Record safety and production performance
Antofagasta plc CEO Iván Arriagada said:
“While Antofagasta emerges from 2019 with a record copper production and safety performance, a strong balance sheet and low cash costs resulting in EBITDA increasing by 9.5% to $2.4 billion, 2020 has begun with an unprecedented global challenge in the form of COVID-19. We are taking every measure possible to keep our colleagues safe and healthy, and our operations have not yet been impacted by the virus. The strength of our balance sheet, the flexibility of our cash flow due to our Cost and Competitiveness Programme and our strong safety and health culture means that the business is extremely robust in this challenging macro environment.
“During 2019, our copper production increased to a record of 770,000 tonnes while cash costs improved to $1.22/lb. The Board has declared a final dividend of 23.4 cents per share, taking our full year dividend pay-out ratio to 67%.
“Looking ahead to the rest of 2020, while we can’t predict the shape of the recovery from COVID-19, Antofagasta is in good shape. We expect to maintain our strong safety and operating performance with copper production in the range of 725-755,000 tonnes at a net cash cost of $1.30/lb, as guided previously. We are looking to reduce our expected total capital expenditure, while continuing to progress the delivery of our growth projects at Los Pelambres, Zaldívar and Centinela. We have the flexibility, with our strong cash flows and balance sheet, to remain resilient through the cycle.”
HIGHLIGHTS
Financial performance
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Revenue for the full year of $4,965 million was 4.9% higher than 2018 reflecting the increase in copper and gold sales, partially offset by the decrease in the realised copper price
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EBITDA(1) was $2,439 million, 9.5% higher than the previous year on higher revenue and lower unit costs due to grade increases at all operations, particularly Centinela Concentrates
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EBITDA margin(2) increased to 49.1% from 47.1% in 2018
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Cost and Competitiveness Programme generated savings of $132 million, outperforming the original target of $100 million
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Strong balance sheet with net debt of $563.4 million at the end of 2019, a 5.5% decrease compared to 2018, equivalent to a Net Debt/EBITDA ratio of 0.23 times
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Capital expenditure increased to $1,079 million(3), below guidance of $1,200 million and $206 million higher than in 2018 with higher capital expenditure on the Los Pelambres Expansion project
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Earnings per share from continuing operations of 50.9 cents per share, were 1.2% lower than in 2018 with higher EBITDA offset by higher depreciation and amortisation, and tax
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Final dividend of 23.4 cents per share declared, bringing the total dividend for the year to 34.1 cents per share, which amounts to $336 million, equal to a 67% pay-out of net earnings and similar to last year’s pay-out ratio
Operational performance
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Safety is our top priority. As previously announced, during 2019 the Group had its best safety performance ever with improved safety performance at all its mining and transport operations and no fatalities
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Record copper production for the full year at 770,000 tonnes, 6.2% higher than 2018 with a particularly strong performance at Centinela Concentrates
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Cash costs before by-product credits(1) for the full year were $1.65/lb, 7c/lb lower than last year due to higher production, tight cost control and the weaker Chilean peso
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Net cash costs(1) for 2019 were $1.22/lb, 5.4% lower than in 2018, due to lower cash costs before by- product credits and were below guidance
2020 Guidance
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As previously announced, production in 2020 is expected to be 725-755,000 tonnes of copper, 180- 200,000 ounces of gold and 12,500-14,000 tonnes of molybdenum. Copper production is expected to decrease as Centinela Concentrates mines through lower grade areas
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As previously announced, cash costs in 2020 before and after by-product credits are expected to be $1.70/lb and $1.30/lb respectively
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Capital expenditure in 2020 is expected to be in the range of $1.3-1.5 billion. In view of the current global situation, the expenditure programme is being reviewed to identify possible savings or deferrals
Other
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2019 was the driest year of a 10-year drought in Central Chile. Los Pelambres continues to review and optimise its water usage to ensure water availability under different drought scenarios
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Cost savings of $100 million targeted in 2020 under the Cost and Competitiveness Programme, which have been included in the unit cost guidance
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As previously announced, progress on the Los Pelambres Expansion project (engineering, procurement and construction) reached 31% as at the end of 2019
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The feasibility study and review of the Centinela second concentrator will be completed during the year and the final decision is scheduled for 2021. This expansion project could increase production by up to 180,000 tonnes of copper equivalent
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Construction of Zaldívar Chloride Leach and Esperanza Sur projects began during 2019. These projects will each add 10-15,000 tonnes of copper production from 2022
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During Q4 2019 Twin Metals filed a Mine Plan of Operations with both State and Federal agencies in the USA formally starting the environmental permitting process
| YEAR ENDING 31 DECEMBER | 2019 | 2018 | % | |
|---|---|---|---|---|
| Group revenue | $m | 4,964.5 | 4,733.1 | 4.9 |
| EBITDA(1) | $m | 2,438.9 | 2,228.3 | 9.5 |
| EBITDA margin(1)(2) | % | 49.1% | 47.1% | 4.2 |
| Underlying Earnings per share1 (continuing operations) | Cents | 50.9 | 51.5 | (1.2) |
| Earnings per share (continuing and discontinued operations) | Cents | 50.9 | 55.1 | (7.6) |
| Dividend per share | Cents | 34.1 | 43.8 | (22.1) |
| Cash flow from operations (continuing & discontinued) | $m | 2,570.7 | 1,877.0 | 37.0 |
| Capital expenditure(3) | $m | 1,078.8 | 872.9 | 23.6 |
| Net debt at period end(1) | $m | 563.4 | 596.3 | (5.5) |
| Average realised copper price | $/lb | 2.75 | 2.81 | (2.1) |
| Copper sales | kt | 772.2 | 717.6 | 7.6 |
| Gold sales | koz | 288.8 | 198.1 | 45.8 |
| Molybdenum sales | kt | 12.1 | 14.0 | (13.6) |
| Cash costs before by-product credits(1) | $/lb | 1.65 | 1.72 | (4.1) |
| Net cash costs(1) | $/lb | 1.22 | 1.29 | (5.4) |
Note: The financial results are prepared in accordance with IFRS, unless otherwise noted below.
(1) Non IFRS measures. Refer to the alternative performance measures in Note 29 to the preliminary results announcement
(2) Calculated as EBITDA/Group revenue. If Associates and JVs revenue is included EBITDA margin was 45.3 % in 2019 and 43.6% in 2018.
(3) On a cash basis
A recording and copy of the 2019 Full Year Results presentation is available for download from the Company’s website www.antofagasta.co.uk.
There will be a Q&A telephone conference call on 17 March 2020 at 10:00am GMT hosted by Iván Arriagada, Chief Executive Officer, and Alfredo Atucha, Chief Financial Officer. Participants can call any of the following numbers: United Kingdom 0330 336 9105, United States/Canada 800 239 9838, International +44 (0)330 336 9105. The call title is Antofagasta 2019 Full Year Results and the Confirmation Code is 8599722.
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Investors – London
Andrew Lindsay alindsay@antofagasta.co.uk
Andres Vergara avergara@antofagasta.co.uk
Telephone +44 20 7808 0988
Media – London
Carole Cable antofagasta@brunswickgroup.com
Will Medvei antofagasta@brunswickgroup.com
Telephone +44 20 7404 5959
Media – Santiago
Pablo Orozco porozco@aminerals.cl
Paola Raffo praffo.van@aminerals.cl
Telephone +56 2 2798 7000