Antofagasta beats profit expectations in the first half

Chile-based copper miner Antofagasta saw earnings per share (EPS) come in a smidgen ahead of expectations in the first half as a decrease in copper prices was offset by higher levels of production.

EPS for this six months to June 30th were 65.5 US cents, 7.2% under the 70.6 cents reported the year before but slightly ahead of consensus forecasts of 65.0 cents. Credit Suisse had estimated EPS of 63 cents.

Earnings before interest, tax, depreciation and amortisation (EBITDA) fell by 5.4% from $1,946.7m to $1,841.4m. Nevertheless, cash costs (as already guided to) - a concern for most mining heavyweights in the industry as of late - actually decreased by 6.3% from 105.6 to 98.9 cents per pound (net of by-product credits).

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Revenue rose by 3.5% from $,3054.3m to $3,160.8m, with rising volumes outweighing a 13.8% fall in the average copper price (from 426.3 to 367.3 cents per pound).

As already announced earlier this month, copper production rose by 16.5% year-on-year to 336,000 tonnes, mainly due to increased production from Esperanza which had started operation at the start of 2011. Gold production meanwhile almost doubled to 136,100 ounces, again due to the improvement at Esperanza.

The group has maintained its full-year production forecast of around 700,000 tonnes of copper, as well as 280,000 ounces of gold and 11,000 tonnes of molybdenum.

The development of the Antucoya project continues with all of the main engineering, procurement and construction (EPC) contracts having now been executed.

"ANTO is a stock to hold for the long term with a high quality asset base, strong balance sheet and cash generation and longer term growth options," said analysts at Credit Suisse on Tuesday.

"We expect the mid-size Antucoya project to take group volumes from c.700 kt in 2012 to c.800 kt by 2015 and longer term projects could take volumes beyond 1 mtpa by the end of the decade.

Antofagasta raised its interim dividend by 6.3% from 8.0 cents to 8.5 cents.

Chief Executive Officer Diego Hernandez, who joined the board on August 1st, said: "I am delighted to have taken on the role of Chief Executive Officer of Antofagasta Minerals S.A. [...]. I am looking forward to helping the group to realise the great potential from its current operations and strong pipeline of growth projects."