Santiago, 30 May 2014.- Codelco's C1 direct cost fell 61 per cent during the first quarter of 2014, over the prior-year period. This enabled the company to partially offset the negative impact of lower copper and other by-product prices on its operating income.

"During the first quarter our revenue fell US$ 407 million due to lower prices, in addition to higher collective bargaining costs and deteriorated mine variables. This cost reduction helped to prevent a further fall in our pre-tax profit," explained Administration and Finance vice-president, Iván Arriagada.

Codelco's pre-tax profit was US$ 539 million during the first three months of 2014, down US$ 329 million (38%) compared to the previous year, when it was US$ 868 million. Comparable profits (calculated by applying the same tax requirements as private-sector companies) totalled US$ 473 million.

From January to March 2104, copper prices averaged 319.4 US cents per pound, down 11 per cent over 2013. Molybdenum prices, Codelco's key by-product, were down 12 per cent to US$ 22 per kilogram. Prices for gold (-21%), silver (-32%) and sulphuric acid (-29%) also dropped.

"We must boost our efforts to reduce costs and increase productivity by being prepared for market downturns, such as the one that affects us today, However, we continue to have higher prices and pre-tax profits than Codelco's historical average. These results are lower than previous years, but they are still positive if we have a long-term perspective," Mr. Arriagada added.

CODELCO MAINTAINS OUTPUT

Codelco's output for the first three months of 2014 was 428,000 metric tonnes of refined copper (Mt), the same as the first quarter of 2013. This figure factors in production from Codelco's stakes in El Abra and Anglo American Sur S.A. deposits.

Production at Codelco's divisions, i.e., excluding its stakes in El Abra and Anglo American Sur deposits, during the first quarter totalled 383,000 tonnes, down 2,000 t from the same period in 2013. However, this figure includes 30,000 tonnes produced by Ministro Hales Division, which is currently in its start-up phase.

Chuquicamata and El Teniente divisions increased production. As expected, Radomiro Tomic Division had a lower output, which also evidences the lower grades of copper oxides ores available. "In general, Codelco's, productions is in line with what we expected for the first three months," reported the Administration and Finance Vice-president.

During the period under review, all by-products increased production. Molybdenum output rose 52 per cent, silver 33 per cent, gold 22 per cent and sulphuric acid 15 per cent.

LOWER PRODUCTION COSTS

During the first quarter of 2014, Codelco's total expenses were down 3.6 per cent to 236.1 US cents per pound of copper (c/lb), versus 245.0 c/lb observed from January to March the prior year.
The Company's Net Cathode Cost (C3) fell by 2.9 per cent, down to an average 222.4 c/lb. This cost is based on the LME price benchmark.

Codelco's direct cost (C1) was 159.6 c/lb of copper, which is down 6.1% from the first quarter of 2013. C1 is the type of cost used as a benchmark by the global mining industry to compare efficiency.
"Reducing costs allows us to be more competitive and to keep Codelco among the lowest-cost copper producers. This is an on-going effort, with the help and support from everyone at the Company," Mr Arriagada explained.

LOWER SALES REVENUE

Copper sales revenue totalled US$ 2.317 billion from January to March 2014, down US$ 350 million from US$ 2.668 billion for the same quarter in 2013, mainly due to lower copper prices.

Since the cost of copper sales in this period was US$ 1.755 billion, gross profits for copper sales was US$ 562 million.

A further US$ 107 million is added from by-product sales during this period, which also evidenced a slight decline compared to 2013.

PRE-TAX PROFIT DISTRIBUTION

The company reported US$ 539 million in pre-tax profit during the first quarter of 2014, distributed as follows:

* Equivalent to Codelco's profit applying the same tax requirements as private-sector companies.

ACCIDENT RATE

So far this year, Codelco has not had any fatal accidents. During the first quarter, the total accident rate, which includes employees and contractors, was 1.50 lost time accidents per man hours worked.
During this period, Codelco has focused on three lines of actions as part of its Occupational Health and Safety structural Project: implementation of critical controls for critical risks defined; compliance of special occupational health and safety regulations for contractors and subcontractors (RESSO) and on-going incident reporting and learning.

Communications Department