Progress at Antofagasta PLC's (LSE:ANTO) Centinela mine has impressed another set of analysts, after the Chilean copper producer hosted a visit to the Atacama desert site, where a second concentrator is being built
RBC Capital Markets said the development is expected to be largely on budget and on time, with guidance that the ramp-up will reach full capacity by the end of 2028 appearing “conservative”, with the analysts pencilling in the second quarter of that year.
Centinela has no significant constraints on space, altitude, or labour, with the ability to attract a skilled workforce, "notable" (and aided by padel courts on site), and the use of existing pits for tailings, meaning that costs should be kept down.
RBC reiterated a 'sector perform' rating, with risks “skewed to the upside” as Antofagasta enters a new growth phase.
With medium-term worries "out of the way", the analysts shift their focus to future growth, namely further expansions at both Los Pelambres and Centinela.
"Despite management's sharp focus on the now and reluctance to be drawn too far ahead, they have left plenty of options for further expansions.
Looking further out, RBC noted that both Antofagasta's core Los Pelambres mine and Centinela both benefit from multiple organic growth options.
"The less straightforward pathway is the stake in BVN, developing Cachorro (unlikely to be a stand-alone mine) and where to deploy Culrpchor-T beyond Zaldivar. Ultimately, we think [it] should all be to the upside."
While management has shown little appetite to grow its 19% stake in Peru’s Buenaventura (BVN), RBC expects a full acquisition “at an opportune time”.
It warned, however, that tensions between controlling families and balance sheet limitations could complicate such a move. “An all-cash deal will maintain the Luksics’ 65% control, but the Benavides are unlikely to sell without a large premium.”