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Anglo American Q1 Copper Production Down 9%; Reduces FY20 Capex Guidance

Anglo American plc (AAUKY.PK,AAL.L) reported Thursday that its copper production for the first quarter declined 9 percent from last year to 147,000 tonnes, largely due to an expected reduction at Los Bronces, driven by the continued drought conditions in central Chile. This was partially offset by continued strong plant performance at Collahuasi.

The company's production of metallurgical coal decreased 8 percent from the prior-year period to 3.8 million tonnes due to the timing of longwall moves.

De Beers' diamond production decreased by 1 percent to 7.8 million carats, with limited impact from COVID-19 measures introduced at the end of the quarter in producer countries.

Kumba's iron ore production volumes declined 1 percent to 9.4 million tonnes. However, Minas-Rio in Brazil continued its strong operational performance, with 6.4 million tonnes of premium grade iron ore production, reflecting P101 productivity improvements.

"The onset of varying degrees of lockdown or distancing measures in a number of our operating countries towards the end of the quarter, combined with the impact of longwall moves in our Metallurgical Coal business, led to 4% lower production compared to the same period of 2019, despite continued strong iron ore production at Minas-Rio," said Mark Cutifani, CEO of Anglo American.

For full-year 2020, Anglo American maintained its outlook for copper production in a range of 620,000 to 670,000 tonnes.

However, the iron ore production outlook for Kumba, based on the current lockdown measures in South Africa, has been revised to a range of 37 million to 39 million tonnes from 41.5 million to 42.5 million tonnes previously, subject to the extent of further COVID-19-related disruptions.

Anglo American said that in response to COVID-19, it is implementing cash improvement measures, including operating cost reductions of at least $0.5 billion and an approximately $1.0 billion reduction to its 2020 capital expenditure guidance.

The company noted that it had liquidity of $14.5 billion at the end of March, with more than $6 billion of cash, including the proceeds from $1.5 billion of US bond issuances.

There are no financial covenants associated with the Group's bonds or the core $4.5 billion revolving credit facility, the maturity of which was extended to March 2025 on 10 February 2020 and remains undrawn.

The company added that the dividend for the second half of 2019 is due to be paid as planned on 7 May, subject to shareholder approval at the AGM on 5 May.

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