Antofagasta shares gained 0.3% to 1,050p in late morning trading on Wednesday following a reported 6.5% fall in copper production to 129,800 tonnes.
The decline was linked to the Antofagasta’s previously announced concentrate pipeline incident at Los Pelambres, which reduced reported production by approximately 23,000 tonnes.
The pipeline resumed operation by the end of Q2, with 12,000 tonnes of copper concentrates stockpiled at the concentrator plant scheduled to by moved to the port by October.
Antofagasta confirmed a HY1 copper production fall of 25.7% to 268,000 tonnes as a result of the Los Pelambres incident and drought in the region, and expected lower grades at Centinela concentrates.
The firm reported a 7.8% slide in gold production to 35,4000 ounces in Q2 against Q1, and a HY1 decline of 38.8% to 73,800 ounces on the back of expected lower grades at Centinela.
The mining group also highlighted a Q2 Molybdenum production of 2,000 tonnes, remaining flat compared to Q1, with a year-to-date production drop of 31% due to lower throughput and grades at Los Pelambres.
Meanwhile, net cash costs were reported at $1.90 per pound in Q2 and $1.82 per pound for HY1, against $1.75 per pound in the previous quarter and $1.14 in HY1 2021.
Antofagasta attributed the growth to a rise in cash costs before by-product credits and slightly lower by-product credits on the back of lower by-product production, partially offset by a climb in realised prices.
The company noted its Los Pelambres project was 82% complete at the close of Q2, and its desalination plant is currently scheduled for completion in Q4 2022, with its concentrator plant expansion set to finish in early 2023.
“In the first half of 2022 we produced 268,600 tonnes of copper at a net cash cost of $1.82/lb,” said Antofagasta CEO Iván Arriagada.
“Reduced production levels and higher costs compared to last year reflect the expected impact of the drought and the temporary closure of the concentrate pipeline at Los Pelambres in June, as well as lower grades at Centinela Concentrates.”
FY 2022 outlook
Antofagasta revised its FY copper guidance downwards to 640,000 to 660,000 tonnes, reflecting the Los Pelambres pipeline incident and uncertainty linked to water shortages at the project.
The firm said it expected a net cash cost guidance increase to $1.65 per pound due to increases in diesel and other output prices.
“Following the pipeline incident at Los Pelambres, and the continued uncertainty about water availability, full year copper production is now expected to be 640-660,000 tonnes,” said Arriagada .
“The impact of this and the high current levels of inflation are partially offset by the weakening of the Chilean peso and we now estimate full year net cash cost guidance at $1.65/lb.”
Antofagasta confirmed an anticipated capital expenditure for the FY period of $1.9 billion.