ANTO Antofagasta Plc

By Alex MacDonald

LONDON--Antofagasta PLC (ANTO.LN) shares fell Wednesday after the Chilean copper producer reported a lower than expected rise in third-quarter copper output, spurring analyst jitters that the company may struggle to meet its full-year guidance.

Analysts also said they were disappointed by the weaker-than-expected 2017 copper output guidance, prompting Antofagasta's shares to fall 7.6% to 499.6 pence a share as of 0818 GMT, making the miner the worst performer out of the FTSE 100 index.

Antofagasta, like many of its peers, has struggled recently to meet production targets. Last year protests, heavy rainfall and setbacks in mining high grade ore resulted in Antofagasta losing a chunk of is copper production. This year, the company has already warned that output would be towards the lower end of its original guidance due to inherent risks in ramping up new production capacity.

The miner, which was first incorporated in London in 1888, said copper production rose 8.7% to 180,600 tons in the three months ended Sept. 30, 2016 compared with the previous quarter. This missed Citigroup's forecast of 191,900 tons despite the ramp up of the new Antucoya mine to full production in August.

Antofagasta had previously said it expected stronger output in second half of the year compared with the first half and on Wednesday said it now expects this year's copper output to be close to the lower end of its guidance of 710,000-740,000 tons.

This means the company will have to produce at least 206,100 tons of copper in the fourth quarter to meet the lower end of its guidance range after producing 503,900 tons in the first nine months of the year.

"In our view, management is softly guiding to 2016 production coming in below the guided range without officially downgrading guidance," said Berenberg analyst Fawzi Hanano. The guidance "looks a bit stretched" Citigroup added.

The miner also said it expects to produce between 685,000 to 720,000 tons of copper in 2017 due in part to a decline in copper grades at the Centinela mine and the processing of harder ore at it flagship Los Pelambres mine. This compares with consensus forecast copper output of 750,000 tons for 2017, according to Liberum Capital.

Gold output rose 33% on the quarter to 70,300 ounces in the third quarter due to higher gold grades at its Centinela mine, while net cash costs fell 5.6% on the quarter to $1.18 a pound due to improved cost effiencies, higher metal output, and higher gold prices. This prompted the company to lower its 2016 net cash cost guidance to $1.25 a pound from $1.30/lb.

Antofagasta also noted that its working to address new charges levied against its Los Pelambres mine by the Chilean environmental authority. The charges aren't related to the water dispute court cases already settled and are unlikely to result in any significant fines or the mine being closed, even temporarily, the company said.

Antofagasta, however, noted its considering alternative energy options for Los Pelambres given a 10% to 20% cost overrun at a hydroelectric power plant project.

Antofagasta also lowered its annual capital expenditure to below $900 million for both 2016 and 2017 compared with $1.1 billion previously forecast for this year.

Write to Alex MacDonald at alex.macdonald@wsj.com

(END) Dow Jones Newswires

October 26, 2016 05:33 ET (09:33 GMT)

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