Last checked at 29 Aug 2007 07:01
Antofagasta PLC29 August 2007 Antofagasta plc Interim Results Announcement for the six months ended 30 June 2007 29 August 2007 HIGHLIGHTS • Strong financial results with profit before tax up 8.4% to US$1,437 million (2006 half year - US$1,325 million), and cash flow from operations up 29.1% to US$1,349.3 million (2006 half year - US$1,045.4 million). The Group benefited from higher LME copper prices and market molybdenum prices as well as increased molybdenum volumes, although pricing adjustments on provisionally invoiced copper sales were lower than the comparable period in 2006. Operating costs (excluding by-product credits and tolling charges in the case of Los Pelambres), though higher than the 2006 half year, remained in line with forecasts at all three mines. The transport and water divisions also continued to perform well. Total income tax expense in Chile (including corporation, mining and withholding taxes) amounted to US$332 million (2006 half year - US$255 million) with an effective tax rate similar to the 2006 full year. • Earnings per share up 11.6% to 73.9 cents (2006 half year - 66.2 cents). The Group also benefited from the acquisition of Equatorial Mining Limited in the second half of 2006, which increased its interest in the El Tesoro mine to 100%. Consequently, attributable copper production also increased by 16.0% to 149,200 tonnes (2006 half year - 128,600 tonnes), compared with an increase of 2.0% in total Group production. • Total interim dividend up 19.2% to 6.2 cents per share (2006 half year 5.2 cents per share). The interim dividend comprises an ordinary dividend of 3.2 cents and a special dividend of 3.0 cents. • Continued progress with capital projects at Los Pelambres. The 140,000 tpd expansion has been completed and completion of the Mauro dam is expected by the end of the year; a feasibility study for a further repowering which is within the scope of existing environmental approvals has been carried out. • Esperanza copper-gold project received board approval in June, with environmental applications submitted on 21 August. Development costs are expected to be US$1.5 billion, with first production scheduled for the end of 2010. Average annual production in the first 10 years of operation is forecast at 195,000 tonnes of payable copper, 229,000 ounces of payable gold and 1,556,000 ounces of payable silver. This would represent an increase in the Group's copper output of over 40% from current levels. • Further progress with the exploration programme at the Tethyan Copper Company Limited joint venture, developing the Reko Diq project in the Balochistan province in Pakistan. An updated resource estimate and scoping study are expected to be completed by the end of the year. Marcelo Awad, Chief Executive Officer of Antofagasta Minerals S.A., commented: "We are very pleased with the continued strong performance of the Group in thefirst half of this year. Fundamentals in both the copper and molybdenum marketsremain solid, and despite recent uncertainty in the United States we expectcommodity prices to remain strong for the remainder of the year and well into2008. Production levels and operating costs at the Group's mines remain in linewith forecast, although industry-wide cost pressures from labour, fuel andenergy persist. We continue to make further progress in the Group's strategy forgrowth through new mines and exploration." Antofagasta is a Chilean-based mining group listed in the United Kingdom. Inaddition to copper mining, its interests include rail and road transportoperations and water distribution. +------------------------------------------------+------+---------+---------+--------+|SIX MONTHS TO 30 JUNE | | 2007 | 2006 |% Change|+------------------------------------------------+------+---------+---------+--------+|Group turnover | US$'m|1,942.1 |1,846.9 | 5.2 |+------------------------------------------------+------+---------+---------+--------+|Cash flows from operations | US$'m|1,349.3 |1,045.4 | 29.1 |+------------------------------------------------+------+---------+---------+--------+|Profit before tax | US$'m|1,436.7 |1,325.3 | 8.4 |+------------------------------------------------+------+---------+---------+--------+|Earnings per share | cents| 73.9 | 66.2 | 11.6 |+------------------------------------------------+------+---------+---------+--------+|Dividend per share(1) | cents| 6.2 | 5.2 | 19.2 ||(2007 interim - ordinary 3.2 cents; special 3.0 | | | | ||cents) | | | | ||(2006 interim - ordinary 3.2 cents; special 2.0 | | | | ||cents) | | | | || | | | | |+------------------------------------------------+------+---------+---------+--------+|LME copper price (per pound) | cents| 307.0 | 275.3 | 11.5 |+------------------------------------------------+------+---------+---------+--------+|Group copper production | '000| 212.1 | 207.9 | 2.0 || |tonnes| | | |+------------------------------------------------+------+---------+---------+--------+|Group weighted average cash costs(2) (net of | cents| 30.3 | 46.9 | (35.4) ||by-product credits) | | | | |+------------------------------------------------+------+---------+---------+--------+|Group weighted average cash costs(2) excluding | cents| 104.4 | 95.2 | 9.7 ||by-product credits | | | | |+------------------------------------------------+------+---------+---------+--------+|Market molybdenum price (per pound) | US$ | 28.4 | 23.7 | 19.8 |+------------------------------------------------+------+---------+---------+--------+|Group molybdenum production | '000| 4.9 | 4.1 | 19.5 || |tonnes| | | |+------------------------------------------------+------+---------+---------+--------+ 1 Dividends are paid in either sterling or US dollars. The conversion rate fordividends to be paid in sterling will be set on 25 September 2007. 2 Cash cost is a method used by the mining industry to express the cost ofproduction in cents per pound of copper, and is further explained in Note 28(b)(iii) to the Interim Results Announcement. +----------------------------------------+---------------------------------------+|Enquiries | |+----------------------------------------+---------------------------------------+|London | Santiago|+----------------------------------------+---------------------------------------+|Investor relations - Antofagasta plc | Antofagasta Minerals S.A.|+----------------------------------------+---------------------------------------+|Tel: +44 20 7808 0988 | Tel: +562 377 5000|+----------------------------------------+---------------------------------------+|www.antofagasta.co.uk |Alejandro Rivera - arivera@aminerals.cl|+----------------------------------------+---------------------------------------+|Desmond O'Conor - | ||doconor@antofagasta.co.uk | ||Hussein Barma - | | hbarma@antofagasta.co.uk | |+----------------------------------------+---------------------------------------+|Media enquiries - Bankside Consultants | |+----------------------------------------+---------------------------------------+|Tel: +44 20 7367 8873 | |+----------------------------------------+---------------------------------------+|Keith Irons - | | keith@bankside.com | ||Oliver Winters - | ||oliver.winters@bankside.com | |+----------------------------------------+---------------------------------------+ DIRECTORS' COMMENTS FOR THE HALF YEAR TO 30 JUNE 2007 Overview The Group has achieved strong results for the 2007 half-year, with net earningsup 11.6% to US$728.4 million and cash flow from operations up 29.1% toUS$1,349.3 million compared with the first six months of 2006. These resultsreflect strong operational performances across the Group, in an environment ofcontinued high metal prices. LME copper prices averaged 307.0 cents per pound this period (2006 half year -275.3 cents), despite some weakness in the first quarter when prices fell toapproximately 240 cents. The Group believes market fundamentals remain soundwith strong demand in Asia and Europe. However with uncertainty over whether theproblems in financial markets in the United States will result in slower growthin the real economy, the volatility that has characterised the copper market inrecent months may continue. The Group has benefited from these higher marketprices, although pricing adjustments on provisionally invoiced sales were lowerthan the comparable period in 2006 resulting in an average realised copper priceof 338.9 cents per pound (2006 half year - 353.4 cents per pound). The copperconcentrate market is expected to remain in continued deficit with furtherincreases in smelting capacity coming on stream, and this should keep tollingcharges favourable to producers. Molybdenum prices strengthened in the periodwith market prices averaging US$28.4 per pound (2006 half year - US$23.7 perpound), and strong demand should support the market into 2008. The Group's operations continued to perform well in the first half of 2007.Group copper production was 212,100 tonnes, a 2.0% increase compared with207,900 tonnes in the 2006 half year; however attributable copper productionincreased by 16.0% to 149,200 tonnes (2006 half year - 128,600 tonnes) followingthe acquisition of Equatorial Mining Limited in the second half of last yearwhich increased the Group's interest in El Tesoro to 100%. Molybdenum productionat Los Pelambres was 4,900 tonnes, compared with 4,100 tonnes in the first sixmonths of 2006. The transport and water divisions both achieved increasedvolumes with new contracts coming on stream in the second half of last year. Weighted average cash costs were 30.3 cents per pound compared with 46.9 centsper pound in the first half of 2006 as a result of improved molybdenumby-product credits and lower tolling charges. Excluding these, weighted averageon-site and shipping costs at the Group's mines increased in line with forecastto 85.1 cents per pound (2006 half year - 68.1 cents per pound), due to higherinput costs such as energy, fuel and sulphuric acid prices, one-off costs of newlabour agreements and the impact of lower ore grades at Los Pelambres and higherwaste-to-ore ratios at Los Pelambres and El Tesoro. Los Pelambres has advanced with its capital projects. The plant expansion to140,000 tonnes of ore throughput per day was fully completed in the 2007 halfyear. The Mauro tailings dam is on schedule for completion by the end of theyear, and the Group continues to believe that all permits granted have beenproperly applied for and issued and is confident that this view will be upheldby the courts. A feasibility study for a further repowering at Los Pelambres hasbeen carried out, and Los Pelambres expects to continue with preliminaryexpenditures for this project, which is within the scope of existingenvironmental approvals. The Group has recently approved the development of the Esperanza copper-goldproject, located near its El Tesoro mine, at an estimated cost of US$1.5billion. Production is scheduled to commence at the end of 2010 and in its firstten years of operation Esperanza is expected to produce an annual average ofapproximately 700,000 tonnes of concentrate containing 195,000 tonnes of payablecopper, 229,000 ounces of payable gold and 1,556,000 ounces of payable silver. Tethyan Copper Company Limited ("Tethyan"), the Group's joint venture withBarrick Gold Corporation, is continuing its 18 month exploration programme atReko Diq in South-west Pakistan with encouraging results to date, and an updatedresource estimate and a scoping study are expected to be completed by the end ofthis year. A draft mineral agreement has also been submitted to the federal andprovincial governments for discussion to establish a framework for futureinvestment. During July, the Group decided not to continue with the exploration agreementswith Ascendent Copper Corporation in respect of the Chaucha deposit in Ecuadorand with AngloGold Ashanti in the area of interest in southern Colombia,following a review of drilling results achieved to date. The Group neverthelessremains committed to its disciplined strategy of growth and will continue toseek opportunities in mining both in Latin America and worldwide. The Board has declared an interim ordinary dividend of 3.2 cents per share. Inview of the continued strong results this half year, the Board has also decidedto pay a special dividend of 3.0 cents per share, giving a total interimdividend of 6.2 cents per share. This represents an increase of 19.2% over thetotal interim dividend for 2006. Review of Operations Los Pelambres Los Pelambres achieved another strong set of results, with operating profit ofUS$1,087.0 million (2006 - half year - US$1,097.6 million) as higher molybdenumvolumes and prices and lower tolling charges offset the effects of lowerrealised copper prices and higher on-site and shipping costs. Realised copper prices at Los Pelambres were 348.6 cents per pound (2006 halfyear - 376.8 cents per pound) despite the higher average LME price in the 2007half year, as a result of lower provisional pricing credits compared with thefirst six months of 2006 when the LME copper price had increased verysignificantly within that period. Realised molybdenum prices increased toUS$30.9 per pound (2006 - US$22.7 per pound), mainly reflecting higher marketprices and tight market conditions in the 2007 half year and to a lesser extentstronger pricing credits. Further details of pricing adjustments for both copperand molybdenum are given in the Financial Commentary on page 11 and in Note 4(a)to the interim financial statements. Los Pelambres produced 141,800 tonnes of payable copper in the first six monthsof 2007, marginally above the first six months of last year when 141,600 tonneswere produced, as the benefits of the plant expansion which was largelycompleted by the end of 2006 compensated for lower ore grades and a higherproportion of harder primary ore. Ore throughput averaged 125,500 tonnes per day(2006 half year - 120,000 tonnes per day) while recoveries also improved to92.2% (2006 half year - 88.1%). The average ore grade in the first half of 2007decreased as expected under the mine plan to 0.71% (2006 half year - 0.82%).Production in the 2006 half year had also been affected by a build-up ofunfiltered copper concentrate at the plant due to repairs carried out to theslurry pipeline in the second quarter of that year. Molybdenum production was 4,900 tonnes, 19.5% above the 4,100 tonnes produced inthe first half of 2006. This increase was mainly due to better molybdenum oregrades together with the higher plant throughput, partly offset by lowerrecoveries in the first quarter of this year which have since improved.Production in the 2006 half year had also been affected by changes inwork-in-progress levels. Cash costs, which are stated net of by-product credits and include tollingcharges, were negative 8.6 cents per pound in the first six months of 2007compared with 24.4 cents in the first half of 2006. The decrease of 33.0 centswas due to higher by-product credits (which increased by 39.8 cents to 110.8cents) and lower tolling charges for concentrates (which decreased by 11.0 centsto 28.8 cents), partly offset by an increase in on-site and shipping costs,which increased in line with forecast to 73.4 cents (2006 half year - 55.6cents). Higher by-product credits resulted mainly from the increase in bothmolybdenum production and realised prices. Tolling charges decreased principallydue to the more favourable terms achieved in the negotiations with smelters forthe 2007 calendar year, including both lower treatment and refining charges andnil price participation, although the impact was partly mitigated by the "bricksystem" under which the terms agreed are often averaged over two years. Theincrease in on-site and shipping costs was partly due to lower ore grades andincreased energy, fuel, lubricant and machinery hire costs. In addition, costswere also higher due to a significant level of programmed plant maintenance inthe second quarter and the costs of the one-off bonus payment on the earlyconclusion of the labour negotiation with the mine-port union in May 2007 asexplained below. Labour relations remained excellent and Los Pelambres was able to reach a new 45month labour agreement with its mine-port union in May 2007, in advance of thedue date for negotiations of September 2007. This included a one-off signingbonus at a total cost of US$4.5 million. The next scheduled labour negotiationis due to take place in mid-2008 when the current agreement with the plant unionexpires. During the 2007 half year, Los Pelambres continued to reduce its borrowings withrepayments totalling US$40.7 million. Total borrowings (net of deferredfinancing costs) were US$274.3 million at 30 June 2007. Continued progress was also achieved with Los Pelambres' capital expenditureprogrammes, which are being financed out of its cash resources. Total capitalexpenditure in the 2007 half year was US$156.1 million. Expansion of plant throughput to a life-of-mine average of 140,000 tpd throughre-powering the grinding lines and installing a fifth ball mill and additionalflotation cells, which commenced in mid-2005, was fully completed with finalexpenditures of US$40.4 million incurred in the first half of this year. Thetotal cost of the project was US$185 million, broadly in line with the originalbudget of US$182 million. Los Pelambres also advanced with the Mauro tailings dam, which is currentlyapproximately 95% complete. Cumulative expenditure on this project to 30 June2007 was US$418 million, which included US$90.7 million incurred in the firsthalf of 2007. The project is expected to be completed at the end of this year,and together with the existing Quillayes tailings dam, will provide LosPelambres with sufficient storage capacity for its 2.1 billion tonnes ofexisting ore reserves, thereby supporting its current mine plan to 2047. Aspreviously explained, there are a number of claims currently in the Chileancourts against third parties (governmental authorities or former land owners inthe El Mauro area) either at first instance or on appeal, including the caseagainst the Chilean Water Authority which is under appeal to the Supreme Court.While these cases are not directly against Los Pelambres, the company hasintervened in some cases where an existing or eventual judgement affects orcould affect the project. There has also been one recent claim in August 2007against Los Pelambres. The Group continues to believe that Los Pelambres hasreceived all the necessary technical and legal permits and land ownership forthe Mauro tailings dam and that these have been properly applied for and grantedin accordance with applicable regulations and the law. It is confident that thisview will eventually be upheld by the courts in the relevant cases, which haveso far rejected all applications for injunctions seeking that work on the Maurotailings dam should cease, except in the most recent claim where a firstinstance court in Los Vilos ordered Los Pelambres to suspend only those workswhich directly affect the Pupio stream in the vicinity of the tailings dam. Asthe works affected by this order only form a part of the overall project, LosPelambres does not believe this action will affect the schedule for thecompletion of the project by the end of this year. Los Pelambres' existingoperations also remain unaffected as the Quillayes dam is still in use. During the first half of 2007, Los Pelambres spent a further US$10.5 million toprogress with the feasibility study initiated in July 2006 for a further upgradeof the concentrator plant capacity, through additional infrastructure includinga third SAG mill and a sixth ball mill. The feasibility study is nowsubstantially complete, and Los Pelambres expects to continue with furtherexpenditure on preliminary works in the second half of this year. If fullyapproved, which is not yet the case, this repowering would be within presentenvironmental permits and would enable the production of an additional 75,000tonnes of payable copper per year on average over the first 10 years, and costapproximately US$0.8 billion in total. Los Pelambres is also continuing with itsexploration programme, which commenced during 2006, to identify furtherreserves. Further details are given under "Projects, exploration and newopportunities" below. With improved ore grades and a lower proportion of primary ore resulting inhigher ore throughput expected in the second half of the year as compared withthe first six months, copper production at Los Pelambres for the full year isexpected to be approximately 312,000 tonnes. This is slightly below the originalforecast of 321,000 tonnes as grades in the final quarter of the year are notexpected to increase to the degree originally anticipated. Molybdenum productionfor the full year is nevertheless expected to increase slightly from theoriginal forecast of 11,000 tonnes, due to higher recoveries and a highermolybdenum ore grade expected in the second half of the year. Cash costs beforeby-product credits are expected to remain in line with forecast at approximately100 cents per pound, including on-site and shipping costs of approximately 70cents. With molybdenum prices expected to remain strong, Los Pelambres shouldcontinue to benefit from substantial by-product credits. El Tesoro Operating profit at El Tesoro rose by 25.9% from US$149.6 million in the 2006half year to US$188.4 million, reflecting higher copper prices, improvedproduction volumes and no hedging effect on results this period, partly offsetby increased cash costs. Realised copper prices were 321.8 cents per pound compared with 301.2 cents inthe 2006 half year, reflecting the higher average LME prices, cathode premiumsand to a lesser extent pricing adjustments on provisionally invoiced cathodesales. Production at El Tesoro was 46,800 tonnes, a 10.1% increase on the 2006 halfyear production of 42,500 tonnes. The higher production was due to better oregrades of 1.23% (2006 half year - 1.08%) and marginally higher metallurgicalrecoveries of 77.4% (2006 half year - 75.7%). This was partly offset by lowerore throughput which averaged 27,100 tonnes per day (2006 half year - 28,700tonnes per day). Cash costs rose to 96.9 cents per pound in line with forecastcompared with 79.7 cents per pound in the 2006 half year, mainly due to a higherwaste-to-ore ratio, as well as higher acid consumption and prices and increasedenergy costs. This included the effects of re-negotiating the power supplycontract (including one-off back settlements) in the second quarter of the year.Negotiations with El Tesoro's union for a new labour agreement are not due untilthe beginning of 2009. El Tesoro's results were not affected by commodity hedging in the 2007 halfyear; the 2006 half year included a charge against operating profit of US$43.5million. Further details of the effects of commodity hedging and of instrumentsin place at 30 June 2007 are given in the financial commentary under "DerivativeFinancial Instruments" and in Note 4(b) to the interim financial statements. El Tesoro carried out a review of its mine plan and consequently no longerexpects to process some of the inventory of high carbonate ore accumulated inthe previous year, resulting in the recognition of a provision of US$18.8million. This has resulted partly from higher sulphuric acid prices whichincrease the cost of processing this ore but also partly because El Tesoroexpects eventually to start incorporating some of the surrounding higher gradeoxide deposits which it now controls in place of this inventory. Borrowings were reduced by regular repayments of US$7.0 million, and amounted toUS$21.1 million at 30 June 2007. Full-year production and cash costs are both expected to remain in line withoriginal forecast, at approximately 92,000 tonnes and 100 cents per poundrespectively. Michilla Operating profit in the 2007 half year increased to US$91.3 million (2006 halfyear - US$44.3 million), reflecting continued strong copper prices and thesignificantly lower impact of commodity hedging, partly offset by higherexpected cash costs. Realised copper prices in the period were 315.3 cents per pound (2006 half year- 306.6 cents per pound), reflecting strong LME prices, cathode premiums and toa lesser extent positive pricing adjustments. Production in the period reached 23,400 tonnes of copper cathodes, a marginaldecrease on the 23,800 tonnes produced in the 2006 half year. This reflectedlower ore grades, which averaged 1.04% (2006 half year - 1.10%), offset bymarginally higher ore throughput of 15,300 tonnes per day (2006 half year -15,000 tonnes per day) and improved recoveries of 79.7% (2006 - 76.3%). Cash costs of 132.3 cents per pound were below budget, but have increasedcompared with the 122.0 cents per pound in the first half of 2006, reflectingthe one-off costs of the labour negotiation agreed in May 2007 as discussedbelow, and higher energy, fuel and third-party service costs. The effect ofcommodity hedging on results was significantly lower at US$3.3 million comparedwith US$46.2 million in the first six months of 2006, and further details of theeffects of commodity hedging and of instruments in place at 30 June 2007 aregiven in the financial commentary under "Derivative Financial Instruments" andin Note 4(b) to the interim financial statements. Labour relations at Michilla also remain positive and a new 48 month agreementwas reached with its union in May 2007, in advance of the due date fornegotiations of November. The one-off bonus on conclusion of the new labouragreement amounted to US$2.4 million. Cathode production for the full year is expected to be approximately 45,600tonnes, in line with the original estimate for the year at a similar cash costestimate of 136 cents per pound. Michilla's existing mine plan extends to 2009and it has begun to examine options for a possible extension of mine life,though any eventual decision will depend on the results of further developmentexpenditure and future copper prices. Railway and other transport services Rail and road transport volumes in the first half of 2007 were 2.6 million tons(2006 half year - 2.1 million tons) and 0.7 million tons (2006 half year - 0.8million tons) respectively, a combined increase of 11.6%. The increase in railtonnages was mainly due to the start-up of BHP Billiton's Spence mine, whichcommenced shipments in the second half of 2006, along with increased volumesfrom other customers including additional tonnages from Escondida's sulphideleach operation. Turnover (net of sales to the mining division) increased by12.1% to US$54.7 million in line with increased tonnages. Operating profit (excluding income from associates) increased by 22.7% toUS$17.3 million (2006 half year - US$14.1 million), mainly as a result ofincreased volumes. The 2006 half year was also affected by a number of factorsincluding costs resulting from adverse weather conditions and labour costsfollowing a new union agreement; 2007 did not have these exceptional factors. Transport tonnages should continue to increase in the second half of the yearwith shipments of concentrates from the San Cristobal mine in Bolivia, which hasnow started production. The FCAB's medium to longer term prospects also continueto be positive, with Codelco's Gaby project due to start production in early2008. The rail network also remains well placed to benefit from any furtherincreases in mining activity in northern Chile. Aguas de Antofagasta Aguas de Antofagasta continued to perform well in the 2007 half year. Combinedindustrial and domestic water sales increased by 7.0% from 18.5 million cu. m.in the 2006 first half to 19.8 million cu. m. this period, mainly due to anincrease in sales to industrial customers with the Spence mine startingoperations in the second half of last year. Turnover increased by 3.7% to US$33.4 million as increased volumes were partlyoffset by lower domestic tariffs following the completion of the five-yearlyregulatory review in mid-2006. Operating profit was US$16.1 million, comparedwith US$16.4 million in the first half of 2006, as increased operating costs(including the costs of increasing production from the desalination plant atAntofagasta to meet increased demand) offset the growth in volumes. Projects, exploration and new opportunities Esperanza The Esperanza copper-gold project received board approval for its development atthe end of June 2007 following completion of the feasibility study initiated inAugust 2006. Esperanza is a sulphide deposit located in Chile's II Regionapproximately four kilometres south of the Group's El Tesoro mine. It willproduce copper concentrate containing gold and silver by-product credits througha conventional milling and flotation process, with ore throughput expected toaverage 97,000 tonnes per day. Esperanza has a 15 year mine life based on proven, probable and possible orereserves of 535 million tonnes with an average copper grade of 0.55% and anaverage gold grade of 0.23 g/tonne, based on a cut-off grade of 0.2% equivalentcopper. The total measured, indicated and inferred sulphide resource (includingreserves) based on a cut-off grade of 0.2% copper is 1,130 million tonnes withan average copper grade of 0.45%, an average gold grade of 0.16 g/tonne and anaverage molybdenum grade of 0.011%. In addition, there is an oxide ore resourceof 119 million tonnes with an average copper grade of 0.35%, which mainly formspart of the 170 million tonnes of overburden to be removed throughpre-stripping. The Esperanza project is adjacent to the Group's Telegrafosulphide deposit which ultimately is expected to utilise the Esperanza plant andfacilities and extend the mine life well beyond the initial 15 year mine plan. An environmental impact assessment was submitted in August 2007, with a view toobtaining permission for starting early site works from the first quarter of2008 and obtaining full approval for the project later that year. The projectenvisages using seawater to supply all its water needs. Capital costs are estimated at US$1.5 billion and first production is expectedat the end of 2010. In its first ten years of operation Esperanza is expected toproduce an annual average of approximately 700,000 tonnes of concentratecontaining 195,000 tonnes of payable copper, 229,000 ounces of payable gold and1,556,000 ounces of payable silver. Reko Diq (Tethyan Copper Company Limited) The Group holds a 50% interest in the Tethyan Copper Company Limited("Tethyan"), its joint venture with Barrick Gold Corporation established in2006. Tethyan's principal assets are a 75% interest in the exploration licenceencompassing the Reko Diq prospect in the Chagai Hills region of South-WestPakistan (in which the Government of Balochistan holds the remaining 25%)including the Tanjeel Mineral Resource and the Western Porphyries, and a 100%interest in certain other licences in the region. Tethyan has reported totalindicated and inferred mineral resources at these properties of 2.4 billiontonnes with a copper grade of 0.51% and a gold grade of 0.27g/t. An initial 18-month budget of US$30.5 million (of which 50% is attributable tothe Group) principally for exploration (including a drilling programme ofapproximately 94,000 metres) was established in June 2006; this was increased toUS$46.3 million in the first half of this year to include the costs of a scopingstudy to analyse possible project scenarios and initial pre-feasibility work. Bythe end of June 2007, cumulative expenditure amounted to US$22.5 million andapproximately 56,000 metres of drilling had been completed (including 31,000metres in the 2007 half year). Preliminary exploration results remainencouraging and a new resource estimate and the scoping study are expected to becompleted by the end of the year, with a view to conducting pre-feasibility workduring 2008. A draft mineral agreement to establish the framework for future investment wassubmitted in July to the Federal Government of Pakistan and the Government ofBalochistan for consideration and discussions are expected to take place in thesecond half of this year. Support from both federal and regional governmentsremains strong and the Group continues to believe that the long-term potentialof this investment remains positive. Antucoya The Group has continued its drilling programme at the Antucoya-Buey Muertoproperties, together with pre-feasibility work including initial engineering andtechnical studies. The total budget is US$4.4 million and the studies willexamine the viability of on-site leaching of the deposits to provide enrichedsolution to utilise any excess capacity at Michilla's plant. It is anticipatedthat these studies, including analysis of the drill results, will be completedby the end of 2007. The Antucoya-Buey Muerto properties are sited approximately 40 kilometres fromMichilla. The existing estimate for the combined resource is 460 million tonnesof oxide ore with an average grade of 0.41%. Other exploration activities The Group spent US$16.1 million on exploration activities in the first sixmonths of 2007 (2006 half year - US$8.1 million), including US$0.7 million atEsperanza (2006 half year - US4.4 million, which related mainly to costs of thepre-feasibility study which was then in progress) and US$5.7 million (2006 halfyear - US$1.1 million) relating to its share of exploration costs at Reko Diq. Los Pelambres has continued the second year of its exploration programme toidentify additional deposits beyond the existing 2.9 billion tonne resource,both by drilling the areas surrounding the current mine plan as well as drillingthe existing open pit in greater depth. Expenditure of US$2.5 million wasincurred in the first half of 2007 (2006 half year - US$1.3 million) with afurther 8,000 metres of drilling. It is anticipated that the programme will becompleted by early 2008. The Group also continued with expenditure on its other properties includingthose in the Sierra Gorda district and its target generation programme in Chile.Total costs incurred in the 2007 half year were US$4.2 million (2006 half year -US$1.1 million). Excluding Reko Diq, total expenditure outside Chile amounted to US$3.0 million(2006 half year - US$0.2 million). In July, the Group decided not to continuewith the exploration agreements with Ascendent Copper Corporation in respect ofthe Chaucha deposit in Ecuador and with AngloGold Ashanti in the area ofinterest in southern Colombia, following a review of drilling results achievedto date. In June, the Group also completed the disposal of its 50% interest inCordillera de Las Minas S.A., through which its joint-venture interests in Peruwith Companhia Vale Rio Doce were held, to Panoro Minerals Limited ("Panoro"), acompany listed on the TSX Venture Exchange. The Group's share of theconsideration comprised US$6 million plus 6 million shares in Panoro, valued atUS$3.7 million at the date of disposal, resulting in total consideration ofUS$9.7 million. The Group nevertheless remains committed to its disciplinedstrategy of growth and continues to seek opportunities in mining both in LatinAmerica and worldwide. Dividends The Board has declared an interim ordinary dividend of 3.2 cents per share (2006half year - 3.2 cents per share). In view of the continued strong results thishalf year, the Board has also decided to pay a special dividend of 3.0 cents pershare (2006 half year - 2.0 cents). Accordingly, a total interim dividend of 6.2cents per share will be paid on 11 October 2007 to ordinary shareholders on theregister at the close of business on 21 September 2007. This represents anincrease of 19.2% over the total interim dividend for 2006. Dividends are payable in either US dollars or sterling, and the exchange rate tobe applied to dividends to be paid in sterling will be set on 25 September 2007. Current Trading Prospects The copper market remained volatile during the 2007 half year, with LME pricesincreasing from 281 cents per pound at the beginning of the year to 347 cents atthe end of June, but falling to around 240 cents in February and peaking at over370 cents in May. More recently, the market has weakened again as concerns inthe United States have affected sentiment in commodity markets, with the LMEprice falling to a current level of around 332 cents. Fundamentals for the copper market nevertheless remain strong, with inventoriesremaining at historically low levels. Despite uncertainties over the UnitedStates, demand remains strong in both Europe and Asia, with Chinese imports ofrefined copper in the 2007 half year exceeding imports in the 2006 calendaryear. Supply continues to be affected by disruptions, including labour disputesduring the first half in Chile, Mexico, Peru and Canada. Growth also remainsconstrained by previous under-investment, equipment availability, labourshortages and longer lead times for environmental permitting. The market isexpected to remain in balance in 2007 with a small surplus possible thefollowing year, although this will continue to be subject to supply-side risks.The outlook for prices remains positive and this should continue well into 2008.Nevertheless, the increased role of investment funds in commodity markets hasmade base metal prices more sensitive to changes in market sentiment, andaccordingly short-term copper prices are expected to remain volatile. The concentrate market remains in favour of producers, with the deficit whichdeveloped in 2006 continuing to intensify as further smelting capacity continuesto come on stream without corresponding increases in mine production. Mostmid-year negotiations have been agreed at around US$50 per dry metric tonne ofconcentrate for smelting and 5.0 cents per pound of copper for refining with nilprice participation, compared with US$60 and 6.0 cents and nil priceparticipation for the 2007 calendar year. Most commentators expect theconcentrate deficit to remain to at least 2009, with the market balancingthrough reduced utilisation rates by smelters. The molybdenum market has also remained strong, improving from around US$25 perpound at the beginning of the year and remaining at over US$30 per pound sinceMay. The market is expected to remain strong, with continued demand from thesteel and catalyst sectors combined with limited supply increases. Inventorylevels for molybdenum remain low and the market, which also continues to bevulnerable to supply disruptions, is expected to remain in deficit until atleast 2008. Group copper production for 2007 is expected to be around 449,000 tonnes,compared with the original forecast of 457,000 tonnes. Nevertheless, full yearmolybdenum production is expected to increase slightly from the originalforecast of 11,000 tonnes, and if prices remain at the current level this couldlargely offset the expected lower copper output. On-site and shipping costs forthe Group's three mines, while higher than in 2006, are expected to remain inline with forecasts for the year, although industry-wide cost pressures fromlabour, fuel and energy persist. Treatment and refining charges should remain atlevels favouring producers, with price participation having less of an impactthan in previous years following the 2007 calendar year negotiations. The Group also expects to advance with its capital projects in the second halfof the year, including completion of the Mauro tailings dam; continued progresson the recently approved Esperanza project; and completion of the drillingprogramme and scoping study at Reko Diq. The Group, supported by its soundfinancial position, believes that it has a number of prospects that willcontinue to enhance its production profile in the medium to longer term. Inaddition, it will continue to seek opportunities globally to secure furtherworld-class mining assets. FINANCIAL COMMENTARY FOR THE HALF YEAR TO 30 JUNE 2007 Results Turnover Group turnover in the 2007 half year increased by 5.2% to US$1,942.1 million,compared with US$1,846.9 million in the first six months of 2006. The increasewas mainly due to higher molybdenum prices and volumes, lower tolling chargesfor copper concentrate and higher sales at the transport and water divisions.These factors were partly offset by lower copper revenues due mainly to adecrease in realised prices while copper sales volumes remained substantiallyunchanged. Turnover from copper concentrate and copper cathodes Turnover from copper concentrate sales and copper cathode sales from the Group'sthree mines decreased by 1.8% to US$1,509.1 million compared with US$1,537.4million in the 2006 half year. The Group's average realised copper price decreased by 4.1% to 338.9 cents perpound (2006 half year - 353.4 cents per pound), despite an increase in theaverage LME copper price in the 2007 half year to 307.0 cents per pound comparedwith 275.3 cents per pound in the 2006 half year. Realised copper prices aredetermined by comparing turnover (gross of tolling charges) with sales volumesin the period. Realised copper prices differ from market prices mainly because,in line with industry practice, concentrate and cathode sales agreementsgenerally provide for provisional pricing at the time of shipment with finalpricing based on the average market price for future periods (normally about 30days after delivery to the customer in the case of cathode sales and up to 180days after delivery to the customer in the case of concentrate sales). Thedecrease in realised copper prices was due to lower positive provisional pricingadjustments in the 2007 half year as the level of increase in the LME copperprice in that period was less than in the comparable period in 2006. In the case of Los Pelambres, pricing adjustments added US$142.4 million toinitially invoiced sales before deducting tolling charges in the 2007 half year(when the LME copper price increased from 285 cents per pound at the beginningof the year to 347 cents at the end of June), compared with US$348.8 million inthe 2006 half year (when the LME copper price increased from 208 cents per poundat the beginning of that year to 340 cents at the end of June 2006). The 2007first half adjustments comprised US$22.0 million in respect of sales invoiced in2006 (net of mark-to-market adjustments at the end of 2006) which were finallypriced in 2007 and US$120.4 million in respect of sales invoiced in 2007(including mark-to-market adjustments for open sales at the end of the period ofUS$56.7 million). Pricing adjustments for the first half of 2007 (which relatemainly to sales invoiced in 2007) added US$5.2 million at El Tesoro (2006 halfyear - US$18.6 million) and US$2.2 million at Michilla (2006 half year - US$12.7million). Further details are given in Note 4(a) to the interim resultsannouncement. El Tesoro and Michilla also continued to benefit from strongcathode premiums. In the first half of 2007, turnover also included a loss of US$3.3 million oncommodity derivatives at Michilla which matured during the period under thehedge accounting provisions of IAS 39 "Financial Instruments: Recognition andMeasurement" which were applied with effect from 1 January 2007. As explainedbelow, during 2006 losses on the commodity derivatives were recognised withinother operating expenses. Copper sales volumes increased marginally by 0.4% from 213,200 tonnes in the2006 half year to 214,100 tonnes this half year, as timing differences inshipment and loading schedules partly offset an increase in Group copperproduction of 2.0% to 212,100 tonnes (2006 half year - 207,900 tonnes). Tolling charges for copper concentrates at Los Pelambres decreased by 26.6% fromUS$123.6 million in the 2006 half year to US$90.7 million, mainly as a result ofreduced price participation following annual negotiations for the 2007 calendaryear. Tolling charges are deducted from concentrate sales in reporting turnoverand hence the decrease in these charges has had a positive impact on turnovercompared with the 2006 first half. Turnover from by-products Turnover from by-products at Los Pelambres increased by 50.9% to US$344.9million in the 2007 half year compared with US$228.5 million in the 2006 halfyear, mainly due to both higher molybdenum market prices and increased salesvolumes. Molybdenum revenues (net of roasting charges) were US$320.5 million(2006 half year - US$210.0 million). The realised molybdenum price increased by 36.1% to US$30.9 per pound in the2007 half year (2006 half year - US$22.7 per pound), mainly due to the increasein the market price which averaged US$28.4 per pound compared with US$23.7 perpound in the first half of 2006. Molybdenum sales are also subject toprovisional pricing and as prices strengthened during the first half of thisyear, realised prices were marginally higher than the average market price. Incontrast, during the first half of 2006 weakening prices caused the realisedprice to be lower than the market price. Molybdenum sales of 4,900 tonnes were 11.4% higher than sales of 4,400 tonnes inthe first half of 2006, reflecting the increased production in the currentperiod and inventory movements in the first half of 2006. Credits received for gold and silver contained in copper concentrate soldincreased to US$24.4 million (2006 half year - US$18.5 million). Turnover from the transport and water divisions Turnover from the transport division (FCAB) increased by US$5.9 million or 12.1%to US$54.7 million, reflecting increased volumes due to the impact of the Spenceproject (which commenced shipments in the second half of 2006), as well asincreased volumes from other clients. Turnover at Aguas de Antofagasta, which operates the Group's water business,increased by US$1.2 million or 3.7% to US$33.4 million, mainly due to improvedsales to industrial customers including Spence, partly offset by lower tariffsto domestic customers following the tariff review in mid-2006. Operating profit from subsidiaries and joint ventures and EBITDA Operating profit from subsidiaries and joint ventures was US$1,392.8 million inthe 2007 half year, 6.7% higher than the first six months of 2006 (US$1,304.9million). Operating profit at the mining division was US$1,359.4 million, compared toUS$1,274.4 million in the first half of 2006, mainly reflecting the increasedrevenues discussed above and lower costs from commodity hedging, partly offsetby higher operating costs at the Group's three mines. Excluding by-product credits (which are reported as part of turnover) andtolling charges for concentrates (which are deducted from turnover), weightedaverage cash costs for the Group (comprising on site and shipping costs in thecase of Los Pelambres and cash costs in the case of the other two operations)increased from 68.1 cents per pound in the 2006 half year to 85.1 cents in the2007 half year. This reflected the impact of higher input costs (including thecosts of the one-off bonus payments on the conclusion of labour negotiations atLos Pelambres and Michilla and the re-negotiation of the power supply contractat El Tesoro), lower ore grades at Los Pelambres and a higher waste-to-ore ratioat El Tesoro. During the 2006 half year a loss of US$89.7 million (of which US$43.5 millionrelated to El Tesoro and US$46.2 million related to Michilla) was recognisedwithin other operating expense in respect of commodity derivatives, relatingboth to amounts realised on instruments maturing during the period and netmark-to-market adjustments prior to the adoption of the hedge accountingprovisions of IAS 39. As noted above, during the 2007 half year a loss of US$3.3million relating to commodity derivatives at Michilla which matured in theperiod has been recorded within turnover, along with a net mark-to-market lossof US$14.7 million deferred in equity. Operating profits (excluding income from associates) at the transport divisionincreased to US$17.3 million (2006 half year - US$14.1 million) reflecting theincreased volumes. Aguas de Antofagasta contributed US$16.1 million comparedwith US$16.4 million in the 2006 half year, with revenues from increased volumesbeing offset by lower domestic tariffs and higher operating costs. EBITDA (earnings before interest, tax, depreciation and amortisation) in the2007 half year was US$1,470.8 million, compared with US$1,374.7 million in thefirst half of 2006, up 7.0%. This is calculated by adding back to operatingprofit from subsidiaries and joint ventures the items of depreciation andamortisation of US$75.1 million (2006 half year - US$65.3 million) and loss ondisposals of property, plant and equipment of US$2.9 million (2006 half year -US$4.5 million). Higher depreciation and amortisation charges resulted mainlyfrom the amortisation of fair value adjustments following the acquisition ofEquatorial Mining Limited in the second half of 2006. The Group's share of net profit from its 30% investment in Antofagasta TerminalInternacional S.A. ("ATI") was US$0.8 million (2006 half year - US$0.5 million). Net finance income Net finance income in the 2007 half year was US$43.1 million, compared withUS$19.9 million in the six months ended 30 June 2006. Interest receivable increased from US$34.5 million to US$53.8 million, mainlydue to the higher level of cash and deposit balances but also higher marketinterest rates compared with the 2006 half year. Interest expense (excluding the mark-to-market effect of interest ratederivatives) decreased from US$13.2 million in the first half of 2006 toUSS$11.3 million, reflecting the reduced level of borrowings due to scheduledloan repayments since the previous period. Foreign exchange gains included in finance items were US$0.6 million, comparedwith a loss of US$1.7 million in the 2006 half year. No interest derivativeswere held during the current period and so no mark-to-market gains or lossesarose, compared to a mark-to-market gain of US$0.3 million in the first half of2006. Profit before tax The resulting profit before tax for the period increased by 8.4% to US$1,436.7million compared with US$1,325.3 million in the first half of 2006, reflectingthe improved operating results and increased finance income. Income tax expense The rate of first category (i.e. corporation) tax in Chile is 17% for both 2007and 2006. Los Pelambres, El Tesoro and Michilla are also subject to a mining tax(royalty) which imposes an additional tax of 4% of tax-adjusted operatingprofit. For 2006 and 2007, 50% of the new mining tax can be offset against firstcategory tax and the remaining 50% is tax deductible (i.e. an allowable expensein determining liability to first category tax). From 2008, when the ability tooffset will no longer be available, 100% of the new mining tax will be taxdeductible. The effect is to increase the effective tax rate of these threeoperations (before taking into account deductibility against corporation tax) byapproximately 2% in 2006 and 2007 and 4% thereafter. In addition to firstcategory tax and the new mining tax, the Group incurs withholding taxes on theremittance of profits from Chile. Tax (including deferred tax) amounted to US$331.7 million (2006 half year -US$255.0 million), with the increase compared with 2006 mainly due to the higherlevel of withholding tax recorded in the first half of this year, as explainedbelow. Including both current and deferred taxes, this comprises corporate taxof US$238.3 million (2006 half year - US$221.6 million), the Chilean mining taxof US$25.6 million (2006 half year - US$24.4 million) and provision forwithholding taxes of US$68.1 million (2006 half year - US$9.6 million). This waspartly offset by exchange gains on corporate tax balances of US$0.3 million(2006 half year - US$0.6 million). As a result of these factors, the effective tax rate for the Group for the sixmonths ended 30 June 2007 was 23.1% (2006 half year - 19.2%), compared with theChilean statutory tax rate of 17%. The increase in the effective tax rate in the2007 half year, compared with the first half of 2006, is principally due to ahigher level of deferred withholding taxes as a result of the requirements ofIFRS with respect to intercompany dividends recognised in the period. This hasresulted in an effective tax rate similar to the 2006 full year of 23.3%. During2006, a higher proportion of deferred withholding taxes was recognised in thesecond half of the year resulting in an effective tax rate of 26.7% comparedwith 19.2% in the first half of that year. Minority interests Profit attributable to minority interests decreased to US$376.6 million (2006half year - US$417.7 million), representing 34.1% of Group profit after tax(2006 half year - 39.0%). The decrease was mainly due to the acquisition ofEquatorial Mining Limited in the second half of 2006 which had the effect ofeliminating the 39% minority interest at El Tesoro, thereby reducing theminority interest charge in the period by US$66.1 million. Earnings per share As a result of the factors set out above, profit attributable to equityshareholders of the Company was US$728.4 million compared with US$652.6 millionin the first half of 2006. Accordingly, basic earnings per share increased by 11.6% to 73.9 cents in thefirst half of 2007 compared with 66.2 cents for the 2006 half year. Derivative financial instruments The Group periodically uses derivative financial instruments to reduce exposureto commodity price movements. The Group does not use such derivative instrumentsfor speculative trading purposes. The Group has applied the hedge accounting provisions of IAS 39 "FinancialInstruments: Recognition and Measurement" with effect from 1 January 2007. Fromthat date, changes in the fair value of derivative financial instruments thatare designated and effective as hedges of future cash flows have been recogniseddirectly in equity, with any ineffective portion recognised immediately in theincome statement. Realised gains and losses on commodity derivatives recognisedin the income statement have been recorded within turnover. Prior to 1 January2007 derivatives were measured at fair value through the income statement, withboth realised and unrealised gains or losses on commodity derivatives beingrecorded within other operating income or expense. The impact of such instruments on the Group's results for the period is set outabove in the sections on turnover and operating profit from subsidiaries, and inNotes 4(b) and 5 to the interim financial statements. At 30 June 2007, the Group had min/max instruments for 86,200 tonnes of copperproduction (of which 76,800 tonnes related to El Tesoro and 9,400 tonnes relatedto Michilla), covering a total period to 31 December 2009 and with a weightedaverage floor of 261.0 cents per pound and a weighted average cap of 389.4 centsper pound. The remaining weighted average period covered by the individualhedges calculated with effect from 1 July 2007 is 13.6 months. The Group alsohad futures at Michilla for 8,400 tonnes of copper production covering a totalperiod to 31 December 2007 with an average price of 306.9 cents. The weightedaverage duration of these hedges from 1 July 2007 is 3.5 months. It also hadfutures to both buy and sell copper production at El Tesoro, with the effect ofswapping COMEX prices for LME prices without eliminating underlying market priceexposure. These hedges covered a total period to 31 January 2008 and have aweighted average price of US 312.0 cents. The weighted average duration of theseinstruments from 1 July 2007 is 4 months. These instruments represent approximately 80% of Michilla's forecast productionfor the remainder of 2007 and 35% of El Tesoro's forecast production to the endof 2009, and the Group's exposure to the copper price will be limited to theextent of these instruments. Details of the mark-to-mark position of theseinstruments at 30 June 2007, together with details of any interest and exchangederivatives held by the Group, are given in Note 4(b) to the interim financialstatements. Cash flows, cash and debt Cash flows from operations were US$1,349.3 million in the first six months of2007, up 29.1% compared with US$1,045.4 million in the same period last year,reflecting the improved operating results adjusted for depreciation,amortisation and working capital movements. The movement in working capital wasparticularly material in the 2006 half year due to the effect of the significantincrease in the copper price on the level of trade debtors during that period. A dividend of US$1.3 million (2006 half year - US$0.3 million) was received fromthe Group's investment in ATI. Cash tax payments in the first half of 2007 were US$363.0 million (2006 halfyear - US$265.4 million), comprising corporation tax of US$299.4 million (2006half year - US$208.9 million) and mining tax of US$64.8 million (2006 half year- US$3.9 million), partly offset by a withholding tax rebate of US$1.2 million(2006 half year - payment of US$52.6 million). Withholding taxes of US$118.8million relating to remittance of cash to cover the June dividend payment weresettled in July 2007. These amounts differ from the current tax charge in theconsolidated income statement of US$343.9 million (2006 half year - US$278.5million) because cash tax payments partly comprise monthly payments on accountin respect of current year profits and partly comprise the settlement of theoutstanding balance for the previous year. Cash proceeds from disposals of interests in subsidiaries, joint ventures andavailable for sale investments amounted to US$27.5 million in the 2007 halfyear; there were no comparable proceeds in the 2006 half year. This comprisedUS$4.9 million received at the beginning of the period from the sale ofEquatorial North America Inc. in December 2006; US$6.0 million for the cashelement of the sale of the Group's interest in Cordillera de Las Minas S.A. toPanoro Minerals Limited and US$16.6 million for the sale of shares in MercatorMinerals Limited. No acquisitions were made in the 2007 half year; in the 2006half year the Group paid US$166.3 million on the acquisition of Tethyan CopperCompany Limited (with the part disposal to Barrick Gold Corporation andelimination of BHP Billiton's Claw-back Right as well as the acquisition ofEquatorial Mining Limited taking place in the second half of that year). Capital expenditure was US$241.6 million in the period (2006 half year -US$279.6 million). Expenditure in the first six months of 2007 included US$95.7million relating to the Mauro tailings dam project, US$40.4 million relating tothe completion of the 140,000 tpd plant expansion project, and US$10.5 millionrelating to preliminary work on the possible further repowering, all at LosPelambres. In addition, US$10.8 million was spent in the first half of 2007relating to the feasibility study on Esperanza. Dividends (including special dividends) paid to ordinary shareholders of theCompany in the first six months of this year were US$423.8 million (2006 halfyear - US$185.3 million), which related to the final dividend declared inrespect of the previous year. Dividends paid by subsidiaries to minorityshareholders were US$307.2 million (2006 half year - US$204.2 million),principally due to increased distributions by Los Pelambres. Repayments of borrowings and finance leasing obligations in the first six monthsof 2007, mainly at Los Pelambres and El Tesoro, were US$49.3 million (2006 halfyear - US$48.7 million). New borrowings in the period amounted to US$2.3 million(2006 half year - nil). Details of other cash inflows and outflows in the period are contained in theConsolidated Cash Flow Statement. At 30 June 2007, the Group had cash and cash equivalents of US$1,847.5 million(2006 half year - US$1,238.8 million). Excluding the minority share in eachpartly-owned operation, the Group's attributable share of total cash and cashequivalents was US$1,707.4 million (2006 half year - US$1,009.3 million). Total Group borrowings at 30 June 2007 were US$311.9 million (2006 half year -US$417.1 million). Of this, US$199.0 million (2006 half year - US$254.6 million)is proportionally attributable to the Group after excluding the minorityshareholdings in partly-owned operations. The decrease in debt is mainly due tofurther principal repayments at Los Pelambres and El Tesoro as explained above. Balance Sheet Net equity (i.e. equity attributable to ordinary shareholders of the Company)increased from US$3,155.1 million at the beginning of the year to US$3,455.5million at 30 June 2007, relating mainly to profit after tax and minorityinterests for the period of US$728.4 million less the ordinary dividend for 2006of US$423.8 million which was approved and paid in the first half of 2007. Otherchanges relate mainly to movements in the fair value of hedges and available forsale investments and the currency translation adjustment; these are set out inthe Consolidated Statement of Changes in Equity. Minority interests increased from US$793.0 million at the beginning of the yearto US$859.8 million, principally reflecting the minority's share of profit aftertax less the minority's share of the dividends approved or paid by subsidiariesin the period. Other movements affecting minority interest are also set out inthe Consolidated Statement of Changes in Equity. Condensed Consolidated Income Statement Six months Six months Year ended ended ended 30.06.07 30.06.06 31.12.06 Notes US$'m US$'m US$'m Group turnover 2,3 1,942.1 1,846.9 3,870.0 Total operating costs (549.3) (542.0) (1,065.9) ------- ------- -------Operating profit from subsidiaries 2,3 1,392.8 1,304.9 2,804.1and joint ventures Share of income from associate 12 0.8 0.5 1.1 ------- ------- -------Total profit from operations and 2 1,393.6 1,305.4 2,805.2associates ------- ------- -------Investment income 53.8 34.5 78.3Interest expense (11.3) (13.2) (26.4)Other finance items 0.6 (1.4) 1.9 ------- ------- ------- Net finance income 5 43.1 19.9 53.8 ------- ------- -------Profit before tax 1,436.7 1,325.3 2,859.0 Income tax expense 6 (331.7) (255.0) (664.9) ------- ------- -------Profit for the financial period 1,105.0 1,070.3 2,194.1 ======= ======= ======= Attributable to: ------- ------- -------Minority interests 376.6 417.7 839.8 Equity holders of the Company (net 728.4 652.6 1,354.3earnings) ------- ------- ------- US cents US cents US cents Basic earnings per share 7 73.9 66.2 137.4 ======= ======= ======= Dividends to ordinary shareholdersof the Company Per share US cents US cents US centsDividends per share proposed in 8relation to the period - ordinary dividend (interim) 3.2 3.2 3.2 - ordinary dividend (final) - - 5.0 - special dividend (interim) 3.0 2.0 2.0 - special dividend (final) - - 38.0 ------- ------- ------- 6.2 5.2 48.2 ======= ======= =======Dividends per share paid in theperiod and deducted from netequity - ordinary dividend (interim) - - 3.2 - ordinary dividend (final) 5.0 4.8 4.8 - special dividend (interim) - - 2.0 - special dividend (final) 38.0 14.0 14.0 ------- ------- ------- 43.0 18.8 24.0 ======= ======= ======= In aggregate US$'m US$'m US$'m Dividends proposed in relation to 8 61.1 51.3 475.2the period ======= ======= ======= Dividends paid in the period and 423.8 185.3 236.6deducted from net equity ======= ======= ======= Turnover and operating profit are derived from continuing operations. There was no potential dilution of earnings per share in any period set outabove. Condensed Consolidated Balance Sheet At At At 30.06.07 30.06.06 31.12.06 Notes US$'m US$'m US$'mNon-current assetsIntangible assets 9 204.3 321.2 205.3Property, plant and equipment 10 2,508.1 2,025.4 2,373.7Investment property 11 3.2 3.2 3.2Investment in associate 12 3.0 3.0 3.5Derivative financial instruments 4 1.9 - -Available for sale investments 14 4.0 0.2 6.2Deferred tax assets 19 7.6 6.8 3.1 -------- -------- -------- 2,732.1 2,359.8 2,595.0 -------- -------- --------Current assetsInventories 15 109.4 116.1 120.3Trade and other receivables 670.0 756.4 549.4Current tax assets 4.7 4.6 7.5Derivative financial instruments 4 0.9 - 7.3Cash and cash equivalents 22 1,847.5 1,238.8 1,805.5 -------- -------- -------- 2,632.5 2,115.9 2,490.0 -------- -------- --------Total assets 5,364.6 4,475.7 5,085.0 ======== ======== ======== Current liabilitiesShort-term borrowings 16,22 (101.8) (97.0) (97.6)Derivative financial instruments 4 (1.6) (43.8) -Trade and other payables (190.7) (220.6) (211.5)Current tax liabilities (182.8) (121.1) (204.8) -------- -------- -------- (476.9) (482.5) (513.9) -------- -------- --------Non-current liabilitiesMedium and long term borrowings 16,22 (210.1) (320.1) (261.1)Derivative financial instruments 4 (12.0) - -Trade and other payables (2.9) (3.2) (4.8)Post-employment benefit obligations 17 (24.3) (20.6) (24.1)Long-term provisions 18 (10.3) (10.0) (9.8)Deferred tax liabilities 19 (312.9) (201.6) (323.2) -------- -------- -------- (572.5) (555.5) (623.0) -------- -------- --------Total liabilities (1,049.4) (1,038.0) (1,136.9) ======== ======== ========Net assets 4,315.2 3,437.7 3,948.1 ======== ======== ======== EquityShare capital 20 89.8 89.8 89.8Share premium 20 199.2 199.2 199.2Hedging, translation and fair value 10.5 10.4 12.3reservesRetained earnings 3,156.0 2,203.4 2,853.8 -------- -------- --------Net equity attributable to equity 3,455.5 2,502.8 3,155.1holders of the Company Minority interests 859.7 934.9 793.0 -------- -------- --------Total equity 4,315.2 3,437.7 3,948.1 ======== ======== ======== The interim financial information was approved by the Board of Directors on 28August 2007. Condensed Consolidated Cash Flow Statement Six months Six months Year ended ended ended 30.06.07 30.06.06 31.12.06 Notes US$'m US$'m US$'m Cash flows from operations 21 1,349.3 1,045.4 2,810.1Interest paid (10.7) (14.1) (24.6)Dividends from associate 12 1.3 0.3 0.4Income tax paid (363.0) (265.4) (498.2) -------- -------- --------Net cash from operating activities 976.9 766.2 2,287.7 -------- -------- -------- Investing activitiesAcquisition of subsidiaries 23 - (166.3) (487.5)Disposal and part-disposal of 23 4.9 - 84.3subsidiariesDisposal of joint venture interest 6.0 - -Disposal of available for sale 16.6 - -investmentsRecovery of Chilean VAT paid on 5.1 5.4 8.7purchase of water concessionPurchases of property, plant and (241.6) (279.6) (506.6)equipmentInterest received 52.0 34.5 77.6 -------- -------- --------Net cash used in investing (157.0) (406.0) (823.5)activities -------- -------- -------- Financing activitiesDividends paid to equity holders of (423.8) (185.3) (236.6)the CompanyDividends paid to preference (0.1) (0.1) (0.2)shareholders of the CompanyDividends paid to minority interests (307.2) (204.2) (630.6)Net proceeds from issue of new 2.3 - 3.8borrowingsRepayments of borrowings (48.9) (48.0) (109.6)Repayments of obligations under (0.4) (0.7) (1.8)finance leases -------- -------- --------Net cash used in financing (778.1) (438.3) (975.0)activities -------- -------- -------- Net increase/(decrease) in cash and 41.8 (78.1) 489.2cash equivalents ======== ======== ======== Cash and cash equivalents at 1,805.5 1,316.8 1,316.8beginning of the periodNet increase/(decrease) in cash and 41.8 (78.1) 489.2cash equivalentsEffect of foreign exchange rate 0.2 0.1 (0.5)changes -------- -------- --------Cash and cash equivalents at end of 22 1,847.5 1,238.8 1,805.5the period ======== ======== ======== Condensed Consolidated Statement of Changes in Equity For the six months ended 30 June 2006 Share Share Hedging Fair Translation Retained Net Minority Total capital premium reserve value reserve earnings equity interests reserve US$'m US$'m US$'m US$'m US$'m US$'m US$'m US$'m US$'m Balance at 1 16.6 272.4 - - 16.6 1,736.1 2,041.7 721.3 2,763.0January 2006 Profit for the - - - - - 652.6 652.6 417.7 1,070.3financial periodCurrency - - - - (6.2) - (6.2) 0.1 (6.1)translation adjustmentCapitalisationof share premiumon bonus issue 73.2 (73.2) - - - - - - -of ordinary sharesDividends - - - - - (185.3) (185.3) (204.2) (389.5) ----- ------ ------ ------ ------- ------ ------ ------ ------Balance at 30 89.8 199.2 - - 10.4 2,203.4 2,502.8 934.9 3,437.7June 2006 ===== ====== ====== ====== ======= ====== ====== ====== ====== For the year ended 31 December 2006 Share Share Hedging Fair Translation Retained Net Minority Total capital premium reserve value reserve earnings equity interests reserve US$'m US$'m US$'m US$'m US$'m US$'m US$'m US$'m US$'m Balance at 1 16.6 272.4 - - 16.6 1,736.1 2,041.7 721.3 2,763.0January 2006 Profit for the - - - - - 1,354.3 1,354.3 839.8 2,194.1financial yearCurrency - - - - (4.3) - (4.3) - (4.3)translation adjustmentCapitalisationof share premiumon bonus issue 73.2 (73.2) - - - - - - -of ordinary sharesAcquisition of - - - - - - - (137.5) (137.5)minority interestDividends - - - - - (236.6) (236.6) (630.6) (867.2) ----- ------ ------ ------ ------- ------ ------ ------ ------Balance at 31 89.8 199.2 - - 12.3 2,853.8 3,155.1 793.0 3,948.1December 2006 ===== ====== ====== ====== ======= ====== ====== ====== ====== For the six months ended 30 June 2007 Share Share Hedging Fair Translation Retained Net Minority Total capital premium reserve value reserve earnings equity interests reserve US$'m US$'m US$'m US$'m US$'m US$'m US$'m US$'m US$'m Balance at 1 89.8 199.2 - - 12.3 2,853.8 3,155.1 793.0 3,948.1January 2007 Profit for the - - - - - 728.4 728.4 376.6 1,105.0financial periodCurrency - - - - 4.8 - 4.8 - 4.8translation adjustmentLosses in fairvalue of cashflow hedges - - (8.4) - - (2.9) (11.3) (3.3) (14.6)deferred in reservesGains in fairvalue of cashflow hedgestransferred tothe income statement - - (0.1) - - - (0.1) - (0.1)Gains in fairvalue ofavailable for - - - 10.7 - - 10.7 - 10.7sale investmentsGains in fairvalue ofof available forsale investmentstransferred tothe income statement - - - (10.5) - - (10.5) - (10.5) Deferred taxeffects arisingfrom hedge accounting - - 1.7 - - 0.5 2.2 0.6 2.8Dividends - - - - - (423.8) (423.8) (307.2) (731.0) ----- ------ ------ ------ ------- ------ ------ ------ ------Balance at 30 89.8 199.2 (6.8) 0.2 17.1 3,156.0 3,455.5 859.7 4,315.2June 2007 ===== ====== ====== ====== ======= ====== ====== ====== ====== Notes 1. General information and accounting policies a) General information These June 2007 interim consolidated financial statements ("the interimfinancial statements") are for the six months ended 30 June 2007. The interimfinancial statements are unaudited. The information for the year ended 31 December 2006 does not constitutestatutory accounts as defined in section 240 of the Companies Act 1985. A copyof the statutory accounts for that year has been delivered to the Registrar ofCompanies. The auditors' report on these accounts was unqualified and did notcontain a statement under section 237(2) (regarding adequacy of accountingrecords and returns) or section 237(3) (regarding provision of necessaryinformation and explanations) of the Companies Act 1985. b) Accounting policies The interim financial statements have been prepared in accordance withInternational Financial Reporting Standards ("IFRSs") including IAS 34 "InterimFinancial Reporting". For these purposes, IFRSs comprise the Standards issued bythe International Accounting Standards Board ("IASB") and Interpretations issuedby the International Financial Reporting Interpretations Committee ("IFRIC")that have been endorsed by the European Union. The interim financial information has also been prepared on the basis ofaccounting policies consistent with those applied in the financial statementsfor the year ended 31 December 2006 (except in relation to the application bythe Group of the hedge accounting provisions of IAS 39 "Financial Instruments:Recognition and Measurement" with effect from 1 January 2007 as set out in Note4(b)). This change does not have any effect on prior year comparatives. Change in accounting policies In the current financial year, the Group will adopt IFRS 7 "FinancialInstruments: Disclosures" for the first time. As IFRS 7 is a disclosurestandard, there is no impact of that change in accounting policy on thehalf-yearly financial report. Full details of the change will be disclosed inour annual report for the year ending 31 December 2007. There are no other Standards or Interpretations which apply or are expected toapply for the first time for the year ending 31 December 2007 which are expectedto have any material impact on the Group. 2. Total profit from operations and associates Six months Six months Year ended ended ended 30.06.07 30.06.06 31.12.06 US$'m US$'m US$'m Turnover 1,942.1 1,846.9 3,870.0Cost of sales (470.3) (367.3) (805.1) -------- -------- --------Gross profit 1,471.8 1,479.6 3,064.9Administrative expenses (82.8) (70.6) (152.6)Closure provision (0.3) (0.2) (0.6)Severance charges (1.3) (4.6) (7.7)Exploration costs (16.1) (8.1) (21.5)Other operating income 24.6 0.8 10.3Other operating expenses (3.1) (92.0) (88.7) -------- -------- --------Operating profit from 1,392.8 1,304.9 2,804.1subsidiaries and joint venturesShare of income from associate 0.8 0.5 1.1 -------- -------- --------Total profit from operations and 1,393.6 1,305.4 2,805.2associates ======== ======== ======== Notes to total profit from operations and associates (i) In the current period, cost of sales includes an inventorywrite-off of US$18.8 million relating to high carbonate ore inventories at ElTesoro (see Note 15). (ii) In the current period, other operating income includes again of US$10.5 million relating to the disposal of shares held in MercatorMinerals Ltd (see Note 14), a gain of US$9.7 million relating to the disposal ofthe Cordillera de las Minas joint venture to Panoro Minerals Ltd (see Note 13),and a gain of US$1.6 million from a settlement in respect of the remainingconsideration receivable for the disposal of Minera Tamaya S.A. in 2002. Theseitems totalled US$21.8 million. (iii) In 2006, other operating expenses included losses oncommodity derivatives prior to the application of the hedge accountingprovisions of IAS 39 "Financial Instruments: Recognition and Measurement" witheffect from 1 January 2007 (see Note 3(a)(vii) and Note 4(b)). 3. Segmental analysis Based on risks and returns, the Directors consider the primary reporting formatis by business segment and the secondary reporting format is by geographicalsegment. The Group considers its business segments to be Los Pelambres, ElTesoro, Michilla, exploration, railway and other transport services and thewater concession. Corporate and other items principally relate to the costsincurred by the Company and Antofagasta Minerals S.A., the Group's miningcorporate centre, which are not allocated to any individual business segment.The classification reflects the Group's management structure. The amountspresented for each business segment exclude any amounts relating to theinvestment in Antofagasta Terminal Internacional S.A., an associate which isheld through the railway and other transport services segment. a) Turnover, EBITDA and operating profit /(loss) fromsubsidiaries analysed by business segment Turnover EBITDA Operating profit/(loss) from ---------- -------- subsidiaries and joint ventures --------------------------- Six Six Year Six Six Year Six Six Year months months ended months months ended months months ended ended ended 31.12.06 ended ended 31.12.06 ended ended 31.12.06 30.06.07 30.06.06 30.06.07 30.06.06 30.06.07 30.06.06 US$'m US$'m US$'m US$'m US$'m US$'m US$'m US$'m US$'m Los Pelambres 1,354.5 1,312.8 2,701.3 1,122.1 1,130.5 2,297.0 1,087.0 1,097.6 2,223.7El Tesoro 332.0 287.5 664.8 213.3 168.2 456.0 188.4 149.6 409.9Michilla 167.5 165.6 334.9 97.1 51.5 158.4 91.3 44.3 145.5Exploration - - - (16.1) (8.1) (21.5) (16.1) (8.1) (21.5)Corporate - - - 9.1 (8.4) (16.9) 8.8 (9.0) (17.6)and other items ------ ------ ------ ------ ------ ------ ------ ------ ------Mining 1,854.0 1,765.9 3,701.0 1,425.5 1,333.7 2,873.0 1,359.4 1,274.4 2,740.0Railway and 54.7 48.8 105.3 24.4 19.3 42.9 17.3 14.1 32.6other transport servicesWater concession 33.4 32.2 63.7 20.9 21.7 41.4 16.1 16.4 31.5 ------ ------ ------ ------ ------ ------ ------ ------ ------Group 1,942.1 1,846.9 3,870.0 1,470.8 1,374.7 2,957.3 1,392.8 1,304.9 2,804.1turnover(segmentrevenue),EBITDA andoperatingprofit fromsubsidiariesand jointventures(segmentresult) ====== ====== ====== ====== ====== ====== ====== ====== ====== Notes to turnover by business segment (segment revenue) (i) Turnover by business segment equates to segment revenue asdefined by IAS 14. Turnover from railway and other transport services is statedafter eliminating inter-segmental sales to the mining division of US$5.0 million(2006 half year - US$4.5 million; 2006 full year - US$9.6 million). (ii) Turnover includes the effect of both final pricing andmark-to-market adjustments to provisionally priced sales of copper andmolybdenum concentrates and copper cathodes. Further details of such adjustmentsare given in Note 4(a). (iii) In the current period turnover includes realised losses oncommodity derivatives at Michilla of US$3.3 million. The classification of theseamounts within turnover is due to the application of the hedge accountingprovisions of IAS 39 "Financial Instruments: Recognition and Measurement" witheffect from 1 January 2007. Prior to this point gains and losses on commodityderivatives (including both gains and losses realised in the period andperiod-end mark-to-market adjustments) were included in other operating incomeor expense. Further details of such gains or losses are given in Note 3(a)(vii)and Note 4(b). (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. Notes to EBITDA and operating profit from subsidiaries by business segment(segment result) (v) Operating profit for the separate businesses equates tosegment result as defined by IAS 14. This excludes the share of income fromassociate of US$0.8 million (2006 half year - US$0.5 million; 2006 full year -US$1.1 million). (vi) EBITDA is calculated by adding back depreciation,amortisation and disposals of property, plant and equipment and impairmentcharges (see Note 3(b)) to operating profit from subsidiaries. (vii) As explained in Note 3(a)(iii) above, in the current periodEBITDA and operating profit include realised losses on commodity derivatives atMichilla of US$3.3 million (recorded within turnover). In the six months ended30 June 2006 EBITDA and operating profit included losses on commodityderivatives (including both losses realised in the period and period-endmark-to-market adjustments) at El Tesoro of US$43.5 million, and at Michilla ofUS$46.2 million (recorded within other operating expense). In the year ended 31December 2006 EBITDA and operating profit included losses at El Tesoro ofUS$44.8 million, and losses at Michilla of US$39.7 million (recorded withinother operating expense). (viii) Income and expenditure (other than exploration costs)relating to Tethyan Copper Company Limited (See Note 13) have been includedwithin Corporate and other items. (ix) As explained in Note 2(i) and Note 15, in the current periodEBITDA and operating profit at El Tesoro include an inventory write-off ofUS$18.8 million. (x) As explained in Note 2(ii), EBITDA and operating profit inthe corporate and other items category includes gains of US$21.8 millionrelating to various items. Turnover at Los Pelambres by mineral Before deducting tolling charges Tolling charges Net of tolling charges -------------------------- ----------------- ------------------------ Six Six Year Six Six Year Six Six Year months months ended months months ended months months ended ended ended 31.12.06 ended ended 31.12.06 ended ended 31.12.06 30.06.07 30.06.06 30.06.07 30.06.06 30.06.07 30.06.06 US$'m US$'m US$'m US$'m US$'m US$'m US$'m US$'m US$'m Copper 1,100.3 1,207.9 2,399.0 (90.7) (123.6) (254.0) 1,009.6 1,084.3 2,145.0Molybdenum 331.6 220.4 536.4 (11.1) (10.4) (22.6) 320.5 210.0 513.8Gold and silver 24.8 18.8 43.1 (0.4) (0.3) (0.6) 24.4 18.5 42.5 ------ ------ ------ ------ ------ ------ ------ ------ ------Los Pelambres 1,456.7 1,447.1 2,978.5 (102.2) (134.3) (277.2) 1,354.5 1,312.8 2,701.3 ====== ====== ====== ====== ====== ====== ====== ====== ====== b) Depreciation and amortisation, loss on disposal ofproperty, plant and equipment and capital expenditure by business segment Depreciation and amortisation Loss on disposals Capital expenditure --------------------------- ------------------- --------------------- Six Six Year Six Six Year Six Six Year months months ended months months ended months months ended ended ended 31.12.06 ended ended 31.12.06 ended ended 31.12.06 30.06.07 30.06.06 30.06.07 30.06.06 30.06.07 30.06.06 US$'m US$'m US$'m US$'m US$'m US$'m US$'m US$'m US$'m Los Pelambres (35.0) (32.5) (72.8) (0.1) (0.4) (0.5) 156.1 243.2 463.5El Tesoro (23.7) (17.8) (43.4) (1.2) (0.8) (2.7) 5.2 4.7 16.3Michilla (5.8) (4.9) (10.4) - (2.3) (2.5) 3.9 6.5 7.7Corporate (0.3) (0.2) (0.3) - (0.4) (0.4) 23.6 8.9 20.5and other items ------ ------ ------ ------ ------ ------ ------ ------ ------Mining (64.8) (55.4) (126.9) (1.3) (3.9) (6.1) 188.8 263.3 508.0Railway (5.6) (4.7) (8.4) (1.5) (0.5) (1.9) 18.6 11.6 25.2and othertransport servicesWater concession (4.7) (5.2) (9.7) (0.1) (0.1) (0.2) 2.0 2.0 5.8 ------ ------ ------ ------ ------ ------ ------ ------ ------ (75.1) (65.3) (145.0) (2.9) (4.5) (8.2) 209.4 276.9 539.0 ====== ====== ====== ====== ====== ====== ====== ====== ====== Other non-cash expenses relate to severance and closure costs and are disclosedfor the Group in Note 2. Capital expenditure represents purchases of property, plant and equipment statedon an accruals basis (see Note 10) and may therefore differ from the amountincluded in the cash flow statement. c) Assets and liabilities by business segment Segment assets Segment liabilities Segment net assets ---------------- --------------------- -------------------- Six months Six months Year ended Six months Six months Year ended Six months Six months Year ended ended ended 31.12.06 ended ended 31.12.06 ended ended 31.12.06 30.06.07 30.06.06 30.06.07 30.06.06 30.06.07 30.06.06 US$'m US$'m US$'m US$'m US$'m US$'m US$'m US$'m US$'m Los Pelambres 2,308.8 2,149.2 2,103.4 (96.3) (79.2) (125.5) 2,212.5 2,070.0 1,977.9El Tesoro 564.1 416.3 591.8 (56.1) (73.9) (53.3) 508.0 342.4 538.5Michilla 78.4 76.9 74.5 (35.9) (48.3) (24.8) 42.5 28.6 49.7Corporate 199.2 251.0 145.8 (21.3) (72.3) (12.3) 177.9 178.7 133.5and other items ------ ------ ------ ------ ------ ------ ------ ------ ------Mining 3,150.5 2,893.4 2,915.5 (209.6) (273.7) (215.9) 2,940.9 2,619.7 2,699.6Railway 168.1 142.7 158.8 (24.0) (17.0) (25.2) 144.1 125.7 133.6and othertransportservicesWater concession 176.0 183.0 181.7 (8.2) (7.5) (9.1) 167.8 175.5 172.6 ------ ------ ------ ------ ------ ------ ------ ------ ------ 3,494.6 3,219.1 3,256.0 (241.8) (298.2) (250.2) 3,252.8 2,920.9 3,005.8 ====== ====== ====== ====== ====== ====== ====== ====== ====== Assets and liabilities of Tethyan Copper Company Limited (See Note 13) have beenincluded within Corporate and other items. Segment assets and liabilities are reconciled to entity assets and liabilitiesthrough unallocated items as follows: Segment assets Segment liabilities Segment net assets ---------------- --------------------- -------------------- Six months Six months Year ended Six months Six months Year ended Six months Six months Year ended ended ended 31.12.06 ended ended 31.12.06 ended ended 31.12.06 30.06.07 30.06.06 30.06.07 30.06.06 30.06.07 30.06.06 US$'m US$'m US$'m US$'m US$'m US$'m US$'m US$'m US$'m Segment 3,494.6 3,219.1 3,256.0 (241.8) (298.2) (250.2) 3,252.8 2,920.9 3,005.8assets/(liabilities)Investment 3.2 3.2 3.2 - - - 3.2 3.2 3.2property Investment in 3.0 3.0 3.5 - - - 3.0 3.0 3.5associateAvailable for 4.0 0.2 6.2 - - - 4.0 0.2 6.2sale investmentsDeferred tax 7.6 6.8 3.1 (312.9) (201.6) (323.2) (305.3) (194.8) (320.1)assets/(liabilities)Current tax 4.7 4.6 7.5 (182.8) (121.1) (204.8) (178.1) (116.5) (197.3)assets/(liabilities)Cash and cash 1,847.5 1,238.8 1,805.5 (311.9) (417.1) (358.7) 1,535.6 821.7 1,446.8equivalents/ (borrowings) ====== ====== ====== ====== ====== ====== ====== ====== ======Entity 5,364.6 4,475.7 5,085.0 (1,049.4) (1,038.0) (1,136.9) 4,315.2 3,437.7 3,948.1assets/(liabilities) ====== ====== ====== ====== ====== ====== ====== ====== ====== d) Geographical analysis of turnover by location of customer(geographical segment) Sales ------- Six months Six months Year ended ended ended 31.12.06 30.06.07 30.06.06 US$'m US$'m US$'mEurope - United Kingdom 0.1 - 8.1 - Switzerland 247.8 166.4 396.5 - Rest of Europe 240.1 414.0 877.1 Latin America - Chile 107.2 161.4 407.5 - Rest of Latin 160.9 80.0 165.2AmericaNorth America 227.3 246.9 472.7Asia - Japan 558.1 514.2 1,008.2 - China 247.8 108.0 317.5 - Rest of Asia 152.8 152.3 213.5Australia - 3.7 3.7 ------ ------ ------ 1,942.1 1,846.9 3,870.0 ====== ====== ====== 4. Derivatives and embedded derivatives a) 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 adjustmentsto the balance sheet at the end of each period are as follows: Balance sheet - ------------------ net mark to market effect on debtors ------------------------------------- At 30.06.07 At 30.06.06 At 31.12.06 US$'m US$'m US$'m Los Pelambres - copper 56.7 103.9 (110.1)concentrateLos Pelambres - tolling (11.4) (6.1) 7.6charges for copper concentrateLos Pelambres - molybdenum 13.1 4.4 (3.9)concentrateEl Tesoro - copper cathodes (0.4) 1.0 1.3Michilla - copper cathodes 0.4 0.7 (0.6) -------- -------- -------- 58.4 103.9 (105.7) ======== ======== ======== (i) Copper sales Six months ended Six months ended Year ended 31.12.06 30.06.07 30.06.06 US$'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 957.9 326.8 168.6 859.1 268.9 152.9 2,175.5 653.1 326.0invoiced gross sales Effects of pricing 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 theprevious periodSettlement of (88.1) (6.6) (3.2) 157.2 19.8 0.6 169.2 2.0 0.6copper sales invoiced inthe previousperiod ------- ------ ------ ------ ------ ------ ------ ------ ------ Total effect 22.0 (7.9) (2.6) 124.0 19.6 0.7 136.0 1.8 0.7of adjustmentsto previousperiod invoices inthe current period Effects of pricing adjustments tocurrent periodinvoices ------- ------ ------ ------ ------ ------ ------ ------ ------ Settlement of 63.7 13.5 4.4 120.9 (2.0) 11.3 197.6 8.6 8.8copper salesinvoiced inthe currentperiod Mark-to-market 56.7 (0.4) 0.4 103.9 1.0 0.7 (110.1) 1.3 (0.6)adjustments at the end of thecurrent period ------- ------ ------ ------ ------ ------ ------ ------ ------ Total effect 120.4 13.1 4.8 224.8 (1.0) 12.0 87.5 9.9 8.2of adjustmentsto currentperiod invoices Realised gains - - (3.3) - - - - - -/(losses) oncommodityderivatives ------- ------ ------ ------ ------ ------ ------ ------ ------Turnover 1,100.3 332.0 167.5 1,207.9 287.5 165.6 2,399.0 664.8 334.9before deductingtolling charges Tolling charges (90.7) - - (123.6) - - (254.0) - - ------- ------ ------ ------ ------ ------ ------ ------ ------Turnover net 1,009.6 332.0 167.5 1,084.3 287.5 165.6 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 June 2007, sales totalling103,800 tonnes remained open as to price, with an average mark-to-market priceof 344.2 cents per pound compared with an average provisional invoice price of319.4 cents per pound. At 30 June 2006, sales totalling 104,400 tonnes remainedopen as to price, with an average mark-to-market price of 333.3 cents per poundcompared with an average provisional invoice price of 288.2 cents per pound. At31 December 2006, sales totalling 127,100 tonnes remained open as to price, withan average mark-to-market price of 287.0 cents per pound compared with anaverage provisional invoice price of 326.3 cents per pound. Tolling charges include a mark-to-market loss for copper concentrate sales openas to price at 30 June 2007 of US$11.4 million (30 June 2006 - loss of US$6.1million, 31 December 2006 - gain of US$7.6 million). Copper cathode Copper cathode sales at El Tesoro and Michilla have an average settlement periodof approximately one month from shipment date. At 30 June 2007, sales totalling10,700 tonnes remained open as to price, with an average mark-to-market price of346.7 cents per pound compared with an average provisional invoice price of347.0 cents per pound. At 30 June 2006, sales totalling 11,600 tonnes remainedopen as to price, with an average mark-to-market price of 336.5 cents per poundcompared with an average provisional invoice price of 329.7 cents per pound. At31 December 2006, sales totalling 11,600 tonnes remained open as to price, withan average mark-to-market price of 286.6 cents per pound compared with anaverage provisional invoice price of 294.0 cents per pound. (ii) Molybdenum sales Six months Six months Year ended ended ended 30.06.07 30.06.06 31.12.06 US$'m US$'m US$'m Los Los Los Pelambres Pelambres Pelambres Molybdenum Molybdenum Molybdenum concentrate concentrate concentrate Provisionally invoiced gross sales 295.5 229.7 547.8 Effects of pricing adjustments toprevious period invoices Reversal of mark-to-market adjustments 2.4 12.6 12.6at the end of the previous periodSettlement of molybdenum sales invoiced (1.0) (27.5) (27.5)in the previous periodTotal effect of adjustments to previous 1.4 (14.9) (14.9)period invoices in the current period Effects of pricing adjustments tocurrent period invoices Settlement of molybdenum sales invoiced 21.6 1.2 5.9in the current periodMark-to-market adjustments at the end of 13.1 4.4 (2.4)the current periodTotal effect of adjustments to current 34.7 5.6 3.5period invoices Turnover before deducting tolling 331.6 220.4 536.4charges Tolling charges (11.1) (10.4) (22.6) Turnover net of tolling charges 320.5 210.0 513.8 Molybdenum sales at Los Pelambres have an average settlement period ofapproximately three months after shipment date. At 30 June 2007, sales totalling2,100 tonnes remained open as to price, with an average mark-to-market price ofUS$33.1 per pound compared with an average provisional invoice price of US$30.3per pound. At 30 June 2006, sales totalling 1,500 tonnes remained open as toprice, with an average mark-to-market price of US$25.2 per pound compared withan average provisional invoice price of US$24.1 per pound. At 31 December 2006,sales totalling 2,100 tonnes remained open as to price, with an averagemark-to-market price of US$25.0 per pound compared with an average provisionalinvoice price of US$25.5 per pound. b) Derivative financial instruments The Group uses derivative financial instruments to reduce exposure to foreignexchange, interest rate and commodity price movements. The Group does not usesuch derivative instruments for speculative trading purposes. The Group has applied the hedge accounting provisions of IAS 39 "FinancialInstruments: Recognition and Measurement" with effect from 1 January 2007. Fromthat date, changes in the fair value of derivative financial instruments thatare designated and effective as hedges of future cash flows have been recogniseddirectly in equity, with any ineffective portion recognised immediately in theincome statement. Realised gains and losses on commodity derivatives recognisedin the income statement have been recorded within turnover. Prior to 1 January2007 derivatives were measured at fair value through the income statement, withgains or losses on commodity derivatives being recorded within other operatingincome or expense. Commodity derivatives The Group periodically uses commodity derivatives to reduce its exposure to thecopper price. The balance sheet mark-to-market adjustments in respect of commodity derivativesat the end of each period, and the total effect on operating profit in theincome statement for each period, are as follows: Balance sheet Income statement --------------- ------------------ Net financial asset/(liability) Total effect --------------------------------- -------------- At At At Six Six Full year 30.06.07 30.06.06 31.12.06 months months 2006 ended ended 30 June 30 June 2007 2006 US$'m US$'m US$'m US$'m US$'m US$'mEl Tesoro (2.0) (27.3) - - (43.5) (44.8)Michilla (8.8) (16.5) 7.3 (3.3) (46.2) (39.7) -------- -------- -------- -------- -------- -------- (10.8) (43.8) 7.3 (3.3) (89.7) (84.5) ======== ======== ======== ======== ======== ======== Analysed between:Non-current assets 1.9 - -Current assets 0.9 - 7.3Current liabilities (1.6) (43.8) -Non-current (12.0) - -liabilities -------- -------- -------- (10.8) (43.8) 7.3 ======== ======== ======== During the six months ended 30 June 2007 a loss of US$3.3 million was recognisedwithin turnover at Michilla, relating to amounts realised on derivatives whichmatured in the period. During the period net mark-to-market losses of US$14.7million were recognised within reserves, comprising US$2.0 million at El Tesoroand US$12.7 million at Michilla. During the six months ended 30 June 2006 a loss of US$89.7 million wasrecognised within other operating expense, comprising US$43.5 million at ElTesoro and US$46.2 million at Michilla. This comprised losses on derivativeswhich matured in the first six months of 2006 of US$81.3 million andmark-to-market losses of US$52.9 million in respect of derivatives maturingafter the period end, less reversal of opening mark to market provisions ofUS$44.5 million. The balance sheet impact at 30 June 2006 of US$43.8 million is shown net ofmargin calls of US$9.1 million. There were no margin calls at 30 June 2007 or 31December 2006. The Group had min/max instruments at 30 June 2007 for 86,200 tonnes of copperproduction (of which 76,800 tonnes relate to El Tesoro and 9,400 tonnes relateto Michilla), covering a total period up to 31 December 2009. The weightedaverage remaining period covered by these hedges calculated with effect from 1July 2007 is 13.6 months. The instruments have a weighted average floor of 261.0cents per pound and a weighted average cap of 389.4 cents per pound. At 30 June 2007, the Group also had futures at Michilla for 8,400 tonnes ofcopper production, covering a total period to 31 December 2007. The weightedaverage remaining period covered by these hedges was 3.5 months and the weightedaverage price was 306.9 cents. It also had futures to both buy and sell copperproduction at El Tesoro, with the effect of swapping COMEX prices for LME priceswithout eliminating underlying market price exposure, covering a period to 31January 2008 The remaining weighted average period covered by these instrumentswas 4 months and the weighted average price was 312.0 cents. Interest and exchange derivatives There were no outstanding interest derivative instruments at 30 June 2007 or 31December 2006. At 30 June 2006 the Group had interest rate collars with anotional principal amount of US$ 7.1 million, with a weighted average floor of4.83% and a weighted average cap of 6.00%. These instruments had a remainingduration of six months. The mark-to-market gain at 30 June 2006 was US$0.3million, and the effect on the income statement was included within otherfinance items. There were no outstanding exchange derivative instruments at 30 June 2007, 31December 2006 or 30 June 2006. 5. Net finance income Six months Six months Year ended ended ended 31.12.06 30.06.07 30.06.06 US$'m US$'m US$'m Investment incomeInterest receivable 53.8 34.5 78.3 -------- -------- -------- Interest expenseInterest payable (10.5) (12.4) (24.6)Amortisation of (0.2) (0.2) (0.4)deferred finance costsDiscount charge (0.5) (0.5) (1.2)relating to provisionsPreference dividends (0.1) (0.1) (0.2) -------- -------- -------- (11.3) (13.2) (26.4) -------- -------- -------- Other finance itemsMark-to-market effect - 0.3 0.3of derivativesForeign exchange 0.6 (1.7) 1.6 -------- -------- -------- 0.6 (1.4) 1.9 -------- -------- -------- -------- -------- --------Net finance income 43.1 19.9 53.8 ======== ======== ======== 6. Taxation The tax charge for the period comprised the following: Six months Six months Year ended ended ended 31.12.06 30.06.07 30.06.06 US$'m US$'m US$'m Current tax chargeCorporate tax (principally (203.7) (202.6) (474.2)first category tax in Chile)Mining tax (Royalty) (22.9) (23.8) (58.5)Withholding tax provision (117.6) (52.7) (61.9)Exchange gains on corporate 0.3 0.6 2.4tax balances ------- ------- ------- (343.9) (278.5) (592.2) ------- ------- ------- Deferred tax chargeCorporate tax (principally (34.6) (19.0) (2.4)first category tax in Chile)Mining tax (Royalty) (2.7) (0.6) 1.9Withholding tax provision 49.5 43.1 (72.2) ------- ------- ------- 12.2 23.5 (72.7) ------- ------- ------- Total tax charge (Income tax (331.7) (255.0) (664.9)expense) ======= ======= ======= Current tax is based on taxable profit for the period. Deferred tax is the taxexpected to be payable or recoverable on temporary differences (i.e. differencesbetween the carrying amount of assets and liabilities in the financialstatements and the corresponding tax basis used in the computation of taxableprofit). Deferred tax is accounted for using the balance sheet liability methodand is provided on all temporary differences with certain limited exceptions.The Group incurs withholding taxes on the remittance of profits from Chile andthe other countries in which it operates and deferred tax is provided onundistributed earnings to the extent that remittance is probable in theforeseeable future. The rate of first category (i.e. corporation) tax in Chile is 17% for both 2007and 2006. Los Pelambres, El Tesoro and Michilla are also subject to a mining tax(royalty) which imposes an additional tax of 4% of tax-adjusted operatingprofit. For 2006 and 2007, 50% of the new mining tax can be offset against firstcategory tax and the remaining 50% is tax deductible (i.e. an allowable expensein determining liability to first category tax). From 2008, when the ability tooffset will no longer be available, 100% of the new mining tax will be taxdeductible. The effect is to increase the effective tax rate of these threeoperations (before taking into account deductibility against corporation tax) byapproximately 2% in 2006 and 2007 and 4% thereafter. The effective tax rate for the six months ended 30 June 2007 was 23.1%, comparedwith the Chilean statutory tax rate of 17%. The increase in the effective taxrate above the statutory tax rate was principally due to the provision ofwithholding tax of US$68.1 million and the effect of the mining tax, whichresulted in a charge of US$25.6 million. The effective tax rate for the sixmonths ended 30 June 2006 was 19.2%, principally due to the impact of theUS$24.4 million mining tax charge during that period. 7. Basic earnings per share Basic earnings per share is calculated on profit after tax and minority interestgiving net earnings of US$728.4 million (2006 half year - US$652.6 million) andbased on 985,856,695 ordinary shares. There was no potential dilution ofordinary shares in any period. 8. Dividends The Board has declared an interim dividend of 6.2 cents per ordinary share (2006half year - 5.2 cents) for payment on 11 October 2007 to shareholders on theregister at the close of business on 21 September 2007. The 2007 interimdividend comprises an ordinary dividend of 3.2 cents per share and a specialdividend of 3.0 cents per share (2006 half year - ordinary dividend of 3.2 centsand special dividend of 2.0 cents). Dividends are declared and paid gross. Dividends per share actually paid in the period and recognised as a deductionfrom net equity under IFRS were 43.0 cents (2006 half year - 18.8 cents),representing the final dividend (including the special dividend) declared inrespect of the previous year. Dividends are declared in US dollars but may be paid in either dollars orsterling. Shareholders on the register of members with an address in the UnitedKingdom receive dividend payments in sterling, unless they elect to be paid indollars. All other shareholders are paid by cheque in dollars, unless they havepreviously instructed the Company's registrar to pay dividends by bank transferto a sterling bank account, or they elect for payment by cheque in sterling. TheCompany's registrar must receive any such election before the record date of 21September 2007. The exchange rate to be applied to dividends to be paid insterling will be set on 25 September 2007. 9. Intangible assets Concession Exploration Six months Six months Year right licenses ended ended ended 30.06.07 30.06.06 31.12.06 US$'m US$'m US$'m US$'m US$'m Balance at the 90.3 115.0 205.3 97.7 97.7beginning of the periodAcquisition - - - 230.0 230.0Disposal - - - - (115.0)Amortisation (1.8) - (1.8) (1.9) (4.0)Foreign currency 0.8 - 0.8 (4.6) (3.4)exchange difference -------- -------- -------- ------- -------Balance at the end 89.3 115.0 204.3 321.2 205.3of the period ======== ======== ======== ======= ======= The concession right relates to the 30 year concession to operate the waterrights and facilities in the Antofagasta Region of Chile which the Group'swholly-owned subsidiary, Aguas de Antofagasta S.A., acquired in December 2003.This intangible asset is being amortised on a straight-line basis over the lifeof the concession. The exploration licences relate to the value attributed to the rights acquiredin the Reko Diq area of south-west Pakistan on the purchase of Tethyan CopperCompany Limited in 2006 (see Note 23). 10. Property, plant and equipment Mining Railway Water Six months Six months Year and other Concession ended ended ended transport 30.06.07 30.06.06 31.12.06 services US$'m US$'m US$'m US$'m US$'m US$'m Balance at the 2,180.2 124.9 68.6 2,373.7 1,820.0 1,820.0beginning of theperiodAcquisitions - - - - 0.4 171.6Additions 188.8 18.6 2.0 209.4 276.9 539.0Depreciation (64.8) (5.6) (2.9) (73.3) (63.4) (141.0)Asset disposals (1.3) (1.5) (0.1) (2.9) (4.5) (8.2)Disposal of - - - - - (4.7)subsidiaryForeign currency - 0.5 0.7 1.2 (4.0) (3.0)exchange difference -------- -------- -------- -------- -------- --------Balance at the end 2,302.9 136.9 68.3 2,508.1 2,025.4 2,373.7of the period ======== ======== ======== ======== ======== ======== 11. Investment property Six months Six months Year ended ended ended 30.06.07 30.06.06 31.12.06 US$'m US$'m US$'m Balance at the 3.2 3.4 3.4beginning of the periodForeign currency - (0.2) (0.2)exchange difference -------- -------- --------Balance at the end of 3.2 3.2 3.2the period ======== ======== ======== Investment property represents the Group's forestry properties, which are heldfor long-term potential and accordingly classified as investment property heldat cost. 12. Investment in associate Six months Six months Year ended ended ended 30.06.07 30.06.06 31.12.06 US$'m US$'m US$'m Balance at the 3.5 2.8 2.8beginning of the periodShare of profit 0.9 0.6 1.3before taxShare of tax (0.1) (0.1) (0.2)Dividends received (1.3) (0.3) (0.4) -------- -------- --------Balance at the end of 3.0 3.0 3.5the period ======== ======== ======== The investment in associate refers to the Group's 30% interest in AntofagastaTerminal Internacional S.A. ("ATI"), which operates a concession to manageinstallations in the port of Antofagasta. 13. Joint venture agreements Cordillera de las Minas S.A. The Group had a joint venture agreement, entered into during 2002, withCompanhia Vale do Rio Doce ("CVRD") of Brazil, with the objective of developingmineral exploration activities in a defined area of interest in southern Peru.In March 2007 the Group agreed to sell its 50% interest in the joint venturevehicle Cordillera de Las Minas S.A. ("CMSA") to Panoro Minerals Limited("Panoro"), a company listed on the TSX Venture Exchange. The agreement was subject to a number of conditions including financing byPanoro and regulatory approvals. These conditions were fulfilled in June 2007and the disposal was completed at that point. The fair value of theconsideration received, being US$6.0 million in cash plus six million commonshares in Panoro, was US$9.7 million. The joint venture had a nil carrying valuein the Group's balance sheet, and accordingly the disposal has resulted in again of US$9.7 million being recognised during the period, recorded within otheroperating income. Tethyan Copper Company Limited As explained in Note 23, in April 2006 the Group acquired 100% of the issuedshare capital of Tethyan Copper Company Limited ("Tethyan"). In September 2006the Group entered into a joint venture agreement with Barrick Gold Corporation("Barrick Gold"), to establish a 50:50 joint venture in relation to Tethyan'smineral interests in Pakistan. The Group's 50% share of the assets andliabilities and results of the jointly controlled entity are included in theconsolidated balance sheet and in the consolidated income statement of the Groupunder the proportionate consolidation method. 14. Available for sale investments Available for sale investments represent those investments which are notsubsidiaries, associates or joint ventures and are not held for tradingpurposes. The movement in available for sale investments during the period was as follows: Six months Six months Year ended ended ended 30.06.07 30.06.06 31.12.06 US$'m US$'m US$'m Balance at the 6.2 0.1 0.1beginning of the periodAcquisition 3.7 - 5.6Movements in fair 10.7 0.1 0.5valueDisposal (16.6) - - -------- -------- --------Balance at the end of 4.0 0.2 6.2the period ======== ======== ======== The balance at 31 December 2006 included US$6.1 million related to theinvestment in Mercator Minerals Ltd shares, acquired at a fair value of US$5.6million through the acquisition of Equatorial Mining Limited in August 2006 (seeNote 23). These shares were disposed of during the current period, resulting ina gain of US$10.5 million recognised in the income statement. The acquisition during the period represents the shares in Panoro MineralsLimited acquired as part consideration for the disposal of the Group's share ofthe joint venture entity Cordillera de las Minas S.A. (see Note 13). The fairvalue of these shares as at 30 June 2007 was US$3.9 million. The fair value of the remaining available for sale investments of US$0.1 millionheld by the Group at 30 June 2007 are mainly Chilean-peso denominated and didnot differ materially from cost at the period end. 15. Inventories Six months Six months Year ended ended ended 30.06.07 30.06.06 31.12.06 US$'m US$'m US$'m Raw materials and 34.7 32.7 36.6consumablesWork in progress 59.2 69.5 68.6Finished goods 15.5 13.9 15.1 -------- -------- -------- 109.4 116.1 120.3 ======== ======== ======== Work in progress includes US$5.3 million related to high carbonate oreinventories at El Tesoro which are expected to be processed more than twelvemonths after the balance sheet date (30 June 2006 - US$nil; 31 December 2006 -US$25.3 million). During the period a write-off of US$18.8 million was recordedin respect of these inventories. 16. Borrowings At At At 30.06.07 30.06.06 31.12.06 US$'m US$'m US$'mLos PelambresCorporate loans (267.2) (343.4) (305.3)Other loans (7.1) (11.9) (9.5)El TesoroCorporate loans (20.9) (48.9) (27.9)Finance leases (0.2) (0.2) (0.2)MichillaFinance leases (0.5) (1.9) (0.9)Railway and othertransport servicesLoans (12.0) (7.1) (10.8)OtherPreference shares (4.0) (3.7) (4.1) -------- -------- --------Total (see Note 22) (311.9) (417.1) (358.7) ======== ======== ======== Loans at 30 June 2007 are shown net of deferred financing costs of US$1.3million (2006 half year - US$2.0 million). The amount in relation to LosPelambres was US$1.3 million (2006 half year - US$1.7 million). The amount inrelation to El Tesoro was US$nil (2006 half year - US$0.3 million). Maturity of borrowings At At At 30.06.07 30.06.06 31.12.06 US$'m US$'m US$'m Short-term borrowings (101.8) (97.0) (97.6)Medium and long-term (210.1) (320.1) (261.1)borrowings -------- -------- --------Total (see Note 22) (311.9) (417.1) (358.7) ======== ======== ======== Loans are predominantly floating rate. However the Group periodically entersinto interest rate derivative contracts to manage its exposure to interestrates. Details of any derivative instruments held by the Group are given in Note4. 17. Post-employment benefit obligation Six months Six months Year ended ended ended 30.06.07 30.06.06 31.12.06 US$'m US$'m US$'m Balance at the beginning (24.1) (20.6) (20.6)of the periodCharge to operating (1.3) (4.6) (7.7)profit in the periodRelease of discount to (0.4) (0.2) (0.8)net interest in periodUtilised in period 1.7 2.9 4.2Foreign currency exchange (0.2) 1.9 0.8difference -------- -------- --------Balance at the end of the (24.3) (20.6) (24.1)period ======== ======== ======== The post employment benefit obligation relates to the provision for severanceindemnities which are payable when an employment contract comes to an end, inaccordance with normal employment practice in Chile and other countries in whichthe Group operates. The severance indemnity obligation is treated as an unfundeddefined benefit plan, and the calculation is based on periodic valuationsperformed by an independent actuary. 18. Long-term provisions Six months Six months Year ended ended ended 30.06.07 30.06.06 31.12.06 US$'m US$'m US$'m Balance at the beginning of (9.8) (9.8) (9.8)the periodCharge to operating profit (0.3) (0.2) (0.6)in the periodRelease of discount to net (0.2) (0.3) (0.4)interest in the periodAcquisition - - (0.8)Disposal - - 0.8Utilised in period - 0.5 0.8Foreign currency exchange - (0.2) 0.2difference -------- -------- --------Balance at the end of the (10.3) (10.0) (9.8)period ======== ======== ======== Analysed as follows:Decommissioning and (9.8) (9.4) (9.4)restorationTermination of water (0.5) (0.6) (0.4)concession -------- -------- --------Balance at the end of the (10.3) (10.0) (9.8)period ======== ======== ======== Decommissioning and restoration costs relate to the Group's mining operations.Costs are estimated on the basis of a formal closure plan and are subject toregular formal review. The provision for the termination of the water concession relates to theprovision for items of plant, property and equipment and working capital itemsunder Aguas de Antofagasta's ownership to be transferred to the previousstate-owned operator ESSAN at the end of the concession period, and is based onthe net present value of the estimated value of those assets and liabilities inexistence at the end of the concession. 19. Deferred tax assets and liabilities Six months Six months Year ended ended ended 30.06.07 30.06.06 31.12.06 US$'m US$'m US$'m Net position at the (320.1) (218.9) (218.9)beginning of the yearCredit/(charge) to tax on 12.2 23.5 (72.7)profit in yearDeferred tax recognised directly in reserves and 2.8 - -minority interestAcquisition - - (29.0)Foreign currency exchange (0.2) 0.6 0.5difference ------- -------- --------Net position at the end of (305.3) (194.8) (320.1)the year ======= ======== ======== Analysed between:Deferred tax assets 7.6 6.8 3.1Deferred tax liabilities (312.9) (201.6) (323.2) ------- -------- --------Net position (305.3) (194.8) (320.1) ======= ======== ======== 20. Share capital and share premium There was no change in share capital or share premium in the six months ended 30June 2007. In the comparative periods, there was a 4-for-1 bonus issue ofordinary shares on 19 June 2006, which resulted in an increase in ordinary sharecapital of US$73.7 million and a corresponding reduction in the share premiumaccount. 21. Reconciliation of profit before tax to cash flows from operations Six months Six months Year ended ended ended 30.06.07 30.06.06 31.12.06 US$'m US$'m US$'m Profit before tax 1,436.7 1,325.3 2,859.0Depreciation and amortisation 75.1 65.3 145.0Loss on disposal of property, plant and 2.9 4.5 8.2equipmentProfit on disposal of joint venture interest (9.6) - -Profit on disposal of available for sale (10.5) - -investmentsNet finance income (43.1) (19.9) (53.8)Share of profit of associate (0.8) (0.5) (1.1)Decrease/(increase) in inventories 10.9 (17.4) (21.5)Increase in debtors (95.0) (386.2) (135.5)(Decrease)/increase in creditors and provisions (17.3) 74.3 9.8 ------- ------- -------Cash flows from operations 1,349.3 1,045.4 2,810.1 ======= ======= ======= 22. Analysis of changes in net cash At 1.1.07 Cash flows Other Exchange At 30.06.07 US$'m US$'m US$'m US$'m US$'m Cash and cash equivalents 1,805.5 41.8 - 0.2 1,847.5 -------- -------- -------- -------- --------Bank borrowings due within (96.7) 46.6 (51.0) (0.1) (101.2)one yearBank borrowings due after one (256.8) - 50.8 - (206.0)yearFinance leases due within one (0.9) 0.4 (0.1) - (0.6)yearFinance leases due after one (0.2) - 0.1 - (0.1)yearPreference shares (4.1) - - 0.1 (4.0) -------- -------- -------- -------- --------Total borrowings (358.7) 47.0 (0.2) - (311.9) -------- -------- -------- -------- --------Net cash 1,446.8 88.8 (0.2) 0.2 1,535.6 ======== ======== ======== ======== ======== Net cash at the end of each period was as follows: At At At 30.06.2007 30.06.2006 31.12.06 US$'m US$'m US$'m Cash and cash equivalents 1,847.5 1,238.8 1,805.5Total borrowings (311.9) (417.1) (358.7) -------- -------- -------- 1,535.6 821.7 1,446.8 ======== ======== ======== 23. Acquisitions and disposals Six months ended 30 June 2007 No acquisitions, disposals or part-disposals of subsidiaries or associates havebeen made during the six months ended 30 June 2007. Details of acquisitions andrelated transactions undertaken during 2006 are set out below. 2006 On 20 April 2006 the Group acquired 100% of the issued share capital of TethyanCopper Company Limited ("Tethyan") for cash consideration (including transactioncosts) of US$170.4 million. On 22 September 2006, the Group entered into a 50:50joint venture agreement with Barrick Gold Corporation ("Barrick Gold") inrelation to Tethyan's mineral interests in Pakistan. The Group disposed of 50%of the issued share capital of Atacama Copper Pty Limited ("Atacama"), theimmediate parent company of Tethyan, to Barrick Gold for US$86.8 million. On 24 August 2006 the Group acquired 100% of the issued share capital ofEquatorial Mining Limited ("Equatorial") for a cash consideration (includingtransaction costs) of US$406.1 million. Equatorial's principal asset was a 39%interest in Minera El Tesoro, in which the Group held the remaining 61% andwhich it had accounted for as a subsidiary. The acquisition resulted in theelimination of the minority interest of US$137.5 million recognised in theGroup's balance sheet immediately prior to acquisition. On 11 December 2006, the Group entered into an agreement to dispose ofEquatorial Mining North America Inc. (EMNA), a wholly-owned subsidiary ofEquatorial Mining Limited, to Idaho General Mines Inc ("IGM"). EMNA and itssubsidiaries formerly owned and operated the Tonopah copper mine in Nevada, overwhich they retained royalties. The consideration of US$4.9 million was receivedin January 2007. No amount has been recognised in respect of the furthercontingent consideration of US$6.0 million which is payable should production atthe Tonopah mine commence. 24. Events after the balance sheet date During July 2007, the Group decided not to continue with the explorationagreements with Ascendent Copper Corporation in respect of the Chaucha depositin Ecuador and with AngloGold Ashanti in the area of interest in southernColombia, following a review of drilling results achieved to date. Thisdecision does not have any material impact on any of the amounts included withinthese interim financial statements. On 24 August 2007, Los Pelambres was notified of a new claim relating to theMauro tailings dam project in a first instance court in Los Vilos and of a courtorder relating to that claim. Further details are given in Note 25(a) below. 25. Other disclosures Contingent assets and liabilities There are a number of legal claims currently outstanding to which the Group is aparty, for which no provision has been made in the financial statements and arecurrently not expected to result in any material loss to the Group. Details ofchanges in the status of the principal claims since the date of the 2006 AnnualReport are set out below. a) Los Pelambres - Mauro tailings dam In November 2006, the Court of Appeals of Santiago upheld a challenge byclaimants in the Pupio Valley against the Chilean Water Authority (DireccionGeneral de Aguas) in relation to the award of one of the sectoral permits issuedduring 2005 for the construction of the Mauro tailings dam by Los Pelambres. TheCourt of Appeals has rejected four requests by the claimants that work on thedam should be suspended, and confirmed that Los Pelambres is entitled tocontinue construction pending a final resolution by the Chilean Supreme Court,to whom Los Pelambres have appealed as an affected party together with theDireccion General de Aguas. The Group believes that Los Pelambres has receivedall the necessary technical and legal permits and that these have been properlyapplied for and granted entirely in accordance with the applicable regulations.It is confident that this view will be upheld by the Chilean Supreme Court. On 19 April 2007 a first instance court in Santiago upheld a claim relating to apurchase agreement entered into in 1992 between two former owners of land in thearea of the Mauro tailings dam, in which the validity of that purchase agreementwas challenged by the plaintiff seller. Los Pelambres, which acquired the landin 2001, had participated in this trial to protect its interest and has appealedagainst this decision to the Court of Appeals. The appeal has the effect ofsuspending the effect of the first instance resolution. The Group is confidentthat Los Pelambres' legal title to the land in question will be upheld onappeal. On 18 May 2007 the court rejected a second petition by the plaintiff inthat case that work on the Mauro tailings dam should cease immediately,confirming Los Pelambres' right to complete its construction. The courtnevertheless has held that operation of the dam by depositing tailings cannotfor the moment commence, and Los Pelambres has appealed against this aspect ofthe decision. On 24 August 2007, a first instance court in Los Vilos notified Los Pelambres ofa new claim made by the same individuals involved in other litigation againstthe Mauro tailings dam. The claim was lodged earlier the same week and LosPelambres was neither notified of nor represented in the hearing. The court alsonotified Los Pelambres of an order to suspend those works which directly affectthe Pupio stream in the vicinity of the tailings dam. Los Pelambres believesthat it has obtained all the necessary approvals and permits for theconstruction of the Mauro tailings dam and it intends to seek the reversal ofthis order as soon as possible. As the works affected only form a part of theoverall project, Los Pelambres does not believe this action will affect theschedule for the completion of the project by the end of this year. There are other claims at first instance currently in the Chilean courts againstgovernmental authorities. These claims are not against Los Pelambres, but insome cases the company has intervened in case an eventual judgement affects theproject. Current operations are unaffected as the Quillayes dam remains in use. The Groupbelieves that these claims will not have any material impact on the Maurotailings dam project. b) Tethyan Copper Company Limited - Chagai Hills Exploration Joint Venture On 26 June 2007 the High Court of Balochistan rejected the ConstitutionalPetition filed by three Pakistan citizens which had been directed againstseveral parties including the company, and which had sought to declare that theChagai Hills Exploration Joint Venture of 1993 and the exploration licencesgranted to Tethyan were null and void. c) Equatorial Mining Limited - Errigal In July 2006, Equatorial Mining Limited ("Equatorial") received notice of aclaim by Errigal Limited in the New South Wales Supreme Court. Errigal is aformer minority shareholder in one of Equatorial's subsidiaries whose interestwas acquired by Equatorial in 1993. The claim is for amounts payable under the1993 acquisition agreement. The Group does not agree with the interpretation ofthe 1993 agreement advanced by Errigal and the action will continue to bedefended vigorously. Capital commitments Future capital commitments at 30 June 2007 were US$345.2 million. Related Party Transactions The ultimate parent company of the Group is Metalinvest Establishment, which iscontrolled by the E. Abaroa Foundation, in which members of the Luksic familyare interested. The Company's subsidiaries, in the ordinary course of business,enter into various sale and purchase transactions with companies also controlledby members of the Luksic family, including Banco de Chile S.A., Madeco S.A. andCompania Cervecerias Unidas S.A., which are subsidiaries of Quinenco S.A., aChilean industrial and financial conglomerate the shares of which are traded onthe Santiago Stock Exchange. These transactions, all of which were on normalcommercial terms, are in total not considered to be material. The Group holds a 51% interest in Antomin Limited, which owns a number of copperexploration properties in Chile's II and IV Regions. These include (but are notlimited to) Buey Muerto, some properties in the Sierra Gorda district (includingTesoro North-East) and a small proportion of the Esperanza project. The Groupacquired its interest in Antomin Limited pursuant to an agreement in 2001 for anominal consideration from Mineralinvest Establishment, a company controlled bythe Luksic family, which continues to hold the remaining 49% of Antomin Limited.Under the terms of the acquisition agreement, the Group committed to meet infull the exploration costs relating to these properties. During the period theGroup incurred US$0.5 million (2006 half year - US$0.7 million) of explorationcosts in respect of these properties. The cumulative amount incurred to 30 June2007 was US$9.2 million. In September 2006 the Group entered into a joint venture agreement with BarrickGold Corporation ("Barrick Gold") to establish a 50:50 joint venture overTethyan's mineral interests in Pakistan. During the period the Group contributedUS$9.6 million to Tethyan to provide funds for Tethyan's on-going explorationprogramme. The Group has a 30% interest in Antofagasta Terminal Internacional S.A. ("ATI"),which is accounted for as an associate. The Group received dividends during theperiod of US$1.3 million (2006 half year - US$0.3 million), as disclosed in theConsolidated Cash Flow Statement on page 19. 26. Currency translation Assets and liabilities denominated in foreign currencies are translated intodollars and sterling at the period end rates of exchange. Results denominated inforeign currencies have been translated into dollars at the average rate foreach period. Period end rates Average rates ----------------- -----------------30.06.2007 US$2.0076 = £1; US$1 = Ch$527 US$1.9697 = £1; US$1 = Ch$534 30.06.2006 US$1.8484 = £1; US$1 = Ch$539 US$1.7880 = £1; US$1 = Ch$527 31.12.2006 US$1.9569 = £1; US$1 = Ch$532 US$1.8386 = £1; US$1 = Ch$530 ----------------- ----------------- 27. Distribution These results will be sent by first class post to all shareholders in September.Copies of this report will be available for members of the public who are notshareholders at the Company's registered office, 5 Princes Gate, London SW7 1QJ(telephone: +44 20 7808 0988). INDEPENDENT REVIEW REPORT TO ANTOFAGASTA PLC Introduction We have been instructed by the company to review the financial information forthe six months ended 30 June 2007 which comprises the condensed consolidatedincome statement, the condensed consolidated balance sheet, the condensedconsolidated cash flow statement, the condensed consolidated statement ofchanges in equity and related Notes 1 to 27. We have read the other informationcontained in the interim report and considered whether it contains any apparentmisstatements or material inconsistencies with the financial information. This report is made solely to the company in accordance with Bulletin 1999/4issued by the Auditing Practices Board. Our work has been undertaken so that wemight state to the company those matters we are required to state to them in anindependent review report and for no other purpose. To the fullest extentpermitted by law, we do not accept or assume responsibility to anyone other thanthe company, for our review work, for this report, or for the conclusions wehave formed. Directors' responsibilities The interim report, including the financial information contained therein, isthe responsibility of, and has been approved by, the directors. The directorsare responsible for preparing the interim report in accordance with the ListingRules of the Financial Services Authority and the requirements of IAS 34 whichrequire that the accounting policies and presentation applied to the interimfigures are consistent with those applied in preparing the preceding annualaccounts except where any changes, and the reasons for them, are disclosed. Review work performed We conducted our review in accordance with the guidance contained in Bulletin1999/4 issued by the Auditing Practices Board for use in the United Kingdom. Areview consists principally of making enquiries of group management and applyinganalytical procedures to the financial information and underlying financial dataand, based thereon, assessing whether the accounting policies and presentationhave been consistently applied unless otherwise disclosed. A review excludesaudit procedures such as tests of controls and verification of assets,liabilities and transactions. It is substantially less in scope than an auditperformed in accordance with International Standards on Auditing (UK andIreland) and therefore provides a lower level of assurance than an audit.Accordingly, we do not express an audit opinion on the financial information. Review conclusion On the basis of our review we are not aware of any material modifications thatshould be made to the financial information as presented for the six monthsended 30 June 2007. Deloitte & Touche LLPChartered AccountantsLondon28 August 2007 28. Production and Sales Statistics (not subject to audit or review) a) Production and sales volumes for copper and molybdenum Production Sales ------------ ------- Six Six Full Six Six Full months months year months months year ended ended ended ended 30 June 30 June 2006 30 June 30 June 2006 2007 2006 2007 2006 000 000 000 000 000 000 tonnes tonnes tonnes tonnes tonnes tonnes CopperLos Pelambres 141.8 141.6 324.2 143.2 145.4 324.8El Tesoro 46.8 42.5 94.0 46.8 43.3 95.3Michilla 23.4 23.8 47.3 24.1 24.5 47.7 -------- -------- ------- -------- -------- -------Group total 212.1 207.9 465.5 214.1 213.2 467.8 ======== ======== ======= ======== ======== ======= MolybdenumLos Pelambres 4.9 4.1 9.8 4.9 4.4 9.9 ======== ======== ======= ======== ======== ======= b) Cash costs per pound of copper produced and realised pricesper pound of copper and molybdenum sold Cash cost Realised prices ----------- ----------------- Six Six Full Six Six Full months months year months months year ended ended ended ended 30 June 30 June 2006 30 June 30 June 2006 2007 2006 2007 2006 US cents US cents US cents US cents US cents US cents CopperLos Pelambres (8.6) 24.4 16.4 348.6 376.8 335.0El Tesoro 96.9 79.7 78.6 321.8 301.2 316.4Michilla 132.3 122.0 126.4 315.3 306.6 318.5 -------- -------- ------- -------- -------- -------Group weighted average 30.3 46.9 40.2 338.9 353.4 329.5(net of by-products) ======== ======== ======= ======== ======== ======= Group weighted average 104.4 95.2 95.6(before deducting ======== ======== =======by-products) Cash costs at LosPelambres comprise:On-site and shipping 73.4 55.6 56.4costTolling charges for 28.8 39.8 39.7concentrates -------- -------- -------Cash costs before 102.2 95.4 96.1deducting by-productcreditsBy-product credits (110.8) (71.0) (79.7)(principally -------- -------- -------molybdenum)Cash costs (net of (8.6) 24.4 16.4by-product credits) ======== ======== ======= LME average 307.0 275.3 305.3 ======== ======== ======= US$ US$ US$MolybdenumLos Pelambres 30.9 22.7 24.6 ======== ======== ======= Market average price 28.4 23.7 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. During eachrelevant period, the Group owned 60% 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 68.1 cents per pound in the first half of2006 to 85.1 cents per pound in the first six months of 2007. (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 28(a) and the cash costinformation in Note 28(b) is derived from the Group's production report for thesecond quarter of 2007 published on 31 July 2007. 29. Summary of mining companies' Chilean GAAP financial statements (not subjectto audit or review) The Group's three mining companies, Los Pelambres, El Tesoro and Michilla, willtoday file financial statements under Chilean GAAP for the six-month periodended 30 June 2007 with the Chilean securities regulator, the Superintendenciade Valores y Seguros de Chile ("SVS"). These filings are in accordance with theChilean mining tax legislation which requires companies that have elected toenter a tax stability regime to publish financial information on a quarterlybasis from the 2006 financial year. 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 30.06.07 30.06.06 30.06.07 30.06.06 30.06.07 30.06.06 US$'m US$'m US$'m US$'m US$'m US$'m Cash and cash equivalents 329.7 473.4 365.8 74.5 31.2 42.9Trade and other 390.8 496.0 67.9 53.5 30.8 23.4receivablesInventories 48.9 51.8 41.7 46.3 17.1 16.6Current and deferred 19.1 8.7 3.7 3.2 2.8 2.5tax assets -------- -------- -------- -------- -------- -------- Current assets 788.5 1,029.9 479.1 177.5 81.9 85.4 Fixed assets 1,625.3 1,320.1 250.0 260.9 49.0 61.4 Other non-current assets 149.3 150.5 45.8 58.2 1.0 1.0 -------- -------- -------- -------- -------- --------TOTAL ASSETS 2,563.1 2,500.5 774.9 496.6 131.9 147.8 ======== ======== ======== ======== ======== ======== Short term borrowings (84.7) (82.6) (14.1) (28.2) - -Trade and other (134.3) (112.9) (45.6) (92.4) (25.6) (28.7)payablesCurrent and deferred - (54.3) (11.2) (14.4) (9.0) (3.2)tax liabilities -------- -------- -------- -------- -------- -------- Current liabilities (219.0) (249.8) (70.9) (135.0) (34.6) (31.9) -------- -------- -------- -------- -------- -------- Medium and long term (191.7) (275.5) (7.0) (21.1) - -borrowingsTrade and other (16.3) (13.2) (7.0) (6.0) (7.8) (7.6)payablesDeferred tax (144.6) (133.8) (32.2) (28.6) - -liabilities -------- -------- -------- -------- -------- -------- Non-current (352.6) (422.5) (46.2) (55.7) (7.8) (7.6)liabilities -------- -------- -------- -------- -------- -------- Total liabilities (571.6) (672.3) (117.1) (190.7) (42.4) (39.5) -------- -------- -------- -------- -------- -------- Share capital (373.8) (373.8) (91.0) (91.0) (78.4) (78.4)Reserves (1,617.7) (1,454.4) (566.8) (214.9) (11.1) (29.9) -------- -------- -------- -------- -------- -------- Total shareholders' (1,991.5) (1,828.2) (657.8) (305.9) (89.5) (108.3)equity -------- -------- -------- -------- -------- -------- ======== ======== ======== ======== ======== ========TOTAL LIABILITIES AND (2,563.1) (2,500.5) (774.9) (496.6) (131.9) (147.8)SHAREHOLDERS' EQUITY ======== ======== ======== ======== ======== ======== (b) Income statements Los Los El Tesoro El Tesoro Michilla Michilla Pelambres Pelambres Six Six Six Six Six Six months months months months months months ended ended ended ended ended ended 30 June 30 June 30 June 30 June 30 June 30 June 2007 2006 2007 2006 2007 2006 US$'m US$'m US$'m US$'m US$'m US$'m Turnover 1,296.1 1,243.8 332.0 262.6 170.5 107.7 Operating costs (231.6) (180.9) (121.4) (81.4) (74.1) (70.2) -------- -------- -------- -------- -------- -------- Operating margin 1,064.5 1,062.9 210.6 181.2 96.4 37.5 Administrative and (37.0) (34.5) (13.9) (13.0) (7.5) (6.9)distribution expenses -------- -------- -------- -------- -------- -------- Operating profit 1,027.5 1,028.4 196.7 168.2 88.9 30.6 -------- -------- -------- -------- -------- -------- Other income - 0.1 - - 1.9 0.2Financial income 17.9 17.5 7.9 1.0 2.2 0.5Financial expenses (9.5) (10.8) (1.1) (1.7) (0.1) (0.2)Other expenses (0.9) (0.8) (1.6) (0.9) - (0.3)Exchange difference 1.2 (0.7) (0.1) 2.0 0.6 0.7 -------- -------- -------- -------- -------- -------- Net non-operating income 8.7 5.3 5.1 0.4 4.6 0.9/(expenses) -------- -------- -------- -------- -------- -------- Profit before tax 1,036.2 1,033.7 201.8 168.6 93.5 31.5 Income tax expense (195.0) (191.0) (36.3) (31.2) (17.6) (6.2) -------- -------- -------- -------- -------- -------- Profit for the financial 841.2 842.7 165.5 137.4 75.9 25.3period ======== ======== ======== ======== ======== ======== (c) Cash flow statements Los Los El Tesoro El Tesoro Michilla Michilla Pelambres Pelambres Six Six Six Six Six Six months months months months months months ended ended ended ended ended ended 30 June 30 June 30 June 30 June 30 June 30 June 2007 2006 2007 2006 2007 2006 US$'m US$'m US$'m US$'m US$'m US$'m Net cash flow from 731.1 663.4 157.3 122.3 71.3 34.2operating activities -------- -------- -------- -------- -------- -------- Investing activitiesAdditions to fixed (146.0) (240.7) (3.5) (4.3) (4.2) (6.5)assetsDisposals of fixed assets - 0.7 - - - -Other items - - - - - - -------- -------- -------- -------- -------- -------- Net cash used in (146.0) (240.0) (3.5) (4.3) (4.2) (6.5)investing activities -------- -------- -------- -------- -------- -------- Financing activitiesDividends paid (700.0) (470.0) - (40.0) (105.4) -Loans repaid (40.7) (40.7) (7.0) (7.0) - - -------- -------- -------- -------- -------- -------- Net cash used in (740.7) (510.7) (7.0) (47.0) (105.4) -financing activities -------- -------- -------- -------- -------- -------- Net increase in cash and (155.6) (87.3) 146.8 71.0 (38.3) 27.7cash 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 329.7 473.4 365.8 74.5 31.2 42.9equivalents 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 financial statements of Los Pelambres, ElTesoro and Michilla for the six months ended 30 June 2007 to be filed with theSVS in Chile. Certain detailed lines in the individual statements have beencombined 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. During each relevantperiod, the Group owns 60% of Los Pelambres, 100% of El Tesoro (61% prior to 24August 2006) and 74.2% of Michilla. (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. 30. Reconciliation of Chilean GAAP results to Turnover and EBITDA under IFRSfor individual business segments (a) Turnover Los Los El El Michilla Michilla Pelambres Pelambres Tesoro Tesoro Six Six Six Six Six Six months months months months months months ended ended ended ended ended ended 30 June 30 June 30 June 30 June 30 June 30 June 2007 2006 2007 2006 2007 2006 Notes US$'m US$'m US$'m US$'m US$'m US$'m Chilean GAAP - Turnover 1,296.1 1,243.8 332.0 262.6 170.5 107.7 Mark-to-market of 29(i) 58.4 69.0 - 0.8 0.4 0.7provisionally pricedsalesReclassification of 29(ii) - - - 24.1 (3.4) 57.2realised (gains)/losses ------- ------- ------- ------- ------- -------on commodity derivativesto other operatingexpense/reserves IFRS - Turnover 1,354.5 1,312.8 332.0 287.5 167.5 165.6 ======= ======= ======= ======= ======= ======= (b) EBITDA Los Los El El Michilla Michilla Pelambres Pelambres Tesoro Tesoro Six Six Six Six Six Six months months months months months months ended ended ended ended ended ended 30 June 30 June 30 June 30 June 30 June 30 June 2007 2006 2007 2006 2007 2006 Notes US$'m US$'m US$'m US$'m US$'m US$'m Chilean GAAP - Operating 1,027.5 1,028.4 196.7 168.2 88.9 30.6profit Depreciation & 34.7 33.0 18.4 17.2 9.5 7.4amortisation ------- ------- ------- ------- ------- ------- Chilean GAAP - EBITDA 1,062.2 1,061.4 215.1 185.4 98.4 38.0 Mark-to-market of 29(i) 58.4 69.0 - 0.8 0.4 0.7provisionally pricedsales Mark-to-market of 29 - - - (19.3) (3.4) 11.0financial derivatives (ii) Other IFRS and 29 1.5 0.1 (1.8) 1.3 1.7 1.8consolidation (iii) ------- ------- ------- ------- ------- -------adjustments IFRS - EBITDA 1,122.1 1,130.5 213.3 168.2 97.1 51.5 ======= ======= ======= ======= ======= ======= Notes to reconciliation of turnover and EBITDA (i) Copper and molybdenum concentrate sale agreements andcopper cathode sale agreements generally provide for provisional pricing ofsales at the time of shipment, with final pricing being based on the monthlyaverage London Metal Exchange copper price or monthly average molybdenum pricefor specified future periods. This normally ranges from 30 to 180 days afterdelivery to the customer. 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$45.3 million in respect of copper concentrate sales, and a creditof US$13.1 million in respect of molybdenum concentrate sales. The adjustment inrespect of El Tesoro is nil, and the adjustment in respect of Michilla is acredit of US$0.4 million. (ii) The Group uses derivative financial instruments to reduceexposure to commodity price movements. The Group does not use such derivativeinstruments for 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 materialeither individually or in aggregate. This information is provided by RNS The company news service from the London Stock Exchange
- Home
- Share Prices
- AQSE Share Prices
- Euronext
- Stock Screeners
- Share Chat
- FX
- News & RNS
- Events
- Media
- Trading Brokers
- Finance Tools
- Members
Latest Share Chat
Antofagasta Regulatory News (ANTO)
ANTO Share
Price
ANTO Share
News
ANTO Share
Chat
ANTO Share
Trades1,837
ANTO
Live RNS
ANTO Share
Charts
ANTO Level 2
Console
ANTO Live
Share Price
ANTO Broker
Ratings
ANTO Directors
Deals
ANTO Financial
Diary
ANTO
Fundamentals
ANTO Short
Positions
ANTO
Media
Antofagasta Information
Share Price Information for Antofagasta (ANTO)
Share Price is delayed by 15 minutes
Get Live Data
Share Price:
2,230.00
Bid:
2,237.00
Ask:
2,238.00
Change:
32.00 (1.46%)
Spread:
1.00 (0.045%)
Open:
2,198.00
High:
2,241.00
Low:
2,183.00
Prev. Close:
2,198.00
Last checked at -
Watchlists are a member only feature
Login to your account
Don't have an account? Click here to register.Interim Results
Due to London Stock Exchange licensing terms, we stipulate that you must be a private investor. We apologise for the inconvenience.
To access our Live RNS you must confirm you are a private investor by using the button below.