Antofagasta receives broker backing after 'solid' set interims

Antofagasta PLC reported a robust first half of 2025, with EBITDA surging 60% year-over-year to $2.23 billion, slightly surpassing analyst forecasts, driven by higher commodity prices and a significant 32% reduction in unit costs to $1.32 per pound. The Chilean copper miner also approved a $1 billion development at its Encuentro mine, with capital expenditure commencing in H2 2025 to sustain production. Citi reiterated its 'buy' rating and £23 price target, citing the 'solid' performance and potential for further cost guidance upgrades, which saw Antofagasta shares rise 2%.

Analysis

Antofagasta PLC has reported a robust first half for 2025, with earnings before interest, tax, depreciation, and amortisation (EBITDA) surging 60% year-over-year to $2.23 billion, marginally exceeding analyst forecasts. This strong performance was primarily driven by higher realized prices for copper and gold, coupled with a significant operational achievement in cost management. Unit costs fell by 32% to $1.32 per pound, placing them comfortably below the company's full-year guidance range of $1.45 to $1.65 per pound, signaling strong efficiency gains. While the company has reiterated its full-year production guidance of 660,000 to 700,000 tonnes, Citi's commentary suggests an expectation for output to be at the lower end of this range. Looking ahead, the board has approved a $1 billion capital expenditure program for the Encuentro mine development, set to commence in the second half of 2025, which is critical for maintaining production levels but will accelerate spending. The positive market reaction, with shares up 2%, is supported by Citi's "buy" rating and a £23 price target, which suggests further upside from the current £21.37 price, especially if the company upgrades its cost guidance.

Key Decisions for Investors

• The combination of a 60% EBITDA growth and a 32% reduction in unit costs presents a strong bullish case, suggesting the current operational momentum may support further share price appreciation towards the analyst target of £23.
• Investors should monitor the execution and cash flow impact of the new $1 billion capital spending program beginning in H2 2025, as this will be a key factor in future free cash flow generation.
• Pay close attention to any forthcoming updates on full-year cost and production guidance, as an upward revision on cost savings could serve as a significant positive catalyst, while confirmation of production at the low end of the range may temper expectations.