Antofagasta Plc · LSE:ANTO
Antofagasta — Investor Presentation (July 2007)
36 slides from Antofagasta's investor presentation, July 2007
Slide 1: Investor Presentation
Investor Presentation July 2007
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: Contents
Contents 1. Company overview 2. Operations and finance 3. Projects and exploration 4. Market outlook 3
Slide 4: Company Overview
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Slide 5: Brief history
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 • 1997 Development
Slide 6: Overview
Overview • Listed on the London Stock Exchange – FTSE 100 since March 2004 – Market capitalisation of US$12.0 billion (25 June 2007) – Free float of 35% • Copper producer with operations in Chile – Approximately 455,000 tonnes of copper in concentrate and cathodes cathodes (2007E) – Approximately 11
Slide 7: Operations and projects in Chile
Operations and projects in Chile Northern Chile El Tesoro Esperanza • 100% owned • 535 Mt@0.55% copper+gold 0.23 g/tonne (reserves) • 90,700 tonnes of copper cathodes • Project approved Michilla Sierra Gorda district • 74.2% owned • 385 Mt@ 0.53% copper • 45,600 tonnes of copper (resources) cathodes
Slide 8: Geographical locations – operations, projects and exploration
Geographical locations – operations, projects and exploration Colombia: Exploration Chile: Operations Joint Venture with • Los Pelambres AngloGold Ashanti • El Tesoro • Michilla • Transport and Water divisions Pakistan: Exploration Chile: Projects and Exploration Ecuador: Exploration Joint Venture w
Slide 9: Operations and Finance
Operations and Finance 9
Slide 10: Production, cost and reserves
Production, cost and reserves Reserves and Resources at 31 Dec 2006 Payable copper - moly and cash cost (million of tonnes @ copper grade) 498 461 472 467 466 445 Total Reserves Total Resources 55.4 Los Pelambres 2,125 @ 0.64% 2,939 @0.61% 351 El Tesoro 117 @ 0.74% 166 @ 0.72% Michilla 16 @ 1.09% 66
Slide 11: Financial strength
Financial strength Group EBITDA and Margin 76% 70% 68% 2,957 54% 46% 43% • EBITDA margin among the highest in 1,674 the mining industry 1,357 524 283 350 • ROCE in 2006 of 70% 2001 2002 2003 2004 2005 2006 EBITDA (US$m) EBITDA / Sales (%) Group total and net (debt) / cash • Debt levels steadily decl
Slide 12: Financial strength
Financial strength Earnings per share (cents) 137.4 73.6 58.8 • EPS up 87% in 2006 27.9 14.0 18.3 5.9 1.6 6.3 9.8 • CAGR (2002 - 2006) of 1997 * 1998 * 1999 * 2000 * 2001 * 2002 2003 2004 2005 2006 94% * Includes exceptional items Note: 2001 – 2003 numbers are presented under UK GAAP and 2004 –- 200
Slide 13: Los Pelambres – 2006 review
Los Pelambres – 2006 review EBITDA (US$m) and Margin (% ) 79% 81% 85% • EBITDA up 62%; margin increased to 85% 2,297 63% 54% 1,421 • Expansion completed on budget with high plant 1,072 availability maintained (95% vs 96.4% in 2005) 256 403 – Start up ahead of schedule – Q4 throughput nearly 2002 200
Slide 14: Los Pelambres – Outlook and targets
Los Pelambres – Outlook and targets • Payable Copper: 321,000 tonnes in 2007 – Plant throughput of 134 ktpd vs 127 ktpd in 2006 – Cu grade of 0.74% vs 0.81% in 2006 • Moly: 11,000 tonnes (higher plant throughput) Moly US$25 Moly US$20 • Cash cost (cents/pound) 12.7 35.2 • Labour negotiation for mine
Slide 15: El Tesoro – 2006 review and 2007 targets
El Tesoro – 2006 review and 2007 targets EBITDA (US$m) and Margin (% ) 69% • EBITDA increased 124% to US$456m; 61% 55% 456 margin increased to 69% 44% 47% 203 180 • Production target exceeded by 3.8% despite 59 79 lower grades 2002 2003 2004 2005 2006 EBITDA (US$m) Margin (%) – Continued optimisatio
Slide 16: El Tesoro – Outlook and targets
El Tesoro – Outlook and targets • Mining properties in the Sierra Gorda district consolidated after the acquisition of Equatorial Mining in August 2006 • Total oxide resources of 597 Mtons @ 0.56% copper (including El Tesoro) SPENCE El Tesoro SIERRA GORDA 166 Mton@ 0.72% Cu PROJECT Tesoro NE * SIERR
Slide 17: Michilla – 2006 review
Michilla – 2006 review EBITDA (US$m) and Margin 47.3% 35.2% 158.4 • EBITDA up significantly to US$158.4m 16.3% 14.6% (2005: US$16.3m); margin increased to 47% 9.2% 53.6 13.6 14.0 16.3 • Low debt level maintained (US$0.9m) 2002 2003 2004 2005 2006 EBITDA (US$m) Sales (%) • Copper production up 2% vs
Slide 18: Michilla – Outlook and targets
Michilla – Outlook and targets • 2007: 45,600 tonnes at 136 c/lb cash cost (*) • New mine plan completed – Mine life until 2009 – Average production level of just below 40,000 tonnes per year Antucoya • Exploration and engineering studies of Buey Muerto Antucoya – Buey Muerto (**) deposit in order t
Slide 19: Railway and other transport
Railway and other transport Northern Chile Chile’ Chile’s second region • Located in world’s largest copper mining region • 2006 operational and financial data El Abra • Rail volumes of 4.5 million tons Conchi (4.3 million tons in 2005) Chuquicamata El Salvador • Road volumes maintained at 1.5 milli
Slide 20: Aguas de Antofagasta
Aguas de Antofagasta Chile’ Chile’s second region Northern Chile • Third year of strong operational performance since acquisition in December 2003 Tocopilla • 2006 operational and financial data – Water volumes up 14% to 37.8 million m3 Michilla Calama • Higher domestic consumption Mejillones El Tes
Slide 21: Projects and Exploration
Projects and Exploration 21
Slide 22: Esperanza project
Esperanza project • Approved project based on: – Average daily throughput of 97 ktpd – Annual copper production of 195,000 tonnes (*) – Annual gold production of 229,000 ounces (*) • EIA to be presented in H2 2007 • Pre-stripping programme (30-month) to be initiated in H1 2008 (3 electric shovels as
Slide 23: Tethyan – Reko Diq
Tethyan – Reko Diq • Acquired in April 2006 – 50% JV with Barrick Gold • Development programme – 94,000 metre drilling programme in progress, with current budget of US$30.5 million – Preliminary results suggest an increase in geological resources compared to current estimate – New resources estimate
Slide 24: Exploration
Exploration • Colombia: Joint Venture with AngloGold Ashanti – US$1.3 million initial investment – US$6.7 million programme in 4 years to reach 50% interest • Ecuador: Agreement with Ascendant Copper Corporation – Chaucha project in south west Ecuador – US$1 million initial expenditure – US$40 milli
Slide 25: Market Outlook
Market Outlook 25
Slide 26: Refined copper market outlook
Refined copper market outlook • Inventories remain at historically low levels - exchange stocks less than 5 days’ days’ consumption • Demand growth remains strong - net Chinese imports of refined copper in 2007 H1 will exceed 2006 FY - robust growth in Europe and Asia expected to continue in 2007 H2
Slide 27: Copper concentrates market outlook
Copper concentrates market outlook • Concentrates market in deficit - significant increase in smelting capacity (mainly in China) has not been matched by increased mine output - some spot material generated by closures (e.g. Thai Copper) and delays in start- start-up (e.g. Yanggu in China and Ilo in
Slide 28: Molybdenum market outlook
Molybdenum market outlook • Molybdenum prices have consolidated at historically high levels (above US$25/lb and trending up again) • Inventories remain at low levels and the deficit market is expected to continue during 2008 • The market is expected to remain strong – Limited supply growth (estimate
Slide 29: Conclusion
Conclusion • Significant producer of copper and molybdenum • Long-life, low-cost operating assets based in Chile, an investment grade country • Significant resource base to support expansions and new projects • Medium and long-term growth opportunities in Chile and abroad enhanced through acquisitio
Slide 30: Backup
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Slide 31: Financial summary
Financial summary 2006 2005 % change ktons ktons Copper production 465.5 467.3 0.4% Moly production 9.8 8.7 13% US$m US$m Revenues (*) 3,870 2,445 58% EBITDA 2,957 1,674 77% Profit before tax 2,859 1,536 86% Earnings per share (cents/share) 137.4 73.6 87% Realised copper price (**) (cents/pound) 329
Slide 32: Mining data
Mining data 2006 2005 % change Los Pelambres Copper sales (‘000 tonnes) 324.8 319.1 2% Realised price (cents/pound) 335.0 189.2 77% Moly sales (‘000 tonnes) 9.9 8.5 17% Realised price (US$/pound) 24.6 31.4 22% Cash cost (cents/pound) 16.4 (17.1) n.a (including by- by-product credits) El Tesoro Coppe
Slide 33: Cash cost analysis 2005 - 2006 – 2007E
Cash cost analysis 2005 - 2006 – 2007E Los Pelambres 2005 (17.1) 2006 16.4 Increase in tolling charges 12.1 Decrease in tolling charges (7.5) Increase in freight costs 1.9 Increase in freight costs 2.0 Exchange rate and local inflation 2.4 Exchange rate and local inflation 2.2 Higher material moveme
Slide 34: Copper Market Data
Copper Market Data World Copper Consumption 2000 2001 2002 2003 2004 2005 2006 (' 000 tonnes) North America 3,604 2,951 3,049 2,896 3,073 2,937 2,808 -18% 3% -5% 6% -4% -4% of which US 2,856 2,296 2,420 2,250 2,392 2,248 2,149 -20% 5% -7% 6% -6% -4% South & Central America 527 536 410 495 546 557 59
Slide 35: Copper Market Data
Copper Market Data Copper mine production 2000 2001 2002 2003 2004 2005 2006 (' 000 tonnes) South & central America 5,394 5,751 5,677 5,993 6,771 6,665 6,736 Chile 4,662 4,795 4,600 4,942 5,470 5,354 5,376 Peru 551 729 841 824 1,020 995 1,029 North America 2,417 2,323 2,004 1,960 2,058 2,121 2,169 U
Slide 36: Antofagasta contacts
Antofagasta contacts London – Antofagasta plc Santiago – Antofagasta Minerals SA Desmond O’Conor Chief Executive Officer (UK) Alejandro Rivera Vice President of Corporate Finance and Development Hussein Barma Chief Financial Officer (UK) Sebastian Gil Manager – Corporate Finance and Development Tel: