Antofagasta Plc · LSE:ANTO
Antofagasta — Investor Presentation (September 2007)
35 slides from Antofagasta's investor presentation, September 2007
Slide 1: Investor Presentation
Investor Presentation September 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
Company Overview 4
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$15.7 billion (21 September 2007) – Free float of 35% • Copper producer with operations in Chile – Approximately 450,000 tonnes of copper in concentrate and cathodes (2007E) – Approximately 11,000
Slide 7: Operations and projects in Chile
Operations and projects in Chile Operations Northern Chile Projects El Tesoro Esperanza • 100% owned • 535 Mt@0.55% copper+gold 0.23 g/tonne (reserves) • 92,000 tonnes of copper cathodes • Project approved Michilla Sierra Gorda district • 74.2% owned • 431 Mt@ 0.52% copper • 45,600 tonnes of copper
Slide 8: Geographical locations – Operations and exploration
Geographical locations – Operations and exploration United Kingdom: Registered Office, London Chile: Operations (*) • Los Pelambres (324 ktons copper and 9.8 ktons moly) • El Tesoro (94 ktons copper) • Michilla (47 ktons copper) Pakistan: • Transport and Water divisions Exploration Ecuador: Explorat
Slide 9: Operations and Finance
Operations and Finance 9
Slide 10: Production, cost and reserves
Production, cost and reserves Reserves and Resources at 31 Dec 2006 (million of tonnes @ copper grade) Payable copper - moly and cash cost 498 Total Reserves Total Resources 472 467 466 450 Los Pelambres 2,125 @ 0.64% 2,939 @0.61% El Tesoro 117 @ 0.74% 166 @ 0.72% Michilla 16 @ 1.09% 66 @ 1.35% 36.4
Slide 11: Financial strength
Financial strength Group EBITDA and Margin 76% 70% 68% 76% 2,957 54% 1,674 • EBITDA margin among the highest in 1,357 1,471 the mining industry 524 2003 2004 2005 2006 2007 H1 • ROCE in 2007 (Annualized based on EBITDA (US$m) EBITDA / Sales (%) 2007 H1) of 76% Group total and net(debt)/cash 1,536 1,
Slide 12: Financial strength
Financial strength Earnings per share (cents) 137.4 73.6 73.9 58.8 14.0 18.3 6.3 9.8 2000* 2001* 2002 2003 2004 2005 2006 2007 H1 * Includes exceptional items Note: 2001 – 2003 numbers are presented under UK GAAP and 2004 –- 2007 numbers are presented under IFRS Special Dividends (cents per share) O
Slide 13: Los Pelambres – 2007 H1 review
Los Pelambres – 2007 H1 review EBITDA (US$m) and Margin (% ) • EBITDA of US$1,122m; margin of 83% 85% 79% 81% 83% 2,297 • Copper production marginally up to 141,800 63% tonnes (vs 141,600 tonnes in 2006 H1) 1,421 1,072 1,122 – Expansion of plant capacity offset lower grades 403 – Higher than expecte
Slide 14: Los Pelambres – Outlook and targets
Los Pelambres – Outlook and targets • FY07 Payable copper: 312,000 tonnes – Higher plant throughput in the second half • FY07 Moly: Around 11,000 tonnes Moly US$29 Moly US$25 • FY07 Cash cost (cents/pound) (11.2) 16.8 • Next labour negotiation due in July 2008 (mine- port union agreement reached ahe
Slide 15: El Tesoro – 2007 H1 review
El Tesoro – 2007 H1 review EBITDA (US$m) and Margin (% ) 69% 64% 61% 55% 456 • EBITDA increased 26.8% to US$213m; Margin of 64% 47% • Copper production increased by 10% 180 203 213 – Optimisation of leaching process to treat higher 79 grade ore with significant carbonate contents 2003 2004 2005 2006
Slide 16: El Tesoro – Outlook and targets
El Tesoro – Outlook and targets • FY07 Payable copper: 92,000 tonnes – 1,300 tonnes above original budget • FY07 Cash costs: 100.5 cents per pound – Higher energy costs in the second half – Impact of lower production on unit costs SPENCE El Tesoro SIERRA GORDA PROJECT 166 Mton@ 0.72% Cu • Continuing
Slide 17: Michilla – 2007 H1 review
Michilla – 2007 H1 review EBITDA (US$m) and Margin (% ) 47.3% 58.0% • EBITDA up 89% to US$97m; Margin of 58% 35.2% 14.6% 158.4 9.2% 97.1 • Copper production target exceeded by 6% 53.6 14.0 16.3 – Better than expected recoveries due to 2003 2004 2005 2006 2007 H1 cuprochlor process EBITDA (US$m) Marg
Slide 18: Michilla – Outlook and targets
Michilla – Outlook and targets • FY07 Payable copper: 45,600 tonnes • FY07 Cash costs: 136 cents per pound • Possible extension of mine life until 2012 – Average production level between 28,000 tonnes and 45,000 tonnes from 2010, depending on geological results – Studies to be completed by the first
Slide 19: Railway and other transport
Railway and other transport Northern Chile Chile’s second region • Located in world’s largest copper mining region 2007 H1 review • Combined rail and road volumes up 12% to 3.2 El Abra Conchi million tonnes (rail volumes of 2.6 million Chuquicamata El Salvador tonnes and road volumes of 0.7 million
Slide 20: Aguas de Antofagasta
Aguas de Antofagasta Chile’s second region Northern Chile • Fourth year of strong operational performance since acquisition in December 2003 Tocopilla • Water volumes up 7% from 2006 H1 to 19.8 million m3 Michilla Calama – Higher untreated water sales (due to the start up of Spence in 2006 H2) Mejil
Slide 21: Projects and Exploration
Projects and Exploration 21
Slide 22: Esperanza Copper–Gold Project
Esperanza Copper–Gold Project • Project approved in June 2007 – Average plant throughput of 97,000 tpd – Capital cost of approximately US$1.5 billion – Production (first ten years annual average): • Concentrate: 700,000 tonnes • Payable copper: 195,000 tonnes • Payable gold: 229,000 ounces • Payable
Slide 23: Tethyan – Reko Diq
Tethyan – Reko Diq • Acquired in 2006 – 50% JV with Barrick Gold • 18-month budget to December 2007 has been increased by 50% to US$46 million – Includes scoping study and initial pre-feasibility costs • Foreign investment agreement presented to federal and provincial authorities in July 2007 for di
Slide 24: Market Outlook
Market Outlook 24
Slide 25: Refined copper market outlook
Refined copper market outlook • Inventories remain at historically low levels - Exchange stocks less than 5 days’ consumption • Demand growth remains strong - Solid growth in Europe and Asia expected to continue into 2008 - Chinese demand has exceeded expectations, with 1H07 refined copper imports e
Slide 26: Copper concentrates market outlook
Copper concentrates market outlook • Concentrates market deficit should intensify during 2H07 as more smelting capacity comes on stream (mainly in China), without major increases in mine production • Inventories are already at low levels with little room for further reductions in the production pipe
Slide 27: Molybdenum market outlook
Molybdenum market outlook • Molybdenum prices have consolidated at historically high levels (above US$25/lb and trending up again) • Inventories remain at low levels and the deficit market is expected to continue during 2008 • The market is expected to remain strong – Limited supply growth (estimate
Slide 28: Conclusion
Conclusion • Medium size producer of copper and molybdenum with long mine life • Significant resource base to support expansions and new projects • Medium and long-term growth opportunities in Chile and abroad enhanced through acquisitions and joint venture agreements • Market conditions remain favo
Slide 29: Backup
ANTOFAGASTA @ PLC Backup 29
Slide 30: Financial summary
Financial summary 2007 H1 2006 H1 % change 2006 FY ktons ktons ktons Copper production 212.1 207.9 Ç 2.0% 465.5 Moly production 4.9 4.1 Ç 19.5% 9.8 US$m US$m US$m Revenues (*) 1,942 1,847 Ç 5.2% 3,870 EBITDA 1,471 1,375 Ç 7.0% 2,957 Profit before tax 1,437 1,325 Ç 8.4% 2,859 Earnings per share (cent
Slide 31: Mining data
Mining data 2007 H1 2006 H1 % change 2006 FY Los Pelambres Copper sales (‘000 tonnes) 143.2 145.4 È 1.5% 324.8 Realised price (cents/pound) 348.6 376.8 È 7.5% 335.0 Moly sales (‘000 tonnes) 4.9 4.4 Ç 11.4% 9.9 Realised price (US$/pound) 30.9 22.7 Ç 36.1% 24.6 Cash cost (cents/pound) (8.6) 24.4 È 135
Slide 32: Cash cost analysis 2006 H1 – 2007 H1 – 2007 Budget
Cash cost analysis 2006 H1 – 2007 H1 – 2007 Budget Los Pelambres 2006 H1 24.4 2007 H1 Budget 4.4 Decrease in tolling charges (11.0) Decrease in tolling charges (10.4) Increase in freight costs 1.1 Exchange rate and local inflation (1.9) Exchange rate and local inflation 1.0 Machinery hire, fuel and
Slide 33: 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 34: 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 35: Antofagasta Contacts
Antofagasta Contacts London Santiago de Chile (Antofagasta plc) (Antofagasta Minerals S.A.) Desmond O’Conor Chief Executive Officer (UK) Alejandro Rivera Vice-President of Development and Hussein Barma Chief Financial Officer (UK) Corp Finance Sebastian Gil Business Development Manager Tel: +44 20 7