Shares in the FTSE 100's biggest copper miner are crashing after a worrying production report
Shares in Antofagasta, the London-listed copper miner, are crashing on Wednesday after the company released a downbeat production update which warned that the company's output will be "close to the lower end" of its predicted range at the end of 2016.
"Production growth is expected to continue in Q4 2016 and guidance for the year is expected to be close to the lower end of the 710-740,000 tonnes range provided at the beginning of the year," the company's Q3 production update said.
Investors took against the news, and shares have tanked on Wednesday morning, falling as much as 8% at the open, before recovering slightly. Around 8.50 a.m. BST (3.35 a.m. ET) the stock is trading at £5.01, a fall of 7.31%
Here is the chart:
Commenting on the results, Antofagasta's CEO Ivan Arriagada, who has only been at the helm for six months, said:
"Since becoming CEO I have continued to focus our efforts on reducing costs and improving operational efficiencies, and here again we are making good progress with net cash costs decreasing by 5.6%.
"As part of these efficiency programmes we have also reviewed our mine plans and wider operational activities to improve decision making and the accuracy of forecasting. This has involved a rigorous assessment of our plans with a focus on profitable tonnes and a higher level of certainty without compromising safety or operational standards. Following this review, production in 2017 is expected to be in the range of 685,000 to 720,000 tonnes."
Antofagasta, which conducts the vast majority of its operations in Chile, has so far been a major beneficiary of the UK's vote to leave the EU, like most mining firms. That's because the crash in the pound has helped miners, which tend to denominate their assets in dollars. When sterling falls against the dollar, this is good news for miners like Antofagasta.
However, on Wednesday, the pound can't mask investor fears about the company's ailing production numbers, and shares have tanked.