Antofagasta 9-month EBITDA up 3 percent

Source: Reuters

Date :27/11/2008 13:24:24

London-listed Chilean miner Antofagasta posted a 3 percent rise in its nine-month core profit on Thursday as higher production outweighed flat prices and surging costs.

By Eric Onstad

The copper producer said earnings before interest, tax, depreciation and amortisation (EBITDA) for the nine months to end-September rose to $2.2 billion (1.4 billion pounds), from $2.15 billion a year earlier, as revenues grew 16.6 percent to $3.3 billion.

Credit Suisse said the results were in line with its forecasts and reiterated a "neutral" rating on the company.

Antofagasta shares, which have shed 38 percent so far this year, were up 3.7 percent to 445 pence by 12 p.m., lagging a 4.7 percent increase in the UK mining index .

"We believe Antofagasta's current low cost operation, strong balance sheet is well positioned to deal with the global economic slowdown. However, copper demand is still the key catalyst," Credit Suisse said in a note.

Weak demand amid a global downturn has hammered copper prices, sliding 60 percent since touching a peak in July.

WEAK PRICES

Weak copper prices in recent months resulted in a realised price for the company of 349.1 cents per lb, lower than the average price on the London Metal Exchange and little changed from the realised price of 348.1 cents a lb in the same period last year.

Under "provisional pricing," the sales price is adjusted to to take account for market moves during shipping, impacting negatively on a company when prices are falling.

Earlier this month, Antofagasta released third-quarter production data showing a 23 percent jump in copper output to 123,700 tonnes due to higher ore grades.

It had said mining output so far was in line with a 2008 target for copper production to rise 8 percent to about 463,000 tonnes and molybdenum to fall by a third to 6,800 tonnes.

The company had also detailed a jump in third-quarter group cash costs of 76.4 cents per lb, up from 30.1 cents last year due to lower by-product credits from molybdenum and higher on-site costs.

On November 18, however, President Marcelo Awad said some costs were now falling as the global economy slowed.

He also said the company did not expect delays in projects due to the world economic downturn.

A plant upgrade at Antofagasta's key Pelambres mine is due to start up at the beginning of 2010 and the $1.9 billion Esperanza project is expected to launch output at the end of that year.

Antofagasta had cash of $3.65 billion and total borrowings of of $245.5 million at end-September, it said on Thursday.

(Reporting by Eric Onstad; Editing by Erica Billingham)

LONDON (Reuters)