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%

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).

RBC Capital Markets today reaffirms its sector performer investment rating on Antofagasta PLC (LON:ANTO) and raised its price target to 500p (from 410p)

StockMarketWire.com
Antofagasta's revenues fell by 18.5% to $1,448.0 million in the six months to the end of June, on lower copper prices and sales volumes, and the closure of Michilla at the end of 2015.

But EBITDA increased 2.3% to $571.6 million despite the fall in revenue, reflecting a 24.7% reduction in operating costs and a first time EBITDA contribution from Zaldivar and other associates.

EBITDA margin strengthened to 39.5%, up from 31.5% and operating cost reductions of $124 million were achieved, contributing to savings of $0.11/lb in cash costs.

Operating profit and earnings per share fell by 9.2% and 3.3% respectively.

Operating cash flow generation of $774.1 million in the period, 4.2% less than in the first half of 2015.

Capital expenditure of $385.4 million, $276.9 million lower than in the first half of 2015. Full year expenditure expected to be lower than original guidance.

Interim dividend of 3.1 cents per share. Dividend policy to pay a minimum pay-out ratio of 35% of net earnings for the full year remains unchanged.

Group net debt of $1,039.7 million, almost unchanged since the end of 2015.

Chief executive Iv�n Arriagada said: "A 24.7% reduction in operating costs offset the decline in the copper price and lower sales volumes resulting in EBITDA of $571.6 million, 2.3% higher than in the same period last year. "Continued management actions to reduce costs and preserve cash contributed to our EBITDA margin strengthening to 39.5%, from 26.2% in the full year 2015. While reducing costs in absolute terms is important we are focused on achieving improved efficiencies in a sustainable manner to ensure long-term shareholder value.

"Given the current economic uncertainty we are cautious in our outlook and remain conservative in our approach to managing capital. The Board has declared a dividend of 3.1 cents per share equal to 35% of net earnings at the interim, in line with our policy to pay a minimum of 35% of full year net earnings which remains unchanged.

"At Los Pelambres, following the agreement reached with the Caimanes community in April, the two longstanding court cases relating to the Mauro tailings dam have recently been resolved. Although an appeal is possible, it is unlikely to be accepted and Los Pelambres and the Antofagasta group now move into a new era of community engagement."

JP Morgan Cazenove today reaffirms its neutral investment rating on Antofagasta PLC (LON:ANTO) and raised its price target to 390p (from 380p).

Peel Hunt today reaffirms its hold investment rating on Antofagasta PLC (LON:ANTO) and raised its price target to 575p (from 485p).

Canaccord Genuity today reaffirms its hold investment rating on Antofagasta PLC (LON:ANTO) and raised its price target to 545p (from 505p).

Jefferies International today reaffirms its hold investment rating on Antofagasta PLC (LON:ANTO) and raised its price target to 550p (from 500p).

StockMarketWire.com
Antofagasta reports a strong third quarter, with copper production up 8.7% versus the previous three months and Antucoya reaching production capacity in August.

Group copper production for the year to date of 503,900 tonnes was 9.4% higher than in the same period last year, primarily due to new production from Zaldavar and Antucoya, offset by the closure of Michilla at the end of 2015

Gold production was 70,300 ounces in the quarter, a 33.1% increase on Q2 2016 largely due to higher gold grades at Centinela.

Molybdenum production at Los Pelambres was 1,900 tonnes in Q3 2016, compared to 1,600 tonnes in Q2 2016 with higher grades at Los Pelambres.

Chief executive Ivan Arriagada said: "Performance is expected to continue to improve during the final quarter of the year, with full year 2016 copper production expected to be close to the lower end of the original guidance range of 710,000 to 740,000 tonnes.

"Since becoming CEO I have continued to focus our efforts on reducing costs and improving operational efficiencies, and here again we are making good progress with net cash costs decreasing by 5.6% to $1.18/lb. We now expect cash costs for the full year to be $1.25/lb, 5c/lb lower than previously guided.

"As part of these efficiency programmes we have also reviewed our mine plans and wider operational activities to improve decision making and the accuracy of forecasting. This has involved a rigorous assessment of our plans with a focus on profitable tonnes and a higher level of certainty without compromising safety or operational standards. Following this review, production in 2017 is expected to be in the range of 685,000 to720,000 tonnes."

Slump in Antofagasta.

Shares in Antofagasta PLC (LON:ANTO) slumped by more than 6% in early trade on 26 October after the company’s operational update for the third quarter of 2016 indicated that full year production is likely to come in at the lower end of the previously announced 710,000-740,000 tonnes of copper.

That was in spite of a strong quarterly performance in which costs fell and production rose significantly. Net cash costs for the full year are now expected to come in at US$1.25 per pound, US$0.05 lower than previously anticipated, according to chief executive Ivan Arriagada.

But in the context of a copper market that remains weak in spite of price strength in other areas of the commodities complex, Antofagasta is now forecasting production to be in a lower range again next year, at between 685,000 and 710,000 tonnes.

As it is, analysts are not convinced Antofagasta will even hit its target this year.

“Antofagasta will have to have a very strong quarter to hit the bottom end of 2016 guidance,” said Liberum in a broader note on the copper sector that it issued following the Antofagasta results.

Liberum noted that previous guidance for 2017 from Antofagasta ran in the 750,000 tonne range, but it also pointed out that in the copper space Antofagasta isn’t the only cutting or missing targets.

Downgrades from BHP Billiton (LON:BLT), Rio Tinto (LON:RIO) and Freeport McMoRan (NYSE:FCX) combined with the new bottom-end numbers from Antofagasta will have taken 166,000 tonnes of forecast copper production out of the market by the year end, Liberum noted.

Even so, the market looks likely to remain in surplus until 2019, on the strength of current global production. Liberum is thus bearish on copper in general, and adds that pricing weakness is also likely to be exacerbated by dollar strength.

However, that call isn’t completely cut and dried. Ongoing protests at the massive Las Bambas copper mine in Peru, owned by the Chinese-backed MMG could curtail supply.

And there’s also the possibility that the ongoing Chinese property boom, which pundits are constantly calling an end to, may actually continue and drive up demand for copper.

If that’s the case, the financial impact of production downgrades may be off-set by copper price strength. But no-one in the market is holding their breath for that.

For its part, the other big player in copper, Glencore, is set to release third quarter production results on 3 November. We’ll probably get a further insight into the state of play then.

According to the FT, the declared short interest is c20%. Not sure if that's correct.

Exane BNP Paribas today downgrades its investment rating on Antofagasta PLC (LON:ANTO) to underperform (from neutral) and cut its price target to 435p (from 545p).

Peel Hunt today reaffirms its hold investment rating on Antofagasta PLC (LON:ANTO) and raised its price target to 580p (from 575p).

StockMarketWire.com
Antofagasta says that following the closure of the Michilla mine at the end of 2015 it has today signed an agreement to sell Minera Michilla SA to Haldeman Mining Company SA, for $52 million.

The transaction includes the open pit mine, the underground mine, the cathode production plant and various mining properties.

Antofagasta will retain the acid terminal and other facilities located at Caleta Michilla, which are currently used by its Centinela and Antucoya mining operations.

01/12/16 - Exane BNP Paribas today reaffirms its underperform investment rating on Antofagasta PLC (LON:ANTO) and set its price target at 600p.

07/12/16 - Credit Suisse today reaffirms its underperform investment rating on Antofagasta PLC (LON:ANTO) and raised its price target to 530p (from 450p).

Barclays Capital today (09/01/17) reaffirms its equal weight investment rating on Antofagasta PLC (LON:ANTO) and raised its price target to 650p (from 510p)

Peel Hunt today (11/01/17) reaffirms its hold investment rating on Antofagasta PLC (LON:ANTO) and raised its price target to 675p (from 580p)

StockMarketWire.com
Mining giant Antofagasta has agreed to exit the Alto Maipo hydroelectric project in Chile.

Antofagasta's subsidiary Minera Los Pelambres has been reviewing its options over its 40% investment in the project since October following the announcement of a forecast 10-20% total cost overrun.

Antofagasta said that yesterday (19 January) the project's controlling shareholder, AES Gener SA announced an update on the progress of negotiations between itself, Los Pelambres and lenders, which have reached an advanced stage, subject to final approval by the lenders.

Los Pelambres has agreed to transfer its 40% interest in Alto Maipo to Gener and the electricity price applicable to the power purchase agreement with Alto Maipo is reduced.

Antofagasta chief executive Ivan Arriagada said: "Mining is our core business. We entered into this project when electricity supply in the central region of Chile was constrained to ensure that Los Pelambres would be able to access a reliable source of electricity at competitive prices.

"We are now close to fulfilling this objective at an improved price, and to ensure a clean, stable and long-term energy supply for Los Pelambres."