DEVELOPMENT PROJECTS

Twin Metals Minnesota (USA)

Twin Metals Minnesota (Twin Metals) is a wholly owned copper, nickel, and platinum group metals (PGM) underground mining project, which holds copper, nickel/cobalt, and PGM deposits in north-eastern Minnesota, United States (US). The planned project is over a portion of the total resource and envisages mining and processing 18,000 tonnes of ore per day for 25 years to produce three separate concentrates - copper, nickel/cobalt and PGM. However, further development of the current project, as configured, is on hold whilst litigation takes place to challenge several actions taken by the US federal government to deter its development.

In 2022, Twin Metals filed a lawsuit in the US District Court for the District of Columbia (District Court) challenging the administrative actions resulting in the rejection of Twin Metals' preference right lease applications (PRLAs), the cancellation of its federal mining leases 1352 and 1353, the rejection of its Mine Plan of Operation (MPO), and the dismissal of the administrative appeal of the MPO rejection. Twin Metals claimed that the government's actions were arbitrary and capricious, contrary to the law, and in violation of its rights. In September 2023, the District Court dismissed Twin Metals' suit on motion by the government. In November 2023, Twin Metals appealed the District Court's order to the US Court of Appeals for the District of Columbia Circuit. This action is pending.

 

FINANCIAL REVIEW FOR THE SIX MONTHS ENDED 30 JUNE 2024

 

Results (unaudited)

			Six months ended 30.06.2024	Six months ended 30.06.2023
	Before exceptional items	Exceptional  items	Total	Total
	$m	$m	$m	$m
Revenue	2,955.2	-	2,955.2	2,890.1
EBITDA (including share of EBITDA from associates and joint ventures) 1	1,394.4	-	1,394.4	1,331.0
Total operating costs	(2,283.9)	-	(2,283.9)	(2,116.4)
Operating profit from subsidiaries	671.3	-	671.3	773.7
Net share of results from associates and joint ventures	17.2	-	17.2	(0.4)
Total profit from operations, associates and joint ventures	688.5	-	688.5	773.3
Net finance expense	(26.9)	51.0	24.1	(8.8)
Profit before tax	661.6	51.0	712.6	764.5
Income tax expense	(286.8)	(12.7)	(299.5)	(229.3)
Profit for the year	374.8	38.3	413.1	535.2
Attributable to:
Non-controlling interests	153.5	-	153.5	204.8
Profit attributable to the owners of the parent	221.3	38.3	259.6	330.4
Basic earnings per share	cents	cents	cents	cents
Basic earnings per share from continuing operations	22.4	3.9	26.3	33.5

 

  ¹EBITDA refers to Earnings Before Interest, Tax, Depreciation and Amortisation. EBITDA is calculated by adding back depreciation, amortisation, profit or loss on disposals and impairment charges to operating profit. This comprises 100% of the EBITDA from the Group´s subsidiaries, and the Group´s proportional share of the EBITDA of its associates and joint ventures.

The $70.8 million decrease in the profit for the financial period attributable to the owners of the parent (including exceptional items) from $330.4 million in the first six months of 2023 to $259.6 million in the current period reflected the following factors:

 

	$m
Profit for the financial period attributable to the owners of the parent in H1 2023	330.4
Increase in revenue	65.1
Increase in total operating costs	(167.5)
Increase in net share of results from associates and joint ventures	17.6
Increase in net finance expenses	(18.1)
Increase in income tax expense	(57.5)
Decrease in non-controlling interests	51.3
	(109.1)
Profit attributable to the owners of the parent in 2024 (excluding exceptional items)	221.3
Exceptional items - 2024 (post tax)	38.3
Profit for the financial period attributable to the owners of the parent in H1 2024	259.6

 

Revenue

 

The $65.1 million increase in revenue from $2,890.1 million in the first six months of 2023 to $2,955.2 million in the current period reflected the following factors:

	$m
Revenue in the first six months of 2023	2,890.1
Increase in realised copper price	232.9
Decrease in copper sales volumes	(139.8)
Increase in treatment and refining charges	(2.9)
Decrease in gold revenue	(15.9)
Decrease in molybdenum revenue	(6.2)
Decrease in silver revenue	(2.5)
Decrease in transport division revenue	(0.5)
	65.1
Revenue in the first six months of 2024	2,955.2

 

 

Revenue from the Mining division

 

Revenue in the first half of 2024 from the Mining division increased by $65.6 million, or 2%, to $2,857.2 million, compared with $2,791.6 million in the first six months of 2023. The increase reflected a $90.2 million increase in copper sales, partly offset by a $24.6 million decrease in by-product revenues.

 

 

Revenue from copper sales

 

Revenue from copper concentrate and copper cathode sales increased by $90.2 million, or 3.9%, to $2,423.0 million, compared with $2,332.8 million in the first six months of 2023. The increase reflected the impact of $232.9 million from higher realised prices, partly offset by a $139.8 million reduction due to lower sales volumes and a $2.9 million reduction in revenue from higher treatment and refining charges.

 

(i) Realised copper price

 

The average realised price increased by 10.3% to $4.40/lb in the first six months of 2024 (first half of 2023 - $3.99/lb), resulting in a $232.9 million increase in revenue. The LME average market price increased by 4.6% in H1 2024 to $4.13/lb (first half of 2023 - $3.95/lb). In the first half of 2024 there was a $118.9 million positive impact from provisional pricing adjustments, mainly as a result of a positive impact in the settlement of sales invoiced in the current year.

 

Realised copper prices are determined by comparing revenue (before treatment and refining charges for concentrate sales) with sales volumes in the period. Realised copper prices differ from market prices mainly because, in line with industry practice, concentrate and cathode sales agreements generally provide for provisional pricing at the time of shipment with final pricing based on the average market price in future periods (normally around one month after delivery to the customer in the case of cathode sales and four months after delivery to the customer in the case of concentrate sales).

 

Further details of provisional pricing adjustments are given in Note 6 to the condensed consolidated interim financial statements.

 

 

(ii)  Copper volumes

 

Copper sales volumes reflected within revenue decreased by 5.8% from 275,100 tonnes in 2023 to 259,200 tonnes in 2024, decreasing revenue by $139.8 million. This decrease was mainly due to lower production at Centinela (16,200 tonne decrease), as a result of lower copper grades and harder ores mined.

 

(iii) Treatment and refining charges

 

Treatment and refining charges (TC/RCs) for copper concentrate increased by $2.9 million to $90.7 million in the first half of 2024, compared with $87.8 million in the first six months of 2023, reflecting higher rates, partially offset by decreased concentrate sales volumes at Centinela.

 

With sales of concentrates at Los Pelambres and Centinela, which are sold to smelters and roasting plants for further processing into fully refined metal, the price of the concentrate invoiced to the customer reflects the market value of the fully refined metal less a "treatment and refining charge" deduction, to reflect the lower value of this partially processed material compared with the fully refined metal. For accounting purposes, the revenue amount reflects the invoiced price (which reflects the net of the market value of fully refined metal less the treatment and refining charges). However, under the standard industry definition of unit cash costs, treatment and refining charges are regarded as part of cash costs.

 

Accordingly, the increase in these charges has had a negative impact on revenue in the year.

 

 

Revenue from molybdenum, gold and other by-product sales

 

Revenue from by-product sales at Los Pelambres and Centinela relate mainly to molybdenum and gold and, to a lesser extent, silver. Revenue from by-products decreased by $24.6 million or 5.4% to $434.2 million in the first half of 2024, compared with $458.8 million in the first six months of 2023. This decrease was mainly due to the lower gold sales volumes and molybdenum realised price, partly offset by an increase in molybdenum sales volumes and a higher gold realised price.

 

Revenue from molybdenum sales (net of roasting charges) was $266.0 million (first half of 2023 - $272.2 million), a decrease of $6.2 million. The decrease was due to the lower realised price of $22.8/lb (first half of 2023 - $25.0/lb), partially offset by higher sales volumes of 5,600 tonnes (first half of 2023 - 5,200 tonnes).

 

Revenue from gold sales (net of treatment and refining charges) was $140.8 million (first half of 2023 - $156.7 million), a decrease of $15.9 million which reflected a decrease in gold sales volumes, partially offset by a higher realised price. Gold sales volumes decreased by 22.7% from 78,900 ounces in the first half of 2023 to 61,000 ounces in the first six months of 2024, mainly due to lower production at Centinela, primarily the result of lower gold grades within the ores processed, as well as lower recoveries. The realised gold price was $2,313.8/oz in the first half of 2024 compared with $1,989.4/oz in the first six months of 2023, reflecting the average market price for 2024 of $2,205.1/oz (first half of 2023 - $1,931.6/oz) and a positive provisional pricing adjustment of $3.3 million.

 

Revenue from silver sales decreased by $2.5 million to $27.4 million (first six months of 2023 - $29.9 million). The decrease was due to lower sales volumes of 1.0 million ounces (first half of 2023 - 1.2 million ounces), partially offset by a higher realised silver price of $27.6/oz (first six months of 2023 - $24.9/oz).

 

 

 

Revenue from the Transport division

 

Revenue from the Transport division (FCAB) decreased by $0.5 million or 0.5% to $98.0 million (first six months of 2023 - $98.5 million), mainly due to lower transport volumes in the truck business.

 

 

Total operating costs

 

The $167.5 million increase in total operating costs from $2,116.4 million in the first half of 2023 to $2,283.9 million in the first six months of 2024 reflected the following factors:

	$m
Total operating costs in the first half of 2023	2,116.4
Increase in mine-site operating costs	20.9
Increase in closure provision and other mining expenses	26.2
Decrease in exploration and evaluation costs	(2.5)
Decrease in corporate costs	(9.3)
Decrease in Transport division operating costs	(3.7)
Increase in depreciation, amortisation and loss on disposals	135.9
	167.5
Total operating costs in the first six months of 2024	2,283.9

 

 

Operating costs (excluding depreciation, amortisation and loss on disposals) at the Mining division

 

Operating costs (excluding depreciation, amortisation, loss on disposals and impairments) at the Mining division increased by $35.3 million to $1,577.5 million in the first half of 2024, an increase of 2.3%.

 

Of this increase, $20.9 million was attributable to higher mine-site operating costs. This increase in mine-site costs reflected higher unit costs mainly due to lower ore grade and recoveries at Centinela concentrates and lower grades at Los Pelambres, partially offset by lower key input prices, depreciation of the Chilean peso, decreased sales volumes in the period and the cost savings from the Group's Cost and Competitiveness Programme.

 

On a unit cost basis, weighted average cash costs excluding treatment and refining charges and by-product revenues increased from $2.32/lb in the first six months of 2023 to $2.48/lb in the first six months of 2024. As detailed in the alternative performance measures section on page 56 of the half-year results announcement, for accounting purposes by-product credits and treatment and refining charges both impact revenue and do not therefore affect operating expenses.

 

The Competitiveness Programme was implemented to reinforce the operational improvement and reduce the Group's cost base, improving its competitiveness within the industry. During the first half of 2024, the programme achieved benefits of $130.0 million in the mining division, of which $49.3 million reflected cost savings and $80.7 million reflected the value of productivity improvements. Of the $49.3 million of cost savings, $46.8 million related to Los Pelambres, Centinela and Antucoya, and therefore impacted the Group's operating costs, and $2.5 million related to Zaldívar (on a 100% basis) and therefore impacted the share of results from associates and joint ventures.

 

Closure provisions and other mining expenses increased by $26.2 million. In the current period these costs include $13 million in respect of the "ad valorem" element of the new mining royalty at Los Pelambres. As the ad valorem element is based on revenue rather than profit it does not meet the IAS 12 Income Taxes definition of a tax expense, and is therefore recorded as an operating expense. The increase in these expenses also reflected additional expenditure on project evaluation costs at Los Pelambres.

 

Exploration and evaluation costs decreased by $2.5 million to $26.8 million (2023 - $29.3 million), reflecting decreased exploration and evaluation expenditure principally in respect of Chile exploration.

 

 

Operating costs (excluding depreciation, amortisation and loss on disposals) at the Transport division

 

Operating costs (excluding depreciation, amortisation and loss on disposals) at the Transport division decreased by $3.7 million to $59.2 million (first half of 2023 - $62.9 million), mainly due a weaker Chilean peso and lower diesel price.

 

 

Depreciation, amortisation and disposals

 

The depreciation and amortisation charge increased by $135.9 million in the first half of 2024 to $647.2 million (first half of 2023 - $511.3 million). This increase was mainly due to higher depreciation at Los Pelambres following completion of the Phase 1 Expansion Project as well as the acquisition of other additional assets, and also increases at Centinela in respect of the amortisation of IFRIC 20 stripping costs and the depreciation of additional leased assets.

 

 

Operating profit from subsidiaries

 

As a result of the above factors, operating profit from subsidiaries decreased by $102.4 million or 13.2% in 2024 to $671.3 million (first half of 2023 - $773.7 million).

 

 

Share of results from associates and joint ventures

 

The Group's share of results from associates and joint ventures increased by $17.6 million to a gain of $17.2 million in the first six months of 2024, compared with a loss of $0.4 million in the first half of 2023. This reflected higher earnings from Zaldívar and also the contribution from Compañía de Minas Buenaventura S.A.A., which has been accounted for as an associate from March 2024 onwards.

 

 

EBITDA

 

EBITDA (earnings before interest, tax, depreciation and amortisation) increased by $63.4 million or 4.8% to $1,394.4 million (first half of 2023 - $1,331.0 million). EBITDA includes the Group's proportional share of EBITDA from associates and joint ventures.

 

EBITDA from the Mining division increased by $60.0 million or 4.6% from $1,291.9 million in the first six months of 2023 to $1,351.9 million this half year. This reflected the higher revenue explain above and higher EBITDA from associates and joint ventures, partially offset by higher mine-site costs.

 

EBITDA at the Transport division increased by $3.4 million to $42.5 million in 2024 ($39.1 million - first half of 2023), mainly due to lower operating costs.

 

Commodity price and exchange rate sensitivities

 

The following sensitivities show the estimated approximate impact on EBITDA for the first six months of 2024 of a 10% movement in the average copper, molybdenum and gold prices and a 10% movement in the average US dollar / Chilean peso exchange rate.

 

The impact of the movement in the average commodity prices reflects the estimated impact on the relevant revenues during the first six months of 2024, and the impact of the movement in the average exchange rate reflects the estimated impact on Chilean peso denominated operating costs during the period. These estimates do not reflect any impact in respect of provisional pricing or hedging instruments, any potential inter-relationship between commodity price and exchange rate movements, or any impact from the retranslation or changes in valuations of assets or liabilities held on the balance sheet at the period-end.

 

	Average market commodity price / average exchange rate during the six months ended 30.06.24	Impact of a 10% movement in the commodity price / exchange rate on EBITDA for the six months ended 30.06.24
		$m
Copper price	$4.13/lb	252
Molybdenum price	$20.9/lb	26
Gold price	$2,205.1/oz	13
US dollar / Chilean peso exchange rate	941	85

 

 

Net finance expense (excluding exceptional items)

 

Net finance expense (excluding exceptional items) of $26.9 million reflected an increase of $18.1 million compared with the $8.8 million expense in H1 2023.

                               

	Six months ended 30.06.24 $m	Six months ended 30.06.23 $m
Investment income	73.5	72.1
Interest expense	(132.1)	(50.9)
Other finance items	31.7	(30.0)
Net finance expense	(26.9)	(8.8)

 

 

Investment income increased marginally from $72.1 million in the first six months of 2023 to $73.5 million in H1 2024.

 

Interest expense increased from $50.9 million in 2023 to $132.1 million in 2024, reflecting mainly the start of expensing of the interest on the borrowing in respect Los Pelambres' Phase 1 Expansion Project following the completion of the project construction, as well as to a lesser extent, an increase in the average borrowing balances and an increase in average interest rates.

 

Other finance items were a net gain of $31.7 million, compared with a net loss of $30.0 million in 2023, a variance of $61.7 million. This was mainly due to the foreign exchange impact of the retranslation of Chilean peso denominated assets and liabilities, which resulted in a $41.5 million gain in 2024 compared with a $22.0 million loss in 2023. In addition, there was an expense of $9.7 million in respect of the unwinding of the discounting of provisions (first half of 2023 - expense of $7.9 million).

 

 

Profit before tax (excluding exceptional items)

 

As a result of the factors set out above, profit before tax decreased by 13.5% to $661.6 million in the first half of 2024 (first half of 2023 - $764.5 million).

 

 

Income tax expense

 

The tax charge in the first half of 2024 excluding exceptional items increased by $57.5 million to $286.8 million (first half of 2023 - $229.3 million) and the effective tax rate for the period was 43.3% (first half of 2023 - 30.0%). Including exceptional items, the tax charge in the first half of 2024 was $299.5 million and the effective tax rate was 42.0%.

 

		Six months						Six months							Six months
		ended						ended							ended
		30.06.2024 Excluding exceptional items						30.06.2024 Including exceptional items							30.06.2023
		$m		%				$m		%					$m		%
Profit before tax			661.6						712.6							764.5
Tax at the Chilean corporate tax rate of 27%			(178.7)		27.0				(192.4)			27.0				(206.4)		27.0
Mining Tax (royalty)			(117.0)		17.7				(117.0)			16.4				(47.1)		6.2
Deduction of mining royalty as an allowable expense in determination of first category tax			30.6		(4.6)				30.6			(4.3)				13.2		(1.7)
Withholding tax			(13.5)		2.0				(13.5)			1.9				19.7		(2.6)
Items not deductible from first category tax			(5.6)		0.8				(5.6)			0.8				(6.9)		0.9
Adjustment in respect of prior years			(3.8)		0.6				(3.8)			0.5				(0.9)		0.1
Difference in overseas tax rates			-		-				1.0			(0.1)				-		-
Tax effect of share of profit of associates and joint ventures			2.0		(0.3)				2.0			(0.3)				(0.1)		-
Impact of unrecognised tax losses on current tax			(0.8)		0.1				(0.8)			0.1				(0.8)		0.1
Tax expense and effective tax rate for the period			(286.8)		43.3				(299.5)		42.0					(229.3)		30.0

 

 

The effective tax rate excluding exceptional items for the period was 43.3%, which compares with 30.0% in 2023 (partly reflecting a one-off adjustment to the provision for deferred withholding tax). The complete reconciliation between the effective tax rate and the statutory tax rate reflects the following points:

 

The effective tax rate excluding exceptional items of 43.3% varied from the statutory rate principally due to:

·    The mining tax (royalty) (net impact of $86.4 million / 13.1% including the deduction of the mining tax (royalty) as an allowable expense in the determination of first category tax);

·    The withholding tax relating to the remittance of profits from Chile (impact of $13.5 million / 2.0%);

·    Items not deductible for Chilean corporate tax purposes, principally the funding of expenses outside of Chile (impact of $5.6 million / 0.8%);

·    Adjustments in respect of prior years (impact of $3.8 million / 0.6%), and the impact of previously unrecognized tax losses (impact of $0.8 million / 0.1%);

·    An offsetting impact of the recognition of the Group's share of results from associates and joint ventures, which are included in the Group's profit before tax net of their respective tax charges (impact of $2.0 million / 0.3%).

 

The new Chilean mining royalty had taken effect from 1 January 2024. The new royalty terms include a royalty ranging from 8% to 26% applied to the ''Mining Operating Margin'', depending on each mining operation's level of profitability, as well as a 1% ad valorem royalty on copper sales. As the ad valorem element is based on revenue rather than profit it does not meet the IAS 12 Income Taxes definition of a tax expense, and is therefore recorded as an operating expense. The new royalty terms have a cap, establishing that total taxation, which includes corporate income tax, the two components of the new mining royalty, and theoretical tax on dividends, should not exceed a rate of 46.5% on Mining Operating Margin less the royalty ad-valorem expense.

 

Los Pelambres has been subject to the new royalty from 1 January 2024. The impact of the new royalty for Los Pelambres in the first six months of 2024 included the recognition of a $13 million expenses within operating expenses in respect of the ad valorem element. Centinela and Antucoya have tax stability agreements in place, and so the new royalty rates will only impact their royalty payments from 2030 onwards. Until then, they continue to be subject to the previous royalty system, applying a rate from 5% to 14% of taxable operating profit, depending on the level of operating profit margin.

 

 

Exceptional items

 

Exceptional items are material items of income and expense which are non-regular or non-operating and typically non-cash, including impairments and profits or losses on disposals. The classification of these types of items as exceptional is considered to be useful as it provides an indication of the earnings generated by the ongoing businesses of the Group.

Compañía de Minas Buenaventura S.A.A.

During 2023, the Group entered into an agreement to acquire up to an additional 30 million shares in Compañía de Minas Buenaventura S.A.A. An exceptional fair value gain of $51.0 million (six months ended 30 June 2023 - nil) was recognised during the first six months of 2024 in respect of this agreement. A deferred tax expense of $12.7 million (six months ended 30 June 2023 - nil) has been recognised in respect of this gain, resulting in a post-tax impact of $38.3 million (six months ended 30 June 2023 - nil).

 

 

Non-controlling interests

 

Profit for the first half of the year attributable to non-controlling interests was $153.5 million, compared with $204.8 million in the first half of 2023, a decrease of $51.3 million. This reflected the decrease in earnings analysed above.

 

 

Earnings per share

		Six months ended 30.06.24	Six months ended 30.06.23
		$ cents	$ cents
Underlying earnings per share (excluding exceptional items)		22.4	33.5
Earnings per share (exceptional items)		3.9	-
Earnings per share (including exceptional items)		26.3	33.5

 

 

Earnings per share calculations are based on 985,856,695 ordinary shares. 

 

As a result of the factors set out above, profit attributable to equity shareholders of the Company (excluding exceptional items) was $221.3 million, compared with $330.4 million in the first half of 2023, and underlying earnings per share (excluding exceptional items) were 22.4 cents for the first half of 2024 (first half of 2023 - 33.5 cents per share). The profit attributable to equity shareholders (including exceptional items) was $259.6 million, resulting in earnings per share (including exceptional items) of 26.3 cents per share for the first half of 2024. 

 

 

Dividends

 

Dividends per share declared in relation to the period are as follows:

 

		Six months ended 30.06.24	Six months ended 30.06.23
		$ cents	$ cents
Ordinary dividends:
Interim		7.9	11.7
Total dividends to ordinary shareholders		7.9	11.7

 

 

The Board determines the appropriate dividend each year based on consideration of the Group's cash balance, the level of free cash flow and underlying earnings generated during the year and significant known or expected funding commitments. It is expected that the total annual dividend for each year would represent a payout ratio based on underlying net earnings for that year of at least 35%.

 

The Board has declared an interim dividend for the first half of 2024 of 7.9 cents per ordinary share, which amounts to $77.9 million. The interim dividend will be paid on 30 September 2024 to ordinary shareholders that are on the register at the close of business on 6 September 2024.

 

 

Capital expenditure

 

Capital expenditure increased by $37.6 million from $1,021.9 million in the first half of 2023 to $1,059.5 million in the current period, mainly due to the start of the Centinela Second Concentrator project and the completion of the Los Pelambres Phase 1 Expansion project, and increased sustaining capex at Los Pelambres, partly offset by decreased IFRIC 20 mine development at Centinela.

 

Capital expenditure figures quoted in this report are on a cash flow basis, unless stated otherwise.

 

 

Derivative financial instruments

 

The Group periodically uses derivative financial instruments to reduce its exposure to commodity price, foreign exchange and interest rate movements. The Group does not use such derivative instruments for speculative trading purposes. At 30 June 2024 there were foreign exchange derivative financial instruments in place in respect of the Centinela Second Concentrator project capex, with a negative fair value of $15.7 million (2023 - nil).

 

 

Cash flows

 

The key features of the cash flow statement are summarised in the following table.

		Six months ended 30.06.24	Six months ended 30.06.23
		$m	$m
Cash flows from continuing operations		1,483.9	1,296.4
Income tax paid		(316.8)	(323.2)
Net interest paid		(77.3)	(18.2)
Purchases of property, plant and equipment		(1,059.5)	(1,021.9)
Dividends paid to equity holders of the Company		(239,6)	(497.9)
Disposal of JV		-	944.7
Investment in other financial assets		-	(290.1)
Dividends from associates and joint ventures		3.5	-
Capital increase from non-controlling interest		39.7	-
Acquisition of equity investments		-	(8.4)
Other items		0.1	(0.1)
Changes in net (debt)/cash relating to cash flows		(166.0)	81.3
Other non-cash movements		(124.1)	(14.8)
Effects of changes in foreign exchange rates		11.3	(2.0)
Movement in net (debt)/cash in the period		(278.8)	64.5
Net (debt)/cash at the beginning of the year		(1,159.8)	(885.8)
Net (debt) at the end of the period		(1,438.6)	(821.3)

 

 

Cash flows from continuing operations were $1,483.9 million in the first half of 2024 compared with $1,296.4 million in the first half of 2023.  This reflected EBITDA from subsidiaries for the period of $1,318.5 million (first half of 2023 - $1,285.0 million) adjusted for the positive impact of a net working capital decrease of $171.9 million (first half of 2023 - negative impact of $12.2 million from a net working capital increase), partly offset by a non-cash decrease in provisions of $6.5 million (first half of 2023 - positive impact of an increase in provisions of $23.6 million).

 

The $171.9 million working capital decrease in the first six months of 2024 reflected a decrease in receivables, predominantly due to lower sales volumes at June 2024 compared with December 2023, and an increase in accounts payable, partly offset by an increase of work in progress inventories at Los Pelambres.

 

The net cash outflow in respect of tax in the first half of 2024 was $316.8 million (first half of 2023 - $323.2 million). This amount differs from the current tax charge in the consolidated income statement (including exceptional items) of $394.0 million (first half of 2023 - $284.3 million) mainly because cash tax payments for corporate tax and the mining tax include payments on account for the current year (based on prior periods' profit levels) of $218.8 million (first half of 2023 - $311.0 million), withholding tax payments of $66.5 million (first half of 2023 - $0.1 million), the settlement of outstanding balances in respect of the previous year's tax charge of $49.3 million (first half of 2023 - $14.6 million), as well as the recovery of $17.8 million relating to prior years (first half of 2023 - recovery of $2.6 million).

 

Capital expenditure in the first half of 2024 was $1,059.5 million compared with $1,021.9 million in the first half of 2023. This included expenditure of $631.3 million at Centinela (first half of 2023 - $459.0 million), $355.1 million at Los Pelambres (first half of 2023 - $486.6 million), $52.1 million at Antucoya (first half of 2023 - $41.2 million), $19.3 million at the Transport division (first half of 2023 - $24.6 million) and $1.7 million at Corporate (first half of 2023 - $10.5 million). The increase in capital expenditure reflects the start of the Centinela Second Concentrator project and the completion of the Los Pelambres Phase 1 Expansion project, and increased sustaining capex at Los Pelambres, partly offset by decreased IFRIC 20 mine development at Centinela.

 

Dividends paid to equity holders of the Company in the first half of 2024 were $239.6 million (first half of 2023 - $497.9 million), related to the payment of the final dividend declared in respect of 2023.

Dividends received from associates and joint ventures of $3.5 million (six months ended 30 June 2023 - nil) related to a dividend received from Compañía de Minas Buenaventura S.A.A.

 

A capital contribution of $39.7 million was received from Marubeni, the minority partner at Centinela, in respect of financing for the Centinela Second Concentrator project.

 

 

Financial position

 

			At 30.06.24	At 31.12.23
			$m	$m
Cash, cash equivalents and liquid investments			4,432.2	2,919.4
Total borrowings			(5,870.8)	(4,079.2)
Net cash/(debt) at the end of the period			(1,438.6)	(1,159.8)

 

 

At 30 June 2024, the Group had combined cash, cash equivalents and liquid investments of $4,432.2 million (31 December 2023 - $2,919.4). Excluding the non-controlling interest share in each partly-owned operation, the Group's attributable share of cash, cash equivalents and liquid investments was $3,572.2 million (31 December 2023 - $2,490.5 million).

 

Total Group borrowings and other financial liabilities at 30 June 2024 were $5,870.8 million, an increase of $1,791.6 million on the prior year (at 31 December 2023 - $4,079.2 million). The increase was mainly due to $742.0 million from the issue of the new corporate bond, $600.0 million from the other financial liabilities at Centinela, $475.0 million in respect of a short-term loan at Los Pelambres, $209.8 million in respect of the first tranche of the project financing at Centinela, partly offset by a $270.3 million repayment of the senior loans at Los Pelambres ($185.3 million), Centinela ($55.0 million), Antucoya ($25.0 million) and the Transport division ($5.0 million).

 

In June 2024 the Group announced completion of the process whereby Minera Centinela ("Centinela") entered into a water transportation agreement, involving its existing water supply and future water supply to the Centinela Second Concentrator Project. Under the terms of the agreement, Centinela's existing water transportation assets and rights have been transferred to an international consortium for net cash proceeds of $600 million, which was received as of late June 2024. For accounting purposes, the existing assets remain in the Group's balance sheet, with the cash receipt resulting in the recognition of the corresponding other financial liability balance.

 

 

Excluding the non-controlling interest share in each partly-owned operation, the Group's attributable share of the borrowings was $4,394.0 million (31 December 2023 - $2,948.3 million).

 

This resulted in net debt at 30 June 2024 of $1,438.6 million (31 December 2023 - net debt $1,159.8 million). Excluding the non-controlling interest share in each partly-owned operation, the Group had an attributable net debt position of $821.8 million (31 December 2023 - net debt $457.8 million).

 

 

Going concern

 

The financial information contained in this half-year financial report has been prepared on the going concern basis. Details of the factors which have been taken into account in assessing the Group's going concern status are set out in Note 1 to the half-year results announcement.

 

Principal risks and uncertainties

 

There are a number of potential risks and uncertainties which could have a material impact on the Group's performance over the remaining six months of the financial year and could cause actual results to differ materially from expected and historical results. The principal risks and uncertainties which were disclosed in the 2023 Annual Report are as follows:

 

·    Talent management

·    Labour relations

·    Safety and health

·    Environmental management

·    Climate change

·    Community relations

·    Political, legal and regulatory

·    Corruption

·    Operations

·    Tailing storage

·    Strategic resources

·    Cyber security

·    Liquidity

·    Commodity prices and exchange rates

·    Growth of mineral resource base and opportunities

·    Project development and execution

·    Innovation and digitisation

·    External risks

 

There have been no changes to the above categories of key risks in the first six months of 2024.

 

A detailed explanation of the risks summarised above can be found in the Risk Management section of the 2023 Annual Report, which is available at www.antofagasta.co.uk.

 

Cautionary statement about forward-looking statements

 

This half-year results announcement contains certain forward-looking statements. All statements other than historical facts are forward-looking statements. Examples of forward-looking statements include those regarding the Group's strategy, plans, objectives or future operating or financial performance, reserve and resource estimates, commodity demand and trends in commodity prices, growth opportunities, and any assumptions underlying or relating to any of the foregoing. Words such as "intend", "aim", "project", "anticipate", "estimate", "plan", "believe", "expect", "may", "should", "will", "continue" and similar expressions identify forward-looking statements.

 

Forward-looking statements involve known and unknown risks, uncertainties, assumptions and other factors that are beyond the Group's control. Given these risks, uncertainties and assumptions, actual results could differ materially from any future results expressed or implied by these forward-looking statements, which apply only as at the date of this report. Important factors that could cause actual results to differ from those in the forward-looking statements include: natural events, global economic conditions, demand, supply and prices for copper and other long-term commodity price assumptions (as they materially affect the timing and feasibility of future projects and developments), trends in the copper mining industry and conditions of the international copper markets, the effect of currency exchange rates on commodity prices and operating costs, the availability and costs associated with mining inputs and labour, operating or technical difficulties in connection with mining or development activities, employee relations, litigation, and actions and activities of governmental authorities, including changes in laws, regulations or taxation. Except as required by applicable law, rule or regulation, the Group does not undertake any obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

 

Past performance cannot be relied on as a guide to future performance.

 

Condensed Consolidated Income Statement

 

				Six months ended 30.06.2024 (Unaudited)	Six months ended 30.06.2023 (Unaudited)
		Excluding exceptional items	Exceptional items note 3	Total	Total
	Notes	$m	$m	$m	$m
Revenue	5,6	2,955.2	-	2,955.2	2,890.1
Total operating costs	2	(2,283.9)	-	(2,283.9)	(2,116.4)
Operating profit	2,5	671.3	-	671.3	773.7
Net share of results from associates and joint ventures	2,5	17.2	-	17.2	(0.4)
Operating profit from subsidiaries, and share of total results from associates and joint ventures		688.5	-	688.5	773.3
Investment income	8	73.5	-	73.5	72.1
Interest expense	8	(132.1)	-	(132.1)	(50.9)
Other finance items	3,8,14	31.7	51.0	82.7	(30.0)
Net finance income/(expense)	8	(26.9)	51.0	24.1	(8.8)
Profit before tax		661.6	51.0	712.6	764.5
Income tax expense	3,9	(286.8)	(12.7)	(299.5)	(229.3)
Profit for the period		374.8	38.3	413.1	535.2
Attributable to:
Non-controlling interests		153.5	-	153.5	204.8
Owners of the parent		221.3	38.3	259.6	330.4
		US cents	US cents	US cents	US cents
Basic earnings per share 1	10	22.4	3.9	26.3	33.5

1.        All earnings in all the periods presented are from continuing operations.

 

 

Condensed Consolidated Statement of Comprehensive Income

	Notes	Six months ended 30.06.2024 (Unaudited)	Six months ended 30.06.2023 (Unaudited)
		$m	$m
Profit for the period	5	413.1	535.2
Items that may be or were subsequently reclassified to profit or loss:
Losses on cash flow hedges		(15.9)	-
Tax effects arising on cash flow hedges deferred in reserves		4.3	-
Currency translation adjustment		(0.8)	0.4
Total items that may be or were subsequently reclassified to profit or loss		(12.4)	0.4
Items that will not be subsequently reclassified to profit or loss:
Actuarial (losses)/gains on defined benefit plans		(0.3)	(1.5)
Gains on fair value of equity investments	14	33.1	0.6
Tax on items recognised directly in equity that will not be reclassified		(7.6)	0.2
Share of other comprehensive losses of associates and joint ventures, net of tax		(1.9)	(0.9)
Total items that will not be subsequently reclassified to profit or loss		23.3	(1.6)
Total other comprehensive income		10.9	(1.2)
Total comprehensive income for the period		424.0	534.0
Attributable to:
Non-controlling interests		149.9	204.5
Owners of the parent		274.1	329.5
Total comprehensive income for the period - continuing operations		424.0	534.0
		424.0	534.0

 

 

Condensed Consolidated Statement of Changes in Equity

 

 

For the six months ended 30.06.2024 (Unaudited)

 

	Share       capital	Share premium	Other reserves	Retained earnings	Equity attributable to owners of the parent	Non- controlling interests	Total equity
	$m	$m	$m	$m	$m	$m	$m
Balance at 1 January 2024	89.8	199.2	104.5	8,558.4	8,951.9	3,096.5	12,048.4
Capital increase	-	-	-	-	-	39.7	39.7
Profit for the period	-	-	-	259.6	259.6	153.5	413.1
Other comprehensive income for the period	-	-	16.5	(2.0)	14.5	(3.6)	10.9
Total comprehensive income for the period	-	-	16.5	257.6	274.1	149.9	424.0
Dividends	-	-	-	(239.6)	(239.6)	-	(239.6)
Balance at 30 June 2024	89.8	199.2	121.0	8,576.4	8,986.4	3,286.1	12,272.5

 

 

 

For the six months ended 30.06.2023 (Unaudited)

 

	Share capital	Share premium	Other reserves	Retained earnings	Equity attributable to equity owners of the parent	Non- controlling interests	Total equity
	$m	$m	$m	$m	$m	$m	$m
Balance at 1 January 2023	89.8	199.2	5.0	8,333.5	8,627.5	3,016.9	11,644.4
Profit for the period	-	-	-	330.4	330.4	204.8	535.2
Other comprehensive income/(expense) for the period	-	-	1.0	(1.9)	(0.9)	(0.3)	(1.2)
Total comprehensive income for the period	-	-	1.0	328.5	329.5	204.5	534.0
Dividends	-	-	-	(497.9)	(497.9)	-	(497.9)
Balance at 30 June 2023	89.8	199.2	6.0	8,164.1	8,459.1	3,221.4	11,680.5

 

 

Condensed Consolidated Balance Sheet

 

			At 30.06.2024 (Unaudited)	At 31.12.2023 (Audited)
Non-current assets	Notes		$m	$m
Property, plant and equipment	12		13,166.0	12,678.7
Inventories			462.4	457.0
Investments in associates and joint ventures	14		1,717.0	891.1
Trade and other receivables			60.4	68.5
Equity investments	14		15.3	288.6
Deferred tax assets			66.0	72.0
			15,487.1	14,455.9
Current assets
Inventories			905.1	671.0
Trade and other receivables			904.0	1,117.8
Other financial assets	14		-	457.2
Current tax assets			13.4	25.9
Liquid investments	17		2,923.7	2,274.7
Cash and cash equivalents	17		1,508.5	644.7
			6,254.7	5,191.3
Total assets			21,741.8	19,647.2
Current liabilities
Short-term borrowings and other financial liabilities	15		(1,460.8)	(901.9)
Trade and other payables			(1,268.3)	(1,171.5)
Derivative financial instruments	7		(15.7)	-
Short-term decommissioning and restoration provisions			(11.2)	(15.2)
Current tax liabilities			(167.3)	(100.7)
			(2,923.3)	(2,189.3)
Non-current liabilities
Medium and long-term borrowings and other financial liabilities	15		(4,410.0)	(3,177.3)
Trade and other payables			(8.8)	(9.8)
Post-employment benefit obligations			(135.6)	(139.9)
Decommissioning and restoration provisions			(427.6)	(425.9)
Deferred tax liabilities			(1,564.0)	(1,656.6)
			(6,546.0)	(5,409.5)
Total liabilities			(9,469.3)	(7,598.8)
Net assets			12,272.5	12,048.4
Equity
Share capital			89.8	89.8
Share premium			199.2	199.2
Other reserves			121.0	104.5
Retained earnings			8,576.4	8,558.4
Equity attributable to owners of the parent			8,986.4	8,951.9
Non-controlling interests			3,286.1	3,096.5
Total equity			12,272.5	12,048.4

 

The condensed consolidated interim financial statements were approved by the Board of Directors on 19 August 2024

 

Condensed Consolidated Cash Flow Statement

			At 30.06.2024 (Unaudited)	At 30.06.2023 (Unaudited)
	Notes		$m	$m
Cash flows from continuing operations	16		1,483.9	1,296.4
Interest paid			(129.8)	(70.5)
Income tax paid			(316.8)	(323.2)
Net cash from operating activities			1,037.3	902.7
Investing activities
Dividends from associates and joint ventures			3.5	-
Investments in other financial assets			-	(290.1)
Acquisition of equity investments			-	(8.4)
Proceeds from disposal of investment in joint venture	13		-	944.7
Proceeds from sale of property plant and equipment			0.2	-
Purchases of property, plant and equipment			(1,059.5)	(1,021.9)
Net increase in liquid investments	17		(648.9)	(449.6)
Interest received			52.5	52.3
Net cash used in investing activities			(1,652.2)	(773.0)
Financing activities
Dividends paid to owners of the parent			(239.6)	(497.9)
Dividends paid to preference shareholders of the Company			(0.1)	(0.1)
Capital increase from non-controlling interest			39.7	-
Proceeds from other financial liabilities	15		600.0	-
Proceeds from issue of new borrowings			1,564.8	-
Repayment of borrowings			(408.3)	(110.8)
Principal elements of lease payments			(74.5)	(35.1)
Net cash from/(used in) financing activities			1,482.0	(643.9)
Net increase/(decrease) in cash and cash equivalents	17		867.1	(514.2)
Cash and cash equivalents at beginning of the period			644.7	810.4
Net increase/(decrease) in cash and cash equivalents	17		867.1	(514.2)
Effect of foreign exchange rate changes	17		(3.3)	7.1
Cash and cash equivalents at end of the period	17		1,508.5	303.3

 

 

Notes

1.   General information and accounting policies

a)             General information

These condensed consolidated interim financial statements ("the interim financial statements") of the Antofagasta plc Group for the half-year reporting period ended 30 June 2024 were approved for issue by the Board of Directors of the Company on 19 August 2024. The interim financial statements are unaudited.

These interim financial statements have been prepared under the accounting policies as set out in the statutory accounts for the period ended 31 December 2023.

The interim financial statements have been prepared in accordance with IAS 34 Interim Financial Reporting as issued by the International Accounting Standard Board IASB and as adopted by the UK International Accounting Standards and with the requirements of the Companies Act 2006 as applicable to companies reporting under those standards.

These interim financial statements do not include all of the notes of the type normally included in annual financial statements. Accordingly, the consolidated financial information is not in full accordance with UK-adopted International Accounting Standards. The consolidated financial information has been prepared on the going concern basis.

The information contained in this announcement for the periods ended 30 June 2023 and 31 December 2023 also does not constitute statutory accounts. A copy of the statutory accounts for the year ended 31 December 2023 has been delivered to the Registrar of Companies. The auditors' report on those accounts was unqualified, with no matters by way of emphasis, and did not contain statements under sections 498(2) or (3) of the Companies Act 2006.

The Group's total revenue was previously referred to as "Group revenue" on the face of the income statement; for simplicity and clarity this has now been changed to "Revenue".

 

Going concern

The Directors have assessed the going concern status of the Group, considering the period to 31 December 2025.

The Group's business activities, together with those factors likely to affect its future performance, are set out in the Financial and Operating Review. Details of the cash flows of the Group during the period, along with its financial position at the period-end, are set out in the Financial Review. The condensed consolidated financial statements include details of the Group's cash, cash equivalents and liquid investment balances in Note 17, and details of borrowings are set out in Note 15.

When assessing the going concern status of the Group, the Directors have considered in particular its financial position, including its significant balance of cash, cash equivalents and liquid investments and the terms and remaining durations of the borrowing facilities in place. The Group had a strong financial position as at 30 June 2024, with combined cash, cash equivalents and liquid investments of $4,432.2 million. Total borrowings were $5,870.8 million, resulting in a net debt position of $1,438.6 million. Of the total borrowings, only 25% is repayable within one year, and an additional 13% repayable between one and two years.

When assessing the prospects of the Group, the Directors have considered the Group's copper price forecasts, the Group's expected production levels, operating cost profile and capital expenditure. These forecasts are based on the Group's budgets and life-of-mine models, which are also used when assessing relevant accounting estimates, including depreciation, deferred stripping and closure provisions. This analysis has focused on the existing asset base of the Group, without factoring in potential development projects, which is considered appropriate for an assessment of the Group's ability to manage the impact of a depressed economic environment. The analysis has only included the drawdown of existing committed borrowing facilities, and has not assumed that any new borrowing facilities will be put in place. The Directors have assessed the key risks which could impact the prospects of the Group over the going concern period and consider the most relevant to be risks to the copper price outlook, as this is the factor most likely to result in significant volatility in earnings and cash generation. Robust downside sensitivity analyses have been performed, assessing the standalone impact of each of:

 

●      A significant deterioration in the future copper price forecasts by an average of 15% throughout the going concern period,

●      An even more pronounced short-term reduction of a further 50 c/lb in the copper price for a period of three months, in addition to the above deterioration of 15% in the copper price throughout the review period,

●      The potential impact of the Group's most significant individual operational risks, and

●      A shutdown of any one of the Group's operations for a period of three months, or a shut-down of all of the Group's operations for a period of one month.

 

The stability of tailings storage facilities represents a potentially significant operational risk for mining operations globally. The Group's tailings storage facilities are designed to international standards, constructed using downstream methods, subject to rigorous monitoring and reporting, and reviewed regularly by an international panel of independent experts. Given these standards of design, development, operations and review, the impact of a potential tailings dam failure has not been included in the sensitivity analysis.

The above downside sensitivity analyses indicated results which could be managed in the normal course of business, including the aggregate impact of a number of the above sensitivities occurring at the same time. The analysis indicated that the Group is expected to remain in compliance with all of the covenant requirements of its borrowings throughout the review period and retain sufficient liquidity. Based on their assessment of the Group's prospects and viability, the Directors have formed a judgement, at the time of approving the condensed consolidated interim financial statements, that there are no material uncertainties that the Directors are aware of that cast doubt on the Group's going concern status and that there is a reasonable expectation that the Group has adequate resources to continue in operational existence for the period to 31 December 2025. The Directors therefore consider it appropriate to adopt the going concern basis of accounting in preparing the condensed consolidated interim financial statements.

b)                  Adoption of new accounting standards

The following accounting standards, amendments and interpretations became effective in the current reporting period but the application of these standards and interpretations had no material impact on the amounts reported in these interim financial statements:

 

Amendments	Effective date
Classification of Liabilities as Current or Non-Current (Amendments to IAS 1)	Annual periods beginning on or after 1 January 2024.
Lease Liability in a Sale and Leaseback (Amendments to IFRS 16)	Annual periods beginning on or after 1 January 2024.
Non-current Liabilities with Covenants (Amendments to IAS 1)	Annual periods beginning on or after 1 January 2024.
Supplier Finance Arrangements (Amendments to IAS 7 and IFRS 7)	Annual periods beginning on or after 1 January 2024.

 

c)             Accounting standards issued but not yet effective

At the date of authorisation of these financial statements, the following standards and interpretations, which have not been applied in these financial statements, were in issue but not yet effective. It is expected that where applicable, these standards and amendments will be adopted on each respective effective date. None of these standards are expected to have a significant impact on the Group.

Standards	Effective date
IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information	No earlier than 1 January 2026.
IFRS S2 Climate-related Disclosures	No earlier than 1 January 2026.
Presentation and Disclosures in Financial Statements (IFRS 18)1	Annual periods beginning on or after 1 January 2027.
IFRS 19 Subsidiaries without Public Accountability: Disclosures (IFRS 19)1	Annual periods beginning on or after 1 January 2027.
Amendments to IFRS	Effective date
Lack of Exchangeability (Amendments to IAS 21)1	Annual periods beginning on or after 1 January 2025.
Classification and measurement of financial instruments (Amendments IFRS 9 and IFRS 7)1	Annual periods beginning on or after 1 January 2026.

¹ These amendments are still subject to UK endorsement.

 

 

d)             Critical accounting judgements and key sources of estimation uncertainty

 

The critical accounting judgements and keys estimate applied in these interim financial statements (which are consistent with the 2023 year-end, except for Compañía de Minas Buenaventura S.A.A accounting) are:

 

Judgements

 

●      Non-financial assets impairment indicators and reversal of impairment - see Note 4 for relevant details.

●      During 2023, the Group entered into an agreement to acquire up to 30 million shares in Compañía de Minas Buenaventura S.A.A. (''Buenaventura''), representing approximately 12% of Buenaventura's issued share capital. In addition, the Group held as of December 31, 2023 an existing holding of approximately 18.1 million shares in Buenaventura, representing approximately 7% of Buenaventura's issued share capital. In March 2024, the transaction pursuant to the agreement completed, resulting in the Group holding approximately 48.1 million shares in Buenaventura, representing approximately 19% of Buenaventura's issued share capital. Two Antofagasta officers were elected to Buenaventura's Board in March 2024. Taking into account relevant factors including the Group's approximately 19% interest in Buenaventura's issued share capital and the Group's representation on Buenaventura's Board, the Group is considered to have significant influence (in accordance with the IAS 28 Investments in Associates and Joint Ventures definition) over Buenaventura from March 2024 onwards. Accordingly, the Group's interest in Buenaventura has been accounted for as an investment in associate from that point.

 

Estimates

 

The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. As at 30 June 2024, there were not considered to be particular estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next 12 months.

 

2.   Operating profit from subsidiaries, and total profit from associates and joint ventures

		Six months ended 30.06.2024 (Unaudited)	Six months ended 30.06.2023 (Unaudited)
		$m	$m
Revenue		2,955.2	2,890.1
Cost of sales		(1,852.5)	(1,677.2)
Gross profit		1,102.7	1,212.9
Administrative and distribution expenses		(299.8)	(316.4)
Other operating income		24.5	21.1
Other operating expenses 1		(156.1)	(143.9)
Operating profit from subsidiaries		671.3	773.7
Net share of results from associates and joint ventures		17.2	(0.4)
Total operating profit from subsidiaries, and share of total results from associates and joint ventures		688.5	773.3

¹Other operating expenses comprise $26.8 million of exploration and evaluation expenditure for the 2024 half year (six months ended 30 June 2023 - $29.3 million), $9.0 million in respect of the employee severance provision for the 2024 half year (six months ended 30 June 2023 - $10.3 million), $0.4 million in respect of the closure provision for the 2024 half year (six months ended 30 June 2023 - $14.7 million), and $119.9 million of other expenses for the 2024 half year (including costs of community programmes, project evaluation costs and the "ad valorem" element of the new mining royalty) (six months ended 30 June 2023 - $89.6 million).

 

3.   Exceptional items

Exceptional items are material items of income and expense which are non-regular or non-operating and typically non-cash, including impairments and profits or losses on disposals. The tax effect of items presented as exceptional is also classified as exceptional, as are material deferred tax adjustments that relate to more than one reporting period. The classification of these types of items as exceptional is considered to be useful as it provides an indication of the underlying earnings generated by the ongoing businesses of the Group.

 

Compañía de Minas Buenaventura S.A.A

During 2023, the Group entered into an agreement to acquire up to an additional 30 million shares in Compañía de Minas Buenaventura S.A.A. An exceptional fair value gain of $51.0 million (six months ended 30 June 2023 - nil) was recognised during the first six months of 2024 in respect of this agreement. A deferred tax expense of $12.7 million (six months ended 30 June 2023 - nil) has been recognised in respect of this gain, resulting in a post-tax impact of $38.3 million (six months ended 30 June 2023 - nil).

 

4.   Asset sensitivities

There were no indicators of potential impairment, or reversal of previous impairments, for the Group's non-current assets associated with its mining operations as at 30 June 2024, and accordingly no impairment tests have been performed. The impairment indicator assessment included consideration of the potential indicators set out in IAS 36, 'Impairment of Assets', which included quantitative analysis based on the operations' life-of-mine models as adjusted for certain assumptions (including potential future development opportunities) ("the models"). These models provide indicative valuations and do not represent, or comply with, a formal impairment assessment prepared in accordance with IAS 36.  

 

As noted above, no qualitative indicators of potential impairment or potential reversal of impairment were identified. Similarly, no quantitative indicators of impairment were identified, with the models used within the impairment indicator assessment continuing to indicate positive headroom for all of the Group's mining operations, including the Zaldívar joint venture, with the indicated value of the assets in excess of their carrying value.

Relevant aspects of this process are detailed below:

 

Copper price outlook

The assumption to which the value of the assets is most sensitive is the future long-term copper price. The copper price forecasts (representing the Group's estimates of the assumptions that would be used by independent market participants in valuing the assets) are based on consensus analyst forecasts. A long-term copper price of $4.00/lb (reflecting 2024 real terms) has been used in the models for the impairment indicator assessment, which has increased from $3.70/lb (reflecting 2023 real terms) at the prior year-end.

 

 

The US dollar/Chilean peso exchange rate

The value  of the assets is also sensitive to movements in the US dollar/Chilean peso exchange rate. A long-term exchange rate of Ch$850/$1 has been used in the models considered as part of the impairment indicator assessment. This compares with the long-term exchange rate of Ch$785/$1 used at the 2023 year-end.

 

Discount rate

A real post-tax discount rate of 8% (31 December 2023 - 8%), calculated using relevant market data, has been used in the impairment indicator assessment.

 

Climate risks

The assessments reflect the Group's estimates of potential future climate-related impacts. The Group's Annual Report disclosures are in line with the recommendations of the Task Force on Climate-related Financial Disclosures (''TCFD'').  This process includes scenario analyses assessing the potential future impact of transition and physical risks, as well as potential copper price upside (for example, due to increased demand for the construction of electric vehicles and renewable power generating capacity). On the basis that the potential copper price upside is expected to exceed the downside impact of future risks, no specific adjustments have been reflected in these assessments in relation to climate-change.

 

Other relevant assumptions

In addition to the impact of the future copper price, the US dollar/Chilean peso exchange rate, the discount rate and climate-related impacts, the models used in the impairment indicator assessment are sensitive to the assumptions in respect of future production levels, operating costs and sustaining and development capital expenditure.

 

In the case of Zaldívar, in addition to the assumptions made in respect of the factors outlined above, the conclusion that there are no impairment indicators reflects certain assumptions about future operational consideration to which the model used as part of the impairment indicator assessment is sensitive, in particular the following:

 

·      Currently, Zaldívar is permitted to extract water and mine until May 2025. The mine life after May 2025 is subject to an EIA application which was filed in June 2023 to extend the mining and water environmental permits to 2051. The EIA application includes a proposal to develop the primary sulphide ore deposit, extending the current life of mine and requiring investments over the mine life of $1.2 billion, and a conversion of the water source for Zaldívar to either seawater or water from third parties, following a transition period during which the current continental water extraction permit is extended from 2025 to 2028. The impairment indicator assessment assumes that the EIA will be granted, to enable the continued operation of the mine without interruption. However, if this is not the case, this is likely to be considered an indicator of a potential impairment, requiring an IAS 36 impairment assessment at that point.

 

·      Zaldívar's final pit phase, which represents approximately 20% of current ore reserves, impacts a portion of Minera Escondida's mine property, as well as infrastructure owned by third parties. Mining of the phase will be subject to agreements or easements to access these areas and relocate the infrastructure, as well as related permits.  During 2023, Zaldívar reached an agreement with Escondida with respect to mining matters and certain cost sharing arrangements. The impairment indicator assessment assumes that the necessary agreements, easements and permits will be obtained to allow the mining of the final pit phase.

 

The carrying value of the Group's investment in joint venture balance in respect of Zaldívar as at 30 June 2024 was $886.1 million. (31 December 2023 − $881.3 million).

 

Indicators of potential reversal of previous impairments

Antucoya recognised impairments totalling $716 million in 2012 and 2016. Of the original impairment amounts, approximately $470 million remains in effect unamortised as at 30 June 2024. Based on an assessment of both qualitative and quantitative factors, there were no indicators of a potential reversal of these previous impairments as at 30 June 2024. Whilst the indicative valuation exercise for Antucoya as at 30 June 2024 indicated positive headroom, the analysis also indicated that this positive headroom reflects the passage of time since the original impairment assessments, rather a significant increase in the service potential of the operation, and accordingly is not considered to be an indicator of a potential impairment reversal.

 

5.   Segmental analysis

The Group's reportable segments, which are the same as its operating segments, are as follows:

 

●              Los Pelambres

●              Centinela

●              Antucoya

●              Zaldívar

●              Exploration and evaluation

●              Corporate and other items

●              Transport division

 

For management purposes, the Group is organised into two business divisions based on their products - Mining and Transport. The mining division is split further for management reporting purposes to show results by mine and exploration activity. Los Pelambres produces primarily copper concentrate and molybdenum as a by-product. Centinela produces copper concentrate containing gold as a by-product, copper cathodes and molybdenum concentrates. Antucoya and Zaldívar produce copper cathodes. The transport division provides rail and road cargo transport together with a number of ancillary services. All the operations are based in Chile. The Exploration and evaluation segment incurs exploration and evaluation expenses. "Corporate and other items" comprises costs incurred by the Company, Antofagasta Minerals S.A., the Group's mining corporate centre and other entities, that are not allocated to any individual business segment. Consistent with its internal management reporting, the Group's corporate and other items are included within the mining division.

 

The Chief Operating decision-maker (the Group's Chief Executive Officer) monitors the operating results of the business segments separately for the purpose of making decisions about resources to be allocated and assessing performance. Segment performance is evaluated based on the operating profit of each of the segments.

 

a)   Segment revenues and results

 

For the six months ended 30.06.2024 (Unaudited)

 

	Los Pelambres	Centinela	Antucoya	Zaldívar	Exploration and evaluation2	Corporate and other items	Total Mining	Transport division	Total
	$m	$m	$m	$m	$m	$m	$m	$m	$m
Revenue	1,526.7	970.8	359.7	-	-	-	2,857.2	98.0	2,955.2
Operating costs excluding depreciation	(641.6)	(640.9)	(225.8)	-	(26.8)	(42.4)	(1,577.5)	(59.2)	(1,636.7)
Depreciation	(209.5)	(359.8)	(55.8)	-	-	(4.9)	(630.0)	(17.2)	(647.2)
Operating profit/(loss)	675.6	(29.9)	78.1	-	(26.8)	(47.3)	649.7	21.6	671.3
Net share of results from associates and joint ventures	-	-	-	6.7	-	10.3	17.0	0.2	17.2
Total operating profit from subsidiaries, and share of total results from associates and joint ventures	675.6	(29.9)	78.1	6.7	(26.8)	(37.0)	666.7	21.8	688.5
Investment income	16.4	15.4	3.7	-	-	37.6	73.1	0.4	73.5
Interest expense	(59.9)	(24.1)	(15.5)	-	-	(32.4)	(131.9)	(0.2)	(132.1)
Other finance items (Excluding exceptional items)	10.0	17.4	3.4	-	-	2.0	32.8	(1.1)	31.7
Fair value gain on other financial assets - exceptional items 3	-	-	-	-	-	51.0	51.0	-	51.0
Profit/(loss) before tax	642.1	(21.2)	69.7	6.7	(26.8)	21.2	691.7	20.9	712.6
Tax	(259.0)	3.7	(18.1)	-	-	(9.2)	(282.6)	(4.2)	(286.8)
Tax - exceptional items	-	-	-	-	-	(12.7)	(12.7)	-	(12.7)
Profit/(loss) for the period	383.1	(17.5)	51.6	6.7	(26.8)	(0.7)	396.4	16.7	413.1
Non-controlling interests	152.1	(6.9)	9.2	-	-	(0.9)	153.5	-	153.5
Profit/(losses) attributable to the owners of the parent	231.0	(10.6)	42.4	6.7	(26.8)	0.2	242.9	16.7	259.6
EBITDA1	885.1	329.9	133.9	50.9	(26.8)	(21.1)	1,351.9	42.5	1,394.4
Capital Expenditure (cash basis)4	355.1	631.3	52.1	-	-	1.7	1,040.2	19.3	1,059.5
Segment assets and liabilities
Segment assets	8,104.0	7,438.6	1,884.6	-	-	2,178.6	19,605.8	419.0	20,024.8
Investments in associates and joint ventures	-	-	-	886.1	-	820.9	1,707.0	10.0	1,717.0
Segment liabilities	(4,128.4)	(2,764.4)	(524.6)	-	-	(1,994.9)	(9,412.3)	(57.0)	(9,469.3)

 

¹ EBITDA refers to Earnings Before Interest, Tax, Depreciation and Amortisation. EBITDA is calculated by adding back depreciation, amortisation, profit or loss on disposals and impairment charges to operating profit. This comprises 100% of the EBITDA from the Group´s subsidiaries, and the Group´s proportional share of the EBITDA of its associates and joint ventures.

² Operating cash outflow in the exploration and evaluation segment was $24.0 million.

In order to better reflect the Group's internal reporting, the Group has changed the classification of certain evaluation costs incurred by the individual mining operations, which were previously included in the Exploration and evaluation segment and are now included within the individual mine segments.

³ An exceptional fair value gain of $51.0 million has been recognised in respect of an agreement under which the Group has now acquired 30 million shares in Compañia de Minas Buenaventura S.A.A. (see Note 14).

⁴ In order to better reflect the Group's internal reporting, the Group has changed the basis of its capital expenditure segment measure to be on a cash basis rather than an accruals basis.

 

For the six months ended 30.06.2023 (Unaudited)

 

	Los Pelambres	Centinela	Antucoya	Zaldívar	Exploration and evaluation2	Corporate and other items	Total Mining	Transport division	Total
	$m	$m	$m	$m	$m	$m	$m	$m	$m
Revenue	1,332.4	1,128.7	330.5	-	-	-	2,791.6	98.5	2,890.1
Operating costs excluding depreciation and amortisation	(576.0)	(656.9)	(228.3)	-	(29.3)	(51.7)	(1,542.2)	(62.9)	(1,605.1)
Depreciation and amortisation	(137.5)	(300.6)	(52.3)	-	-	(7.9)	(498.3)	(13.0)	(511.3)
Operating profit/(loss)	618.9	171.2	49.9	-	(29.3)	(59.6)	751.1	22.6	773.7
Net share of results from associates and joint ventures	-	-	-	(1.7)	-	-	(1.7)	1.3	(0.4)
Total operating profit from subsidiaries, and share of total result from associates and joint ventures	618.9	171.2	49.9	(1.7)	(29.3)	(59.6)	749.4	23.9	773.3
Investment income	20.4	6.7	3.2	-	-	41.4	71.7	0.4	72.1
Interest expense	(2.2)	(7.2)	(14.8)	-	-	(26.1)	(50.3)	(0.6)	(50.9)
Other finance items	(8.7)	(14.1)	(2.8)	-	-	(5.4)	(31.0)	1.0	(30.0)
Profit/(loss) before tax	628.4	156.6	35.5	(1.7)	(29.3)	(49.7)	739.8	24.7	764.5
Tax	(193.6)	(47.9)	(6.6)	-	-	28.0	(220.1)	(9.2)	(229.3)
Profit/(loss) for the period	434.8	108.7	28.9	(1.7)	(29.3)	(21.7)	519.7	15.5	535.2
Non-controlling interests	172.3	31.6	2.5	-	-	(1.6)	204.8	-	204.8
Profit/(loss) attributable to the owners of the parent	262.5	77.1	26.4	(1.7)	(29.3)	(20.1)	314.9	15.5	330.4
EBITDA1	756.4	471.8	102.2	42.5	(29.3)	(51.7)	1,291.9	39.1	1,331.0
Capital Expenditure (cash basis) 3	486.6	459.0	41.2	-	-	10.5	997.3	24.6	1,021.9
Segment assets and liabilities
Segment assets	7,178.1	5,904.7	1,679.2	-	-	1,952.7	16,714.7	411.8	17,126.5
Investments in associates and joint ventures	-	-	-	894.8	-	-	894.8	8.5	903.3
Segment liabilities	(3,125.8)	(1,437.0)	(511.4)	-	-	(1,199.9)	(6,274.1)	(75.2)	(6,349.3)

 

¹ EBITDA refers to Earnings Before Interest, Tax, Depreciation and Amortisation. EBITDA is calculated by adding back depreciation, amortisation, profit or loss on disposals and impairment charges to operating profit. This comprises 100% of the EBITDA from the Group´s subsidiaries, and the Group´s proportional share of the EBITDA of its associates and joint ventures.

² Operating cash outflow in the exploration and evaluation segment was $31.1 million.

In order to better reflect the Group's internal reporting, the Group has changed the classification of certain evaluation costs incurred by the individual mining operations, which were previously included in the Exploration and evaluation segment and are now included within the individual mine segments. The above comparative figures for the six months ended 30 June 2023 have been restated to be on a consistent basis. This has resulted in an increase in operating costs excluding depreciation and amortisation of $13.5 million for Los Pelambres, $17.5 million for Centinela and $1.7 million for Antucoya, and a corresponding decrease of $32.7 million for the Exploration and evaluation segment.

³ In order to better reflect the Group's internal reporting, the Group has changed the basis of its capital expenditure segment measure to be on a cash basis rather than an accruals basis. The above comparative figures for the six months ended 30 June 2023 have been restated to be on a consistent basis. The previously reported figures on an accruals basis were $480.1 million for Los Pelambres, $458.1 million for Centinela, $48.0 million for Antucoya, $11.8 million for Corporate, $998.0 million in total for the Mining division, $26.3 million for the Transport division and $1,024.3 million in total for the Group.

 

 

b)     Entity wide disclosures

 

Revenue by product

	Six months ended 30.06.2024	Six months ended 30.06.2023
	$m	$m
Copper
-  Los Pelambres	1,221.2	1,054.6
-  Centinela concentrates	363.9	575.8
-  Centinela cathodes	436.0	327.4
-  Antucoya	356.5	327.2
Provision of shipping services
-  Los Pelambres	28.2	23.0
-  Centinela concentrates	10.6	18.3
-  Centinela cathodes	3.4	3.2
-  Antucoya	3.2	3.3
Gold
-  Los Pelambres	39.9	41.5
-  Centinela concentrates	100.9	115.2
Molybdenum
-  Los Pelambres	217.3	197.6
-  Centinela concentrates	48.7	74.6
Silver
-  Los Pelambres	20.0	15.7
-  Centinela concentrates	7.4	14.2
Total Mining	2,857.2	2,791.6
Transport division	98.0	98.5
	2,955.2	2,890.1

 

 

 

Revenue by location of customer

	Six months ended 30.06.2024	Six months ended 30.06.2023
	$m	$m
Europe
-  United Kingdom	15.8	6.9
-  Switzerland	142.2	188.0
-  Spain	46.8	-
-  Germany	35.2	82.8
-  Rest of Europe	116.7	37.9
Latin America
-  Chile	200.9	217.9
-  Rest of Latin America	140.4	45.4
North America
-  United States	110.4	173.4
Asia Pacific
-  Japan	964.7	952.6
-  China	640.0	584.8
-  Singapore	170.8	244.0
-  South Korea	193.0	235.6
-  Hong Kong	56.2	75.9
-  Rest of Asia	122.1	44.9
	2,955.2	2,890.1

 

Information about major customers

 

In the first half of 2024, the Group´s mining revenue included $446.6 million related to one large customer that individually accounted for more than 10% of the Group's revenue (six months ended 30 June 2023 - one large customer representing $519.9 million)

 

 

 

6.   Revenue

Copper and molybdenum concentrate sale contracts and copper cathode sale contracts generally provide for provisional pricing of sales at the time of shipment, with final pricing being based on the monthly average London Metal Exchange copper price or monthly average molybdenum price for specified future periods. This normally ranges from one to four months after shipment to the customer. For sales contracts which contain provisional pricing mechanisms, the total receivable balance is measured at fair value through profit or loss. Gains and losses from the mark-to-market of open sales are recognised through adjustments to revenue in the income statement and to trade receivables in the balance sheet. The Group determines mark-to-market prices using forward prices at each period-end for copper concentrate and cathode sales, and period-end month average prices for molybdenum concentrate sales due to the absence of a futures market in the market price references for that commodity in the majority of the Group's contracts.

 

With sales of concentrates, which are sold to smelters and roasting plants for further processing into fully refined metal, the price of the concentrate (which is the amount recorded as revenue) reflects the market value of the fully refined metal less a "treatment and refining charge" deduction, to reflect the lower value of this partially processed material compared with the fully refined metal.

 

The Group sells a significant proportion of its products on Cost, Insurance & Freight (CIF) Incoterms, which means that the Group is responsible for shipping the product to a destination port specified by the customer. The shipping service represents a separate performance obligation, and is recognised separately from the sale of the material over time as the shipping service is provided.

 

The total revenue from contracts with customers and the impact of provisional pricing adjustments in respect of concentrate and cathode sales is as follows:

	Six months ended 30.06.2024	Six months ended 30.06.2023
	$m	$m
Revenue from contracts with customers
Sale of products	2,662.8	2,747.5
Provision of shipping services associated with the sale of products 1	45.4	47.8
Transport division 2	98.0	98.5
Provisional pricing adjustments in respect of copper, gold and molybdenum	149.0	(3.7)
Total revenue	2,955.2	2,890.1

¹The Group sells a significant proportion of its products on Cost, Insurance & freight (CIF) incoterms, which means that the Group is responsible for shipping the product to a destination port specified by the customer.

²The transport division provides rail and road cargo transport together with a number of ancillary services.

 

The categories of revenue which are principally affected by different economic factors are the individual product types. A summary of revenue by product is set out in Note 5(b).

 

The following tables set out the impact of provisional pricing adjustments, and treatment and refining charges for the more significant products. The revenue from these products, which includes, for the sale of copper, revenue associated with the provision of shipping services, is reconciled to total revenue in Note 5(b).

 

 

For the period ended 30 June 2024

 

	$m	$m	$m	$m	$m	$m	$m	$m
	Los Pelambres	Centinela	Centinela	Antucoya	Los Pelambres	Centinela	Los Pelambres	Centinela
	Copper concentrate	Copper concentrate	Copper cathodes	Copper cathodes	Gold in concentrate	Gold in concentrate	Molybdenum concentrate	Molybdenum concentrate
Provisionally priced sales of products	1,211.7	355.8	431.8	350.1	39.4	98.3	210.0	45.5
Revenue from freight services	28.2	10.6	3.4	3.2	-	-	-	-
	1,239.9	366.4	435.2	353.3	39.4	98.3	210.0	45.5
Effects of pricing adjustments to previous year invoices
Reversal of mark-to-market adjustments at the end of the previous year	(45.1)	(16.2)	(0.3)	(0.2)	-	(2.6)	1.0	0.4
Settlement of sales invoiced in the previous year	62.5	28.2	(1.0)	(0.9)	(0.4)	1.5	3.3	1.6
Total effect of adjustments to previous year invoices in the current year	17.4	12.0	(1.3)	(1.1)	(0.4)	(1.1)	4.3	2.0
Effects of pricing adjustments to current period invoices
Settlement of sales invoiced in the current period	71.1	25.1	6.6	8.2	1.0	3.7	10.2	3.3
Mark-to-market adjustments at the end of the current period	(12.0)	(5.4)	(1.1)	(0.7)	-	0.1	5.2	1.8
Total effect of adjustments to current period invoices	59.1	19.7	5.5	7.5	1.0	3.8	15.4	5.1
Total pricing adjustments	76.5	31.7	4.2	6.4	0.6	2.7	19.7	7.1
Revenue before deducting treatment & refining charges	1,316.4	398.1	439.4	359.7	40.0	101.0	229.7	52.6
Treatment and refining charges	(67.0)	(23.6)	-	-	(0.1)	(0.1)	(12.4)	(3.9)
Revenue net of tolling charges
	1,249.4	374.5	439.4	359.7	39.9	100.9	217.3	48.7

 

 

For the period ended 30 June 2023

 

	$m	$m	$m	$m	$m	$m	$m	$m
	Los Pelambres	Centinela	Centinela	Antucoya	Los Pelambres	Centinela	Los Pelambres	Centinela
	Copper concentrate	Copper concentrate	Copper cathodes	Copper cathodes	Gold in concentrate	Gold in concentrate	Molybdenum concentrate	Molybdenum concentrate
Provisionally priced sales of products	1,091.7	598.1	324.2	325.3	38.0	117.2	237.6	91.6
Revenue from freight services	23.0	18.3	3.2	3.3	-	-	-	-
	1,114.7	616.4	327.4	328.6	38.0	117.2	237.6	91.6
Effects of pricing adjustments to previous year invoices
Reversal of mark-to-market adjustments at the end of the previous year	(38.0)	(19.9)	(0.8)	(0.8)	-	(2.7)	(12.6)	(7.6)
Settlement of sales invoiced in the previous year	92.6	52.9	10.3	7.7	2.8	1.1	39.9	14.9
Total effect of adjustments to previous year invoices in the current year	54.6	33.0	9.5	6.9	2.8	(1.6)	27.3	7.3
Effects of pricing adjustments to current period invoices
Settlement of sales invoiced in the current period	(29.1)	(14.6)	(6.4)	(4.1)	0.7	0.7	(59.8)	(20.6)
Mark-to-market adjustments at the end of the current period	(10.1)	(5.5)	0.1	(0.9)	-	(0.8)	4.0	1.6
Total effect of adjustments to current period invoices	(39.2)	(20.1)	(6.3)	(5.0)	0.7	(0.1)	(55.8)	(19.0)
Total pricing adjustments	15.4	12.9	3.2	1.9	3.5	(1.7)	(28.5)	(11.7)
Revenue before deducting treatment & refining charges	1,130.1	629.3	330.6	330.5	41.5	115.5	209.1	79.9
Treatment and refining charges	(52.6)	(35.2)	-	-	-	(0.3)	(11.5)	(5.3)
Revenue net of tolling charges
	1,077.5	594.1	330.6	330.5	41.5	115.2	197.6	74.6

 

 

 

(i)      Copper concentrate

 

The typical period for which sales of copper concentrate remain open until settlement occurs is a range of approximately three to four months from shipment date.

		At 30.06.2024	At 30.06.2023
Sales provisionally priced at the balance sheet date	Tonnes	112,400	141,400
Average mark-to-market price	$/lb	4.33	3.77
Average provisional invoice price	$/lb	4.42	3.83

 

 

(ii)     Copper cathodes

 

The typical period for which sales of copper cathodes remain open until settlement occurs is approximately one month from shipment date.

		At 30.06.2024	At 30.06.2023
Sales provisionally priced at the balance sheet date	Tonnes	14,300	10,600
Average mark-to-market price	$/lb	4.30	3.78
Average provisional invoice price	$/lb	4.36	3.81

 

 

(iii)    Gold in concentrate

 

The typical period for which sales of gold in concentrate remain open until settlement is approximately one month from shipment date.

		At 30.06.2024	At 30.06.2023
Sales provisionally priced at the balance sheet date	Ounces	10,500	19,200
Average mark-to-market price	$/oz	2,337	1,924
Average provisional invoice price	$/oz	2,329	1,967

 

 

(iv)    Molybdenum concentrate

 

The typical period for which sales of molybdenum remain open until settlement is approximately two months from shipment date.

 

		At 30.06.2024	At 30.06.2023
Sales provisionally priced at the balance sheet date	Tonnes	2,700	2,900
Average mark-to-market price	$/lb	23.20	22.30
Average provisional invoice price	$/lb	21.95	21.40

 

 

As detailed above, the effects of gains and losses from the marking-to-market of open sales are recognised through adjustments to revenue in the income statement and to trade receivables in the balance sheet. The effect of mark-to-market adjustments on the balance sheet at the end of each period are as follows:

		Effect on debtors of period and year end mark-to-market adjustments
		Six months ended  30.06.2024	Six months ended 30.06.2023
		$m	$m
Los Pelambres - copper concentrate		(12.0)	(10.1)
Los Pelambres - molybdenum concentrate		5.2	4.0
Centinela - copper concentrate		(5.4)	(5.5)
Centinela - molybdenum concentrate		1.8	1.6
Centinela - gold in concentrate		0.1	(0.8)
Centinela - copper cathodes		(1.1)	0.1
Antucoya - copper cathodes		(0.7)	(0.9)
		(12.1)	(11.6)

 

 

7.   Financial instruments and financial risk management

a)             Categories of financial instruments

The carrying value of financial assets and financial liabilities is shown below:

 

	For the period ended 30.06.2024
	At fair value through profit and loss	At fair value through other comprehensive income	Held at amortised cost	Total
	$m	$m	$m	$m
Financial assets
Equity investments	-	15.3	-	15.3
Trade and other receivables	647.4	-	198.2	845.6
Cash and cash equivalents	124.0	-	1,384.5	1,508.5
Liquid investments	2,923.7	-	-	2,923.7
	3,695.1	15.3	1,582.7	5,293.1
Financial liabilities
Derivative financial instruments	-	(15.7)	-	(15.7)
Trade and other payables	-	-	(1,127.8)	(1,127.8)
Other financial liabilities	-	-	(600.0)	(600.0)
Borrowings	-	-	(5,270.8)	(5,270.8)
	-	(15.7)	(6,998.6)	(7,014.3)
	For the year ended 31.12.2023
	At fair value through profit and loss	At fair value through other comprehensive income	Held at amortised cost	Total
	$m	$m	$m	$m
Financial assets
Equity investments	-	288.6	-	288.6
Trade and other receivables	916.5	-	157.1	1,073.6
Other financial assets	457.2	-	-	457.2
Cash and cash equivalents	1.1	-	643.6	644.7
Liquid investments	2,274.7	-	-	2,274.7
	3,649.5	288.6	800.7	4,738.8
Financial liabilities
Trade and other payables	-	-	(1,154.3)	(1,154.3)
Borrowings	-	-	(4,079.2)	(4,079.2)
	-	-	(5,233.5)	(5,233.5)

 

The fair value of the fixed rate bonds included within the "Borrowings" category was $1,691.9 million at 30 June 2024 compared with their carrying value of $1,729.1 million  (year ended 31 December 2023 - fair value of $908.3 million compared with their carrying value of $986.8 million). The fair value of all other financial assets and financial liabilities carried at amortised cost approximates the carrying value presented above.

 

 

The following tables reconcile between the total trade and other receivables and trade and other payables balances on the balance sheet with the financial instrument amounts included in this note:

 

	Six months  ended 30.06.2024	Year ended  31.12.2023
Financial assets
Trade and other receivables (non-current) per balance sheet	60.4	68.5
Trade and other receivables (current) per balance sheet	904.0	1,117.8
Total trade and other receivables per balance sheet	964.4	1,186.3
Less: non-financial assets (including prepayments and VAT receivables)	(118.8)	(112.7)
Total trade and other receivables	845.6	1,073.6
Financial liabilities
Trade and other payables (current) per balance sheet	(1,268.3)	(1,171.5)
Trade and other payables (non-current) per balance sheet	(8.8)	(9.8)
Total trade and other payables per balance sheet	(1,277.1)	(1,181.3)
Less: non-financial liabilities (including VAT payables)	149.3	27.0
Total trade and other payables	(1,127.8)	(1,154.3)

 

Fair value of financial instruments

An analysis of financial assets and financial liabilities measured at fair value is presented below:

 

	For the period ended 30.06.2024
	Level 1	Level 2	Level 3	Total
	$m	$m	$m	$m
Financial assets
Equity investments (a)	15.3	-	-	15.3
Trade and other receivables (b)	-	647.4	-	647.4
Cash and cash equivalents (d)	124.0	-	-	124.0
Liquid investments (e)	-	2,923.7	-	2,923.7
	139.3	3,571.1	-	3,710.4
Financial liabilities
Derivatives financial instruments (f)	-	(15.7)	-	(15.7)
	-	(15.7)	-	(15.7)

 

	For the year ended 31.12.2023
	Level 1	Level 2	Level 3	Total
	$m	$m	$m	$m
Financial assets
Equity investments (a)	288.6	-	-	288.6
Trade and other receivables (b)	-	916.5	-	916.5
Other financial assets (c)	-	457.2	-	457.2
Cash and cash equivalents (d)	1.1	-	-	1.1
Liquid investments (e)	-	2,274.7	-	2,274.7
	289.7	3,648.4	-	3,938.1

 

Recurring fair value measurements are those that are required in the balance sheet at the end of each reporting period.

a)     Equity investments are investments in shares on active markets and are valued using unadjusted quoted market values of the shares at the financial reporting date. These are level 1 inputs as described below.

b)     Provisionally priced metal sales for the period are marked-to-market at the end of the period. Gains and losses from the marking-to-market of open sales are recognised through adjustments to revenue in the income statement and trade receivables in the balance sheet. Forward prices at the end of the period are used for copper sales while period-end average prices are used for molybdenum concentrate sales. These are level 2 inputs as described below.

c)     The fair value of the other financial assets has been calculated using observable market data. These are level 2 inputs.

d)     The element of cash and cash equivalents measured at fair value relates to money market funds, which are valued reflecting market prices at the period end. These are level 1 inputs as described below.

e)     Liquid investments are highly liquid current asset investments that are valued reflecting market prices at the period end. These are level 2 inputs as described below.

f)     Derivatives in designated hedge accounting relationships are valued using a discounted cash flow analysis valuation model, which includes observable credit spreads and using the applicable yield curve for the duration of the instruments for non-optional derivatives, and option pricing models for optional derivatives. These are level 2 inputs as described below. Hedging instruments at 30 June 2024 relate to foreign exchange and commodity options.

 

The inputs to the valuation techniques described above are categorised into three levels, giving the highest priority to unadjusted quoted prices in active markets (level 1) and the lowest priority to unobservable inputs (level 3 inputs):

Level 1 fair value measurement inputs are unadjusted quoted prices in active markets for identical assets or liabilities.

Level 2 fair value measurement inputs are derived from inputs other than quoted market prices included in level 1 that are observable for the asset or liability, either directly or indirectly.

Level 3 fair value measurement inputs are unobservable inputs for the asset or liability.

The degree to which inputs into the valuation techniques used to measure the financial assets and liabilities are observable and the significance of these inputs in the valuation are considered in determining whether any transfers between levels have occurred. In the six months ended 30 June 2024 and 30 June 2023, there were no transfers between levels in the hierarchy.

 

b)             Derivative financial instruments

 

The Group periodically uses derivative financial instruments to reduce exposure to foreign exchange, interest rate and commodity price movements. The Group does not use such derivative instruments for trading purposes. The Group has applied the hedge accounting provisions of IFRS 9 Financial Instruments. The effective portion of changes in the fair value of derivative financial instruments that are designated and qualify as hedges of future cash flows have been recognised directly in equity, with such amounts subsequently recognised in profit or loss in the period when the hedged item affects profit or loss. Any ineffective portion is recognised immediately in profit or loss. Realised gains and losses on commodity derivatives recognised in profit or loss are recorded within revenue. The time value element of changes in the fair value of derivative options is recognised within other comprehensive income. Derivatives embedded in other financial instruments or other host contracts are treated as separate derivatives when their risks and characteristics are not closely related to those of host contracts and the host contracts are not carried at fair value. Changes in fair value are reported in profit or loss for the year.

 

 

8.   Net finance income/(expense)

	Six months  ended 30.06.2024	Six months ended 30.06.2023
	$m	$m
Investment income
Interest income	30.5	28.8
Gains on liquid investments held at fair value through profit or loss	43.0	43.3
	73.5	72.1
Interest expense
Interest expense	(132.1)	(50.9)
	(132.1)	(50.9)
Other finance items
Unwinding of discount on provisions	(9.7)	(7.9)
Exceptional fair value gains (see note 3)	51.0	-
Effects of changes in foreign exchange rates	41.5	(22.0)
Preference dividends	(0.1)	(0.1)
	82.7	(30.0)
Net finance income/(expense)	24.1	(8.8)

In the six months ended 30 June 2024, amounts capitalised and consequently not included within the above table were as follows: $20.7 million at Los Pelambres (six months ended 30 June 2023 - $46.6 million) and $6.2 million at Centinela (six months ended 30 June 2023 - $1.7 million).

The interest expense shown above includes $9.6 million in respect of leases (six months ended 30 June 2023 - $4.1 million).

 

9.   Taxation

The tax charge for the period comprised the following:

	Six months ended 30.06.2024	Six months ended 30.06.2023
	$m	$m
Current tax charge
Corporate tax (principally first category tax in Chile)	(211.8)	(232.9)
Mining tax (royalty)	(113.3)	(49.0)
Withholding tax	(68.9)	(2.2)
Exchange rate	-	(0.2)
	(394.0)	(284.3)
Deferred tax
Corporate tax (principally first category tax in Chile)	61.9	33.2
Mining tax (royalty)	(10.1)	(0.1)
Exceptional items	(12.7)	-
Withholding tax	55.4	21.9
	94.5	55.0
Total tax charge	(299.5)	(229.3)

 

The rate of first category (i.e. corporate) tax in Chile is 27.0% (2023 - 27.0%).

 

In addition to first category tax, the Group incurs withholding taxes on any remittance of profits from Chile. Withholding tax is levied on remittances of profits from Chile at 35% less first category (i.e. corporation) tax already paid in respect of the profits to which the remittances relate.

 

The Group's mining operations are also subject to a mining tax (royalty).

 

The new Chilean mining royalty has taken effect from 1 January 2024. The new royalty terms include a royalty ranging from 8% to 26% applied to the ''Mining Operating Margin'', depending on each mining operation's level of profitability, as well as a 1% ad valorem royalty on copper sales. As the ad valorem element is based on revenue rather than profit it does not meet the IAS 12 Income Taxes definition of a tax expense, and is therefore recorded as an operating expense. The new royalty terms have a cap, establishing that total taxation, which includes corporate income tax, the two components of the new mining royalty, and theoretical tax on dividends, should not exceed a rate of 46.5% on Mining Operating Margin less the royalty ad-valorem expense.

 

 Los Pelambres has been subject to the new royalty from 1 January 2024. The impact of the new royalty for Los Pelambres in the half year 2024 included the recognition of a $13 million expenses within operating expenses in respect of the ad valorem element. Centinela and Antucoya have tax stability agreements in place, and so the new royalty rates will only impact their royalty payments from 2030 onwards. Until then, they continue to be subject to the previous royalty system, applying a rate of between from 5% to 14% of taxable operating profit, depending on the level of operating profit margin.

 

The following table provides a numerical reconciliation between the accounting profit before tax multiplied by the applicable statutory tax rate and the total tax expense (including both current and deferred tax).

			Six months ended 30.06.2024 excluding exceptional items			Six months ended 30.06.2024 Including exceptional  items			Six months ended 30.06.2023
			$m	%		$m	%		$m	%
	Profit before tax		661.6			712.6			764.5
	Profit before tax multiplied by Chilean corporate tax rate of 27%		(178.7)	27.0		(192.4)	27		(206.4)	27.0
	Mining Tax (royalty)		(117.0)	17.7		(117.0)	16.4		(47.1)	6.2
	Deduction of mining royalty as an allowable expense in determination of first category tax		30.6	(4.6)		30.6	(4.3)		13.2	(1.7)
	Items not deductible from first category tax		(5.6)	0.8		(5.6)	0.8		(6.9)	0.9
	Adjustment in respect of prior years		(3.8)	0.6		(3.8)	0.5		(0.9)	0.1
	Difference in overseas tax rates		-	-		1.0	(0.1)		-	-
	Withholding tax		(13.5)	2.0		(13.5)	1.9		19.7	(2.6)
	Tax effect of (loss)/ profit of associates and joint ventures		2.0	(0.3)		2.0	(0.3)		(0.1)	-
	Impact of previously unrecognised tax losses on current tax		(0.8)	0.1		(0.8)	0.1		(0.8)	0.1
	Tax expense and effective tax rate for the period		(286.8)	43.3		(299.5)	42.0		(229.3)	30.0

                                                 

The effective tax rate (excluding exceptional items) of 43.3% varied from the statutory rate principally due to:

·      The mining tax (royalty) (net impact of $86.4 million/13.1% including the deduction of the mining tax (royalty) as an allowable expense in the determination of first category tax);

·      The withholding tax relating to the remittance of profits from Chile (impact of $13.5 million / 2.0%);

·      Items not deductible for Chilean corporate tax purposes, principally the funding of expenses outside of Chile (impact of $5.6 million / 0.8%);

·      Adjustments in respect of prior years (impact of $3.8 million / 0.6%);

·      The impact of previously unrecognised tax losses (impact of $0.8 million / 0.1%); and

·      An offsetting impact of the recognition of the Group's share of results from associates and joint ventures, which are included in the Group's profit before tax net of their respective tax charges (impact of $2.0 million / 0.3%).

 

The effective tax rate (including exceptional items) of 42.0% varied from the statutory rate due to the factors outlined above, and due to the impact of the difference in the overseas tax rate which applied to the exceptional item (tax effect of 25% in the UK versus the 27% Chilean rate).

 

The main factors which could impact the sustainability of the Group's existing effective tax rate are:

 

 

·      The level of future distributions made by the Group's Chilean subsidiaries out of Chile, which could result in increased withholding tax charges. When determining whether it is likely that distributions will be made in the foreseeable future, and what is the appropriate foreseeable future period for this purpose, the Group considers factors such as the predictability of the likely future Group dividends, taking into account the Group's dividend policy and the level of potential volatility of the Group's future earnings, as well as the current level of distributable reserves at the Antofagasta plc entity level. The withholding tax charge in the comparative period reflected a one-off adjustment of $34.7 million to the provision for deferred withholding tax, as a result of an intra-group restructuring of intercompany balances. This resulted in a 4.5% reduction in the effective tax rate for the six months ended 30 June 2023.

 

·      The impact of expenses which are not deductible for Chilean first category tax. Some of these expenses are fixed costs, and so the relative impact of these expenses on the Group's effective tax rate will vary depending on the Group's total profit before tax in a particular year.

 

OECD Pillar two model rules

The Group falls within the scope of the OECD Pillar two model rules, which introduces a minimum effective tax rate of 15% for multinational companies.

 

The rules were substantively enacted in the UK in 2023 and became effective from 1 January 2024. Currently, the Antofagasta Group operates in Chile and is subject to the Chilean first category (corporate) tax rate of 27%, plus withholding taxes on any profits distributed from Chile.

 

The Group is evaluating the potential future impact of these rules on its tax expense. However, based on the Group's current position, it does not anticipate any effect on its 2024 tax expense. There have not been changes to the Group's position or results subsequent to that date which would significantly impact that analysis.

 

The Group applied the mandatory exception to recognising and disclosing information about the deferred tax assets and liabilities related to Pillar 2 income taxes in accordance with the amendments to IAS 12 adopted by the UK Endorsement Board on 19 July 2023.

 

Minera Centinela tax claims and queries

In the context of an administrative review, the Chilean Internal Revenue Service (IRS) has raised claims and queries with Minera Centinela in respect of approximately $85 million of tax deductions recognised in relation to the amortisation of start-up costs relating to the Encuentro pit. The Group considers the tax treatment adopted by Minera Centinela to be correct and appropriate, has robust arguments to support its position, and expects its position to be upheld by the review processes. If the Group is unsuccessful in supporting its position, this amount (plus potential interest and penalties) would fall due.

 

 

10. Earnings per share

		Six months ended 30.06.2024	Six months  ended 30.06.2023
		$m	$m
Profit for the period attributable to owners of the parent (excluding exceptional items)		221.3	330.4
Exceptional Items		38.3	-
Profit for the period attributable to owners of the parent (including exceptional items) from operations		259.6	330.4
		Number	Number
Ordinary shares in issue throughout each period		985,856,695	985,856,695
		Six months ended 30.06.2024	Six months ended 30.06.2023
		US cent	US cent
Basic earnings per share (excluding exceptional items) from operations		22.4	33.5
Basic earnings per share (exceptional items) from operations		3.9	-
Basic earnings per share (including exceptional items) from operations		26.3	33.5

 

 

Basic earnings per share are calculated as profit after tax and non-controlling interests, based on 985,856,695 (2023: 985,856,695) ordinary shares.

 

There was no potential dilution of earnings per share in either year set out above, and therefore diluted earnings per share did not differ from basic earnings per share as disclosed above.

 

 

11. Dividends

 

The Board has declared an interim dividend of 7.9 cents per ordinary share for the 2024 half year (2023 half year - 11.7 cents per ordinary share). Dividends are declared and paid gross. Dividends actually paid in the period and recognised as a deduction from net equity under IFRS were 24.3 cents per ordinary share (2023 half year - 50.5 cents per ordinary share), representing the final dividend declared in respect of the previous year.

 

The interim dividend will be paid on 30 September 2024 to ordinary shareholders that are on the register at the close of business on 6 September 2024. Shareholders can elect (on or before 9 September 2024) to receive this interim dividend in US Dollars, Pounds Sterling or Euro, and the exchange rate to be applied to interim dividends to be paid in Pounds Sterling or Euro will be set as soon as reasonably practicable after that date (which is currently anticipated to be on 12 September 2024).

 

Further details of the currency election timing and process (including the default currency of payment) are available on the Antofagasta plc website (www.antofagasta.co.uk) or from the Company's registrar, Computershare Investor Services PLC on +44 370 702 0159.

 

 

12. Property, plant and equipment

 

	Mining	Railway and other transport	At 30.06.2024	At 31.12.2023
	$m	$m	$m	$m
Balance at the beginning of the year	12,363.5	315.2	12,678.7	11,543.5
Additions	1,193.9	22.1	1,216.0	2,307.9
Additions - depreciation capitalised	42.3	-	42.3	90.3
Reclassifications	-	(0.6)	(0.6)	(0.4)
Capitalisation of interest	26.9	-	26.9	112.1
Adjustment to capitalised decommissioning provisions	-	-	-	(31.9)
Depreciation expensed in the period	(630.0)	(17.2)	(647.2)	(1,211.3)
Depreciation capitalised in PP&E	(42.3)	-	(42.3)	(90.3)
Depreciation capitalised in inventories	(107.7)	-	(107.7)	(41.2)
Asset disposals	-	(0.1)	(0.1)	-
Balance at the end of the period	12,846.6	319.4	13,166.0	12,678.7

 

During the six months ended 30 June 2024, the total effect of depreciation capitalised within Property, plant and equipment or inventories in respect of assets relating to Los Pelambres, Centinela and Antucoya is $150.0 million (year ended 31 December 2023 - $131.5 million), and has accordingly been excluded from the depreciation charge recorded in the income statement as shown in Note 5.

 

At 30 June 2024, the Group had entered into contractual commitments for the acquisition of property, plant and equipment amounting to $4,216.1 million (31 December 2023 - $978.3 million).

 

Depreciation capitalised in property, plant and equipment of $42.3 million related to the depreciation of assets used in mine development (operating stripping) at Centinela, Los Pelambres and Antucoya (year ended 31 December 2023 - $90.3 million).

 

 

 

13. Disposal of investment in Tethyan joint venture

In May 2023 the Group received the $944.7 million cash proceeds in respect of its agreement to exit its 50% interest in the Tethyan joint venture, which was a joint venture with Barrick Gold Corporation ("Barrick") in respect of the Reko Diq project in Pakistan.

 

14. Investments in associates and joint ventures

 

The investments which are included in the $1,717.0 million balance at 30 June 2024 are set out below:

 

	At 30.06.2024	At 31.12.2023
	$m	$m
Buenaventura	820.9	-
ATI	10.0	9.8
Zaldívar	886.1	881.3
Total	1,717.0	891.1

 

 

Investments in associates

 

●      Buenaventura - during 2023, the Group entered into an agreement to acquire up to 30 million shares in Buenaventura, representing approximately 12% of Buenaventura's issued share capital. In addition, the Group held as of 31 December 2023 an existing holding of approximately 18.1 million shares in Buenaventura, representing approximately 7% of Buenaventura's issued share capital. In March 2024, the transaction pursuant to the agreement completed, resulting in the Group holding approximately 48.1 million shares in Buenaventura, representing approximately 19% of Buenaventura's issued share capital. Two Antofagasta officers were elected to Buenaventura's Board in March 2024. Taking into account relevant factors including the Group's approximately 19% interest in Buenaventura's issued share capital and the Group's representation on Buenaventura's Board, the Group is considered to have significant influence (in accordance with the IAS 28 Investments in Associates and Joint Ventures definition) over Buenaventura from March 2024 onwards. Accordingly, the Group's interest in Buenaventura has been accounted for as an investment in associate from that point.

 

Immediately prior to the transaction completing in March 2024, the Group's existing 7% equity interest was carried at a fair value of $305.9m and the financial asset relating to the agreement to acquire the 12% interest was carried at a fair of $508.2m, with both valuations being based on the quoted share price of Buenaventura on that date. On completion, these two assets were de-recognised and the investments in associate was initially recognised at an equivalent value of $814.1m with no gain or loss arising.

 

The Group has undertaken a provisional exercise to recognise the identifiable assets and liabilities effectively included within the investments in associate balance at their acquisition-date fair values and expects to complete this exercise during the second half of 2024.

 

·      ATI - the Group's 30% interest in Antofagasta Terminal Internacional ("ATI"), which operates a concession to manage installations in the port of Antofagasta.

 

Investments in joint ventures

 

·      Zaldívar - the Group's 50% interest in Minera Zaldívar SpA ("Zaldívar").

 

15. Borrowings and other financial liabilities

 

	At	At
	30.06.2024	31.12.2023
	$m	$m
Borrowings
Los Pelambres
-  Senior loan	(1,886.4)	(2,067.2)
- Other loans	(475.0)	-
Centinela
- Senior loan	(277.3)	(166.3)
- Other loans	(310.0)	(265.0)
Antucoya
- Senior loan	(149.3)	(174.1)
- Subordinated debt	(196.3)	(187.6)
Railway and other transport services
- Senior loan	-	(5.0)
	(3,294.3)	(2,865.2)
Bonds
Corporate and other items	(1,729.1)	(986.8)
	(1,729.1)	(986.8)
Other financial liabilities
Centinela1	(600.0)	-
	(600.0)	-
Leases
Los Pelambres	(38.2)	(45.2)
Centinela	(171.7)	(142.8)
Antucoya	(18.7)	(17.4)
Corporate and other items	(15.1)	(18.4)
Railway and other transport services	(1.2)	(0.9)
	(244.9)	(224.7)
Preference shares
Corporate and other items	(2.5)	(2.5)
	(2.5)	(2.5)
Total	(5,870.8)	(4,079.2)

 

At 30 June 2024, $3,361.5 million (December 2023 - $1,219.0 million) of the borrowings and other financial liabilities has fixed rate interest and $2,509.3 million (December 2023 - $2,860.2 million) has floating rate interest.

 

¹In June 2024, the Group announced completion of the process whereby Minera Centinela ("Centinela") entered into a water transportation agreement, involving its existing water supply and future water supply to the Centinela Second Concentrator Project. Under the terms of the agreement, Centinela's existing water transportation assets and rights have been transferred to an international consortium for net cash proceeds of $600 million, which was received as of late June 2024. For accounting purposes, the existing assets remain in the Group's balance sheet, with the cash receipt resulting in the recognition of a corresponding other financial liability balance.

 

In March 2024 Centinela put in place $2,500 million of project financing for its Second Concentrator Project. As of 30 June 2024, Centinela had drawn down $284 million of this financing, leaving $2,216 million undrawn at that date.

 

On 30 December 2022, Antofagasta plc agreed a revolving credit facility "RCF" of US$500 million with a group of six banks and where the Canadian Imperial Bank of Commerce "CIBC" has the role of Administrative Agent. This revolving credit facility has a term of three years, which expires on 30 December 2025.

 

 

	Facility available			Drawn			Undrawn
	30 June 2024	31 December 2023		30 June 2024	31 December 2023		30 June 2024	31 December 2023
	$m	$m		$m	$m		$m	$m
Revolving credit facility	500.0	500.0		-	-		500.0	500.0

 

 

16. Reconciliation of profit before tax to net cash flow from operating activities

 

	At 30.06.2024	At 30.06.2023
	$m	$m
Profit before tax	712.6	764.5
Depreciation and amortisation	647.2	511.3
Net finance expense/(income) - excluding exceptional items	26.9	8.8
Net share of (profit) /loss of associates and joint ventures	(17.2)	0.4
Exceptional fair value gain in respect of other financial asset	(51.0)	-
(Increase) in inventories	(131.9)	(115.2)
Decrease/(increase) in debtors	247.0	256.8
Increase/(decrease) in creditors	56.8	(153.8)
(Decrease)/increase in provisions	(6.5)	23.6
Cash flow generated from operations	1,483.9	1,296.4

 

 

17. Analysis of changes in net debt

For the period ended 30 June 2024

	At 31.12.2023	Cash flows	Fair value gain	New leases	Amortisation of finance costs	Capitalisation of interest	Reclassification	Exchange	At 30.06.2024
	$m	$m	$m	$m	$m	$m	$m	$m	$m
Cash and cash equivalents	644.7	867.1	-	-	-	-	-	(3.3)	1,508.5
Liquid investments	2,274.7	648.9	0.1	-	-	-	-	-	2,923.7
Total cash and cash equivalents and liquid investments	2,919.4	1,516.0	0.1	-	-	-	-	(3.3)	4,432.2
Borrowings due within one year	(794.1)	(204.7)	-	-	-	-	(318.0)	-	(1,316.8)
Borrowings due after one year	(3,057.9)	(951.8)	-	-	(6.2)	(8.8)	318.0	-	(3,706.7)
Other financial liabilities due within one year	-	(10.7)	-	-	-	-	-	-	(10.7)
Other financial liabilities due after one year	-	(589.3)	-	-	-	-	-	-	(589.3)
Leases due within one year	(107.8)	74.5	-	-	-	-	(100.0)	-	(133.3)
Leases due after one year	(116.9)	-	-	(109.2)	-	-	100.0	14.6	(111.5)
Preference shares	(2.5)	-	-	-	-	-	-	-	(2.5)
Total liabilities from financing activities	(4,079.2)	(1,682.0)	-	(109.2)	(6.2)	(8.8)	-	14.6	(5,870.8)
Net debt	(1,159.8)	(166.0)	0.1	(109.2)	(6.2)	(8.8)	-	11.3	(1,438.6)

 

For the period ended 31 December 2023

 

	At 31.12.2022	Cash flows	Fair value gains	New leases	Amortisation of finance costs	Capitalisation of interest	Other	Reclassification	Foreign exchange	At 31.12.2023
	$m	$m	$m	$m	$m	$m	$m	$m	$m	$m
Cash and cash equivalents	810.4	(162.0)	-	-	-	-	-	-	(3.7)	644.7
Liquid investments	1,580.8	674.2	19.7	-	-	-	-	-	-	2,274.7
Total	2,391.2	512.2	19.7	-	-	-	-	-	(3.7)	2,919.4
Borrowings due within one year	(377.4)	116.7	-	-	-	-	-	(533.4)	-	(794.1)
Borrowings due after one year	(2,765.4)	(797.2)	-	-	(12.7)	(16.0)	-	533.4	-	(3,057.9)
Leases due within one year	(55.1)	81.2	-	-	-	-	-	(133.9)	-	(107.8)
Leases due after one year	(76.6)	-	-	(178.6)	-	-	-	133.9	4.4	(116.9)
Preference shares	(2.5)	-	-	-	-	-	-	-	-	(2.5)
Total liabilities from financing activities	(3,277.0)	(599.3)	-	(178.6)	(12.7)	(16.0)	-	-	4.4	(4,079.2)
Net debt	(885.8)	(87.1)	19.7	(178.6)	(12.7)	(16.0)	-	-	0.7	(1,159.8)

 

 

Net debt

 

Net debt at the end of each period was as follows:

 

	At 30.06.2024	At 31.12.2023
	$m	$m
Cash, cash equivalents and liquid investments	4,432.2	2,919.4
Total liabilities from financing activities	(5,870.8)	(4,079.2)
Net debt	(1,438.6)	(1,159.8)

 

 

18. Related party transactions

 

a)             Joint ventures

The Group has a 50% interest in Minera Zaldívar, which is a joint venture with Barrick Gold Corporation. During the six months ended 30 June 2024, the Group has not received dividends from Minera Zaldívar (six months ended 30 June 2023 - nil).

 

b)             Associates

The Group has a 18.9% interest in Compañía de Minas Buenaventura S.A.A, which is an associate. During the six months ended 30 June 2024, the Group has   received dividends from Buenaventura of $3.5 million.

 

c)             Other related parties

The ultimate parent company of the Group is Metalinvest Establishment, which is controlled by the E. Abaroa Foundation, in which members of the Luksic family are interested. The Company's subsidiaries, in the ordinary course of business, enter into various sale and purchase transactions with companies also controlled by members of the Luksic family, including Banco de Chile S.A., BanChile Corredores de Bolsa S.A., ENEX S.A. and Compañía de Inversiones Adriático S.A. These transactions were all on normal commercial terms.

 

The Group holds a 51% interest in Antomin 2 Limited ("Antomin 2") and Antomin Investors Limited ("Antomin Investors"), which own a number of copper exploration properties. The Group originally acquired its 51% interest in these properties for a nominal consideration from Mineralinvest Establishment, a company controlled by the Luksic family, which continues to hold the remaining 49% of Antomin 2 and Antomin Investors. The Group is responsible for any exploration costs relating to the properties held by these entities. During the six months ended 30 June 2024, the Group incurred $0.1 million (30 June 2023 - $0.1 million) of exploration costs at these properties.

 

 

19. Litigation and contingent liabilities

 

The Group is subject from time to time to legal proceedings, claims, complaints and investigations arising out of the ordinary course of business. The Group cannot predict the outcome of individual legal actions or claims or complaints or investigations. As a result, the Group may become subject to liabilities that could affect the Group's business, financial position and reputation. Litigation is inherently unpredictable and large judgments may at times occur. The Group may incur, in the future, judgments or enter into settlements of claims that could lead to material cash outflows. The Group considers that no material loss to the Group is expected to result from the legal proceedings, claims, complaints and investigations that the Group is currently subject to. A provision is recognized for legal claims where the Group has a present obligation as a result of past events, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation.

 

RESPONSIBILITY STATEMENT

 

 

We confirm to the best of our knowledge:

 

a)         the condensed set of financial statements has been prepared in accordance with IAS 34 Interim Financial Reporting;

 

b)         the half yearly financial report includes a fair review of the information required by DTR 4.2.7R (being an indication of important events that have occurred during the first six months of the financial year, and their impact on the half yearly financial report and a description of the principal risks and uncertainties for the remaining six months of the financial year); and

 

c)          the half yearly financial report includes a fair review of the information required by DTR 4.2.8R (being disclosure of related party transactions that have taken place in the first six months of the financial year and that have materially affected the financial position or the performance of the Group during that period and any changes in the related party transactions described in the last annual report that could have a material effect on the financial position or performance of the Group in the first six months of the current financial year).

 

 

By order of the Board

 

 

 

Jean-Paul Luksic                                     Francisca Castro

Chairman                                                  Senior Independent Director

 

Independent Review Report to Antofagasta plc

 

Conclusion

We have been engaged by the company to review the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2024 which comprises the condensed consolidated income statement, the condensed consolidated balance sheet, the condensed consolidated statement of comprehensive income, the condensed consolidated statement of changes in equity, the condensed consolidated cash flow statement and related notes 1 to 19.

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2024 is not prepared, in all material respects, in accordance with United Kingdom adopted International Accounting Standard 34 and the Disclosure Guidance and Transparency Rules of the United Kingdom's Financial Conduct Authority.

Basis for Conclusion

We conducted our review in accordance with International Standard on Review Engagements (UK) 2410 "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Financial Reporting Council for use in the United Kingdom (ISRE (UK) 2410). A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

As disclosed in note 1, the annual financial statements of the group are prepared in accordance with United Kingdom adopted international accounting standards. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with United Kingdom adopted International Accounting Standard 34, "Interim Financial Reporting".

Conclusion Relating to Going Concern

Based on our review procedures, which are less extensive than those performed in an audit as described in the Basis for Conclusion section of this report, nothing has come to our attention to suggest that the directors have inappropriately adopted the going concern basis of accounting or that the directors have identified material uncertainties relating to going concern that are not appropriately disclosed.

This Conclusion is based on the review procedures performed in accordance with ISRE (UK) 2410; however future events or conditions may cause the entity to cease to continue as a going concern.

Responsibilities of the directors

The directors are responsible for preparing the half-yearly financial report in accordance with the Disclosure Guidance and Transparency Rules of the United Kingdom's Financial Conduct Authority.

In preparing the half-yearly financial report, the directors are responsible for assessing the group's ability to continue as a going concern, disclosing as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.

Auditor's Responsibilities for the review of the financial information

In reviewing the half-yearly financial report, we are responsible for expressing to the company a conclusion on the condensed set of financial statements in the half-yearly financial report. Our Conclusion, including our Conclusion Relating to Going Concern, are based on procedures that are less extensive than audit procedures, as described in the Basis for Conclusion paragraph of this report.

Use of our report

This report is made solely to the company in accordance with ISRE (UK) 2410. Our work has been undertaken so that we might state to the company those matters we are required to state to it in an independent review report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company, for our review work, for this report, or for the conclusions we have formed.

 

 

Deloitte LLP

Statutory Auditor

London, United Kingdom

19 August 2024

 

Alternative performance measures (not subject to audit or review)

This consolidated financial information includes a number of alternative performance measures, in addition to amounts in accordance with UK-adopted International Accounting Standards. These measures are included because they are considered to provide relevant and useful additional information to users of the accounts. Set out below are definitions of these alternative performance measures, explanations as to why they are considered to be relevant and useful, and reconciliations to the IFRS figures.

a) Underlying earnings per share

Underlying earnings per share is earnings per share from continuing operations, excluding exceptional items. This measure is reconciled to earnings per share from continuing and discontinued operations (including exceptional items) on the face of the income statement. This measure is considered to be useful as it provides an indication of the earnings generated by the ongoing businesses of the Group, excluding the impact of exceptional items which are irregular or non-operating in nature.

b)     EBITDA

EBITDA is calculated by adding back depreciation, amortisation, profit or loss on disposals and impairment charges to operating profit. This comprises 100% of the EBITDA from the Group´s subsidiaries, and the Group´s proportional share of the EBITDA of its associates and joint ventures.

EBITDA is considered to provide a useful and comparable indication of the current operational earnings performance of the business, excluding the impact of the historical cost of property, plant & equipment or the particular financing structure adopted by the business.

 

For the six months ended 30 June 2024

	Los Pelambres	Centinela	Antucoya	Zaldívar	Exploration and evaluation	Corporate and other items	Mining	Railway and other transport services	Total
	$m	$m	$m	$m	$m	$m	$m	$m	$m
Operating profit/(loss)	675.6	(29.9)	78.1	-	(26.8)	(47.3)	649.7	21.6	671.3
Depreciation and amortisation	209.5	359.8	55.8	-	-	4.9	630.0	17.2	647.2
EBITDA from subsidiaries	885.1	329.9	133.9	-	(26.8)	(42.4)	1,279.7	38.8	1,318.5
Proportional share of the EBITDA from associates and JVs	-	-	-	50.9	-	21.3	72.2	3.7	75.9
Total EBITDA	885.1	329.9	133.9	50.9	(26.8)	(21.1)	1,351.9	42.5	1,394.4

 

For the six months ended 30 June 2023

	Los Pelambres	Centinela	Antucoya	Zaldívar	Exploration and evaluation	Corporate and other items	Mining	Railway and other transport services	Total
	$m	$m	$m	$m	$m	$m	$m	$m	$m
Operating profit/(loss)	618.9	171.2	49.9	-	(29.3)	(59.6)	751.1	22.6	773.7
Depreciation and amortisation	137.5	300.6	52.3	-	-	7.9	498.3	13.0	511.3
EBITDA from subsidiaries	756.4	471.8	102.2	-	(29.3)	(51.7)	1,249.4	35.6	1,285.0
Proportional share of the EBITDA from associates and JVs	-	-	-	42.5	-	-	42.5	3.5	46.0
EBITDA	756.4	471.8	102.2	42.5	(29.3)	(51.7)	1,291.9	39.1	1,331.0

 

c)     Cash costs

Cash costs are a measure of the cost of operational production expressed in terms of cents per pound of payable copper produced.

This is considered to be a useful and relevant measure as it is a standard industry measure applied by most major copper mining companies which reflects the direct costs involved in producing each pound of copper. It therefore allows a straightforward comparison of the unit production cost of different mines, and allows an assessment of the position of a mine on the industry cost curve. It also provides a simple indication of the profitability of a mine when compared against the price of copper (per lb).

With sales of concentrates at Los Pelambres and Centinela, which are sold to smelters and roasting plants for further processing into fully refined metal, the price of the concentrate invoiced to the customer reflects the market value of the fully refined metal less a "treatment and refining charge" deduction, to reflect the lower value of this partially processed material compared with the fully refined metal. For accounting purposes, the revenue amount reflects the invoiced price (which reflects the net of the market value of fully refined metal less the treatment and refining charges). Under the standard industry definition of cash costs, treatment and refining charges are regarded as  part of the total cash cost figure.

	At 30.06.2024	At 30.06.2023
Reconciliation of cash costs excluding treatment & refining charges and by-product revenue:
Total Group operating costs (Note 5) ($m)	2,283.9	2,116.4
Zaldívar operating costs (attributable basis - 50%)	123.7	129.0
Less:
Depreciation and amortisation (Note 5) ($m)	(647.2)	(511.3)
Corporate and other items - Total operating cost (excluding depreciation) (Note 5) ($m)	(42.4)	(51.7)
Exploration and evaluation - Total operating cost (excluding depreciation) (Note 5) ($m)	(26.8)	(29.3)
Transport division - Total operating cost (excluding depreciation) (Note 5) ($m)	(59.2)	(62.9)
Closure provision and other expenses not included within cash costs ($m)	(75.6)	(62.1)
Inventories variation	44.4	21.9
Medium and long-term drilling costs & evaluation	(45.4)	(32.7)
Total cost relevant to the mining operations' cash costs ($m)	1,555.4	1,517.3
Copper production volumes (tonnes)1	284,700	295,500
Cash costs excluding treatment & refining charges and by-product revenue ($/tonne)	5,463	5,135
Cash costs excluding treatment & refining charges and by-product revenue ($/lb)	2.48	2.32
	At 30.06.2024	At 30.06.2023
Reconciliation of cash costs before deducting by-products revenue:
Treatment & refining charges - copper and by-products - Los Pelambres ($m)	79.8	64.3
Treatment & refining charges - copper and by-products - Centinela ($m)	27.8	40.8
Treatment & refining charges - copper - total ($m)	107.6	105.1
Copper production volumes (tonnes)1	284,700	295,500
Treatment & refining charges ($/tonne)	378.0	355.8
Treatment & refining charges ($/lb)	0.17	0.16
Cash costs excluding treatment & refining charges and by-product revenue ($/lb)	2.48	2.32
Treatment & refining charges ($/lb)	0.17	0.16
Cash costs before deducting by-product revenue (S/lb)	2.65	2.48

¹The 284,700 tonnes includes 18,900 tonnes of production at Zaldívar on a 50% attributable basis.

 

c) Cash costs (continued)

	At 30.06.2024	At 30.06.2023
Reconciliation of cash costs (net of by-product revenue):
Gold revenue - Los Pelambres ($m)	40.0	41.5
Gold revenue - Centinela ($m)	101.0	115.5
Molybdenum revenue - Los Pelambres ($m)	229.7	209.1
Molybdenum revenue - Centinela ($m)	52.6	79.9
Silver revenue - Los Pelambres ($m)	20.3	15.9
Silver revenue - Centinela ($m)	7.5	14.5
Total by-product revenue ($m)	451.1	476.4
Copper production volumes (tonnes)2	284,700	295,500
By-product revenue ($/tonne)	1,585.2	1,612.2
By-product revenue ($/lb)	0.71	0.73
Cash costs before deducting by-product revenue (S/lb)	2.65	2.48
By-product revenue ($/lb)	(0.71)	(0.73)
Cash costs (net of by-product revenue) ($/lb)	1.94	1.75

²The 284,700 tonnes includes 18,900 tonnes of production at Zaldívar on a 50% attributable basis.

The totals in the tables above may include some small apparent differences as the specific individual figures have not been rounded.

 

 

d) Attributable cash, cash equivalents & liquid investments, borrowings and net debt

 

Attributable cash, cash equivalents & liquid investments, borrowings and net debt reflects the proportion of those balances which are attributable to the equity holders of the Company, after deducting the proportion attributable to the non-controlling interests in the Group's subsidiaries.

This is considered to be a useful and relevant measure as the majority of the Group's cash tends to be held at the corporate level and therefore 100% attributable to the equity holders of the Company, whereas the majority of the Group's borrowings tend to be at the level of the individual operations, and hence only a proportion is attributable to the equity holders of the Company.

 

		June 2024				December 2023
	Total amount	Attributable share	Attributable amount		Total amount	Attributable share	Attributable amount
	$m		$m		$m		$m
Cash, cash equivalents and liquid investments:
Los Pelambres	1,148.0	60%	688.8		587.0	60%	352.2
Centinela	1,050.1	70%	735.1		516.9	70%	361.8
Antucoya	286.1	70%	200.3		129.9	70%	90.9
Corporate	1,923.2	100%	1,923.2		1,668.3	100%	1,668.3
Transport division	24.8	100%	24.8		17.3	100%	17.3
Total	4,432.2		3,572.2		2,919.4		2,490.5
Borrowings:
Los Pelambres (Note 15)	(2,399.6)	60%	(1,439.8)		(2,112.4)	60%	(1,267.4)
Centinela (Note 15)	(1,359.0)	70%	(951.3)		(574.1)	70%	(401.9)
Antucoya (Note 15)	(364.3)	70%	(255.0)		(379.1)	70%	(265.4)
Corporate (Note 15)	(1,744.2)	100%	(1,744.2)		(1,007.7)	100%	(1,007.7)
Transport division (Note 15)	(3.7)	100%	(3.7)		(5.9)	100%	(5.9)
Total (Note 15)	(5,870.8)		(4,394.0)		(4,079.2)		(2,948.3)
Net debt	(1,438.6)		(821.8)		(1,159.8)		(457.8)

 

 

Production and Sales Statistics (not subject to audit or review)

a)   Production and sales volumes for copper, gold and molybdenum

 

	Production			Sales
	Six months ended 30.06.2024	Six months ended 30.06.2023		Six months ended 30.06.2024	Six months ended 30.06.2023
Copper	000 tonnes	000 tonnes		000 tonnes	000 tonnes
Los Pelambres	132.5	128.5		133.4	129.1
Centinela	93.0	109.2		87.4	108.6
Antucoya	40.3	38.0		38.4	37.4
Zaldívar (attributable basis - 50%)	18.9	19.8		18.0	20.3
Group total	284.7	295.5		277.2	295.4
Gold	000 ounces	000 ounces		000 ounces	000 ounces
Los Pelambres	18.9	19.6		17.2	20.5
Centinela	48.0	66.7		43.8	58.4
Group total	66.9	86.2		61.0	78.9
Molybdenum	000 tonnes	000 tonnes		000 tonnes	000 tonnes
Los Pelambres	4.2	3.4		4.5	3.7
Centinela	1.0	1.5		1.1	1.5
Group total	5.2	4.9		5.6	5.2
Silver	000 ounces	000 ounces		000 ounces	000 ounces
Los Pelambres	777.8	670.2		734.5	633.3
Centinela	305.4	633.2		271.3	589.3
Group total	1,083.2	1,303.4		1,005.8	1,222.6

 

 

b)      Cash costs per pound of copper produced and realised prices per pound of copper and molybdenum sold

 

	Net Cash costs		Realised prices
	Six months ended 30.06.2024	Six months ended 30.06.2023	Six months ended 30.06.2024	Six months ended 30.06.2023
	$/lb	$/lb	$/lb	$/lb
Copper
Los Pelambres	1.21	1.17	4.48	3.97
Centinela	2.48	1.88	4.35	4.01
Antucoya	2.58	2.72	4.25	4.01
Zaldívar (attributable basis - 50%)	2.97	2.96	-	-
Group weighted average (net of by-products)	1.94	1.75	4.40	3.99
Group weighted average (before deducting by-products)	2.65	2.48
Group weighted average (before deducting by-products and excluding treatment & refining charges from concentrate)	2.48	2.32
Cash costs at Los Pelambres comprise:
On-site and shipping costs	1.89	1.82
Treatment & refining charges for concentrates	0.27	0.22
Cash costs before deducting by-product credits	2.16	2.04
By-product credits (principally molybdenum)	(0.95)	(0.87)
Cash costs (net of by-product credits)	1.21	1.17
Cash costs at Centinela comprise:
On-site and shipping costs	3.16	2.65
Treatment & refining charges for concentrates	0.15	0.17
Cash costs before deducting by-product credits	3.31	2.82
By-product credits (principally gold)	(0.83)	(0.94)
Cash costs (net of by-product credits)	2.48	1.88
LME average copper price			4.13	3.95
Gold			$/oz	$/oz
Los Pelambres			2,331	2,022
Centinela			2,307	1,978
Group weighted average			2,314	1,989
Market average price			2,205	1,932
Molybdenum			$/lb	$/lb
Los Pelambres			22.9	25.3
Centinela			22.8	24.1
Group weighted average			22.8	25.0
Market average price			20.9	27.1
Silver			$/oz	$/oz
Los Pelambres			27.6	25.2
Centinela			27.6	24.6
Group weighted average			27.6	24.9
Market average price			26.1	23.4

 

Notes to the production and sales statistics

 

(i)            For the Group's subsidiaries, the production and sales figures reflect the total amounts produced and sold by the mine, not the Group's share of each mine. The Group owns 60% of Los Pelambres, 70% of Centinela and 70% of Antucoya. For the Zaldívar joint venture, the production and sales figures reflect the Group's proportional 50% share. The figures in the tables above do not include Compañía de Minas Buenaventura S.A.A.

 

(ii)           Los Pelambres produces copper and molybdenum concentrates, Centinela produces copper concentrate, copper cathodes and molybdenum concentrate, and Antucoya and Zaldívar produce copper cathodes. The figures for Los Pelambres and Centinela are expressed in terms of payable metal contained in concentrate and in cathodes. Los Pelambres and Centinela are also credited for the gold and silver contained in the copper concentrate sold. Antucoya and Zaldívar produce cathodes with no by-products.

 

(iii)          Cash costs are a measure of the cost of operational production expressed in terms of cents per pound of payable copper produced. Cash costs are stated net of by-product credits. Cash costs exclude depreciation, financial income and expenses, hedging gains and losses, exchange gains and losses and corporate tax for all four operations. With sales of concentrates at Los Pelambres and Centinela, which are sold to smelters and roasting plants for further processing into fully refined metal, the price of the concentrate invoiced to the customer reflects the market value of the fully refined metal less a "treatment and refining charge" (TC/RC) deduction, to reflect the lower value of this partially processed material compared with the fully refined metal.  For accounting purposes, the revenue amount reflects the invoiced price (is which reflects the net of the market value of fully refined metal less the treatment and refining charges). However, under the standard industry definition of unit cash costs, treatment and refining charges are regarded as an expense and part of cash costs.

(iv)          Realised copper prices are determined by comparing revenue from copper sales (after adding back treatment and refining charges for concentrates) with sales volumes for each mine in the period. Realised molybdenum and gold prices are calculated on a similar basis. Realised prices reflect mark-to-market adjustments for sales contracts which contain provisional pricing mechanisms and gains and losses on commodity derivatives, which are included within revenue.

 

(v)           The totals in the tables above may include some small apparent differences as the specific individual figures have not been rounded.

 

(vi)         The production information and the cash cost information is derived from the Group's production report for the second quarter of 2024, published on 17 July 2024.