Antofagasta Plc achieves 12% increase in quarterly output

Antofagasta Plc (LON:ANTO) has announced its Q4 2024 production report.

Antofagasta plc CEO, Iván Arriagada said: “This was another sequentially stronger quarter for the Company, with copper production higher across all operations. Our solid performance on costs, at a time of rising costs in the copper industry, demonstrates the importance of our Competitiveness Programme.

“Our key development projects at Los Pelambres and Centinela continue to advance according to their respective programmes, on time and budget. Once completed, these projects will deliver industry-leading copper growth, whilst also increasing competitiveness and delivering a solid platform for further growth over the longer term.

“Full year production guidance for 2025 is expected to be between 660,000 and 700,000 tonnes, and we expect a reduction in net cash costs, and capital expenditure of $3.9 billion as we continue to invest for growth and development.

“Copper remains the key critical mineral for the energy transition, global economic growth and energy security, as it plays such a fundamental role in the generation, transmission and storage of electricity. As a pure play copper producer in Chile, we are well positioned to supply this growing demand.”

(1)  Cash cost is a non-GAAP measure used by the mining industry to express the cost of production in US dollars per pound of copper produced.

HIGHLIGHTS

PRODUCTION

·    Copper production in Q4 2024 was 200,300 tonnes, 12% higher on a quarter-on-quarter basis, driven by increased production at all operations, particularly Centinela Concentrates.

·    Copper production in FY 2024 was 664,000 tonnes, 1% higher on a year-on-year basis, reflecting higher production at Centinela Cathodes and Los Pelambres, offset by lower grades at Centinela Concentrates.

·    Gold production in Q4 2024 was 68,200 ounces, 32% higher on a quarter-on-quarter basis, following higher gold grades at Centinela Concentrates. Gold production in full year 2024 decreased by 11% to 186,900 ounces, reflecting lower grades at Centinela Concentrates.

·    Molybdenum production in Q4 2024 was 2,800 tonnes, 4% higher than Q3 2024. Full year 2024 molybdenum production was 10,700 tonnes, in line with the prior year.

CASH COSTS

·    Cash costs before by-product credits in Q4 2024 were 14% lower at $2.01/lb, driven by higher production at Centinela Concentrates and Los Pelambres. Full year cash costs before by-product credits were 3% higher at $2.37/lb, following lower copper grades at Los Pelambres.

·    By-product credits in Q4 2024 were 78c/lb (Q3 2024: 71c/lb), primarily because of higher gold production. Full year by-product credits were 73c/lb, a 4% increase year-on-year.

·    Net cash costs in Q4 2024 were $1.23/lb, 24% lower than Q3 2024, with this movement primarily resulting from lower underlying cash costs and stronger by-product credits. Full year net cash costs were 2% higher on a year-on-year basis at $1.64/lb, with this reflecting movements in the underlying cash costs.

GROWTH AND DEVELOPMENT PROJECTS

·    Centinela Second Concentrator: Full construction activities continued during Q4 2024, with work continuing to progress in line with expectations and on budget, including the camp facilities, ore delivery system, concentrator and tailings facility. Foundation works and the installation of concrete at the site of the primary crusher have commenced, in addition to continued work to pour concrete and earthworks at the planned concentrator and tailings facility. Key equipment continues to be shipped to Chile on schedule.

·    Los Pelambres: Construction of the new concentrate pipeline continued in line with expectations and on budget in Q4 2024, with trench excavation work underway and the welding of pipe sections. Following a successful mobilisation of personnel and equipment during 2024, construction work to double capacity of the Company’s desalination plant is expected to commence in Q1 2025, in line with the project schedule.

·    The Company filed the Environmental Impact Assessment for the Los Pelambres Development Options Project in December 2024, in line with expectations. This project is a mine life extension beyond 2035, adding a minimum of 15 additional years by increasing the capacity of the El Mauro tailings facility, in addition to options to further increase the capacity of the processing plant and existing desalinated water facility.

GUIDANCE

·    As previously announced, total full year Group copper production in 2025^[1] is expected to be between 660,000 and 700,000 tonnes, with an incremental gain in production at Centinela Concentrates. Output of by-products is expected to be 210,000-230,000 ounces of gold and 15,000-16,500 tonnes of molybdenum.

·    Group cash costs in 2025 before by-product credits are expected to be between $2.25/lb and $2.45/lb.

·    Group net cash costs in 2025 are expected to be between $1.45/lb and $1.65/lb, with by-product credits expected to marginally increase year-on-year.

·    In 2025 consolidated Group capital expenditure, which excludes Zaldívar, is expected to be $3.9 billion, in line with prior directional guidance given in the Company’s Full Year 2023 Announcement, as development expenditure peaks on the Centinela Second Concentrator and as we advance other growth projects at Los Pelambres and Centinela during the year.

SAFETY AND SUSTAINABILITY

·    The Company achieved historical safety results in 2024 as the strong safety record continues, with no fatalities in 2024 (2023: none), and the Mining Division recorded a year-on-year decline in the frequency rates for both lost time injuries and total recordable injuries.

·    During drought conditions, a water redistribution agreement initially approved by the DGA (Chile’s water administration department) in March 2024 is expected to take effect that requires certain conditions be completed to enable Los Pelambres to extract up to 400 litres per second according to its water rights at that point of extraction. While a declaration of drought was issued on 26 July 2024, this condition was superseded by the subsequent elimination of water restrictions on extractions as water availability improved due to stronger precipitation during the year. During this time, Los Pelambres has continued to work with the local water council or JVRCH (Junta de Vigilancia Río Choapa) and the DGA to arrive at a revised agreement including a more expeditious renewal process and validation that the conditions required for taking effect have been complied with.

·    During the quarter, the Company’s Transport Division (FCAB) took delivery of a hydrogen locomotive for operation at FCAB’s yards, representing the first of its kind in South America. The locomotive is expected to start operating in 2025 and is part of the Company’s strategy to evaluate alternatives to replace diesel fuel and curb its carbon footprint.

ZALDÍVAR UPDATE

·    In relation to the previously announced claim filed by the Consejo de Defensa del Estado (CDE), an independent governmental agency that represents the interests of the Chilean state, against the Company, Minera Escondida and Albemarle due to the water extraction from the Monturaqui-Negrillar-Tilopozo aquifer, in December 2024 the parties reached a settlement agreement, which was thereafter approved by the Environmental Court in January 2025, thus putting an end to the proceeding.

·    The operation at Zaldívar has rights to mine ore and extract water until May 2025. The mine life after May 2025 is, therefore, subject to the approval of an Environmental Impact Assessment (EIA). This EIA is under review by the relevant authorities, which contemplates up to three rounds of comments and reviews.

·    Responses to the second round of comments made by government agencies in Chile were filed as planned in Q4 2024. For reference, the Company responded to the first round of comments in Q1 2024. In line with expectations, the third round of comments were received in January 2025.

·    Separate to the above EIA, under local environmental regulations, if a permit allowing continuity of operations is not favourably resolved by the current permit expiry date in May 2025, Zaldívar will be required to have in place at that time an approved temporary closure plan. In line with this eventual regulatory condition being required, the Company filed in December 2024 a temporary closure plan application with the mining authority. However, the Company’s full year guidance for 2025 is presented based on 12-months of normal operations at Zaldívar.

2025 Guidance

(1) Assumed CLP/USD exchange rate of 900.

(2) Includes by-product credits at a gold price of $2,100/oz and a molybdenum price of $19/lb.

As previously announced, Antofagasta Group production in 2025 is expected to be 660,000-700,000 tonnes of copper. Output of by-products is expected to be 210,000-230,000 ounces of gold and 15,000-16,500 tonnes of molybdenum.

In 2025, Los Pelambres will be mining an area of the pit with a different grade profile (lower copper, higher molybdenum) to historic levels. It is planned for Los Pelambres to return to historic copper and molybdenum grade profiles in 2026.

Group cash costs before by-product credits in 2025 are expected to be $2.25-2.45/lb.

Group net cash costs in 2025 are expected to be $1.45-1.65/lb, with by-product credits expected to increase year-on-year.

In 2025, consolidated Group capital expenditure, which excludes Zaldívar, is expected to be $3.9 billion. This includes approximately $1.8 billion of development capital expenditure, which is principally related to the Centinela Second Concentrator Project. Group capital expenditure is expected to decline in 2026 as development capital expenditures reduce at Centinela.