Broker snap: Investec concerned with metals prices at Antofagasta

1st May 2013 10:11

FIrst-quarter production results from copper miner Antofagasta were well-received by the market on Wednesday but Investec has kept its 'reduce' rating for the stock given a weaker commodity price environment.Total copper output of 183.8k tonnes in the first three months of the year was in line with company expectations and slightly ahead of Investec's model on an annualised basis.Cash costs stood at 172 cents per pound pre by-products, under the broker's 174 cents estimate.However, Investec pointed out that commodity prices have fallen sharply in recent months with copper now at $7,000 per tonne, down from $7,960 in the first quarter."The recent drop in commodity prices is leading toward negative provisional price adjustments totalling c$88m for the quarter. "Should commodities drop further then this is a growing area of risk. We expect to see some further negative adjustment at the interim results, although ANTO does have a strong balance sheet to handle such issues."The broker has kept its 892p target price for the shares, but noted that if it were valuing Antofagasta at spot prices, the target price would be somewhere closer to 763p.The stock was up 3.29% at 927p by 10:05 on Wednesday.BC