QUARTERLY PRODUCTION INCREASES 20%, FULL YEAR PRODUCTION EXPECTED IN THE LOWER END OF GUIDANCE RANGE

Antofagasta plc CEO, Iván Arriagada said: “With a 20% increase in copper production in the second quarter, output in H1 2024 was close to the same level seen in H1 2023, despite lower grades at both Los Pelambres and Centinela. Los Pelambres achieved higher ore processing volumes in the second quarter following the recently completed Phase 1 Expansion Project, and for the second half of the year, production is also expected to include drawdowns from Los Pelambres’ concentrate inventories that accumulated in February 2024. At Centinela, production in Q2 2024 also reflected lower recoveries that were impacted by elevated levels of clay and fines in ores processed. Considering the above, we expect that full year production will be in the lower end of our guidance range of 670-710,000 tonnes, with cash cost guidance adjusted.

“At Antofagasta, through our consistent investment throughout the commodity cycle, we have delivered growth and built a portfolio of high-quality, long-life operations. At Centinela, construction work is progressing ahead of schedule at the Second Concentrator Project. At Los Pelambres, the Phase 1 Expansion Project has successfully ramped-up to nameplate capacity, with work now underway to double the capacity of the desalination plant to 800 litres per second and to construct the new concentrate pipeline. Taken together, these investments will add both growth and long-term security to the future of our portfolio at a time when there is strong and widespread recognition of copper’s fundamental role in the energy transition.”

^{(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 Q2 2024 was 155,300 tonnes, 20% higher than Q1 2024, with this increase primarily driven by Los Pelambres following the extended concentrate pipeline maintenance and cleaning activities that was required in February. This increase was, however, offset by lower grades and recoveries at Centinela’s concentrator related to elevated levels of clay and fines in ores processed.
• Copper production in H1 2024 was 284,700 tonnes, 4% lower year-on-year, principally representing a balance of lower production from Centinela concentrates, and higher production at Centinela cathodes and Los Pelambres, with the latter happening despite the inventory build-up at Los Pelambres in February 2024.
• Gold production in Q2 2024 was 33,600 ounces, 1% higher than Q1 2024, with higher gold output at Los Pelambres offset by a similar decline in gold production at Centinela. For the first six months of the year, gold production decreased by 22% to 66,900 ounces, reflecting lower gold grades at Centinela.
• Molybdenum production in Q2 2024 was 2,500 tonnes, 7% lower than Q1 2024, with this decrease connected to lower molybdenum grades at Los Pelambres. Year to date molybdenum production was 5,200 tonnes, 6% higher than in the same period last year due to higher ore processing rates at Los Pelambres.

CASH COSTS

• Cash costs before by-product credits in Q2 2024 were $2.63/lb, representing a 2% decrease quarter-on-quarter, related to higher production at Los Pelambres. Cash costs in H1 2024 were $2.65/lb, a year-on-year increase of 7% due to lower ore grade and recoveries at Centinela concentrates and lower grades at Los Pelambres.
• By-product credits in Q2 2024 were 69c/lb (Q1 2024: 74c/lb), with lower molybdenum sales at Los Pelambres offset by increases in pricing for both molybdenum and gold. By-product credits year to date of 71c/lb were in line with H1 2023, which represents a balance of lower gold production at Centinela and higher pricing for gold.
• Net cash costs in Q2 2024 were $1.94/lb, in line with Q1 2024, with lower cash costs before by-products, balanced in turn by lower credits for by-products. Net cash costs were $1.94/lb for the first half of the year, 11% higher than the same period in 2023, with this increase driven by the increase in the underlying cash costs before by-product credits.

PROJECT DEVELOPMENT UPDATE

• Centinela Second Concentrator: Following definitive financing agreements for the Centinela Second Concentrator Project, as announced on 19 March 2024, and the release of funds by lenders at the end of March, full construction commenced in April 2024. Initial construction activities include preparatory groundwork at the site of the planned second concentrator, mobilisation of contracting personnel to site and the formal receipt of construction schedules from all key contractors, with the overall project progress being ahead of plan.
• Centinela water infrastructure: The Company announced completion of the process whereby Minera Centinela (“Centinela”) entered into a water transportation agreement, involving its existing water supply and future water supply to the Centinela Second Concentrator Project. Under the terms of the agreement, Centinela’s existing water transportation assets and rights have been transferred to an international consortium for net cash proceeds of $600 million, which was received as of late June 2024. For accounting purposes, the existing assets remain in the Group’s balance sheet, with the cash receipt resulting in the recognition of a corresponding other financial liability balance. In addition, the planned expansion of the water transportation system will now be undertaken by the acquiring consortium, resulting in a reduction in the overall capital cost of the Centinela Second Concentrator Project by approximately $380 million, with this reduction to be realised over the course of the project’s construction period.
• Los Pelambres: Preliminary construction work has commenced on schedule at two key projects that are intended to enable future growth at Los Pelambres: (1) Doubling the capacity of the recently completed desalination plant to 800 litres per second, and (2) Replacement of the existing concentrate pipeline.

2024 GUIDANCE

• Total production for 2024 is expected to be in the lower end of the Company’s 670-710,000 tonne guidance range. At Los Pelambres, given that the existing concentrate pipeline is currently operating with enhanced parameters for safety and maintenance, which are periodically reviewed by the Company, combined with the high throughput rates that are being achieved at the processing plant, the drawdown of the inventory accumulated in February 2024 is now expected to be completed in the next 2-3 quarters. In the case of Centinela, following lower grades in H1 2024, the clay and fines content in ore fed to the concentrator plant, which has impacted recoveries, is expected to reduce towards the end of the year.
• Following projected production for the full year, cash cost guidance, both before and after by-product credits, is now expected to be $2.40/lb and $1.70/lb respectively (based on current spot prices).
• Capital expenditure guidance is unchanged at $2.7 billion.

SAFETY AND SUSTAINABILITY

• Safety remains a key priority for the Company, with strong safety performance being recorded in 2024, with no fatalities, and the injury frequency rate continuing at a level below 1.0. The Company’s year-to-date total recordable injury rate also continues at a level materially below industry benchmarks for safety performance.¹
• At Los Pelambres, following discussions with our stakeholders in the Choapa Valley about water distribution arrangements under drought conditions and the provisions of the new Water Code, a revised agreement is in place that was approved in Q1 2024 by the relevant water authority. Under the terms of this agreement, when in drought, Los Pelambres will be able to draw its full freshwater intake requirements, subject to certain administrative conditions being periodically renewed by the relevant water authority. In the absence of an annual drought decree, Los Pelambres is entitled to draw the water required for its operation by exercising its water rights.  
• During the period the Company launched a micro-site covering its sustainability performance in 2023 (https://sr.antofagasta.co.uk/), which is available in both English and Spanish and is designed to help support engagement with the Company’s local and international stakeholders. This new website demonstrates the work completed in areas such as people and communities, the environment and corporate governance, which are central to our purpose of developing mining for a better future.

ZALDÍVAR UPDATE

• In early 2024 approval was received from the authorities for the DIA (Declaration of Environmental Impact) to extend the mining permit and, therefore, align the water and mining permits at Zaldívar. This approval ensures that the operation has rights to mine ore and extract water until 2025. The mine life after 2025 is, therefore, subject to the approval of and Environmental Impact Assessment (EIA).
• The formal process for reviewing the EIA submitted for Zaldívar continues, with responses to the second round of queries raised by various government agencies in Chile currently being prepared by the Company for planned submission in 2024. For reference, the Company had responded to the first round of queries in Q1 2024, and a summary of the EIA submitted and the application process to date was provided in the Company’s Q1 2024 Production Report.
• Separate to the above permits, and as previously reported, the Company (as well as other named defendants) submitted a response contradicting the allegations made by the Consejo de Defensa del Estado (CDE), an independent governmental agency that represents the interests of the Chilean state, who previously filed a claim against Minera Escondida, Albemarle and Zaldívar, alleging that their extraction of water from the Monturaqui-Negrillar-Tilopozo aquifer over the years has impacted the underground water level. The evidentiary record is now closed, and a decision from the Court is pending. However, conversations regarding a potential settlement are continuing.

CORPORATE

• In April 2024, the Company announced that it had agreed the pricing of the issuance of $750 million of Senior Unsecured Notes due 2034, with the use of net proceeds for general corporate purposes. Further details are available on the Company’s website (www.antofagasta.co.uk).
• The Company held its Annual General Meeting on 8 May 2024, with all resolutions passed during the meeting.

OTHER

• During the period, the Company concluded a three-year labour agreement with a workers union at Centinela, with discussions completed ahead of schedule. Following the conclusion of this process, the Company has no further labour agreements due to expire in 2024.
• The Company published its Report on Payments to Governments on 28 June 2024, showing that 99.9% of the Company’s taxes and other payments to governments in 2023 were paid in Chile.

^{1 Group-level total recordable injury frequency rates of 1.81 and 1.85 in FY 2023 and H1 2024 respectively, compared to latest data available ICMM data (link).}

Investors – London

Rosario Orchard rorchard@antofagasta.co.uk 

Robert Simmons alindsay@antofagasta.co.uk 

Telephone +44 20 7808 0988 

Media – London

Carole Cable antofagasta@brunswickgroup.com

Telephone +44 20 7404 5959

Media – Santiago

Pablo Orozco porozco@aminerals.cl 

Carolina Pica cpica@aminerals.cl

Telephone +56 2 2798 7000

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