Annual Report 2007 - Antofagasta plc

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A R G E N T I N ACHAIRMAN’S REVIEWChairman’s Review continuedLos PelambresPuntaChungoPortC H I L ELOS VILOSBOLIVIAC H I L EILLAPELSALAMANCAMauroTailingsDamConcentratorPlantARGENTINAMine siteQuillayesTailingsDamCities / TownsLos Pelambres facilitiesSlurry pipelineTailings pipelineIn a separate legal action last April the First InstanceCourt of Santiago declared null and void the salecontract made in 1992 between the sellers of theMauro property and the purchasers who subsequentlyon-sold it to Los Pelambres. Los Pelambres boughtthe property with good title in 2001, almost ten yearsafter the 1992 sale agreement now being challengedby third parties. Los Pelambres is prohibitedfrom depositing tailings in the Mauro dam as aconsequence of this third party action, which willbe heard by the Appeal Court of Santiago.In another case, in August, the First Instance Courtof Los Vilos decreed that certain works should bestopped in the vicinity of the Pupio. This ruling hasbeen appealed by Los Pelambres in the Court ofLa Serena and judgement is expected in March.Other cases have been launched directly or indirectlyby the same plaintiffs.Los Pelambres continues working with itsneighbouring communities to ensure that theyshare and benefit as the mine develops. In supportof this, Los Pelambres has provided training forworkers and given assistance to local schools.The Fundación Minera Los Pelambres, which wascreated in 2003, has recently established a 100hectare agricultural project to produce table grapesfor export in addition to its on-going programmes.These activities have helped the communities and atthe same time given Los Pelambres a leading role inthe social and economic development of the area.Los Pelambres is confident that its permits werelegally granted and the correct procedures followedduring the environmental process for the Maurodam which involved full consultation with localcommunities. Its important contribution to the regionin particular and the country in general is widelyrecognised by the authorities and local communities.The Mauro dam was 98.5% complete at the endof 2007 and when in operation will provide storagecapacity for the tailings from 1.7 billion tonnes of orereserves. The existing Quillayes dam will continueoperating until early 2009.The judicial proceedings concerning the Mauro tailingsdam are moving through the Chilean Courts and theAppeal Court’s decision questioning the validity of thepermission given by the Chilean Water Authority(Dirección General de Aguas (“DGA”)) to build thedam has been appealed by both the DGA and LosPelambres to the Supreme Court and is being heardin March 2008.10Antofagasta plc Annual Report and Financial Statements 2007
CHAIRMAN’S REVIEWEl Tesoro(100 per cent owned)El Tesoro produced 93,000 tonnes of Grade A cathodein 2007, compared to 94,000 tonnes in 2006. Theincrease in average ore grades from 1.16 per cent in2006 to 1.23 per cent in 2007 was largely offset byexcessively high moisture levels in the treated ore.This problem was resolved in the second half of theyear by blending dry ore from the stockpiles and bymodifying the production processes, which were alsoadversely affected by high levels of carbonates.El Tesoro achieved above average copper prices ofUS 327.6 cents per pound compared to US 316.4cents per pound in 2006. Operating profit wasUS$380.3 million compared to US$409.9 millionin 2006. Cash costs averaged US 109.8 cents perpound, up from US 78.6 cents per pound in 2006,due to various factors including higher variable energycosts (following the necessity to renegotiate thepower supply contract in May), higher acid and fuelcosts, higher waste-to-ore ratios and lower levels ofore treated. Cash costs increased to US 128.6 centsper pound in the last quarter due to higher energycosts and higher sulphuric acid costs resulting fromincreased consumption levels as well as higher prices.As expected the long term grades of ore at El TesoroSelected data for El Tesoro92.4•42.497.8•52.498.1•66.194.0 93.0•78.6‘03 ‘04 ‘05 ‘06 ‘07Copper production (’000 tonnes)• Cash costs (US cents per pound)22.1•1.4625.4•1.3527.2•1.2328.7•1.16•109.8‘03 ‘04 ‘05 ‘06 ‘07Plant throughput (’000 tonnes per day of ore)• Copper grade (per cent)26.8•1.23Operations and projects in Chile’s II RegionB O L I V I AC H I L EMichillaMEJILLONESAntucoyaEsperanzaTesoroA R G E N T I N AANTOFAGASTACitiesGroup minesProjectsAntofagasta plc Annual Report and Financial Statements 2007 11
Page 1: ANTOFAGASTAAnnual Report and Financ
Page 4 and 5: Highlights• Net earnings up 2.1%
Page 6 and 7: Highlights continued471.8 498.4 467
Page 8 and 9: CHAIRMAN’S REVIEWChairman’s Rev
Page 24 and 25: Financial ReviewFINANCIAL REVIEWBas
Page 26 and 27: Financial Review continuedFINANCIAL
Page 38 and 39: Corporate Social ResponsibilityCSR
Page 41 and 42: TransportationThe Antofagasta Railw
Page 43 and 44: Other international and national st
Page 45 and 46: Organisations of which Group compan
Page 47 and 48: Compensation, recruitment and reten
Page 49 and 50: CSR REPORTEl Tesoro promotes a cult
Page 51 and 52: • health and safety issues are mo
Page 53 and 54: Native vegetation at the Choapa Val
Page 55 and 56: existing naturally in the Andean re
Page 57 and 58: saponaria), Espino (Acacia caven),
Page 59 and 60: • The “Together We Can Grow Mor
Page 61 and 62: Awards and RecognitionDuring the ye
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special dividend. The total cost of
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EnvironmentThe Group seeks to ensur
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Antofagasta Railway Company plc (ra
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Information and professional develo
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Company, for safeguarding the asset
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Statement of Compliance withthe Det
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Non-Executive Directors’ feesThe
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Audited InformationDirectors’ rem
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Basis of audit opinionWe conducted
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Consolidated Balance SheetAt 31 Dec
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Consolidated Statement of Changes i
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2 Principal Accounting Policiesa) A
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2 Principal Accounting Policies con
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4 Revenue and Total Profit from Ope
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5 Segment Information continueda) P
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5 Segment Information continueda) P
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6 Profit for the YearProfit for the
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8 Net Finance IncomeNet finance inc
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11 DividendsAmounts recognised as d
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13 Property, Plant and EquipmentLan
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16 Investment in Associate2007 2006
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19 Inventories2007 2006US$m US$mRaw
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22 Borrowings continued(ii)Other lo
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22 Borrowings continuedd) Maturity
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24 Financial Instruments and Financ
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26 Deferred Tax continuedAt 31 Dece
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29 Minority InterestsThe minority i
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33 Notes to the Consolidated Cash F
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37 Related Party Transactions conti
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38 Contingent Assets and Contingent
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40A Basis of Preparation of the Bal
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40D Subsidiaries continueda) Invest
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40G Independent Auditors’ Report
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Dividends to Ordinary ShareholdersD
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Mining Production and Sales, Transp
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A ‘Measured Mineral Resource’ i
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Notes to Ore Reserve and Mineral Re
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GDPGross Domestic Product.Governmen
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TC/RCTreatment and refining charges
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Directors and AdvisorsDirectorsJ-P
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