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VANCOUVER (miningweekly.com) – London-listed and Chile-focused base metals miner Antofagasta has reported lower-than expected copper output for the fourth quarter, as lower output at Centinela offset higher production at Los Pelambres and the ramp-up of the Encuentro Oxides project.
For the three months to December 31, Antofagasta produced 177 800 t of copper – 1.3% less than in the prior quarter. For the full 2017, Antofagasta produced 704 300 t of red metal, which was in line with guidance and 0.7% lower than in 2016.
This, the company advised, was owing to the impact of the expected lower grades at Los Pelambres and Centinela, which was offset by Encuentro Oxides coming into production in October and following the completion of the ramp-up at Antucoya in 2016.
Gold output totalled 40 500 oz in the fourth quarter – 32% lower than in the prior period, as lower grades and recoveries at Centinela weighed on production. For the full year, production was 212 400 oz – 21.6% lower than in 2016, again reflecting lower grades and recoveries at Centinela.
Antofagasta also produced 3 300 t of molybdenum in the quarter and 10 500 t for the full year, 47.9% more than in the previous year as a result of higher grades.
Cash costs before by-product credits were $1.69/lb, 8.3% higher than in the third quarter, owing to the one-off signing bonus payable following the successful completion of labour negotiations at Centinela and the expected lower grades at Centinela Concentrates.
Cash costs before by-product credits for the full year were $1.60/lb, 6c/lb higher than last year owing to a decline in grades at Los Pelambres and Centinela, higher input prices and a stronger local currency.
STABLE OUTLOOK
For this year, Antofagasta expects to produce between 705 000 t and 740 000 t of copper, between 190 000 oz and 210 000 oz of gold and between 11 500 t and 12 500 t of molybdenum. Copper output is weighted towards the second half of the year, the company advised.
Copper grades are expected to decrease to 0.52% at Centinela Concentrates and Encuentro Oxides will operate at capacity for the full year, Antofagasta said.
Group cash costs before and after by-product credits are expected to be $1.65/lb and $1.35/lb, respectively, this year.
Antofagasta will spend about $1-billion on its capital programmes, including on the Los Pelambres incremental expansion project, which will add 55 000 t/y of copper once in full operation. The project is expected to be presented to the board for approval during the year, once the environmental-impact assessment has been approved and start-up is expected in 2021. Sustaining capital expenditure will increase this year owing to the concentration of mine equipment replacement and tailings dam expenditure.
"Our disciplined approach to capital allocation has allowed the group to continue to invest in profitable tonnes throughout the cycle. The new additions to our portfolio at Zaldívar, Antucoya and Encuentro Oxides now account for 25% of group production, helping offset declines at our mature assets and providing Antofagasta with a platform for growth as copper prices recover," CEO Iván Arriagada said.
The company's LSE-listed stock fell 2.6% to an intra-day low of 944.2p.