FTSE 100, a listed metals mining company in Antofagasta (LON:ANTO), saw its stocks fall as it reported a decline in copper and gold production in the previous year.
Copper production fell 7.3% in the previous year to 541.3kt. Similarly, YTD molybdenum production fell 4.3% from 9.3kt to 8.3kt. However, the big hit came with gold. This saw volumes down 34.1% year-on-year for the first nine months of the year to 149.4 koz.
These trends were highly reflected in the unfortunate third quarter, with copper production dropping to 4.6%, to 169.6kt and gold production dropping to 16.7%, to 38.3koz. However, one positive was a noticeable 9.7% increase in molybdenum production, which rose from 3.1 kt to 3.4 kt.
In addition to these rather overwhelming production volumes, Antofagasta had an increase in overhead in the quarter of 2020, with net cash expenses increasing from 5.3% from the second quarter to 1.13 $/lb to 1.19 $/lb. However, over the previous year, the net cash costs will be down 2.6% from $1.17/lb to $1.14/lb for the first three months.
The company said that Covid numbers peaked in Chile in June but decided to put in place pandemic protocols for a “foreseeable future.” It added that about two-thirds of staff are on-site and the rest are working at home or in the prevention department. Additionally, the workforce for the Los Pelambres expansion project has built up to 75% of the initially planned figure, and will remain at this level until Covid restrictions are eased.
Of course, Antofagasta
Though it’s not an ideal scenario, CEO Iván Arriagada says the company remains within the scope of guidance.
“The performance of copper production and cost management over the quarter was in line with expectations. From this year to the present, production volume was 541,300 tons at a net cash cost of $1.14/lb.
“We continue to focus on the health and safety of our employees and contractors, as well as the communities close to our operations. Chile’s Covid-19 infection rate fell in the quarter, but we continue to be vigilant and apply all health protocols we have implemented. Following the temporary and preventative halt of the LOS Pelambres expansion project in the second quarter, approximately 75% of the original planned number is currently working on the field, with all Covid-19 protocols being followed. Similarly, work has also begun on the Esperanza Sur and Zaldívar Chloride Leaching Project.”
“We continue to expect production to be at the bottom of the original 725-755,000 tonne guidance range for the full year of 2020, with net cash costs expected to fall below the initial guided $1.20/lb. In 2021, production is expected to range from 730-760,000 tonne copper as grades increase in centinella concentrates, and we conservatively assume that Covid-19 health protocols will remain all year round.”
Investor’s Notes
Following the news, the company’s shares fell to 1,042.50pa shares at a modest 0.38%. The price is roughly 12% above the analyst’s target of 917.69p, but the six-month high seen in August is not 1,148.50p.
Currently, analysts have a consensus “hold” stance on the company’s stocks. The P/E ratio of 26.64 is below the average base material 37.53. The MarketBeat community also currently has a “low-performance” stance of 71.91% for the company.
