3rd Quarter Results
Antofagasta PLC
29 November 2007
Antofagasta plc
Unaudited Results for the Third Quarter ended 30 September 2007
London, 29 November 2007
Highlights
Nine Nine
months months
ended ended
30 September 30 September Full year
2007 2006 Change 2006
US$'m US$'m % US$'m
Group turnover 2,838.6 2,980.4 -4.8% 3,870.0
======== ======== ========
Group EBITDA 2,152.0 2,292.8 -6.1% 2,957.3
======== ======== ========
Turnover
Group turnover in the nine months ended 30 September 2007 was US$2,838.6 million
compared with US$2,980.4 million in the same period of 2006, reflecting reduced
copper sales volumes and lower realised copper prices, partly offset by higher
molybdenum volumes and prices, and lower tolling charges.
LME copper prices averaged 321.5 cents per pound compared with 299.9 cents per
pound in the nine months ended 30 September 2006. Pricing adjustments on
provisionally invoiced sales, while remaining positive, were lower than the
comparable period in 2006, resulting in an average realised copper price of
348.1 cents per pound compared with 354.2 cents per pound in the nine months
ended 30 September 2006. Market molybdenum prices, which did not differ
significantly from prices realised by Los Pelambres, averaged US$29.5 per pound
in the nine months to 30 September 2007, an increase from the average price of
US$24.5 per pound in the comparative nine month period.
The volume of copper sold was 298,700 tonnes (nine months ended 30 September
2006 - 339,100 tonnes). The decrease was partly due to lower production of
312,600 tonnes in the period (nine months ended 30 September 2006 - 334,300
tonnes), mainly as a result of reduced ore grades at Los Pelambres. Sales in the
2007 period were also affected by timing differences in shipping and loading
schedules which resulted in an increase in inventories at the end of September
which were shipped in October. Molybdenum sales and production volumes in the
period were 7,400 tonnes (nine months ended 30 September 2006 - sales volume of
6,900 tonnes and production volume of 7,000 tonnes).
The transport and water divisions continued to perform well, with both
businesses generating increased volumes and revenues.
Further details of production and sales volumes and realised prices by mining
operation are given in Note 2, and an analysis of turnover by business segment
is given in Note 3. Further details of the operating performance of each mine
and the rail and water division are also given in the Group's third quarter
production report released on 31 October 2007.
EBITDA
Group EBITDA in the nine months ended 30 September 2007 was US$2,152.0 million,
compared with US$2,292.8 million in the nine months ended 30 September 2006. The
decrease in EBITDA mainly resulted from the reduction in turnover described
above and higher on-site and shipping costs at the Group's mining operations,
partly offset by lower costs for the Group's commodity hedging programme
compared with the nine months ended 30 September 2006.
As reported on 31 October 2007, weighted average cash costs for the Group's
mining operations, which are stated net of by-product credits, were 30.2 cents
per pound in the nine months ended 30 September 2007. This compared with 41.0
cents per pound in the comparative period in 2006. The decrease was largely due
to improved by-product credits and lower tolling charges at Los Pelambres, both
of which are included in the financial statements within turnover. By-product
credits (expressed in cents per pound of copper produced) improved as a result
of the higher molybdenum prices and volumes outlined above, as well as the
impact of the reduced copper production in the period. Tolling charges were
lower as a result of lower benchmark terms for the 2007 calendar year as
compared with 2006 and reduced price participation with smelters.
Weighted average on-site and shipping costs (excluding by-product credits and
tolling charges) were 88.1 cents per pound (nine months ended 30 September 2006
- 67.7 cents per pound). Further details of the cash costs of each mine are
given in the Group's third quarter production report of 31 October 2007.
The amount recognised in the income statement during the current period in
respect of the Group's commodity hedging programme was a loss of US$11.8
million, recorded within turnover as the Group has applied the hedge accounting
provisions of IAS 39 'Financial Instruments: Recognition and Measurement' with
effect from 1 January 2007. This loss recognised during the current period
relates to commodity instruments which matured during the period. During the
nine months ended 30 September 2006 a charge of US$94.7 million was recognised
in respect of commodity hedging, recorded within other operating expenses.
Further details of cash costs by mining operation are given in Note 2, and an
analysis of EBITDA by business segment is given in Note 3. Details of commodity
instruments are given in Note 5.
Basis of Information
The Group turnover and EBITDA figures included in this release for the
nine-month period ended 30 September 2007 are presented on a basis consistent
with the accounting policies used in the Group's 2006 Annual Report and
Financial Statements (except in relation to the application by the Group of the
hedge accounting provisions of IAS 39 'Financial Instruments: Recognition and
Measurement' with effect from 1 January 2007 as set out in Note 5) under
International Financial Reporting Standards and Interpretations ('IFRS').
The Group's three mining companies, Los Pelambres, El Tesoro and Michilla, will
today also file quarterly financial statements under Chilean GAAP for the
nine-month period ended 30 September 2007 with the Chilean securities regulator,
the Superintendencia de Valores y Seguros de Chile ('SVS'). These filings are in
accordance with mining tax legislation introduced in Chile in 2005 which
requires companies that have elected to enter a tax stability regime to publish
quarterly financial information from the 2006 financial year onwards. This
release includes a summary of the Chilean GAAP income statement, balance sheet
and cash flow statement for each of the three mining companies to be filed with
the SVS.
Enquiries
London Santiago
Investor relations - Antofagasta plc Antofagasta Minerals S.A.
Tel: +44 20 7808 0988 Tel +562 798 7145
www.antofagasta.co.uk Alejandro Rivera
Desmond O'Conor Email: arivera@aminerals.cl
Email: doconor@antofagasta.co.uk
Hussein Barma
Email: hbarma@antofagasta.co.uk
Media enquiries - Bankside Consultants
Tel: +44 20 7367 8873
Keith Irons
keith@bankside.com
Oliver Winters
oliver.winters@bankside.com
Notes
1. General information and accounting policies
These unaudited third quarter results are for the nine-month period ended 30
September 2007. The Group turnover and EBITDA information, including all
comparatives, have been prepared on the basis of the accounting policies set out
in the Group's statutory accounts for the year to 31 December 2006 (except in
relation to the application by the Group of the hedge accounting provisions of
IAS 39 'Financial Instruments: Recognition and Measurement' with effect from 1
January 2007 as set out in Note 5) and in accordance with applicable
International Financial Reporting Standards and Interpretations (IFRS) which
have been endorsed by the European Union.
While the turnover and EBITDA information contained in this nine month results
announcement has been computed in accordance with IFRS, this announcement does
not itself contain sufficient information to comply with IFRS. The information
included in this announcement for the nine month periods ending 30 September
2006 and 30 September 2007 is unaudited.
The information contained in this announcement for the year ended 31 December
2006 does not constitute statutory accounts. The statutory accounts for that
year have been approved by the Board and reported on by the auditors, and have
been delivered to the Registrar of Companies. The auditors' report on those
accounts was unqualified and did not contain statements under section 237(2) of
the Companies Act 1985 (regarding adequacy of accounting records and returns) or
under section 237(3) (regarding provision of necessary information and
explanations). The comparative information contained in Note 2 of this
announcement is not derived from the statutory accounts for the year ended 31
December 2006 and is accordingly not covered by the auditors' report.
2. Production and Sales Statistics
(See notes following Note 2(b).)
(a) Production and sales volumes for copper and molybdenum
Production Sales
------------ -------
Nine months Nine months Full Nine months Nine months Full
ended ended year ended ended year
30 30 2006 30 30 2006
September September September September
2007 2006 2007 2006
000 tonnes 000 tonnes 000 tonnes 000 tonnes 000 tonnes 000 tonnes
Copper
Los Pelambres 208.4 230.4 324.2 192.9 233.2 324.8
El Tesoro 69.4 68.4 94.0 70.6 69.6 95.3
Michilla 34.9 35.4 47.3 35.2 36.3 47.7
--------- -------- ------- --------- -------- -------
Group total 312.6 334.3 465.5 298.7 339.1 467.8
========= ======== ======= ========= ======== =======
Molybdenum
Los Pelambres 7.4 7.0 9.8 7.4 6.9 9.9
========= ======== ======= ========= ======== =======
(b) Cash costs per pound of copper produced and realised prices per pound of
copper and molybdenum sold
Cash cost Realised prices
----------- -----------------
Nine months Nine Full Nine months Nine Full
ended months year ended months year
ended 2006 ended 2006
30 30 30 30
September September September September
2007 2006 2007 2006
US cents US cents US cents US cents US cents US cents
Copper
Los Pelambres (12.1) 17.2 16.4 358.5 369.1 335.0
El Tesoro 103.4 78.3 78.6 334.3 320.5 316.4
Michilla 137.7 123.9 126.4 318.8 322.8 318.5
--------- -------- ------- --------- -------- -------
Group weighted average 30.2 41.0 40.2 348.1 354.2 329.5
(net of by-products) ========= ======== ======= ========= ======== =======
Group weighted average 108.4 95.7 95.6
(before deducting ========= ======== =======
by-products)
Cash costs at Los
Pelambres comprise:
On-site and shipping 74.7 55.9 56.4
cost
Tolling charges for 30.4 40.6 39.7
concentrates --------- -------- -------
Cash costs before 105.1 96.5 96.1
deducting by-product
credits
By-product credits (117.2) (79.4) (79.7)
(principally --------- -------- -------
molybdenum)
Cash costs (net of (12.1) 17.2 16.4
by-product credits) ========= ======== =======
LME average 321.5 299.9 305.3
========= ======== =======
US$ US$ US$
Molybdenum
Los Pelambres 31.7 25.2 24.6
========= ======== =======
Market average price 29.5 24.5 24.8
========= ======== =======
Notes to the production and sales statistics
(i) The production and sales figures represent the actual
amounts produced and sold, not the Group's share of each mine. The Group owns
60% of Los Pelambres, 100% of El Tesoro (61% prior to 24 August 2006) and 74.2%
of Michilla.
(ii) Los Pelambres produces copper and molybdenum concentrates,
and the figures for Los Pelambres are expressed in terms of payable metal
contained in concentrate. Los Pelambres is also credited for the gold and silver
contained in the copper concentrate sold. El Tesoro and Michilla produce
cathodes with no by-products.
(iii) Cash costs are a measure of the cost of operational
production expressed in terms of cents per pound of payable copper produced.
Cash costs are stated net of by-product credits and include tolling charges for
concentrates at Los Pelambres. Cash costs exclude depreciation, financial income
and expenses, hedging gains and losses, exchange gains and losses and
corporation tax for all three operations. By-product calculations do not take
into account mark-to-market gains for molybdenum at the beginning or end of each
period.
(iv) Excluding by-product credits (which are reported as part of
turnover) and tolling charges for concentrates (which are deducted from
turnover), weighted average cash costs for the Group (comprising on-site and
shipping costs in the case of Los Pelambres and cash costs in the case of the
other two operations) increased from 67.7 cents per pound in the first nine
months of 2006 to 88.1 cents per pound in the first nine months of 2007 (68.0
cents per pound in the year ended 31 December 2006).
(v) Realised copper prices are determined by comparing turnover
from copper sales (grossing up for tolling charges for concentrates) with sales
volumes for each mine in the period. Realised molybdenum prices at Los Pelambres
are calculated on a similar basis. In the current period realised prices reflect
gains and losses on commodity derivatives, which are included within turnover.
The classification of these amounts within turnover is due to the application of
the hedge accounting provisions of IAS 39 'Financial Instruments: Recognition
and Measurement' with effect from 1 January 2007. Prior to this point, gains and
losses on commodity derivatives were included in other operating income or
expense, and so are not reflected within the realised price figures for the
comparative periods.
(vi) The totals in the tables above may include some small
apparent differences as the specific individual figures have not been rounded.
(vii) The production information in Note 2(a) and the cash cost
information in Note 2(b) is derived from the Group's production report for the
third quarter of 2007 published on 31 October 2007.
3. Turnover and EBITDA analysed by business segment
Turnover EBITDA
---------- --------
Nine Nine Full year Nine Nine Full year
months months 2006 months months 2006
ended ended ended ended
30 30 30 30
September September September September
2007 2006 2007 2006
US$'m US$'m US$'m US$'m US$'m US$'m
Los Pelambres 1,936.5 2,103.7 2,701.3 1,626.9 1,812.0 2,297.0
El Tesoro 520.2 491.8 664.8 338.7 329.6 456.0
Michilla 247.4 258.3 334.9 140.7 110.3 158.4
Exploration - - - (21.8) (14.9) (21.5)
Corporate and other - - - 0.7 (8.0) (16.9)
items --------- -------- ------- --------- -------- -------
Mining 2,704.1 2,853.8 3,701.0 2,085.2 2,229.0 2,873.0
Railway and other 85.2 79.5 105.3 36.1 32.4 42.9
transport services
Water concession 49.3 47.1 63.7 30.7 31.4 41.4
--------- -------- ------- --------- -------- -------
Group turnover and 2,838.6 2,980.4 3,870.0 2,152.0 2,292.8 2,957.3
EBITDA ========= ======== ======= ========= ======== =======
Turnover at Los Pelambres by mineral:
Before deducting tolling Tolling charges Net of tolling charges
charges ----------------- ------------------------
-----------------------------
Nine Nine Full year Nine Nine Full Nine Nine Full year
months months 2006 months months year months months 2006
ended ended ended ended 2006 ended ended
30 30 30 30 30 30
September September September September September September
2007 2006 2007 2006 2007 2006
US$'m US$'m US$'m US$'m US$'m US$'m US$'m US$'m US$'m
Copper 1,524.6 1,897.7 2,399.0 (120.8) (192.5) (254.0) 1,403.8 1,705.2 2,145.0
Molybdenum 516.3 383.1 536.4 (18.1) (16.0) (22.6) 498.2 367.1 513.8
Gold and 35.0 31.9 43.1 (0.5) (0.5) (0.6) 34.5 31.4 42.5
silver ------- ------- ------ ------- ------- ------ ------- ------- ------
Los 2,075.9 2,312.7 2,978.5 (139.4) (209.0) (277.2) 1,936.5 2,103.7 2,701.3
Pelambres ======= ======= ====== ======= ======= ====== ======= ======= ======
Notes to turnover and EBITDA by business segment
(i) Turnover from Railway and other transport services is
stated after eliminating inter-segmental sales to the mining division of US$7.5
million (nine months ended 30 September 2006 - US$6.8 million; full year 2006 -
US$9.6 million).
Turnover from the water concession is stated after elimination inter-segmental
sales to the transport and mining divisions of US$0.3 million (nine months ended
30 September 2006 - US$0.6 million; full year 2006 - US$0.6 million).
(ii) Turnover includes the effect of both final pricing and
mark-to-market adjustments to provisionally priced sales of copper and
molybdenum concentrates and copper cathodes. Further details of such adjustments
are given in Note 4.
(iii) In the current period turnover includes realised losses on
commodity derivatives at Michilla of US$11.9 million, and gains of US$0.1
million at El Tesoro. The classification of these amounts within turnover is due
to the application of the hedge accounting provisions of IAS 39 'Financial
Instruments: Recognition and Measurement' with effect from 1 January 2007. Prior
to this point, gains and losses on commodity derivatives were included in other
operating income or expense. In the comparative periods, other operating expense
included losses at El Tesoro of US$46.9 million in the nine months ended 30
September 2006 and US$44.8 million in the 2006 full year, and losses at Michilla
of US$47.8 million in the nine months ended 30 September 2006 and US$39.7
million in the 2006 full year. Further details of such gains or losses are given
in Note 5.
(iv) Los Pelambres produces and sells copper and molybdenum
concentrates. It is also credited for the gold and silver content in the copper
concentrate it sells. Turnover by type of metal is analysed below to show
separately the amounts prior to deduction of tolling charges, the tolling
charges involved and the net amounts included in turnover. El Tesoro and
Michilla do not generate by-products from their copper cathode operations.
(v) EBITDA is calculated by adding back depreciation,
amortisation and disposals of plant, property and equipment and any impairment
charges to operating profit from subsidiaries.
(vi) An adjustment of US$4.2 million has been made to the
comparative EBITDA of the water concession for the period ended 30 September
2006 as a result of a classification between depreciation and cash operating
costs. The adjustment had no effect on turnover or operating profit for that
period and there have been no adjustments required to the comparative amounts
for the 2006 full year.
4. Embedded derivatives - provisionally priced sales
Copper and molybdenum concentrate sale agreements and copper cathode sale
agreements generally provide for provisional pricing of sales at the time of
shipment, with final pricing being based on the monthly average London Metal
Exchange copper price or monthly average molybdenum price for specified future
periods. This normally ranges from 30 to 180 days after delivery to the
customer.
Under IFRS, both gains and losses from the marking-to-market of open sales are
recognised through adjustments to turnover in the income statement and to trade
debtors in the balance sheet. The Group determines mark-to-market prices using
forward prices at each period end for copper concentrate and cathode sales, and
period-end month average prices for molybdenum concentrate sales due to the
absence of a futures market for that commodity.
The mark-to-market adjustments at the end of each period and the effect on
turnover in the income statement for each period are as follows:
Balance sheet -
------------------
net mark to market effect on debtors
-------------------------------------
At 30.09.07 At 30.09.06 At 31.12.06
US$'m US$'m US$'m
Los Pelambres - copper 30.9 (2.7) (110.1)
concentrate
Los Pelambres - tolling (8.5) (0.9) 7.6
charges for copper
concentrate
Los Pelambres - molybdenum (0.1) 7.0 (3.9)
concentrate
El Tesoro - copper cathodes 2.7 0.1 1.3
Michilla - copper cathodes 1.3 (0.1) (0.6)
-------- -------- --------
26.3 3.4 (105.7)
======== ======== ========
(a) Copper sales
Nine months ended Nine months ended Full
year
2006
30 September 2007 30 September 2006
US$'m US$'m US$'m US$'m US$'m US$'m US$'m US$'m US$'m
Los El Michilla Los El Michilla Los El Michilla
Pelambres Tesoro Pelambres Tesoro Pelambres Tesoro
Copper Copper Copper Copper Copper Copper Copper Copper Copper
concentrate cathodes cathodes concentrate cathodes cathodes concentrate cathodes cathodes
Provisionally 1,342.2 512.7 255.5 1,529.7 471.8 245.2 2,175.5 653.1 326.0
invoiced gross
sales
------- ------ ------ ------ ------ ------ ------ ------ ------
Effects of
pricing
adjustments to
previous period
invoices
Reversal of 110.1 (1.3) 0.6 (33.2) (0.2) 0.1 (33.2) (0.2) 0.1
mark-to-market
adjustments at
the end of the
previous
period
Settlement of (88.1) (6.6) (3.2) 169.2 22.1 0.6 169.2 2.0 0.6
copper sales
invoiced in
the previous
period
------- ------ ------ ------ ------ ------ ------ ------ ------
Total effect 22.0 (7.9) (2.6) 136.0 21.9 0.7 136.0 1.8 0.7
of adjustments
to previous
period
invoices in
the current
period
Effects of
pricing
adjustments to
current period
invoices
------- ------ ------ ------ ------ ------ ------ ------ ------
Settlement of 129.5 12.6 5.1 234.7 (2.0) 12.5 197.6 8.6 8.8
copper sales
invoiced in
the current
period
Mark-to-market 30.9 2.7 1.3 (2.7) 0.1 (0.1) (110.1) 1.3 (0.6)
adjustments at
the end of the
current period
------- ------ ------ ------ ------ ------ ------ ------ ------
Total effect 160.4 15.3 6.4 232.0 (1.9) 12.4 87.5 9.9 8.2
of adjustments
to current
period
invoices
Impact of - 0.1 (11.9) - - - - - -
commodity
derivatives
recognised
within
turnover
------- ------ ------ ------ ------ ------ ------ ------ ------
Turnover 1,524.6 520.2 247.4 1,897.7 491.8 258.3 2,399.0 664.8 334.9
before
deducting
tolling
charges
Tolling (120.8) - - (192.5) - - (254.0) - -
charges
------- ------ ------ ------ ------ ------ ------ ------ ------
Turnover net 1,403.8 520.2 247.4 1,705.2 491.8 258.3 2,145.0 664.8 334.9
of tolling ======= ====== ====== ====== ====== ====== ====== ====== ======
charges
Copper concentrate
Copper concentrate sales at Los Pelambres have an average settlement period of
approximately four months from shipment date. At 30 September 2007, sales
totalling 80,800 tonnes remained open as to price, with an average
mark-to-market price of 364.8 cents per pound compared with an average
provisional invoice price of 347.4 cents per pound. At 30 September 2006, sales
totalling 117,300 tonnes remained open as to price, with an average
mark-to-market price of 342.4 cents per pound compared with an average
provisional invoice price of 344.6 cents per pound. At 31 December 2006, sales
totalling 127,100 tonnes remained open as to price, with an average
mark-to-market price of 287.0 cents per pound compared with an average
provisional invoice price of 326.3 cents per pound.
Tolling charges include a mark-to-market loss for copper concentrate sales open
as to price at 30 September 2007 of US$8.5 million (30 September 2006 - loss of
US$0.9 million, 31 December 2006 - gain of US$7.6 million).
Copper cathodes
Copper cathode sales at El Tesoro and Michilla have an average settlement period
of approximately one month from shipment date. At 30 September 2007, sales
totalling 11,200 tonnes remained open as to price, with an average
mark-to-market price of 365.9 cents per pound compared with an average
provisional invoice price of 350.2 cents per pound. At 30 September 2006, sales
totalling 12,800 tonnes remained open as to price, with an average
mark-to-market price of 343.3 cents per pound compared with an average
provisional invoice price of 343.4 cents per pound. At 31 December 2006, sales
totalling 11,600 tonnes remained open as to price, with an average
mark-to-market price of 286.6 cents per pound compared with an average
provisional invoice price of 294.0 cents per pound.
(b) Molybdenum sales
Nine months Nine months Year
ended ended
30 30 ended
September September 31.12.06
2007 2006
US$'m US$'m US$'m
Los Los Los
Pelambres Pelambres Pelambres
Molybdenum Molybdenum Molybdenum
concentrate concentrate concentrate
Provisionally invoiced gross sales 489.3 383.2 547.8
Effects of pricing adjustments to
previous period invoices
Reversal of mark-to-market 2.4 12.6 12.6
adjustments at the end of the
previous period
Settlement of molybdenum sales (1.0) (27.5) (27.5)
invoiced in the previous period
Total effect of adjustments to 1.4 (14.9) (14.9)
previous period invoices in the
current period
Effects of pricing adjustments to
current period invoices
Settlement of molybdenum sales 25.7 7.8 5.9
invoiced in the current period
Mark-to-market adjustments at the end (0.1) 7.0 (2.4)
of the current period
Total effect of adjustments to 25.6 14.8 3.5
current period invoices
Turnover before deducting tolling 516.3 383.1 536.4
charges
Tolling charges (18.1) (16.0) (22.6)
Turnover net of tolling charges 498.2 367.1 513.8
Molybdenum sales at Los Pelambres have an average settlement period of
approximately three months after shipment date. At 30 September 2007, sales
totalling 2,100 tonnes remained open as to price, with an average mark-to-market
price of US$31.9 per pound compared with an average provisional invoice price of
US$31.9 per pound. At 30 September 2006, sales totalling 1,700 tonnes remained
open as to price, with an average mark-to-market price of US$27.6 per pound
compared with an average provisional invoice price of US$26.3 per pound. At 31
December 2006, sales totalling 2,100 tonnes remained open as to price, with an
average mark-to-market price of US$25.0 per pound compared with an average
provisional invoice price of US$25.5 per pound.
5. Commodity derivatives
The Group periodically uses derivative financial instruments to reduce exposure
to commodity price movements. The Group does not use such derivative instruments
for speculative trading purposes.
The Group has applied the hedge accounting provisions of IAS 39 'Financial
Instruments: Recognition and Measurement' with effect from 1 January 2007. From
that date, changes in the fair value of derivative financial instruments that
are designated and effective as hedges of future cash flows have been recognised
directly in equity, with such amounts subsequently recognised in the income
statement in the period when the hedged item affects profit or loss. Any
ineffective portion is recognised immediately in the income statement. Realised
gains and losses on commodity derivatives recognised in the income statement
have been recorded within turnover. Prior to 1 January 2007 derivatives were
measured at fair value through the income statement, with gains or losses on
commodity derivatives being recorded within other operating income or expense.
The balance sheet mark-to-market adjustments at the end of each period and the
total effect of commodity derivatives on operating profit in the income
statement for each period are as follows:
Balance sheet Income statement
--------------- ------------------
Net financial asset/(liability) Total effect
--------------------------------- --------------
At At At 31.12.06 Nine Nine Full year
30.09.07 30.09.06 months months 2006
ended ended
30 30
September September
2007 2006
US$'m US$'m US$'m US$'m US$'m US$'m
El Tesoro (21.4) (19.5) - 0.1 (46.9) (44.8)
Michilla (7.7) (8.9) 7.3 (11.9) (47.8) (39.7)
-------- -------- -------- -------- -------- --------
(29.1) (28.4) 7.3 (11.8) (94.7) (84.5)
======== ======== ======== ======== ======== ========
The balance sheet mark-to-market effect is stated before taking into account any
payments on account of margin calls.
The US$11.8 million loss recognised within turnover during the nine months ended
30 September 2007 related to amounts realised on derivatives which matured in
the period. During the period net mark-to-market losses before tax and minority
interests of US$29.1 million were recognised within reserves (US$22.1 million
after tax and minority interests).
The Group had min/max instruments at 30 September 2007 for 73,200 tonnes of
copper production (of which 68,400 tonnes relate to El Tesoro and 4,800 tonnes
relate to Michilla), covering a period up to 31 December 2009. The weighted
average remaining period covered by these hedges calculated with effect from 1
October 2007 is 12.7 months. The instruments have a weighted average floor of
255.5 cents per pound and a weighted average cap of 387.6 cents per pound.
At 30 September 2007, the Group also had futures at Michilla for 4,200 tonnes of
copper production, covering a period up to 31 December 2007. The weighted
average remaining period covered by these hedges was 2.0 months and the weighted
average price was 305.9 cents. It also had futures to both buy and sell copper
production at El Tesoro, with the effect of swapping COMEX prices for LME prices
without eliminating underlying market price exposure, covering a period to 31
January 2008. The remaining weighted average period covered by these instruments
was 2.5 months and the weighted average price was 312.0 cents.
Between 30 September 2007 and the date of this report the Group has entered into
additional min/max instruments for 3,600 tonnes of copper production at
Michilla, covering a period up to 31 December 2008. The weighted average period
covered by these instruments calculated with effect from 1 October 2007 is 9.5
months. The instruments have a weighted average floor of 250.0 cents per pound
and a weighted average cap of 500.0 cents per pound.
6. Summary of mining companies' Chilean GAAP financial statements
(See notes following Note 6(c)).
The balance sheets, income statements and cash flow statements prepared under
Chilean GAAP and to be filed with the SVS are summarised below.
(a) Balance sheets
Los Los El Tesoro El Tesoro Michilla Michilla
Pelambres Pelambres
At At At At At At
30.09.2007 30.09.2006 30.09.2007 30.09.2006 30.09.2007 30.09.2006
US$'m US$'m US$'m US$'m US$'m US$'m
Cash and cash 554.4 539.2 466.0 116.7 67.6 36.4
equivalents
Trade and other 315.2 420.3 70.0 65.0 27.7 19.8
receivables
Inventories 75.2 46.9 37.4 51.4 18.5 2.3
Current and deferred 33.8 6.5 4.1 2.9 5.3 17.9
tax assets -------- -------- -------- -------- -------- --------
Current assets 978.6 1,012.9 577.5 236.0 119.1 76.4
Fixed assets 1,678.0 1,406.2 249.9 259.6 47.1 59.2
Other non-current 151.5 149.8 42.7 54.7 1.4 0.6
assets -------- -------- -------- -------- -------- --------
TOTAL ASSETS 2,808.1 2,568.9 870.1 550.3 167.6 136.2
======== ======== ======== ======== ======== ========
Short term 86.0 87.4 14.4 14.6 - -
borrowings
Trade and other 504.6 116.4 41.4 37.2 69.7 21.4
payables
Current and deferred - 92.1 10.8 29.3 10.5 10.6
tax liabilities -------- -------- -------- -------- -------- --------
Current liabilities 590.6 295.9 66.6 81.1 80.2 32.0
-------- -------- -------- -------- -------- --------
Medium and long term 191.7 273.1 7.0 21.0 - -
borrowings
Trade and other 14.4 13.9 7.6 6.2 8.6 7.5
payables
Deferred tax 146.6 135.9 32.4 30.3 - -
liabilities -------- -------- -------- -------- -------- --------
Non-current 352.7 422.9 47.0 57.5 8.6 7.5
liabilities -------- -------- -------- -------- -------- --------
Total liabilities 943.3 718.8 113.6 138.6 88.8 39.5
-------- -------- -------- -------- -------- --------
Share capital 373.8 373.8 91.0 91.0 78.4 78.4
Reserves 1,491.0 1,476.3 665.5 320.7 0.4 18.3
-------- -------- -------- -------- -------- --------
Total shareholders' 1,864.8 1,850.1 756.5 411.7 78.8 96.7
equity -------- -------- -------- -------- -------- --------
======== ======== ======== ======== ======== ========
TOTAL LIABILITIES 2,808.1 2,568.9 870.1 550.3 167.6 136.2
AND
SHAREHOLDERS' EQUITY
======== ======== ======== ======== ======== ========
(b) Income statements
Los Los El Tesoro El Tesoro Michilla Michilla
Pelambres Pelambres
Nine Nine Nine Nine Nine Nine
months months months months months months
ended ended ended ended ended ended
30 30 30 30 30 30
September September September September September September
2007 2006 2007 2006 2007 2006
US$'m US$'m US$'m US$'m US$'m US$'m
Turnover 1,913.1 2,130.0 517.5 447.6 253.2 192.0
Operating costs (316.3) (288.8) (183.4) (129.1) (112.5) (102.9)
-------- -------- -------- -------- -------- --------
Operating margin 1,596.8 1,841.2 334.1 318.5 140.7 89.1
Administrative and (54.9) (54.3) (22.1) (20.2) (11.9) (11.9)
distribution expenses -------- -------- -------- -------- -------- --------
Operating profit 1,541.9 1,786.9 312.0 298.3 128.8 77.2
-------- -------- -------- -------- -------- --------
Other income 7.8 0.7 0.5 0.2 2.3 0.3
Financial income 24.3 26.8 13.6 1.8 2.9 1.2
Financial expenses (13.8) (16.4) (2.2) (2.4) (0.2) (0.2)
Other expenses (1.9) (1.4) (1.6) (1.1) (0.1) (0.4)
Exchange difference 6.5 1.1 (0.9) 2.2 0.6 0.8
-------- -------- -------- -------- -------- --------
Net non-operating income 22.9 10.8 9.4 0.7 5.5 1.7
/(expenses) -------- -------- -------- -------- -------- --------
Profit before tax 1,564.8 1,797.7 321.4 299.0 134.3 78.9
Income tax expense (294.0) (333.1) (57.0) (55.8) (25.3) (15.2)
-------- -------- -------- -------- -------- --------
Profit for the financial 1,270.8 1,464.6 264.4 243.2 109.0 63.7
period ======== ======== ======== ======== ======== ========
(c) Cash flow statements
Los Los El Tesoro El Tesoro Michilla Michilla
Pelambres Pelambres
Nine Nine Nine Nine Nine Nine
months months months months months months
ended ended ended ended ended ended
30 30 30 30 30 30
September September September September September September
2007 2006 2007 2006 2007 2006
US$'m US$'m US$'m US$'m US$'m US$'m
Net cash flow from 1,199.4 1,435.1 262.8 238.1 110.3 79.5
operating activities -------- -------- -------- -------- -------- --------
Investing activities
Additions to fixed (207.9) (344.9) (8.8) (8.9) (6.8) (8.2)
assets
Disposals of fixed 7.1 1.4 - - - -
assets
Other items - - - - - (0.1)
-------- -------- -------- -------- -------- --------
Net cash used in (200.8) (343.5) (8.8) (8.9) (6.8) (8.3)
investing activities -------- -------- -------- -------- -------- --------
Financing activities
Dividends paid (886.4) (1,070.0) - (95.0) (105.4) (50.0)
Loans repaid (43.1) (43.1) (7.0) (21.0) - -
-------- -------- -------- -------- -------- --------
Net cash used in (929.5) (1,113.1) (7.0) (116.0) (105.4) (50.0)
financing activities -------- -------- -------- -------- -------- --------
Net increase in cash and 69.1 (21.5) 247.0 113.2 (1.9) 21.2
cash equivalents
Cash and cash 485.3 560.7 219.0 3.5 69.5 15.2
equivalents at the -------- -------- -------- -------- -------- --------
beginning of the period
Cash and cash 554.4 539.2 466.0 116.7 67.6 36.4
equivalents at the end ======== ======== ======== ======== ======== ========
of the period
Notes to Chilean GAAP financial statements
(i) The above balance sheets, income statements and cash flow
statements have been derived from the quarterly financial statements of Los
Pelambres, El Tesoro and Michilla to be filed with the SVS in Chile. Certain
detailed lines in the individual statements have been combined for convenience.
(ii) The balance sheets, income statements and cash flow
statements above have been prepared under Chilean GAAP and therefore do not
necessarily equate to the amounts that would be included in the Group's
consolidated financial statements for a corresponding period either as to
measurement or classification.
(iii) The amounts disclosed above represent the full amount for
each company and not the Group's attributable share. The Group owns 60% of Los
Pelambres, 100% of El Tesoro (61% prior to 24 August 2006) and 74.2% of
Michilla.
(iv) A translation into English of the full quarterly financial
statements for each company shown in summary form above will be available on the
Group's website www.antofagasta.co.uk.
7. Reconciliation of Chilean GAAP results to Turnover and EBITDA under IFRS
for individual business segments
(a) Turnover
Los Los El Tesoro El Tesoro Michilla Michilla
Pelambres Pelambres
Nine Nine Nine Nine Nine Nine
months months months months months months
ended ended ended ended ended ended
30 30 30 30 30 30
September September September September September September
2007 2006 2007 2006 2007 2006
Notes US$'m US$'m US$'m US$'m US$'m US$'m
Chilean GAAP - 1,913.1 2,130.0 517.5 447.6 253.2 192.0
Turnover
Mark-to-market of 7(i) 23.4 (26.2) 2.6 (0.2) 1.4 (0.1)
provisionally priced
sales
Reclassification of 7(ii) - - 0.1 44.4 (7.2) 66.4
realised (gains)/ -------- ------- ------- ------- ------- -------
losses on commodity
derivatives to other
operating expense/
reserves
IFRS - Turnover 1,936.5 2,103.7 520.2 491.8 247.4 258.3
======== ======= ======= ======= ======= =======
(b) EBITDA
Los Los El Tesoro El Tesoro Michilla Michilla
Pelambres Pelambres
Nine Nine Nine Nine Nine Nine
months months months months months months
ended ended ended ended ended ended
30 30 30 30 30 30
September September September September September September
2007 2006 2007 2006 2007 2006
Notes US$'m US$'m US$'m US$'m US$'m US$'m
Chilean GAAP - 1,541.9 1,786.9 312.0 298.3 128.8 77.2
Operating profit
Depreciation & 51.9 52.6 26.9 29.5 14.4 13.6
amortisation -------- ------- ------- ------- ------- -------
Chilean GAAP - EBITDA 1,593.8 1,839.5 338.9 327.8 143.2 90.9
Mark-to-market of 7(i) 23.4 (26.2) 2.6 (0.2) 1.4 (0.1)
provisionally priced
sales
Mark-to-market of 7(ii) - 0.3 0.1 (2.5) (7.2) 18.6
financial derivatives
Other IFRS and 7 9.7 (1.6) (2.9) 4.5 3.3 0.9
consolidation (iii) -------- ------- ------- ------- ------- -------
adjustments
IFRS - EBITDA 1,626.9 1,812.0 338.7 329.6 140.7 110.3
======== ======= ======= ======= ======= =======
Notes to reconciliation of turnover and EBITDA
(i) Copper and molybdenum concentrate sale agreements and copper cathode sale
agreements generally provide for provisional pricing of sales at the time of
shipment, with final pricing being based on the monthly average London Metal
Exchange copper price or monthly average molybdenum price for specified future
periods. This normally ranges from 30 to 180 days after delivery to the
customer.
Under Chilean GAAP, the Group's accounting treatment is to value sales, which
remain open as to final pricing at the period end, in aggregate at the lower of
provisional invoice prices and mark-to-market prices at the balance sheet date.
The Group determines mark-to-market prices using forward prices at each period
end for copper concentrate and cathode sales, and period-end month average
prices for molybdenum concentrate sales due to the absence of a futures market
for that commodity.
Under IFRS, both gains and losses from the marking-to-market of open sales are
recognised through adjustments to turnover in the income statement and to trade
debtors in the balance sheet. Under IFRS, the Group determines mark-to-market
prices in the same way as under Chilean GAAP.
This results in a GAAP adjustment in cases where the mark-to-market prices are
higher than the provisional invoice prices. For Los Pelambres this results in a
credit of US$23.4 million in respect of copper concentrate sales. The adjustment
in respect of El Tesoro is a credit of US$2.6 million, and the adjustment in
respect of Michilla is a credit of US$1.4 million.
(ii) The Group uses derivative financial instruments to reduce exposure to
commodity price movements. The Group does not use such derivative instruments
for trading purposes.
Under Chilean GAAP, such derivatives are held off the balance sheet. Gains or
losses on derivative instruments are matched in the income statement against the
item intended to be hedged. Such gains or losses are reflected by way of
adjustment to turnover.
The Group has applied the hedge accounting provisions of IAS 39 'Financial
Instruments: Recognition and Measurement' with effect from 1 January 2007. From
that date, changes in the fair value of derivative financial instruments that
are designated and effective as hedges of future cash flows have been recognised
directly in equity, with any ineffective portion recognised immediately in the
income statement. Realised gains and losses on commodity derivatives recognised
in the income statement have been recorded within turnover. Prior to 1 January
2007 derivatives were measured at fair value through the income statement, with
gains or losses on commodity derivatives being recorded within other operating
income or expense. For the comparative periods, any amounts included in turnover
under Chilean GAAP were reclassified accordingly.
(iii) Other IFRS and consolidation adjustments are not material either
individually or in aggregate.
This information is provided by RNS
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