Antofagasta pl (LON:ANTO)c saw its stock rise over 2% on Tuesday following its fiscal year 2024 results, which exceeded analyst expectations on several fronts.
The mining company posted an EBITDA of $3.4 billion, slightly surpassing both its own forecast and consensus estimates, this marked a marginal beat over the consensus estimate of $3.37 billion.
The better-than-expected performance was attributed to lower-than-anticipated spending on exploration and corporate costs.
Meanwhile, the company’s underlying earnings per share came in at $0.63, though it fell short of consensus, which was at $0.67 per share.
The discrepancy was largely driven by a stronger-than-expected contribution from joint ventures, particularly Buenaventura.
In terms of returns to shareholders, Antofagasta declared a final dividend of 31.4 US cents per share, which was 13% above the consensus estimate of 27.73 US cents.
This translates to a payout ratio of 50%, in line with the company’s policy of distributing at least 35% of its earnings.
By the end of 2026, the company expects to owe $3.5 billion in debt, which will indirectly fund its dividends.
Despite the rise in debt, Antofagasta’s net debt for FY24 stood at $1.6 billion, which was 14% lower than the consensus projection.
However, free cash flow for the period was negative at $130 million, although this was still an improvement compared to the much larger losses anticipated by the consensus, which had forecast FCFs of negative $310 million. The surprise in cash flow was mainly due to reduced capital expenditures
Antofagasta's major projects are progressing well. The Centinela concentrator expansion and Los Pelambres brownfield projects remain on schedule and within budget.
For the Zaldivar project, the company is in the third round of environmental permitting consultations, targeting approval before the current permit expires in May 2025.
Additionally, Antofagasta has boosted its ore reserves at Centinela with the addition of the Encuentro sulphide pit.
The new reserves, which total 738 million tonnes at a copper grade of 0.45%, are higher in grade than the existing ore at Centinela and increase the overall reserve base by 35%, now standing at 2.6 billion tonnes.
Antofagasta's 2025 production, cost, and capital expenditure guidance remains unchanged, signaling no immediate shifts.
Despite rising debt, the company's strong FY24 performance has reassured investors of its ability to execute current projects and deliver shareholder returns.
"With the price arbitrage between the COMEX and LME price at all-time highs, we think the move in copper price looks overdone, and we expect ANTO shares to be dragged as copper prices move back to our $4.00/lb forecast for 2025," said analysts at RBC Capital Markets in a note.
