Broker snap: Antucoya re-start rules out large divi at Antofagasta, says Credit Suisse

28th Mar 2013 11:28

Shares in mining giant Antofagasta were under pressure on Thursday after the company announced the anticipated re-start of the Antucoya copper project in Chile, something which Credit Suisse believes rules out a large dividend in 2013.Capital expenditure (capex) at the project has been raised from $1.7bn to $1.9bn with $500m already used. Meanwhile, Credit Suisse estimates that cash costs will be higher than previous guidance due to inflation.The broker said this was a negative move as returns of the project are "marginal" due to high capex intensity and high cash costs. Meanwhile, it likely rules out another elevated dividend payment this year with the consolidated free cash flow yield falling from 9.0% to below 5.0% and the payout ratio likely to drop back to 35% from 70% in 2012."Longer term ANTO remains one of the true global high quality copper names and the group has several brownfield expansion options that are likely to be higher return/lower risk than greenfield options. "However, growth is likely to be very limited before 2016, we expect a more balanced/surplus copper market in 2013 and see 15% downside risk to consensus estimates for 2013."Credit Suisse retained its 'underperform' rating and 1,150p target price for the shares.The stock was down 3.66% at 987.5p by 11:26.BC