Annual Report 2007 - Antofagasta plc

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CHAIRMAN’S REVIEWChairman’s Review continuedAccording to the mine plan, a total of 50 milliontonnes of oxide ore of 0.43 per cent copper and122 million tonnes of waste material will be removedduring the pre-stripping period of 30 months and theoxide ore could be treated at El Tesoro. Pre-strippingwill begin during the first quarter of 2008 after aprovisional authorisation was granted by the regionalauthorities.Esperanza will build a 145 km pipeline from south ofthe existing Michilla port to the ore processing plantto provide seawater. Two reverse-osmosis plants,one located at the port and one at the mine site, willprovide the salt-free water required for drinking andindustrial use being about 10 per cent of the totalwater requirement for the future operation. Esperanzawill be able to start mining activities early as a resultof its fast track strategy of pre-placing purchaseorders. The final Environmental Impact Assessment(EIA) for the Esperanza project is expected to beapproved by mid 2008, with construction beginningduring the third quarter of 2008 and the firstconcentrate shipments are expected to startin the fourth quarter of 2010.Group exploration expenditure38.122.421.5Exploration ReviewChileSierra Gorda districtThe Group acquired the remaining 39 per centminority interest in El Tesoro owned by EquatorialMining in August 2006 and has consolidated itsposition in the Sierra Gorda district. The purchase gaveit access to an additional 20,000 hectares to the northand south of the Esperanza and Telégrafo projectsthrough a joint venture with Minera Rayrock Limitada,a wholly-owned subsidiary of Compañía Minera MilpoS.A.A. of Peru. The Group now has an 81.5 per centinterest in the joint venture entity CompañíaContractual Minera Caracoles. During 2007 explorationwork at Caracoles resulted in the discovery ofa porphyry copper-gold system located approximately10 kms southeast of Esperanza, rich in oxidesand sulphides. As additional drilling is required todefine further the extent of the oxide and sulphidemineralisation an exploration budget of US$12.0million has been allocated to this area for 2008.Telégrafo’s northern part (Telégrafo Norte) was drilledduring 2007 to define tonnage and grade potential asa complement to Esperanza, whereas its southernpart (Telégrafo Sur) will undergo infill drilling of 45,000metres of diamond and reverse circulation drill holesduring 2008. Preliminary in-house estimated resourcesat Telégrafo Norte are 404 million tonnes of 0.41per cent copper, 0.1 g/t gold and 0.013 per centmolybdenum and at Telégrafo Sur are 898 milliontonnes of 0.45 per cent copper, 0.17 g/t gold and0.013 per cent molybdenum, at a 0.3 per centcopper cut-off.10.33.5‘03 ‘04 ‘05 ‘06 ‘07US$ millionGeo-thermal and coal explorationAs countries in the southern cone, particularly Chile,are now facing severe problems relating to shortagesof energy supplies, coupled with soaring costs, theGroup decided to enter the energy explorationbusiness and formed management and explorationteams for geo-thermal exploration. AMSA hasbeen granted title to the 62,000-hectare Tinguiririca14Antofagasta plc Annual Report and Financial Statements 2007
CHAIRMAN’S REVIEWgeo-thermal concessions in south-central Chile andalso secured approximately 116,000 hectares of alargely unexplored coal basin in southern Chile, withexploration planned during 2008.Latin America – excluding ChilePeruThe Group concluded the sale of its 50 per centinterest in Cordillera de las Minas S.A. in 2007 butPeru nevertheless remains within the Group’s areaof focus and it continues to seek exploration andbusiness opportunities there.Colombia-EcuadorThe Group continued its international explorationeffort in 2007. In Latin America, exploration wasconcentrated in Colombia and Ecuador through jointventures with AngloGold Ashanti and AscendantCopper respectively. In Colombia the joint venturewas terminated as the results, after the first yearof exploration, did not come up to the Group’sminimum criteria and in Ecuador the joint venturewas also terminated as the Chaucha porphyrycopper-molybdenum project did not satisfy theGroup’s parameters. These areas nevertheless remainwithin the Group’s areas of focus and the Group hasan on-going programme in Ecuador.Rest of the worldPakistan-Reko DiqAn aggressive 18 month drilling programme wascompleted by the end of 2007 when approximately100,000 metres of infill drill holes were completed ontarget in the Western Porphyries and a new geologicaland resource model was defined. The new modelincludes measured, indicated and inferred resourcesof 4.1 billion tonnes of 0.50 per cent copper and0.29 g/t of gold. A scoping study was also completedin 2007 defining the development concepts for theproject with a starting throughput capacity of 72,000tonnes per day. The infrastructure required for theproject was also defined as was a programmecentred on collecting metallurgical, geotechnical andenvironmental data. A full feasibility study has beenapproved for completion in the first half of 2009.AFGHANISTANQUETTAReko DiqPAKISTANIRANAFGHANISTANEL-8GWADARKARACHIEL-6RL-7 (Chagai East)EL-5Reko DiqLicenceTAFTANNOK KUNDIYAKMUCHDALBANDINIRANPAKISTANRail and sealed roadAntofagasta plc Annual Report and Financial Statements 2007 15
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 12 and 13: A R G E N T I N ACHAIRMAN’S REVIE
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
Page 63 and 64: special dividend. The total cost of
Page 65 and 66: EnvironmentThe Group seeks to ensur
Page 67 and 68:
Antofagasta Railway Company plc (ra
Page 69 and 70:
Information and professional develo
Page 71 and 72:
Company, for safeguarding the asset
Page 73 and 74:
Statement of Compliance withthe Det
Page 75 and 76:
Non-Executive Directors’ feesThe
Page 77 and 78:
Audited InformationDirectors’ rem
Page 79 and 80:
Basis of audit opinionWe conducted
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Consolidated Balance SheetAt 31 Dec
Page 83 and 84:
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
Page 111 and 112:
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
Page 135 and 136:
38 Contingent Assets and Contingent
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40A Basis of Preparation of the Bal
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40D Subsidiaries continueda) Invest
Page 141 and 142:
40G Independent Auditors’ Report
Page 143 and 144:
Dividends to Ordinary ShareholdersD
Page 145 and 146:
Mining Production and Sales, Transp
Page 147 and 148:
A ‘Measured Mineral Resource’ i
Page 149 and 150:
Notes to Ore Reserve and Mineral Re
Page 151 and 152:
GDPGross Domestic Product.Governmen
Page 153 and 154:
TC/RCTreatment and refining charges
Page 155 and 156:
Directors and AdvisorsDirectorsJ-P
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Annual Report 2007 - Antofagasta plc

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