VANCOUVER (miningweekly.com) – London-listed base metals miner Antofagasta has reported a 3% decline in profit for the six months ended June, despite a 24.7% reduction in operating costs offsetting the decline in the copper price and lower sales volumes, the miner said Tuesday.

Antofagasta reported a net profit of $88.1-million for the first six months of the year, compared with $706-million in the same period a year earlier, when it benefited from a $620-million gain on proceeds from the sale of its water division.

Revenue fell 18.5% year-on-year to $1.45-billion in the first half as a result of lower copper prices and sale volumes, as well as the closure of its Michilla mine at the end of last year. However, earnings before interest, taxes, depreciation and amortisation, a metric that gives investors a glimpse of the company’s core financial performance, rose 2.3% year-on-year to $572-million, boosted by declining costs.

Antofagasta reaffirmed that it expected to meet the lower end of its full-year guidance at 710 000 t to 740 000 t copper, up nearly 13% when compared with 630 000 t produced in 2015. This was mainly owing to the ramp up of its Antucoya project, which started commercial production in the previous quarter, and the purchase of a 50% stake in the Chilean Zaldivar mine, in December.

Unit costs were expected to be $0.05/lb lower with cash costs before by-product credits of $1.60/lb and net cash costs of $1.30/lb. Production for the year was weighted to the second half of the year with the completion of the Centinela concentrates expansion and Antucoya, as well as an increase in grade at Centinela.

"Given the current economic uncertainty, we are cautious in our outlook and remain conservative in our approach to managing capital," said Antofagasta CEO Iván Arriagada.

Antofagasta also lowered its full-year spending budget, slashing its capital expenditure by $276.9-million to $385.4-million in its first half from a year earlier, noting that full-year spending would be lower than original guidance.

It advised that there had been few cuts in mine production so far this year, which reflected the industry’s continued success in reducing costs and the strengthening of the copper price. It cautioned that, only if prices weakened to $2/lb or below with conviction, could further supply cuts be expected, but that in the meantime supply surpluses were forecast until at least 2018, as demand growth was forecast to remain modest. The outlook beyond 2018 looked stronger, when the market was expected to go into deficit.

The company declared an interim dividend of $0.031 a share, unchanged from last year.

Antofagasta’s LSE-listed stock rose nearly 10% on Tuesday to £5.65 apiece.