Production figures fuel Antofagasta’s climb

FTSE 100 miner Antofagasta (LON:ANTO) saw its share price rise by 4.32% to 762.40p (as of 10:50 BST) after reporting that gold and copper production was up in the first quarter. Net cash costs also decreased, partly due to a weaker Chilean Peso. Management said that they had taken steps to slow the spread of infection and production guidance for the full year is dependent on how the pandemic situation continues to develop.

CEO Iván Arriagada commented: “Antofagasta´s top priority has always been the safety and health of our workforce and communities. Since the outbreak of COVID-19 we have implemented multiple measures to prevent the spread of infection across our operations and launched a $6 million fund to support the communities we work in. We are also working alongside government to deliver a coordinated response and we review the situation daily to ensure we are responding effectively to health, operational and financial concerns. We are committed to operating safely, providing employment, supporting our suppliers and contributing to the economic and social recovery of Chile.

“Although we are currently operating with about two-thirds of our workforce on-site in line with our preventative health measures, this has so far had a limited impact on production. Indeed, in Q1 2020 copper production was 194,000 tonnes, 4.6% higher than in the previous quarter, and net cash costs were $1.10/lb, some 27c/lb lower because of the weaker Chilean peso, higher production and tighter cost control. We expect that for the foreseeable future we will need to maintain and continue to evolve the precautionary health measures we have adopted, including social distancing, revised personal protective equipment, increased teleworking and other health related changes. Because of these and other actions we have taken we now expect copper production to be towards the lower end of the original 725-755,000 tonnes guidance range, assuming our mining operations are not required to shut down temporarily.

“Capital expenditure for the year is now expected to be less than $1.3 billion, that is at least $200 million lower than our original guidance of $1.5 billion due to the temporary suspension of the Los Pelambres Expansion project, the deferral of sustaining and other growth capital expenditure, lower mine development and a weaker Chilean peso.

“We have a solid balance sheet with $2.5 billion of cash which put us in a strong position to confront this unprecedented situation of operational uncertainty and lower copper price environment. We are expanding our Cost and Competitiveness Programme and continue to review all expenditure to preserve our financial strength while operating safely and efficiently“.