In a May 8 research report, analyst Edward Sterck with BMO Capital Markets relayed that Antofagasta Plc (ANTO:LSE) has resolved the blocked concentrate pipeline at Los Pelambres that caused concentrate shipments to be stopped for 21 days. The company confirmed the pipeline is now cleared and undamaged and shipments have since resumed.
During the period in which shipments were suspended, the company continued operating the plant and mine as usual, so mining and processing continued unaffected. Production and sales, however, were impacted as the concentrate had to be stockpiled, Sterck explained. Consequently, Q2/18 earnings will likely reflect lower-than-expected copper production of about 10 thousand tons (10 Kt) and a drop in copper sales of about 15 Kt.
Despite that, however, Sterck noted any impact on 2018 as a whole should be "minimal," with any shortfall incurred in Q2/18 or H1/18 balancing out in H2/18, "given that operations have resumed with no capex impact." He added, "At most, the impact to full year 2018 would likely be 5 Kt copper."
In fact, Antofagasta reiterated its 2018 production guidance of 705–740 Kt of copper. BMO estimates 727 Kt of production for the year.
It also maintains an Outperform rating and a £12 per share target price on Antofagasta, whose stock is currently trading at around £10.37 per share.
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Disclosures from BMO Capital Markets, Antofagasta, May 8, 2018
I, Edward Sterck, hereby certify that the views expressed in this report accurately reflect my personal views about the subject securities or issuers. I also certify that no part of my compensation was, is, or will be, directly or indirectly, related to the specific recommendations or views expressed in this report.
Analysts who prepared this report are compensated based upon (among other factors) the overall profitability of BMO Capital Markets and their affiliates, which includes the overall profitability of investment banking services. Compensation for research is based on effectiveness in generating new ideas and in communication of ideas to clients, performance of recommendations, accuracy of earnings estimates, and service to clients.
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