Interim Results - Part 1
Antofagasta PLC
5 September 2000
Part 1
INTERIM RESULTS ANNOUNCEMENT
FOR THE SIX MONTHS ENDED 30 JUNE 2000
Half year to 30 June
2000 1999
US$m US$m
Turnover 316.2 70.7 + 347 %
Profit before tax 100.0 18.2 + 449 %
Operating cash flow 91.4 15.2 + 501 %
Net assets 1,197.4 1,059.3 + 13 %
Earnings per share (US$) 36.4c 8.0c + 355 %
Interim dividend per share
(£) 3.25p 2.25p + 44 %
Interim dividend per share
(US$) 4.92c 3.56c
Group profit before tax of US$100.0 million (1999 - US$18.2 million).
Earnings per share of 36.4 cents (1999 - 8.0 cents).
Group copper production of 167,700 tonnes including 141,200 from Los Pelambres
(1999 half year - 30,500 tonnes).
Los Pelambres completion tests achieved so releasing the Group from completion
guarantees and also releasing the US$133 million escrow account.
El Tesoro project 40 per cent completed by June remaining on budget with first
production scheduled for May 2001.
Record Railway results continue with volumes up 7 per cent to 1.6 million
tons.
Dividend income of US$31.3 million received from Quinenco S.A. in May (1999
half year - US$5.5 million).
Interim dividend increased 44 per cent to 3.25 pence per share (1999 interim
dividend 2.25 pence per share).
The successful commissioning of the Los Pelambres mine combined
with improved copper prices enabled the Group to increase profit
before tax by 449 per cent to US$100.0 million and earnings per
share by 355 per cent to 36.4 cents. Group copper production was
167,700 tonnes (1999 half-year - 30,500 tonnes) including 141,200
tonnes from Los Pelambres and average cash costs down 30 per cent
to 39.2 cents per pound. The El Tesoro project is on schedule
with first production of cathodes expected in May 2001. The
Group also benefited from a strong performance from its transport
division and a higher dividend from its 33.6 per cent investment
in Quinenco S.A.
Jean-Paul Luksic, CEO of the mining division commented, 'The
successful development of Los Pelambres has been a great
achievement for Antofagasta, and the strength of that project is
clearly demonstrated in these results. We are now evaluating the
expansion potential for Los Pelambres and taken together with the
El Tesoro project now under construction, we consider the Group
has excellent opportunities for further growth in low cost copper
mining.'
Antofagasta is a UK-listed mining group based in Chile. In addition
to copper mining, its interests include rail and road transport
operations and a 33.6 per cent interest in Quinenco S.A. (LQ -
NYSE).
Enquiries to:
Hussein Barma Philip Adeane
Chief Financial Officer Managing Director
Email: hbarma@antofagasta.co.uk Email:itrevor@antofagasta.co.uk
Tel: 07785 957 784 Tel: +44 20 7374 8091
Issued by:
Keith Irons
Bankside Consultants Ltd
Tel: +44 20 7220 7477 Email: keith@bankside.com
DIRECTORS' COMMENTS for the half year to 30 June 2000
After the successful commissioning of the new Los Pelambres mine at the
start of this year, the Group increased its copper production to 30 June
2000 to 167,700 tonnes compared with 30,500 tonnes in the same period last
year. The average copper price also improved to 80 cents per pound compared
to 65 cents per pound in the first six months of 1999. Principally as a
result of these factors, Group turnover increased from US$70.7 million to
US$316.2 million and Group profit before tax increased from US$18.2 million
to US$100.0 million.
Interim Review of Operations
Los Pelambres
The development of the Group's 60 per cent owned Los Pelambres mine,
which began in November 1997, was completed on schedule in the first quarter
of 2000 and within the original US$1.36 billion budget. Production of
concentrates started ahead of schedule in November 1999 and first shipments
from its new Punta Chungo port facility at Los Vilos started in January
2000. Los Pelambres produced 141,200 tonnes of copper in concentrates and
shipped 128,200 tonnes in the six months to June. Low treatment and
refining charges this year have contributed to low average cash costs of
35.4 cents per pound, with total costs after depreciation and financial
expenses amounting to 60.7 cents per pound. These factors enabled Los
Pelambres to contribute US$54.6 million to Group profit before tax.
On 10 July, the Group was released from all obligations under the
Project Completion Guarantee. This guarantee, to ensure timely construction
and start-up of operations, was issued by the Group and its Japanese
partners in favour of the banks and institutions which financed the
development. Los Pelambres' borrowings are now non-recourse and the Group's
US$133 million escrow account and the charge over its 33.6 per cent
interest in Quinenco S.A. which were established to secure the Completion
Guarantee have been released. In July, a four-year collective bargaining
agreement was reached with Los Pelambres' labour unions.
Los Pelambres exceeded its planned capacity of 85,000 tonnes per day (tpd)
in February and averaged 87,400 tpd in the first six months. Average
processing levels in July were 90,000 tpd, and Los Pelambres is seeking
to further optimise existing capacity by the end of the year. As a result of
these higher processing levels, copper production this year is expected to be
approximately 300,000 tonnes compared with an original forecast of 275,000
tonnes. Los Pelambres is also evaluating the advantages of expanding
production capacity and a decision on the size of any expansion is
expected in the following months.
El Tesoro
Construction began in November 1999 at the El Tesoro project,
immediately following completion of the US$205 million project financing
agreements. At the end of June, US$105 million of the total US$296
million budget had been spent and US$70.5 million drawn down from the
financing facilities. The project remains on budget with 40 per cent
completed by June and first production is expected in May 2001. El
Tesoro will be a heap-leach SX-EW operation with an annual production of
75,000 tonnes and average cash costs of 40 cents per pound in the first five
years. This will place the El Tesoro mine among the lowest cash cost
producers worldwide. El Tesoro is owned 61 per cent by the Group and 39 per
cent by Equatorial Mining Ltd, a subsidiary of AMP.
Michilla
Michilla's new mine plan has extended its operations to 2007. Reserves are
now 28.3 million tonnes with an average copper grade of 1.28 per cent. The
mine plan involves expanding the existing open pit by successive Phases as
well as continuing the operation of the underground mine. During this
period total capital expenditures will amount to US$36 million in mine
expansion and plant upgrading. Michilla is continuing its exploration
programme to identify additional reserves.
Cathode production to June was 25,400 tonnes compared with 25,700 tonnes
in 1999. The concentrator produced a final 1,100 tonnes prior to being
mothballed in February 2000 (1999 half-year - 4,800 tonnes). Today, sulphide
as well as oxide ores are being treated by leaching rather than using the
traditional flotation method for sulphides. Cash costs at Michilla increased
to 59.4 cents per pound compared with 55.9 cents per pound in the same period
last year, due to a higher waste to ore ratio during the present expansion
of the open pit. Total costs were 78.8 cents per pound compared with 68.6
cents in 1999 due to the adoption of more conservative depreciation
policies in 2000. A hedging programme involving 12,500 tonnes of copper
until May 2000 was implemented in March 1999 at an average price of 71.8
cents per pound. This was done during a period of copper price weakness,
which contributed to an operating loss of US$1.6 million. Michilla is cash
positive, having low debt levels and low on-going capital expenditure
requirements and made a distribution of US$18.3 million to its
shareholders in May. Future production is currently unhedged
and reflects the stronger outlook for copper prices.
Exploration
The Group continued with its exploration programmes in Peru and Chile,spending
US$2.4 million in the first six months of the year. The two main targets
were the Magistral prospect in Peru and the area surrounding the El
Tesoro properties near Calama in Chile. At Magistral, the Phase 2 drilling
programme was completed in August and a mineral resource calculation is now
in progress. The Group is financing the drilling programme over three years
in order to acquire a 51 per cent interest in the project. This will
increase to a 65 per cent interest on completion of a feasibility
study. In Chile, further exploration also demonstrated the presence of a
copper-gold porphyry resource at Esperanza which is located south of the
Tesoro-NE deposit, containing 10 million tonnes of copper oxides with an
average copper grade of 0.62 per cent and 150 million tonnes of copper
sulphides, with an average copper grade of 0.81 per cent and 0.46 grammes of
gold per ton.
Transport and other services
Tonnage carried in the first six months this year increased by 7 per cent
to 1.6 million tons compared to 1.5 million tons in 1999 while
ton-kilometres increased 11 per cent. Turnover from the Group's transport
operations based in northern Chile increased from US$25.6 million to US$28.1
million and operating profits from US$9.6 million to US$10.7 million.
Planned production increases at existing mines such as El Abra and Escondida
indicate that current tonnage levels can be maintained for the next few
years.
The Group restructured its investment in the Bolivian Railway network
by exchanging its 12 per cent interest in the Oriental Railway for an
increased stake in the Andino Railway, which connects directly to the FCAB
network in Chile. The Group now controls 50% of the Andino, the results of
which have been consolidated from the beginning of the year. The
Andino contributed US$5.8 million to turnover and US$1.1 million to operating
profit in the first six months of the year.
Investments
The Group holds a 33.6 per cent interest in Quinenco S.A., a diversified
industrial and financial group listed in Santiago and New York with
interests in the Southern Cone and Brazil. Income from Quinenco is accounted
for on a dividends-received basis and in May 2000 the Group received
US$31.3 million (1999 - US$5.5 million). This represents a distribution of
30 per cent of Quinenco's previous year's profits after tax and minorities,
which included the profit on the sale of its banking and cable television
interests. Difficult economic conditions throughout the region persisted
longer into 2000 than anticipated and resulted in Quinenco reporting a loss
after tax and minorities of US$12.6 million to June 2000.
Nevertheless, underlying operating performance by its subsidiaries has
begun to improve as the Chilean economy begins to emerge from recession.
Operating profit was US$11.7 million compared with a loss of US$17.3 million
in the same period in 1999. The market value of the Group's holding in
Quinenco was US$353.8 million at 30 June 2000 and US$342.5 million at 28
August 2000.
Interim Financial Review
Results
Profit before tax rose from US$18.2 million in the first six months of 1999
to US$100.0 million in 2000, an increase of 449 per cent and earnings per
share rose from 8.0 cents to 36.4 cents, an increase of 355 per
cent. The significant improvement came mainly from the production at Los
Pelambres helped by higher copper prices and an increased dividend from
Quinenco.
Turnover increased from US$70.7 million to US$316.2 million, of which
US$282.3 million was from the mining division and US$33.9 million from the
transport division. Mining revenues included US$238.9 million from Los
Pelambres and transport revenues included US$28.1 million from existing
operations in Chile.
Operating profits increased from US$3.2 million to US$92.1 million,
including US$88.4 million in respect of Los Pelambres. The operating profit
from the transport division was US$11.8 million which included a contribution
of US$10.7 million from Chile. Operating profit is stated after
depreciation and amortisation costs of US$54.6 million (1999 half-year -
US$10.5 million).
Income from fixed asset investments increased from US$5.6 million to
US$31.4 million, due to the higher dividend received from Quinenco.
During the year, the Group sold surplus assets from its El Chacay
mine, resulting in a profit of US$3.9 million (US$3.3 million after tax).
This amount has been separately disclosed as an exceptional item.
Net interest expense was US$27.4 million, compared with net interest income
of US$8.4 million in the 1999 half-year. This included interest costs of
US$36.5 million relating to Los Pelambres. During 1999, these costs were
capitalised while the project remained under development. Interest costs
in El Tesoro will continue to be capitalised until a commercial level of
operations has been achieved during 2001.
Tax amounted to US$10.4 million, representing an effective tax rate
(including deferred tax) of 10.4 per cent, compared with the statutory Chilean
tax rate of 15 per cent. The lower tax rate arises mainly because the
dividend from Quinenco is paid out of its post-tax profits and is not subject
to further tax on receipt. Excluding this dividend, the effective tax rate
would have been 15.2 per cent.
Cash Flows
Net cash inflow from operating activities increased to US$91.4 million in
the first six months of 2000 from US$15.2 million in 1999. Net cash inflow
was affected by the build-up of stocks and debtors as part of the Los
Pelambres start-up, and excluding working capital movements, cash inflow would
have been US$149.6 million (1999 half-year - US$14.2 million).
Net capital expenditures in the period were US$165.8 million, compared
with US$301.1 million in 1999 half-year when Los Pelambres remained
under development. Amounts spent in 2000 relate mainly to the El Tesoro
project and final construction costs in the first quarter, at Los Pelambres.
Cash and debt
At 30 June 2000, the Group had cash and deposits of US$344.4 million (1999
- US$292.0 million). This includes US$79.5 million held by El Tesoro to fund
its development costs and US$131.9 million belonging to Antofagasta plc and
held in escrow under the Los Pelambres project financing arrangements
released on 10 July. Accrued interest on the escrow account was US$1.0
million. On 23 August 2000, US$56.5 million was paid to AMP for funding the
Group's share of El Tesoro's development costs.
The Group had total borrowings at 30 June of US$1,162.7 million (1999
- US$692.9 million). This included US$946.0 million provided to Los
Pelambres under its project financing arrangements, of which 40 per cent is
attributable to minority shareholders. These Los Pelambres borrowings are now
non-recourse. Group borrowings also included US$70.5 million drawn down to
date by El Tesoro under its project financing arrangements, of which 39 per
cent is attributable to minority shareholders. These borrowings will become
non-recourse when the El Tesoro project satisfies its completion test,
expected 2002. Group borrowings also included US$130.1 million provided to
Los Pelambres and El Tesoro in the form of subordinated loans and, as
explained above, part of this has since been paid to AMP. In addition to
interest already being serviced, Los Pelambres will start repaying the
principal amount of its project debt in semi-annual instalments. The first
repayment of US$44.8 million is due in December this year. After this,
the Group's total borrowings are expected to reduce progressively.
Balance Sheet
Shareholders' funds increased from US$887.3 million at the beginning of
the year to US$947.0 million, reflecting mainly profit after tax and
minorities for the period.
Minority interests increased from US$216.3 million at the beginning of the
year to US$250.4 million. This resulted from the acquisition and
consolidation of the Andino, further contributions from minority
shareholders to complete the Los Pelambres project and share of profit after
tax.
Dividends
An interim dividend of 3.25p (1999 interim - 2.25p) will be paid on 13
October 2000 to ordinary shareholders on the Register at the close of
business on 15 September 2000.
Current trading prospects
The outlook for the world economy remains favourable with continued growth
in the United States, improving industrial production in Europe and Japan
and further recovery in the largest emerging Asian economies. Copper prices
have continued to improve and LME inventory levels have declined steadily
from a high of 843,000 tonnes in March 2000 to 453,000 tonnes on 28 August.
Copper prices averaged 80 cents in the first six months of this year (1999
first six months 65 cents), and are now approximately 84 cents. There is
a growing consensus among commodity analysts that the copper market is now
in deficit and that copper prices should continue to improve. With the
start-up of operations at Los Pelambres, Group copper production is expected
to be 350,000 tonnes this year and to exceed 400,000 tonnes next year when
El Tesoro enters production. Following its transformation into a major
low-cost producer, the Group is well placed to benefit from any further
improvement in copper prices.
Group Profit and Loss Account - Dollars
Unaudited half year to 30.6.00 Audited year to 31.12.99
Notes Before Excepl Unaud Before Excep
excepl items ited excepl items
items Note 5 Total half year items Note 5 Total
to 30.6.99
US$'m US$'m US$'m US$'m US$'m US$'m US$'m
Turnover
Continuing 310.4 - 310.4 70.7 145.5 - 145.5
operations
Acquisitions 10 5.8 - 5.8 - - - -
3 316.2 - 316.2 70.7 145.5 - 145.5
Operating
profit/(loss)
Continuing 91.0 - 91.0 3.2 10.0 (18.6) (8.6)
operations
Acquisitions10 1.1 - 1.1 - - - -
3,4 92.1 - 92.1 3.2 10.0 (18.6) (8.6)
Share of operating - - - 0.9 1.7 - 1.7
profit in associates
Profit on disposal - 3.9 3.9 - - - -
of fixed assets
Income from
other 31.4 - 31.4 5.6 5.4 - 5.4
fixed asset
investments
Net interest
(payable)/receivable
Group (27.4) - (27.4) 8.4 14.4 - 14.4
Associates - - - 0.1 0.3 - 0.3
Profit
before tax 5 96.1 3.9 100.0 18.2 31.8 (18.6) 13.2
Tax
Group 6 (9.8) (0.6) (10.4) (2.9) (4.2) 2.8 (1.4)
Associates 6 - - - (0.4) (0.5) - (0.5)
Profit after
tax 86.3 3.3 89.6 14.9 27.1 (15.8) 11.3
Minority
interests- (17.7) - (17.7) 0.3 (0.9) 5.5 4.6
equity
Profit for
the 68.6 3.3 71.9 15.2 26.2 (10.3) 15.9
financial period
Dividends
Preference
- non (0.1) - (0.1) (0.1) (0.2) - (0.2)
equity
Ordinary -8 (9.7) - (9.7) (7.0) (25.4) - (25.4)
equity
Retained 58.8 3.3 62.1 8.1 0.6 (10.3) (9.7)
profit/(loss)
Earnings per7 34.7c 36.4c 8.0c 13.5c 8.1c
share
There were no exceptional items in the six months to 30 June 1999.
Other recognised gains and losses
Other recognised gains and losses in the period (exchange differences)
amounted to a gain of US$15.0 million (1999 half year - a gain of US$10.8
million), and are shown in Note 14 together with other movements in
shareholders' funds.
Group Profit and Loss Account - Sterling
Unaudited half year Audited year to
to 30.6.00 31.12.99
Notes Befor Excep Unaud Befor Excep
e l ited e l
excep items Total half excep items Total
l Note £'m year l Note £'m
items 5 to items 5
£'m £'m 30.6. £'m £'m
99
£'m
Turnover
Continuing 198.1 - 198.1 43.5 89.8 - 89.8
operations
Acquisitions 10 3.7 - 3.7 - - - -
3 201.8 - 201.8 43.5 89.8 - 89.8
Operating
profit/(loss)
Continuing 58.0 - 58.0 1.9 6.2 (11.5) (5.3)
operations
Acquisitions 10 0.7 - 0.7 - - - -
3,4 58.7 - 58.7 1.9 6.2 (11.5) (5.3)
Share of operating - - - 0.6 1.0 - 1.0
profit in associates
Profit on disposal - 2.5 2.5 - - - -
of fixed assets
Income from other 20.0 - 20.0 3.4 3.3 - 3.3
fixed asset
investments
Net interest
(payable)/receivable
Group (17.4) - (17.4) 5.2 8.9 - 8.9
Associates - - - 0.1 0.2 - 0.2
Profit before tax 5 61.3 2.5 63.8 11.2 19.6 (11.5) 8.1
Tax
Group 6 (6.2) (0.4) (6.6) (1.8) (2.7) 1.8 (0.9)
Associates 6 - - - (0.2) (0.3) - (0.3)
Profit after tax 55.1 2.1 57.2 9.2 16.6 (9.7) 6.9
Minority interests -(11.3) - (11.3) 0.1 (0.6) 3.4 2.8
equity
Profit for the 43.8 2.1 45.9 9.3 16.0 (6.3) 9.7
financial period
Dividends
Preference - non (0.1) - (0.1) (0.1) (0.1) - (0.1)
equity
Ordinary - equity 8 (6.4) - (6.4) (4.4) (15.8) - (15.8)
Retained 37.3 2.1 39.4 4.8 0.1 (6.3) (6.2)
profit/(loss)
Earnings per 7 22.2p 23.2p 4.8p 8.2p 5.0p
share
Dividend per 8 3.25p 2.25p 8.0p
share
There were no exceptional items in the six months to 30 June 1999.
Other recognised gains and losses
Other recognised gains and losses in the period (exchange differences)
amounted to a gain of £24.1 million (1999 half year - a gain of £16.8
million), and are shown in Note 14 together with other movements in
shareholders' funds.
Group Balance Sheet
US Dollars Sterling
Unaudi Unaudi Audite Unaudi Unaudi Audite
ted ted d year ted ted d year
30.6.00 30.6.99 to 30.6.00 30.6.99 to
Notes 31.12.99 31.12.99
US$'m US$'m US$'m £'m £'m £'m
Fixed assets
Tangible fixed 9 1,799.5 1,265.7 1,635.8 1,186.0 801.0 1,016.6
assets
Investments in 10 - 19.7 20.6 - 12.7 13.2
associates
Other investments 11 185.8 186.0 185.8 108.3 108.4 108.3
1,985.3 1,471.4 1,842.2 1,294.3 922.1 1,138.1
Current assets
Stocks 52.8 10.8 32.4 34.9 6.8 20.1
Debtors 115.5 76.0 76.1 76.3 48.0 47.3
Current asset
investments (including 338.8 291.0 328.4 223.8 184.2 204.0
time deposits)
Cash at bank and 5.6 1.0 3.2 3.7 0.7 2.0
in hand
512.7 378.8 440.1 338.7 239.7 273.4
Creditors - amounts
falling due within one
year
Trade and other (67.8) (79.9) (79.0) (44.7) (50.6) (49.2)
creditors
Loans 12 (122.4) (1.7) (64.8) (80.9) (1.1) (40.1)
Dividends (9.7) (8.3) (18.3) (6.4) (5.2) (11.3)
(199.9) (89.9) (162.1) (132.0) (56.9) (100.6)
Net current assets 312.8 288.9 278.0 206.7 182.8 172.8
Total assets less
current 2,298.1 1,760.3 2,120.2 1,501.0 1,104.9 1,310.9
liabilities
Creditors -
amounts falling
due after more
than one year
Other creditors (30.0) - - (19.8) - -
Loans 12 (1,040.3) (691.2) (1,006.3) (687.1) (437.5 (625.0)
Provisions for 13 (30.4) (9.8) (10.3) (20.1) (6.2) (6.4)
liabilities and
charges
1,197.4 1,059.3 1,103.6 774.0 661.2 679.5
Capital and
reserves
Called up share 18.0 18.2 19.1 11.9 11.5 11.9
capital
Share premium 256.5 231.6 272.8 169.4 146.6 169.4
Reserves 672.5 620.1 595.4 427.3 383.1 363.8
Shareholders' 14 947.0 869.9 887.3 608.6 541.2 545.1
funds
Minority interests 250.4 189.4 216.3 165.4 120.0 134.4
1,197.4 1,059.3 1,103.6 774.0 661.2 679.5
Approved by the Board of Directors on 4 September 2000.
P J Adeane, Director.
Group Cash Flow Statement
US Dollars Sterling
Notes Unaudit Unaudi Audite Unaudit Unaudi Audite
ed ted d year ed tedhal d year
half half to half f year to
year to year 31.12. year to to 31.12.
30.6.0 to 99 30.6.0 30.6.9 99
0 30.6.9 US$'m 0 9 £'m
US$'m 9 £'m £'m
US$'m
Net cash inflow 15 91.4 15.2 4.3 58.3 9.2 2.8
from operating
activities
Returns on
investment and
servicing of finance
Dividends received - 1.3 1.3 - 0.8 0.8
from associates
Dividends received 31.4 5.6 5.4 20.0 3.4 3.3
from other fixed
asset investments
Interest received 13.5 9.6 19.6 8.6 5.7 12.2
(including
capitalised
interest)
Interest paid (35.5) (16.0) (39.6) (22.7) (9.9) (24.5)
(including
capitalised
interest)
Dividends paid to (4.1) - - (2.6) - -
minority interests
Preference dividends (0.1) (0.1) (0.2) (0.1) (0.1) (0.1)
paid
Net cash 5.2 0.4 (13.5) 3.2 (0.1) (8.3)
inflow/(outflow)
from returns on
investment and
servicing of finance
Tax paid (1.6) (2.6) (4.5) (1.0) (1.6) (2.8)
Net cash outflow (165.8) (301.1) (600.6) (105.8) (186.0) (370.6)
from capital
expenditure and
financial investment
Acquisitions and
disposals
Net cash 0.9 - - 0.5 - -
balances
acquired with
subsidiary
Equity dividends (17.2) (15.8) (24.3) (11.3) (9.5) (14.8)
paid
Cash outflow before (87.1) (303.9) (638.6) (56.1) (188.0) (393.7)
management of liquid
resources
Management of liquid
resources
Net (1.9) 91.9 55.4 (1.3) 56.6 34.2
(increase)/decre
ase in time
deposits
Financing
Contribution from 7.9 30.4 65.5 5.1 18.8 40.4
minority interests
Net other 86.7 178.9 517.2 55.3 110.4 319.3
borrowings in
period
Net cash inflow from 94.6 209.3 582.7 60.4 129.2 359.7
financing
Net cash 16 5.6 (2.7) (0.5) 3.0 (2.2) 0.2
inflow/(outflow)
in the period
Notes
1 Accounting policies
The profit and loss account, balance sheet and cash flow statement for the
half year to 30 June 2000 have been prepared on the basis of the accounting
policies set out in the Group's statutory accounts for the year to 31 December
1999.
2 Production
The Group announced second quarter production volumes and quantities on 31
July 2000. Production information on mining operations for the first six
months may be summarised as follows:
a) Tonnes of copper produced (neither audited nor reviewed)
Half year to: Half year to: Year to
30.6.00 30.6.99 31.12.99
'000 '000 '000
tonnes tonnes tonnes
Los Pelambres
Copper in concentrates 1 - -
Michilla
Copper cathodes 25.7 51.3
Copper in concentrates 4.8 9.2
Group total 1 30.5 60.5
b) Cash costs per pound (neither audited nor reviewed)
Half year to: 30.6.00 Half year to:
30.6.00 Year to 31.12.9
cents cents cents
Los Pelambres - -
Michilla 55.9 55.4
Group weighted average 39.2 55.9 55.4
3 Segmental analysis
a) Turnover by geographical destination
US Dollars Sterling
Unaudited half Audited Unaudited half Audited
year to: year to year to: year to
30.6.00 30.6.99 31.12.99 30.6.00 30.6.99 31.12.99
US$'m US$'m US$'m £'m £'m £'m
UK 1.0 4.3 7.9 0.6 2.6 4.9
Rest of Europe 61.4 25.8 41.3 39.2 15.9 25.5
Chile 33.0 23.8 45.7 21.1 14.6 28.3
Rest of Latin 28.4 13.9 33.2 18.1 8.6 20.5
America
North America 9.4 - 2.8 6.0 - 1.7
Asia Pacific / 183.0 2.9 14.6 116.8 1.8 8.9
other
316.2 70.7 145.5 201.8 43.5 89.8
3 Segmental analysis (continued)
b) Turnover and operating profit before exceptional items by class of business
and geographical location
Operations are based in Chile, except where stated below. Turnover and
operating profit before exceptional items can be analysed as follows:
US Dollars Sterling
Unaudited half Audited Unaudited half Audited
year to: year to year to year to
30.6.00 30.6.99 31.12.99 30.6.00 30.6.99 31.12.99
US$'m US$'m US$'m £'m £'m £'m
Turnover
Mining 45.1 93.6 180.1 27.9 57.8
Transport and other
services
- Chile 25.6 51.9 18.0 15.6 32.0
- Bolivia - - 3.7 - -
(acquisitions)
70.7 145.5 201.8 43.5 89.8
Operating profit
before exceptional
items
Mining (6.4) (9.2) 51.3 (3.9) (5.6)
Transport and other
services
- Chile 9.6 19.2 6.7 5.8 11.8
- Bolivia - - 0.7 - -
(acquisitions)
3.2 10.0 58.7 1.9 6.2
Details of exceptional items affecting operating profit are given in Note 5.
4 Operating profit / (loss)
US Dollars Sterling
Unaudited half Audited Unaudited Audited
year to: half year to: half year to year to
30.6.00 30.6.99 31.12.99 30.6.00 30.6.99 31.12.99
US$'m US$'m US$'m £'m £'m £'m
Turnover 316.2 70.7 145.5 201.8 43.5 89.8
Cost of sales (180.8) (47.5) (95.2) (115.4) (29.3) (58.8)
Gross profit 135.4 23.2 50.3 86.4 14.2 31.0
Exceptional items - - (18.6) - - (11.5)
Administrative (40.4) (18.7) (36.5) (25.8) (11.5) (22.5)
expenses
Severance charges (0.6) (0.4) (1.1) (0.4) (0.2) (0.7)
Exploration costs (2.4) (0.9) (3.3) (1.5) (0.6) (2.0)
Other net operating 0.1 - 0.6 - - 0.4
income
Operating 92.1 3.2 (8.6) 58.7 1.9 (5.3)
profit/(loss)
Depreciation and amortisation costs amounted to US$54.6 million (£34.9
million; 1999 half year - US$10.5 million; £6.4 million). Of this amount,
US$46.3 million (£29.6 million; 1999 half year - US$5.1 million; £3.1 million)
is included in cost of sales and US$8.3 million (£5.3 million; 1999 half year
- US$5.4 million; £3.3 million) is included in administrative expenses.
5 Exceptional items
US Dollars Sterling
Unaudited half Audited Unaudited half Audited
year to: year to year to: year to
30.6.00 30.6.99 31.12.99 30.6.00 30.6.99 31.12.99
US$'m US$'m US$'m US$'m US$'m US$'m
Operating
Provision for write- - (12.0) - - (7.4)
down of mining
assets and stocks
Non-incremental - -
overhead costs (6.6) - - (4.1)
incurred in the
course of mining
development
Non-operating
Profit on disposal
of fixed assets at
El Chacay 3.9 - - 2.5 - -
3.9 - (18.6) 2.5 - (11.5)
Tax effect (0.6) - 2.8 (0.4) - 1.8
Minority interest - - 5.5 - - 3.4
effect
3.3 - (10.3) 2.1 - (6.3)
6 Tax
The tax charge of US$10.4 million (£6.6 million; 1999 half year - US$ 3.3
million; £2.0 million) represents an effective rate of 10.4 per cent (1999
half year - 18.1 per cent) on profit before tax, as compared with the Chilean
statutory tax rate of 15 per cent. The lower effective tax rate arises
principally because the dividend of US$31.3 million (£19.9 million) received
from Quinenco is paid out of Quinenco's post-tax profits and is not subject to
further tax on receipt.
7 Earnings per share
Earnings per share is calculated on profit after tax, minority interest and
preference dividends giving adjusted earnings of US$71.8 million (£45.8
million; 1999 half year - US$15.1 million ; £9.2 million) and based on
197,171,399 (1999 half year - 190,171,399) ordinary shares in issue
throughout the period. Earnings per share excluding exceptional items is
calculated on the same basis but excluding a gain on exceptional items of
US$3.3 million (£2.1 million; 1999 half year - nil).
8 Dividends
The Board has declared an interim dividend of 3.25p (1999 half year - 2.25p)
per ordinary share for payment on 13 October 2000 to shareholders on the
Register at the close of business on 15 September 2000. Dividends are
declared gross, but dividends payable to United Kingdom shareholders will be
paid net of witholding tax.
9 Tangible fixed assets
US Dollars
Rolling
stock,
Freehold Permanent plant, Mining Total
land and way and machinery
buildings works and water
distribution
US$'m US$'m US$'m US$'m US$'m
Net book value
1 January 2000 30.6 33.3 39.4 1,532.5 1,635.8
Acquisition - 9.5 16.8 - 26.3
Additions - 0.4 2.0 192.9 195.3
Disposals - - (0.1) (3.3) (3.4)
Depreciation (0.2) (0.9) (2.1) (51.4) (54.6)
Exchange 0.1 - - - 0.1
30 June 2000 30.5 42.3 56.0 1,670.7 1,799.5
(unaudited)
Sterling
Freehold Permanent plant, Mining Total
land and way and machinery
buildings works and water
distribution
£'m £'m £'m £'m £'m
Net book value
1 January 2000 19.2 21.5 24.1 951.8 1,016.6
Acquisition - 5.9 10.4 - 16.3
Additions - 0.2 1.3 123.2 124.7
Disposals - - (0.1) (2.1) (2.2)
Depreciation (0.1) (0.6) (1.4) (32.8) (34.9)
Exchange 0.7 0.4 0.9 63.5 65.5
30 June 2000 19.8 27.4 35.2 1,103.6 1,186.0
(unaudited)
10 Disposal of associate and acquisition of subsidiary
Investments in associates
US$'m £'m
1 January 2000
Transferred to investments in subsidiaries 20.6 13.2
and consolidated (20.6) (13.2)
30 June 2000 (unaudited) - -
At 31 December 1999, the Group held a 36.5% interest in Empresa Ferroviaria
Andina S.A. ('Andino') and a 12 per cent interest in Empresa Ferroviaria
Oriental S.A. ('Oriental'), rail networks operating in Bolivia. These
investments were jointly controlled by the Group and its strategic partner,
the Cruz Blanca group, which held 13.5 per cent of the Andino and 38 per cent
of the Oriental. At the beginning of 2000, the Group exchanged its interest
in the Oriental for Cruz Blanca's interest in the Andino. The Group now holds
50 per cent of the Andino and no longer has an interest in the Oriental. The
Group exercises management control over the Andino and has the right to
appoint the majority of the company's board. Accordingly this investment has
been treated as a subsidiary and consolidated from 1 January 2000. Turnover
and operating profit for the Andino have been disclosed as acquisitions in the
profit and loss account.
11 Other investments
US$'m £'m
1 January 2000 and 30 June 2000 (unaudited) 185.8 108.3
The book value of quoted investments at 30 June 2000 included above was
US$185.5 million, and the corresponding market value was US$357.3 million
(1999 half year - US$ 344.4 million). These investments include a 33.61 per
cent interest in Quinenco S.A.
12 Loans
US Dollars Sterling
Unaudited half Audited Unaudited half Audited year
year to: year to year to: to
30.6.00 30.6.99 31.12.99 30.6.00 30.6.99 31.12.99
US$'m US$'m US$'m £'m £'m £'m
Los Pelambres
-Loans (946.0) (677.0) (902.8) (624.9) (428.5) (560.7)
-Subordinated (31.2) - (34.7) (20.6) - (21.5)
debt
El Tesoro
-Loans (70.5) - (25.2) (46.6) - (15.7)
-Subor
dinated (98.9) - (94.9) (65.3) - (58.9)
debt
Michilla
-Finance (1.1) (1.2) (1.2) (0.7) (0.8) (0.7)
leases
-Loans (0.1) (0.6) (0.2) (0.1) (0.4) (0.1)
Railway
-Loans (11.1) (14.1) (12.1) (7.3) (8.9) (7.5)
(Chile) (3.8) - - (2.5) - -
-Loans
(Bolivia)
(1,162.7) (692.9) (1,071.1) (768.0 ) (438.6) ( 665.1)
At the end of 1999, certain balances were reclassified from minority interests
to subordinated debt. The amount reclassified (included in minority interests
at 30 June 1999) was US$26.6 million (£16.0 million).
Maturity of borrowings:
US Dollars Sterling
Unaudited half Audited Unaudited half Audited
year to: year to year to year to
30.6.00 30.6.99 31.12.99 30.6.00 30.6.99 31.12.99
US$'m US$'m US$'m £'m £'m £'m
Due within one (122.4 ) (1.7) (64.8) (80.9) (1.1) (40.1)
year
Due after more (1,040.3) (691.2) (1,006) (687.1) (437.5) (625.0)
than one year
(1,162.7) (692.9) (1,071.1) (768.0) (438.6) (665.1)
13 Provisions for liabilities and charges
US Dollars
Site Severance Deferred
rehabilitation indemnities tax Total
US$'m US$'m US$'m US$'m
1 January 2000 (3.1) (7.2) - (10.3)
Reclassification - - (7.0) (7.0)
Acquisition - (1.7) - (1.7)
Charge to (1.6) (0.6) - (2.2)
operating profit
in period
Release of (0.1) (0.2) - (0.3)
discount to net
interest in period
Charge to tax on - - (9.0) (9.0)
profit in period
Exchange - 0.1 - 0.1
30 June 2000 (4.8) (9.6) (16.0) (30.4)
(unaudited)
Sterling
Site Severance Deferred
rehabilitation indemnities tax Total
£'m £'m £'m
1 January 2000 (1.9) (4.5) - (6.4)
Reclassification - - (4.3) (4.3)
Acquisition - (1.0) - (1.0)
Charge to (1.0) (0.4) - (1.4)
operating profit
in period
Release of (0.1) (0.1) - (0.2)
discount to net
interest in period
Charge to tax on - - (5.7) (5.7)
profit in period
Exchange (0.2) (0.3) (0.6) (1.1)
30 June 2000 (3.2) (6.3) (10.6) (20.1)
(unaudited)
Deferred tax balances were previously netted off against corporation tax
debtor and creditor balances. These have been reclassified and separately
disclosed in provisions for liabilities and charges above.
14 Reconciliation of movements in shareholders' funds
US Dollars Sterling
Unaudited half Audited Unaudited half Audited
year to: year to year to year to
30.6.00 30.6.99 31.12.99 30.6.00 30.6.99 31.12.99
US$'m US$'m US$'m £'m £'m £'m
Profit for the 71.9 15.2 15.9 45.9 9.3 9.7
financial period
Other recognised
gains relating to
the period
- currency 15.0 10.8 3.9 24.1 16.8 8.5
translation
adjustment
Total recognised 86.9 26.0 19.8 70.0 26.1 18.2
gains and losses
Dividends (9.8) (7.1) (25.6) (6.5) (4.5) (15.9)
77.1 18.9 (5.8) 63.5 21.6 2.3
Issue of - - 0.6 - - 0.4
ordinary shares
Share premium - - 37.0 - - 22.8
on issue
Exchange movement (17.4) (12.7) (8.2) - - -
on sterling
denominated share
capital and share
premium
Opening 887.3 863.7 863.7 545.1 519.6 519.6
shareholders'
funds
Closing 947.0 869.9 887.3 608.6 541.2 545.1
shareholders'
funds
15 Reconciliation of operating profit / (loss) to net cash inflow from
operating activities
US Dollars Sterling
Unaudited half Audited Unaudited half Audited
year to: year to year to year to
30.6.00 30.6.99 31.12.99 30.6.00 30.6.99 31.12.99
US$'m US$'m US$'m £'m £'m £'m
Operating 92.1 3.2 (8.6) 58.7 1.9 (5.3)
profit/(loss)
Depreciation 54.6 10.5 22.4 34.9 6.4 13.9
Loss on disposal 2.9 0.5 12.3 1.9 0.3 7.6
of tangible fixed
assets
(Increase)
/decrease (15.5) 0.7 (20.9) (9.9) 0.4 (12.9)
in stocks
(Increase)
/decrease (71.6) 0.8 (0.1) (45.7) 0.7 (0.1)
in debtors
Increase/(decre 28.9 (0.5) (0.8) 18.4 (0.5) (0.4)
ase) in INTERIM RESULTS ANNOUNCEMENT
FOR THE SIX MONTHS ENDED 30 JUNE 2000
Half year to 30 June
2000 1999
US$m US$m
Turnover 316.2 70.7 + 347 %
Profit before tax 100.0 18.2 + 449 %
Operating cash flow 91.4 15.2 + 501 %
Net assets 1,197.4 1,059.3 + 13 %
Earnings per share (US$) 36.4c 8.0c + 355 %
Interim dividend per share
(£) 3.25p 2.25p + 44 %
Interim dividend per share
(US$) 4.92c 3.56c
Group profit before tax of US$100.0 million (1999 - US$18.2 million).
Earnings per share of 36.4 cents (1999 - 8.0 cents).
Group copper production of 167,700 tonnes including 141,200 from Los Pelambres
(1999 half year - 30,500 tonnes).
Los Pelambres completion tests achieved so releasing the Group from completion
guarantees and also releasing the US$133 million escrow account.
El Tesoro project 40 per cent completed by June remaining on budget with first
production scheduled for May 2001.
Record Railway results continue with volumes up 7 per cent to 1.6 million
tons.
Dividend income of US$31.3 million received from Quinenco S.A. in May (1999
half year - US$5.5 million).
Interim dividend increased 44 per cent to 3.25 pence per share (1999 interim
dividend 2.25 pence per share).
The successful commissioning of the Los Pelambres mine combined
with improved copper prices enabled the Group to increase profit
before tax by 449 per cent to US$100.0 million and earnings per
share by 355 per cent to 36.4 cents. Group copper production was
167,700 tonnes (1999 half-year - 30,500 tonnes) including 141,200
tonnes from Los Pelambres and average cash costs down 30 per cent
to 39.2 cents per pound. The El Tesoro project is on schedule
with first production of cathodes expected in May 2001. The
Group also benefited from a strong performance from its transport
division and a higher dividend from its 33.6 per cent investment
in Quinenco S.A.
Jean-Paul Luksic, CEO of the mining division commented, 'The
successful development of Los Pelambres has been a great
achievement for Antofagasta, and the strength of that project is
clearly demonstrated in these results. We are now evaluating the
expansion potential for Los Pelambres and taken together with the
El Tesoro project now under construction, we consider the Group
has excellent opportunities for further growth in low cost copper
mining.'
Antofagasta is a UK-listed mining group based in Chile. In addition
to copper mining, its interests include rail and road transport
operations and a 33.6 per cent interest in Quinenco S.A. (LQ -
NYSE).
Enquiries to:
Hussein Barma Philip Adeane
Chief Financial Officer Managing Director
Email: hbarma@antofagasta.co.uk Email:itrevor@antofagasta.co.uk
Tel: 07785 957 784 Tel: +44 20 7374 8091
Issued by:
Keith Irons
Bankside Consultants Ltd
Tel: +44 20 7220 7477 Email: keith@bankside.com
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