availability and the concentrate pipeline issue in June 2022.
(ii) Realised copper price
The average realised price decreased by 3.4% to $3.99/lb in the
first six months of 2023 (first half of 2022 - $4.13/lb), resulting
in a $82.7 million decrease in revenue. The LME average market
price decreased by 10.8% in H1 2023 to $3.95/lb (first half of 2022
- $4.43/lb). In the first half of 2023 there was a $33.4 million
positive impact from provisional pricing adjustments, mainly as a
result of a positive impact in the settlement of sales invoiced in
the previous year partially offset by the slight decrease in the
period end mark to market price to $3.78/lb at 30 June 2023,
compared with $3.80/lb at 31 December 2022. Conversely there had
been a $206.8 million negative impact from provisional pricing
adjustments in the first six months of 2022, which mainly reflected
the decrease in the period-end copper price to $3.75/lb at 30 June
2022, compared with $4.42/lb at 31 December 2021.
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.
(iii) Treatment and refining charges
Treatment and refining charges (TC/RCs) for copper concentrate
increased by $30.8 million to $87.8 million in the first half of
2023, compared with $57.0 million in the first six months of 2022,
reflecting higher rates and increased concentrate sales volumes at
Los Pelambres.
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 increased by $152.4 million or
49.8% to $458.8 million in the first half of 2023, compared with
$306.4 million in the first six months of 2022. This increase was
mainly due to the higher molybdenum realised price and higher
molybdenum sales volumes.
Revenue from molybdenum sales (net of roasting charges) was
$272.2 million (first half of 2022 - $141.9 million), an increase
of $130.3 million. The increase was due to higher sales volumes of
5,200 tonnes (first half of 2022 - 3,900 tonnes) and a 38.9% higher
realised price of $25.0/lb (first half of 2022 - $18.0/lb).
Revenue from gold sales (net of treatment and refining charges)
was $156.7 million (first half of 2022 - $139.4 million), an
increase of $17.3 million which reflected an increase in volumes
and a higher realised price. Gold sales volumes increased by 7.2%
from 73,600 ounces in the first half of 2022 to 78,900 ounces in
the first six months of 2023, mainly due to higher production at
Los Pelambres. The realised gold price was $1,989.4/oz in the first
half of 2023 compared with $1,899.3/oz in the first six months of
2022, reflecting the average market price for 2023 of $1,931.6/oz
(2022 - $1,873.4/oz) and a positive provisional pricing adjustment
of $1.9 million.
Revenue from silver sales increased by $4.8 million to $29.9
million (first six months of 2022 - $25.1 million). The increase
was due to higher sales volumes of 1.2 million ounces (first half
of 2022 - 1.1 million ounces) and a 6.0% higher realised silver
price of $24.9/oz (first six months of 2022 - $23.5/oz).
Revenue from the Transport division
Revenue from the Transport division (FCAB) increased by $6.5
million or 7.1% to $98.5 million (first six months of 2022 - $92.0
million), mainly due to better prices linked to current sales
contracts.
Total operating costs
The $229.5 million increase in total operating costs from
$1,886.9 million in the first half of 2022 to $2,116.4 million in
the first six months of 2023 reflected the following factors:
$m
Total operating costs in the first half
of 2022 1,886.9
Increase in mine-site operating costs 164.5
Increase in closure provision and other
mining expenses 18.6
Increase in exploration and evaluation costs 10.6
Increase in corporate costs 8.2
Increase in Transport division operating
costs 5.3
Increase in depreciation, amortisation and
loss on disposals 22.3
229.5
Total operating costs in the first six
months of 2023 2,116.4
--------
Operating costs (excluding depreciation, amortisation and loss
on disposals) at the Mining division
Operating costs (excluding depreciation, amortisation and loss
on disposals) at the Mining division increased by $201.9 million to
$1,542.2 million in the first half of 2023, an increase of 15.1%.
Of this increase, $164.5 million was attributable to higher
mine-site operating costs. This increase in mine-site costs
reflected higher general inflation, the stronger Chilean peso and
increased sales volumes in the period partially offset by the cost
savings from the Group's Cost and Competitiveness Programme, lower
key input prices and commercial costs. On a unit cost basis,
weighted average cash costs excluding treatment and refining
charges and by-product revenue increased from $2.25/lb in the first
six months of 2022 to $2.32/lb in the first half of 2023. As
detailed in the alternative performance measures section on page 61
of the half-year financial report, for accounting purposes
by-product credits and treatment and refining charges both impact
revenue and don't therefore affect operating expenses.
The Cost and Competitiveness Programme was implemented to reduce
the Group's cost base and improve its competitiveness within the
industry. During the first half of 2023, the programme achieved
benefits of $60.5 million in the mining division, of which $37.5
million reflected cost savings and $23 million reflected the value
of productivity improvements. Of the $37.5 million of cost savings,
$36.2 million related to Los Pelambres, Centinela and Antucoya, and
therefore impacted the Group's operating costs, and $1.3 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 $18.6
million. Exploration and evaluation costs increased by $10.6
million to $62.0 million (2022 - $51.4 million), reflecting
increased exploration and evaluation expenditure principally in
respect of geotechnical drilling in Centinela. Corporate costs
increased by $8.2 million.
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 increased by $5.3 million
to $62.9 million (first half of 2022 - $57.6 million), mainly due
to general inflation and the stronger Chilean peso.
Depreciation, amortisation and disposals
The depreciation and amortisation charge increased by $22.3
million in the first half of 2023 to $511.3 million (first half of
2022 - $489.0 million). This increase is mainly due to higher
amortisation of IFRIC 20 stripping costs at Centinela and Los
Pelambres, as well as increased inventory variation, partially
offset by lower amortisation of pre-stripping and start-up costs at
Centinela.
Operating profit from subsidiaries
As a result of the above factors, operating profit from
subsidiaries increased by $132.4 million or 20.6% in 2023 to $773.7
million (first half of 2022 - $641.3 million).
Share of results from associates and joint ventures
The Group's share of results from associates and joint ventures
decreased by $49.5 million to a loss of $0.4 million in the first
six months of 2023, compared with a profit of $49.1 million in the
first half of 2022. Of this decrease, $49.9 million was due to the
lower profit from Zaldívar, reflecting the decreased copper sales
volumes, due to lower throughput and lower copper grades, a lower
realised copper price and higher cash costs.
EBITDA
EBITDA (earnings before interest, tax, depreciation and
amortisation) increased by $93.3 million or 7.5% to $1,331.0
million (first half of 2022 - $1,237.7 million). EBITDA includes
the Group's proportional share of EBITDA from associates and joint
ventures.
EBITDA from the Mining division increased by $91.6 million or
7.6% from $1,200.3 million in the first six months of 2022 to
$1,291.9 million this half year. This reflected the higher revenue,
partially offset by higher mine-site costs and lower EBITDA from
associates and joint ventures.
EBITDA at the Transport division increased by $1.7 million to
$39.1 million in 2023 ($37.4 million - first half of 2022),
reflecting the higher revenue and slightly increased EBITDA from
associates, offset by the higher operating costs.
Commodity price and exchange rate sensitivities
The following sensitivities show the estimated approximate
impact on EBITDA for the first six months of 2023 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 2023, and the impact of the movement in the
average exchange rate reflects the estimated impact on Chilean peso
denominated operating costs during the period. These estimates do
not reflect any impact in respect of provisional pricing or hedging
instruments, any potential inter-relationship between commodity
price and exchange rate movements, or any impact from the
retranslation or changes in valuations of assets or liabilities
held on the balance sheet at the period-end.
Average market Impact of a
commodity price 10% movement
/ average exchange in the commodity
rate during price / exchange
the six months rate on EBITDA
ended 30.06.23 for the six
months ended
30.06.23
$m
Copper price $3.95/lb 257
Molybdenum price $27.1/lb 31
Gold price $1,932/oz 15
US dollar / Chilean peso exchange
rate 806 79
Net finance expense
Net finance expense decreased by $2.0 million to $8.8 million,
compared with $10.8 million in 2022.
Six months Six months
ended ended
30.06.23 30.06.22
$m $m
Investment income 72.1 4.3
Interest expense (50.9) (34.8)
Other finance items (30.0) 19.7
----------- -----------
Net finance expense (8.8) (10.8)
----------- -----------
Investment income increased from $4.3 million in 2022 to $72.1
million in 2023, mainly due to an increase in average interest
rates.
Interest expense increased from $34.8 million in 2022 to $50.9
million in 2023, reflecting an increase in the average interest
rates.
Other finance items were a net loss of $30.0 million, compared
with a net gain of $19.7 million in 2022, a variance of $49.7
million. This was mainly due to the foreign exchange impact of the
retranslation of Chilean peso denominated assets and liabilities,
which resulted in a $22.0 million loss in 2023 compared with a
$26.6 million gain in 2022. In addition, there was an expense of
$7.9 million in respect of the unwinding of the discounting of
provisions (first half of 2022 - expense of $6.8 million).
Profit before tax
As a result of the factors set out above, profit before tax
increased by 12.5% to $764.5 million in the first half of 2023
(first half of 2022 - $679.6 million).
Income tax expense
The tax charge in the first half of 2023 decreased by $18.6
million to $229.3 million (first half of 2022 - $247.9 million) and
the effective tax rate was 30.0% (first half of 2022 - 36.5%).
Six months Six months
ended ended
30.06.2023 30.06.2022
items items
$m % $m %
Profit before tax 764.5 679.6
Tax at the Chilean corporate
tax rate of 27% (206.4) 27.0 (183.5) 27.0
Mining Tax (royalty) (47.1) 6.2 (41.0) 6.0
Deduction of mining royalty
as an allowable expense
in determination of first
category tax 13.2 (1.7) 11.7 (1.7)
Withholding tax 19.7 (2.6) (32.0) 4.7
Items not deductible from
first category tax (6.9) 0.9 (13.7) 2.0
Adjustment in respect of
prior years (0.9) 0.1 (2.5) 0.4
Tax effect of share of
profit of associates and
joint ventures (0.1) - 13.0 (1.9)
Impact of unrecognised
tax losses on current tax (0.8) 0.1 0.1 0.0
Tax expense and effective
tax rate for the period (229.3) 30.0 (247.9) 36.5
------------ ------ ------------ ------
The effective tax rate for the period was 30.0%, partly
reflecting a one-off adjustment to the provision for deferred
withholding tax, which compares with 36.5% in 2022. The complete
reconciliation between the effective tax rate and the statutory tax
rate reflects the following points:
The effective tax rate items of 30.0% varied from the statutory
rate principally due to the mining tax (royalty) (net impact of
$33.9 million / 4.5% including the deduction of the mining tax
(royalty) as an allowable expense in the determination of first
category tax), items not deductible for Chilean corporate tax
purposes, principally the funding of expenses outside of Chile
(impact of $6.9 million / 0.9%), and adjustments in respect of
prior years (impact of $0.9 million / 0.1%), the impact of
unrecognised tax losses (impact of $0.8 million / 0.1%), 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 $0.1 million / nil),
partly offset by the impact of the withholding tax relating to the
remittance of profits from Chile (impact of $19.7 million /
2.6%).
Non-controlling interests
Profit for the first half of the year attributable to
non-controlling interests was $204.8 million, compared with $171.4
million in the first half of 2022, an increase of $33.4 million.
This reflected the increase in earnings analysed above.
Earnings per share
Six months Six months
ended ended
30.06.23 30.06.22
$ cents $ cents
Basic earnings per share 33.5 26.4
----------- -----------
Earnings per share calculations are based on 985,856,695
ordinary shares.
As a result of the factors set out above, profit attributable to
equity shareholders of the Company was $330.4 million, compared
with $260.3 million in the first half of 2022, and total earnings
per share were 33.5 cents for the first half of 2023 (first half of
2022 - 26.4 cents per share).
Dividends
Dividends per share declared in relation to the period are as
follows:
Six months Six months
ended ended
30.06.23 30.06.22
$ cents $ cents
Ordinary dividends:
Interim 11.7 9.2
Total dividends to ordinary shareholders 11.7 9.2
----------- -----------
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
2023 of 11.7 cents per ordinary share, which amounts to $115.3
million. The interim dividend will be paid on 29 September 2023 to
ordinary shareholders that are on the register at the close of
business on 1 September 2023.
Capital expenditure
Capital expenditure increased by $190.9 million from $831.0
million in the first half of 2022 to $1,021.9 million in the
current period, mainly due to increased sustaining capex at
Centinela and Los Pelambres, and increased mine development
principally at Centinela.
Capital expenditure figures quoted in this report are on a cash
flow basis, unless stated otherwise.
Cash flows
The key features of the cash flow statement are summarised in
the following table.
Six months Six months
ended 30.06.23 ended
30.06.22
$m $m
Cash flows from continuing operations 1,296.4 1,682.5
Income tax paid (323.2) (620.6)
Net interest paid (18.2) (26.2)
Purchases of property, plant and equipment (1,021.9) (831.0)
Dividends paid to equity holders of the
Company (497.9) (1,172.2)
Dividends paid to non-controlling interests - (80.0)
Dividends from associates and joint ventures - 50.0
Disposal of JV 944.7 -
Investment in other financial assets (290.1) -
Acquisition of equity investments (8.4) -
Other items (0.1) (0.1)
----------------- -------------
Changes in net cash/(debt) relating to
cash flows 81.3 (997.6)
Other non-cash movements (14.8) (23.0)
Effects of changes in foreign exchange
rates (2.0) (11.3)
----------------- -------------
Movement in net cash/(debt) in the period 64.5 (1,031.9)
Net (debt)/cash at the beginning of the
year (885.8) 540.5
----------------- -------------
Net (debt) at the end of the period (821.3) (491.4)
----------------- -------------
Cash flows from continuing operations were $1,296.4 million in
the first half of 2023 compared with $1,682.5 million in the first
half of 2022. This reflected EBITDA from subsidiaries for the
period of $1,285.0 million (first half of 2022 - $1,130.3 million)
adjusted for the negative impact of a net working capital increase
of $12.2 million (first half of 2022 - positive impact of $569.7
million from a net working capital decrease), partly offset by a
non-cash increase in provisions of $23.6 million (first half of
2022 - negative impact of a decrease in provisions of $17.5
million).
The $12.2 million working capital increase in the first six
months of 2023 reflected an increase of work in progress
inventories at Los Pelambres and Centinela, and a decrease in
accounts payables, partially offset by a decrease in receivables,
predominantly due to lower sales volumes at June 2023 compared with
December 2022. The $569.7 million working capital decrease in the
first six months of 2022 was mainly due to a decrease in
receivables, reflecting lower sales volumes in June 2022 relative
to December 2021, partly as a result of the concentrate pipeline
issue at Los Pelambres in June 2022.
The net cash outflow in respect of tax in the first half of 2023
was $323.2 million (first half of 2022 - $620.6 million). This
amount differs from the current tax charge in the consolidated
income statement of $284.3 million (first half of 2022 - $276.1
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 $311.0 million (first half of
2022 - $272.3 million), withholding tax payments of $0.1 million
(first half of 2022 - $21.2 million), the settlement of outstanding
balances in respect of the previous year's tax charge of $14.6
million (first half of 2022 - $332.2 million), as well as the
recovery of $2.6 million relating to prior years (first half of
2022 - recovery of $5.1 million).
Capital expenditure in the first half of 2023 was $1,021.9
million compared with $831.0 million in the first half of 2022.
This included expenditure of $486.6 million at Los Pelambres (first
half of 2022 - $404.0 million), $459.0 million at Centinela (first
half of 2022 - $387.2 million), $41.2 million at Antucoya (first
half of 2022 - $21.9 million), $10.5 million at Corporate (first
half of 2022 - $4.1 million) and $24.7 million at the Transport
division (first half of 2022 - $13.8 million). The increase in
capital expenditure reflects higher sustaining capex at Centinela
and Los Pelambres, and increased mine development principally at
Centinela.
As detailed in Note 14, in December 2022 Antofagasta completed
its disposal of its 50% interest in the Tethyan joint venture. It
was agreed that the disposal proceeds would be distributed to
Antofagasta during 2023. In May 2023 the disposal proceeds of
$944.7 million, plus interest of $11.6 million, were received by
the Group.
There was a cash outflow of $290.1 million in respect of
investment in other financial assets in the first six months of
2023 (2022 - nil).
Dividends paid to equity holders of the Company in the first
half of 2023 were $497.9 million (first half of 2022 - $1,172.2
million), related to the payment of the final dividend declared in
respect of 2022.
Dividends paid by subsidiaries to non-controlling shareholders
were nil for the first half of 2023 (first half of 2022 was $80.0
million).
Financial position
At 30.06.23 At 31.12.22
$m $m
Cash, cash equivalents
and liquid investments 2,349.5 2,391.2
Total borrowings (3,170.8) (3,277.0)
------------ ------------
Net cash/(debt) at the
end of the period (821.3) (885.8)
------------ ------------
At 30 June 2023, the Group had combined cash, cash equivalents
and liquid investments of $2,349.5 million (31 December 2022 -
$2,391.2). Excluding the non-controlling interest share in each
partly-owned operation, the Group's attributable share of cash,
cash equivalents and liquid investments was $1,971.5 million (31
December 2022 - $1,991.0 million).
Total Group borrowings at 30 June 2023 were $3,170.8 million (at
31 December 2022 - $3,277.0 million). The decrease of $106.2
million was mainly due to repayment of part of the senior loans at
Centinela ($55.6 million), Los Pelambres ($25.0 million), Antucoya
($25.0 million) and the Transport division ($5.3 million) partly
offset by $18.6 million of new finance leases.
Excluding the non-controlling interest share in each
partly-owned operation, the Group's attributable share of the
borrowings was $2,376.0 million (31 December 2022 - $2,449.7
million).
This resulted in net debt at 30 June 2023 of $821.3 million (31
December 2022 - net debt $885.8 million). Excluding the
non-controlling interest share in each partly-owned operation, the
Group had an attributable net debt position of $404.5 million (31
December 2022 - net debt $458.7 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
financial report.
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
2022 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 2023. A detailed explanation of the
risks summarised above can be found in the Risk Management section
of the 2022 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.
Consolidated Income Statement
Year ended
Year ended 31.12.2022
31.12.2022 exceptional
Six months Six months excluding items Year ended
ended 30.06.2023 ended 30.06.2022 exceptional note 31.12.2022
(Unaudited)(1) (Unaudited) items 3 (Audited)
------------------ ------------------ ------------- ------------- ------------
Total Total Total Total Total
Notes $m $m $m $m $m
Revenue 5,6 2,890.1 2,528.2 5,862.0 - 5,862.0
Total operating costs 2 (2,116.4) (1,886.9) (4,227.7) - (4,227.7)
------------------ ------------------ ------------- ------------- ------------
Operating profit from
subsidiaries 2,5 773.7 641.3 1,634.3 - 1,634.3
Net share of results
of associates and joint
ventures 2,5,14 (0.4) 49.1 48.1 - 48.1
Gain on disposal of
investment in joint
venture 3,14 - - - 944.7 944.7
------------------ ------------------ ------------- ------------- ------------
Operating profit from
subsidiaries, and total
profit from associates
and joint ventures 773.3 690.4 1,682.4 944.7 2,627.1
Investment income 72.1 4.3 40.2 - 40.2
Interest expense (50.9) (34.8) (78.6) - (78.6)
Other finance items (30.0) 19.7 (29.8) - (29.8)
------------------ ------------- ------------- ------------
Net finance expense 8 (8.8) (10.8) (68.2) - (68.2)
------------------ ------------------ ------------- ------------- ------------
Profit before tax 764.5 679.6 1,614.2 944.7 2,558.9
Income tax expense 9 (229.3) (247.9) (603.6) - (603.6)
------------------ ------------------ ------------- ------------- ------------
Profit for the period 535.2 431.7 1,010.6 944.7 1,955.3
------------------ ------------------ ------------- ------------- ------------
Attributable to:
Non-controlling
interests 204.8 171.4 422.3 - 422.3
Owners of the parent 330.4 260.3 588.3 944.7 1,533.0
------------------ ------------- ------------- ------------
US cents US cents US cents US cents US cents
Basic earnings per
share (1) 10 33.5 26.4 59.7 95.8 155.5
------------- -------------
1. All earnings in all the periods presented are from continuing operations.
Consolidated Statement of Comprehensive Income
Six months Six months
ended ended Year ended
30.06.2023 30.06.2022 31.12.2022
(Unaudited) (Unaudited) (Audited)
------------- ------------- ------------
$m $m $m
Profit for the period 535.2 431.7 1,955.3
Items that may be or were subsequently
reclassified to profit or loss:
Currency translation adjustment 0.4 (0.7) (0.4)
------------- ------------- ------------
Total items that may be or were subsequently
reclassified to profit or loss 0.4 (0.7) (0.4)
Items that will not be subsequently reclassified
to profit or loss:
Actuarial losses on defined benefit plans (1.5) (1.9) (18.1)
Gains/(losses) on fair value of equity
investments 0.6 (2.1) 15.8
Tax relating to these items 0.2 0.7 5.7
Share of other comprehensive losses of
associates and joint ventures, net of
tax (0.9) - -
------------- ------------- ------------
Total Items that will not be subsequently
reclassified to profit or loss (1.6) (3.3) 3.4
Total other comprehensive (expense)/income (1.2) (4.0) 3.0
Total comprehensive income for the period 534.0 427.7 1,958.3
------------- ------------- ------------
Attributable to:
Non-controlling interests 204.5 171.0 418.1
Owners of the parent 329.5 256.7 1,540.2
------------- -------------
Total comprehensive income for the period
- continuing operations 534.0 427.7 1,958.3
------------- ------------- ------------
Consolidated Statement of Changes in Equity
For the six months ended 30.06.2023 (Unaudited)
Equity
attributable
to equity
owners Non-
Share Share Other Retained of the controlling Total
capital premium reserves earnings parent interests 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
--------- --------- ---------- ---------- -------------- ------------- ----------
For the six months ended 30.06.2022 (Unaudited)
Equity
attributable
to equity
owners
of Non-
Share Share Other Retained the controlling
capital premium reserves earnings parent interests Total
$m $m $m $m $m $m $m
Balance at 1 January
2022 89.8 199.2 (10.4) 8,071.6 8,350.2 2,678.8 11,029.0
Profit for the period - - - 260.3 260.3 171.4 431.7
Other comprehensive
expense
for period - - (2.8) (0.8) (3.6) (0.4) (4.0)
--------- --------- ---------- ----------- -------------- ------------- ----------
Total comprehensive
income
for the year - - (2.8) 259.5 256.7 171.0 427.7
Dividends - - - (1,172.2) (1,172.2) (80.0) (1,252.2)
--------- --------- ---------- ----------- -------------- ------------- ----------
Balance at 30 June 2022 89.8 199.2 (13.2) 7,158.9 7,434.7 2,769.8 10,204.5
========= ========= ========== =========== ============== ============= ==========
For the year ended 31.12.2022 Audited
Equity
attributable
to equity
owners Non-
Share Share Other Retained of the controlling Total
capital premium reserves earnings parent interests equity
$m $m $m $m $m $m $m
Balance at 1 January 2022 89.8 199.2 (10.4) 8,071.6 8,350.2 2,678.8 11,029.0
Profit for the year - - - 1,533.0 1,533.0 422.3 1,955.3
Other comprehensive
income/(expense)
for the year - - 15.4 (8.2) 7.2 (4.2) 3.0
Total comprehensive income
for the year - - 15.4 1,524.8 1,540.2 418.1 1,958.3
Dividends - - - (1,262.9) (1,262.9) (80.0) (1,342.9)
--------- --------- ---------- ---------- -------------- ------------- -----------
Balance at 31 December
2022 89.8 199.2 5.0 8,333.5 8,627.5 3,016.9 11,644.4
========= ========= ========== ========== ============== ============= ===========
Consolidated Balance Sheet
At 30.06.2023 At 30.06.2022 At 31.12.2022
(Unaudited) (Unaudited) (Audited)
Non-current assets Notes $m $m $m
Property, plant and equipment 13 12,059.1 10,924.0 11,543.5
Other non-current assets - 0.6 1.1
Inventories 407.2 321.0 347.0
Investments in associates and
joint ventures 15 903.3 905.2 904.6
Trade and other receivables 61.2 56.2 51.0
Equity investments 99.5 6.4 90.5
Deferred tax assets 99.8 74.3 78.5
-------------- --------------
13,630.1 12,287.7 13,016.2
-------------- -------------- --------------
Current assets
Inventories 808.8 699.5 708.1
Trade, other receivables and
other financial assets 1,166.7 366.5 2,087.2
Current tax assets 74.7 36.0 35.6
Liquid investments 18 2,046.2 2,005.6 1,580.8
Cash and cash equivalents 18 303.3 872.6 810.4
-------------- --------------
4,399.7 3,980.2 5,222.1
-------------- -------------- --------------
Total assets 18,029.8 16,267.9 18,238.3
-------------- -------------- --------------
Current liabilities
Short-term borrowings and other
financial liabilities 16 (596.0) (268.6) (432.5)
Trade and other payables (973.0) (835.1) (1,079.7)
Short-term decommissioning &
restoration provisions (23.6) (24.7) (33.2)
Current tax liabilities (53.5) (51.2) (60.4)
-------------- -------------- --------------
(1,646.1) (1,179.6) (1,605.8)
-------------- -------------- --------------
Non-current liabilities
Medium and long-term borrowings
and other financial liabilities 16 (2,574.8) (3,101.0) (2,844.5)
Trade and other payables (7.4) (18.5) (8.0)
Liabilities in relation to joint
ventures 15 - (0.9) -
Post-employment benefit obligations (154.1) (100.6) (137.3)
Decommissioning and restoration
provisions (457.9) (301.7) (455.0)
Deferred tax liabilities (1,509.0) (1,361.1) (1,543.3)
-------------- --------------
(4,703.2) (4,883.8) (4,988.1)
-------------- -------------- --------------
Total liabilities (6,349.3) (6,063.4) (6,593.9)
-------------- -------------- --------------
Net assets 11,680.5 10,204.5 11,644.4
Equity
Share capital 89.8 89.8 89.8
Share premium 199.2 199.2 199.2
Other reserves 6.0 (13.2) 5.0
Retained earnings 8,164.1 7,158.9 8,333.5
-------------- -------------- --------------
Equity attributable to owners
of the parent 8,459.1 7,434.7 8,627.5
Non-controlling interests 3,221.4 2,769.8 3,016.9
-------------- -------------- --------------
Total equity 11,680.5 10,204.5 11,644.4
-------------- -------------- --------------
The condensed consolidated interim financial statements were
approved by the Board of Directors on 9 August 2023
Consolidated Cash Flow Statement
At 30.06.2023 At 30.06.2022 At 31.12.2022
(Unaudited) (Unaudited) (Audited)
Notes $m $m $m
Cash flows from continuing operations 17 1,296.4 1,682.5 2,738.3
Interest paid (70.5) (31.6) (74.3)
Income tax paid (323.2) (620.6) (787.1)
-------------- -------------- --------------
Net cash from operating activities 902.7 1,030.3 1,876.9
-------------- -------------- --------------
Investing activities
Dividends from associates and
joint ventures 15 - 50.0 50.0
Investment in other financial (290.1) - -
assets
Acquisition of equity investments (8.4) - (66.5)
Disposal of interest in joint
venture 14 944.7 - -
Proceeds from sale of property, plant
and equipment - 0.1 0.2
Purchases of property, plant
and equipment (1,021.9) (831.0) (1,879.2)
Net (increase) /decrease in liquid
investments 18 (449.6) 964.1 1,388.9
Interest received 52.3 5.4 29.1
-------------- -------------- --------------
Net cash used in investing activities (773.0) 188.6 (477.5)
-------------- -------------- --------------
Financing activities
Dividends paid to owners of the
parent (497.9) (1,172.2) (1,262.9)
Dividends paid to preference shareholders
of the Company (0.1) (0.1) (0.1)
Dividends paid to non-controlling
interests - (80.0) (80.0)
Proceeds from issue of new borrowings - 866.1 865.9
Repayments of borrowings (110.8) (640.5) (751.3)
Principal elements of lease payments (35.1) (54.6) (105.4)
Net cash used in financing activities (643.9) (1,081.3) (1,333.8)
-------------- -------------- --------------
Net (decrease)/increase in cash
and cash equivalents 18 (514.2) 137.6 65.6
-------------- -------------- --------------
Cash and cash equivalents at beginning
of the period 810.4 743.4 743.4
Net (decrease)/increase in cash
and cash equivalents 18 (514.2) 137.6 65.6
Effect of foreign exchange rate
changes 18 7.1 (8.4) 1.4
Cash and cash equivalents at
end of the period 18 303.3 872.6 810.4
-------------- -------------- --------------
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 2023 were approved for
issue by the Board of Directors of the Company on 9 August 2023.
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 2022.
The interim financial statements have been prepared in
accordance with UK-adopted 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 2022 and 31 December 2022 also does not constitute
statutory accounts. A copy of the statutory accounts for the year
ended 31 December 2022 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 2024.
The Group's business activities, together with those factors
likely to affect its future performance, are set out in the
Directors' Comments, and in particular within the Review of
Operations. 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 18, and details
of borrowings are set out in Note 16.
When assessing the going concern status of the Group, the
Directors have considered in particular its financial position,
including its significant balance of cash, cash equivalents and
liquid investments and the terms and remaining durations of the
borrowing facilities in place. The Group had a strong financial
position as at 30 June 2023, with combined cash, cash equivalents
and liquid investments of $2,349.5 million. Total borrowings were
$3,170.8 million, resulting in a net debt position of $821.3
million. Of the total borrowings, only $596.0 million is repayable
within one year, and $744.9 million 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 analysis has included the
forecast impact of the new Chilean mining royalty. 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 20% 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 3 months, in addition to
the above deterioration of 20% 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.
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 2024. 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:
-- IFRS 17 Insurance Contracts,
-- Deferred Tax related to Assets and Liabilities arising from a
Single Transaction (Amendments to IAS 12),
-- International Tax Reform - Pillar Two Model Rules (Amendments to IAS 12),
-- Disclosure of Accounting Policies - Amendments to IAS 1 and IFRS Practice Statement 2, and
-- Definition of Accounting Estimates - Amendments to IAS 8.
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.
Amendments to IFRSs Effective date
Lease Liability in a Sale and Leaseback Annual periods beginning
(Amendments to IFRS 16) on or after January 1, 2024
-----------------------------
Classification of Liabilities as Current Annual periods beginning
or Non-Current (Amendments to IAS 1) on or after January 1, 2024
-----------------------------
Non-current Liabilities with Covenants Annual periods beginning
(Amendments to IAS 1) on or after January 1, 2024
-----------------------------
Supplier Finance Arrangements (Amendments Annual periods beginning
to IAS 7 and IFRS 7)(1) on or after January 1, 2024
-----------------------------
(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
2022 year-end) are:
Judgements
-- Non-financial assets impairment- see Note 4 for relevant details
-- Capitalisation of project costs within property, plant and
equipment - the costs of developing mining properties are
capitalised as property, plant and equipment when the mining
project is considered to be commercially viable. Commercial
viability is normally considered to be demonstrable when the
project has completed a pre-feasibility study, and the start of a
feasibility study has been approved. Management reviews amounts
capitalised to ensure that the treatment of that expenditure as
capital rather than operating expenditure is reasonable, in
particular in respect of the commercial viability of the
project.
Estimates
-- Deferred taxation - no deferred tax liability is recognised
in respect of the undistributed earnings of subsidiaries where it
is not likely that those profits will be distributed in the
foreseeable future. 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.
2. Operating profit from subsidiaries, and total profit from associates and joint ventures
Six months Six months
ended ended Year ended
30.06.2023 30.06.2022 31.12.2022
(Unaudited) (Unaudited) (Audited)
$m $m $m
Revenue 2,890.1 2,528.2 5,862.0
Cost of sales (1,677.2) (1,490.6) (3,432.7)
------------- ------------- ------------
Gross profit 1,212.9 1,037.6 2,429.3
Administrative and distribution
expenses (316.4) (294.0) (558.9)
Other operating income 21.1 21.1 37.9
Other operating expenses(1) (143.9) (123.4) (274.0)
------------- ------------- ------------
Operating profit from subsidiaries 773.7 641.3 1,634.3
------------- ------------- ------------
Net share of (loss)/profit from
associates and joint ventures (0.4) 49.1 48.1
------------- ------------- ------------
Gain on disposal of investment
in joint venture - - 944.7
------------- ------------- ------------
Total profit from operations,
associates and joint ventures 773.3 690.4 2,627.1
------------- ------------- ------------
(1) Other operating expenses comprise $62.0 million of
exploration and evaluation expenditure for the 2023 half year ( six
months ended 30 June 2022 - $51.4 million), $10.3 million in
respect of the employee severance provision for the 2023 half year
(six months ended 30 June 2022 - $7.2 million), $14.7 million in
respect of the closure provision for the 2023 half year (six months
ended 30 June 2022 - $6.6 million), and $56.9 million of other
expenses for the 2023 half year (six months ended 30 June 2022 -
$58.2 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.
Six months ended 30 June 2023
There were no exceptional items in the six months ended 30 June
2023.
2022 - Disposal of investment in Tethyan joint venture
On 15 December 2022, Antofagasta entered into definitive
agreements to exit its interest in the Tethyan joint venture. As a
result, Antofagasta recognised a gain on disposal of its investment
in the joint venture as at 15 December 2022 of $944.7 million.
Further details of the agreements and gain on disposal are set out
in Note 14.
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 2023, 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 ("the
models"). These models provide indicative valuations and do not
represent, or comply with, a formal impairment assessment prepared
in accordance with IAS 36. Sensitivity analyses have been performed
on the models to quantify the impact of changes in assumptions to
which the models are most sensitive and to support the overall
impairment indicator assessment.
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 $3.70/lb (reflecting 2023 real terms) has been used
in the models for the impairment indicator assessment, which has
increased from $3.50/lb (reflecting 2022 real terms) at the prior
year-end. As an additional down-side sensitivity, an indicative
valuation was performed with a long-term copper price of $3.33/lb,
reflecting a 10% reduction in the long-term price forecast. Los
Pelambres and Centinela still showed positive headroom in their
models in this alternative down-side scenario. However, the
Antucoya valuation indicated a potential deficit of $180 million
and the Zaldívar valuation indicated a potential deficit of $150
million (on a 50% basis). This was a simple sensitivity exercise,
looking at an illustrative change in the forecast long-term copper
price in isolation. In reality, a deterioration in the long-term
copper price environment is likely to result in corresponding
improvements in a range of input cost factors. In particular, given
that copper exports account for over 50% of Chile's exports,
historically there has often been a correlation between movements
in the copper price and the US dollar/Chilean peso exchange rate,
and a decrease in the copper price may therefore result in a
weakening of the Chilean peso, with a resulting reduction in the
Group's operating costs and capital expenditure in US$ terms. These
likely cost reductions, as well as potential operational changes
which could be made in a weaker copper price environment, could
partly mitigate the impact of the lower copper price modelled in
these estimated potential sensitivities.
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$785/$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$850/$1 used at the 2022 year-end. As an
additional downside sensitivity an indicative valuation was
prepared with a 10% stronger long-term Chilean peso exchange rate
assumption. All of the Group's mining operations still showed
positive headroom in their models in this alternative down-side
scenario. As noted above, historically there has often been a
correlation between movements in the copper price and the US
dollar/Chilean peso exchange rate, and so a strengthening of the
Chilean peso may often reflect a stronger copper price environment,
which could mitigate the impact of a stronger exchange rate.
Climate risks
The models incorporate estimates of potential future
climate-related impacts. In the 2022 Annual Report, the Group
disclosed in line with the recommendations of the Task Force on
Climate-related Financial Disclosures ("TCFD"). As part of the
preparation of the disclosures for the 2023 Annual Report, scenario
analyses assessing the potential future impact of transition and
physical risks, as well as potential copper price upside due to
increased demand for the construction of electric vehicles and
renewable power generating capacity, are being prepared. The
combined estimated impact of these factors has been incorporated
into the models.
Chilean mining royalty
The models include the forecast impact of the new Chilean mining
royalty.
Other relevant assumptions
In addition to the impact of the future copper price, the US
dollar/Chilean peso exchange rate, climate-related impacts and the
new Chilean mining royalty regime, the models used in the
impairment indicator assessment are sensitive to the assumptions in
respect of future production levels, operating costs, sustaining
and development capital expenditure, and the discount rate used to
determine the present value of the future cash flows.
A real post-tax discount rate of 8% (calculated using relevant
market data) has been used in determining the present value of the
changes in forecast future cash flows from the assets as part of
the quantitative analysis performed for the overall impairment
indicator assessment.
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 factors to which the model considered as part of
the impairment indicator assessment is sensitive, in particular the
following:
-- Currently, Zaldívar is permitted to extract water and mine
until 2025 and 2024 respectively. To ensure the continuity of this
operation, in March 2023 Zaldívar submitted a Declaration of
Environmental Impact ("DIA"), a more limited scope and simplified
procedure than an Environmental Impact Assessment ("EIA"). The DIA
submitted requests that the mining permit be extended from 2024 to
2025, to expire at the same date as the current water permit. After
this, and after withdrawing an earlier EIA application filed in
2018 which remained unresolved, in June 2023 Zaldívar submitted an
EIA application to extend its mining and water environmental
permits through to 2051. This EIA 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 DIA and 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 (a road, railway, power line and pipelines). Mining of the
phase will be subject to agreements or easements to access these
areas and relocate the infrastructure, and related permits. The
impairment indicator assessment assumes that the necessary
agreements, easements and permits will be obtained to allow the
mining of the final pit phase.
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 30.06.2023 (Unaudited)
Los Centinela Antucoya Zaldívar Exploration Corporate Total Transport Total
Pelambres and and other Mining division
evaluation(2) items
$m $m $m $m $m $m $m $m $m
Revenue 1,332.4 1,128.7 330.5 - - - 2,791.6 98.5 2,890.1
Operating costs
excluding
depreciation
and
amortisation (562.5) (639.4) (226.6) - (62.0) (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) 632.4 188.7 51.6 - (62.0) (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)
Operating profit
from
subsidiaries,
and total
profit from
associates
and joint
ventures 632.4 188.7 51.6 (1.7) (62.0) (59.6) 749.4 23.9 773.3
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 641.9 174.1 37.2 (1.7) (62.0) (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 448.3 126.2 30.6 (1.7) (62.0) (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 276.0 94.6 28.1 (1.7) (62.0) (20.1) 314.9 15.5 330.4
---------- --------- -------- ------------- ------------- ---------- ---------- --------- ----------
EBITDA(1) 769.9 489.3 103.9 42.5 (62.0) (51.7) 1,291.9 39.1 1,331.0
Additions to
non-current
assets
Additions to
property,
plant and
equipment 480.1 458.1 48.0 - - 11.8 998.0 26.3 1,024.3
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 $58.3 million.
For the six months ended 30.06.2022
(Unaudited)
Los Centinela Antucoya Zaldívar Exploration Corporate Total Transport Total
Pelambres and and other Mining division
evaluation(2) items
$m $m $m $m $m $m $m $m $m
Revenue 950.9 1,130.3 355.0 - - - 2,436.2 92.0 2,528.2
Operating costs
excluding
depreciation
and
amortisation (440.3) (603.4) (201.6) - (51.4) (43.6) (1,340.3) (57.6) (1,397.9)
Depreciation and
amortisation (109.2) (307.3) (50.3) - - (7.6) (474.4) (14.6) (489.0)
---------- ---------- -------- ------------- ------------- ---------- ---------- --------- ----------
Operating
profit/(loss) 401.4 219.6 103.1 - (51.4) (51.2) 621.5 19.8 641.3
---------- ---------- -------- ------------- ------------- ---------- ---------- --------- ----------
Net share of
income/(loss)
from associates
and
joint ventures - - - 48.6 - (0.3) 48.3 0.8 49.1
Investment
income 1.3 1.1 0.3 - - 1.4 4.1 0.2 4.3
Interest expense (1.4) (4.5) (8.4) - - (19.0) (33.3) (1.5) (34.8)
Other finance
items 4.0 13.4 2.1 - - 1.3 20.8 (1.1) 19.7
---------- ---------- -------- ------------- ------------- ---------- ---------- --------- ----------
Profit/(loss)
before
tax 405.3 229.6 97.1 48.6 (51.4) (67.8) 661.4 18.2 679.6
Tax (121.5) (69.6) (27.3) - - (25.2) (243.6) (4.3) (247.9)
---------- ---------- -------- ------------- ------------- ---------- ---------- --------- ----------
Profit/(loss)
for
the period 283.8 160.0 69.8 48.6 (51.4) (93.0) 417.8 13.9 431.7
Non-controlling
interests 107.7 45.6 17.7 - - 0.4 171.4 - 171.4
Profit/(loss)
for
the period
attributable
to owners of
the parent 176.1 114.4 52.1 48.6 (51.4) (93.4) 246.4 13.9 260.3
---------- ---------- -------- ------------- ------------- ---------- ---------- --------- ----------
EBITDA(1) 510.6 526.9 153.4 104.8 (51.4) (44.0) 1,200.3 37.4 1,237.7
Additions to
non-current
assets
Capital
expenditure 475.1 396.6 25.9 - - 4.1 901.7 14.7 916.4
Segment assets
and
liabilities
Segment assets 5,934.6 5,699.9 1,675.2 - - 1,634.6 14,944.3 418.4 15,362.7
Investments in
associates
and joint
ventures - - - 898.6 - - 898.6 6.6 905.2
Segment
liabilities (2,827.4) (1,459.2) (543.7) - - (1,149.7) (5,980.0) (83.4) (6,063.4)
(1) EBITDA refers to Earnings Before Interest, Tax, Depreciation
and Amortisation. EBITDA is calculated by adding back depreciation,
amortisation, profit or loss on disposals and impairment charges to
operating profit. This comprises 100% of the EBITDA from the
Group's subsidiaries, and the Group's proportional share of the
EBITDA of its associates and joint ventures.
(2) Operating cash outflow in the exploration and evaluation
segment was $40.7 million.
For the year ended 31.12.2022 Audited
Los Centinela Antucoya Zaldívar Exploration Corporate Total Transport Total
Pelambres and and other Mining division
evaluation(2) items
$m $m $m $m $m $m $m $m $m
Revenue 2,558.9 2,406.2 703.5 - - - 5,668.6 193.4 5,862.0
Operating costs
excluding
depreciation,
amortisation
and loss on
disposals (1,086.1) (1,249.0) (442.3) - (113.0) (75.0) (2,965.4) (119.1) (3,084.5)
Depreciation and
amortisation (276.1) (710.2) (105.6) - - (18.7) (1,110.6) (30.5) (1,141.1)
Loss on
disposals (0.5) (1.0) - - - (0.6) (2.1) - (2.1)
--------- --------- -------- ------------- ------------- --------- --------- --------- ---------
Operating
profit/(loss) 1,196.2 446.0 155.6 - (113.0) (94.3) 1,590.5 43.8 1,634.3
--------- --------- -------- ------------- ------------- --------- --------- --------- ---------
Net share of
results
from associates
and
joint ventures - - - 47.3 - (0.7) 46.6 1.5 48.1
Gain on disposal
of
investment in
joint
venture (3) - - - - - 944.7 944.7 - 944.7
--------- --------- -------- ------------- ------------- --------- --------- --------- ---------
Operating profit
from
subsidiaries,
and total
profit from
associates and
joint
ventures 1,196.2 446.0 155.6 47.3 (113.0) 849.7 2,581.8 45.3 2,627.1
Investment
income 10.7 6.6 2.4 - - 19.8 39.5 0.7 40.2
Interest expense (3.3) (10.6) (19.9) - - (44.2) (78.0) (0.6) (78.6)
Other finance
items (5.2) (11.3) (6.6) - - (5.0) (28.1) (1.7) (29.8)
--------- --------- -------- ------------- ------------- --------- --------- --------- ---------
Profit/(loss)
before
tax 1,198.4 430.7 131.5 47.3 (113.0) 820.3 2,515.2 43.7 2,558.9
Tax (371.8) (130.8) (34.9) - - (50.8) (588.3) (15.3) (603.6)
--------- --------- -------- ------------- ------------- --------- --------- --------- ---------
Profit/(loss)
for
the year 826.6 299.9 96.6 47.3 (113.0) 769.5 1,926.9 28.4 1,955.3
Non-controlling
interests 319.3 82.9 21.2 - - (1.1) 422.3 - 422.3
Profit/(loss)
attributable
to owners of
the parent 507.3 217.0 75.4 47.3 (113.0) 770.6 1,504.6 28.4 1,533.0
--------- --------- -------- ------------- ------------- --------- --------- --------- ---------
EBITDA(1) 1,472.8 1,157.2 261.2 147.2 (113.0) (75.7) 2,849.7 80.0 2,929.7
Additions to
non-current
assets
Additions to
property,
plant and
equipment 965.2 889.0 75.1 - 0.5 16.4 1,946.2 55.8 2,002.0
Segment assets
and
liabilities
Segment assets 6,786.6 5,922.8 1,708.0 - - 2,504.1 16,921.5 412.2 17,333.7
Investments in
associates
and joint
ventures - - - 897.3 - - 897.3 7.3 904.6
Segment
liabilities (3,155.0) (1,565.1) (558.1) - - (1,225.8) (6,504.0) (89.9) (6,593.9)
(1) EBITDA refers to Earnings Before Interest, Tax, Depreciation
and Amortisation. EBITDA is calculated by adding back depreciation,
amortisation, profit or loss on disposals and impairment charges to
operating profit. This comprises 100% of the EBITDA from the
Group's subsidiaries, and the Group's proportional share of the
EBITDA of its associates and joint ventures.
(2) Operating cash outflow in the exploration and evaluation
segment was $98.3 million.
(3) An exceptional gain of $944.7 million has been recognised in
respect of the Group's disposal of its investment in the Tethyan
joint venture (see notes 3 and 14)
b) Entity wide disclosures
Revenue by product
Six months
ended Six months Year ended
30.06.2023 ended 30.06.2022 31.12.2022
$m $m $m
Copper
- Los Pelambres 1,054.6 786.9 2,107.7
- Centinela concentrates 575.8 524.7 1,132.7
- Centinela cathodes 327.4 406.8 844.4
- Antucoya 327.2 352.1 697.5
Provision of shipping services
- Los Pelambres 23.0 21.9 51.9
- Centinela concentrates 18.3 31.3 58.5
- Centinela cathodes 3.2 3.2 6.7
- Antucoya 3.3 2.9 6.0
Gold
- Los Pelambres 41.5 29.3 75.4
- Centinela concentrates 115.2 110.1 238.4
Molybdenum
- Los Pelambres 197.6 100.1 291.4
- Centinela concentrates 74.6 41.8 100.8
Silver
- Los Pelambres 15.7 12.7 32.5
- Centinela concentrates 14.2 12.4 24.7
Total Mining 2,791.6 2,436.2 5,668.6
Transport division 98.5 92.0 193.4
------------ ------------------ ------------
2,890.1 2,528.2 5,862.0
------------ ------------------ ------------
Revenue by location of customer
Six months Six months
ended Ended Year ended
30.06.2023 30.06.2022 31.12.2022
$m $m $m
Europe
- United Kingdom 6.9 37.6 71.0
- Switzerland 188.0 398.8 753.6
- Spain - 0.9 1.0
- Germany 82.8 86.4 140.0
- Rest of Europe 37.9 4.6 96.5
Latin America
- Chile 217.9 157.3 369.1
- Rest of Latin America 45.4 82.6 179.7
North America
- United States 173.4 112.1 312.3
Asia Pacific
- Japan 952.6 663.0 1,668.6
- China 584.8 562.4 1,072.0
- Singapore 244.0 161.3 423.8
- South Korea 235.6 148.6 332.2
- Hong Kong 75.9 25.8 178.2
- Rest of Asia 44.9 86.8 264.0
------------ ------------
2,890.1 2,528.2 5,862.0
------------ ------------ ------------
Information about major customers
In the first half of 2023, the Group's mining revenue included
$519.9 million related to one large customer that individually
accounted for more than 10% of the Group's revenue (six months
ended 30 June 2022 - one large customer representing $363.4
million; year ended 31 December 2022 - one large customer
representing $785.5 million)
Non-current assets by location of asset
Six months
Six months ended
ended 30.06.2022 Year ended
30.06.2023 Restated(1) 31.12.2022
$m $m $m
- Chile 13,359.8 12,140.3 12,786.1
- Other 9.8 10.4 10.1
------------ ------------- ------------
13,369.6 12,150.7 12,796.2
------------ ------------- ------------
(1) The comparatives have been restated to show a
reclassification of $9.5 million for the half year 2022 from the
"Chile" to the "Other" category.
The following table reconciles between the total non-current
assets on the balance sheet with the non-current assets relevant to
the above geographical analysis:
Six months Six months
ended ended Year ended
30.06.2023 30.06.2022 31.12.2022
$m $m $m
Non-current assets per the balance
sheet 13,630.1 12,287.7 13,016.2
The above amounts reflect non-current
assets excluding;
- Deferred tax assets (99.8) (74.3) (78.5)
- Trade and other receivables (61.2) (56.2) (51.0)
- Equity investments (99.5) (6.4) (90.5)
Total excluded non-current assets: (260.5) (136.9) (220.0)
------------ ------------ ------------
Non-current assets relevant to the
above geographical analysis 13,369.6 12,150.8 12,796.2
------------ ------------ ------------
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. 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.
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 Six months Year ended
30.06.2023 ended 30.06.2022 31.12.2022
$m $m $m
Revenue from contracts with customers
Sale of products 2,747.5 2,593.3 5,671.2
Provision of shipping services associated
with the sale of products (1) 47.8 59.3 123.1
Transport division (2) 98.5 92.0 193.4
Provisional pricing adjustments in respect
of copper, gold and molybdenum (3.7) (216.4) (125.7)
Total revenue 2,890.1 2,528.2 5,862.0
------------ ------------------ ------------
(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 2023
$m $m $m $m $m $m $m $m
Los Centinela Centinela Antucoya Los Centinela Los Centinela
Pelambres Pelambres Pelambres
Copper Copper Copper Copper Gold Gold Molybdenum Molybdenum
concentrate concentrate cathodes cathodes in in concentrate concentrate
concentrate 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
------------ ------------ ---------- --------- ------------ ------------ ------------ ------------
For the period
ended
30 June 2022
$m $m $m $m $m $m $m $m
Los Centinela Centinela Antucoya Los Centinela Los Centinela
Pelambres Pelambres Pelambres
Copper Copper Copper Copper Gold Gold Molybdenum Molybdenum
concentrate concentrate cathodes cathodes in in concentrate concentrate
concentrate concentrate
Provisionally
priced
sales of
products 953.5 600.7 417.4 362.8 28.9 107.1 118.7 48.6
Revenue from
freight
services 21.9 31.3 3.2 2.9 - - - -
------------ ------------ ---------- --------- ------------ ------------ ------------ ------------
975.4 632.0 420.6 365.7 28.9 107.1 118.7 48.6
Effects of
pricing
adjustments to
previous
year invoices
Reversal of
mark-to-market
adjustments at
the end
of the
previous year (12.0) (5.2) (0.3) (0.8) - (0.3) 5.6 0.7
Settlement of
sales
invoiced in
the previous
year 10.7 24.3 0.5 1.0 - 3.8 (4.1) (0.6)
------------ ------------ ---------- --------- ------------ ------------ ------------ ------------
Total effect of
adjustments
to previous
year invoices
in the current
period (1.3) 19.1 0.2 0.2 - 3.5 1.5 0.1
------------ ------------ ---------- --------- ------------ ------------ ------------ ------------
Effects of
pricing
adjustments to
current
period invoices
Settlement of
sales
invoiced in
the current
period (35.4) (14.5) (6.3) (7.6) 0.5 0.9 (4.6) 1.3
Mark-to-market
adjustments
at the end of
the current
period (101.7) (51.8) (4.5) (3.3) - (1.1) (7.8) (3.6)
------------ ------------ ---------- --------- ------------ ------------ ------------ ------------
Total effect of
adjustments
to current
period
invoices (137.1) (66.3) (10.8) (10.9) 0.5 (0.2) (12.4) (2.3)
------------ ------------ ---------- --------- ------------ ------------ ------------ ------------
Total pricing
adjustments (138.4) (47.2) (10.6) (10.7) 0.5 3.3 (10.9) (2.2)
------------ ------------ ---------- --------- ------------ ------------ ------------ ------------
Treatment and
refining
charges (28.2) (28.8) - - (0.1) (0.3) (7.7) (4.5)
Revenue 808.8 556.0 410.0 355.0 29.3 110.1 100.1 41.9
------------ ------------ ------------ ------------
For the year ended 31 December 2022
$m $m $m $m $m $m $m $m
Los Centinela Centinela Antucoya Los Centinela Los Centinela
Pelambres Pelambres Pelambres
Copper Copper Copper Copper Gold Gold Molybdenum Molybdenum
concentrate concentrate cathodes cathodes in in concentrate concentrate
concentrate concentrate
Provisionally
priced
sales of
products 2,313.7 1,231.8 851.8 710.6 75.1 235.9 281.3 98.5
Revenue from
freight
services 51.9 58.5 6.7 6.0 - - - -
2,365.6 1,290.3 858.5 716.6 75.1 235.9 281.3 98.5
Effects of
pricing
adjustments to
previous
year invoices
Reversal of
mark-to-market
adjustments at
the
end of the
previous
year (12.0) (5.2) (0.3) (0.8) - (0.3) 5.6 0.7
Settlement of
sales
invoiced in
the previous
year 10.7 23.3 0.5 1.0 - 3.6 (4.1) (0.6)
Total effect of
adjustments
to previous
year invoices
in the current
year (1.3) 18.1 0.2 0.2 - 3.3 1.5 0.1
Effects of
pricing
adjustments to
current
year invoices
Settlement of
sales
invoiced in
the current
year (155.3) (68.7) (8.4) (14.1) 0.4 (2.9) 16.5 4.0
Mark-to-market
adjustments
at the end of
the current
year 38.0 19.9 0.8 0.8 - 2.7 12.6 7.6
Total effect of
adjustments
to current
year invoices (117.3) (48.8) (7.6) (13.3) 0.4 (0.2) 29.1 11.6
Total pricing
adjustments (118.6) (30.7) (7.4) (13.1) 0.4 3.1 30.6 11.7
Revenue before
deducting
treatment &
refining
charges 2,247.0 1,259.6 851.1 703.5 75.5 239.0 311.9 110.2
Treatment and
refining
charges (87.4) (68.4) - - (0.1) (0.6) (20.5) (9.4)
Revenue net of
tolling
charges 2,159.6 1,191.2 851.1 703.5 75.4 238.4 291.4 100.8
------------ ------------
(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 30.06.2023 At 30.06.2022 At 31.12.2022
Sales provisionally priced
at the balance sheet date Tonnes 141,400 114,400 179,000
Average mark-to-market price $/lb 3.77 3.75 3.80
Average provisional invoice
price $/lb 3.83 4.36 3.65
(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 30.06.2023 At 30.06.2022 At 31.12.2022
Sales provisionally priced
at the balance sheet date Tonnes 10,600 11,400 22,700
Average mark-to-market price $/lb 3.78 3.75 3.80
Average provisional invoice
price $/lb 3.81 4.06 3.77
(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 30.06.2023 At 30.06.2022 At 31.12.2022
Sales provisionally priced
at the balance sheet date Ounces 19,200 22,600 31,000
Average mark-to-market price $/oz 1,924 1,808 1,828
Average provisional invoice
price $/oz 1,967 1,859 1,742
(iv) Molybdenum concentrate
The typical period for which sales of molybdenum remain open
until settlement is approximately two months from shipment
date.
At 30.06.2023 At 30.06.2022 At 31.12.2022
Sales provisionally priced
at the balance sheet date Tonnes 2,900 2,500 2,500
Average mark-to-market price $/lb 22.30 17.30 26.10
Average provisional invoice
price $/lb 21.40 19.25 22.20
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 year
end
mark-to-market adjustments
Six months
Ended Six months Year ended
30.06.2023 ended 30.06.2022 31.12.2022
$m $m $m
Los Pelambres - copper concentrate (10.1) (101.7) 38.0
Los Pelambres - molybdenum
concentrate 4.0 (7.8) 12.6
Centinela - copper concentrate (5.5) (51.8) 19.9
Centinela - molybdenum concentrate 1.6 (3.6) 7.6
Centinela - gold in concentrate (0.8) (1.1) 2.7
Centinela - copper cathodes 0.1 (4.5) 0.8
Antucoya - copper cathodes (0.9) (3.3) 0.8
(11.6) (173.8) 82.4
The trade and other receivables balance at 30 June 2023 was
$1,166.7 million compared with $2,087.2 million at 31 December
2022. The decrease was mainly due to the Tethyan disposal proceeds
of $944.7 million recognised at 31 December 2022 which were
received during the current period, as well as a decrease
reflecting lower sales volumes towards the end of the current
period compared with the end of 2022, as well as the impact of the
negative mark-to-market adjustment of $11.6 million at 30 June 2023
compared with a positive mark-to-market adjustment of $82.4 million
at 31 December 2022 as shown above.
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 30.06.2023
At fair At fair value Held at Total
value through through other amortised
profit and comprehensive cost
loss income
$m $m $m $m
Financial assets
Equity investments - 99.5 - 99.5
Trade and other receivables 356.0 - 459.4 815.4
Other financial assets 290.1 - - 290.1
Cash and cash equivalents 1.1 - 302.2 303.3
Liquid investments 2,046.2 - - 2,046.2
2,693.4 99.5 761.6 3,554.5
Financial liabilities
Trade and other payables - - (957.7) (957.7)
Borrowings and leases - - (3,170.8) (3,170.8)
- - (4,128.5) (4,128.5)
For the period ended 30.06.2022
At fair At fair value Held at Total
value through through other amortised
profit and comprehensive cost
loss income
$m $m $m $m
Financial assets
Equity investments - 6.4 - 6.4
Trade and other receivables 215.4 - 84.1 299.5
Cash and cash equivalents - - 872.6 872.6
Liquid investments 2,005.6 - - 2,005.6
2,221.0 6.4 956.7 3,184.1
Financial liabilities
Trade and other payables - - (848.2) (848.2)
Borrowings and leases - - (3,369.6) (3,369.6)
- - (4,217.8) (4,217.8)
For the year ended 31.12.2022
At fair At fair value Held at Total
value through through other amortised
profit and comprehensive cost
loss income
$m $m $m $m
Financial assets
Equity investments - 90.5 - 90.5
Trade and other receivables 897.2 - 1,047.5 1,944.7
Cash and cash equivalents 8.5 - 801.9 810.4
Liquid investments 1,580.8 - - 1,580.8
2,486.5 90.5 1,849.4 4,426.4
Financial liabilities
Trade and other payables - - (1,067.3) (1,067.3)
Borrowings and leases - - (3,277.0) (3,277.0)
- - (4,344.3) (4,344.3)
The fair value of the fixed rate bonds included within the
"Borrowings and leases" category was $906.9 million at 30 June 2023
compared with their carrying value of $986.1 million (six months
ended 30 June 2022 - fair value of $877.8 million compared with
their carrying value of $985.1 million; year ended 31 December 2022
- fair value of $899.4 million compared with their carrying value
of $985.3 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 Six months Year ended
ended ended 31.12.2022
30.06.2023 30.06.2022
Financial assets
Trade and other receivables (non-current)
per balance sheet 61.2 56.2 51.0
Trade, other receivables, and other financial
assets 1,166.7 366.5 2,087.2
Total trade and other receivables per
balance sheet 1,227.9 422.7 2,138.2
Less: non-financial assets (including
prepayments and VAT receivables) (122.4) (123.2) (193.5)
Less: Other financial assets (290.1) - -
Total loans and receivables (financial
assets) 815.4 299.5 1,944.7
Financial liabilities
Trade and other payables (current) per
balance sheet (973.0) (835.1) (1,079.7)
Trade and other payables (non-current)
per balance sheet (7.4) (18.5) (8.0)
Total trade and other payables per balance
sheet (980.4) (853.6) (1,087.7)
Less: non-financial liabilities (including
VAT payables) 22.7 5.4 20.4
Total loans and payables (financial liabilities) (957.7) (848.2) (1,067.3)
Fair value of financial instruments
An analysis of financial assets and financial liabilities
measured at fair value is presented below:
For the period ended 30.06.2023
Level Level Level Total
1 2 3
$m $m $m $m
Financial assets
Equity investments (a) 99.5 - - 99.5
Trade and other receivables (b) - 356.0 - 356.0
Other financial assets (c) - 290.1 - 290.1
Cash and cash equivalents (d) 1.1 - - 1.1
Liquid investments (e) - 2,046.2 - 2,046.2
100.6 2,692.3 - 2,792.9
For the period ended 30.06.2022
Level Level Level Total
1 2 3
$m $m $m $m
Financial assets
Equity investments (a) 6.4 - - 6.4
Trade and other receivables (b) - 215.4 - 215.4
Liquid investments (e) - 2,005.6 - 2,005.6
6.4 2,221.0 - 2,227.4
For the period ended 31.12.2022
Level Level Level Total
1 2 3
$m $m $m $m
Financial assets
Equity investments (a) 90.5 - - 90.5
Trade and other receivables (b) - 897.2 - 897.2
Cash and cash equivalents (d) 8.5 - - 8.5
Liquid investments (e) - 1,580.8 - 1,580.8
99.0 2,478.0 - 2,577.0
Recurring fair value measurements are those that are required in
the balance sheet at the end of each reporting year.
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.
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 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.
No derivative instruments have been in place during 2022 or
2023.
8. Net finance expense
Six months Six months
ended ended Year ended
30.06.2023 30.06.2022 31.12.2022
$m $m $m
Investment income
Interest receivable 28.8 5.1 19.8
Gains on liquid investments held at
fair value through profit or loss 43.3 (0.8) 20.4
72.1 4.3 40.2
Interest expense
Interest expense (50.9) (34.8) (78.6)
(50.9) (34.8) (78.6)
Other finance items
Unwinding of discount on provisions (7.9) (6.8) (16.9)
Effects of changes in foreign exchange
rates (22.0) 26.6 (12.8)
Preference dividends (0.1) (0.1) (0.1)
(30.0) 19.7 (29.8)
Net finance expense (8.8) (10.8) (68.2)
In the six months ended 30 June 2023, amounts capitalised and
consequently not included within the above table were as follows:
$46.6 million at Los Pelambres (six months ended 30 June 2022 -
$14.5 million; year ended 31 December 2022 - $47.0 million) and
$1.7 million at Centinela (six months ended 30 June 2022 - $0.4
million; year ended 31 December 2022 - $2.0 million).
The interest expense shown above includes $4.1 million in
respect of leases (six months ended 30 June 2022 - $3.1 million;
year ended 31 December 2022 - $7.1 million).
9. Taxation
The tax charge for the period comprised the following:
Six months Six months
ended ended Year ended
30.06.2023 30.06.2022 31.12.2022
$m $m $m
Current tax charge
Corporate tax (principally first category
tax in Chile) (232.9) (213.0) (340.4)
Mining tax (royalty) (49.0) (41.9) (83.9)
Withholding tax (2.2) (21.2) (24.5)
Exchange rate (0.2) - -
(284.3) (276.1) (448.8)
Deferred tax
Corporate tax (principally first category
tax in Chile) 33.2 36.9 (96.5)
Mining tax (royalty) (0.1) 2.1 (9.8)
Withholding tax 21.9 (10.8) (48.5)
55.0 28.2 (154.8)
Total tax charge (229.3) (247.9) (603.6)
The rate of first category (i.e. corporate) tax in Chile is
27.0% (2022 - 27.0%).
In addition to first category tax and the mining tax, the Group
incurs withholding taxes on any remittance of profits from Chile.
Withholding tax is levied on remittances of profits from Chile at
35% less first category (i.e. corporation) tax already paid in
respect of the profits to which the remittances relate.
The Group's mining operations are also subject to a mining tax
(royalty). Production from Los Pelambres, Antucoya, Encuentro
(oxides), the Tesoro North East pit and the Run-of-Mine processing
at Centinela Cathodes is subject to a rate of between 5-14%,
depending on the level of operating profit margin, and production
from Centinela Concentrates and the Tesoro Central and Mirador pits
at Centinela Cathodes is subject to a rate of 5% of taxable
operating profit.
New mining royalty
In May 2023, both the Chilean Senate and lower house of Congress
approved the proposed revision to Chile's mining royalty bill, with
final Presidential approval confirmed in August 2023. This new law
is scheduled to take effect from 1 January 2024, replacing the
existing specific mining tax. However, companies with tax stability
agreements will continue to be governed by their current terms
until those agreements expire. The new regime will apply to Los
Pelambres' and Zaldivar's royalty payments from the start of 2024.
Centinela and Antucoya have tax stability agreements which extend
beyond that point, and so the new royalty rates will only impact
their royalty payments from 2030 onwards for both companies.
The new royalty terms include a 1% ad valorem royalty on copper
sales, as well as a royalty ranging from 8% to 26% applied to the
"Mining Operating Margin", depending on each mining operation's
level of profitability. The new royalty terms include 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% (relative to
the Mining Operating Margin less the royalty ad-valorem
expense).
The impact on the Group's royalty payments starting in 2024 will
be subject to various factors, including future revenue and
earnings, which will be influenced by parameters such as copper
prices, production volumes, and operating costs. A one-off
adjustment will also be recognized to the deferred tax balances of
all of the Group's mining operations, recognised in the 2023
year-end balance sheet and the results for the second half of 2023.
Currently, it is estimated that this could increase the Group's
deferred tax liabilities by approximately $40 million as of 31
December 2023, with a corresponding impact on the Group's deferred
tax expense for 2023. The Chilean tax authority has not yet issued
definitive interpretations regarding the methodologies for
determining and calculating the new royalty amounts, and the level
of future royalty payments and the adjustment to the deferred tax
liabilities at 31 December 2023 could be impacted by such
guidance.
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 Six months Year ended Year ended
ended ended 31-12-2022 31-12-2022
30.06.2023 30.06.2022 excluding Including
exceptional exceptional
items items
$m $m $m % $m %
% %
Profit before tax 764.5 679.6 1,614.2 2,558.9
Tax at the Chilean corporate
tax rate of 27% (206.4) 27.0 (183.5) 27.0 (435.9) 27.0 (691.0) 27.0
Mining Tax (royalty) (47.1) 6.2 (41.0) 6.0 (94.5) 5.8 (94.5) 3.7
Deduction of mining royalty
as an allowable expense in
determination of first category
tax 13.2 (1.7) 11.7 (1.7) 23.1 (1.4) 23.1 (0.9)
Withholding tax (including
substitute tax at 30% rate) 19.7 (2.6) (32.0) 4.7 (33.9) 2.1 (33.9) 1.3
Items not deductible from
first category tax (6.9) 0.9 (13.7) 2.0 (2.6) 0.1 (2.6) 0.1
Adjustment in respect of
prior years (0.9) 0.1 (2.5) 0.4 (73.0) 4.6 (73.0) 2.9
Tax effect of share of profit
of associates and joint ventures (0.1) - 13.0 (1.9) 13.0 (0.8) 13.0 (0.5)
Impact of unrecognised tax
losses on current tax (0.8) 0.1 0.1 - 0.2 - 0.2 -
Gain on disposal of investment
in joint venture - - - - - - 255.1 (10.0)
Tax expense and effective
tax rate for the period (229.3) 30.0 (247.9) 36.5 (603.6) 37.4 (603.6) 23.6
The effective tax rate for the period was 30.0%, partly
reflecting a one-off adjustment to the provision for deferred
withholding tax, which compares with 36.5% in 2022. The complete
reconciliation between the effective tax rate and the statutory tax
rate reflects the following points:
The effective tax rate of 30.0% varied from the statutory rate
principally due to the mining tax (royalty) (net impact of $33.9
million / 4.5% including the deduction of the mining tax (royalty)
as an allowable expense in the determination of first category
tax), items not deductible for Chilean corporate tax purposes,
principally the funding of expenses outside of Chile (impact of
$6.9 million / 0.9%) and adjustments in respect of prior years
(impact of $0.9 million / 0.1%), the impact of unrecognised tax
losses (impact of $0.8 million / 0.1%), the recognition of the
Group's share of profit from associates and joint ventures, which
are included in the Group's profit before tax net of their
respective tax charges (impact of $0.1 million / nil), partly
offset by the impact of the withholding tax relating to the
remittance of profits from Chile (impact of $19.7 million /
2.6%).
The main factors which could impact the sustainability of the
Group's existing effective tax rate are:
-- The impact of the new Chilean mining royalty which is
expected to be effective from 1 January 2024, as described
above.
-- 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. As noted above, the withholding
tax credit in the current period reflected a one-off adjustment to
the provision for deferred withholding tax.
-- 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.
The Group is within the scope of the OECD Pillar two model
rules. Pillar two legislation was recently substantively enacted in
the UK and will come into effect from 1 January 2024. At 30 June
2023, none of the Pillar two legislation is effective and so the
Group has no related current tax impact. Related amendments to IAS
12 clarify that Pillar two related balances are not within the
scope of IAS12 for deferred tax purposes and provide an exception
on this basis, and accordingly no deferred tax impact will be
recognised as a result of the implementation of the Pillar two
model rules. The group has commenced their Pillar two impact
analysis but is, as yet, not in a position to provide quantified
analysis of the potential future impact.
10. Earnings per share
Six months
Six months ended Year ended
ended 30.06.2023 30.06.2022 31.12.2022
$m $m $m
Profit for the period attributable to owners
of the parent (exc. exceptional items) 330.4 260.3 588.3
Exceptional Items - - 944.7
Profit for the period attributable to owners
of the parent (inc. exceptional items)
from operations 330.4 260.3 1,533.0
Number Number Number
Ordinary shares in issue throughout each
period 985,856,695 985,856,695 985,856,695
Six months Six months Year ended
ended 30.06.2023 ended 30.06.2022 31.12.2022
US cent US cent US cent
Basic earnings per share (exc. exceptional
items) from operations 33.5 26.4 59.7
Basic earnings per share (exceptional items)
from operations - - 95.8
Basic earnings per share (inc. exceptional
items) from operations 33.5 26.4 155.5
Basic earnings per share are calculated as profit after tax and
non-controlling interests, based on 985,856,695 (2022: 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 11.7 cents per
ordinary share for the 2023 half year (2022 half year - 9.2 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 50.5 cents per ordinary share (2022
half year - 118.9 cents per ordinary share), representing the final
dividend declared in respect of the previous year.
The interim dividend will be paid on 29 September 2023 to
ordinary shareholders that are on the register at the close of
business on 1 September 2023. Shareholders can elect (on or before
4 September 2023) 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 7 September 2023).
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. Intangible assets
The intangible asset relates to Twin Metals' mining licences
assets (included within the corporate segment). A full impairment
provision was recognised in respect of the $150.1 million cost of
this asset as at 31 December 2021, as a result of the US federal
government's cancellation of certain of Twin Metals' mining leases.
Twin Metals believes it has a valid legal right to the mining
leases and a strong case to defend its legal rights. Although the
Group is pursuing validation of those rights, considering the time
and uncertainty related to any legal action to challenge the
government decisions, a full impairment provision has been
recognised in respect of the carrying value of the asset.
Cost Impairment Net
book
value
$m $m $m
At 1 January 2022, 31 December
2022 and 30 June 2023 150.1 (150.1) -
13. Property, plant and equipment
Railway
and other At
Mining transport 30.06.2023 At 30.06.2022 At 31.12.2022
$m $m $m $m $m
Balance at the beginning
of the year 11,247.8 295.7 11,543.5 10,538.5 10,538.5
Additions 998.0 26.3 1,024.3 916.4 2,002.0
Additions - depreciation
capitalised 33.8 - 33.8 34.3 73.3
Reclassifications - - - (5.3) -
Capitalisation of interest 48.3 - 48.3 14.9 49.0
Adjustment to capitalised
decommissioning provisions - - - 4.6 173.8
Depreciation expensed in
the year (498.3) (13.0) (511.3) (489.0) (1,141.1)
Depreciation capitalised
in PP&E (33.8) - (33.8) (34.3) (73.3)
Depreciation capitalised
in inventories (45.7) - (45.7) (56.0) (71.1)
Asset disposals - - - (0.1) (7.6)
Balance at the end of the
year 11,750.1 309.0 12,059.1 10,924.0 11,543.5
During the six months ended 30 June 2023, the net effect of
depreciation capitalised within Property, plant and equipment or
inventories in respect of assets relating to Los Pelambres,
Centinela and Antucoya is $79.5 million ( six months ended 30 June
2022 -$90.3 million; year ended 31 December 2022 - $144.4 million),
and has accordingly been excluded from the depreciation charge
recorded in the income statement as shown in Note 5.
At 30 June 2023, the Group had entered into contractual
commitments for the acquisition of property, plant and equipment
amounting to $1,059.2 million (30 June 2022 - $915.0 million; 31
December 2022 - $845.1 million).
Depreciation capitalised in property, plant and equipment of
$33.8 million related to the depreciation of assets used in mine
development (operating stripping) at Centinela, Los Pelambres and
Antucoya (six months ended 30 June 2022 - $34.3 million; year ended
31 December 2022 - $73.3 million).
14. Disposal of investment in Tethyan joint venture
On 15 December 2022, Antofagasta entered into definitive
agreements 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. Antofagasta
recognised a gain on disposal of its investment in the joint
venture as at 15 December 2022 of $944.7 million. The joint venture
project was held via the Australian entity Atacama Copper Pty
Limited ("Atacama"). The disposal proceeds, which together with
accrued interest up to 15 December 2022 totalled US$946.0 million,
were held by Atacama in a segregated interest-bearing account.
Antofagasta and Barrick agreed that the proceeds of this account,
including all further interest received, less working capital and
other adjustments, would be distributed to the Antofagasta Group
during 2023, on a date to be determined by Antofagasta. Atacama was
seeking a binding private ruling from the Australian Tax Office to
confirm that the disposal proceeds and their distribution to the
Antofagasta Group would not be subject to Australian tax. In May
2023, Atacama received the binding private ruling confirming these
points. Antofagasta then requested that the disposal proceeds
including interest be distributed to the Antofagasta Group,
resulting in a total distribution of $956.3 million by Atacama to
the Antofagasta Group in May 2023.
15. Investment in associates and joint ventures
ATI(1) Minera At At 30.06.2022 At
Zaldívar(2) 30.06.2023 31.12.2022
$m $m $m $m $m
Balance at the beginning of the year 7.3 897.3 904.6 905.8 905.8
Obligations on behalf of JV and associates
at the beginning of the year - - - (0.6) (0.6)
Share of profit/(loss) before tax 1.6 (1.6) - 72.5 70.6
Share of tax (0.3) (0.1) (0.4) (23.4) (22.5)
Share of other comprehensive loss of
associates and joint ventures, net of
tax (0.1) (0.8) (0.9) - -
Share of profit/(loss) from JV and associates 1.2 (2.5) (1.3) 49.1 48.1
Dividends received - - - (50.0) (50.0)
Disposal of investment in JV - - - - 1.3
Balance at the end of the period 8.5 894.8 903.3 905.2 904.6
Obligations on behalf of JV at the - - - (0.9) -
end of the period
The investments which are included in the $903.3 million balance
at 30 June 2023 are set out below:
Investment in associates
1. The Group's 30% interest in Antofagasta Terminal
Internacional ("ATI"), which operates a concession to manage
installations in the port of Antofagasta.
Investment in joint ventures
2. The Group's 50% interest in Minera Zaldívar SpA ("Zaldívar").
As the net carrying value of the interest in Tethyan was
negative, it was included within non-current liabilities, as the
Group was liable for its share of the joint venture's
obligations.
Summarised financial information for the associates at June 2023
is as follows:
Total Total Total
30.06.2023 30.06.2022 31.12.2022
$m $m $m
Cash and cash equivalents 3.7 0.6 0.4
Current assets(1) 15.1 12.8 18.2
Non-current assets 88.6 95.9 91.8
Current liabilities (15.5) (13.8) (19.3)
Non-current liabilities (66.3) (76.0) (69.5)
Revenue 33.5 26.2 55.2
Profit from continuing operations 4.2 2.8 5.1
Total comprehensive income 4.2 2.8 5.1
(1) The current assets includes cash and cash equivalents.
Summarised financial information for the joint ventures at June
2023 is as follows :
Total Total Total
30.06.2023 30.06.2022 31.12.2022
$m $m $m
Cash and cash equivalents 44.6 82.9 70.1
Current assets(1) 652.8 672.2 661.8
Non-current assets 1,640.2 1,637.6 1,658.6
Current financial liabilities (excl.
trade, other payables and provisions) (58.2) (52.6) (53.2)
Current liabilities (141.3) (154.4) (159.3)
Non-current financial liabilities (excl.
trade, other payables and provisions) (31.8) (99.6) (68.3)
Non-current liabilities (79.4) (173.8) (203.3)
Revenue 360.3 436.4 783.4
Depreciation and amortisation. (78.8) (70.2) (149.2)
Interest income 1.1 0.2 1.5
Interest expense (5.6) (0.2) (0.8)
Income tax expense or income (0.3) (43.8) (43.9)
(Loss)/profit after tax (3.3) 97.0 94.6
Total comprehensive (expense)/income (3.3) 97.0 94.6
(1) The current assets includes cash and cash equivalents.
The above summarised financial information is based on the
amounts included in the IFRS financial statements of the associate
or joint venture (100% of the results or balances of the associate
or joint venture, rather than the Group's proportionate share),
after the Group's fair value adjustments and applying the Group's
accounting policies.
16. Borrowings and other financial liabilities
At At At
30.06.2023 30.06.2022 31.12.2022
$m $m $m
Los Pelambres
Senior loan (1,447.9) (1,493.1) (1,470.5)
Leases (55.7) (40.6) (55.3)
Centinela
Senior loan (221.5) (331.8) (276.7)
Leases (31.0) (42.5) (35.2)
Antucoya
Senior loan (198.8) (248.2) (223.5)
Subordinated debt (179.1) (165.9) (171.5)
Leases (14.5) (19.5) (16.5)
Corporate and other items
Bonds (986.1) (985.1) (985.3)
Leases (22.6) (18.2) (23.1)
Railway and other transport
services
Senior loan (10.0) (20.5) (15.3)
Leases (1.1) (1.9) (1.6)
Preference shares (2.5) (2.3) (2.5)
Total (3,170.8) (3,369.6) (3,277.0)
At 30 June 2023, $1,120.0 million (30 June 2022 - $1,122.2
million; December 2022 - $1,129.0 million) of the borrowings has
fixed rate interest and $2,050.8 million (30 June 2022 - $2,247.4
million; December 2022 - $2,148.0 million) has floating rate
interest.
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 December 30, 2025.
The facility remained undrawn throughout the period 2023.
Facility available Drawn Undrawn
30 June 31 December 30 June 31 December 30 June 31 December
2023 2022 2023 2022 2023 2022
$m $m $m $m $m $m
Revolving credit
facility 500.0 500.0 - - 500.0 500.0
17. Reconciliation of profit before tax to net cash inflow from
operating activities
At At At
30.06.2023 30.06.2022 31.12.2022
$m $m $m
Profit before tax 764.5 679.6 2,558.9
Depreciation and amortisation 511.3 489.0 1,141.1
Net loss on disposals - - 2.1
Net finance expense 8.8 10.8 68.2
Share of loss/(profit) of
associates and joint ventures 0.4 (49.1) (48.1)
Gain on disposal of investment
in joint venture - - (944.7)
Increase in inventories (115.2) (161.0) (180.7)
Decrease in debtors 256.8 788.8 27.0
(Decrease) /increase in creditors (153.8) (58.1) 141.0
Increase /(decrease) in provisions 23.6 (17.5) (26.5)
Cash flow generated from
operations 1,296.4 1,682.5 2,738.3
18. Analysis of changes in net debt
Fair Amortisation
At Cash New value of finance Capitalisation At
31.12.2022 flows leases gain costs of interest Other Reclassification Exchange 30.06.2023
$m $m $m $m $m $m $m $m $m $m
Cash and
cash
equivalents 810.4 (514.2) - - - - - - 7.1 303.3
Liquid
investments 1,580.8 449.6 - 15.8 - - - - - 2,046.2
Total cash
and cash
equivalents
and liquid
investments 2,391.2 (64.6) - 15.8 - - - - 7.1 2,349.5
Borrowings
due within
one year (377.4) 110.8 - - - - - (271.3) - (537.9)
Borrowings
due after
one year (2,765.4) - - - (3.9) (7.6) - 271.3 - (2,505.6)
Leases due
within one
year (55.1) 35.1 - - - - - (35.1) (3.0) (58.1)
Leases due
after one
year (76.6) - (18.6) - - - (0.5) 35.1 (6.1) (66.7)
Preference
shares (2.5) - - - - - - - - (2.5)
Total
borrowings (3,277.0) 145.9 (18.6) - (3.9) (7.6) (0.5) - (9.1) (3,170.8)
Net
(debt)/cash (885.8) 81.3 (18.6) 15.8 (3.9) (7.6) (0.5) - (2.0) (821.3)
Net (debt)/ cash
Net (debt)/cash at the end of each period was as follows:
At At At
30.06.2023 30.06.2022 31.12.2022
$m $m $m
Cash, cash equivalents and
liquid investments 2,349.5 2,878.2 2,391.2
Total borrowings and other
financial liabilities (3,170.8) (3,369.6) (3,277.0)
Net (debt)/cash (821.3) (491.4) (885.8)
19. 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 2023, the Group has not received dividends from
Minera Zaldívar (six months ended 30 June 2022 - $50.0 million;
year ended 31 December 2022 - $50.0 million).
b) 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 2023,
the Group incurred $0.1 million (30 June 2022 - $0.1 million) of
exploration costs at these properties.
20. 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.
Provision is made for all liabilities that are expected to
materialise through legal claims against the Group.
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 Tony Jensen
Chairman Chair of Audit & Risk Committee
Independent review report to Antofagasta plc
Report on the condensed consolidated interim financial
statements
Our conclusion
We have reviewed Antofagasta plc's condensed consolidated
interim financial statements (the "interim financial statements")
in the half yearly financial report of Antofagasta plc for the six
month period ended 30 June 2023 (the "period").
Based on our review, nothing has come to our attention that
causes us to believe that the interim financial statements are not
prepared, in all material respects, in accordance with UK adopted
International Accounting Standard 34, 'Interim Financial Reporting'
and the Disclosure Guidance and Transparency Rules sourcebook of
the United Kingdom's Financial Conduct Authority.
The interim financial statements comprise:
-- the consolidated balance sheet as at 30 June 2023;
-- the consolidated income statement and consolidated statement
of comprehensive income for the period then ended;
-- the consolidated cash flow statement for the period then
ended;
-- the consolidated statement of changes in equity for the
period then ended; and
-- the explanatory notes to the interim financial
statements.
The interim financial statements included in the half yearly
financial report of Antofagasta plc have been prepared in
accordance with UK adopted International Accounting Standard 34,
'Interim Financial Reporting' and the Disclosure Guidance and
Transparency Rules sourcebook 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 enquiries, primarily of persons
responsible for financial and accounting matters, and applying
analytical and other review procedures.
A review is substantially less in scope than an audit conducted
in accordance with International Standards on Auditing (UK) and,
consequently, does not enable us to obtain assurance that we would
become aware of all significant matters that might be identified in
an audit. Accordingly, we do not express an audit opinion.
We have read the other information contained in the half yearly
financial report and considered whether it contains any apparent
misstatements or material inconsistencies with the information in
the interim financial statements.
Conclusions 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 group to cease
to continue as a going concern.
Responsibilities for the interim financial statements and the
review
Our responsibilities and those of the directors
The half yearly financial report, including the interim
financial statements, is the responsibility of, and has been
approved by the directors. The directors are responsible for
preparing the half yearly financial report in accordance with the
Disclosure Guidance and Transparency Rules sourcebook of the United
Kingdom's Financial Conduct Authority. In preparing the half yearly
financial report, including the interim financial statements, 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
group or to cease operations, or have no realistic alternative but
to do so.
Our responsibility is to express a conclusion on the interim
financial statements in the half yearly financial report based on
our review. Our conclusion, including our Conclusions relating to
going concern, is based on procedures that are less extensive than
audit procedures, as described in the Basis for conclusion
paragraph of this report. This report, including the conclusion,
has been prepared for and only for the company for the purpose of
complying with the Disclosure Guidance and Transparency Rules
sourcebook of the United Kingdom's Financial Conduct Authority and
for no other purpose. We do not, in giving this conclusion, accept
or assume responsibility for any other purpose or to any other
person to whom this report is shown or into whose hands it may come
save where expressly agreed by our prior consent in writing.
PricewaterhouseCoopers LLP
Chartered Accountants
London
9 August 2023
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 refers to Earnings Before Interest, Tax, Depreciation and
Amortisation. EBITDA is calculated by adding back depreciation,
amortisation, profit or loss on disposals and impairment charges to
operating profit. This comprises 100% of the EBITDA from the
Group's subsidiaries, and the Group's proportional share of the
EBITDA of its associates and joint ventures.
EBITDA is considered to provide a useful and comparable
indication of the current operational earnings performance of the
business, excluding the impact of the historical cost of property,
plant & equipment or the particular financing structure adopted
by the business.
For the six months ended 30 June 2023
Los Centinela Antucoya Zaldívar Exploration Corporate Mining Railway Total
Pelambres and and other and other
evaluation items transport
services
$m $m $m $m $m $m $m $m $m
Operating
profit/(loss) 632.4 188.7 51.6 - (62.0) (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 769.9 489.3 103.9 - (62.0) (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 769.9 489.3 103.9 42.5 (62.0) (51.7) 1,291.9 39.1 1,331.0
For the six months ended 30 June 2022
Los Centinela Antucoya Zaldívar Exploration Corporate Mining Railway Total
Pelambres and and other and other
evaluation items transport
services
$m $m $m $m $m $m $m $m $m
Operating
profit/(loss) 401.4 219.6 103.1 - (51.4) (51.2) 621.5 19.8 641.3
Depreciation
and
amortisation 109.2 307.3 50.3 - - 7.6 474.4 14.6 489.0
EBITDA from
subsidiaries 510.6 526.9 153.4 - (51.4) (43.6) 1,095.9 34.4 1,130.3
Proportional
share
of the EBITDA
from
associates
and JVs - - - 104.8 - (0.4) 104.4 3.0 107.4
Total EBITDA 510.6 526.9 153.4 104.8 (51.4) (44.0) 1,200.3 37.4 1,237.7
For the year ended 31 December 2022
Los Centinela Antucoya Zaldívar Exploration Corporate Mining Railway Total
Pelambres and and other and other
evaluation items transport
services
$m $m $m $m $m $m $m $m $m
Operating
profit/(loss) 1,196.2 446.0 155.6 - (113.0) (94.3) 1,590.5 43.8 1,634.3
Depreciation
and
amortisation 276.1 710.2 105.6 - - 18.7 1,110.6 30.5 1,141.1
Loss on
disposals 0.5 1.0 - - - 0.6 2.1 - 2.1
EBITDA from
subsidiaries 1,472.8 1,157.2 261.2 - (113.0) (75.0) 2,703.2 74.3 2,777.5
Proportional
share
of the EBITDA
from
associates
and JVs - - - 147.2 - (0.7) 146.5 5.7 152.2
Total EBITDA 1,472.8 1,157.2 261.2 147.2 (113.0) (75.7) 2,849.7 80.0 2,929.7
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 30.06.2023 At 30.06.2022 At 31.12.2022
Reconciliation of cash costs excluding treatment
& refining charges and by-product revenue:
Total Group operating costs (Note 5) ($m) 2,116.4 1,886.9 4,227.7
Zaldívar operating costs (attributable
basis - 50%) 129.0 106.2 234.4
Less:
Depreciation and amortisation (Note 5) ($m) (511.3) (489.0) (1,141.1)
Loss on disposal (Note 5) ($m) - - (2.1)
Corporate and other items - Total operating
cost (excluding depreciation) (Note 5) ($m) (51.7) (43.5) (75.0)
Exploration and evaluation - Total operating
cost (excluding depreciation) (Note 5) ($m) (62.0) (51.4) (113.0)
Transport division - Total operating cost (excluding
depreciation) (Note 5) ($m) (62.9) (57.6) (119.1)
Other costs not included within cash costs ($m) (62.1) (43.5) (97.6)
Inventories Variation 21.9 31.3 (12.0)
Total cost relevant to the mining operations'
cash costs ($m) 1,517.3 1,339.4 2,902.2
Copper production volumes (tonnes) 295,500 268,630 646,200
Cash costs excluding treatment & refining charges
and by-product revenue ($/tonne) 5,135 4,986 4,491
Cash costs excluding treatment & refining charges
and by-product revenue ($/lb) 2.32 2.25 2.05
At 30.06.2023 At 30.06.2022 At 31.12.2022
Reconciliation of cash costs before deducting
by-products revenue:
Treatment & refining charges - copper and by-products-
Los Pelambres (Note 5) 64.3 36.2 108.5
Treatment & refining charges - copper and by-products-
Centinela (Note 5) 40.8 33.8 78.8
Treatment & refining charges - copper - total 105.1 70.0 187.3
Copper production volumes (tonnes) 295,500 268,630 646,200
Treatment & refining charges ($/tonne) 355.8 260.3 289.9
Treatment & refining charges ($/lb) 0.16 0.12 0.14
Cash costs excluding treatment & refining charges
and by-product revenue ($/lb) 2.32 2.25 2.05
Treatment & refining charges ($/lb) 0.16 0.12 0.14
Cash costs before deducting by-product revenue
(S/lb) 2.48 2.37 2.19
(1) The 295,500 tonnes includes 19,800 tonnes of production at
Zaldívar on a 50% attributable basis.
c) Cash costs (continued)
At 30.06.2023 At 30.06.2022 At 31.12.2022
Reconciliation of cash costs (net of by-product
revenue):
Gold revenue - Los Pelambres (Note 6) ($m) 41.5 29.4 75.5
Gold revenue - Centinela (Note 6) ($m) 115.5 110.3 239.0
Molybdenum revenue - Los Pelambres (Note 6)
($m) 209.1 107.8 311.9
Molybdenum revenue - Centinela (Note 6) ($m) 79.9 46.5 110.2
Silver revenue - Los Pelambres (Note 5) ($m) 15.9 12.9 33.1
Silver revenue - Centinela (Note 5) ($m) 14.5 12.6 25.1
Total by-product revenue ($m) 476.4 319.5 794.8
Copper production volumes (tonnes) 295,500 268,630 646,200
By-product revenue ($/tonne) 1,612.2 1,189.4 1,230.0
By-product revenue ($/lb) 0.73 0.55 0.58
Cash costs before deducting by-product revenue
(S/lb) 2.48 2.37 2.19
By-product revenue ($/lb) (0.73) (0.55) (0.58)
Cash costs (net of by-product revenue) ($/lb) 1.75 1.82 1.61
(1) The 295,500 tonnes includes 19,800 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 June
2023 2022
Total Attributable Attributable Total Attributable Attributable
amount share amount amount share amount
$m $m $m $m
Cash, cash equivalents and
liquid investments:
Los Pelambres 705.0 60% 423.0 784.3 60% 470.6
Centinela 190.4 70% 133.3 447.8 70% 313.5
Antucoya 129.8 70% 90.9 173.4 70% 121.4
Corporate 1,297.7 100% 1,297.7 1,404.4 100% 1,404.4
Transport division 26.6 100% 26.6 68.3 100% 68.3
Total 2,349.5 1,971.5 2,878.2 2,378.2
Borrowings:
Los Pelambres (Note 16) (1,503.6) 60% (902.2) (1,533.7) 60% (920.2)
Centinela (Note 16) (252.5) 70% (176.8) (374.3) 70% (262.0)
Antucoya (Note 16) (392.4) 70% (274.7) (433.6) 70% (303.5)
Corporate (Note 16) (1,011.2) 100% (1,011.2) (1,005.6) 100% (1,005.6)
Transport division (Note
16) (11.1) 100% (11.1) (22.4) 100% (22.4)
Total (Note 16) (3,170.8) (2,376.0) (3,369.6) (2,513.7)
Net (debt)/cash (821.3) (404.5) (491.4) (135.5)
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 Six months Year ended Six months Six months Year ended
30.06.2023 ended 30.06.2022 31.12.2022 ended 30.06.2023 ended 30.06.2022 31.12.2022
Copper 000 tonnes 000 tonnes 000 tonnes 000 tonnes 000 tonnes 000 tonnes
Los Pelambres 128.5 98.4 275 129.1 96.3 271.2
Centinela 109.2 111.3 247.5 108.6 107 246.1
Antucoya 38.0 36.4 79.2 37.4 37.1 80.8
Zaldívar
(attributable
basis - 50%) 19.8 22.5 44.5 20.3 22.7 44.4
----------------
Group total 295.5 268.6 646.2 295.4 263.1 642.5
----------------
Gold 000 ounces 000 ounces 000 ounces 000 ounces 000 ounces 000 ounces
Los Pelambres 19.6 15.4 43.1 20.5 15.2 42.3
Centinela 66.7 58.4 133.7 58.4 58.4 132.3
----------------
Group total 86.2 73.8 176.8 78.9 73.6 174.6
----------------
Molybdenum 000 tonnes 000 tonnes 000 tonnes 000 tonnes 000 tonnes 000 tonnes
Los Pelambres 3.4 2.7 7.2 3.7 2.7 6.8
Centinela 1.5 1.3 2.4 1.5 1.2 2.4
----------------
Group total 4.9 4.0 9.6 5.2 3.9 9.2
----------------
Silver 000 ounces 000 ounces 000 ounces 000 ounces 000 ounces 000 ounces
Los Pelambres 670.2 568.2 1,603.8 633.3 548.2 1,562.9
Centinela 633.2 544.6 1,212.1 589.3 537.9 1184.2
----------------
Group total 1,303.4 1,112.8 2,815.9 1,222.6 1,086.1 2,747.1
----------------
b) Cash costs per pound of copper produced and realised prices
per pound of copper and molybdenum sold
Net Cash costs Realised prices
Six Six Six Six
months months Year months months Year
ended ended ended ended ended ended
30.06.2023 30.06.2022 31.12.2022 30.06.2023 30.06.2022 31.12.2022
$/lb $/lb $/lb $/lb $/lb $/lb
Copper
Los Pelambres 1.17 1.32 1.10 3.97 3.94 3.76
Centinela 1.88 1.98 1.75 4.01 4.22 3.89
Antucoya 2.72 2.50 2.50 4.01 4.34 3.95
Zaldivar (attributable basis
- 50%) 2.96 2.14 2.39 - - -
Group weighted average (net
of by-products) 1.75 1.82 1.61 3.99 4.13 3.84
Group weighted average (before
deducting by-products) 2.48 2.37 2.19
Group weighted average (before
deducting by-products and excluding
treatment & refining charges
from concentrate) 2.32 2.25 2.05
Cash costs at Los Pelambres
comprise:
On-site and shipping costs 1.82 1.85 1.66
Treatment & refining charges
for concentrates 0.22 0.17 0.18
Cash costs before deducting
by-product credits 2.04 2.02 1.84
By-product credits (principally
molybdenum) (0.87) (0.70) (0.74)
Cash costs (net of by-product
credits) 1.17 1.32 1.10
Cash costs at Centinela comprise:
On-site and shipping costs 2.65 2.54 2.29
Treatment & refining charges
for concentrates 0.17 0.14 0.15
Cash costs before deducting
by-product credits 2.82 2.68 2.44
By-product credits (principally
gold) (0.94) (0.70) (0.69)
Cash costs (net of by-product
credits) 1.88 1.98 1.75
LME average copper price 3.95 4.43 4.23
Gold $/oz $/oz $/oz
Los Pelambres 2,022 1,930 1,785
Centinela 1,978 1,891 1,806
Group weighted average 1,989 1,899 1,801
Market average price 1,932 1,873 1,800
Molybdenum $/lb $/lb $/lb
Los Pelambres 25.3 18.1 20.9
Centinela 24.1 17.7 20.5
Group weighted average 25.0 18.0 20.8
Market average price 27.1 18.7 18.7
Silver $/oz $/oz $/oz
Los Pelambres 25.2 23.5 21.2
Centinela 24.6 23.4 21.1
Group weighted average 24.9 23.5 21.2
Market average price 23.4 23.3 21.8
Notes to the production and sales statistics
(i) For the Group's subsidiaries, the production and sales
figures reflect the total amounts produced and sold by the mine,
not the Group's share of each mine. The Group owns 60% of Los
Pelambres, 70% of Centinela and 70% of Antucoya. For the Zaldívar
joint venture, the production and sales figures reflect the Group's
proportional 50% share.
(ii) Los Pelambres produces copper and molybdenum concentrates,
Centinela produces copper concentrate, 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 2023, published on 19 July 2023.
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END
IR SSIFAUEDSEIA
(END) Dow Jones Newswires
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