Quarterly Production Report - Q3 2021
STEADY QUARTER AND LOWER COST GUIDANCE
Antofagasta plc CEO, Iván Arriagada said: “Our copper production and cost performance during the quarter was in line with our expectations despite external pressures such as the ongoing drought in Chile, the global supply chain challenges, the energy crisis and higher input costs.
“Year-to-date production and net cash costs were very similar to last year at 542,600 tonnes at $1.15/lb and we remain on track to deliver on our previously stated production guidance of 710-740,000 tonnes for the full year and, despite input cost pressures, our net cash costs are now expected to be lower than our original guidance of $1.25/lb.
“Since we last reported, there has been no material rainfall at our operations and as we head into the summer months, we do not expect any rain until the next rainy season, which begins in June next year. The construction of the desalination plant at Los Pelambres is on track for completion in H2 2022 and we now anticipate Group production in 2022 to be between 660,000 and 690,000 tonnes reflecting the previously advised production tonnes at risk at Los Pelambres due to the weather, and lower grades at Centinela Concentrates.
“The COVID-19 situation in Chile continues to improve but the measures we implemented last year will stay in place as we continue to prioritise the health and safety of our employees and surrounding communities. While we expect the extraordinary global supply chain events and energy crisis to ease over time, we remain focused on controlling costs while progressing our current and future growth projects.”
- Group copper production in Q3 2021 was 181,100 tonnes, 1.5% higher than in the previous quarter on higher production at Centinela, partly offset by lower throughput at Los Pelambres
- Group copper production for the first nine months of the year was 542,600 tonnes, 0.2% higher than in the same period last year mainly on expected higher grades at Centinela Concentrates, offset by expected lower grades at Los Pelambres
- Gold production for the quarter was 66,800 ounces, 8.8% higher than in the previous quarter, and for the year-to-date production rose by 25.4% to 187,300 ounces, both increases as a result of higher grades at Centinela
- Molybdenum production in the quarter was 2,600 tonnes, 7.1% lower than the previous quarter on lower grades and recoveries at Centinela. For the year-to-date, production was 8,400 tonnes, 500 tonnes lower than in the same period last year
- Cash costs before by-product credits in Q3 2021 were $1.79/lb, 2c/lb higher than in the second quarter. The global energy and supply chain crisis over Q3 resulted in higher commodity and therefore input prices, such as energy and diesel. However, evidence of wage inflation has been limited to temporary hires mostly for projects while the labour market has yet to recover to pre COVID-19 employment levels. The weaker Chilean peso in Q3 has offset the higher input costs.
- Cash costs before by-product credits for the first nine months of the year were $1.75/lb, 13.6% higher than in the same period last year primarily because of the stronger Chilean peso (8%) and higher energy and diesel prices
- Net cash costs were $1.16/lb in Q3 2021 and $1.15/lb for the year-to-date, a 2.7% increase compared with the previous quarter and 0.9% higher than the same period last year. This was primarily due to higher cash costs before by-product credits, mainly offset by higher by-product credits on higher realised prices
- Copper production guidance for the full year of 710-740,000 tonnes is unchanged from the update provided in August. Net cash costs are expected to be below the originally guided $1.25/lb
- Accelerated mine development at Centinela and sustaining capex at Los Pelambres have increased expected capital expenditure for the year to between $1.6 and $ 1.8 billion. This level is similar to current estimates for 2022 as sustaining and mine development expenditure increase, and development expenditure continues
- In 2022 copper production is expected to be 660-690,000 tonnes, as grades decrease at Centinela Concentrates and assuming there is no precipitation until the next rainy season and the desalination plant comes into operation in H2 2022
- In line with the UN Sustainable Development Goals and after a voluntary and independent evaluation process, Centinela and Zaldívar obtained the Copper Mark, the global standard for the copper industry that demonstrates responsible and sustainable production. The Copper Mark is among the first group of standards LME brands can indicate to demonstrate their sustainability credentials
- The Company released a progress report on its implementation of the recommendations of the Task Force on Climate-Related Financial Disclosures (TCFD). The report provides an overview of the Company’s TCFD-related work to date and its climate resilience response
- As at the end of Q3 the Los Pelambres Expansion project was 59% complete (design, procurement and construction). Completion of the desalination plant is expected in H2 2022 and of the concentrator plant expansion by the end of 2022
- At Zaldívar construction of the Chloride Leach project at the end of Q3 was 90% complete and is expected to be completed on schedule and according to plan in H1 2022
- During the quarter, the first autonomous trucks were delivered to the Esperanza Sur pit
- Some shipments were delayed by adverse weather over the period end and were shipped in early October
|GROUP PRODUCTION AND CASH COSTS||Year to Date||Q3||Q2|
|Copper production kt||542.6||541.3||0.2||181.1||178.4||1.5|
|Copper sales kt||528.4||536.1||(1.4)||182.3||163.4||11.6|
|Gold production koz||187.3||149.4||25.4||66.8||66.8||8.8|
|Cash costs before by-product credits (1) $/lb||1.75||1.54||13.6||1.79||1.77||1.1|
|Net cash costs (1) $/lb||1.15||1.14||0.9||1.16||1.13||2.7|
(1) Cash cost is a non-GAAP measure used by the mining industry to express the cost of production in US dollars per pound of copper produced.
There will be a Q&A video conference call at 1:00pm BST hosted by Iván Arriagada - Chief Executive Officer, Mauricio Ortiz - Chief Financial Officer and René Aguilar, Vice President - Corporate Affairs and Sustainability. Participants can join the conference call here.
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