Antofagasta, the Chilean copper producer, saw its profit before tax for the period ended 30 June fall from $981m to $850.7m due to lower copper output, prices and higher than expected taxes in Chile.
Sales were down 4.2% to $2.66bn, while earnings before interest, taxes, depreciation and amortization (EBITDA) fell from $1.27bn to $1.128bn (consensus: $1.12bn).
The company attributed the fall in revenues to a 2.2% drop in the average copper sales price as well as lower gold sales and realised prices. Copper output 4.4% fall due to expected lower grades at the Los Pelambres and Esperanza mines.
Net cash costs during the period rose by 15.9% to $1.46 per pound, reflecting lower gold and molybdenum volumes and lower gold prices.
Fundamentals for copper "strong"
"We continue to operate in a challenging market, however, we believe that the market fundamentals for copper are strong," said the group's chief executive Diego Hernandez.
"Despite recent increases in new mine supply from various projects coming on stream, the market remains balanced, contrary to expectations earlier in the year that a supply surplus would emerge."
The FTSE-100 company confirmed that net profit fell to $331m in the first half of 2014, a 16% decrease year-on-year. Earnings per share came in at 33.6 cents (consensus: 36 cents).
The miner's bottom line was impacted by higher tax charges than some analysts had expected due to retroactive changes to the country's corporate and withholding taxes which Chile's national congress is expected to soon approve.
With a view to generating cost savings and developing its Centinela Mining District Antofagasta recently merged its Esperanza and El Tesoro mines into one single project renamed Minera Centinela, alongside other initiatives such as reducing the use of contractors at new projects.
Production and cost guidance maintained
According to company estimates, Antofagasta should produce 700,000 tonnes of copper, 270,000 troy ounces of gold and 7,500 tonnes of molybdenum this year.
Despite first half copper production coming in ahead of forecasts the miner does not believe there will be any changes to its copper guidance for the full year.
Cash costs for copper are still expected to come in at $1.45 per pound for the full year.
Capital expenditures on the other hand are now seen coming in $200m below previous estimates, at $1.7bn, as a result of delays to the timing of payments at Antucoya, analysts at Westhouse Securities pointed out.
The group's interim dividend was raised by 32% to $0.117 (Consensus: $0.099) a share.
In a note to investors on Tuesday, Canaccord Genuity reiterated its "hold" status for Antofagasta shares, with a target price of 835p.
were down 2.78% to 785.5p at 09:31 on Tuesday.