Antofagasta PLC

Antofagasta PLC (LSE: ANTO) is an FTSE 100 index listed Company engaged in copper mining. It operates four copper mines in Chile. Besides, the Company has a transport division as well in Northern Chile, to serve mining customers. This Report covers the Key Recommendation Rationale, Conclusion, and Recommendation on the stock.

Key Recommendation Rationale – Sell at GBX 1,861.00

• Resistance near Current levels: ANTO’s stock price crossed the Resistance (R2) which was stated in the previous report on 07 April 2025 therefore, there can be a possibility of a decline in resistance levels. Considering the market conditions and the price action, it is prudent to exit the stock.

• QoQ Decline in Copper Production: Although copper production increased 19.6% YoY to 154.7kt, it declined sharply by 22.8% QoQ from 200.3kt in Q4 2024. The fall was driven by reduced throughput and lower grades at Los Pelambres and Centinela, reflecting operational softness in the current quarter.

• Higher Net Cash Costs Erode Margin Gains: Net cash costs rose 25.2% QoQ to $1.54/lb, reversing the positive YoY trend of a 20% reduction. The increase was due to lower copper volumes and rising input costs, squeezing margins despite higher by-product credits.

• Gold Production Fell Sharply QoQ: Gold output dropped by 37.1% QoQ to 42.9koz, down from 68.2koz in Q4 2024, despite a 28.8% YoY increase. The fall was largely due to lower grades and scheduled maintenance at Centinela, reducing the benefit from by-product credits.

• Macroeconomic Risk: The market sentiments can remain weak in the short term due to the subdued consumer disposable income, geopolitical tensions, and political risks.

Valuation Methodology: Price/ Earnings Approach

Share Price Chart  

Conclusion

ANTO is expected to trade at a discount, weighed down by a sharp QoQ decline in copper production, a 25.2% rise in net cash costs to $1.54/lb, and a steep drop in gold output. Additional pressures include regulatory uncertainty and operational risks at Zaldívar, declining transport volumes across both rail and road segments all across Q1 FY25, and ongoing structural burdens such as policy-related disadvantages and persistent inflation—factors likely to constrain near-term profitability.  For conducting the valuation, the following peers have been considered: Rio Tinto PLC (LSE: RIO), BHP Group Ltd. (LSE: BHP), etc.

Given its current trading levels, the recent financial performance, strategic investments and partnerships, market expansion and cost optimization strategies, relative valuation, and associated risks, it is prudent to exit the stock at the current levels. Hence, a ‘Sell’ recommendation is given on the stock at the Current Market Price of GBX 1,861.00 as of 12 May 2025, 08:40 AM, GMT+1. 

Note 1: Past performance is not a reliable indicator of future performance.

Note 2: The reference date for all price data, currency, technical indicators, support, and resistance levels is 12 May 2025. The reference data in this report has been partly sourced from REFINITIV.

Note 3: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned as per the Valuation and or the technical levels provided has been achieved and is subject to the factors discussed above.

Note 4: Target Price refers to a price level which the stock is expected to reach as per the relative valuation method and/or technical analysis taking into consideration both short-term and long-term scenario.

Note 5: ‘Kalkine reports are prepared based on the stock prices captured either from the London Stock Exchange (LSE) and or REFINITIV. Typically, both sources (LSE and or REFINITIV) may reflect stock prices with a delay which could be a lag of 15-20 minutes. There can be no assurance that future results or events will be consistent with the information provided in the report. The information is subject to change without any prior notice.’

Note 6: Dividend Yield may vary as per the stock price movement.