More on Antofagasta
Antofagasta AGM statement
Antofagasta announced a five month trading update at its AGM.
Total copper production at 194,800 is 0.9% higher than the corresponding period reflecting lower production in the last two months. Q1 production was up 9.0% to 118,800 tonnes; thus production fell by 9.7% over the last two months. As noted previously, full year production will be 5.7% lower than the previous year at 470,000 tonnes.
Antofagasta produces copper and its activities are mainly concentrated in Chile. The Chilean government will impose a 5% mining tax on operating profits. This is estimated to increase the effective tax rate by 3%, which will reduce EPS growth. EPS growth will further be reduced by lower production.
Antofagasta’s share trades at a prospective PE× of 9.2 (at 1,179p) at the lower end of the range for the sector. The 3.3% yield is at the higher end of the range for the sector. Copper prices are expected to fall in the medium term as producers increase production to make use of the higher prices. The growth of the Chinese and other Asian economies will sustain long term demand for copper.
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