Antofagasta (ANTO) has cut its half-year dividend after dropping worker numbers at its mines and seeing copper prices tumble in the first months of the pandemic. The high gold price did not prop-up earnings because production fell 26 per cent year-on-year on lower grades.
While the Chile-focused miner did not have to close any operations in the first half, it said it was running mines with two-thirds the usual number of workers, and had suspended expansion works. This includes the major Los Pelambres expansion, which has lost six months.
The delay will add around $50m (£37.9m) to the initial $1.3bn cost of the work, and Antofagasta said it had spent the down months adding new capacity to the desalination plant design because of the risk of water shortages, at a cost of $150m.
Spending cuts combined with a weaker Chilean peso saw net cash costs fall 6 per cent in the first half, to $1.12 per pound (lb) of copper. Cash profits were down 22 per cent to $1bn, with the margin falling from 52 per cent to 47 per cent.
A positive for Antofagasta – alongside the major improvement in the copper price in recent weeks – was net debt coming down in the first half. The miner completed a debt-to-equity swap in the period and its net borrowings dropped from $563m at the end of 2019 to $320m at the end of June.
Peel Hunt forecasts full-year cash profits of $2bn, rising to $3.4bn in 2021.
| ANTOFAGASTA (ANTO) | ||||
| ORD PRICE: | 1,085p | MARKET VALUE: | £ 10.7bn | |
| TOUCH: | 1,084-1,085p | 12-MONTH HIGH: | 1,149p | LOW: 575p |
| DIVIDEND YIELD: | 0.9% | PE RATIO: | 42 | |
| NET ASSET VALUE: | 756¢ | NET DEBT: | 3% | |
| Half-year to 30 Jun | Turnover ($bn) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (¢) |
| 2019 | 2.53 | 763 | 30.7 | 10.7 |
| 2020 | 2.14 | 388 | 13.7 | 6.2 |
| % change | -15 | -49 | -55 | -42 |
| Ex-div: | 03 Sep | |||
| Payment: | 02 Oct | |||
| £1=$1.31 | ||||
