Tuesday preview: Antofagasta reveals annual results

Copper mining company Antofagasta unveils its 2012 financial results on Tuesday, following its strong fourth-quarter production released earlier in the year.

The company's output increased 7.8% to 193,800 tonnes quarter-on-quarter, driven by production at Los Pelambres and Esperanza, according to a trading update on January 30th.

However, analysts at Investec warned in February that the firm faces "near-term declining production and rising costs".

"[...]we feel that with declining production and falling grades leading to rising costs the company is fundamentally overvalued," the broker said last month, issuing a 'sell' rating for the company's stocks and a target price of 958p.

Investec estimates revenues of $6.58bn compared to $6.0bn in 2011. Pre-tax profits are pegged at $3.3bn, up from $3.0bn. Earnings per share are expected to come in at $1.41, up from $1.26 previously.

"The company has a strong balance sheet and does not face financial distress," Investec added.

"However, we need to see a clearer path to growth to justify a higher valuation. Although should copper prices rally, then [Antofagasta] will respond similarly. [Antofagasta] is thus heavily dependent on the copper price to deliver share price upside."

Shares rose in Monday afternoon trading ahead of the results.

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