Antofagasta share price: Miner posts results after ‘challenging year’

on Mar 15, 2016
Updated: Oct 21, 2019

Antofagasta (LON:ANTO) has become the latest blue-chip miner to reveal the impact of lower commodity prices on its performance. The company posted a 34-percent fall in full-year revenue this morning and said that it had decided not to recommend a final dividend.

**Highlights from Antofagasta’s statement:**
· Revenue 34.0% lower at $3,394.6 million, with realised copper prices falling almost 24% during the period and sales volumes down by 9.5%, following a challenging year for the Group.
· Operating cost savings of $245 million, higher than targeted reducing unit cash costs by 11c/lb and mining division operating costs by 8%.
· EBITDA from continuing operations fell 58.4% to $890.7 million, as revenues declined

· Net earnings from continuing operations fell to $5.5 million, from $422.4 million following lower prices and, lower taxes and minority interests. Including the profit from the water division net earnings were $608.2 million.
· Consistent with the Group’s dividend policy, 35% minimum payout achieved. Given the 3.1 cents per share interim dividend and the minimum payout of full year earnings policy, the Board is not recommending a final dividend.
· Cash flow from operations decreased by 65.8% to $858.3 million, compared with $2,507.8 million in 2014.
· Capital expenditure for the year was $1,048.5 million, $591.8 million lower than in 2014 and some $250 million less than originally planned driven by savings identified to protect cash flow.
· Attributable net debt at the end of 2015 was $525.4 million from a net cash position of $315.4 million at the end of the previous year, following the acquisition of a 50% interest in the Zaldívar mine.
Outlook for 2016
· Synergies being captured at Zaldívar as it is integrated into the Group’s corporate functions together with costs savings during the year expected to reach $15-20 million on an annualised basis.
· Further $160 million of savings targeted in 2016, equivalent to 8% of 2015’s net cash costs.
· Sustaining and development capital expenditure is expected to decrease by $260 million in 2016, as no new projects started and capital costs reduced or deferred. However, capitalised stripping increasing by $200 million at Centinela.
· Antucoya to reach design capacity by mid-2016 of 85,000 tonnes of copper cathode per annum
· Balanced capital structure. Following the acquisition of Zaldívar some 50% of the purchase price will be financed with a corporate loan to preserve the Group’s financing flexibility.
Antofagasta plc CEO Diego Hernández said:
“Each of our mines continued to generate cash flow at the operating level despite the exceptionally challenging operating environment. The year was one of change and the Group has emerged stronger, more focussed on its core business and operating at significantly lower costs.
“During the year we started production at the Antucoya mine, sold the water division and purchased 50% of the Zaldívar copper mine while closing our oldest operation, Michilla. Now, in 2016 we expect our net cash costs to return to levels we have not seen since 2012. Combined with our healthy balance sheet we will be in a better position to weather the current market conditions.
“We know that copper is a cyclical industry and as a result of the actions that we have taken over the past year we will be positioned to benefit from the recovery when it comes. In the meantime, our focus is on optimising our operations and projects under construction to cut costs and free-up cash flow whilst retaining the flexibility to accelerate investment for future growth if circumstances are appropriate.”
As of 07:16 GMT, Tuesday, 15 March, Antofagasta plc share price is 537.50p.