Antofagasta meets 2022 guidance and releases 2023 forecast

Antofagasta (LSE: ANTO) produced 646,200 tonnes of copper at net cash costs of US$1.61 per lb. last year and forecasts this year it will produce 670,000 to 710,000 tonnes at net cash costs of US$1.65 per pound, the company said in its Q4 production report Wednesday.

The copper miner said 2022 production was 10.4% lower than 2021 due to a reduction in throughput at its flagship Los Pelambres mine, 240 km north of Santiago, as a result of drought and lower concentrate pipeline availability in June, and lower grades at its Cintenela mine, 1,350 km north of the capital.

The company said it is on track to complete the desalination plant and concentrator expansion at its Los Pelambres operation in the second quarter of this year. The concentrator expansion is forecast to boost production by about 40,000 tonnes of copper a year for the first four to five years and then by 70,000 tonnes a year. Both are expected to be in production in the second quarter, Antofagasta said.

In the first phase of the desalination plant, the risk of restrictions due to future water shortages will be reduced, the company says. It is now permitting the second phase, which will involve relocating the concentrate pipeline and other works.

The company, among Chile’s top five copper producers, also issued guidance for gold and molybdenum production for 2023. It expects to produce 220,000 to 240,000 oz. of gold and 10,000 to 11,500 tonnes of molybdenum. Last year Antogafasta produced 176,800 oz. gold and 9,700 tonnes of molybdenum.

“Antofagasta delivered a solid finish to the year with copper production and costs in line with expectations,” BMO mining analyst Alexander Pearce wrote in a research note. “Expanded 2023 guidance shows slightly higher than expected cash costs (+6%), however, lower capex (-5%) and more by-products should largely offset the difference.”

“Looking ahead, the focus remains on the delivery of the Los Pelambres expansion and associated desalination plant, both scheduled to be in production in Q2/23 and key to improved stability and growth at the operation.”

Antofagasta’s 60%-owned Los Pelambres—a sulphide deposit in Chile’s Coquimbo region—produces copper concentrate containing gold, silver and molybdenum concentrate through a milling and flotation process.

At its 70%-owned Cintinela operation, the company mines sulphide and oxide deposits and produces the same copper concentrate made at Los Pelambres. It also produces copper cathodes using the solvent extraction and electrowinning (SX-EW) process.

In addition to Los Pelambres and Cintinela, Antofagasta owns 70% of the Antucoya mine and 50% of the Zaldívar mine.

Antucoya, about 1,400 km north of Santiago and 125 km northeast of the city of Antofagasta, mines and leaches oxide ore to produce copper cathodes through the SX-EW process.

Zaldívar, an open-pit, heap-leach copper mine also produces copper cathodes ((SX-EW) process) and is 175 km southeast of Antofagasta and 1,400 km north of Santiago.