RESPONDING TO A CHALLENGING YEAR
Antofagasta plc CEO Diego Hernández said:
“Each of our mines continued to generate cash flow at the operating level despite the exceptionally challenging operating environment. The year was one of change and the Group has emerged stronger, more focussed on its core business and operating at significantly lower costs.
“During the year we started production at the Antucoya mine, sold the water division and purchased 50% of the Zaldívar copper mine while closing our oldest operation, Michilla. Now, in 2016 we expect our net cash costs to return to levels we have not seen since 2012. Combined with our healthy balance sheet we will be in a better position to weather the current market conditions.
“We know that copper is a cyclical industry and as a result of the actions that we have taken over the past year we will be positioned to benefit from the recovery when it comes. In the meantime, our focus is on optimising our operations and projects under construction to cut costs and free-up cash flow whilst retaining the flexibility to accelerate investment for future growth if circumstances are appropriate.”
HIGHLIGHTS
Financial performance
- Revenue 34.0% lower at $3,394.6 million, with realised copper prices falling almost 24% during the period and sales volumes down by 9.5%, following a challenging year for the Group.
- Operating cost savings of $245 million, higher than targeted reducing unit cash costs by 11c/lb and mining division operating costs by 8%.
- EBITDA from continuing operations fell 58.4% to $890.7 million, as revenues declined.
- Net earnings from continuing operations fell to $5.5 million, from $422.4 million following lower prices and, lower taxes and minority interests. Including the profit from the water division net earnings were $608.2 million.
- Consistent with the Group’s dividend policy, 35% minimum payout achieved. Given the 3.1 cents per share interim dividend and the minimum payout of full year earnings policy, the Board is not recommending a final dividend.
- Cash flow from operations decreased by 65.8% to $858.3 million, compared with $2,507.8 million in 2014.
- Capital expenditure for the year was $1,048.5 million, $591.8 million lower than in 2014 and some $250 million less than originally planned driven by savings identified to protect cash flow.
- Attributable net debt at the end of 2015 was $525.4 million from a net cash position of $315.4 million at the end of the previous year, following the acquisition of a 50% interest in the Zaldívar mine.
Operational performance
- Safety, tragically during the year a fatality occurred as result of a rockfall at Michilla, despite improved performance across all operations.
- Copper production of 630,300 tonnes, 10.6% lower than in 2014, primarily due to lower production at Los Pelambres and Centinela.
- Group cash costs before by-product credits of $1.81/lb, 1.1% lower than last year as the benefit of the weaker Chilean peso, cost savings and lower input prices were substantially offset by the impact on unit costs of lower production.
- Group net cash costs slightly higher than expected at $1.50/lb, 4.9% higher than the same period last year as lower realised by-product prices and lower gold production outweighed the lower cash costs before by-product credits.
Outlook for 2016
- Synergies being captured at Zaldívar as it is integrated into the Group’s corporate functions together with costs savings during the year expected to reach $15-20 million on an annualised basis.
- Further $160 million of savings targeted in 2016, equivalent to 8% of 2015’s net cash costs.
- Sustaining and development capital expenditure is expected to decrease by $260 million in 2016, as no new projects started and capital costs reduced or deferred. However, capitalised stripping increasing by $200 million at Centinela.
- Antucoya to reach design capacity by mid-2016 of 85,000 tonnes of copper cathode per annum
- Balanced capital structure. Following the acquisition of Zaldívar some 50% of the purchase price will be financed with a corporate loan to preserve the Group’s financing flexibility.
| YEAR ENDING 31 DECEMBER | 2015 | 2014 | % | |
|---|---|---|---|---|
| Group revenue | $m | 3,394.6 | 5,145.6(1) | (34.0)% |
| EBITDA(2) | $m | 890.7 | 2,141.4(1) | (58.4)% |
| Earnings per share | Cents | 0.6 | 42.8(1) | (98.6)% |
| Earnings per share including discontinued operations | Cents | 61.7 | 3.8 | 1,524% |
| Dividend per share | Cents | 3.1 | 21.5 | (85.6)% |
| Cash flow from operations | $m | 858.3 | 2,507.8 | (65.8)% |
| Attributable net debt/(cash) at period end(3) | $m | 525.4 | (315.4) | -- |
| Average realised copper price | $/lb | 2.28 | 3.00 | (24.0)% |
| Copper sales | kt | 635.9 | 703.0 | (9.5)% |
| Gold sales | koz | 219.2 | 267.4 | (18.0)% |
| Molybdenum sales | kt | 9.9 | 8.2 | 20.7% |
| Cash costs before by-product credits(4) | $/lb | 1.81 | 1.83 | (1.1%) |
| Net cash costs(4) | $/lb | 1.50 | 1.43 | 4.9% |
(1) Restated to exclude the results from discontinued operations (the water division) for the period
(2) EBITDA refers to Earnings Before Interest, Tax, Depreciation and Amortisation and is defined and reconciled to operating profit in Note 3 to the preliminary results.
(3) Attributable net debt/cash refers to the net of attributable debt to the Group and total of cash, cash equivalents and liquid investment, as analysed in Note 26 to the preliminary results below.
(4) Cash costs are a measure of the cost of operational production expressed in terms of cents per pound of payable copper produced, and are defined and reconciled to operating costs in Note 31 to the preliminary results announcement.
Investors – London
Andrew Lindsay
alindsay@antofagasta.co.uk
Paresh Bhanderi
pbhanderi@antofagasta.co.uk
Telephone: +44 20 7808 0988
Investors – Santiago
Alfredo Atucha
aatucha@aminerals.cl
Telephone: +56 2 2798 7000
Media – London
Carole Cable
antofagasta@brunswickgroup.com
Will Medvei
antofagasta@brunswickgroup.com
Telephone: +44 20 7404 5959
Media – Santiago
Pablo Orozco
porozco@aminerals.cl
Telephone: +56 2 2798 7000
Download PDF (1MB)