Slide 1: 2017 FY Results Presentation
2017 FY Results Presentation 13th March 2018 Iván Arriagada Chief Executive Officer Alfredo Atucha Chief Financial Officer
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: Agenda
Agenda Market & 2017 Financial Overview Growth Guidance Results Opportunities 3
Slide 4: Overview
ANTOFAGASTA PLC
Slide 5: 2017 highlights
2017 highlights Robust operating Strong financial Shareholders return platform performance in 2017 and disciplined growth Zero fatalities 54.5% EBITDA margin(1, 2) 50.9 cps total dividend 9.6 ppts 177% 11c/lb $2,495m operating Encuentro Oxides productivity gains cash flow(1) completed under budget a
Slide 6: Capital allocation – drives decision making
Capital allocation – drives decision making 2017 Operating Cash Flow $2,157m(1) Decision factors Copper • Stress test forecasts at various Sustaining Capex & price copper prices $623m Mine Development Free cash • Future free cash flow generation flow • Cash buffer 35% payout Committed Dividends poli
Slide 7: 2018 priorities
2018 priorities Value and profitable growth over volume • Zero fatalities • Continue to deliver on guidance, with 3% copper production growth • Preparing for grade improvement in 2019 • Capture an additional $100 million of cost savings ($525 million 2014-17) • Successfully complete final labour neg
Slide 8: 2017 Financial Results
2017 Financial Results 8
Slide 9: 2017 a year of solid progress
2017 a year of solid progress Los Centinela Antucoya Zaldívar Pelambres • Sustained high mine and • Encuentro Oxides • First year of full • Labour negotiation plant reliability completed below production successfully completed • Compliance programme budget • Cost improvements • Continued primary agr
Slide 10: Revenue – benefiting from improving copper price
Revenue – benefiting from improving copper price Copper price ($/lb) Revenue(1) 2016 vs 2017 ($m) 3.4 $3.18/lb 3.0 2.6 $2.80/lb $1,127m $2.50/lb 2.2 $2.21/lb 1.8 145 5 11 $4,749 Jan 2015 Jun 2015 Dec 2015 Jun 2016 Dec 2016 Jun 2017 Dec 2017 966 Gold price ($/oz) 1,400 $1,331/oz 1,300 $1,248/oz $1,25
Slide 11: Unit cash costs
Unit cash costs Cash costs before by-product credits and C1 Costs ($/lb) - by operation $0.06/lb $1.54/lb 0.04 0.02 $1.60/lb (0.00) $1.25/lb (0.35) (1) Gross Costs Los Pelambres Centinela Other Operations Gross Costs By product credits Net Costs 2016 2017 2017 Cash costs before by-product credits an
Slide 12: Continued focus on productivity
Continued focus on productivity Cost and Competitiveness Programme Cumulative mine site savings of $525 million • 13% unit cost reduction, despite head grade $m decline of 16% (2014-17) 166 525 • Embedded cost culture across operations 359 • $166m of cost savings and productivity improvements achiev
Slide 13: Strong increase in EBITDA and EBITDA Margin
Strong increase in EBITDA and EBITDA Margin EBITDA(1) 2016 vs 2017 ($m) 44.9% 54.5% +9.6 ppts Margin(2) Margin(2) +$960m 1,128 52 $2,587m 20 (206) (25) (9) $1,626m FY 2016 Revenue Mining Exploration & Corporate costs Associates Transport FY 2017 costs Evaluation & other non & JVs operating expenses
Slide 14: Capital expenditure
Capital expenditure Capital expenditure ($m) $1,646m 97 64 399 $1,049m $1,000m 38 $899m 60 63 $795m Others 32 270 36 375 371 Mine Development 320 1,086 678 178 221 365 Sustaining 262 276 200 Development Sustaining 2014 2015 2016 2017 2018E capex ratio $400-450 $566/tCu $433/tCu $270/tCu $338/tCu $53
Slide 15: Cash flow
Cash flow Cash flow in period ($m) +$203m 2,431 13 (338) (899) (45) (487) 102 $2,049m $2,252m (320) (252) (1) Cash at EBITDA from Working Tax Capex Net Debt Div. to Div. to plc Others Cash at(1) 1 Jan 2017 subsidiaries capital interest Repayment Subsidiaries' shareholders 31 Dec 2017 Minorities 1. I
Slide 16: Debt reduction from strong free cash flow
Debt reduction from strong free cash flow Net debt - gross basis ($m) Net debt - attributable basis ($m) 2016 2017 2016 2017 (42) (456) (500) (1,072) -$458m -$616m Net debt/EBITDA 0.48pts 0.66x 0.18x 2016 2017 16
Slide 17: Value and profitable growth over volume
Value and profitable growth over volume High- Cash Cost Capital quality generation control discipline assets • Strong and growing • Cost and • Disciplined capital production Competitiveness allocation Programme • Large resource base • Strong and flexible • Innovation balance sheet • Low cost and lon
Slide 18: Market & Growth Opportunities
Market & Growth Opportunities 18
Slide 19: Copper market fundamentals
Copper market fundamentals Growing demand Constrained supply • Synchronised growth of major economies • Global grade decline with emerging risk of trade disruptions • Limited pipeline of projects • China transition to sustainable growth • Environmental restrictions on scrap - Growing personal income
Slide 20: Labour relations
Labour relations 2018 mining labour negotiations in Chile • 32 scheduled labour negotiations • Negotiating framework set out in law • Potentially affects a significant portion of world production Status of Antofagasta’s labour negotiations • Zaldivar successfully completed in Q3 2017 • Centinela com
Slide 21: Investing through the cycle
Investing through the cycle Mining assets Los Pelambres Incremental Expansion Encuentro Oxides Cu: 50ktpa Phase 1 Phase 2 Cu: +55ktpa Cu: +35ktpa Antucoya Moly Plant Centinela Expansion Alternatives Cu: 85ktpa Mo: 2,400tpa EITHER: Second Concentrator Zaldívar Acquisition OR: Existing concentrator Cu
Slide 22: Los Pelambres expansion
Los Pelambres expansion Los Pelambres Incremental Expansion Phase 1 (190ktpd throughput) Phase 2 (205ktpd throughput) • Includes desalination plant • Further EIA required • EIA approved in February 2018 • Additional 35ktpa copper production • Increasing copper production by 55ktpa from 2021 • Increa
Slide 23: Centinela expansion
Centinela expansion Centinela expansion alternatives Mirador Oxides Either: Second concentrator Tesoro • 90ktpd throughput • Feasibility study underway Mirador Sulfuros • Increasing production by 180ktpa CuEq Esperanza • Ore from the Esperanza Sur and Encuentro pits • LOM extension to 30+ years Espe
Slide 24: Guidance
A, ANTOFAGASTA PLC Guidance 24
Slide 25: 2018 guidance
2018 guidance Cu Au Mo C1 2018 Guidance (t) 2018 Guidance (oz) 2018 Guidance (t) 2018 Guidance ($/lb) 705,000 - 740,000 190,000 - 210,000 11,500 - 12,500 1.35 25
Slide 26: 2018 priorities
2018 priorities Value and profitable growth over volume • Zero fatalities • Continue to deliver on guidance, with 3% copper production growth • Preparing for grade improvement in 2019 • Capture an additional $100 million of cost savings ($525 million 2014-17) • Successfully complete final labour neg
Slide 27: Appendix
, ANTOFAGASTA PLC Appendix e WN. r=
Slide 28: Antofagasta at a glance
Antofagasta at a glance Antucoya Group o 70% owned o 65% owned by Luksic Group, 35% free float o Copper production(1): 80,500 t o Market cap: $12.2 billion (9th March 2018) o Remaining mine life(2): 19 years o FTSE 100 o Reserves(3): 697 million t @ 0.33% Cu Centinela Mining division(1) o 70% owned
Slide 29: Chile: Context
Chile: Context Antucoya Key Indicators • Largest copper endowment in the • GDP* : $247.0bn world Centinela • Population: 17.9 million • Copper key contributor to the Zaldívar • Per Capita GDP (PPP): economy 1970: $2,300 ; 2016: $24,000 • History of stability with robust Los Pelambres • Mining: 8.1%
Slide 30: Net earnings almost doubled
Net earnings almost doubled Net Earnings(1) 2016 vs 2017 ($m) +$371m 9 36 1 909 (320) $751m (226) (38) $380m 2016 EBITDA from Depreciation & Associates Net Finance Tax Non-controlling Profit from 2017 Subsidiaries Amortisation & JVs costs Interest discontinued operations 1. From continuing operation
Slide 31: EBITDA contribution by operation
EBITDA contribution by operation Los Pelambres and Centinela account for 85% of EBITDA EBITDA Margin(1) 70% Los Pelambres 60% Group(2): Centinela 50.1% 50% Transport Zaldivar Antucoya 40% 30% 20% 10% 0% 0 1,000 2,000 3,000 4,000 5,000 Revenue ($m) 1. Calculated as EBITDA/Revenue. 2. Calculated as EB
Slide 32: Cash Cost breakdown
Cash Cost breakdown 2017 Cash costs 14% 8% 3% Energy 15% 2% Diesel 5% 15% Acid 3% 4% 33% 31% Mill balls 4% 3% Explosives 2% Others 3% 5% 14% Labour Consumables Spare parts Services Overheads 14% 33% 14% 31% 8% 32
Slide 33: Production and metal prices
Production and metal prices Group production Metal prices (1) 2015 2016 2017 2018E 2014 2015 2016 2017 Copper ('000 tonnes) Copper ($/lb) Los Pelambres 363.2 355.4 343.8 345 - 355 Realised 3.00 2.28 2.33 3.00 Centinela Concentrates 145.2 180.4 163.9 LME 3.11 2.50 2.21 2.80 230 - 245 Centinela Cathod
Slide 34: Unit cash costs
Unit cash costs 2015 2016 2017 2018E(3) Group cash costs ($/lb) Los Pelambres 1.23 1.06 1.02 1.10 Centinela Concentrates 1.85 1.19 1.36 1.50 Centinela Cathodes Michilla 2.14 - - - Antucoya(1) - 1.83 1.68 1.75 Zaldívar(2) 1.73 1.54 1.62 1.70 Cash costs before by-product credits 1.81 1.54 1.60 1.65 By
Slide 35: Market data – recent trends
Market data – recent trends Exchange rate CLP/USD – inverted axis WTI oil price ($/barrel) 550 70 600 60 50 650 40 700 30 20 750 10 800 0 Jan 2015 Jun 2015 Dec 2015 Jun 2016 Dec 2016 Jun 2017 Dec 2017 Jan 2015 Jun 2015 Dec 2015 Jun 2016 Dec 2016 Jun 2017 Dec 2017 Sulphuric acid ($/tonne – CIF ) By-p
Slide 36: Antofagasta contacts
Antofagasta contacts Andrew Lindsay alindsay@antofagasta.co.uk Andres Vergara avergara@antofagasta.co.uk Director, London Office Tel: +44 20 7808 0988 Investor Relations Manager Tel: +44 20 7808 0988