UPDATE 1-Miner Antofagasta boosts payout as profits tick higher

Tue Mar 12, 2013 3:14am EDT

By Clara Ferreira-Marques

LONDON, March 12 (Reuters) - Copper miner Antofagasta sought to brush off investor worries about its growth options with a better-than-expected 2012 payout and special dividend on Tuesday, as profits ticked higher despite lower copper prices.

The group said on Tuesday that it would pay a dividend of 98.5 cents per share, more than double a year ago, implying a payout ratio of 70 percent of net earnings - above market forecasts. That includes a special dividend of 77.5 cents.

Analysts hoped Antofagasta's robust balance sheet and the suspension of its only major growth project late last year would mean a boost for 2012 dividends, reinvigorating shares that have underperformed since the group announced lacklustre 2013 guidance.

Antofagasta has been one of the worst performers among London-listed blue chips so far this year.

The Chilean miner has paid special dividends for the past decade, even through the global financial crisis - though it reined in its payout for 2011 and said it would spend more on a new generation of growth projects.

Antofagasta halted development at its $1.7 billion Antucoya copper mine in December, blaming escalating costs at what was already one of the most capital intensive projects in the copper industry.

Chief Executive Diego Hernandez - pushing for better returns, along with the rest of the sector - said then that Antofagasta would "temporarily suspend" work.

It said on Tuesday that the Antucoya review continued, though its "conservative" assessment had prompted the group to take a $500 million impairment on the value of the asset - $350 million for the group, based on Antofagasta's majority share.

Antofagasta had approved Antucoya only the previous year, selling a 30 percent stake to Japanese trading house Marubeni Corp to help shoulder the burden of the costs.

The miner's full-year earnings before interest, tax, depreciation and amortisation (EBITDA) were $3.83 billion, up just under 5 percent and within analyst forecasts, though just above a consensus market forecast of $3.72 billion, according to Thomson Reuters I/B/E/S.

Revenues rose almost 11 percent, despite an almost 10 percent drop in the copper price.

Antofagasta warned when it published 2012 production numbers earlier this year that it would not increase output this year, while cash costs would jump by over a third due to greater spending at two key mines, Esperanza and Los Pelambres.

The world's biggest miners have had their profits dented by costs and weaker prices, prompting them to scale back expansion and raising concerns that a decade-long mining boom is over.

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