Copper slump chisels £655m off Antofagasta
A SLUMP in earnings at Chilean copper miner Antofagasta tarnished the company’s shine, wiping £654.6m off its market value.
Antofagasta announced that earnings for the first half of the year were down 16.2pc to £708.1m, as the strengthening Chilean peso meant costs climbed.
Copper production was also down 8.5pc due to lower grades of ore in its mines and a blockage found earlier this year at the Los Pelambres pipeline, which moves copper concentrates to nearby ports.
Production of gold, which Antofagasta mines as a by-product of its copper operations, dropped by 35.8pc as a result of lower grades found at the Centinela mine.
Though the copper giant had already warned that its first-half figures could be disappointing, shares still sank by 7pc, or 66.4p, to 886.4p.
Antofagasta’s chief executive Ivan Arriagada said: ‘As we have guided, this year is a tale of two halves. The first half, on which we are reporting, is expectedly softer due to lower sales tonnes and grades and higher costs, but we are expecting tonnages and unit costs to improve substantially during the second half and well into 2019 as mined grades increase in line with our mine plan.’
Arriagada was keen to impress on investors that it was still expecting full-year copper production to be between 705,000 tonnes and 740,000 tonnes.
In a silver lining for investors, revenue was up 3.6pc to £1.6bn as Antofagasta managed to nab higher prices for the copper it did sell to offset the lower volumes.
But the company added that current trade negotiations between President Trump and China were creating ‘considerable market uncertainty’. Ian Forrest, an analyst at The Share Centre, said: ‘ Antofagasta still has the potential to deliver good results if demand for copper and prices continue on an upward path, especially as the group has been increasing its productive capacity and is reducing costs.’
In an otherwise uneventful day for the FTSE 100, Antofagasta’s decline weighed the index down. It ended the day 0.4pc, or 30.81 points lower, at 7611.6 points. Shares in online bingo company
JPJ Group, formerly Jackpotjoy, fell 6.3pc, or 64p, to 950p as it announced first-half earnings had slipped by 4pc to £56.9m.
Though investors were unimpressed, analysts at broker Numis said the figures were ‘reassuring’ and retained their ‘buy’ rating on the stock.
Numis said earnings fell due to additional taxes and marketing spend, and instead pointed revenue growth of 12pc – excluding the company’s ‘social’ business which has since been sold for £18.1m.
On London’s junior market
Realm Therapeutics – a biopharmaceutical company which focuses on finding cures for diseases involving the body’s immune system – sank 51.3pc, or 20.5p, to 19.5p. Investors backed away from the business as it announced that its latest drug, which it hoped would treat eczema, was ineffective in clinical trials.
Realm boss Alex Martin said: ‘Having just received the data, we are working to better understand this outcome and to analyse all of the data collected in the study.’
Loss before interest and tax at Realm increased from £3m to £8.5m for the first six months of the year, mainly due to ramped-up spending on research and development.
But shareholders in Salva Rx, a biotechnology firm which attempts to create treatments that boost the body’s natural defences to fight cancer, were in for a more positive surprise.
Shares shot up 43.5pc, or 19.4p, to 64p as the company announced it was selling its subsidiary to Canada-listed Portage Biotech.