Antofagasta Earnings Rise On Copper, Gold Volumes; Costs Up

May 17, 2012 LONDON (Dow Jones)--London-listed Chilean miner Antofagasta PLC (ANTO.LN) Thursday said first-quarter earnings rose, largely due to higher copper volumes which more than offset higher costs.

Earnings before interest, taxes, depreciation and amortization, or Ebitda, rose 35% on the year to $1.1 billion after revenue rose 39% to $1.76 billion.

Antofagasta is among the few copper miners that have managed to increase copper production at a time when maturing deposits and declining ore grades have made it difficult for copper producers to expand output in line with growing demand. But the miner has suffered production setbacks at its relatively new Esperanza mine as well as at its Los Pelambres mine, which prompted the company's board to seek a new chief executive to shepherd the company through its next growth phase.

It's currently being run by major shareholder and chairman Jean-Paul Luksic, until a new CEO has been selected.

Antofagasta benefited in the first quarter from a 26% on-year rise in copper production to 162,900 tons, largely driven by the ramp up of its Esperanza gold and copper mine. Sales volume reached 158,700 tons, the difference between output and sales being attributed to the timing of shipping and loading schedules.

Gold output nearly trebled on-year to 63,500 troy ounces from 22,100 oz due to the ramp-up of the Esperanza mine, contributing to sales volume that was 100,000 oz less than output.

Antofagasta said that, while the average-achieved copper price was broadly flat on-year in the first quarter, it booked a positive provisional adjustment of $181 million since the final achieved sale price upon delivery was higher than the provisional price set for the copper sale when it was first shipped.

Antofagasta said that the average first quarter gold price was 22% higher on-year at $1,690.9/oz. It also noted that the achieved first quarter sale price was slightly higher at $1,703.5/oz, resulting in a positive provisional adjustment during the first quarter.

The higher revenues were partly offset by increased operating costs. Antofagasta's weighted average cash cost for the group, excluding credits from the sale of by-products such as gold and molybdenum and tolling charges rose to $1.512 a pound from $1.408 a pound a year ago.

The increase mainly reflected the impact of higher Esperanza output, where pre-credit costs were above the average of the other operations and to a lesser extent higher costs at its Los Pelambres and Michilla mines.

At the end of March, Antofagasta's cash and cash equivalents position rose 8.2% on quarter to $3.29 billion and its total borrowings dropped 3.8% on quarter to $2.06 billion.

Antofagasta shares closed Wednesday up 0.9% at 1,012 pence a share resulting in a market capitalization of GBP9.98 billion. The company's shares are down 16.7% since the beginning of the year.