Antofagasta : 2019 Half Year Financial Report

Antofagasta plc CEO Iván Arriagada said:

'We have delivered robust financial results for the first half of the year reflecting higher production at all of our operations with EBITDA increasing by 44% to $1.3 billion.

'In line with our plan for the year, copper production during the half year period increased by 22% and we expect this rate of production to continue into the second half of 2019, which we expect to be another year of record copper production.

'With Antofagasta's strategy focused on producing profitable tonnes, the successful Cost and Competitiveness Programme continues to deliver benefits and has yielded a cost saving of 7c/lb in the first half of the year helping us to reduce our net cash costs by 33c/lb to $1.19/lb.

'While the outlook for the copper market remains uncertain with the protracted negotiations between the USA and China impacting global trade, Antofagasta continues to be in a strong position generating solid cash flows and improving returns. We have the assets, capabilities and disciplined capital allocation strategy that allow us to deliver long-term value for all our stakeholders even in a challenging external macro environment.'

Financial performance

• Revenue up 19.1% to $2,525.6 million as higher copper sales volumes and by-product revenues were partially offset by a 6.3% lower realised copper price
• EBITDA(²) for the first six months of the year was $1,305.9 million, 44.0% higher than in the first half of 2018
• EBITDA margin(³) of 51.7%, increased from 42.6% during same period last year as unit production costs decreased
• Cost and Competitiveness Programme achieved savings of $61 million in the first half of 2019, equivalent to 7c/lb of unit cash costs
• Cash flow from operations(⁵) of $1,514.5 million, 70% higher than in the same period last year predominantly due to higher EBITDA
• Capital expenditure of $465.5 million, 38.8% of full year guidance
• Net debt decreased by $78.9 million to $517.4 million during the period, representing a Net Debt to EBITDA ratio of 0.20 times on higher cash flow from operations despite a drawdown of $198.0 million of the Los Pelambres Expansion debt facility, the $131.3 million initial impact of the adoption of IFRS 16, the payment of an increased final dividend and higher taxes
• Earnings per share of 30.7 cents, a 55.1% increase on the same period in 2018
• Interim dividend of 10.7 cents per share, equivalent to a payout ratio of 35% of Net Earnings(²). An increase of 57.4% on last year's interim

Operating performance

• The Group had no fatalities during the period
• Group copper production increased by 22.2% to 387,300 tonnes, with higher production at all of the Group's operations
• Group cash costs before by-product credits(²) for the half year were $1.66/lb, down from $1.92/lb in the same period last year due to gains arising from the Cost and Competiveness Programme, higher production and a weaker Chilean peso
• Group net cash costs(²) of $1.19/lb, a decrease of 21.7% from $1.52/lb in the same period in 2018, on lower cash costs before by-product credits and higher by-product revenues
• Construction of the Los Pelambres Expansion project has started on-site and project completion (engineering, procurement and construction) was at 22% as of the end of June. Capital expenditure in the first six months of 2019 was $77.6 million. The rate of expenditure is expected to accelerate in the second half of the year as the project advances

Guidance

• As previously reported, Group copper production guidance for the full year is unchanged at 750-790,000 tonnes and net cash cost guidance has been reduced by 5c/lb to $1.25/lb, assuming by-product prices and the Chilean peso exchange rate remain at similar levels to the first half of the year
• Capital expenditure guidance for the full year is unchanged at $1.2 billion

Other

• It is with great sadness that the Board reports the passing of Gonzalo Menendez, our longest-serving director, after 34 years on the Board. Gonzalo has been associated with every major strategic initiative of the Group and we will greatly miss his honest, forthright and wise counsel
• As announced on 12 July, the World Bank's International Center for Settlement of Investment Disputes ('ICSID') awarded $5.84 billion in damages to Tethyan Copper Company Pty Limited, a joint venture held equally by the Company and Barrick Gold Corporation, in relation to arbitration claims filed against the Islamic Republic of Pakistan ('Pakistan') following the unlawful denial of a mining lease for the Reko Diq project in Pakistan in 2011
• Labour negotiations are scheduled with the supervisors at Zaldívar and Los Pelambres, and the workers at Antucoya and are expected to conclude in H2 2019

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UNAUDITED RESULTS SIX MONTHS ENDING 30 JUNE		2019	2018	%
Revenue(1)	$m	2,525.6	2,120.7	19.1
EBITDA(2)	$m	1,305.9	904.2	44.4
EBITDA margin(3)	%	51.7	42.6	21.4
Earnings per share	cents	30.7	19.8	55.1
Dividend per share	cents	10.7	6.8	57.4
Cash flow from operations(4,5)	$m	1,514.5	890.4	70.1
Group net debt at period end	$m	517.4	782.8	(33.9)
Average realised copper price	$/lb	2.81	3.00	(6.3)
Copper sales(6)	kt	354.5	283.3	25.1
Gold sales	koz	148.3	68.1	117.8
Moly sales	kt	6.6	6.1	8.2
Cash costs before by-product credits(2)	$/lb	1.66	1.92	(13.5)
Net cash costs(2)	$/lb	1.19	1.52	(21.7)

^{Note: The financial results are for continuing operations and are prepared in accordance with IFRS other than as noted in (2) below.
(1) Figures include both revenue from the sale of products and the associated income from the provision of shipping services.
(2) Non-IFRS measures. Refer to the alternative performance measures in Note 22 to the half-year financial report below.
(3) Calculated as EBITDA/Revenue. If Associates and JVs' revenue is included EBITDA Margin was 47.8% in HY 2019 and 39.3% in HY 2018.
(4) From continuing and discontinued operations.
(5) Includes a VAT tax refund of $274.8 million in the period that was originally paid in H2 2018. Excluding the refund cash flow from operations increased by 39.2%.
(6) Does not include 26,900 tonnes of sales by Zaldívar in HY 2019 and 20,600 tonnes in HY 2018, as it is equity accounted.}

A recording and copy of the 2019 Half Year Results presentation is available on the Company's website www.antofagasta.co.uk

There will be a Q&A telephone conference call at 12.00 BST (07.00 EST) hosted by Ivan Arriagada and Alfredo Atucha. Participants can call any of the following numbers: UK 0800 358 6377 (tollfree), UK [phone], USA [phone] and Chile 123 0020 9713 (tollfree). The call title is Antofagasta 2019 Half Year Results and the Confirmation Code is 5150631.

Investors - London
Andrew Lindsay [e-mail]
Andres Vergara [e-mail]
Telephone [phone]

Media - London
Carole Cable [e-mail]
Will Medvei [e-mail]
Telephone [phone]

Media - Santiago
Pablo Orozco [e-mail]
Carolina Pica [e-mail]
Telephone [phone]

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