TIDMANTO
RNS Number : 4393X
Antofagasta PLC
20 December 2023
NEWS RELEASE, 20 DECEMBER 2023
CENTINELA SECOND CONCENTRATOR PROJECT APPROVED FOR
DEVELOPMENT
ADDING 170,000 COPPER EQUIVALENT TONNES PER YEAR(1)
Antofagasta plc ("Antofagasta" or the "Company"), a global
leader in the copper mining industry, is pleased to announce that
after an extensive review, the construction of the Centinela Second
Concentrator Project has been approved. Critical path works will
begin immediately with full construction expected to commence after
definitive project finance documents have been executed during Q1
2024.
Antofagasta's CEO, Iván Arriagada said: "The Centinela Second
Concentrator Project is a key element of our profitable growth
strategy as it will add a further 170,000 copper equivalent tonnes
per year of production(1) , with first copper expected in 2027,
significantly progressing us towards our long-term ambition of
900,000 tonnes of profitable copper production. Importantly, it
will also reduce net cash costs and unlock significant value in the
Centinela District's two billion tonne ore reserve. This brownfield
expansion project is expected to deliver attractive returns in
excess of our cost of capital at a wide range of commodity prices.
We are leveraging more than 20-years of operational experience and
understanding of Centinela's ores, utilising existing
infrastructure and building on long-established relationships
within our local communities.
"We are a company focused on profitable growth and financial
discipline, and this project will elevate Centinela to become one
of the top 15 copper mines in the world by output and we will
become one of the leading gold producers in Chile. At the same
time, this project will create significant financial and
non-financial value for all stakeholders while remaining consistent
in our approach to disciplined capital allocation.
"Our view on the medium to long-term outlook is that the world
is facing a significant shortage of copper, with electrification
and the energy transition driving rising demand. The Second
Concentrator Project is a clear opportunity to provide additional
copper from our existing resource base, using 100% renewable
electricity and raw sea water to reduce our environmental
footprint, and as a project, represents a demonstration of our
purpose of developing mining for a better future. "
KEY HIGHLIGHTS
-- Growth: Centinela Second Concentrator to produce an
additional 170,000 tonnes of copper equivalent tonnes per annum,
comprising of 144,000 tonnes of copper production, 130,000 ounces
of gold production and 3,500 tonnes of molybdenum production[1],
with a 36-year mine life based on Centinela's substantial ore
reserve of two billion tonnes.
-- Lower net cash costs: Moving to first quartile C1 cost of
production at Centinela through an increased focus on concentrator
capacity that incorporates modern technologies, increased
by-products and greater economies of scale. Net cash costs in the
Centinela district are expected to be in the first quartile of the
industry cost curve following the expansion.
-- Capital investment: Project cost of $4.4 billion, including a
new 95ktpd concentrator plant incorporating high pressure grinding
rolls ("HPGRs") to reduce energy consumption, the expansion of the
existing raw seawater pumping and transport system, a new tailings
storage facility, capacity growth in energy and other input supply
infrastructure, the expansion of outbound logistics networks such
as the concentrate transport system and critical port
infrastructure, additional loading equipment, autonomous hauling
equipment and a truck-shop for the mine expansion at Esperanza Sur.
Also included are camps, and ancillary civil infrastructure, which
have been designed to fully integrate into the existing Centinela
operation, to avoid any redundancy. This updated and approved
capital cost estimate (previously $3.7 billion - announced in
August 2022) is based on advanced detailed engineering and includes
escalation for inflation during construction, a stronger local
currency estimate, updates to local labour regulations and
additional contingency provisions. The phasing of the project's
capex is expected to be weighted towards 2025, with similar
expenditures in adjacent years.
-- Mining plan: The second concentrator will source ore
initially from the recently opened Esperanza Sur pit and later from
the Encuentro pit. The sulphide ore in the Encuentro pit lies under
the Encuentro Oxides reserves, which are expected to be depleted by
2026. Fully exposing the sulphide ore in the optimal sequence
required to initiate feed to the second concentrator from the
Encuentro Pit is expected to require separate investments in
infrastructure, mining equipment and mine development activities,
which will materially commence half-way through the construction
phase of the second concentrator and will span a period of 3-4
years. The combined investment in mine development and sustaining
capital for the expansion of the Encuentro pit is estimated to be
approximately $1 billion. This expansion in mining activities will
further enable Centinela to achieve the development potential of
its extensive mineral resource base.
-- Financing: Project to be financed by Centinela through a
combination of direct funding from Centinela's shareholders
(Antofagasta plc and Marubeni Corporation, representing
approximately 40% of total funding), and project finance provided
by lenders. Definitive project finance documents are expected to be
executed during Q1 2024.
-- Water infrastructure: Detailed terms and conditions have been
substantially completed for the option to provide water for
Centinela's current and future operations by a third party
acquiring the existing water supply system and building the new
water pipeline expansion. The planned outsourcing of the water
supply will only proceed if it improves the net present value of
the project, with closure of this process scheduled to be made
alongside the execution of definitive project finance documents
during Q1 2024. If it goes ahead as planned, an estimated amount of
$600 million in cash will be received for the divestment of the
existing water infrastructure and the project cost will reduce by
approximately $400 million, considering that the investment
required to expand the existing water system to supply the Second
Concentrator will be undertaken by a third party.
-- Project permitting: The Centinela Second Concentrator Project
has all the relevant permits approved by the authorities in Chile
for the project to proceed into the construction phase.
-- Timeline: Three-year construction schedule, with critical
path works commencing immediately. First production is expected in
2027.
Further details are provided in a presentation on the Company's
website, available at www.antofagasta.co.uk .
Management Presentation and Q&A
There will be a virtual presentation and Q&A that will be
hosted today at 10:00am (UK time) by Iván Arriagada - Chief
Executive Officer and Mauricio Ortiz - Chief Financial Officer,
with the following details for accessing the meeting:
Date Wednesday 20 December 2023
Time 10:00am (UK time)
Online link Please click here to join the conference online (or
copy the URL shown below into your browser).
https://antofagasta-creating-a-tier-1-mining-district.open-exchange.net/
For those investors who are not able to join the conference by
video, you can join by telephone using the dial-in details provided
via the link shown above, where participants will be able to hear
the presentation, the Q&A, and ask questions. Note, however,
that if you choose the dial-in option, when registering please add
the telephone number that you intend to use to access the call.
Unregistered numbers may be removed from the call.
Video and telephone participants are encouraged to register in
advance of the call commencing, to avoid delays in accessing the
meeting.
Investors Media - London
- London
Rosario Orchard rorchard@antofagasta.co.uk Carole Cable antofagasta@brunswickgroup.com
Robert Simmons rsimmons@antofagasta.co.uk Telephone +44 20 7404 5959
Telephone +44 20 7808 0988
Media - Santiago
Pablo Orozco porozco@aminerals.cl
Carolina cpica@aminerals.cl
Pica
Telephone +56 2 2798 7000
Register on our website to receive our email alerts at the
following address:
https://www.antofagasta.co.uk/investors/news/email-alerts/
LinkedIn
[1] Figures represent the average over an initial 10-year
period.
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