Slide 1: Investor Presentation May 2003
Investor Presentation May 2003 1
Slide 2: Important notice
Antofagasta plc Important notice Statements in this presentation include "forward-looking statements" that express expectations of future events or results. All statements based on future expectations rather than on historical facts are forward-looking statements that involve a number of risks and u
Slide 3: Company Highlights
ANTOFAGASTA @ PLC Company Highlights
Slide 4: Company highlights: Core businesses
Company highlights Core businesses • Focus on copper mining and transport EBITDA 2002 (US$ 350m) 91% Copper Mining 9% Transport • Operating assets in Chile, the world’s largest copper producing country (34% of world mine production) • Listed on the London Stock Exchange (FTSE 250) • Market capitalis
Slide 5: Company highlights: Growth record
Company highlights Growth record • Two major copper projects developed Copper production (000 tonnes) between 1997 and 2001 461 445 • Los Pelambres: US$ 1,360 million 351 • El Tesoro: US$ 300 million Group Project Capex (US$m) 615 580 61 1999 2000 2001 2002 303 • Group production equals 10% of Chile
Slide 6: Company highlights: Growth record (railway)
Company highlights Growth record Railway tonnage carried (M tons)3.9 3.9 4.1 3.1 2.8 2.5 2.0 1.7 1.4 1.3 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2002 Year • 6% growth in railway tonnages • 49% growth in sales at road subsidiary • Transport revenues of US$70.4 million 6
Slide 7: Company highlights: Cost base
Company highlights Cost base Antofagasta copper production Cash cost curve (cents per pound) and cash cost Copper industry 2002 – Western World 461 80 445 351 60 55.4 40 39.2 38.8 38.9 Antofagasta 38.9 c/lb 20 61 0 1999 2000 2001 2002 0 2,000 4,000 6,000 8,000 10,000 Copper production (000 tonnes) C
Slide 8: Antofagasta Key strengths
ANTOFAGASTA @ PLC Antofagasta Key strengths
Slide 9: Antofagasta Key strengths
Antofagasta Key strengths • Asset quality • Operational efficiency • Financial strength • Growth opportunities 9
Slide 10: Asset quality & operational efficiency: Los Pelambres
Asset quality & operational efficiency Los Pelambres 1.05% 115 111 • Continuing optimisation with throughput 0.98% 105 in 2002 up 19% since first year 93 0.91% • Plant upgrade to be completed in 0.88% 2003 H2 362 325 325 299 2000 2001 2002 2003 E Throughput (000 tonnes per day) Copper grade % 35.6 3
Slide 11: Asset quality & operational efficiency: El Tesoro
Asset quality & operational efficiency El Tesoro Copper production (000 tonnes) 23.4 22.8 21.2 20.9 19.3 target level 21,250 tonnes per quarter equivalent to 85,000 tonnes per year 2002 Q1 2002 Q2 2002 Q3 2002 Q4 2003 Q1 • Production and cash cost targets achieved in first full year of operation (20
Slide 12: Michilla - cuprochlor process
Asset quality & operational efficiency Michilla - cuprochlor process • Process for heap-leaching sulphide ores with calcium chloride, having a cycle of 100 days • Developed and patented by Michilla in 2001 • Currently applied to 720 k tonnes of ore per year, producing 25% of Michilla’s cathode outpu
Slide 13: Asset quality & operational efficiency: Railway and transport
Asset quality & operational efficiency Railway and transport • Transport network for world’s Northern Chile largest copper mining region • 12% average annual growth rate since 1993 • Long term contracts with major mining clients (Codelco- Codelco-Chuquicamata, Chuquicamata, Escondida, El Abra, Zaldi
Slide 14: Financial strength: Cash generation
Financial strength Cash generation Group EBITDA and margin 46% 41% 37% 355 350 283 2000 2001 2002 EBITDA (US$m) EBITDA / Sales (%) • Strong cash generation despite weaker copper prices in 2001 and 2002 • EBITDA margin among the highest in the mining industry 14
Slide 15: Financial strength: Steadily declining debt profile
Financial strength Steadily declining debt profile Consolidated net debt and leverage 796 809 • Project finance debt of US$ 1.2 bn 713 raised between 1997 and 1999 590 0.66 • Mainly floating rate, with margins 0.61 0.56 around 1-2% 0.46 • Los Pelambres debt repayments started in December 2000 • El T
Slide 16: Financial strength: Ordinary dividends
Financial strength Ordinary dividends 28.0 22.0 19.3 12.0 12.8 10.2 10.2 11.5 6.3 7.7 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 Ordinary dividend (cents/share) • Ordinary dividend steadily increased since 1980 • Special dividend of 18 cents and 10 cents also paid in 2000 and 2001 16
Slide 17: Organic growth opportunities: Los Pelambres
Organic growth opportunities Los Pelambres Optimisation • Complete plant upgrade by Q4 2003 (US$ 34m) • Increase processing levels to around 118 ktpd Potential expansion • Environmental impact study submitted in May, covering an expansion to 175 ktpd (110 ktpd in 2002) ? increasing reserves to 2.1 b
Slide 18: Organic growth opportunities: Exploration
Organic growth opportunities Exploration Northern Chile: Sierra Gorda - Esperanza Chile Michilla • High potential exploration area Port of Mejillones • Targets Port of – Sulphide ores to complement Antofagasta Tesoro Esperanza project Esperanza – Oxide ores and leachable sulphides • Drilling program
Slide 19: Organic growth opportunities: Exploration Peru
Organic growth opportunities Exploration Peru: Cordillera de las Minas S.A. Peru • 50-50 joint venture with CVRD • 3-year timeframe Lima • Target area of 60,000 sq kms Cuzco • Exploration started in August 2002 • At least 4 out of 10 targets will be drilled in 2003 19
Slide 20: Summary: Strategy for 2003
Summary Strategy for 2003 • Focus on operational performance at mines • Maintain growth at railway and transport business • Continue exploration in high potential areas in Chile and Peru • Take next steps for potential expansion at Los Pelambres 20
Slide 21: Additional information: Handout
Additional information Handout 21
Slide 22: Group Overview: Brief History
Group Overview Brief History • 1888 Antofagasta Railway incorporated and listed in London • 1979 Luksic Group acquires controlling interest and begins investing in mining, financial and industrial sectors in Chile • 1996 Financial and industrial interests exchanged for 33.6% interest in Quiñenco • 1
Slide 23: Group Overview: Operations
Group Overview Operations Copper mining Los Pelambres (60%) : 325,000 tpy in concentrates El Tesoro (61%) : 85,000 tpy of cathodes Michilla (74%) : 52,000 tpy of cathodes Exploration programmes in Chile and Peru (CVRD) Transport Chile (FCAB-100%) and Bolivia (FCA- (FCA-50%) Record 4.1 million tons c
Slide 24: Group Overview: Mining Operations and Exploration
Group Overview Mining Operations and Exploration Northern Chile Michilla Peru Port of Mejillones Tesoro Lima Port of Antofagasta Cuzco Esperanza Proyecto Sur Port for Los Pelambres Los Pelambres 24
Slide 25: Group Operations: Los Pelambres
Group Operations Los Pelambres • 3.1 billion tonnes sulphide resource • Open pit • 30 year mine plan • Year 2002 – Payable copper: 324.6 ktonnes – Cash cost: 34.9 c/lb – EBITDA: US$ 256.2m 25
Slide 26: Group Operations: El Tesoro
Group Operations El Tesoro • 188 million tonnes oxide resource • Open pit • 21 year mine plan • Year 2002 – Payable copper: 84.3 k tonnes – Cash cost: 40.8 c/lb – EBITDA: US$ 58.9m 26
Slide 27: Group Operations: Michilla
Group Operations Michilla • 54 million tonnes oxide and sulphie resource • Open pit and underground mine • Mine plan until year 2007 • Year 2002 – Payable copper: 51.8 k tonnes – Cash cost: 61.4 c/lb – EBITDA: US$ 13.6m 27
Slide 28: Process & Costs: Los Pelambres
Process & Costs: Los Pelambres all numbers refer to year 2002 Mining & Crushing Milling, Flotation & Treatment & Refining (open pit) Shipping (91% recovery) (Abroad) Crushed Ore Copper Concentrate Copper Cathode (avg 44% copper) (99.999% copper) (avg 0.9% copper) plus Moly concent. plus gold and sil
Slide 29: Process & Costs: El Tesoro
Process & Costs: El Tesoro all numbers refer to year 2002 Agglomeration / Heap leaching Mining / Crushing Solvent Extraction / Electrowinning (open pit) (74% recovery) Crushed Ore Copper Cathode (avg 1.5% copper) (99.999% Cu) 50 30.3 40.8 Cash Cost (cents/lb) 40 9.4 12.9 32% 30 20 20.9 10.5 68% 27.9
Slide 30: Process & Costs: Michilla
Process & Costs: Michilla all numbers refer to year 2002 Agglomeration / Heap leaching Mining / Crushing Solvent Extraction / Electrowinning (open pit/underground) (76% recovery) Crushed Ore Copper Cathode (avg 1.4% copper) (99.999% Cu) 70.0 35.2 61.4 60.0 Cash cost (cents/lb) 13.0 50.0 34.5 55% 40.
Slide 31: Financial highlights: Year 2002
Financial highlights Year 2002 2002 2001 c/lb c/lb LME copper price 70.7 71.6 (- 1%) Realised copper price 71.6 66.7 + 7% US$m US$m Revenues 863.1 769.5 + 12% EBITDA 349.7 283.1 + 24% Net income 96.8 62.1 + 56% ROCE 9.1% 6.6% + 38% 31
Slide 32: Financial highlights: Year 2002
Financial highlights Year 2002 2002 2001 cents cents EPS 49.0 31.4 + 56.1% Dividends: Interim 10.0 7.25 Final 18.0 14.75 Ordinary 28.0 22.00 + 27.3% Special - 10.00 Total 28.0 32.00 32
Slide 33: Copper market: World consumption
Copper market World Copper Consumption 1999 2000 2001 2002 (000 tonnes) North America 3,599 3,568 2,896 2,999 -1% -19% 4% of which US 2,878 2,820 2,212 2,338 -2% -22% 6% South & Central America 489 527 536 425 8% 2% -21% Europe 4,094 4,449 4,204 4,054 9% -6% -4% of which West. Europe 3,726 4,070 3,7
Slide 34: Copper market: Mine production
Copper market Copper mine production (000 tonnes) 2000 2001 2002 South & central America 5,398 5,738 5,672 Chile 4,665 4,798 4,610 Peru 552 715 827 North America 2,414 2,336 2,072 USA 1,467 1,375 1,150 Canada 622 636 594 Asia 2,030 2,090 2,219 China 595 610 620 Indonesia 1,006 1,047 1,163 CIS 1,132
Slide 35: Antofagasta contacts
Antofagasta contacts London Santiago de Chile (Antofagasta plc) (Antofagasta Minerals S.A.) Philip Adeane Managing Director Jean-Paul Luksic Chief Executive Officer Hussein Barma Chief Financial Officer Alejandro Rivera Chief Financial Officer Sebastian Gil Head of Investor Relations Tel: +44 20 738