* Special dividend for 2010 100 cents, vs 14 cents in 2009
* 2010 earnings/share 106.7 cents, vs 119 cents forecast
* Market fundamentals positive, but volatility to continue
* CEO sees net earnings rising to $1.5 bln in 2011
* Shares down 3.5 percent
(Adds interview with CEO, updates shares)
By Julie Crust
LONDON, March 8 (Reuters) - Chilean miner Antofagasta (ANTO.L: Quote) announced a special dividend of 100 cents on Tuesday, sweetening a set of annual profit figures that missed forecast due to higher energy costs.
The copper miner said it would pay a final dividend of 112 cents, including the special dividend, reflecting its continued confidence. It has paid a special dividend for the past seven years, including during the global downturn.
Earnings per share rose 58 percent to 106.7 cents, missing the forecast for 119 cents on higher costs.
"Cost inflation is a concern and is a theme we are likely to see elsewhere, in our view," Numis Securities said in a note.
Cost pressures, particularly rising energy prices, have been rising across the industry, though the impact has been softened by stronger commodity prices.
Antofagasta shares were down 3.5 percent at 1600 GMT, compared with a 2.3 percent fall in a British mining index .
The group's revenue grew 54.5 percent to $4.58 billion on higher copper prices and output.
"Market fundamentals remain positive, and while the high level of volatility that has characterised commodity prices in recent years is expected to continue, consensus estimates are for copper prices to remain favourable in 2011," chief executive Marcelo Awad said.
Larger rivals BHP Billiton (BHP.AX: Quote) (BLT.L: Quote) and Rio Tinto (RIO.AX: Quote) (RIO.L: Quote), flush with cash as demand from China helps fuel a commodity price boom, announced billion dollar buybacks alongside their results.
Average copper prices on the London Metal Exchange rose 46 percent in 2010 and continued rising early this year, peaking at a record in mid-February before easing back on concerns about economic growth. [MET/L]
Antofagasta had previously announced copper output rose 18 percent in 2010, just shy of an already reduced target, and that it expected to produce 715,000 tonnes this year.
Production for first two months of this year has been below target due to lower grades, Awad told Reuters in an interview, though he was confident the group can catch up and so has left 2011 output targets unchanged.
"We may have lower production in Q1. However, after Q2 we will be back to normal," he said, adding that in the second half it expects grades to rise and production at full capacity.
He said the company expected net earnings to rise to about $1.5 billion this year, assuming current metals prices and production targets are met, from $1.05 billion in 2010.
EXPANSION
The company has focused mainly on developing early stage exploration projects.
"We don't rule out an M&A, but at this moment they are all very expensive. They are trading at a huge premium," Awad said.
"We don't foresee any M&A in the near future, but it doesn't mean to say we are not prepared to do it."
His comments echoed those made last month by BHP Billiton's CEO Marius Kloppers, who said the commodity boom had raised price expectations for potential assets.
Antofagasta only targets copper exploration projects, but Awad said it would look at any metal when it comes to M&A.
There is some uncertainty over the $3.3 billion Reko Diq project, a joint venture in Pakistan with Barrick Gold (ABX.TO: Quote), as approval of a mining lease is delayed by a legal probe into the award of the concession in the past.
"We hear conflicting news from the central government compared with the provincial government, so it has been very difficult to read whether they are very eager to have the project up and running or completely against it," Awad said.
On Feb. 18, a Chilean newspaper said Pakistan's top court might rule in a month on the investigation.
"But we have heard this many times," said Awad. He added that the government would probably like to take a larger stake in the project.
"They want us to come to the negotiating table to offer something to them to take away all these petitions, but we are not prepared to do that," he said.
On other exploration projects, a decision on whether to progress with the Antucoya deposit, potentially an 80,000 tonne per year project, will be made in the second half of this year.
Capital expenditure for that project could begin in the middle of next year and in the meantime Antofagasta will look to raise financing and attract a joint venture partner. (Editing by Dan Lalor and Will Waterman, sourced :Thomson Reuters)
* 2010 earnings/share 106.7 cents, vs 119 cents forecast
* Market fundamentals positive, but volatility to continue
* CEO sees net earnings rising to $1.5 bln in 2011
* Shares down 3.5 percent
(Adds interview with CEO, updates shares)
By Julie Crust
LONDON, March 8 (Reuters) - Chilean miner Antofagasta (ANTO.L: Quote) announced a special dividend of 100 cents on Tuesday, sweetening a set of annual profit figures that missed forecast due to higher energy costs.
The copper miner said it would pay a final dividend of 112 cents, including the special dividend, reflecting its continued confidence. It has paid a special dividend for the past seven years, including during the global downturn.
Earnings per share rose 58 percent to 106.7 cents, missing the forecast for 119 cents on higher costs.
"Cost inflation is a concern and is a theme we are likely to see elsewhere, in our view," Numis Securities said in a note.
Cost pressures, particularly rising energy prices, have been rising across the industry, though the impact has been softened by stronger commodity prices.
Antofagasta shares were down 3.5 percent at 1600 GMT, compared with a 2.3 percent fall in a British mining index .
The group's revenue grew 54.5 percent to $4.58 billion on higher copper prices and output.
"Market fundamentals remain positive, and while the high level of volatility that has characterised commodity prices in recent years is expected to continue, consensus estimates are for copper prices to remain favourable in 2011," chief executive Marcelo Awad said.
Larger rivals BHP Billiton (BHP.AX: Quote) (BLT.L: Quote) and Rio Tinto (RIO.AX: Quote) (RIO.L: Quote), flush with cash as demand from China helps fuel a commodity price boom, announced billion dollar buybacks alongside their results.
Average copper prices on the London Metal Exchange rose 46 percent in 2010 and continued rising early this year, peaking at a record in mid-February before easing back on concerns about economic growth. [MET/L]
Antofagasta had previously announced copper output rose 18 percent in 2010, just shy of an already reduced target, and that it expected to produce 715,000 tonnes this year.
Production for first two months of this year has been below target due to lower grades, Awad told Reuters in an interview, though he was confident the group can catch up and so has left 2011 output targets unchanged.
"We may have lower production in Q1. However, after Q2 we will be back to normal," he said, adding that in the second half it expects grades to rise and production at full capacity.
He said the company expected net earnings to rise to about $1.5 billion this year, assuming current metals prices and production targets are met, from $1.05 billion in 2010.
EXPANSION
The company has focused mainly on developing early stage exploration projects.
"We don't rule out an M&A, but at this moment they are all very expensive. They are trading at a huge premium," Awad said.
"We don't foresee any M&A in the near future, but it doesn't mean to say we are not prepared to do it."
His comments echoed those made last month by BHP Billiton's CEO Marius Kloppers, who said the commodity boom had raised price expectations for potential assets.
Antofagasta only targets copper exploration projects, but Awad said it would look at any metal when it comes to M&A.
There is some uncertainty over the $3.3 billion Reko Diq project, a joint venture in Pakistan with Barrick Gold (ABX.TO: Quote), as approval of a mining lease is delayed by a legal probe into the award of the concession in the past.
"We hear conflicting news from the central government compared with the provincial government, so it has been very difficult to read whether they are very eager to have the project up and running or completely against it," Awad said.
On Feb. 18, a Chilean newspaper said Pakistan's top court might rule in a month on the investigation.
"But we have heard this many times," said Awad. He added that the government would probably like to take a larger stake in the project.
"They want us to come to the negotiating table to offer something to them to take away all these petitions, but we are not prepared to do that," he said.
On other exploration projects, a decision on whether to progress with the Antucoya deposit, potentially an 80,000 tonne per year project, will be made in the second half of this year.
Capital expenditure for that project could begin in the middle of next year and in the meantime Antofagasta will look to raise financing and attract a joint venture partner. (Editing by Dan Lalor and Will Waterman, sourced :Thomson Reuters)
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