News & Analysis » UK

Antofagasta: December Quarter Production Figures in Line

Contributed by Fox-Davies Capital

Antofagasta announced its December quarter production figures. The group produced 1,293.8kt of copper, 2.7kt of molybdenum and 86.4koz of gold for the quarter. The weighted average cash cost per pound, before by-product credits was US171.6c and after credits US113.5c. This took production for the 2012 year to 709.6kt of payable copper, 12.2kt of payable molybdenum and 299.9koz of payable gold.

The quarter was a bit better than our expectations from a production point of view. This was due to the higher mill throughputs at both Los Pelambres and Esperanza. However, cash costs blew out by 9% on a quarter on quarter basis due to higher levels of maintenance, labour costs and increased mine movement.

Production guidance for 2013 was given on a mine by mine basis. In total, the forecast is for the production of 700kt of copper, 8kt of molybdenum and 260koz of gold. Whilst this may have disappointed some, the truth is that both Los Pelambres and Esperanza had been processing ore grading above reserve grade and in time mill feed grades had to drop. Although grades have dropped for 2013, they are still above reserve grade at both mines.

A bigger disappointment was the cash cost guidance for 2013.This has been guided to approximately USc185/lb before by-product credits, a rise of 13.6% over 2012. The factors behind the increasing costs are higher energy prices, lower grades and increases in mine movement.