Antofagasta Plc · LSE:ANTO
Antofagasta — H1 2019 Earnings Presentation
38 slides from Antofagasta's earnings presentation, Aug 22, 2019
Slide 1: Antofagasta plc 2019 half year results
Antofagasta plc 2019 half year results 22nd August 2019 Santiago Iván Arriagada Chief Executive Officer Alfredo Atucha Chief Financial Officer Developing mining for a better future
Slide 2: Cautionary statement
Cautionary statement This presentation has been prepared by Antofagasta plc. By reviewing and/or attending this presentation you agree to the following conditions: This presentation contains forward-looking statements. All statements other than historical facts are forward-looking statements. Exampl
Slide 3: Overview
Overview Iván Arriagada Chief Executive Officer
Slide 4: Sustainability is central to everything we do
Sustainability is central to everything we do Transparency and People Economic Performance Social Development Environment Corporate Governance • Zero fatalities • Long-life assets and large • From mitigating impacts • Environmental • Updated risk • Strong labour relations resource base to shared dev
Slide 5: Safety is the Group's top priority
Safety is the Group’s top priority Safety performance ▪ Safety and health are at the core 2.00 of all our decisions 1.61 1.53 1.57 1.27 ▪ No fatalities during the period 2 ▪ Mining Division LTIFR1 0.97 1 0 1 0 2015 2016 2017 2018 HY 2019 Fatalities Lost Time Injury Frequency Rate (LTIFR)1 1 Lost Tim
Slide 6: Strong HY 2019 – Highlights
Strong HY 2019 – Highlights Safety is the Group’s top priority EBITDA of $1,306m and margin2 of 52% The Group continued its period of no fatalities Reflects strong copper production and lower LTIRF1 down to 1.27 cash costs Record year of copper production on track Strong cost and operating performan
Slide 7: Capital allocation drives decision making
Capital allocation drives decision making HY 2019 Operating Cash Flow1 $1,515m Copper • Stress test forecasts at various copper prices Price Free Cash • Future free cash flow generation Sustaining Capex & Mine Development $368m Flow • Cash buffer DECISION FACTORS Committed Dividends (35% pay-out) $1
Slide 8: HY 2019 – production increased at all mines
HY 2019 – production increased at all mines Los Pelambres Centinela • Continued stable and Cu production • Strong copper sulphide Cu production reliable performance 180,400t grade 0.71% 141,900t • Strong moly production • High gold production Net cash costs Net cash costs • Costs in mid-2nd quartile
Slide 9: Guidance
Guidance Group copper production (kt) Copper production FY 2019 Guidance • Record year expected 750-790 • Guidance unchanged 750-790kt 704 725 • Gradual decline expected in 2020 on lower Antucoya & 120 grades at Centinela, partially reversed in Zaldivar1 132 2021 248 Centinela 228 387 Net cash costs
Slide 10: Our priorities are unchanged
Our priorities are unchanged Continuing our record of zero fatalities Sustainable long term operations Delivering on guidance Maintaining operating reliability and efficiency Further cost savings Advancing growth projects Progress innovation portfolio Returns to shareholders 10
Slide 11: Financial review
Financial review Alfredo Atucha Chief Financial Officer
Slide 12: HY 2019 financial highlights
HY 2019 financial highlights HY 2019 v. HY 2018 REVENUE Strong copper sales volumes and by-products revenues, offset by lower $2,526 million 19% realised copper price NET CASH COSTS Higher production and higher by-product credits $1.19/lb -22% EBITDA Reflects stronger copper production and lower uni
Slide 13: Production and cash costs
Production and cash costs 70kt 15 3 387 59 Copper (1) (6) Production 317 kt Copper Grade Throughput Recovery Inventory ROM Copper HY 2018 variation and others HY 2019 ($0.26/lb) 1.92 0.04 Cash costs 0.02 (0.04) 0.04 1.66 by (0.26) (0.07) cost type 1.19 $/lb (0.47) Pre-credit FX & Input Higher Activi
Slide 14: EBITDA
EBITDA EBITDA1 and margin2 HY 2018 versus HY 2019 $ million and % 43% 9pp 52% $402m 568 2 12 15 $1,306m (157) (22) (5) (11) $904m HY 2018 Sales Realised Input prices, Activity level Exploration Corporate Associates Transport HY 2019 EBITDA volumes prices FX & inflation and others & evaluation costs
Slide 15: Net earnings
Net earnings Net earnings1 HY 2018 versus HY 2019 $ million $110m 387 3 23 (115) (121) $302m $192m (67) HY 2018 EBITDA from Depreciation Associates Net Tax Non-controlling HY 2019 Net earnings subsidiaries1 and and JVs finance costs2 interests Net earnings amortisation 1 Excludes Associates & JVs’ E
Slide 16: Capital expenditure
Capital expenditure FY 2019 Guidance $1,200m $1,047 m Others 38 $899 m $873 m $795 m 32 17 68 276 144 Development 675 296 $466 m 352 19 371 90 Mine development 63 304 179 271 310 Sustaining 178 221 178 2015 2016 2017 2018 2019E Sustaining ratio 2015 2016 2017 2018 FY 2019E $400-450/tCu $433/tCu $270
Slide 17: Net debt
Net debt Net debt and ND/EBITDA ratio $ million and times $79m 283 1,231 (208) 0.32x 0.20x ratio1 ratio1 (466) (18) Minorities Anto Share holders (365) (565) (164) (14) $(517)m $(596)m Net Debt at EBITDA from Working Tax Capex Net interest Dividends Leases Others Net Debt at 1 Jan 2019 subsidiaries
Slide 18: Cost discipline, productivity and efficiency improvements
Cost discipline, productivity and efficiency improvements $61 million 4 $/lb 2019 Cash cost curve1 saved in half year 2019 $1.08/lb $1.32/lb $1.67lb 3 Improved productivity, based on 27% greater throughputs and recoveries 2 $0.10/lb2 $0.07/lb2 Through contract and energy prices negotiations, improve
Slide 19: Growth opportunities and investment case
Growth opportunities and investment case Iván Arriagada Chief Executive Officer
Slide 20: Copper market
Copper market Current market position Copper exchange stocks Stocks LME Stocks CMX Stock Shanghai ▪ Long term fundamentals remain strong 1,000 ▪ Market in balance 800 Thousand Tonnes ▪ US/China trade negotiations 600 ▪ Limited supply growth in 2019 and 2020 400 ▪ Rate of disruptions increasing to av
Slide 21: Low risk organic growth
Low risk organic growth 2018 2019 2020 2021 2022+ Los Pelambres Expansion Phase 1 Phase 2 Cu +60 ktpa | Capex $1.3 bn Cu +35 ktpa|Capex $0.5 bn1 (including $0.5 bn desalination plant) 15 year LOM extension Organic Moly plant Esperanza Sur Pit Centinela 2nd concentrator Growth Cu +10-15 ktpa | Capex
Slide 22: Innovation road map
Innovation road map Transformational innovation, key component of Antofagasta´s strategy ▪ Leaching of primary sulphides – now in industrial scale testing Strategic ▪ Low cost material movement technologies Initiatives ▪ Thickened tailings and real time monitoring Digital ▪ Open digital collaboratio
Slide 23: Tethyan Copper arbitration
Tethyan Copper arbitration History of the case ▪ ICSID1 arbitration award announced 12 July 1993 JV between BHP and Govt. of Balochistan4 signed ▪ $5.8 billion2 award (50/50 Antofagasta/ Barrick Gold) 2000 BHP transferred it’s JV interest to TCC3 ▪ Limited grounds for challenging the 2006 Antofagast
Slide 24: Investment case
Investment case High quality Operating efficiency Capital discipline Robust platform assets and cost control ▪ Large resource base ▪ Cost and ▪ Low net debt ▪ Continuing to optimise ▪ Low cost and long-life competitiveness ▪ Disciplined approach to mines assets programme acquisitions and ▪ Protectin
Slide 25: Appendix
®) ANTOFAGASTA PLC > Appendix
Slide 26: Antofagasta at a glance
Antofagasta at a glance Group Antucoya • 65% owned by Luksic Group, 35% free float • 70% owned • Market cap: $9.7 billion (August 21st 2019) • Copper production1: 72,200 t • Remaining mine life2: 21 years • FTSE 100 • Reserves3: 641 million t @ 0.34% Cu Mining division1 Centinela • Top 10 copper pro
Slide 27: Antofagasta's tailings dams
Antofagasta´s tailings dams Group operates two major concentrators producing tailings Antofagasta’s TSF1 Active Inactive • Los Pelambres: El Mauro dam designed for extreme weather and Northern Chile2 2 - severe earthquakes. Reviewed twice a year by a panel of Central Chile3 2 - international experts
Slide 28: Chile
28% 29% 50% Chile of global copper production of global copper reserves of exports are copper Strengths Challenges ▪ Largest copper endowment in the world ▪ Moving from middle to high income Antucoya Centinela ▪ Copper key contributor to the economy economy Zaldívar ▪ History of stability with robus
Slide 29: Revenue
Revenue Revenue HY 2018 versus HY 20191 $ million $405m 116 $2,526m 471 (29) (6) $2,121m (147) HY 2018 Copper price Copper sales By-products TC/RC Transport division HY 2019 1 Excludes Zaldívar (JV) 29
Slide 30: Cash flow
Cash flow Cash flow in period $ million $292m 283 1,231 (208) 22 (466) (18) 12 $2,189m (200) $1,898m (365) Cash at EBITDA from Working Tax Capex Net Net Dividends to Dividends to Others Cash at 1 Jan 2019 subsidiaries capital1 interest drawdowns minorities Antofagasta 30 June 2019 & repayments share
Slide 31: HY 2019 production cost breakdown
HY 2019 production cost breakdown $1.66/lb 0.25 $1.66/lb Others Other inputs 8% Energy 11% 14% Sulphuric acid 0.25 6% $1.19/lb Fuel and Lubricants 7% 0.47 $1,416m 13% Labour 13% Materials and spare parts 16% 13% Services Maintenance services Net Cash By-products Gross Cash TC/RC & Mine Production Co
Slide 32: Growth projects progress
Growth projects progress Esperanza Sur pit opening Los Pelambres expansion ▪ Additional feedsource for Centinela ▪ Construction started in 2019. Project concentrator. Will later feed the second progress 22%1 concentrator ▪ Additional milling and flotation capacity, ▪ Pre-stripping will start by year
Slide 33: Market data
Market data 340 1,400 320 1,321 296 300 1,300 1,258 1,269 280 280 1,250 280 260 1,200 240 221 220 1,100 Copper Gold 200 c/lb US$/oz 180 1,000 Jan 2016 Jul 2016 Jan 2017 Jul 2017 Jan 2018 Jul 2018 Jan 2019 Jul 2019 Jan 2016 Jul 2016 Jan 2017 Jul 2017 Jan 2018 Jul 2018 Jan 2019 Jul 2019 14 800 11.9 11
Slide 34: Production and metals prices
Production and metals prices Group production1 Metal prices 2016 2017 2018 HY 2019 2019E1 2016 2017 2018 HY 2019 Copper ('000 tonnes) Copper ($/lb) Los Pelambres 355.4 343.8 357.8 180.4 360-370 Realised 2.33 3.00 2.81 2.81 Centinela Concentrates 180.4 163.9 155.5 100.1 LME 2.21 2.80 2.96 2.80 260-28
Slide 35: Unit cash costs
Unit cash costs Group cash costs1 2016 2017 2018 HY 2019 2019E1 Group cash costs ($/lb) Los Pelambres 1.06 1.02 0.91 0.89 1.05 Centinela 1.19 1.36 1.51 1.18 1.35 Antucoya 1.83 1.68 1.99 2.26 2.00 Zaldívar 1.54 1.62 1.94 1.79 1.75 Cash costs before by-products credits ($/lb) 1.54 1.60 1.72 1.66 1.70
Slide 36: Reserves and resources as of 31 December 2018
Reserves and resources as of 31 December 2018 Tonnage (millions tonnes) Copper (%) Molybdenum (%) Gold (g/t) Attributable Tonnage (millions tonnes) 2018 2017 2018 2017 2018 2017 2018 2017 2018 2017 Ore reserves Los Pelambres 1,132.2 1,193.4 0.60 0.60 0.019 0.020 0.05 0.05 679.3 716.0 Centinela Conce
Slide 37: Antofagasta contacts
Antofagasta contacts Andrew Lindsay alindsay@antofagasta.co.uk Andrés Vergara avergara@antofagasta.co.uk Director, London Office Tel: +44 20 7808 0988 Investor Relations Manager Tel: +44 20 7808 0988 37
Slide 38: www.antofagasta.co.uk
a Fay oon re 9 fou a www.antofagasta.co.uk AN ANTOFAGASTA PLC