Antofagasta (LON:ANTO) have given shareholders a steady update regarding their quarterly activity.
The mining titan said that it had been hit by drought and political uncertainty, however the firm has managed got combat these.
Fourth quarter copper production totaled 185,500 tonnes, which saw a 5.8% decline from the third quarter.
Antofagasta said that this was due to planned lower grades and maintenance at their Centinela mine, combined with strikes at Antucoya and fuel delivery disruption at Los Pelambres due to social unrest in Chile.
In 2019, the firm saw copper production of 770,000 tonnes, which hit a new company record at the top end of guidance, which notably saw a 6.2% rise from the 2018 figure.
The firm had cut their guidance in November due to political unrest which hindered operations, as guidance was lowered to 750,000 tonnes to 770,000 tonnes off copper, from 750,000 tonnes to 790,000 tonnes before.
Looking at gold production, Antofagasta noted that this sector fell 28% quarterly to 55,600 ounces due to lower grades at Centinela.
Molybdenum production in the fourth-quarter was 2,300 tonnes, down 21% on the previous quarter, and annual production fell 15% to 11,600 tonnes.
Net cash costs for 2019 were $1.22, which was 5.4% lower than the year before and slightly below guidance which was something for shareholders to note.
Speculating for the next year, the firm said that copper production can be expected to be in the range of 725,000 tonnes to 755,000 tonnes in 2020, as previously guided. Gold output is guided between 180,000 ounces and 200,000 ounces and 12,500 tonnes to 14,000 tonnes off molybdenum.
Did Antofagasta take their chance?
Antofagasta plc CEO, Iván Arriagada said:
“2019 was a good year operationally for Antofagasta. We had record copper production of 770,000 tonnes, at the top end of our revised guidance, and improved cash costs of $1.22/lb. I am also pleased to report that there were no fatalities during the year, a target we remain focused on as our top priority.
“We expect a solid performance from the Group in 2020 as we continue to focus on improving the operating efficiency of our mines, enter into labour negotiations at Centinela and Zaldivar, and continue to optimise water usage across the Group and particularly at Los Pelambres. We will also complete the Centinela Second Concentrator feasibility study and continue to invest in our growth projects including the Los Pelambres expansion, the Esperanza Sur pit and the Zaldivar Chloride Leach project. Production is expected to be 725-755,000 tonnes of copper at a net cash cost of $1.30/lb.”
“Following the civil unrest in Chile last year and the disruption of supplies at Los Pelambres, all of our mining operations have been operating in line with their respective plans, although the Transport division has had some interruptions due to occasional road blockages in the city of Antofagasta.
“Our purpose remains robust – developing mining for a better future – and this means making decisions with the understanding that our activities make an important contribution to developing the world of the future while also providing societal benefits to our host countries and local communities. In line with this, and following a practice we introduced some years ago, we recently increased the minimum wage for our employees and contractors to a level that is now two thirds higher than the national minimum wage”.
Political Unrest
In October, the firm faced a production disruption after tough political conditions outlined in their third quarter update.
The strikes disrupted their copper production line, and as a result 15 people died.
Antofagasta said that the disruption could cause problems in their supply chain and prevent workers getting to site, with the potential to lower output by about 5,000 tonnes.
The union of national copper miners, Codelco were expected to join today’s general strike which would give huge backing to the demonstrations.
Antofagasta operates four mines in Chile, with its flagship Los Pelambres project located 240km north-east of the capital.
Production guidance is cut
One week on from the political strikes, Antofagasta cut their annual production guidance.
The FTSE 100 listed firm doubled its production cut to 10,000 tonnes pointing to a bigger hit from the workers’ protests.
The firm also added that its mines in the South American country have resumed operations. In addition, labour negotiations at the Antucoya mine have been successfully concluded, Antofagasta said.
This has resulted in the end of the strike which started on October 16, but not before 4,000 tonnes copper output was lost.
For 2019 as a whole, the London-based firm now expects production of between 750,000 and 770,000 tonnes. This is lower than the 750,000 to 790,000 tonnes forecast given previously.
In 2018, total copper production totaled to 725,300 tonnes which shows little progress year on year.
Antofagasta have certainly had a tough year, but the firm have shown their resilient nature to bounce back and produce results in testing waters.
Shares in Antofagasta trade at 921p (-2.99%). 22/1/20 9:47BST.
