2014

Edison Expands UK Mining Sector Presence With Launch of Coverage of Antofagasta, a FTSE 100-Listed Company

LONDON, July 18, 2013 /PRNewswire/ --

Edison Investment Research, a leading international investment research firm, announces the initiation of coverage of Antofagasta (LSE: ANTO), a major Chilean-based copper mining group with interests in transport and water distribution.

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Edison's comprehensive report, Rebasing expectations, was published today, and examines the investment case for Antofagasta.

Highlights from the analysis by Gavin Wood, an analyst on Edison's Mining team, include:

After three years of strong growth, Antofagasta's copper production is expected to stabilise at around 700ktpa for the next three years. Its next major growth phase is expected to commence in late-2015 and could lead to a doubling of production over the next decade. The current cash position, combined with strong operating cash flows, should be sufficient to fund development of the growth portfolio.

Despite the stable production outlook, earnings are expected to nearly halve in 2013 due to lower commodity prices and cost inflation. After an exceptionally high dividend payout in 2012, the return to a normal 35% payout ratio and lower earnings in 2013 leads to a fall in the expected dividend by more than two-thirds.

Although development projects have the potential to double copper production over the next decade, the value generated by these projects is limited due to their high capital intensity.

We value Antofagasta at 828p/share based on a US$2.96/lb long-term copper price and a 9% discount rate. Our valuation is highly leveraged to the long-term copper price and a 10% increase in the latter would raise our valuation by 20%.

Antofagasta is a copper-focused mining group with high-quality assets and a major portfolio of growth opportunities, predominantly in Chile. It has a proven track record in successfully discovering, developing and operating major copper mines.

For the full report see: http://www.edisoninvestmentresearch.com/research/company/antofagasta

The launch of coverage on Antofagasta marks a further expansion of Edison's worldwide mining coverage. Edison provides research coverage on more than 100 mining companies across the UK, mainland Europe, North America and Australasia. All reports published by Edison are available to download free of charge from its website http://www.edisongroup.com.

About Edison Investment Research

Edison, the investment intelligence firm, is the future of investor interaction with corporates. Our team of over 100 analysts and investment professionals works with leading companies, fund managers and investment banks worldwide to support its capital markets activity. We provide services to more than 400 retained corporate and investor clients from our offices in London, New York, Berlin, Sydney and Wellington. Edison is authorised and regulated by the Financial Services Authority (http://www.fsa.gov.uk/register/firmBasicDetails.do?sid=181584).

Edison is not an adviser or broker-dealer and does not provide investment advice. Edison's reports are not solicitations to buy or sell any securities.

For more information please contact: Gavin Wood, Edison Investment Research, +44(0)20-3077-5700, mining@edisongroup.com

SOURCE Edison Investment Research



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