Investec reiterates 'sell' on miner Antofagasta

26th Aug 2014 13:34

Despite largely in-line operating profits from Chilean copper miner Antofagasta broker Investec has reiterated its 'sell' recommendation on the shares of the company. In particular, analyst Marc Elliot highlights the fact the company has capital programmes ahead. Together with volatile commodity prices he does not expect the company to repeat the 142% pay-out ratio achieved at the end of fiscal year 2013. Nevertheless, and as he points out, the firm is working on various projects to cut costs. Those include the creation of an owner operator team rather than using contractors. In parallel, both the Antucoya and Los Pelambres projects are being expanded in a bid to take on harder ore and offset declining grades.Also on the negative side of things, the Chilean government is working on a tax reform - set to be passed at the end of September - which looks likely to take the total effective charge to 35%. Despite the above Investec does not intend to make significant changes to its forecasts or price target, which are now under review.AB