Molybdenum production surges while copper and gold fall for Antofagasta

Antofagasta posted its production report for the first quarter on Wednesday, reporting that as it expected, copper production decreased by 10.5% to 153,800 tonnes compared with the same quarter in 2017, which was mainly due to the anticipated lower grades.

The FTSE 100 miner said gold production was 32,300 ounces in the period - 39.4% lower than at the same time last year, and 20.4% lower than in the previous quarter, as grades were down at Centinela.

Molybdenum production increased by 40.9%, which was due to better grades and recoveries.

Cash costs before by-product credits in the quarter were up to $2.00/lb from $1.59/lb in the same period last year, which Antofagasta said was primarily because of lower production and a stronger Chilean Peso.

Net cash costs were $1.54/lb in the first quarter, compared to $1.27/lb a year ago and $1.36/lb in the previous quarter, which was said to reflect the changes in cash costs before by-product credits, partially offset by higher by-product credits arising from higher molybdenum production and a significant increase in the realised molybdenum price.

Guidance for the year remained unchanged.

The board said group copper production for the full year was expected to be between 705,000 and 740,000 tonnes, with production increasing quarter-by-quarter during the year as grades improved to achieve guided grades for the full year.

Net cash costs guidance stood at $1.35/lb, also unchanged, assuming no further strengthening in the Chilean peso during the balance of the year.

Antofagasta also highlighted that In February, Los Pelambres successfully completed labour negotiations with the plant union and in March with the mine union.

The one-off signing bonuses related to those three-year agreements increased Los Pelambres' cash costs by 8c/lb and group cash costs by 4c/lb for the quarter, equivalent to 2c/lb and 1c/lb on an annual basis.

Those negotiations concluded the group's scheduled negotiations for the year

“As planned and in line with budget the year has started with lower grades at our operations,” said CEO Iván Arriagada.

“During the quarter, we have also successfully concluded the labour negotiations at Los Pelambres.”