Company has three business divisions: Mining, Transport and Water, being the first of them the most important. Antofagasta plc is one of the largest international copper producing companies in the industry. Its activities are mainly concentrated in Chile where it owns and operates three copper mines, Los Pelambres, El Tesoro and Michilla, with a total production of 498 thousand tonnes in 2004, at an average cash cost of 24.4 c/lb. The Groups mining division, Antofagasta Minerals, is also actively involved in exploration particularly in Chile and Peru. The transport division operates an extensive rail network servicing the important mining region of northern Chile, which is centred on the port of Antofagasta. The water division operates a concession for the distribution of water in this region.

SALES PER ACTIVITY (Data as of 31/12/2005)

Copper mining: 94%
Rail transport:   4%
Water:             2%

Credit Suisse note:
■ Event: ANTO has purchased a 50% interest in the Zaldivar copper mine from Barrick Gold and will become the operator with Barrick retaining a 50% stake. Total consideration is US$1,005m in cash ($980 upon closing, rest spread over five years). The transaction will be funded with cash and is expected by the company to be immediately earnings and cash flow accretive. The deal is expected to complete in Q415.
■ View: It is no surprise that ANTO has done a deal given previous CEO comments around growth by acquisition, the company's strong balance sheet and recent project delays. The valuation appears full and will likely rule out a special dividend for the foreseeable future. The company has said there is potential to expand both the mine's production base and mine life and also see synergy potential from 2016 but would not give precise detail at this stage.
■ Premium valuation: Our Barrick analyst valued 100% of the asset at $1.2bn using a WACC of 8% therefore on this basis the purchase price is at a 67% premium to NPV. Based on available data the transaction multiple equates to a PE of c11x on 2014, 16x under our 2015 base case (c280c copper) or c30x at spot (240c) copper prices. Although these assets are higher cost than ANTO's existing asset base, the deal is likely to be earnings accretive at spot prices or higher due to ANTO's net cash balance and low interest rates.
■ Zaldivar details: open pit heap-leach copper mine in Northern Chile. In 2014, it produced 100 kt copper, at a net cash cost of 179c/lb and PBT of $244m. It has 2.5mt of contained copper reserves and a LOM of 14 years.

StockMarketWire.com
Antofagasta's revenue fell to $1,785.9m in the six months to the end of June, 31.4% down on a year ago.

This was due to significant declines in copper and by-product prices and lower sales volumes due to delayed shipments from bad weather.

Earnings before interest, tax, depreciation and amortisation was $561.6m, a 48.6% decline reflecting the lower revenue which was partly offset by a 18.9% decrease in operating costs.

Total operating costs were $1,224.3 million, $284.0 million lower than in H1 2014 of which $198 million was due to a reduction in costs and the balance was due to lower volumes.

Net earnings from continuing operations, were $86.3 million, in line with the decrease in EBITDA with improved net finance expenses and lower taxes.

Operating cash flow was $807.7 million compared with $1,170.0 million in the H1 2014

CitiBank note today:
"Time to Buy
We resume coverage on Antofagasta, following a restriction period, and upgrade from Sell to Buy with a £4.40/share price target (having been sellers since 2012). The stock has lost ~75% of its value over the past three years and has relative scarcity within the mining sector given its strong balance sheet, ability to self-fund at spot prices, and pure exposure to a structurally deficit commodity. We see ANTO as a “trough cycle survivor” which should appeal to investors despite the risk of a further copper price decline. Spot 2017F attributable EV/EBITDA at 7.2x, while not cheap, is still significantly below the likes of SCCO and BHP.
Trough Cycle Survivor
We calculate 1.3x 2017F Net Debt/EBITDA at spot copper. The company is FCF neutral at current copper prices in 2017+ (negative 2016 due to Encuentro capex). Volume growth is limited until Los Pelambres expansion or second Centinela concentrator; but we see value at current levels, even ex-growth.
Copper Structurally Good, Technically Challenged
Citi’s global commodity team maintains a positive outlook for copper, viewing 2Q16 as the trough in the price (averaging $4,300/t). Structural deficits are expected to emerge in 2020+, exacerbated by the current downturn and lack of investment. Yet, short-term we do acknowledge the downside price risks.
Zaldivar Incorporated and Other Key Changes in Our Model
Earnings uplift from Zaldivar is more than offset by a significantly lower copper price forecast, resulting in greater than 50% EPS downgrades for 2015-17F. NPV has dropped to £5.0/sh from £6.8/sh. Price target based on NPV and multiples based valuation methods is cut to £4.40/sh from £6.0/sh due to lower NPV and earnings.
4Q 2015 Production Report on 27th January and 2016 Roadmap
We expect 731kt copper guidance @$1.48/lb C1 for 2016. Key 2016 events include ramp-up of Antucoya, Encuentro oxides first production, integration and potential revised mine plan at Zaldivar, EIA submission for Los Pelambres (LP) expansion, Centinela Moly plant construction, and progress/resolution of LP lawsuit."

StocKMarketWire.com
Antofagasta finished 2015 with its best quarter of the year with copper and molybdenum production up against Q3 and gold production 22% higher.

Copper production in Q4 2015 was 169,900 tonnes, 8.2% higher than Q3 2015. This increase was primarily driven by higher production at Los Pelambres and Centinela Concentrates and the contribution from Antucoya and Zaldivar.

Group copper production for the full year of 630,300 tonnes was 10.6% lower than in 2014, primarily due to lower production at Los Pelambres and Centinela.

Gold production was 55,700 ounces in Q4 2015, a 21.8% increase on Q3 2015 as grades increased at Centinela.

Gold production for the year was 213,900 ounces compared to 270,900 in 2014, mainly reflecting 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, as a new, higher grade phase of the pit was mined.

Chief executive Diego Hernandez said: "We have finished the year strongly with our best quarter of the year. Copper and molybdenum production were up against Q3 and gold production was 22% higher. Our production benefited from an improved performance at Los Pelambres and Centinela, and the addition of new production from Antucoya and Zaldivar. As production rose we kept a tight grip on our costs, with net cash costs for the quarter falling to $1.38/lb, down 2.8% against Q3.

"Whilst we have finished the year on a good note, 2015 has been undeniably difficult. The continued deterioration of the macro-environment and associated falling commodity prices combined with several operational set-backs resulted in copper production declining 11% year-on-year and cash costs before by-product credits declining by 1% to USD1.81/lb. Although we achieved significant savings during the year and benefited from the weaker Chilean Peso and falling energy and diesel prices, this was outweighed by our lower production.

"Looking to 2016, we are focused on operational excellence and improving productivity across all our mines in order to continue to maintain a tight control on costs. We will benefit from growth at Antucoya and Centinela Concentrates and we will have a full year of production from our share of Zaldivar. With this focus on our operations, we expect the Group's total copper production for 2016 to be in the range of 710,000 and 740,000 tonnes at a net cash cost of USD1.35/lb."

Deutsche Bank today reaffirms its hold investment rating on Antofagasta PLC (LON:ANTO) and cut its price target to 480p (from 530p).

JP Morgan Cazenove today reaffirms its overweight investment rating on Antofagasta PLC (LON:ANTO) and cut its price target to 360p (from 380p).

Investec today reaffirms its sell investment rating on Antofagasta PLC (LON:ANTO) and raised its price target to 305p (from 263p).

i think the markets may correct so am more than happy to have banked a very tasty 55p profit after less than a week

shall almost certainly re-enter the fray at a later date

Britain's top share index rallied on Thursday, rebounding from the previous session's falls after a drop in the dollar boosted commodity prices and gave a lift to mining and oil shares.

Britain's FTSE 100 was up 1.1 percent at 5,898.76 points at its close, snapping a three-day losing streak that had seen the index shed 4 percent.

The rally came as expectations for a rate hike from the U.S. Federal Reserve evaporated. That sent the dollar tumbling, making dollar-priced crude oil and metals cheaper for holders of other currencies.

ANTO
if you're brave, you'll see that ANTO is just flirting with 50 dma southwards
if you think that today's fall is overdone (8.5% = 38.5p, then consider buying

meanwhile i've just received a flash that BLT is now down 5.2% today

Most broker notes are negative in the sector, though acknowledging that the commodity market is cyclical.
RBC summary today:
"Fundamentals remain very challenging in the mining sector. Commodity oversupply is not improving fast enough and long-term demand conditions are deteriorating. Our analysis suggests there will still be some time before the erosion in cash flow and balance sheet strength stop; a heightened concern for the diversified miners as debt levels are already at record levels vs EV. We acknowledge that sentiment is very poor, but we do not expect a fundamental turnaround in the near-term and this could have material implications on equity value."

Another miner bounced strongly.

StockMarketWire.com
Antofagasta's revenues fell by 34% to USD3,394.6m in the year to the end of December with realised copper prices falling almost 24% during the period and sales volumes down by 9.5%, following a challenging year for the group.

Chief executive Diego Hernandez 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 Zaldivar 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."

Financial highlights:
- 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 Zaldivar mine.

Canaccord comment:
"These were poor results, towards the bottom of a very wide consensus range. Antofagasta had already reported 2015 copper production of 630,300t (down 11%), gold production of 213,900oz (down 21%) and molybdenum production of 10,100t (up 8%) as well as average cash costs before by-product credits of 181c/lb, down 1%, and net costs of 150c/lb, up 5%. Given lower production and weaker realised prices (228c/lb copper in 2015, off 24%), EBITDA fell significantly, to US$891M, down 58% from US$2,141M in 2014, and relative to our forecast of US$1,078M and Bloomberg consensus of US $1,035M (range US$877-1,481M). Eps on continuing operations was 0.6c, down 99% from 42.8c in 2014 and relative to our eps forecast of 3.3c (Bloomberg consensus 7.8c, range -9.6c to +28c). As expected, no final dividend was declared, given that the interim payment of 3.1c exceeded the 35% minimum payout ratio set in the dividend policy. It’s worth noting that the company did not give its usual collated consensus, saying that the range was so wide as to render the consensus misleading. Net debt was US$1,024M, worse than our US$985M forecast.

Stieffel comment:
"Bottom line. Antofagasta shares have rallied over 40% since mid-January 2016 (vs. the FTSE Mining index up 23% over the same period) and at the current share price of 534p are at a level close to our valuation price of 558p. Whilst we are confident that Antofagasta remains the sleep easy long-term macro copper investment with the shares likely to track copper prices in the medium term, we think investors wishing to bank some profits following the significant recovery in the sector year to date might want to consider taking some money off the table following the last two months’ share price performance. Antofagasta remains a stable cash flowing business with a relatively strong balance sheet and offers investors relative safety in the available copper investment landscape, in our view."

JP Morgan Cazenove today reaffirms its overweight investment rating on Antofagasta PLC (LON:ANTO) and raised its price target to 600p (from 360p).

Deutsche Bank today reaffirms its hold investment rating on Antofagasta PLC (LON:ANTO) and raised its price target to 510p (from 495p).

Credit Suisse summary:
"Valuation: The company is trading on a 2016E EV/EBITDA of c10x or c9.5x at spot prices, a significant premium to European peers. We forecast FCF yields close to 0% and a DY of 1.5% in 2016 based on the company’s 35% payout ratio policy. We reduce our target price from £4 to £3.8 to reflect higher year end net debt."

JP Morgan Cazenove today downgrades its investment rating on Antofagasta PLC (LON:ANTO) to neutral (from overweight) and cut its price target to 410p (from 600p).

Credit Suisse today reaffirms its underperform investment rating on Antofagasta PLC (LON:ANTO) and cut its price target to 360p (from 380p).

Haitong Securities today upgrades its investment rating on Antofagasta PLC (LON:ANTO) to buy (from neutral) and cut its price target to 484p (from 553p).

Deutsche Bank today reaffirms its hold investment rating on Antofagasta PLC (LON:ANTO) and raised its price target to 585p (from 470p).

Berenberg today reaffirms its sell investment rating on Antofagasta PLC (LON:ANTO) and raised its price target to 370p (from 365p).

Credit Suisse today reaffirms its underperform investment rating on Antofagasta PLC (LON:ANTO) and raised its price target to 400p (from 360p).

Peel Hunt today reaffirms its hold investment rating on Antofagasta PLC (LON:ANTO) and cut its price target to 485p (from 515p).