Antofagasta (LSE:ANTO) was upgraded to “buy” from “hold” by Berenberg, with the broker maintaining a price target of 4,400 pence following a decline in copper prices and copper-related equities.
Copper had recently traded towards $15,000 per tonne before falling to around $14,200 per tonne. Berenberg attributed the earlier increase to factors including supply disruptions, tight physical markets, investor positioning and speculation over possible additional US tariffs on copper imports.
The broker said speculation surrounding potential tariffs has contributed to record levels of US copper inventories. Berenberg does not expect the additional tariffs to be introduced, citing their potential inflationary impact on the US economy.
Following the subsequent decline in copper prices and mining shares, the broker said current valuations presented an opportunity to increase exposure to Antofagasta.
Berenberg Forecasts Antofagasta Copper Production Growth
Berenberg expects Antofagasta’s copper production to increase 27% to 818,000 tonnes in 2028 from an estimated 646,000 tonnes in 2026.
At the Los Pelambres mine in Chile, the broker forecasts production of 373,000 tonnes in 2028, compared with 322,000 tonnes in 2026. Berenberg noted that its 2026 production estimate is also affected by weather-related events.
The broker also expects the Centinela second concentrator project in Chile to contribute to higher production. It forecasts Centinela volumes of 329,000 tonnes in 2028 and 360,000 tonnes in 2029, compared with 207,000 tonnes in 2026.
According to Berenberg, higher copper output would also increase production of by-products including molybdenum and gold, which it expects to contribute to lower unit costs.
Free Cash Flow Forecast at $3.1 Billion in 2027
Berenberg expects Antofagasta’s capital expenditure to begin declining in 2027 following investment in its growth projects.
The broker forecasts free cash flow of $3.1 billion in 2027, equivalent to a 6.2% yield, compared with approximately $700 million and a 1.4% yield in 2026. It also forecasts EBITDA margins of approximately 66% to 68%.
Berenberg said it made limited changes to its financial model as part of the upgrade.
The broker expects production growth during 2027 and 2028 to support a higher valuation for Antofagasta shares. According to its estimates, the shares trade at 2.37 times net asset value and 7.8 times estimated 2027 EBITDA.
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