Broker snap: Antofagasta could pay special divi by 2015, says Canaccord

6th Sep 2013 15:05

Shares in Chile-based copper miner Antofagasta were making gains on Friday after Canaccord Genuity retained their positive stance on the stock, giving an upbeat outlook for free cash flow (FCF) and the prospect of a special dividend in the new few years.In the aftermath of last week's first-half report Canaccord highlighted the revised outlook for project scale and likely sequencing of developments, which has resulted in volume downgrades in the medium and longer term as project slate contracts."Given our current copper price, operating cost and capex estimates it means we no longer expect a period of negative FCF after minority interest dividend payments through 2014 and 2015. All told, to 2016 we now expect FCF generation of $2bn, some $2.4bn higher than the $0.4bn outflow previously estimated," said analyst Peter Mallin-Jones.He explained that this improved FCF outlook now means that Antofagasta will have the capability of paying "substantial special dividends" from late 2015 - "many years" earlier than expected."We expect the balance sheet to sustain a net cash position of ~$1.5bn through 2014 and 2015 rather than drawing down to approximately cash neutral as we previously estimated."The broker however has cut its target price for the stock slightly from 1,035p to 1,020p to reflect reduced near-term production.The shares were trading 2.16% higher at 900p in late afternoon trade on Friday.BC