Annual Report 2007 - Antofagasta plc

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