Antofagasta PLC (LON:ANTO) has said it expects the ongoing protests in Chile, where it is based, to hit production by 5,000 tonnes, while full-year guidance remains unchanged.
Last week violent demonstrations took place in the South American country to express frustration over the unequal distribution of wealth and to demand improvements in education, healthcare and wages. It is not clear when they will stop.
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In a third-quarter production update, the FTSE 100-listed firm said full-year 2019 production is expected to be between 750,000 and 790,000 tonnes of copper with costs at below US$1.25 per pound (/lb), decreasing to between 725,000 and 755,000 tonnes in 2020 as grades decline at the Centinela mine before picking up again in 2021.
The company said production in the three months to 30 September was 197,000 tonnes of copper, down 0.8% quarter-on-quarter, and 226,600 ounces of gold, dipping 10.7% quarter-on-quarter due to declining grades at Centinela.
Molybdenum production was 2,900 tonnes, a 3.3% decrease quarter-on-quarter, while net cash costs were US$1.12/lb, 1.8% lower quarter-on-quarter as higher production and cost savings were offset by a weaker Chilean Peso.
“We delivered another quarter of strong production underpinned by a consistent operating performance, which together with higher grades at some of our operations, contributed to year to date copper volumes of 584,200 tonnes which are 16% higher than the same period in 2018,” said Antofagasta chief executive Iván Arriagada.
Peel Hunt said the production guidance for 2020 is lower than expected, with grades falling more than anticipated.
"We believe the potential for downgrades to 2020 estimates is likely to offset the positives from the lower costs from the operations seen in Q3," the broker added, keeping the 950p target price and the 'hold' recommendation.
Shares were little changed on Wednesday morning at 858.2p.
--Adds broker's comment, shares--