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Antofagasta on track to hit targets, but key metal prices have fallen

Last updated: 19:14 29 Oct 2014 AEDT, First published: 20:14 29 Oct 2014 AEDT

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Antofagasta (LON:ANTO) told investors it remains on track to meet full year production guidance, though it also revealed a sharp drop in key metal prices during the third quarter.

Anto produced 169,200 tonnes of copper in the third quarter, 5% less than the previous quarter and the realised price was down almost 8% lower at US$3.02 per pound. Cash costs in the third quarter reduced by 2.1% to US$1.42.

The miner aims to produce 700,000 tonnes of copper over the full year and in the first nine months output totalled 517,300 tonnes.

Gold production totalled 64,700 ounces in the third quarter, down 3.9%, and at US$1,149 the price was 12.6% lower.

In the first nine months Anto produced 188,500 ounces of a targeted 270,000 ounces for the full year, and in during this period the realised gold price is down 18%.

Anto produced 2,300 tonnes of Molybdenum in the third quarter up from 1,600 tonnes in the preceding three months thanks to better grades. At US$11.1 per pound the price was down 40% over the same period, however it remains 30% better than at the start of the year despite the recent pull back.

City broker Investec called it a “vanilla quarter” for Anto, with no major issues and guidance intact.

RBC’s Timothy Huff, however, said quarterly copper output fell short of his 180,000 tonne forecast.

Sanlam’s Charlie Long, meanwhile, took a broader view of the Anto business and claimed it is “nothing to get excited about”.

“Chile is introducing a less attractive fiscal regime (there are two options but both equate to a higher tax charge) and the copper outlook is soft, at least in the short to medium term.

“Antofagasta’s best mines are ageing and will find it increasingly difficult to grow production in the future.”

In early deals in London Antofagasta shares were up 6.5p, 0.9%, trading at 707p each.

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