Antofagasta Lines Up Expansion at Los Pelambres

Antofagasta (LSE:ANTO) has decided to take its already massive Los Pelambres copper mine in Chile to another level, with the equivalent of a 60,000-tonne expansion in copper production now approved.

In a Thursday (November 15) release, the company said expanding operations would cost US$1.3 billion and works would begin early next year

Los Pelambres is already Antofagasta’s largest mine, contributing half of the company’s copper production in the September quarter.

CEO of Antofagasta Ivan Arriagada said the expansion would also include the construction of a desalination plant and a water pipeline in order to insure operations against prolonged drought.

“The expansion of our world-class Los Pelambres mine is an important step forward in the advancement of the group’s organic growth pipeline,” said Arriagada.

“The expansion project will add 60,000 tonnes a year of low cost copper production at this long-life operation and will ensure that it remains a first quartile producer for many years to come.”

In Q3, Los Pelambres produced 98,600 tonnes of copper with an annual target of over 340,000 tonnes. With the approved expansion, the mine would tick above 400,000 tonnes of copper annually.

“Annual copper production will increase from 40,000 tonnes in the first year at the expanded throughput to 70,000 tonnes towards the end of a 15 year period, as the hardness of the ore increases and the benefit of the higher milling capacity is fully realised,” said the company.

Construction will begin in early 2019 with first production from the expanded operations forecast to begin in the second half of 2021. Of the US$1.3 billion, US$500 million would be for the desalination plant.

The company also left the door open for additional expansion at Los Pelambres in another phase.

“This phase will further increase production and also significantly extend the mine life of Los Pelambres as it accesses the operation’s substantial undeveloped mineral resources, which are currently some five times larger than its ore reserves.”

Antofagasta did not say how the expansion would affect molybdenum or gold production at the mine. Los Pelambres produces 10,500 tonnes of molybdenum and 55,400 ounces of gold annually at its current capacity.

In its most recent quarterly report, the company posted group 2018 copper guidances of 705,000-725,000 tonnes from its four operational mines.

On the London Stock Exchange, Antofagasta enjoyed a 4.49 percent increase in share value to GBX 796 by market close on Thursday.

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Securities Disclosure: I, Scott Tibballs, hold no direct investment interest in any company mentioned in this article.