Antofagasta Regulatory News (ANTO)

NEWS RELEASE, 26 AUGUST, 2014

HALF YEARLY FINANCIAL REPORT FOR THE SIX MONTHS ENDED 30 JUNE 2014

FOCUS ON TWO 'WORLD CLASS' MINING DISTRICTS

Financial performance

· Revenue 4.2% lower, at $2,661.4 million, following realised copper prices falling by 2.2% as prices trended downwards during the period, and lower gold sales and realised prices

· EBITDA fell 11.5% to $1,128.3 million,reflecting decreased revenue and increased net cash costs

· EBITDA margin remains strong at 42.4%

· Net earnings fell 16.3% to $330.8 million, in line with the decrease in EBITDA

· Operating cash flow generation of $1,170.0 million in the period, compared with $1,373.5 million in the first half of 2013

· Interim dividend of 11.7 cents per share, representing a 35% pay-out ratio of the half year net earnings

· Capital expenditure of $767.3 million in first six months, full year outlook is reduced by $200 million to $1.7 billion due to expected delays in the timing of payments at Antucoya

· Group attributable net cash of $403.5 million, following payment of large 2013 final dividend and ongoing capital expenditure programme

Operational performance

· Group copper production in H1 2014 was 348,200 tonnes, 4.4% lower than in the same period last year primarily due to lower grades at Los Pelambres and Esperanza

· Group cash costs (before by-product credits) were $1.87/lb, 6.3% higher than 2013 primarily due to the one-off signing bonuses made by Los Pelambres and Esperanza to their respective labour unions

· Group net cash costs were $1.46/lb, up 15.9% compared to 2013 reflecting lower gold and molybdenum volumes and lower gold prices

· Group guidance for the year remains unchanged, with production of copper expected to be 700,000 tonnes at a net cash cost of $1.45/lb

Project update

· Merger of Esperanza and El Tesoro into one single operation, Minera Centinela, announced in June

· Cost reduction initiatives are underway across the Group which are intended to produce significant cost savings in 2015 and beyond

· Antucoya project progressing on-time and on-budget, with 74% construction progress as at 30 June 2014

· Feasibility studies on Encuentro Oxides and the Los Pelambres incremental expansion both expected to be completed by end of 2014

· Primary focus remains on utilising brownfield growth to deliver greatest returns, including increasing throughput at Esperanza to 105ktpd, the Los Pelambres expansion and Encuentro Oxides projects.

(1) Cash refers to the total of cash, cash equivalents and liquid investments, as analysed in Note 16 to the preliminary results announcement.

(2) Cash cost is a method used by the mining industry to express the cost of production in US dollars per pound of copper and is further explained in Note 30(b)) to the preliminary results announcement.

Antofagasta Minerals CEO Diego Hernandez said: "I am pleased to report a good set of financials for the first six months of 2014, despite the current weaker market conditions. While copper production in the first half of the year was ahead of original expectations, we do not believe that there will be any changes to our copper guidance for the full year.

This half year has seen the continued progress in our strategy of optimising our current asset base within Chile. The recently announced merger of Esperanza and El Tesoro to form Minera Centinela will create value and savings for the existing business and also supports the longer-term development of the Centinela Mining District. Antofagasta has two 'world class' mining districts with a total of some 13 billion tonnes of resources These districts lie at the heart of our business and provide optionality as to how we grow in the medium to long term and this merger is one step in the process of realising the full potential of the Centinela Mining District.

We continue to operate in a challenging market, however, we believe that the market fundamentals for copper are strong. Despite recent increases in new mine supply from various projects coming on-stream, the market remains balanced, contrary to expectations earlier in the year that a supply surplus would emerge."

Investors - London Media (Brunswick)

Andrew Lindsay alindsay@antofagasta.co.uk Carole Cable antofagasta@brunswickgroup.com

Telephone +44 (0) 207 808 0988 Robin Wrench antofagasta@brunswickgroup.com

Telephone +44 (0) 207 404 5959

Investors - Santiago

Alejandro Rivera arivera@aminerals.cl

Telephone +56 2 2798 7000

DIRECTORS' COMMENTS FOR THE SIX MONTHS ENDED 30 JUNE 2014

FINANCIAL

Group revenues for the first six months of the year were $2,661.4 million, 4.2% lower than in the same period last year as the average LME copper price decreased by 8.3% to $3.14/lb. The realised copper price fell by 2.2% to $3.08/lb between the two periods reflecting the declining trend in the copper price during this period.

EBITDA for the current period was $1,128.3 million, a 11.5% decrease on the equivalent period in 2013, primarily reflecting the lower revenues and a 15.9% increase in net cash costs, which were partially offset by lower exploration and evaluation expenditure. This has resulted in earnings per share for the period of 33.6 cents per share, a 16.2% decrease compared with the comparative period.

The interim ordinary dividend of 11.7 cents per share, represents a 35% pay-out of the half year earnings per share and is consistent with the new dividend policy which was approved by the Board earlier this year.

PRODUCTION AND CASH COSTS

Group copper production in the first half of 2014 was slightly ahead of expectations at 348,200 tonnes, 4.4% lower than in the same period last year primarily due to lower grades at Los Pelambres and Centinela Concentrates (formerly Esperanza). Group gold production was 123,900 ounces in the first six months of the year, 39,000 ounces less than in the first half of 2013 as a result of significantly lower grades and recoveries at Esperanza. Molybdenum production at Los Pelambres was 3,300 tonnes in the first half of 2014, compared with 4,700 tonnes in the first six months of 2013, principally due to lower grade.

Group cash costs before by-product credits in the first half of 2014 were $1.87/lb, a 6.3% increase compared with the same period last year. This increase mainly related to the one-off signing bonuses made by Los Pelambres and Centinela Concentrates with their respective labour unions.

Net cash costs for the first half of 2014 at $1.46/lb were consistent with guidance for the year, 15.9% higher than the same period last year primarily due to the lower by-product credit at Centinela Concentrates and ceased mining activities at El Tesoro's lower cash cost Mirador pit.

The Group remains on track to meet its full year guidance of 700,000 tonnes of copper, 270,000 ounces of gold and 7,500 tonnes of molybdenum and net cash costs of $1.45/lb.

CENTINELA MERGER

In Chile the Group is focusing its mining activities on two districts, Los Pelambres and Centinela. As the latest stage of this process the Group is merging Esperanza and El Tesoro into a single operating company, Minera Centinela, and expects this to be completed during the fourth quarter of this year. Centinela and Los Pelambres are two of the largest mining districts in Chile with a total of some 14 billion tonnes of resources.

The merger will not only provide a greater focus for the Group's activities in the Centinela Mining District, but will also lead to value creation through operational synergies. These synergies will arise from the sharing of operational overheads, integration of the mine plans of the two operations, sharing of mining properties and facilities, such as waste ore dumps, economies of scale from tendering larger contracts, combining the management team and operating a single, more flexible mining fleet deployment.

This merger also opens up further potential opportunities and synergies through future development of the Centinela Mining District.

TAX

As previously announced, in April a comprehensive tax reform bill was presented to the Chilean National Congress. The key proposed tax changes set out in the bill which will impact the Group relate to corporate tax and withholding tax.

The bill has been passed by the Chamber of Deputies, but following a period of deliberation by the Senate a number of changes to the original bill have been proposed, including an alternative corporate and withholding tax structure.

The amended bill was returned to the Chamber of Deputies where further amendments have been introduced and the bill is expected to re-presented to the Senate for approval in August or September. As certain parts of the bill are intended to be retrospective to the beginning of this year the Government is keen that the bill is passed as soon as possible to allow adequate time for their implementation. It is therefore expected that the bill will be passed by the end of September.

COST REDUCTION

The Group continues to focus on cost control at each of the operations and projects. In 2013, a process began to review all costs including the supply chain, work practices and use of contractors. During the first half of 2014, this review has continued and a number of cost reduction initiatives have been implemented with some operational and capital cost savings already being captured.

The Group is confident that it will continue to achieve significant improvements and will rebase costs to a level from which the growth programme can be implemented over the coming years. The focus is on profitability at each of the operations.

The supply chain has been a key focus of the Group's efforts through the gradual centralisation of all goods purchasing, simplification of supplier base and negotiation of group agreements with key suppliers on significantly improved terms. The Centinela merger is another key area that will offer further operational synergies, as set out above, which will support the cost base of the combined business as well the future development of the Centinela Mining District.

From a project perspective, the Group is assessing the way it approaches the development of new assets. Encuentro Oxides has been identified as the first opportunity to use a larger Antofagasta led project team (larger owner's team) to run the project instead of using a traditional EPCM contractor with the intention of ensuring the Group's aims lie at the heart of the project.

SAFETY

Sadly, during the first half of the year there was a fatality at Centinela Concentrates (formerly Esperanza). This is completely unacceptable and the Board of Directors and Senior Management team extend their heartfelt condolences to the family of Johnny Lara Colman who passed away. The root causes of this fatality have been carefully investigated and actions have been taken to ensure that such incidents do not happen again. The Group is committed to achieving zero fatalities and continually working to strengthen and deepen the safety culture at all of the operations.

Further information on the Group's effort to support and develop safety culture within the business are set out on pages 54-55 of the 2013 Annual Report and Accounts.

OUTLOOK

The Group reiterates production guidance for the full year of 700,000 tonnes of copper, 270,000 ounces of gold and 7,500 tonnes of molybdenum and net cash costs of $1.45/lb.

The expected surplus in the copper market continues not to materialise, but is still expected to occur by the end of the year although with a less significant tonnage than previously anticipated. Economic, industry and financing activities in China all impact on both supply and demand and this is further impacted by developments in Indonesia and variations in the scrap market. Overall the outlook for the copper market looks encouraging in the short to medium term and remains strong in the longer term.

This year will continue to be a year of consolidation in which the Group will create a solid base from which to grow over the coming years. Evaluation procedures are being strengthened and the cost base lowered while the Group invests in projects that will improve operating efficiencies at the operations and generate significant value for the Group and shareholders.

REVIEW OF OPERATIONS AND PROJECTS

MINING DIVISION

LOS PELAMBRES

Operating profit

Operating profit at Los Pelambres was $661.0 million in the first half of 2014, compared with $726.7 million in the first six months of 2013. This decrease in profitability can be explained by two main factors, marginally higher net cash costs and lower realised prices.

Production

Copper production was 196,600 tonnes in the first half of 2014, compared with 203,600 tonnes in the same period last year. This 3.4% decrease in production was mainly due to lower grade, partially offset by improved recoveries.

Molybdenum production of 3,300 tonnes was also lower in the first half of 2014 compared to the same period last year, again due primarily to lower grade. However, guidance for the full year remains at 7,500 tonnes with improved grades expected in the second half of the year. Gold production was 38.3% higher in the first half of 2014 at 33,600 ounces produced and sold, compared with 24,300 ounces in the first six months of 2013.

Costs

Cash costs before by-product credits were $1.62/lb in the first half of the year, $0.04/lb higher than in the same period last year. This 2.5% increase was mostly due to the impact of the one-off labour agreement signed in 2014, partially offset by the weaker Chilean peso. Net cash costs for the first half of 2014 were $1.21/lb, compared with $1.19/lb in the first half of 2013 supported by marginally better by-product credits as gold sales increased, partially offset by lower molybdenum sales.

Capital expenditure

Capital expenditure in the first six months of 2014 was $111.2 million, which included new mine equipment and new mine infrastructure as part of a mine optimisation project. Capital expenditure for the 2014 full year is expected to be approximately $250 million.

Legal update - El Mauro tailings dam

Over the years since the Mauro tailings dam began operating in 2008 there have been a series of legal claims by some members of the Caimanes community who live in the area seeking to stop the operation of the dam. These claims have been through various courts and stages of appeal, but Los Pelambres has always complied with all applicable laws, regulations and controls. To date, Los Pelambres has successfully defended its right to continue operating the dam and the details of certain claims currently before the courts in Chile are set out in Note 17.

CENTINELA CONCENTRATES (PREVIOUSLY ESPERANZA)

Operating profit

The operating profit at Centinela concentrates in the first six months of 2014 was $198.7 million, compared with $271.7 million in the same period last year, this was despite a 62.4% increase in net cash costs during the period as sales were supported by higher volumes. The realised copper price marginally decreased from $3.09/lb in first half of 2013 to $3.06/lb in the same period in 2014, whilst the realised gold price fell 4.4% to $1,377/oz in the period.

Production

Centinela Concentrates produced 82,300 tonnes of copper in the first half of 2014 compared with 90,100 tonnes in the first half of 2013, principally reflecting the lower grade and to a lesser extent, lower recoveries. Gold production in the first half of the year was 34.8% lower than in the same period last year as a result of significantly lower grades and recoveries. Gold production guidance for the full year remains on track, supported by expected higher grades in the second half of the year.

Costs

Compared with the first six months of 2013, cash costs before by-product credits were 11.2% higher, primarily due to payment of a one-off signing bonus to employees following the successful completion of a new four-year agreement in May 2014 and lower production. Net cash costs for the first half of 2014 were $1.60/lb compared with $0.99/lb in the first half of 2013. This increase is primarily due to the significant decrease in gold production and realised price, and the increase in cash costs before by-product credits as explained above.

Capital expenditure

Capital expenditure in the first six months of 2014 was $207.5 million, which included $89.7 million related to the ACD project and $69.1 million on mine equipment and new truck fleet. Capital expenditure for the 2014 full year is expected to be approximately $430 million, which includes approximately $235 million with respect to the ACD project.

ACD project

During the first half of the year, work continued on the optimisation of Centinela concentrates (previously Esperanza) to bring the level of throughput to the original design capacity of 97,000 tonnes per day. This project, which includes the installation of two additional tailings thickeners, crushing equipment and flotation cells, is due to be completed in early 2015.

The total capital expenditure required for this project is approximately $460 million, of which $217 million has been spent as at 30 June 2014. The operation is also undertaking a brownfield expansion which will see a further increase in throughput, further information on this project is included within the projects section below.

Molybdenum plant

The Group is currently undertaking a feasibility study for construction of a separate molybdenum plant which would produce approximately 2,000 tonnes per year of molybdenum. The feasibility study is currently expected to be completed in late 2014 and production could commence from 2016.

CENTINELA CATHODES (PREVIOUSLY EL TESORO)

Operating profit

The operating profit at El Tesoro in the first six months of 2014 was $86.7 million, compared with $196.5 million in the same period last year. This decrease was primarily due to higher cash costs and a 6.6% fall in the realised copper price. Sales volumes were also down as production decreased following a fall in the copper grade.

Production

Production in the first half of 2014 was 11.2% lower than in the same period last year. This decrease was mainly due to the drop in grades and recoveries following completion of mining activities at the higher grade Mirador pit during the last quarter of 2013 and the resumption of mining at the lower grade and higher cost Tesoro Central and Tesoro North-East pits.

Cash costs

Cash costs in the first half of 2014 were 42.4% higher than in the same period last year primarily reflecting the end last year of the lower cost of production from processing the higher grade Mirador ore.

Capital expenditure

Capital expenditure in the first six months of 2014 was $41.9 million, which included capitalised long-term stripping works at the Tesoro Central pit. Capital expenditure is expected to be approximately $130 million for the full year.

MICHILLA

Operating profit

Michilla had an operating profit of $9.7 million in the first six months of 2014, in comparison to a $8.3 million loss in the same period last year. The operating profit was supported by a significant improvement in Michilla's cash costs, which fell from $3.36/lb in the first half of 2013 to $2.38/lb in the same period in 2014. Michilla's realised copper price of $3.34/lb was significantly higher than the other operations due to hedging instruments, which cover approximately 80% of the production in 2014.

Production

Copper production at Michilla was 23,200 tonnes during the first six months of 2014, 24.7% higher than in the same period last year primarily as a result of higher grade and throughput.

Costs

Cash costs for the first half of 2014 were $2.38/lb compared with $3.36/lb in the first half of 2013. This decrease was primarily due to lower stripping costs, less processing of higher cost, third party ores and the weaker peso.

Mine plan extension

Michilla continue to look at feasible options for the extension of mining activities at the operation. At this stage, the Board has made no formal decision on the future of the operation and the current mine plan is set to end by the end of 2015.

GROWTH PROJECTS AND OPPORTUNITIES

The Group is focused on developing its projects and growth opportunities, both around its existing mining districts in Chile and elsewhere in Chile and internationally. The Group's primary focus is on value, to ensure that potential production from existing operations is maximised through debottlenecking and incremental expansions. The Group also has a portfolio of longer term growth options which are currently being evaluated as part of several pre-feasibility and feasibility studies. Given the early-stage nature of some of these projects, their potential and timing are inherently uncertain so the following outline is only intended to provide a high-level indication of potential opportunities.

The Group's exploration and evaluation expenditure in the first six months of 2014 was $93.4 million in comparison to expenditure in the same period last year of $149.6 million.

Projects under construction

Antucoya

Antucoya is an oxide deposit located approximately 45km east of Michilla in Chile's Antofagasta Region. The Group has a 70% economic interest in the project.

During the first half of 2014, good progress has been made on construction with 86% total project progress (including design, engineering, procurement and construction) and 74% construction progress as of 30 June 2014.

The project is on-time and on-budget with first production expected in the second quarter of 2015 and ramp-up to full production of 85,000 tonnes per year of copper cathodes expected by 2016. Cash costs are expected to be approximately $1.80/lb for the first five years of operation. The mine plan includes proved and probable ore reserves of 629 million tonnes of 0.35% copper (using a cut-off grade of 0.16%) over the 20-year mine life.

Total development costs, pre-financing, for the project are expected to be $1.9 billion, of which approximately $1.2 billion has been incurred up to 30 June 2014.

Brownfield growth projects

Given the particular pressure on capital costs in the market at present, the Group is focused on ensuring that production from existing operations is optimised through debottlenecking and incremental plant expansions. Brownfield expansions offer lower risk, lower capital intensive and operational performance and are the focus of the Group's short to medium term production strategy. The Group has three main brownfield projects at its existing operations.

Centinela concentrates incremental expansion to 105,000tpd

A study was undertaken in 2013 which identified that for a small additional capital investment, Centinela concentrates (previously Esperanza) would be able to increase the plant's throughput capacity beyond the 97,000 tonnes per day being provided by the ACD project to 105,000 tonnes per day for the investment of a further $105 million. This project is currently finalising basic engineering and offers attractive investment returns. A significant proportion of the capital expenditure would include the installation of a sixth tailings thickener at the plant as well as further mining equipment to support additional activities. The ramp up to 105,000 tonnes per day is expected to commence in late 2015.

With the merger of Esperanza and El Tesoro this project forms a key part of the development of Centinela concentrates' development strategy.

Los Pelambres

The Group commenced a feasibility study in late 2013 to further evaluate an incremental brownfield expansion which would increase Los Pelambres' daily plant throughput from the current 175,000 tonnes per day to 205,000 tonnes per day, representing a 15% increase.

The feasibility study is expected to be completed by the end of 2014 with the intention to submit an updated environmental study to authorities mid-2015. The brownfield expansion is necessary to provide additional grinding capacity without which the mine would see a drop in throughput levels as the mine plan moves into a harder ore phase towards the end of the decade. However, the expansion has been sized to maximise the capacity of the conveyor running from the mine to the plant and this will result in a net increase in production of an average of 40-45,000 tonnes of copper per year once the project is completed.

Encuentro Oxides

The Group is conducting a feasibility study on the development of Encuentro Oxides to provide feed for Centinela's (previously El Tesoro's) cathodes plant and is expected to produce approximately 50,000 tonnes of copper cathode per year over an eight-year period. This would allow the plant to maintain its annual output at approximately 100,000 tonnes per annum for the remainder of the mine life as opposed to seeing a steady decline in production that would otherwise occur if material was not sourced from Encuentro Oxides.

The Group's approach to the project has changed since commencing the feasibility study in late 2013. As opposed to traditionally engaging an EPCM contractor to manage the project, the Group is building an experienced internal management team (owner's team) to lead the project going forward. This strategy of more closely aligning the interests of those running the project with the Group's should support the project execution, including its timing and cost.

The main capital expenditure items of the project will include a crushing circuit, heap leach facilities and a pipeline to take the copper rich solution to the existing Centinela (previously El Tesoro) SX-EW plant for processing. Additionally, a run-of-mine (ROM) heap will be developed for lower grade copper ore.

Early works relating to pre-stripping commenced in July, with first production expected in 2016.

Preliminary indications of the potential capital cost of the project were approximately $760 million following the pre-feasibility study. However, one focus of the feasibility study is to reduce this figure. The Group will provide further information once the feasibility study is completed in Q4 2014.

Longer term growth projects

Centinela Mining District Development

Following the merger of Esperanza and El Tesoro the Group's development of the Centinela Mining District, which includes the construction of a second concentrator, will now be carried out as part of the integrated Minera Centinela, rather than as a separate project. Over the longer term the Group's ambition is to transform the existing assets and projects into a world class mining district operating multiple deposits to feed initially two concentrators and one SX-EW plant.

The prefeasibility study on the second Centinela concentrator is underway with the intention to complete the study in Q1 2015. The current initial scope of the project is for a 88,000 tonne per day plant with annual copper and gold production of 140,000 tonnes and 150,000 ounces respectively. Production could commence in 2019 and at the scoping study stage capital development costs were estimated at $2.7 billion. The Centinela Mining District remains a key focus area for the Group with over 8 billion tonnes of resources giving significant optionality as to how the district is developed in the future.

Los Pelambres 

Los Pelambres remains a world class deposit with a resource base triple that of the current mine plan. A full expansion could see a considerable increase in the current throughput capacity, however, the Group's current focus remains on the nearer term, incremental expansion.

A project of this scale and complexity will take time to progress with community, energy and water the key challenges to advancing the project and in the longer term the Group remains committed to exploring options for the further development of the resource.

United States - Twin Metals

The Group has a 40% interest in Twin Metals Minnesota LLC ("Twin Metals"), which holds the Maturi, Maturi SW, Birch Lake and Spruce Road copper-nickel-PGM deposits in Minnesota, USA.

In July 2014, the Group terminated its option to acquire an additional 25% of Twin Metals from its project partner Duluth Metals Limited ("Duluth"). As a result Duluth has the right to purchase, within 180 days, the Group's interest in Twin Metals for a price equal to the Group's sunk costs (currently estimated to be approximately $220 million) plus approximately $10 million currently outstanding (plus accrued and unpaid interest) under the bridge loan facility. If Duluth does not exercise its buy-back right, the Group will continue to own 40% of Twin Metals and Duluth will control the management and development of the Twin Metals Project.

During the first half of 2014 a total of $20.8 million (2013 half year $35.4 million) of expenditure was incurred in respect of the project and the pre-feasibility study was completed in July.

Other exploration and evaluation activities

The Group has been involved with a wide range of early-stage exploration activities in areas beyond the existing core locations of the Centinela Mining District and Los Pelambres, both through its in-house exploration team and through partnerships with third parties, in order to build a portfolio of longer term opportunities across an increasingly diversified geographical area.

Chile

The Group continues with exploration activities in Chile to identify prospective targets on the main copper belts in the northern and central regions, including studies on covered copper porphyries in Northern Chile. Exploration work continues at the Brujulina Sur deposit as well as in areas nearby (including the Cerro Las Papas project) to define potential resources. During the 2014 half year, 1.2 billion tonnes of mineral inventory relating to the Los Volcanes project was upgraded to mineral resource, demonstrating the Group's ability to continually expand and develop its resource base.

The total expenditure on exploration and evaluation activities in Chile during the first half of 2014 was $61.5 million (2013 half year - $98.6 million).

International

The Group operates international exploration offices in Lima, Toronto and Brisbane to support a strategy which permits global exposure to exploration opportunities in a cost effective manner. The team's approach is to partner with experienced junior exploration companies, funding their exploration programmes and benefiting from their local expertise and knowledge.

As at 30 June 2014, the Group has over 20 earn-in agreements and strategic alliances across Africa, Australia, Europe, and the Americas and incurred exploration and evaluation expenditure of $11.1 million during the first half of the year (2013 half year - $15.6 million).

Power Generation in Chile

Over the last few years the Group has developed an energy strategy to support the power supply requirements of the Group's mining operations and has been particularly successful at investing in renewable energy generators which are core to its broader strategy.

El Arrayan

The Group has a 30% interest in Parque Eolico El Arrayan SpA ("El Arrayan"), which has recently commissioned one of the largest wind farms in Chile, that now supplies approximately 20% of Los Pelambres' energy requirements at long-term, favourable prices compared to the current spot price.

Inversiones Hornitos

The Antofagasta Railway Company ("FCAB") owns a 40% interest in Inversiones Hornitos SA ("Inversiones Hornitos"), which operates the 165MW Hornitos thermoelectric power plant in Mejillones, in Chile's Antofagasta Region. Inversiones Hornitos continues to supply Centinela under long-term power purchase agreements (PPAs).

Alto Maipo

The Group holds a 40% interest in the 531MW Alto Maipo run-of-river hydroelectric project located in the upper section of the Maipo river, approximately 50km to the southeast of Santiago.

As part of the transaction, the Group also signed two 20-year PPAs that will secure the provision of up to 160MW to Los Pelambres, with the first PPA starting in early 2015 and the second in 2018, this last one following commissioning of the Alto Maipo project.

In December 2013, Alto Maipo secured $1.2 billion project financing for construction of the $2.1 billion project. The project started construction in December 2013 and, during the first six months of 2014, the Group has provided funding to Alto Maipo of $77.4 million.

Energía Andina

Energía Andina SA is a geothermal energy joint venture with Origin Energy Limited of Australia in which the Group holds a 60% stake. To date, exploration has demonstrated the existence of an active geothermal system at the Tingiririca project located close to Santiago.

TRANSPORT DIVISION

Total transport volumes in the first half of 2014 were 3.5 million tonnes compared with 3.7 million tonnes in the first half of 2013, comprising 2.9 million tonnes of rail volumes (2013 half year - 3.0 million tonnes) and 0.6 million tonnes of road volumes (2013 half year - 0.7 million tonnes).

Revenue decreased by 5.9% to $90.3 million, principally due to a reduction in customer tonnage volumes and a weaker Chilean peso. Operating profit decreased by 8.0% to $28.6 million as the decrease in operating costs was not able to offset the decline in revenues.

WATER DIVISION

The water business continued to perform well, with volumes for the first half of 2014 of 25.6 million cubic metres, a similar level to the same period last year.

Revenue decreased by 13.2% to $61.7 million, mainly reflecting the weakening of the peso. Despite lower revenues, operating profit increased by 15.4% to $32.3 million reflecting efforts to control operating costs.

The water business is currently undertaking a project to expand the existing desalination plant to support anticipated higher future consumption.

FINANCIAL REVIEW FOR THE SIX MONTHS ENDED 30 JUNE 2014

Results

A detailed segmental analysis of the components of the income statement is contained in Note 3 to the half yearly financial report.

The following table reconciles between EBITDA in the first half of 2013 and the first half of 2014:

Turnover

Group turnover in the first half of 2014 was $2,661.4 million, 4.2% below the $2,777.4 million achieved in the first half of 2013. The decrease of $116.0 million mainly reflected a decrease in the realised copper price as well as lower gold by-product revenues.

Turnover from the mining division

Turnover from copper concentrate and copper cathodes

Turnover from copper concentrate and copper cathode sales decreased by $68.1 million, or 3%, to $2,204.1 million, compared with $2,272.1 million in the first half of 2013. The decrease reflected the impact of lower realised prices and increased tolling charges partly offset by improved volumes.

(i) Copper volumes

Copper sales volumes increased by 0.6% from 341,100 tonnes in the first half of 2013 to 343,300 tonnes in the first half of this year. The uplift in sales volumes accounted for an increase of $14.9 million in turnover from copper concentrate and cathode sales.

(ii) Realised copper prices

The Group's average realised copper price decreased by 2.2% to $3.08 per pound in the first six months of 2014 (first six months of 2013 - $3.15 per pound). The level of decrease was lower than the reduction in the average LME copper price, which decreased by 8.2% to $3.14 per pound from $3.42 in the first half of 2013, due to a lower level of negative provisional pricing adjustments in the current period compared with the prior year. The decrease in average realised prices led to a $56.8 million reduction in turnover from copper concentrate and cathode sales.

Realised copper prices are determined by comparing turnover (gross of tolling charges for concentrate sales) with sales volumes in the period. Realised copper prices differ from market prices mainly because, in line with industry practice, concentrate and cathode sales agreements generally provide for provisional pricing at the time of shipment with final pricing based on the average market price for future periods (normally about 30 days after delivery to the customer in the case of cathode sales and up to 150 days after delivery to the customer in the case of concentrate sales). Realised copper prices also reflect the impact of realised gain or losses of commodity derivative instruments hedge accounted for in accordance with IAS 39 "Financial Instruments: Recognition and Measurements".

Provisional pricing adjustments decreased initially invoiced sales (before adjusting for tolling charges) by $57.4 million in the first half of 2014, compared with a decrease of $231.5 million in the first half of 2013. The negative adjustment in the current period reflected the decrease in the copper price in the first half of 2014, partly offset by positive period-end mark to market adjustment reflecting the increase in the price immediately prior to the period-end. Further details of provisional pricing adjustments are given in Note 4 to the half yearly financial report.

In the first half of 2014 turnover also includes a gain of $8.2 million (first six months of 2013 - gain of $9.7 million), mainly relating to commodity derivatives at Michilla which matured during the first half of the year. Further details of hedging activity in the period are given in Note 5(b) to the half yearly financial report.

(iii) Tolling charges

Tolling charges for copper concentrate increased by $26.2 million to US$125.3 million in the first half of 2014 from $99.1 million in the first half of 2013. This reflected increased tolling charges at Los Pelambres and Centinela Concentrates (previously Esperanza), mainly due to an increase in average tolling charges during the period as well as a minor impact of the increased sales volumes mainly at Centinela Concentrates.

Tolling charges are deducted from concentrate sales in reporting turnover and hence the increase in these charges has had a negative impact on turnover.

Turnover from molybdenum, gold and other by-products

Turnover from by-products at Los Pelambres and Centinela Concentrates relate mainly to molybdenum and gold, and a lesser extent silver. Turnover from by-products decreased by $32.9 million or 9.7% to $305.3 million in the first half of 2014, compared with $338.2 million in the first half of 2013.

Turnover from gold in concentrate (net of tolling charges) was $169.6 million (first half of 2013 - $202.5 million), a decrease of $32.9 million, which mainly reflected a decrease in the realised gold price, as well as lower volumes. The realised gold price was $1,355 per ounce in the first half of 2014 compared with $1,447 per ounce in the first half of 2013, with the decrease largely reflecting the general reduction in average market prices. Gold sales volumes decreased from 140,000 ounces in the first half of 2013 to 125,000 ounces in the first half of 2014, mainly due to the lower gold grades and recoveries at Centinela Concentrates.

Turnover from molybdenum (net of roasting charges) was $97.7 million (first half of 2013 - $96.1 million), an increase of $1.6 million. The increase was mainly due to higher realised price of $14.8 per pound (first half of 2013 - $10.8 per pound) partly offset by decreased sales volumes of 3,200 tonnes (first half of 2013 - 4,300 tonnes).

Turnover from silver decreased by $1.6 million to $38.0 million in the first half of 2014 (first half of 2013 - $39.6 million). The decrease was mainly due to a decrease in the realised silver price from $25.7 per ounce in the first half of 2013 to $19.8 per ounce in the first half of 2014, partially offset by increased sales volumes of 2.0 million ounces (first half of 2013 - 1.6 million ounces).

Turnover from the transport and water divisions

Turnover from the transport division (FCAB) decreased by $5.7 million or 5.9% to $90.3 million. This mainly reflected a decrease in rail tonnages. Turnover at Aguas de Antofagasta, which operates the Group's water business, decreased by $9.4 million or 13.2% to $61.7 million in the first half of 2014, mainly reflecting the impact of the weaker Chilean peso.

Operating costs (excluding depreciation and amortisation)

Operating costs (excluding depreciation and amortisation) amounted to $1,533.1 million (first half of 2013 - $1,501.9 million), an increase of $31.2 million. This was mainly due to increased average mining unit costs, as well as the impact of the higher mining production and sales volumes, partly offset by lower exploration and evaluation costs.

Operating costs (excluding depreciation and amortisation) at the mining division

Operating costs at the mining division increased by $42.6 million to $1,455.7 million in the first half of 2014, an increase of 3.0%.

Of this increase, $8.3 million is attributable to the higher mining sales volumes described above. As explained in more detail above, the additional turnover associated with the increased copper sales volumes was $14.9 million.

$87.0 million of the overall cost increase is attributable to higher unit costs. Excluding by-product credits (which are reported as part of turnover) and tolling charges for concentrates (which are deducted from turnover), weighted average cash costs for the Group (comprising on-site and shipping costs in the case of Los Pelambres and Centinela Concentrates and cash costs in the case of Centinela Cathodes (previously El Tesoro) and Michilla increased from $1.61/lb in the first half of 2013 to $1.69/lb. This increase was mainly due to the labour agreement signing bonuses at Los Pelambres and Centinela Concentrates, and ceased mining activities at the lower cash cost Mirador pit by Centinela Cathodes.

Exploration and evaluation costs decreased by $56.2 million to $93.4 million (first half of 2013 - $149.6 million). This mainly reflected decreases relating to the pre-feasibility studies at Los Pelambres and Twin Metals.

The charge to the income statement for mine closure rehabilitation costs was $4.2 million (first half of 2013 - $1.7 million).

Operating costs (excluding depreciation and amortisation) at the transport and water divisions

Operating costs at the transport division decreased by $3.7 million to $54.0 million. This was mainly due to decreased expenditure on fuel, salaries and maintenance. Operating costs at the water division decreased by $7.7 million to $23.4 million, mainly reflecting the weaker Chilean peso.

EBITDA and operating profit from subsidiaries and joint ventures

EBITDA

EBITDA (earnings before interest, tax, depreciation, and amortisation) from subsidiaries and joint ventures decreased by $147.2 million or 11.5% to $1,128.3 million in the first half of 2014 (first half of 2013- $1,275.5 million).

EBITDA at the mining division decreased by 12.0% from $1,197.2 million in the first half of 2013 to $1,053.7 million in the first half of 2014. As explained above, this was mainly due to the decrease in the realised copper price and higher unit costs, partly offset by lower exploration and evaluation costs, and increased copper sales volumes.

EBITDA at the transport division decreased by $2.0 million to $36.3 million in the first half of 2014, reflecting the decreased revenue as explained above. The water division contributed $38.3 million in the first half of 2014 compared with $40.0 million in the first half of 2013, reflecting the decreased revenue as well as operating costs, as explained above.

Depreciation and amortisation

The depreciation and amortisation charge was broadly stable at $247.5 million (first half of 2013 - $239.8 million). Increased depreciation at Centinela Cathodes and Michilla was offset by decreases at Centinela Concentrates and Corporate.

Operating profit from subsidiaries

As a result of the above factors, operating profit from subsidiaries decreased by 14.4% to $881.0 million.

Share of results from associates and joint ventures

The Group's share of results from its associates and joint ventures was a loss of $7.5 million (first half of 2013 - loss of $4.1 million). This mainly reflects a decrease in the profit at Inversiones Hornitos and losses at Alto Maipo, an associate which the Group acquired in the second half of 2013, partly offset by lower expenditures in respect of the Energia Andina joint venture.

Net finance expense

Net finance expense in the first half of 2014 was $22.8 million, compared with a net finance expense of $44.6 million in the first half of 2013.

Interest income increased from $6.1 million in the first half of 2013 to $8.5 million in the first half of 2014, mainly reflecting additional interest income in respect of a loan from Los Pelambres to the Alto Maipo associate.

Interest expense decreased from $33.7 million in the first half of 2013 to $27.9 million in the first half of 2014, mainly due to a decrease of interest payable at Centinela Concentrates as a consequence of debt repayments as well as lower interest rates in Centinela Cathodes' borrowings.

Other finance items comprised a loss of $3.4 million (first half of 2013 - loss of $17.0 million). A loss of $3.3 million (first half of 2013 - loss of $8.1 million) has been recognised in respect of the time value element of changes in the fair value of commodity derivative options, which is excluded from the designated hedging relationship, and is therefore recognised directly in profit or loss. Foreign exchange gains included in finance items were $7.5 million in the first half of 2014, compared with a loss of $2.4 million in the first half of 2013. An expense of $7.6 million (first half of 2013 - $6.5 million) has been recognised in relation to the unwinding of the discount on provisions.

Profit before tax

As a result of the factors set out above, profit before tax decreased by $130.3 million or 13.3% to $850.7 million in the first half of 2014 compared with $981.0 million in the first half of 2013.

Income tax expense

The tax charge for the first half of 2014 was $279.1 million (first half of 2013 - $320.2 million) and the effective tax rate was 32.8% (first half of 2013 - 32.6%).

The effective tax rate in the first half of 2014 varies from the standard rate of Chilean corporation tax of 20% principally due to the additional mining tax (royalty) and withholding tax.

Corporation (first category) tax

The rate of corporation (first category) tax in Chile is 20%. The effective rate of corporation tax is higher than the statutory rate principally due to the impact of exploration expenditure (in particular in countries outside of Chile) which does not give rise to tax credits.

Mining tax

The Group's mining operations are also subject to a mining tax (royalty). Production from Los Pelambres, the Tesoro Central and Mirador pits at Centinela Cathodes and Michilla are subject to a rate of 4% of taxable operating profit and Centinela Concentrates of 5%, and production from the Tesoro North East pit and the run-of-mine processing at Centinela Cathodes is subject to a rate of between 5-14%, depending on the level of operating profit margin.

Withholding taxes

In addition to corporation (first category) tax and the mining tax, the Group incurs withholding taxes on any remittance of profits from Chile, and deferred tax is provided on undistributed earnings to the extent that remittance is probable in the foreseeable future. Withholding tax is levied on remittances of profits from Chile at 35% less corporation (first category) tax already paid in respect of the profits to which the remittances relate. Accordingly the effective tax rate of withholding tax is approximately 15% of the amount remitted or expected to be remitted.

Chilean tax reform

In April a comprehensive tax reform bill was presented to the Chilean National Congress. The key proposed tax changes set out in the bill which will impact the Group relate to corporate tax and withholding tax. The bill has been passed by the Chamber of Deputies, but following a period of deliberation by the Senate a number of changes to the original bill have been proposed, including an alternative corporate and withholding tax structure. The amended bill was returned to the Chamber of Deputies where further amendments have been introduced and the bill is expected to re-presented to the Senate for approval in August or September. As certain parts of the bill are intended to be retrospective to the beginning of this year the Government is keen that the bill is passed as soon as possible to allow adequate time for their implementation. It is therefore expected that the bill will be passed by the end of September.

Non-controlling interests

Profit for the first half of the year attributable to non-controlling interests was $240.8 million, compared with $265.8 million in the first half of 2013, reflecting the lower profit attributable to the non-controlling interests as a consequence of the decrease in the earnings of the mining operations analysed above.

Earnings per share

Earnings per share calculations are based on 985,856,695 ordinary shares. As a result of the factors set out above, profit for the first half of 2014 attributable to equity shareholders of the Company was $330.8 million compared with $395.0 million in the first half of 2013. Accordingly, earnings per share were 33.6 cents in the first half of 2014 compared with 40.1 cents in the first half of 2013, a decrease of 16.2%.

Dividends

Dividends per share proposed in relation to the first half of 2014 are as follows:

Details of dividends proposed in relation to the first half of 2014, and the Board's policy regarding dividends, are set out on page 3.

Capital expenditure

Capital expenditure increased by $226.4 million from $540.9 million in the first half of 2013 to $767.3 million in the first half of 2014. This was mainly due to the on-going construction at the Centinela Concentrates ACD project and the Antucoya project, as discussed on pages 6 and 7 respectively.

Derivatives financial instruments

The Group periodically uses derivative financial instruments to reduce exposure to commodity price movements. At 30 June 2014 Michilla had min/max instruments for 18,000 tonnes of copper production covering a total period up to 31 December 2014. The weighted average remaining period covered by the min/max hedges calculated with effect from 1 July 2014 was 3.5 months. The instruments had a weighted average floor of $331.7 per pound and a weighted average cap of $433.0 cents per pound. The portion maturing in 2014 represents approximately 80% of Michilla's forecast production, and approximately 5% of Group copper production for this year. The Group´s exposure to the copper price will be limited by the extent of these instruments.

The Group periodically uses foreign exchange derivatives to cover expected operational cash flow needs. At 30 June 2014 Michilla had cross-currency swaps with a principal value of $48 million to swap Chilean pesos for US dollars at an average rate of Ch$594.4/$1, covering a total period up to 15 December 2014. Antucoya had cross-currency swaps with a principal value of $153 million to swap Chilean pesos for US dollars at an average rate of Ch$563.3/$1, covering a total period up to 15 April 2015. The weighted average remaining period covered by these hedges calculated with effect from 1 July 2014 is 3.6 months for Michilla and 4.5 months for Antucoya. Additionally, at 30 June 2014 Antucoya had zero cost collars instruments with a principal value of $153.9 million covering a total period up to 15 May 2015. The weighted average remaining period covered by the zero cost collars hedges calculated with effect from 1 July 2014 was 4.1 months. The instruments had a weighted average floor of Ch$586.6/$1 and a weighted average cap of Ch$547.1/$1.

The Group also periodically uses interest rate swaps to swap the floating rate interest for fixed rate interest. At 30 June 2014 the Group had entered into contracts in relation to the Centinela Concentrates financing for a maximum notional amount of $140 million at a weighted average fixed rate of 3.372 % fully maturing in August 2018.

Cash flows

The key features of the Group cash flow statement are summarised in the following table.

Cash flows from operations were $1,170.0 million in the first half of 2014 compared with $1,373.5 million in the first half of 2013. This reflected EBITDA for the period of $1,128.3 million (first half of 2013 - $ 1,275.5 million) adjusted for a net working capital decrease of $41.7 million (first half of 2013 - decrease of $98.0 million).

Cash tax payments in the first half of 2014 year were $389.0 million (first half of 2013 - $577.5 million), comprising corporation tax of $99.0 million (first half of 2013 - $318.4 million), mining tax of $59.0 million (first half of 2013 - $81.0 million) and withholding tax of $231.1 million (first half of 2013 - $178.1 million). These amounts differ from the current tax charge in the consolidated income statement of $441.7 million (first six months 2013 - $418.1 million) mainly because cash tax payments for corporation tax and the mining tax partly comprise the settlement of outstanding balances in respect of the previous year's tax charge and payments on account for the current year based on the prior year profit levels.

Contributions and loans to associates and joint ventures of $84.9 million mainly relate to the Group's share of the funding of the development of the Alto Maipo project, in which the Group acquired a 40% interest in the second half of 2013.

Cash disbursements relating to capital expenditure in the first half of 2014 were $788.5 million compared with $619.0 million in the first half of 2013. This included expenditure of $373.5 million at Antucoya (first half of 2013 - $277.7 million), $223.8 million relating to Centinela Concentrates (first half of 2013 - $142.9 million), $109.5 million relating to Los Pelambres (first half of 2013 - $82.4 million) and $43.7 million relating to Centinela Cathodes (first half of 2013 - $71.2 million).

Dividends (including special dividends) paid to ordinary shareholders of the Company in the first half of 2014 were $848.8 million (first half of 2013 - $887.3 million), which related to the final dividend declared in respect of the previous year.

Dividends paid by subsidiaries to non-controlling shareholders were $192.2 million (first half of 2013 - $162.1 million), consisting mainly of distributions by Los Pelambres and Centinela Cathodes.

Financial position

At 30 June 2014 the Group had combined cash, cash equivalents and liquid investments of $2,264.4 million (31 December 2013 - $2,685.1 million). Excluding the non-controlling interest share in each partly-owned operation, the Group's attributable share of cash, cash equivalents and liquid investments was $1,864.2 million (31 December 2013 - $2,420.8 million).

New borrowings in the first half of 2014 were $1,167.9 million (first half of 2013 - $68.1 million), mainly due to new long-term borrowings at Centinela Concentrates of $548.4 million and Antucoya of $455.3 million, and new short-term borrowings at Los Pelambres of $160.0 million. Repayments of borrowings and finance leasing obligations in the first half of 2014 were $420.4 million, relating mainly to prepayments on senior debt at Centinela Concentrates of $266.4 million and to regular repayments on existing loans at Los Pelambres of $67.7 million (first half 2013 - $142.2 million), the repayment of subordinated debt at Centinela Concentrates of $31.2 million and repayment of Centinela Cathodes senior debt of $41.8 million.Total Group borrowings at 30 June 2014 were $2,119.4 million (31 December 2013 - $1,373.9million). Of this, $1,460.7 million (31 December 2013 - $948.5million) is proportionally attributable to the Group after excluding the non-controlling interest shareholdings in partly-owned operations.

Foreign currency exchange differences

The principal subsidiaries with a functional currency other than the US dollar are Chilean peso denominated, of which the most significant is Aguas de Antofagasta S.A.

In the first half of 2014 the currency translation loss recognised in net equity was $8.5 million (first half of 2013 - loss of $11.8 million).

Going concern

The Group's business activities, together with those factors likely to affect its future performance, are set out in the Review of Operations. Details of the cash flows of the Group during the period, along with its financial position at the period-end are set out in this Financial Review. The half yearly financial report includes details of the Group's cash, cash equivalent and liquid investment balances in Note 16, and details of borrowings are set out in Note 13.

In assessing the Group's going concern status the Directors have taken into account the above factors, including the financial position of the Group and in particular its significant balance of cash, cash equivalents and liquid investments, the borrowing facilities (including the undrawn committed facilities) in place and their terms, the current copper price and market expectations in the medium-term, the Group's expected operating cost profile and the its capital expenditure and financing plans.

After making appropriate enquiries, the Directors consider that the Company and the Group have adequate resources to continue in operational existence for the foreseeable future and that it is appropriate to adopt the going concern basis in preparing the half yearly financial report.

Principal risks and uncertainties

There are a number of potential risks and uncertainties which could have a material impact on the Group's performance over the remaining six months of the financial year and could cause actual results to differ materially from expected and historical results. The Directors do not consider that the principal risks and uncertainties have changed since the publication of the annual report for the year ended 31 December 2013. A detailed explanation of the risks summarised below can be found in the Risk Management section of that annual report which is available at www.antofagasta.co.uk. Key headline risks relate to the following:

· Community relations

· Strategic resources

· Operational risks

· Development projects

· Political, legal and regulatory risks

· Health and safety

· Environmental management

· Growth opportunities

· Commodity prices

· Foreign currency exchange

· Identification of new mineral resources

· Ore reserves and mineral resources estimates

· Talent and labour relations

Cautionary statement about forward-looking statements

This half yearly financial report contains certain forward-looking statements. All statements other than historical facts are forward-looking statements. Examples of forward-looking statements include those regarding the Group's strategy, plans, objectives or future operating or financial performance; reserve and resource estimates; commodity demand and trends in commodity prices; growth opportunities; and any assumptions underlying or relating to any of the foregoing. Words such as "intend", "aim", "project", "anticipate", "estimate", "plan", "believe", "expect", "may", "should", "will", "continue" and similar expressions identify forward-looking statements.

Forward-looking statements involve known and unknown risks, uncertainties, assumptions and other factors that are beyond the Group's control. Given these risks, uncertainties and assumptions, actual results could differ materially from any future results expressed or implied by these forward-looking statements, which speak only as at the date of this report. Important factors that could cause actual results to differ from those in the forward-looking statements include: global economic conditions; demand, supply and prices for copper; long-term commodity price assumptions, as they materially affect the timing and feasibility of future projects and developments; trends in the copper mining industry and conditions of the international copper markets; the effect of currency exchange rates on commodity prices and operating costs; the availability and costs associated with mining inputs and labour; operating or technical difficulties in connection with mining or development activities; employee relations; litigation; and actions and activities of governmental authorities, including changes in laws, regulations or taxation. Except as required by applicable law, rule or regulation, the Group does not undertake any obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Past performance cannot be relied on as a guide to future performance.

Condensed Consolidated Income Statement

Revenue and operating profit are derived from continuing operations.

Condensed Consolidated Statement of Comprehensive Income 

Condensed Consolidated Statement of Changes in Equity

Condensed Consolidated Balance Sheet

The interim financial information was approved by the Board of Directors on 25 August 2014.

Condensed Consolidated Cash Flow Statement

Notes

a) General information

These June 2014 interim condensed consolidated financial statements ("the condensed financial statements") are for the six months ended 30 June 2014. The condensed financial statements are unaudited.

The information for the year ended 31 December 2013 does not constitute statutory accounts as defined in section 434 of the Companies Act 2006. A copy of the statutory accounts for that year has been delivered to the Registrar of Companies. The auditor's report on these accounts was not qualified, did not include a reference to any matters to which the auditor drew attention by way of emphasis without qualifying the report and did not contain statements under section 498(2) (regarding adequacy of accounting records and returns) or section 498(3) (regarding provision of necessary information and explanations) of the Companies Act 2006.

The Group is in the process of merging Minera Esperanza and Minera El Tesoro into a single entity - Mineral Centinela. In these condensed financial statements Minera Esperanza is now referred to as Centinela concentrates, and El Tesoro is referred to as Centinela cathodes.

b) Basis of preparation

The annual financial statements of Antofagasta plc for the year ended 31 December 2013 were prepared in accordance with International Financial Reporting Standards (IFRS) and with those parts of the companies Act 2006 applicable to companies reporting under IFRS. For these purposes, IFRS comprise the standards issued by the International Accounting Standards Board ("IASB") and Interpretations issued by the International Financial Reporting Interpretations Committee (IFRIC) that have been endorsed by the European Union ("EU"). The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with International Accounting Standard (IAS) 34 Interim Financial Reporting and the requirements of the UK Disclosure and Transparency Rules (DTR) of the Financial Conduct Authority (FCA) in the United Kingdom as applicable to interim financial reporting.

The condensed financial statements represent a "condensed set of financial statements" as referred to in the DTR issued by the FCA. Accordingly, they do not include all of the information required for a full annual financial report and are to be read in conjunction with the Group's financial statements for the year ended 31 December 2013.

c) Going concern

After making enquiries, the Directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future, a period of no less than 12 months from the date of this report. Accordingly, they continue to adopt the going concern basis in preparing the condensed financial statements. Detail of the factors which have been taken into account in assessing the Group's going concern status are set out in the Going Concern section of the Financial Review above.

d) Accounting policies

The following International Financial Reporting Standards (IFRS), amendments and interpretations are effective for the first time in the current period.

Amendment to standards

IAS 32, Financial instruments: Presentation - Clarified requirements for offsetting of financial assets and financial liabilities

Investment entities - Amendments to IFRS 10, Consolidated Financial Statements; IFRS 12, Disclosure interests in other entities and IAS 27, Separate Financial Statements.

IAS 36, Impairment of assets- Recoverable amount disclosure for non-financial assets

IAS 39, Financial Instruments: Recognition and measurement - Novation of derivatives and continuation of hedge accounting.

Interpretations:

IFRIC 21, Levies

The application of these standards and interpretations effectives for the first time in the current period has had no significant impact on the amounts reported in these interim financial statements.

 The following accounting standards, interpretations and amendments have been issued by the IASB, but are not yet effective:

The Group is continuing to evaluate the impact of adopting these new standards and interpretations.

2. Total profit from operations, associates and joint ventures

3. Segmental analysis

The Group's reportable segments are as follows:

· Los Pelambres

· Centinela Concentrates (previously Esperanza)

· Centinela Cathodes (previously El Tesoro)

· Michilla

· Antucoya

· Exploration and evaluation

· Railway and other transport services

· Water concession

· Corporate and other items

For management purposes, the Group is organised into three business divisions based on their products - Mining, Railway and other transport services and the Water concession. The mining division is split further for management reporting purposes to show results by mine and exploration activity. Los Pelambres, Centinela Concentrates, Centinela Cathodes and Michilla are all operating mines and Antucoya is a development project. Los Pelambres produces primarily copper concentrate and molybdenum as a by-product. Centinela Concentrates produces primarily copper concentrate containing gold as a by-product. Centinela Cathodes and Michilla both produce copper cathodes. The transport division provides rail cargo (based in Chile and Bolivia) and road cargo (based in Chile) together with a number of ancillary services (based in Chile). The water division produces and distributes potable water to domestic customers and untreated water to industrial customers in Chile's Antofagasta Region. The Exploration and evaluation segment incurs exploration and evaluation expenses. "Corporate and other items" also comprise costs incurred by the Company, other holding companies of the Group and Antofagasta Minerals S.A., the Group's mining corporate centre, that are not allocated to any individual business segment. Consistent with its internal management reporting, the Group's corporate and other items are included within the mining division.

Management monitors the operating results of business segments separately for the purpose of making decisions about resources to be allocated and of assessing performance. Segment performance is evaluated based on the operating profit of each of the segments.

a) Segment revenues and results

For the six months ended 30 June 2014

For the six months ended 30 June 2013