Strong end to a tough year for Antofagasta

Antofagasta was looking at a strong end to a tough year, as it updated the market on its fourth quarter on Wednesday.

The FTSE 100 mining firm saw is copper production rise by 8.2% in the three months to 31 December 2015, to 169,900 tonnes.

Antofagasta said the increase was primarily driven by higher production at its Los Pelambres and Centinela Concentrates facilities and the contribution from new production at Antucoya and Zaldivar.

Group copper production for the full year was down by 10.6%, however, to 630,300 tonnes, which the company blamed mainly on lower production overall at Los Pelambres and Centinela.

Antofagasta's gold production for the quarter was 55,700 ounces - a 21.8% increase on the previous quarter - as grades increase in Centinela towards the end of the year.

Gold production for the year was down to 213,900 ounces, from 270,900 ounces in 2014, which the company said mainly reflected lower grades at Centinela in the second half of the year.

Molybdenum production at Los Pelambres was 10,100 tonnes in 2015, compared to 7,900 tonnes in 2014, which the firm said was due to a new, higher grade phase of the pit being mined.

"Whilst we have finished the year on a good note, 2015 has been undeniably difficult", said Antofagasta CEO Diego Hernandez.

"The continued deterioration of the macro-environment and associated falling commodity prices combined with several operational setbacks resulted in copper production declining 11% year-on-year and cash costs before by-product credits declining by 1% to $1.81/lb (£1.26/lb)", he added.

The company's net cash costs were $1.38/lb in the fourth quarter, down 2.8% compared with the previous quarter, due to higher gold and molybdenum prices offset by lower realised prices.

Its net cash costs for the year were $1.50/lb, 4.9% higher than 2014, as lower realised by-product prices and lower gold production outweighed the lower cash costs before by-product credits.

"Looking to 2016, we are focused on operational excellence and improving productivity across all our mines in order to maintain a tight control on costs", said Hernandez.

"We will benefit from growth at Antucoya and Centinela Concentrates and we will have a full year of production from Zaldivar."

Antofagasta said group cash cost before by-product credits in 2016 were expected to reduce by nearly 9% compared to 2015 to $1.65/lb, and net cash cost to fall 10% to $1.35/lb, as production increased and further savings were achieved.