Antofagasta Regulatory News (ANTO)

29 Nov 2007 10:00

Antofagasta PLC29 November 2007 Antofagasta plc Unaudited Results for the Third Quarter ended 30 September 2007 London, 29 November 2007 Highlights Nine Nine months months ended ended 30 September 30 September Full year 2007 2006 Change 2006 US$'m US$'m % US$'m Group turnover 2,838.6 2,980.4 -4.8% 3,870.0 ======== ======== ========Group EBITDA 2,152.0 2,292.8 -6.1% 2,957.3 ======== ======== ======== Turnover Group turnover in the nine months ended 30 September 2007 was US$2,838.6 millioncompared with US$2,980.4 million in the same period of 2006, reflecting reducedcopper sales volumes and lower realised copper prices, partly offset by highermolybdenum volumes and prices, and lower tolling charges. LME copper prices averaged 321.5 cents per pound compared with 299.9 cents perpound in the nine months ended 30 September 2006. Pricing adjustments onprovisionally invoiced sales, while remaining positive, were lower than thecomparable period in 2006, resulting in an average realised copper price of348.1 cents per pound compared with 354.2 cents per pound in the nine monthsended 30 September 2006. Market molybdenum prices, which did not differsignificantly from prices realised by Los Pelambres, averaged US$29.5 per poundin the nine months to 30 September 2007, an increase from the average price ofUS$24.5 per pound in the comparative nine month period. The volume of copper sold was 298,700 tonnes (nine months ended 30 September2006 - 339,100 tonnes). The decrease was partly due to lower production of312,600 tonnes in the period (nine months ended 30 September 2006 - 334,300tonnes), mainly as a result of reduced ore grades at Los Pelambres. Sales in the2007 period were also affected by timing differences in shipping and loadingschedules which resulted in an increase in inventories at the end of Septemberwhich were shipped in October. Molybdenum sales and production volumes in theperiod were 7,400 tonnes (nine months ended 30 September 2006 - sales volume of6,900 tonnes and production volume of 7,000 tonnes). The transport and water divisions continued to perform well, with bothbusinesses generating increased volumes and revenues. 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 third quarterproduction report released on 31 October 2007. EBITDA Group EBITDA in the nine months ended 30 September 2007 was US$2,152.0 million,compared with US$2,292.8 million in the nine months ended 30 September 2006. Thedecrease in EBITDA mainly resulted from the reduction in turnover describedabove and higher on-site and shipping costs at the Group's mining operations,partly offset by lower costs for the Group's commodity hedging programmecompared with the nine months ended 30 September 2006. As reported on 31 October 2007, weighted average cash costs for the Group'smining operations, which are stated net of by-product credits, were 30.2 centsper pound in the nine months ended 30 September 2007. This compared with 41.0cents per pound in the comparative period in 2006. The decrease was largely dueto improved by-product credits and lower tolling charges at Los Pelambres, bothof which are included in the financial statements within turnover. By-productcredits (expressed in cents per pound of copper produced) improved as a resultof the higher molybdenum prices and volumes outlined above, as well as theimpact of the reduced copper production in the period. Tolling charges werelower as a result of lower benchmark terms for the 2007 calendar year ascompared with 2006 and reduced price participation with smelters. Weighted average on-site and shipping costs (excluding by-product credits andtolling charges) were 88.1 cents per pound (nine months ended 30 September 2006- 67.7 cents per pound). Further details of the cash costs of each mine aregiven in the Group's third quarter production report of 31 October 2007. The amount recognised in the income statement during the current period inrespect of the Group's commodity hedging programme was a loss of US$11.8million, recorded within turnover as the Group has applied the hedge accountingprovisions of IAS 39 "Financial Instruments: Recognition and Measurement" witheffect from 1 January 2007. This loss recognised during the current periodrelates to commodity instruments which matured during the period. During thenine months ended 30 September 2006 a charge of US$94.7 million was recognisedin respect of commodity hedging, recorded within other operating expenses. 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. Details of commodityinstruments are given in Note 5. Basis of Information The Group turnover and EBITDA figures included in this release for thenine-month period ended 30 September 2007 are presented on a basis consistentwith the accounting policies used in the Group's 2006 Annual Report andFinancial Statements (except in relation to the application by the Group of thehedge accounting 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 thenine-month period ended 30 September 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 whichrequires 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. Enquiries London Santiago Investor relations - Antofagasta plc Antofagasta Minerals S.A. Tel: +44 20 7808 0988 Tel +562 798 7145 www.antofagasta.co.uk Alejandro Rivera Desmond O'Conor Email: arivera@aminerals.cl Email: doconor@antofagasta.co.uk Hussein Barma Email: hbarma@antofagasta.co.uk Media enquiries - Bankside Consultants Tel: +44 20 7367 8873 Keith Irons keith@bankside.com Oliver Winters oliver.winters@bankside.com Notes 1. General information and accounting policies These unaudited third quarter results are for the nine-month period ended 30September 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 nine 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 nine month periods ending 30 September2006 and 30 September 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 ------------ ------- Nine months Nine months Full Nine months Nine months Full ended ended year ended ended year 30 30 2006 30 30 2006 September September September September 2007 2006 2007 2006 000 tonnes 000 tonnes 000 tonnes 000 tonnes 000 tonnes 000 tonnes CopperLos Pelambres 208.4 230.4 324.2 192.9 233.2 324.8El Tesoro 69.4 68.4 94.0 70.6 69.6 95.3Michilla 34.9 35.4 47.3 35.2 36.3 47.7 --------- -------- ------- --------- -------- -------Group total 312.6 334.3 465.5 298.7 339.1 467.8 ========= ======== ======= ========= ======== ======= MolybdenumLos Pelambres 7.4 7.0 9.8 7.4 6.9 9.9 ========= ======== ======= ========= ======== ======= (b) Cash costs per pound of copper produced and realised prices per pound ofcopper and molybdenum sold Cash cost Realised prices ----------- ----------------- Nine months Nine Full Nine months Nine Full ended months year ended months year ended 2006 ended 2006 30 30 30 30 September September September September 2007 2006 2007 2006 US cents US cents US cents US cents US cents US cents CopperLos Pelambres (12.1) 17.2 16.4 358.5 369.1 335.0El Tesoro 103.4 78.3 78.6 334.3 320.5 316.4Michilla 137.7 123.9 126.4 318.8 322.8 318.5 --------- -------- ------- --------- -------- -------Group weighted average 30.2 41.0 40.2 348.1 354.2 329.5(net of by-products) ========= ======== ======= ========= ======== ======= Group weighted average 108.4 95.7 95.6(before deducting ========= ======== =======by-products) Cash costs at LosPelambres comprise:On-site and shipping 74.7 55.9 56.4costTolling charges for 30.4 40.6 39.7concentrates --------- -------- -------Cash costs before 105.1 96.5 96.1deducting by-productcreditsBy-product credits (117.2) (79.4) (79.7)(principally --------- -------- -------molybdenum)Cash costs (net of (12.1) 17.2 16.4by-product credits) ========= ======== ======= LME average 321.5 299.9 305.3 ========= ======== ======= US$ US$ US$MolybdenumLos Pelambres 31.7 25.2 24.6 ========= ======== ======= Market average price 29.5 24.5 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) Excluding by-product credits (which are reported as part ofturnover) and tolling charges for concentrates (which are deducted fromturnover), weighted average cash costs for the Group (comprising on-site andshipping costs in the case of Los Pelambres and cash costs in the case of theother two operations) increased from 67.7 cents per pound in the first ninemonths of 2006 to 88.1 cents per pound in the first nine months of 2007 (68.0cents per pound in the year ended 31 December 2006). (v) 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. (vi) The totals in the tables above may include some smallapparent differences as the specific individual figures have not been rounded. (vii) The production information in Note 2(a) and the cash costinformation in Note 2(b) is derived from the Group's production report for thethird quarter of 2007 published on 31 October 2007. 3. Turnover and EBITDA analysed by business segment Turnover EBITDA ---------- -------- Nine Nine Full year Nine Nine Full year months months 2006 months months 2006 ended ended ended ended 30 30 30 30 September September September September 2007 2006 2007 2006 US$'m US$'m US$'m US$'m US$'m US$'m Los Pelambres 1,936.5 2,103.7 2,701.3 1,626.9 1,812.0 2,297.0El Tesoro 520.2 491.8 664.8 338.7 329.6 456.0Michilla 247.4 258.3 334.9 140.7 110.3 158.4Exploration - - - (21.8) (14.9) (21.5)Corporate and other - - - 0.7 (8.0) (16.9)items --------- -------- ------- --------- -------- -------Mining 2,704.1 2,853.8 3,701.0 2,085.2 2,229.0 2,873.0Railway and other 85.2 79.5 105.3 36.1 32.4 42.9transport servicesWater concession 49.3 47.1 63.7 30.7 31.4 41.4 --------- -------- ------- --------- -------- -------Group turnover and 2,838.6 2,980.4 3,870.0 2,152.0 2,292.8 2,957.3EBITDA ========= ======== ======= ========= ======== ======= Turnover at Los Pelambres by mineral: Before deducting tolling Tolling charges Net of tolling charges charges ----------------- ------------------------ ----------------------------- Nine Nine Full year Nine Nine Full Nine Nine Full year months months 2006 months months year months months 2006 ended ended ended ended 2006 ended ended 30 30 30 30 30 30 September September September September September September 2007 2006 2007 2006 2007 2006 US$'m US$'m US$'m US$'m US$'m US$'m US$'m US$'m US$'m Copper 1,524.6 1,897.7 2,399.0 (120.8) (192.5) (254.0) 1,403.8 1,705.2 2,145.0 Molybdenum 516.3 383.1 536.4 (18.1) (16.0) (22.6) 498.2 367.1 513.8Gold and 35.0 31.9 43.1 (0.5) (0.5) (0.6) 34.5 31.4 42.5silver ------- ------- ------ ------- ------- ------ ------- ------- ------Los 2,075.9 2,312.7 2,978.5 (139.4) (209.0) (277.2) 1,936.5 2,103.7 2,701.3Pelambres ======= ======= ====== ======= ======= ====== ======= ======= ====== 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$7.5million (nine months ended 30 September 2006 - US$6.8 million; full year 2006 -US$9.6 million). Turnover from the water concession is stated after elimination inter-segmentalsales to the transport and mining divisions of US$0.3 million (nine months ended30 September 2006 - US$0.6 million; full year 2006 - US$0.6 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 losses oncommodity derivatives at Michilla of US$11.9 million, and gains of US$0.1million at El Tesoro. The classification of these amounts within turnover is dueto the application of the hedge accounting provisions of IAS 39 "FinancialInstruments: Recognition and Measurement" with effect from 1 January 2007. Priorto this point, gains and losses on commodity derivatives were included in otheroperating income or expense. In the comparative periods, other operating expenseincluded losses at El Tesoro of US$46.9 million in the nine months ended 30September 2006 and US$44.8 million in the 2006 full year, and losses at Michillaof US$47.8 million in the nine months ended 30 September 2006 and US$39.7million in the 2006 full year. Further details of such gains or losses are givenin 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. (vi) An adjustment of US$4.2 million has been made to thecomparative EBITDA of the water concession for the period ended 30 September2006 as a result of a classification between depreciation and cash operatingcosts. The adjustment had no effect on turnover or operating profit for thatperiod and there have been no adjustments required to the comparative amountsfor the 2006 full year. 4. Embedded derivatives - provisionally priced sales Copper and molybdenum concentrate sale agreements and copper cathode saleagreements generally provide for provisional pricing of sales at the time ofshipment, with final pricing being based on the monthly average London MetalExchange copper price or monthly average molybdenum price for specified futureperiods. This normally ranges from 30 to 180 days after delivery to thecustomer. Under IFRS, both gains and losses from the marking-to-market of open sales arerecognised through adjustments to turnover in the income statement and to tradedebtors in the balance sheet. The Group determines mark-to-market prices usingforward prices at each period end for copper concentrate and cathode sales, andperiod-end month average prices for molybdenum concentrate sales due to theabsence of a futures market for that commodity. The mark-to-market adjustments at the end of each period and the effect onturnover in the income statement for each period are as follows: Balance sheet - ------------------ net mark to market effect on debtors ------------------------------------- At 30.09.07 At 30.09.06 At 31.12.06 US$'m US$'m US$'mLos Pelambres - copper 30.9 (2.7) (110.1)concentrateLos Pelambres - tolling (8.5) (0.9) 7.6charges for copperconcentrateLos Pelambres - molybdenum (0.1) 7.0 (3.9)concentrateEl Tesoro - copper cathodes 2.7 0.1 1.3Michilla - copper cathodes 1.3 (0.1) (0.6) -------- -------- -------- 26.3 3.4 (105.7) ======== ======== ======== (a) Copper sales Nine months ended Nine months ended Full year 2006 30 September 2007 30 September 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 1,342.2 512.7 255.5 1,529.7 471.8 245.2 2,175.5 653.1 326.0invoiced grosssales ------- ------ ------ ------ ------ ------ ------ ------ ------Effects ofpricing adjustments toprevious period invoices 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 thepreviousperiod Settlement of (88.1) (6.6) (3.2) 169.2 22.1 0.6 169.2 2.0 0.6copper sales invoiced inthe previousperiod ------- ------ ------ ------ ------ ------ ------ ------ ------ Total effect 22.0 (7.9) (2.6) 136.0 21.9 0.7 136.0 1.8 0.7of adjustmentsto previousperiodinvoices inthe currentperiod Effects ofpricing adjustments tocurrent periodinvoices ------- ------ ------ ------ ------ ------ ------ ------ ------Settlement of 129.5 12.6 5.1 234.7 (2.0) 12.5 197.6 8.6 8.8copper salesinvoiced inthe currentperiod Mark-to-market 30.9 2.7 1.3 (2.7) 0.1 (0.1) (110.1) 1.3 (0.6)adjustments at the end of thecurrent period ------- ------ ------ ------ ------ ------ ------ ------ ------Total effect 160.4 15.3 6.4 232.0 (1.9) 12.4 87.5 9.9 8.2of adjustmentsto currentperiodinvoices Impact of - 0.1 (11.9) - - - - - -commodityderivativesrecognisedwithinturnover ------- ------ ------ ------ ------ ------ ------ ------ ------Turnover 1,524.6 520.2 247.4 1,897.7 491.8 258.3 2,399.0 664.8 334.9beforedeductingtollingcharges Tolling (120.8) - - (192.5) - - (254.0) - -charges ------- ------ ------ ------ ------ ------ ------ ------ ------Turnover net 1,403.8 520.2 247.4 1,705.2 491.8 258.3 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 30 September 2007, salestotalling 80,800 tonnes remained open as to price, with an averagemark-to-market price of 364.8 cents per pound compared with an averageprovisional invoice price of 347.4 cents per pound. At 30 September 2006, salestotalling 117,300 tonnes remained open as to price, with an averagemark-to-market price of 342.4 cents per pound compared with an averageprovisional invoice price of 344.6 cents per pound. At 31 December 2006, salestotalling 127,100 tonnes remained open as to price, with an averagemark-to-market price of 287.0 cents per pound compared with an averageprovisional invoice price of 326.3 cents per pound. Tolling charges include a mark-to-market loss for copper concentrate sales openas to price at 30 September 2007 of US$8.5 million (30 September 2006 - loss ofUS$0.9 million, 31 December 2006 - gain of US$7.6 million). Copper cathodes Copper cathode sales at El Tesoro and Michilla have an average settlement periodof approximately one month from shipment date. At 30 September 2007, salestotalling 11,200 tonnes remained open as to price, with an averagemark-to-market price of 365.9 cents per pound compared with an averageprovisional invoice price of 350.2 cents per pound. At 30 September 2006, salestotalling 12,800 tonnes remained open as to price, with an averagemark-to-market price of 343.3 cents per pound compared with an averageprovisional invoice price of 343.4 cents per pound. At 31 December 2006, salestotalling 11,600 tonnes remained open as to price, with an averagemark-to-market price of 286.6 cents per pound compared with an averageprovisional invoice price of 294.0 cents per pound. (b) Molybdenum sales Nine months Nine months Year ended ended 30 30 ended September September 31.12.06 2007 2006 US$'m US$'m US$'m Los Los Los Pelambres Pelambres Pelambres Molybdenum Molybdenum Molybdenum concentrate concentrate concentrate Provisionally invoiced gross sales 489.3 383.2 547.8 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 (1.0) (27.5) (27.5)invoiced in the previous period Total effect of adjustments to 1.4 (14.9) (14.9)previous period invoices in thecurrent period Effects of pricing adjustments tocurrent period invoicesSettlement of molybdenum sales 25.7 7.8 5.9invoiced in the current period Mark-to-market adjustments at the end (0.1) 7.0 (2.4)of the current period Total effect of adjustments to 25.6 14.8 3.5current period invoices Turnover before deducting tolling 516.3 383.1 536.4charges Tolling charges (18.1) (16.0) (22.6) Turnover net of tolling charges 498.2 367.1 513.8 Molybdenum sales at Los Pelambres have an average settlement period ofapproximately three months after shipment date. At 30 September 2007, salestotalling 2,100 tonnes remained open as to price, with an average mark-to-marketprice of US$31.9 per pound compared with an average provisional invoice price ofUS$31.9 per pound. At 30 September 2006, sales totalling 1,700 tonnes remainedopen as to price, with an average mark-to-market price of US$27.6 per poundcompared with an average provisional invoice price of US$26.3 per pound. At 31December 2006, sales totalling 2,100 tonnes remained open as to price, with anaverage mark-to-market price of US$25.0 per pound compared with an averageprovisional invoice price of US$25.5 per pound. 5. Commodity derivatives The Group periodically uses derivative financial instruments to reduce exposureto commodity price movements. The Group does not use such derivative instrumentsfor speculative trading purposes. The Group has applied the hedge accounting provisions of IAS 39 "FinancialInstruments: Recognition and Measurement" with effect from 1 January 2007. Fromthat date, changes in the fair value of derivative financial instruments thatare designated and effective as hedges of future cash flows have been recogniseddirectly in equity, with such amounts subsequently recognised in the incomestatement in the period when the hedged item affects profit or loss. Anyineffective portion is recognised immediately in the income statement. Realisedgains and losses on commodity derivatives recognised in the income statementhave been recorded within turnover. Prior to 1 January 2007 derivatives weremeasured at fair value through the income statement, with gains or losses oncommodity derivatives being recorded within other operating income or expense. The balance sheet mark-to-market adjustments at the end of each period and thetotal effect of commodity derivatives on operating profit in the incomestatement for each period are as follows: Balance sheet Income statement --------------- ------------------ Net financial asset/(liability) Total effect --------------------------------- -------------- At At At 31.12.06 Nine Nine Full year 30.09.07 30.09.06 months months 2006 ended ended 30 30 September September 2007 2006 US$'m US$'m US$'m US$'m US$'m US$'mEl Tesoro (21.4) (19.5) - 0.1 (46.9) (44.8)Michilla (7.7) (8.9) 7.3 (11.9) (47.8) (39.7) -------- -------- -------- -------- -------- -------- (29.1) (28.4) 7.3 (11.8) (94.7) (84.5) ======== ======== ======== ======== ======== ======== The balance sheet mark-to-market effect is stated before taking into account anypayments on account of margin calls. The US$11.8 million loss recognised within turnover during the nine months ended30 September 2007 related to amounts realised on derivatives which matured inthe period. During the period net mark-to-market losses before tax and minorityinterests of US$29.1 million were recognised within reserves (US$22.1 millionafter tax and minority interests). The Group had min/max instruments at 30 September 2007 for 73,200 tonnes ofcopper production (of which 68,400 tonnes relate to El Tesoro and 4,800 tonnesrelate to Michilla), covering a period up to 31 December 2009. The weightedaverage remaining period covered by these hedges calculated with effect from 1October 2007 is 12.7 months. The instruments have a weighted average floor of255.5 cents per pound and a weighted average cap of 387.6 cents per pound. At 30 September 2007, the Group also had futures at Michilla for 4,200 tonnes ofcopper production, covering a period up to 31 December 2007. The weightedaverage remaining period covered by these hedges was 2.0 months and the weightedaverage price was 305.9 cents. It also had futures to both buy and sell copperproduction at El Tesoro, with the effect of swapping COMEX prices for LME priceswithout eliminating underlying market price exposure, covering a period to 31January 2008. The remaining weighted average period covered by these instrumentswas 2.5 months and the weighted average price was 312.0 cents. Between 30 September 2007 and the date of this report the Group has entered intoadditional min/max instruments for 3,600 tonnes of copper production atMichilla, covering a period up to 31 December 2008. The weighted average periodcovered by these instruments calculated with effect from 1 October 2007 is 9.5months. The instruments have a weighted average floor of 250.0 cents per poundand a weighted average cap of 500.0 cents per pound. 6. Summary of mining companies' Chilean GAAP financial statements (See notes following Note 6(c)). The balance sheets, income statements and cash flow statements prepared underChilean GAAP and to be filed with the SVS are summarised below. (a) Balance sheets Los Los El Tesoro El Tesoro Michilla Michilla Pelambres Pelambres At At At At At At 30.09.2007 30.09.2006 30.09.2007 30.09.2006 30.09.2007 30.09.2006 US$'m US$'m US$'m US$'m US$'m US$'m Cash and cash 554.4 539.2 466.0 116.7 67.6 36.4equivalentsTrade and other 315.2 420.3 70.0 65.0 27.7 19.8receivablesInventories 75.2 46.9 37.4 51.4 18.5 2.3Current and deferred 33.8 6.5 4.1 2.9 5.3 17.9tax assets -------- -------- -------- -------- -------- -------- Current assets 978.6 1,012.9 577.5 236.0 119.1 76.4 Fixed assets 1,678.0 1,406.2 249.9 259.6 47.1 59.2 Other non-current 151.5 149.8 42.7 54.7 1.4 0.6assets -------- -------- -------- -------- -------- -------- TOTAL ASSETS 2,808.1 2,568.9 870.1 550.3 167.6 136.2 ======== ======== ======== ======== ======== ======== Short term 86.0 87.4 14.4 14.6 - -borrowingsTrade and other 504.6 116.4 41.4 37.2 69.7 21.4payablesCurrent and deferred - 92.1 10.8 29.3 10.5 10.6tax liabilities -------- -------- -------- -------- -------- -------- Current liabilities 590.6 295.9 66.6 81.1 80.2 32.0 -------- -------- -------- -------- -------- -------- Medium and long term 191.7 273.1 7.0 21.0 - -borrowingsTrade and other 14.4 13.9 7.6 6.2 8.6 7.5payablesDeferred tax 146.6 135.9 32.4 30.3 - -liabilities -------- -------- -------- -------- -------- -------- Non-current 352.7 422.9 47.0 57.5 8.6 7.5liabilities -------- -------- -------- -------- -------- -------- Total liabilities 943.3 718.8 113.6 138.6 88.8 39.5 -------- -------- -------- -------- -------- -------- Share capital 373.8 373.8 91.0 91.0 78.4 78.4Reserves 1,491.0 1,476.3 665.5 320.7 0.4 18.3 -------- -------- -------- -------- -------- -------- Total shareholders' 1,864.8 1,850.1 756.5 411.7 78.8 96.7equity -------- -------- -------- -------- -------- -------- ======== ======== ======== ======== ======== ========TOTAL LIABILITIES 2,808.1 2,568.9 870.1 550.3 167.6 136.2ANDSHAREHOLDERS' EQUITY ======== ======== ======== ======== ======== ======== (b) Income statements Los Los El Tesoro El Tesoro Michilla Michilla Pelambres Pelambres Nine Nine Nine Nine Nine Nine months months months months months months ended ended ended ended ended ended 30 30 30 30 30 30 September September September September September September 2007 2006 2007 2006 2007 2006 US$'m US$'m US$'m US$'m US$'m US$'m Turnover 1,913.1 2,130.0 517.5 447.6 253.2 192.0 Operating costs (316.3) (288.8) (183.4) (129.1) (112.5) (102.9) -------- -------- -------- -------- -------- -------- Operating margin 1,596.8 1,841.2 334.1 318.5 140.7 89.1 Administrative and (54.9) (54.3) (22.1) (20.2) (11.9) (11.9)distribution expenses -------- -------- -------- -------- -------- -------- Operating profit 1,541.9 1,786.9 312.0 298.3 128.8 77.2 -------- -------- -------- -------- -------- -------- Other income 7.8 0.7 0.5 0.2 2.3 0.3Financial income 24.3 26.8 13.6 1.8 2.9 1.2Financial expenses (13.8) (16.4) (2.2) (2.4) (0.2) (0.2)Other expenses (1.9) (1.4) (1.6) (1.1) (0.1) (0.4)Exchange difference 6.5 1.1 (0.9) 2.2 0.6 0.8 -------- -------- -------- -------- -------- -------- Net non-operating income 22.9 10.8 9.4 0.7 5.5 1.7/(expenses) -------- -------- -------- -------- -------- -------- Profit before tax 1,564.8 1,797.7 321.4 299.0 134.3 78.9 Income tax expense (294.0) (333.1) (57.0) (55.8) (25.3) (15.2) -------- -------- -------- -------- -------- -------- Profit for the financial 1,270.8 1,464.6 264.4 243.2 109.0 63.7period ======== ======== ======== ======== ======== ======== (c) Cash flow statements Los Los El Tesoro El Tesoro Michilla Michilla Pelambres Pelambres Nine Nine Nine Nine Nine Nine months months months months months months ended ended ended ended ended ended 30 30 30 30 30 30 September September September September September September 2007 2006 2007 2006 2007 2006 US$'m US$'m US$'m US$'m US$'m US$'m Net cash flow from 1,199.4 1,435.1 262.8 238.1 110.3 79.5operating activities -------- -------- -------- -------- -------- -------- Investing activitiesAdditions to fixed (207.9) (344.9) (8.8) (8.9) (6.8) (8.2)assetsDisposals of fixed 7.1 1.4 - - - -assetsOther items - - - - - (0.1) -------- -------- -------- -------- -------- -------- Net cash used in (200.8) (343.5) (8.8) (8.9) (6.8) (8.3)investing activities -------- -------- -------- -------- -------- -------- Financing activitiesDividends paid (886.4) (1,070.0) - (95.0) (105.4) (50.0) Loans repaid (43.1) (43.1) (7.0) (21.0) - - -------- -------- -------- -------- -------- -------- Net cash used in (929.5) (1,113.1) (7.0) (116.0) (105.4) (50.0)financing activities -------- -------- -------- -------- -------- -------- Net increase in cash and 69.1 (21.5) 247.0 113.2 (1.9) 21.2cash 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 554.4 539.2 466.0 116.7 67.6 36.4equivalents 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 Tesoro El Tesoro Michilla Michilla Pelambres Pelambres Nine Nine Nine Nine Nine Nine months months months months months months ended ended ended ended ended ended 30 30 30 30 30 30 September September September September September September 2007 2006 2007 2006 2007 2006 Notes US$'m US$'m US$'m US$'m US$'m US$'m Chilean GAAP - 1,913.1 2,130.0 517.5 447.6 253.2 192.0Turnover Mark-to-market of 7(i) 23.4 (26.2) 2.6 (0.2) 1.4 (0.1)provisionally pricedsales Reclassification of 7(ii) - - 0.1 44.4 (7.2) 66.4realised (gains)/ -------- ------- ------- ------- ------- -------losses on commodityderivatives to otheroperating expense/reserves IFRS - Turnover 1,936.5 2,103.7 520.2 491.8 247.4 258.3 ======== ======= ======= ======= ======= ======= (b) EBITDA Los Los El Tesoro El Tesoro Michilla Michilla Pelambres Pelambres Nine Nine Nine Nine Nine Nine months months months months months months ended ended ended ended ended ended 30 30 30 30 30 30 September September September September September September 2007 2006 2007 2006 2007 2006 Notes US$'m US$'m US$'m US$'m US$'m US$'m Chilean GAAP - 1,541.9 1,786.9 312.0 298.3 128.8 77.2Operating profit Depreciation & 51.9 52.6 26.9 29.5 14.4 13.6amortisation -------- ------- ------- ------- ------- ------- Chilean GAAP - EBITDA 1,593.8 1,839.5 338.9 327.8 143.2 90.9 Mark-to-market of 7(i) 23.4 (26.2) 2.6 (0.2) 1.4 (0.1)provisionally pricedsales Mark-to-market of 7(ii) - 0.3 0.1 (2.5) (7.2) 18.6financial derivatives Other IFRS and 7 9.7 (1.6) (2.9) 4.5 3.3 0.9consolidation (iii) -------- ------- ------- ------- ------- -------adjustments IFRS - EBITDA 1,626.9 1,812.0 338.7 329.6 140.7 110.3 ======== ======= ======= ======= ======= ======= 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$23.4 million in respect of copper concentrate sales. The adjustmentin respect of El Tesoro is a credit of US$2.6 million, and the adjustment inrespect of Michilla is a credit of US$1.4 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