Antofagasta lowers FY copper guidance

Mining giant Antofagasta lowered full-year copper guidance on Wednesday after Q2 production levels dropped and costs increased as a result of a drought in Chile, the temporary shuttering of its concentrate pipeline at Los Pelambres, and lower grades at Centinela Concentrates.

Antofagasta produced 129,800 tonnes of copper in the second quarter, down 6.5% quarter-on-quarter, mainly due to the aforementioned concentrate pipeline incident, while gold production slipped 7.8% to 35,400 ounces and molybdenum production was 2,000 tonnes, the same as the previous quarter.

For the first half, Antofagasta said it produced 268,600 tonnes of copper at a net cash cost of $1.82 per pound, while gold production slumped 38.8% to ounces, mainly due to expected lower grades at Centinela, and year-to-date molybdenum production sunk 31% to 4,000 on the back of lower throughput and grades at Los Pelambres.

Looking ahead, Antofagasta said full-year copper production had been revised downwards to 640,000-660,000 tonnes, mainly reflecting the impact of the pipeline incident and "continued uncertainty" arising from the water shortage at Los Pelambres.

Antofagasta stated cash costs before by-product credits in the quarter were $2.40 per pound, $0.06 higher than in the first quarter, while for H1 as a whole, cash costs came to $2.37 per pound - a 37% year-on-year increase year, mainly due to the temporary decrease in production and higher input prices, particularly for diesel and sulphuric acid. Net cash costs were $1.90 per pound in Q2 and $1.82 per pound for H1.

The FTSE 100-listed firm added that with increases in diesel and other input prices, it had also increased net cash cost guidance to $1.65 per pound, assuming market consensus estimates of by-product prices and the Chilean Peso exchange rate can be achieved for the rest of 2022.

Reporting by Iain Gilbert at Sharecast.com