Antofagasta expects weaker output increase in 2015

Mining group Antofagasta reported its annual output for 2014 was in line with its guidance but added it expected a smaller-than-expected increase in production this year.

The Chile-based miner said it expects copper production for 2015 to be marginally below analysts’ forecasts at 710,000 tonnes, at net cash cost of $1.50 per pound.

"This is unlikely to give any confidence to the investors who, in our view, were expecting annual improvement in unit costs due to a weak Chilean peso and lower oil prices," Citi analysts said in an emailed statement on Wednesday.

"The market could react negatively on today's results."

Antofagasta, which like its sector peers has been affected by a 13% plunge in the price of copper, said its production in 2014 fell 2.3% year-on-year to 704,800 tonnes.

The decline was partly attributable to lower grades at the group’s Los Pelambres mine, though it remained in line with its 700,000 tonnes guidance.

Net cash costs for the year rose 5.1% from the corresponding period in 2013 to $1.43 per pound but were marginally better than the miner’s $1.45 target.

"We continue to focus on controlling our cost base in 2015 whilst growing our production," group chief executive Diego Hernández said.

"We remain optimistic about the copper market in the medium to long term."

The Chilean miner said it was shifting its focus on its $1.9bn Antucoya project, which is expected to come on line this year, and said the decision was motivated by the need to balance a decline in production due to declining grades and aging mines.

The FTSE-100 group added it hopes its $3bn investment over the next five years will enable it to grow production to 900,000 tonnes by the end of the period.

Antofagasta shares were 4.11% down at 665.00p at 10:25 on Wednesday.