Antofagasta Regulatory News (ANTO)

30 May 2007 10:00

Antofagasta PLC30 May 2007 Antofagasta plc Unaudited Results for the First Quarter ended 31 March 2007 London, 30 May 2007 Highlights Three Three months months ended ended 31 March 31 March Full year 2007 2006 Change 2006 US$'m US$'m % US$'m Group turnover 830.4 748.6 10.9% 3,870.0 ======== ======== ========Group EBITDA 625.0 522.7 19.6% 2,957.3 ======== ======== ======== Turnover Group turnover in the three months ended 31 March 2007 was US$830.4 millioncompared with US$748.6 million in the first quarter of 2006, reflecting highercopper and molybdenum prices. LME copper prices averaged 269.5 cents per pound compared with 224.3 cents perpound in the three months ended 31 March 2006. Pricing adjustments on the closeout of provisional sales resulted in an average realised copper price of 297.1cents per pound as prices improved toward the end of the quarter, compared with276.3 cents per pound in the comparative period. Market molybdenum prices, whichdid not differ significantly from prices realised by Los Pelambres, averagedUS$26.2 per pound in the three months, an increase from the average price ofUS$23.0 per pound in Q1 2006. The volume of copper sold was 106,300 tonnes (three months ended 31 March 2006 -108,100 tonnes). Production was 105,900 tonnes (three months ended 31 March 2006- 107,000 tonnes). The marginal reduction was mainly due to the expecteddecrease in ore grades at Los Pelambres, partly offset by higher ore throughput.The overall decrease was also partly offset by improved production at El Tesoro,where ore grades improved compared with the first quarter of 2006. Molybdenumsales and production volumes were 2,200 tonnes and 2,100 tonnes respectively(three months ended 31 March 2006 - both sales and production of 2,000 tonnes).In the case of both copper and molybdenum, sales volumes vary from theproduction volumes reported on 3 May 2007 as a result of timing differences inshipping and loading schedules. The transport and water divisions continued to perform well, benefiting in bothcases from increased volumes. Further details of production and sales volumes and realised prices by miningoperation are given in Note 2, and an analysis of turnover by business segmentis given in Note 3. Further details of the operating performance of each mineand the rail and water division are also given in the Group's first quarterproduction report released on 3 May 2007. EBITDA Group EBITDA in the three months ended 31 March 2007 was US$625.0 million,compared with US$522.7 million in Q1 2006. The improved EBITDA resulted mainlyfrom the higher realised copper and molybdenum prices in the current period asexplained in connection with turnover above, and the impact in the comparativeperiod of charges related to the Group's commodity hedging programme, asdiscussed below. As reported on 3 May 2007, weighted average cash costs for the Group's miningoperations, which are stated net of by-product credits, were 35.8 cents perpound in the three months ended 31 March 2007. This compared with 49.7 cents perpound in the comparative period in 2006. This decrease was largely the result ofimproved by-product credits at Los Pelambres. By-product credits (expressed incents per pound of copper produced) improved as a result of lower copperproduction at Los Pelambres in this quarter, and the higher molybdenum pricesoutlined above. Weighted average cash costs excluding by-product credits were 93.4 cents perpound (three months ended 31 March 2006 - 90.9 cents per pound). These costsinclude tolling charges and production costs for both copper and molybdenum.Compared with the same period in 2006, cost increases were mainly due to higheron-site costs at the Group's mines, largely offset by lower tolling charges atLos Pelambres (reflecting lower treatment and refining charges and a reducedimpact of price participation with smelters). Cash costs for each mine remain inline with the Group's initial forecasts for the year. Further details of thecash costs of each mine are given in the Group's first quarter production reportof 3 May 2007. The amount recognised in the income statement during the current period inrespect of the Group's commodity hedging programme was a gain of US$1.4 million,recorded within turnover as the Group has applied hedge accounting provisions ofIAS 39 "Financial Instruments: Recognition and Measurement" with effect from 1January 2007. During the three months ended 31 March 2006 a charge of US$37.8million was recognised in respect of commodity hedging, recorded within otheroperating expenses. The gain recognised during the current period relates tothose commodity instruments in place at the end of 2006 which matured during theperiod. Further details of cash costs by mining operation are given in Note 2, and ananalysis of EBITDA by business segment is given in Note 3. Additional commodityhedging has recently been put in place at El Tesoro and Michilla; details ofcommodity instruments are given in Note 5. Basis of Information The Group turnover and EBITDA figures included in this release for thethree-month period ended 31 March 2007 are presented on a basis consistent withthe accounting policies used in the Group's 2006 Annual Report and FinancialStatements (except in relation to the application by the Group of the hedgeaccounting provisions of IAS 39 "Financial Instruments: Recognition andMeasurement" with effect from 1 January 2007 as set out in Note 5) underInternational Financial Reporting Standards and Interpretations ("IFRS"). The Group's three mining companies, Los Pelambres, El Tesoro and Michilla, willtoday also file quarterly financial statements under Chilean GAAP for thethree-month period ended 31 March 2007 with the Chilean securities regulator,the Superintendencia de Valores y Seguros de Chile ("SVS"). These filings are inaccordance with mining tax legislation introduced in Chile in 2005 whichrequired companies that have elected to enter a tax stability regime to publishquarterly financial information from the 2006 financial year onwards. Thisrelease includes a summary of the Chilean GAAP income statement, balance sheetand cash flow statement for each of the three mining companies to be filed withthe SVS. +---------------------------------------+-----------------------------------------+|Analyst Enquiries - London | Enquiries - Santiago|+--------------------------------------++-----------------------------------------+|Antofagasta plc | Antofagasta Minerals S.A.|+--------------------------------------+------------------------------------------+|Tel: +44 20 7808 0988 | Tel +562 377 5145|+--------------------------------------+------------------------------------------+|www.antofagasta.co.uk | Alejandro Rivera|+--------------------------------------+------------------------------------------+|Desmond O'Conor | Email: arivera@aminerals.cl|+--------------------------------------+------------------------------------------+|Email: doconor@antofagasta.co.uk | Press Enquiries|+--------------------------------------+------------------------------------------+|Hussein Barma | Bankside Consultants|+--------------------------------------+------------------------------------------+|Email: hbarma@antofagasta.co.uk | Tel: +44 20 7367 8873|+--------------------------------------+------------------------------------------+| | Keith Irons|+--------------------------------------+------------------------------------------+| | Email: keith@bankside.com|+--------------------------------------+------------------------------------------+| | Oliver Winters|+--------------------------------------+------------------------------------------+| | Email: oliver.winters@bankside.com|+--------------------------------------++-----------------------------------------+ Notes 1. General information and accounting policies These unaudited first quarter results are for the three-month period ending 31March 2007. The Group turnover and EBITDA information, including allcomparatives, have been prepared on the basis of the accounting policies set outin the Group's statutory accounts for the year to 31 December 2006 (except inrelation to the application by the Group of the hedge accounting provisions ofIAS 39 "Financial Instruments: Recognition and Measurement" with effect from 1January 2007 as set out in Note 5) and in accordance with applicableInternational Financial Reporting Standards and Interpretations (IFRS) whichhave been endorsed by the European Union. While the turnover and EBITDA information contained in this three month resultsannouncement has been computed in accordance with IFRS, this announcement doesnot itself contain sufficient information to comply with IFRS. The informationincluded in this announcement for the three month periods ending 31 March 2006and 31 March 2007 is unaudited. The information contained in this announcement for the year ended 31 December2006 does not constitute statutory accounts. The statutory accounts for thatyear have been approved by the Board and reported on by the auditors, and havebeen delivered to the Registrar of Companies. The auditors' report on thoseaccounts was unqualified and did not contain statements under section 237(2) ofthe Companies Act 1985 (regarding adequacy of accounting records and returns) orunder section 237(3) (regarding provision of necessary information andexplanations). The comparative information contained in Note 2 of thisannouncement is not derived from the statutory accounts for the year ended 31December 2006 and is accordingly not covered by the auditors' report. 2. Production and Sales Statistics (See notes following Note 2(b).) (a) Production and sales volumes for copper and molybdenum Production Sales ------------ ------- Three Three Three Three months months months months ended ended ended ended 31 March 31 March Full year 31 March 31 March Full year 2007 2006 2006 2007 2006 2006 000 tonnes 000 tonnes 000 tonnes 000 tonnes 000 tonnes 000 tonnesCopperLos Pelambres 70.7 74.1 324.2 71.9 75.0 324.8El Tesoro 23.6 20.8 94.0 22.2 21.9 95.3Michilla 11.6 12.1 47.3 12.2 11.2 47.7 -------- -------- -------- -------- -------- --------Group total 105.9 107.0 465.5 106.3 108.1 467.8 ======== ======== ======== ======== ======== ========MolybdenumLos Pelambres 2.1 2.0 9.8 2.2 2.0 9.9 ======== ======== ======== ======== ======== ======== (b) Cash costs per pound of copper produced and realised prices per pound ofcopper and molybdenum sold Cash cost Realised prices ----------- ----------------- Three Three Three Three months months months months ended ended ended ended 31 March 31 March Full year 31 March 31 March Full year 2007 2006 2006 2007 2006 2006 US cents US cents US cents US cents US cents US centsCopperLos Pelambres 4.2 29.8 16.4 304.8 291.1 335.0El Tesoro 87.4 79.6 78.6 278.9 242.1 316.4Michilla 123.1 120.2 126.4 284.8 244.6 318.5 -------- -------- -------- -------- -------- --------Group weighted average 35.8 49.7 40.2 297.1 276.3 329.5(net of by-products) ======== ======== ======== ======== ======== ======== Group weighted average 93.4 90.9 95.6(before deducting by-products) ======== ======== ======== Cash costs at LosPelambres comprise: On-site and shipping 64.7 54.5 56.4costTolling charges for 25.7 34.8 39.7concentrates -------- -------- --------Cash costs before 90.4 89.3 96.1deducting by-productcredits By-product credits (86.3) (59.5) (79.7)(principally molybdenum) -------- -------- --------Cash costs (net of 4.2 29.8 16.4by-product credits) ======== ======== ======== LME average 269.5 224.3 305.3 ======== ======== ======== US$ US$ US$MolybdenumLos Pelambres 27.4 22.5 24.6 ======== ======== ========Market average price 26.2 23.0 24.8 ======== ======== ======== Notes to the production and sales statistics (i) The production and sales figures represent the actualamounts produced and sold, not the Group's share of each mine. The Group owns60% of Los Pelambres, 100% of El Tesoro (61% prior to 24 August 2006) and 74.2%of Michilla. (ii) Los Pelambres produces copper and molybdenum concentrates,and the figures for Los Pelambres are expressed in terms of payable metalcontained in concentrate. Los Pelambres is also credited for the gold and silvercontained in the copper concentrate sold. El Tesoro and Michilla producecathodes with no by-products. (iii) Cash costs are a measure of the cost of operationalproduction expressed in terms of cents per pound of payable copper produced.Cash costs are stated net of by-product credits and include tolling charges forconcentrates at Los Pelambres. Cash costs exclude depreciation, financial incomeand expenses, hedging gains and losses, exchange gains and losses andcorporation tax for all three operations. By-product calculations do not takeinto account mark-to-market gains for molybdenum at the beginning or end of eachperiod. (iv) Realised copper prices are determined by comparing turnoverfrom copper sales (grossing up for tolling charges for concentrates) with salesvolumes for each mine in the period. Realised molybdenum prices at Los Pelambresare calculated on a similar basis. In the current period realised prices reflectgains and losses on commodity derivatives, which are included within turnover.The classification of these amounts within turnover is due to the application ofthe hedge accounting provisions of IAS 39 "Financial Instruments: Recognitionand Measurement" with effect from 1 January 2007. Prior to this point, gains andlosses on commodity derivatives were included in other operating income orexpense, and so are not reflected within the realised price figures for thecomparative periods. (v) The totals in the tables above may include some smallapparent differences as the specific individual figures have not been rounded. (vi) The production information in Note 2(a) and the cash costinformation in Note 2(b) is derived from the Group's production report for thefirst quarter of 2007 published on 3 May 2007. 3. Turnover and EBITDA analysed by business segment Turnover EBITDA ---------- -------- Three Three Three Three months months months months ended ended ended ended 31 March 31 March Full year 31 March 31 March Full year 2007 2006 2006 2007 2006 2006 US$'m US$'m US$'m US$'m US$'m US$'m Los Pelambres 574.0 531.1 2,701.3 474.8 439.0 2,297.0El Tesoro 136.5 116.9 664.8 93.4 61.6 456.0Michilla 76.6 60.4 334.9 43.6 8.6 158.4Exploration - - - (5.5) (2.4) (21.5)Corporate and other - - - (5.1) (3.9) (16.9)items -------- -------- -------- -------- -------- --------Mining 787.1 708.4 3,701.0 601.2 502.9 2,873.0Railway and other 26.2 23.5 105.3 12.5 8.5 42.9transport servicesWater concession 17.1 16.7 63.7 11.3 11.3 41.4 -------- -------- -------- -------- -------- --------Group turnover and 830.4 748.6 3,870.0 625.0 522.7 2,957.3EBITDA ======== ======== ======== ======== ======== ======== Turnover at Los Pelambres by mineral: Before deducting tolling charges Tolling charges Net of tolling charges ----------------------------- ----------------- ------------------------ Three Three Three Three Three Three months months months months months months ended ended ended ended ended ended 31 March 31 March 31 31 Full 31 31 Full year March March year March March Full year 2007 2006 2006 2007 2006 2006 2007 2006 2006 US$'m US$'m US$'m US$'m US$'m US$'m US$'m US$'m US$'m Copper 483.1 481.3 2,399.0 (47.6) (51.8) (254.0) 435.5 429.5 2,145.0Molybdenum 131.6 99.3 536.4 (4.5) (6.1) (22.6) 127.1 93.2 513.8Gold and silver 11.6 8.5 43.1 (0.2) (0.1) (0.6) 11.4 8.4 42.5 ------ ------ ------- ------ ------ ------ ------ ------ ------Los Pelambres 626.3 589.1 2,978.5 (52.3) (58.0) (277.2) 574.0 531.1 2,701.3 ====== ====== ======= ====== ====== ====== ====== ====== ====== Notes to turnover and EBITDA by business segment (i) Turnover from Railway and other transport services isstated after eliminating inter-segmental sales to the mining division of US$2.2million (three months ended 31 March 2006 - US$2.1 million; full year 2006 -US$9.6 million). (ii) Turnover includes the effect of both final pricing andmark-to-market adjustments to provisionally priced sales of copper andmolybdenum concentrates and copper cathodes. Further details of such adjustmentsare given in Note 4. (iii) In the current period turnover includes realised gains oncommodity derivatives at Michilla of US$1.4 million. The classification of theseamounts within turnover is due to the application of the hedge accountingprovisions of IAS 39 "Financial Instruments: Recognition and Measurement" witheffect from 1 January 2007. Prior to this point, gains and losses on commodityderivatives were included in other operating income or expense. In thecomparative periods, other operating expense included losses at El Tesoro ofUS$17.3 million in the three months ended 31 March 2006 and US$44.8 million inthe 2006 full year, and losses at Michilla of US$20.5 million in the threemonths ended 31 March 2006 and US$39.7 million in the 2006 full year. Furtherdetails of such gains or losses are given in Note 5. (iv) Los Pelambres produces and sells copper and molybdenumconcentrates. It is also credited for the gold and silver content in the copperconcentrate it sells. Turnover by type of metal is analysed below to showseparately the amounts prior to deduction of tolling charges, the tollingcharges involved and the net amounts included in turnover. El Tesoro andMichilla do not generate by-products from their copper cathode operations. (v) EBITDA is calculated by adding back depreciation,amortisation and disposals of plant, property and equipment and any impairmentcharges to operating profit from subsidiaries. 4. Embedded derivatives - provisionally priced sales Copper and molybdenum concentrate sale agreements and copper cathode saleagreements generally provide for provisional pricing of sales at the time ofshipment, with final pricing being based on the monthly average London MetalExchange copper price or monthly average molybdenum price for specified futureperiods. This normally ranges from 30 to 180 days after delivery to thecustomer. Under IFRS, both gains and losses from the marking-to-market of open sales arerecognised through adjustments to turnover in the income statement and to tradedebtors in the balance sheet. The Group determines mark-to-market prices usingforward prices at each period end for copper concentrate and cathode sales, andperiod-end month average prices for molybdenum concentrate sales due to theabsence of a futures market for that commodity. The mark-to-market adjustments at the end of each period and the effect onturnover in the income statement for each period are as follows: Balance sheet - ------------------ net mark to market effect on debtors ------------------------------------- At 31.03.07 At 31.03.06 At 31.12.06 US$'m US$'m US$'mLos Pelambres - copper concentrate 65.1 78.0 (110.1)Los Pelambres - tolling charges for copper (4.0) (3.7) 7.6concentrateLos Pelambres - molybdenum concentrate 6.8 (5.8) (3.9)El Tesoro - copper cathodes 3.6 3.1 1.3Michilla - copper cathodes 0.9 1.0 (0.6) -------- -------- -------- 72.4 72.6 (105.7) ======== ======== ======== (a) Copper sales Three months ended Three months ended Full year 2006 31 March 2007 31 March 2006 US$'m US$'m US$'m US$'m US$'m US$'m US$'m US$'m US$'m Los El Michilla Los El Michilla Los El Michilla Pelambres Tesoro Pelambres Tesoro Pelambres Tesoro Copper Copper Copper Copper Copper Copper Copper Copper Copper concentrate cathodes cathodes concentrate cathodes cathodes concentrate cathodes cathodes Provisionally 429.7 136.6 76.8 362.9 109.7 56.7 2,175.5 653.1 326.0invoiced grosssales Effects of pricing adjustments toprevious periodinvoices Reversal of 110.1 (1.3) 0.6 (33.2) (0.2) 0.1 (33.2) (0.2) 0.1mark-to-marketadjustments atthe end of theprevious period Settlement of (125.8) (6.6) (3.2) 73.6 1.4 0.8 169.2 2.0 0.6copper sales invoiced inthe previousperiod Total effect (15.7) (7.9) (2.6) 40.4 1.2 0.9 136.0 1.8 0.7of adjustmentsto previousperiod invoices inthe current period Effects ofpricing adjustments to current periodinvoices Settlement of 4.0 4.2 1.5 - 2.9 1.8 197.6 8.6 8.8copper salesinvoiced inthe current period Mark-to-market 65.1 3.6 0.9 78.0 3.1 1.0 (110.1) 1.3 (0.6)adjustments at the end of thecurrent period Total effect 69.1 7.8 2.4 78.0 6.0 2.8 87.5 9.9 8.2of adjustmentsto currentperiod invoices ------- ------ ------ ------ ------ ------ ------ ------ ------Turnover 483.1 136.5 76.6 481.3 116.9 60.4 2,399.0 664.8 334.9before deductingtolling charges Tolling charges (47.6) - - (51.8) - - (254.0) - - ------- ------ ------ ------ ------ ------ ------ ------ ------Turnover net 435.5 136.5 76.6 429.5 116.9 60.4 2,145.0 664.8 334.9of tolling charges ======= ====== ====== ====== ====== ====== ====== ====== ====== Copper concentrate Copper concentrate sales at Los Pelambres have an average settlement period ofapproximately four months from shipment date. At 31 March 2007, sales totalling112,000 tonnes remained open as to price, with an average mark-to-market priceof 311.7 cents per pound compared with an average provisional invoice price of285.3 cents per pound. At 31 March 2006, sales totalling 113,500 tonnes remainedopen as to price, with an average mark-to-market price of 245.3 cents per poundcompared with an average provisional invoice price of 215.1 cents per pound. At31 December 2006, sales totalling 127,100 tonnes remained open as to price, withan average mark-to-market price of 287.0 cents per pound compared with anaverage provisional invoice price of 326.3 cents per pound. Tolling charges include a mark-to-market loss for copper concentrate sales openas to price at 31 March 2007 of US$11.6 million (31 March 2006 - loss of US$3.7million, 31 December 2006 - gain of US$7.6 million). Copper cathodes Copper cathode sales at El Tesoro and Michilla have an average settlement periodof approximately one month from shipment date. At 31 March 2007, sales totalling 10,900 tonnes remained open as to price, withan average mark-to-market price of 312.8 cents per pound compared with anaverage provisional invoice price of 294.0 cents per pound. At 31 March 2006,sales totalling 11,400 tonnes remained open as to price, with an averagemark-to-market price of 246.8 cents per pound compared with an averageprovisional invoice price of 230.7 cents per pound. At 31 December 2006, salestotalling 11,600 tonnes remained open as to price, with an averagemark-to-market price of 286.6 cents per pound compared with an averageprovisional invoice price of 294.0 cents per pound. (b) Molybdenum sales Three Three months months ended ended 31.03.07 31.03.06 Year ended 31.12.06 US$'m US$'m US$'m Los Los Los Pelambres Pelambres Pelambres Molybdenum Molybdenum Molybdenum concentrate concentrate concentrate Provisionally invoiced gross 121.8 117.8 547.8sales Effects of pricing adjustments toprevious period invoices Reversal of mark-to-market 2.4 12.6 12.6adjustments at the end of theprevious period Settlement of molybdenum sales (1.7) (22.8) (27.5)invoiced in the previous period Total effect of adjustments to 0.7 (10.2) (14.9)previous period invoices in thecurrent period Effects of pricing adjustments tocurrent year invoices Settlement of molybdenum sales 2.3 (2.5) 5.9invoiced in the current period Mark-to-market adjustments at the 6.8 (5.8) (2.4)end of the current period Total effect of adjustments to 9.1 (8.3) 3.5current period invoices Turnover before deducting tolling 131.6 99.3 536.4charges Tolling charges (4.5) (6.1) (22.6) Turnover net of tolling charges 127.1 93.2 513.8 Molybdenum sales at Los Pelambres have an average settlement period ofapproximately three months after shipment date. At 31 March 2007, salestotalling 1,500 tonnes remained open as to price, with an average mark-to-marketprice of US$27.9 per pound compared with an average provisional invoice price ofUS$25.9 per pound. At 31 March 2006, sales totalling 1,500 tonnes remained openas to price, with an average mark-to-market price of US$22.9 per pound comparedwith an average provisional invoice price of US$24.1 per pound. At 31 December2006, sales totalling 2,100 tonnes remained open as to price, with an averagemark-to-market price of US$25.0 per pound compared with an average provisionalinvoice price of US$25.5 per pound. 5. Commodity derivatives The Group periodically uses derivative financial instruments to reduce exposureto commodity price movements. The Group does not use such derivative instrumentsfor speculative trading purposes. The Group has applied the hedge accounting provisions of IAS 39 "FinancialInstruments: Recognition and Measurement" with effect from 1 January 2007. Fromthat date, changes in the fair value of derivative financial instruments thatare designated and effective as hedges of future cash flows have been recogniseddirectly in equity, with any ineffective portion recognised immediately in theincome statement. Realised gains and losses on commodity derivatives recognisedin the income statement have been recorded within turnover. Prior to 1 January2007 derivatives were measured at fair value through the income statement, withgains or losses on commodity derivatives being recorded within other operatingincome or expense. The balance sheet mark-to-market adjustments at the end of each period and thetotal effect of commodity derivatives on operating profit in the incomestatement for each period are as follows: Balance sheet Income statement Net financial asset/(liability) Total effect --------------------------------- -------------- At At At Three Three Full year 31.03.07 31.03.06 31.12.06 months months 2006 ended ended 31 March 31 March 2007 2006 US$'m US$'m US$'m US$'m US$'m US$'m El Tesoro (0.2) (27.5) - - (17.3) (44.8)Michilla (0.4) (30.8) 7.3 1.4 (20.5) (39.7) -------- -------- -------- -------- -------- -------- (0.6) (58.3) 7.3 1.4 (37.8) (84.5) ======== ======== ======== ======== ======== ======== The balance sheet mark-to-market effect is stated before taking into account anypayments on account of margin calls. The US$1.4 million gain recognised within turnover during the three months ended31 March 2007 related to amounts realised on derivatives which matured in theperiod. During the period net mark-to-market losses of US$6.5 million wererecognised within reserves. The Group had min/max instruments at 31 March 2007 for 10,800 tonnes of copperproduction, with a weighted average floor of 281.0 cents per pound and aweighted average cap of 338.5 cents per pound. These instruments had a weightedaverage duration of 4.5 months and a maximum duration of 9 months. At 31 March 2007, the Group also had futures at Michilla for 10,800 tonnes ofcopper production with an average price of US 306.9 cents, a weighted averageduration of 5.5 months and a maximum duration of 9 months. It also had futuresto both buy and sell copper production at El Tesoro, with the effect of swappingCOMEX prices for LME prices without eliminating underlying market priceexposure. These have a weighted average price of US 312.0 cents, a weightedaverage duration of 5.5 months and a maximum duration of 10 months. Between 31 March 2007 and the date of this report the Group has entered intoadditional min/max instruments for 85,800 tonnes of copper production (of which82,400 tonnes relate to El Tesoro and 3,400 tonnes relate to Michilla), coveringa total period up to 31 December 2009. The weighted average period covered bythese instruments calculated with effect from 1 April 2007 is 21 months. Themaximum duration of the individual instruments in place during this period is 12months. The instruments have a weighted average floor of 261.8 cents per poundand a weighted average cap of 394.6 cents per pound. 6. Summary of mining companies' Chilean GAAP financial statements (See notes following Note 6(c)). The balance sheets, income statements and cash flow statements prepared underChilean GAAP and to be filed with the SVS are summarised below. (a) Balance sheets Los Los El Tesoro El Tesoro Michilla Michilla Pelambres Pelambres At At At At At At 31.03.2007 31.03.2006 31.03.2007 31.03.2006 31.03.2007 31.03.2006 US$'m US$'m US$'m US$'m US$'m US$'m Cash and cash 761.1 780.7 285.0 40.9 105.0 7.8equivalentsTrade and other 339.2 248.1 54.2 47.1 22.7 16.4receivablesInventories 51.2 46.2 61.9 35.6 16.1 20.9Current and deferred 11.8 14.8 3.2 22.7 3.0 5.2tax assets -------- -------- -------- -------- -------- -------- Current assets 1,163.3 1,089.8 404.3 146.3 146.8 50.3 Fixed assets 1,559.7 1,242.2 253.2 264.9 51.7 64.4 Other non-current 150.9 149.4 48.3 61.4 0.9 1.1assets -------- -------- -------- -------- -------- -------- TOTAL ASSETS 2,873.9 2,481.4 705.8 472.6 199.4 115.8 ======== ======== ======== ======== ======== ======== Short term 86.6 87.2 14.6 14.9 - -borrowingsTrade and other 111.5 65.9 35.9 34.3 18.8 18.3payablesCurrent and deferred 112.5 97.8 43.3 35.2 21.8 0.6tax liabilities -------- -------- -------- -------- -------- -------- Current liabilities 310.6 250.9 93.8 84.4 40.6 18.9 -------- -------- -------- -------- -------- -------- Medium and long term 232.4 313.8 14.0 42.0 - -borrowingsTrade and other 12.8 11.7 6.4 5.9 7.4 7.6payablesDeferred tax 141.1 132.4 31.8 27.8 - -liabilities -------- -------- -------- -------- -------- -------- Non-current 386.3 457.9 52.2 75.7 7.4 7.6liabilities -------- -------- -------- -------- -------- -------- Total liabilities 696.9 708.8 146.0 160.1 48.0 26.5 -------- -------- -------- -------- -------- -------- Share capital 373.8 373.8 91.0 91.0 78.4 78.4Reserves 1,803.2 1,398.8 468.8 221.5 73.0 10.9 -------- -------- -------- -------- -------- -------- Total shareholders' 2,177.0 1,772.6 559.8 312.5 151.4 89.3equity -------- -------- -------- -------- -------- -------- ======== ======== ======== ======== ======== ========TOTAL LIABILITIES 2,873.9 2,481.4 705.8 472.6 199.4 115.8AND SHAREHOLDERS' EQUITY ======== ======== ======== ======== ======== ======== (b) Income statements Los Los El Tesoro El Tesoro Michilla Michilla Pelambres Pelambres Three Three Three Three Three Three months months months months months months ended ended ended ended ended ended 31 March 31 March 31 March 31 March 31 March 31 March 2007 2006 2007 2006 2007 2006 US$'m US$'m US$'m US$'m US$'m US$'m Turnover 513.7 490.0 132.9 107.2 77.3 42.1 Operating costs (100.1) (90.4) (44.7) (40.5) (35.3) (31.2) -------- -------- -------- -------- -------- -------- Operating margin 413.6 399.6 88.2 66.7 42.0 10.9 Administrative and (17.5) (17.8) (6.8) (6.0) (3.4) (3.5)distribution expenses -------- -------- -------- -------- -------- -------- Operating profit 396.1 381.8 81.4 60.7 38.6 7.4 -------- -------- -------- -------- -------- --------Other income - 0.1 - 0.3 0.1 0.2Financial income 8.5 7.1 3.5 - 1.1 0.1Financial expenses (4.8) (5.4) (0.5) (0.9) (0.1) (0.1)Other expenses (0.1) (0.2) (0.6) (0.3) - (0.3)Exchange difference 1.3 2.6 0.3 0.6 - 0.5 -------- -------- -------- -------- -------- --------Net non-operating income 4.9 4.2 2.7 (0.3) 1.1 0.4/(expenses) -------- -------- -------- -------- -------- -------- Profit before tax 401.0 386.0 84.1 60.4 39.7 7.8 Income tax expense (74.4) (68.9) (16.5) (11.3) (7.4) (1.5) -------- -------- -------- -------- -------- --------Profit for the financial 326.6 317.1 67.6 49.1 32.3 6.3period ======== ======== ======== ======== ======== ======== (c) Cash flow statements Los Los El Tesoro El Tesoro Michilla Michilla Pelambres Pelambres Three Three Three Three Three Three months months months months months months ended ended ended ended ended ended 31 March 31 March 31 March 31 March 31 March 31 March 2007 2006 2007 2006 2007 2006 US$'m US$'m US$'m US$'m US$'m US$'m Net cash flow from 334.2 367.9 66.6 40.2 37.8 (3.3)operating activities -------- -------- -------- -------- -------- -------- Investing activities Additions to fixed (56.0) (146.1) (0.6) (2.8) (2.3) (3.7)assetsDisposals of fixed - 0.6 - - - -assetsOther items - - - - - (0.4) -------- -------- -------- -------- -------- -------- Net cash used in (56.0) (145.5) (0.6) (2.8) (2.3) (4.1)investing activities -------- -------- -------- -------- -------- -------- Financing activitiesDividends paid - - - - - -Loans repaid (2.4) (2.4) - - - - -------- -------- -------- -------- -------- -------- Net cash used in (2.4) (2.4) - - - -financing activities -------- -------- -------- -------- -------- -------- Net increase in cash and 275.8 220.0 66.0 37.4 35.5 (7.4)cash equivalents Cash and cash 485.3 560.7 219.0 3.5 69.5 15.2equivalents at the beginning of the period -------- -------- -------- -------- -------- -------- Cash and cash 761.1 780.7 285.0 40.9 105.0 7.8equivalents at the end ======== ======== ======== ======== ======== ========of the period Notes to Chilean GAAP financial statements (i) The above balance sheets, income statements and cash flowstatements have been derived from the quarterly financial statements of LosPelambres, El Tesoro and Michilla to be filed with the SVS in Chile. Certaindetailed lines in the individual statements have been combined for convenience. (ii) The balance sheets, income statements and cash flowstatements above have been prepared under Chilean GAAP and therefore do notnecessarily equate to the amounts that would be included in the Group'sconsolidated financial statements for a corresponding period either as tomeasurement or classification. (iii) The amounts disclosed above represent the full amount foreach company and not the Group's attributable share. The Group owns 60% of LosPelambres, 100% of El Tesoro (61% prior to 24 August 2006) and 74.2% ofMichilla. (iv) A translation into English of the full quarterly financialstatements for each company shown in summary form above will be available on theGroup's website www.antofagasta.co.uk. 7. Reconciliation of Chilean GAAP results to Turnover and EBITDA under IFRSfor individual business segments (a) Turnover Los Los El El Michilla Michilla Pelambres Pelambres Tesoro Tesoro Three Three Three Three Three Three months months months months months months ended ended ended ended ended ended 31 March 31 March 31 March 31 March 31 March 31 March 2007 2006 2007 2006 2007 2006 Notes US$'m US$'m US$'m US$'m US$'m US$'m Chilean GAAP - Turnover 513.7 490.0 132.9 107.2 77.3 42.1 Mark-to-market of 7(i) 60.3 41.1 3.6 2.9 0.9 1.1provisionally priced sales Reclassification of 7(ii) - - - 6.8 (1.6) 17.2realised (gains)/losses on commodity derivativesto other operatingexpense/reserves ------- ------- ------- ------- ------- -------IFRS - Turnover 574.0 531.1 136.5 116.9 76.6 60.4 ======= ======= ======= ======= ======= ======= (b) EBITDA Los Los El El Michilla Michilla Pelambres Pelambres Tesoro Tesoro Three Three Three Three Three Three months months months months months months ended ended ended ended ended ended 31 March 31 March 31 March 31 March 31 March 31 March 2007 2006 2007 2006 2007 2006 Notes US$'m US$'m US$'m US$'m US$'m US$'m Chilean GAAP - Operating 396.1 381.8 81.4 60.7 38.6 7.4profit Depreciation & amortisation 17.4 16.5 8.7 8.8 4.8 3.5 ------- ------- ------- ------- ------- -------Chilean GAAP - EBITDA 413.5 398.3 90.1 69.5 43.4 10.9 Mark-to-market of 7(i) 60.3 41.1 3.6 2.9 0.9 1.1provisionally priced sales Mark-to-market of 7(ii) - - - (10.5) (1.6) (3.3)financial derivatives Other IFRS and 7(iii) 1.8 (0.4) (0.3) (0.3) 0.9 (0.1)consolidation ------- ------- ------- ------- ------- -------adjustments IFRS - EBITDA 474.8 439.0 93.4 61.6 43.6 8.6 ======= ======= ======= ======= ======= ======= Notes to reconciliation of turnover and EBITDA (i) Copper and molybdenum concentrate sale agreements and copper cathode saleagreements generally provide for provisional pricing of sales at the time ofshipment, with final pricing being based on the monthly average London MetalExchange copper price or monthly average molybdenum price for specified futureperiods. This normally ranges from 30 to 180 days after delivery to thecustomer. Under Chilean GAAP, the Group's accounting treatment is to value sales, whichremain open as to final pricing at the period end, in aggregate at the lower ofprovisional invoice prices and mark-to-market prices at the balance sheet date.The Group determines mark-to-market prices using forward prices at each periodend for copper concentrate and cathode sales, and period-end month averageprices for molybdenum concentrate sales due to the absence of a futures marketfor that commodity. Under IFRS, both gains and losses from the marking-to-market of open sales arerecognised through adjustments to turnover in the income statement and to tradedebtors in the balance sheet. Under IFRS, the Group determines mark-to-marketprices in the same way as under Chilean GAAP. This results in a GAAP adjustment in cases where the mark-to-market prices arehigher than the provisional invoice prices. For Los Pelambres this results in acredit of US$53.5 million in respect of copper concentrate sales, and a creditof US$6.8 million in respect of molybdenum concentrate sales. The adjustment inrespect of El Tesoro is a credit of US$3.6 million, and the adjustment inrespect of Michilla is a credit of US$0.9 million. (ii) The Group uses derivative financial instruments to reduce exposure tocommodity price movements. The Group does not use such derivative instrumentsfor trading purposes. Under Chilean GAAP, such derivatives are held off the balance sheet. Gains orlosses on derivative instruments are matched in the income statement against theitem intended to be hedged. Such gains or losses are reflected by way ofadjustment to turnover. The Group has applied the hedge accounting provisions of IAS 39 "FinancialInstruments: Recognition and Measurement" with effect from 1 January 2007. Fromthat date, changes in the fair value of derivative financial instruments thatare designated and effective as hedges of future cash flows have been recogniseddirectly in equity, with any ineffective portion recognised immediately in theincome statement. Realised gains and losses on commodity derivatives recognisedin the income statement have been recorded within turnover. Prior to 1 January2007 derivatives were measured at fair value through the income statement, withgains or losses on commodity derivatives being recorded within other operatingincome or expense. For the comparative periods, any amounts included in turnoverunder Chilean GAAP were reclassified accordingly. (iii) Other IFRS and consolidation adjustments are not material eitherindividually or in aggregate. This information is provided by RNS The company news service from the London Stock Exchange