Hello and welcome to Antofagasta's 2025 Half-Year Results Call. We will start today's session with a short introduction from Antofagasta to be followed by a question and answer session. If you have a question, we ask that you please use the raise hand function at the bottom of your Zoom screen. When it is your turn, you will receive a prompt to be promoted as a panelist. Please accept, wait a moment, and once you have been introduced, you may unmute yourself, turn your video on, and ask your question. If you have joined us via telephone, please press star nine to raise your hand to enter the queue. Once your name has been announced, you can ask your question. You may also type a written question in the Q&A box at the bottom of the screen at any time.
I'll now hand you over to Rosario Orchard, Director of Antofagasta's London office, to introduce today's speakers.
Good morning, good afternoon, everybody. Welcome to our half-year call for 2025. I'm here today with our Chief Executive, Iván Arriagada, our CFO, Mauricio Ortiz, and our Vice President of Sustainability, Alejandra Vial. In terms of process today, Iván will start with a short introduction, then we'll move straight into Q&A. We'll aim to wrap up within 45 minutes. Iván, over to you.
Thank you, Rosario, and hello to everyone. It's great to be hosting this call and thank you for your time. We have today released our set of half-one financial results. We have a strong set of financial results. Our revenues are up 29%, EBITDA is up 60%, and our cash flow has also shown a significant increase. This has been achieved on the back of higher copper production when we compared with last year and also an important increase in gold and moly production. EBITDA margin was 58.8%, which is a 25% increase on the prior year. By all measures, I would say that our financial performance in the first half was strong. In parallel to that, we continue to make good progress on our projects.
We are executing two important projects, as you know, the expansion at Centinela, which involves the construction of a new concentrator plant, and also the expansion of the water system at Los Pelambres and replacing some infrastructure like the concentrate pipeline. I'm pleased to share with you that we've made good progress during this first half. Our projects are tracking according to program, and therefore, by the end, and when this is completed, when we expect they will, we should be able to achieve an increase in production, which is in the order of 30%. Good progress in our projects. Finally, as an introduction, I would say that we have declared a dividend, which is in line with our policy. Our policy, which we have consistently applied, is that we have a dividend of 35% of net earnings at the interim or half year.
In line with that, we've declared a dividend of $0.166 per share. Overall, I think a solid performance for the first half. With those brief words, I would then like to essentially initiate the Q&A. I will pass that on to Rosario.
Ladies and gentlemen, we will now begin our Q&A session. If you have a question, we ask that you please use the raise hand function at the bottom of your Zoom screen. When it is your turn, you will receive a prompt to be promoted as a panelist. Please accept, wait a moment, and once you have been introduced, you may unmute yourself, turn your video on, and ask your question. If you want to withdraw your question, please lower your hand using the raise hand function in the Zoom app. If you have dialed in by phone, please press star nine to raise your hand and star six to unmute. You may also submit written questions in the Q&A chat function at the bottom of the webinar screen. We will pause a moment to allow questioners to enter the queue. Our first question comes from Ephrem Ravi with Citigroup .
You may now unmute your audio, turn your video on, and ask your question.
Thank you for the chance to ask a question. Congratulations first on a good set of results. There are two very quick questions from me. Firstly, clearly the CapEx in the first half is significantly below the 50% mark for the $3.9 billion CapEx guidance for the year. There is an end-to-end through deposit where the construction will start. Other than that, can you give a bridge as to what are the incremental items that will kind of require $2.3 billion of CapEx for the second half? I guess end-to-end through is probably about $200 million. That still gives a significant delta versus the first half CapEx number. Secondly, in terms of copper chlor, clearly Zaldivar mine life extension permits is good news. When is the earliest you would be deploying that at Zaldivar, which I guess is the first place where you would be trying that out? Thank you.
Thank you for the question, sir Ephrem. I would say on capital spend, we did report $1.6 billion of capital spend for the first half, and we kept our guidance of $3.9 billion for the full year. I think the factors that explain that, one is that by plan, the second half was more weighted with respect to the annual capital spend. We do expect, according to our programs and how the work is performed, that more work is done in the second half compared to the first one. I would say that's largely across the main projects. In the second half, as you pointed out, we have some new projects which have not recorded spend in the first half, and that's namely the Encuentro pit.
The Encuentro pit project was sanctioned in June, and therefore we expect that spend to start to ramp up, and none of that was present in the first half. Those are, I would say, the key elements that explain why we expect the second half to be more loaded on spend. I want to emphasize that the good news is that we have both projects at Centinela and Los Pelambres on track. They are progressing well. We've had a lot of very impressive progress, I would say, at Centinela and at Los Pelambres, some of which you will be able to see for those who come at the site visit in November.
Our projects are doing well, and the fact that we have more phased spend in half two is, as I say, associated to the planned spend, which was loaded to the second half, and also new projects like the Encuentro pit. Those are the reasons. There's nothing different to that, Ephrem, on that front. Now, with respect to copper chlor leaching, you know that this is a technology that we've been working for a long time, and we are expecting now to complete the construction of what we call an industrial scale heap at Zaldivar. We will be completing that in the course of next year. As we do that and test that case, we expect to deploy this technology in Zaldivar, but not, I would say, before 2028. There's still some time to go, but obviously, this is an important step.
All the tests that we have conducted so far indicate that this is a highly reliable technology for the purposes of recovering copper from a primary ore of the chalcopyrite type. We're very excited about what we're constructing and how this is moving.
Thank you, clear.
Our next question comes from Ioannis Masvoulas at Morgan Stanley. You may now unmute your audio, turn your video on, and ask your question.
Yes, hello. Thank you very much for the presentation. Just two questions from my side. First of all, on the production outlook for the balance of this year and also potentially if you can talk about next year as well. Your guidance has remained unchanged for 2025, and yet you indicated some additional maintenance at Los Pelambres that will have some production impact. As we think about the H1 to H2 bridge, is the volume uplift that is embedded into your guidance fully driven by Los Pelambres, or are any of the other operations delivering better volumes in the second half? Maybe on this topic, if you can comment around how do you see the grade profile at Los Pelambres into next year as well, because I think in the past you were talking about potentially north of 0.6% grade next year.
Do you think that's still sort of the base case? A second question on Zaldivar. We're talking here about the mine life extension, which looks quite interesting, but at the same time, water solution, you have two or three different options here. It is the highest cost asset you have in your business today. Do you think a fully owned water solution that's going to be fairly capital intensive is still one of the preferred solutions, or would you seek alternative options that will be more capital light? I'll leave it here on my side. Thank you.
Yes, thank you, Ioannis, for the question. I mean, in terms of production, again, if you look back, there's been a pattern of higher production in the second half, especially in quarter four, and that's associated generally to more maintenance work being done in the first half, especially in quarter one. That remains the case. We have reiterated our guidance, and therefore we expect that annual production will be within the range that we have provided. Now, with respect to next year, we will provide guidance as we usually do in quarter three. As we've mentioned in the past, we do expect that there's a grade trend in Los Pelambres, which we will start to see next year towards grades which are more consistent with historical averages. That will come into play next year, and we expect some grade increase there. We will provide full guidance in quarter three.
I think in terms of the mix between the different operations for half two, we obviously expect that our two main operations will see some increase at Los Pelambres and Centinela, and that makes part of the guidance for the full year that we have provided. Now, on Zaldivar, moving on to that question, I think we're very pleased with the fact that the permit was renewed and there was no discontinuity in the operation. We have a mine permit which takes us to now 2051, but we need to provide for a water solution beyond 2028 when the current new permit expires. We are looking at a couple of options. One is to undertake a project ourselves, as you mentioned.
We have an alternative which would be lighter on the capital side because it would rely on essentially water being provided by a third party at a point in which we have to then pick up and transport to Zaldivar. We like lighter asset solutions, and certainly that's something that we're looking at with a lot of interest. We need to finish the review that we're doing with respect to the specific risks that that alternative involves, but it's looking good. To the extent that we have an option which is lighter on capital, it will rank ahead. We are reviewing those studies and completing the review of those alternatives. I think the good news is that we have a long-term solution, and therefore we have the ability to continue to operate Zaldivar and monetize over a billion tons of resources that Zaldivar has.
I think the extension of the permit, the continuity of the operation, and the fact that we can look now until 2051 is very good news.
Thank you very much. Thank you.
Our next question comes from Matt Greene at Goldman Sachs . You may now unmute your audio and ask your question.
Hey, good morning, Iván and team. Hope you can hear me okay. Probably just a follow-on from Zaldivar. When can we expect a final investment decision on copper chlor take? Obviously, you mentioned the industrial scale next year, but perhaps if we just kind of think about, you know, over the next, over the medium term, what are the sort of the critical parts around that? To Ioannis's question, I guess, does a decision around a water solution come before a decision around copper chlor take? That's my first question. I'll follow up with the next. Thanks.
Yeah. Look, I think we are planning to complete this industrial scale heap next year. We will therefore integrate these into the full feasibility studies that we have to complete. As I mentioned before, we don't expect a decision before 2028 as we progress our feasibility and review studies. They're all looking positive. This is a technology that, in our view, now we've reached a level in which it's been fully tested. We are looking at the specifics of the ore type at Zaldivar, which is important for how we operate it in the long term. With that having been said, the sequence likely involves that we will make a decision on water before we make a decision on the copper chlor take. I think what is important is the current mine life of Zaldivar takes us well beyond, I would say, 2035.
On the back of that, on top of that, we've got the primary ore body. We will be quite advanced when we make the assessment on which water solution we make with respect to these studies. Likely to come before, but we will be quite advanced. As I say, we think this is a quite reliable solution. The tests that we're performing have more to do with the specifics of the configuration for the type of ore that's mined at Zaldivar than with the proof of the technology.
That's helpful. Thanks. If I could just follow up, you mentioned on the previous question that you're open to more CapEx light solutions in relation to that water. I presume on the go forward, lower risk pathways to scaling up copper chlor. I guess Antofagasta in the past says you've been vocal about being open to collaborations that present physical, I guess, operating synergies around mine planning. I'm asking this through the lens of Zaldivar and Escondida. There's Pinta Verde, that is a large oxide resource that is essentially an extension of Zaldivar. Obviously, Escondida Norte, which could do with a pushback into your land package there and give Escondida some high-grade sulfides.
Is there not a partnership to be had here between Escondida and Zaldivar just around ore movements and potentially, from your standpoint, a lower risk pathway to scaling up copper chlor if you have access to more oxide material?
Yeah, look, I think certainly Zaldivar is adjacent to Escondida. I mean, very adjacent in the sense that they're almost sharing the same footprint. We have a partnership in the sense that we have internship agreements to be able to jointly mine certain common areas. That coordination at the mine planning and execution level does take place, and it's been ongoing. Obviously, we will always be looking and continue to look at opportunities to enhance that. When you have a common wall, as we do have, there are synergies and potential benefits of having a more coordinated mining activity, as you've mentioned. To the extent that there are opportunities to expand those and amplify those, we will always be available and looking for them. We will continue to pursue those.
We have today, as I say, agreements in place that allow us to, in a coordinated way, mine the areas that are of common interest. We will continue to work in this line.
Thanks, Iván.
As a reminder, if you would like to ask a question, please use the raise hand feature. When it is your turn, you will receive a prompt to be promoted as a panelist. Please accept, wait a moment, and once you have been introduced, you may unmute yourself, turn your video on, and ask your question. Alternatively, if you have dialed in, please press star nine to raise hand. Once you've been invited to ask your question, please unmute and ask your question. Our next question comes from Amos Fletcher at Barclays. Please unmute your line by pressing star six and ask your question.
Good afternoon, gentlemen. I had a couple of questions. The first one was to ask about working capital in the second half, what your expectations are there. The second question is just on CapEx. I was just wondering if you could give us a sense of the sensitivity of your CapEx budget to movements in FX, please. Thanks.
Yeah, look, I think with respect to both of these, I'm going to ask Mauricio to address them. Working capital and CapEx sensitivity. Mauricio, you want to take them, please?
Thank you. Regarding working capital in the first half, we have a negative movement, mainly driven by the increase on receivables. As you may realize, we have higher sales in all our products. That was translated in higher receivables, and that explained the bulk of the working capital movement, along with a slightly higher copper price and, of course, higher gold price. Going into the second half, what we may expect is that some of that impact will be removed in the second half as our shipment will normalize. Of course, as the price is moving to the positive area, we may see an increase in payables along in the second half as well. In CapEx sensitivity, I don't know if you can give me some a bit more details of what you are asking specifically. Just don't repeat what Iván mentioned at the beginning of the call.
Yeah, it was just to get a sense, I guess, of what FX assumption you're using and the sensitivity of it to movements in the U.S. dollar.
As a general assumption, we are using CLP 900 per US dollar. The rule of thumb is 50% of our CapEx is peso denominated. That is very quarter on quarter, depending on the specific activities that we are doing. In general terms, 50% is a good proxy. We have a variance, or we have an exchange rate over the first half in the space of 960 Chilean pesos per dollar. That is roughly a 6% positive movement for our CapEx during the first half. In the second half, if we remain with a weaker than CLP 900 per dollar, we will also potentially capture the benefit of this exchange rate in our CapEx in the second half.
Perfect. That's very clear. Thank you.
Thank you. There are no further questions. I therefore hand back to Iván for closing comments.
Thank you very much all for attending and joining the call. As I've mentioned initially, you know, it's been a good first half with strong financial results and also operating performance, especially on cost and our project delivery. We continue on track to execute our strategy, and we will continue therefore to focus on the same points during the second half for delivering our annual results. Again, thank you and have a good day.