Slide 1: 2005 Results Presentation
2005 Results Presentation 14 March 2006
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: Highlights 2005 (comparatives vs 2004)
Highlights 2005 (comparatives vs 2004) • Results Turnover and net earnings up over 25% • Dividends Total dividend for the year up 39% to 110 cents • Commodity prices LME copper price up 29% to 167 c/lb; Molybdenum market price up 98% to US$32.0/lb • Group cash cost Reduced to 13.9 c/lb (record low c
Slide 4: Highlights 2005 (comparatives vs 2004)
Highlights 2005 (comparatives vs 2004) • Los Pelambres Plant expansion to 140 ktpd started • El Tesoro Plant expansion to 10.5 Mtpa completed • Esperanza project Feasibility study expected to be completed by end of 2006 • Business development Takeover bid for Tethyan Copper and further agreement wit
Slide 5: Financial analysis
ANTOFAGASTA @ PLC Financial analysis
Slide 6: Financial highlights (1)
Financial highlights (1) 2005 2004 % change Realised copper price1 (c/lb) 185.2 140.2 Ç 32% Realised moly price1 (US$/lb) 31.4 21.5 Ç 46% US$m US$m Revenues2 2,445 1,942 Ç 26% EBITDA 1,674 1,357 Ç 23% Profit before tax 1,536 1,199 Ç 28% Net earnings 726 580 Ç 25% (after tax and minorities) (1) Deter
Slide 7: Financial highlights (2)
Financial highlights (2) 2005 2004 % change cents cents EPS 368.1 293.9 Ç 25.2% Dividends Interim 16.0 15.0 Final 24.0 24.0 Ordinary 40.0 39.0 Ç 2.6% Special 70.0 40.0 Total 110.0 79.0 Ç 39.2% 7
Slide 8: Profit after tax and minorities Variances 2005 vs 2004
Profit after tax and minorities Variances 2005 vs 2004 US$m 334.8 3.7 34.8 3.6 17.5 14.4 66.2 725.8 125.3 579.5 Net Mining Transport Water Exploration Depreciation Net interest Tax Minority Net Earnings EBITDA EBITDA EBITDA & Corporate and and other interest Earnings 2004 impairment 2005 8
Slide 9: Cash flow 2005
Cash flow 2005 US$m 2800 2600 1,647.5 2400 2200 2000 343.8 1800 211.2 1600 155.6 23.5 1,316.8 1400 385.6 1200 881.4 139.4 1000 800 600 400 200 0 Initial Cash Cash flow Income tax Net capex Group Minority Change in Other Final cash from paid dividends dividends debt operations 9
Slide 10: Group debt (US$ million)
Group debt (US$ million) Consolidated debt 2000-2005 Net cash 2005 1100 1,316.8 1061 969 851.5 862 603 465 Total loans Total cash Net cash 2000 2001 2002 2003 2004 2005 -465.3 10
Slide 11: Operations review and outlook
Operations review and outlook 11
Slide 12: Los Pelambres – 2005 review
Los Pelambres – 2005 review 126 128 113 111 105 93 • Plant throughput increased 2%, partially offsetting the impact of lower copper grades. 0.98% 1.05% Concentrator availability increased to 96.4% 0.91% 0.91% 0.88% 0.80% • Moly production increased 10% to 8,700 tonnes, as result of mine plan optimis
Slide 13: Los Pelambres – 2005 review
Los Pelambres – 2005 review • EBITDA increased 32% to US$ 1,420m • Cost increases mainly attributable to market conditions (1) 452.7 1,420.5 55.5 10.2 15.2 13.6 9.8 1,072.0 EBITDA 2004 Increase in Copper TC/RC Moly Roasting Exchange and Fuel, energy Other cost EBITDA 2005 turnover Inflation and othe
Slide 14: Los Pelambres – Outlook and targets
Los Pelambres – Outlook and targets • Production and costs 2006 • Payable copper: 308,000 tonnes (Cu grade of 0.77% vs 0.80% in 2005) • Molybdenum: 10,800 tonnes (Mo grade of 0.03% vs 0.022% in 2005) • Cash cost of 40 c/lb (based on Mo price of 17 US$/lb, realised price of 13 US$/lb) • Growth plans
Slide 15: El Tesoro – 2005 review
El Tesoro – 2005 review 97.8 98.1 92.4 • Copper production slightly increased, despite 9% decrease in grades (1.23% in 2005 vs 1.35% in 2004) 84.3 66.1 – Metallurgical recoveries improved to 80%, 52.4 from 78% in 2004, as result of an 40.8 42.4 optimisation in leaching process 1.50% – Plant throughp
Slide 16: El Tesoro – 2005 review
El Tesoro – 2005 review • EBITDA increased 13% to US$ 203.2m • Operating costs affected mainly by: higher stripping ratio, sulphuric acid, fuel prices, and exchange rate(2) 50.8 1.3 203.2 4.8 8.4 179.6 15.3 EBITDA 2004 Net increase in Exchange rate Acid, fuel, Stripping ratio Others EBITDA 2005 turn
Slide 17: El Tesoro – Outlook and targets 2006
El Tesoro – Outlook and targets 2006 • Production target of 91,600 tonnes (Cu grade of 1.14% vs 1.23% in 2005) • Cash costs expected to increase to 78 c/lb, as result of (1): • Higher stripping ratio • Impact of lower production on unit costs • Plant optimisation to 10.5 million tonnes per annum com
Slide 18: Michilla – operational and financial review
Michilla – operational and financial review 52.0 52.7 50.0 46.4 • Copper production down 7% to 46,400 tonnes 118.8 – Operational difficulties in the open pit and underground mine 85.6 69.8 – Lower than expected copper grades 61.4 • Costs affected by market and operational factors 2002 2003 2004 2005
Slide 19: Michilla – Outlook and targets
Michilla – Outlook and targets • 2006: 41,900 tonnes at 127 c/lb cash cost (1) • New mine plan to be completed in May – may result in a reduced but sustainable copper production level • Antofagasta Minerals is acquiring the Antucoya deposit • located 45 km north-east from Michilla • 400 Mtons @ 0.4%
Slide 20: Esperanza Project
Esperanza Project • Feasibility underway • 2.25 km exploration decline with 75% progress, expected to be completed in July (to obtain metallurgical and geotechnical bulk samples) • 40,000 metres infill drilling campaign completed • Comminution and flotation testwork: 70% progress, with positive resu
Slide 21: Exploration and growth opportunities
Exploration and growth opportunities 2005 review • “Target-generation” programme (announced in March 2005), was carried out during the year in Chile and Argentina • 20 targets reviewed in Chile and 3 in Argentina • 4 targets drilled • Programme will continue in 2006 • Active search of early stage ex
Slide 22: Tethyan Copper / Reko Diq
Tethyan Copper / Reko Diq • Tethyan Copper acquired the Reko Diq project from BHP Billiton in 1999 • Resource estimate (updated January 2006) • 2.4 billion tonnes @ 0.51% Copper and 0.27g/t Gold • Contains 12.3 million tonnes of copper and 20.9 million ounces of gold • Antofagasta announced a 100% t
Slide 23: Railway and other transport
Railway and other transport • Rail volumes of 4.34 million tons (4.48 million tons in 2004) El Abra Conchi • Road volumes of 1.52 million tons Chuquicamata (1.41 million tons in 2004) El Salvador Michilla Calama Sierra Gorda • Total revenues of US$ 92.5 million*, Mejillones Interacid Terminal El Tes
Slide 24: Aguas de Antofagasta
Aguas de Antofagasta • Strong operational performance in second year of operations • Revenues of US$ 53.7 million • EBITDA of US$ 33.9 million • 3% growth in water volumes to 33.1 million m3 • Water losses reduced 3% in the last 2 years, being now close to 26% • Growth prospects • Spence: 15-year co
Slide 25: Market outlook
ANTOFAGASTA @ PLC Market outlook 25
Slide 26: Refined Copper Market Outlook
Refined Copper Market Outlook • Copper fundamentals remain strong • Despite the recent increase, stocks remain at critical levels (¢/ l b) ('000 t on ne s ) 24 0 1, 6 00 22 0 1, 4 00 20 0 1, 2 00 18 0 16 0 1, 0 00 14 0 800 12 0 600 10 0 400 80 200 60 40 0 J a n -80 J a n-8 4 J a n-88 J a n -92 J a n
Slide 27: Refined Copper Market Outlook
Refined Copper Market Outlook • Demand is expected to recover during 2006 as re-stocking takes place Global Demand Change 2004a 2005e 2006f (Bloomsbury –February 06) 7.0% nil% 5.9% During 2005 there was no growth in world apparent consumption due to the de-stocking • 2006 production growth could be
Slide 28: Refined Copper Market Outlook
Refined Copper Market Outlook • Most analysts now do not expect the refined copper balance to move from deficit to surplus until the second half of 2006 • Market Balance (´000 tonnes) 2004a 2005e 2006 (f) (Bloomsbury February 06) (875) (380) (207) (Brook Hunt February 06) (1030) (100) 330 (CRU Febru
Slide 29: Refined Copper Market Outlook
Refined Copper Market Outlook Positive outlook for copper prices • Consensus forecast is 200 c/lb for 2006 and over 150 c/lb for 2007 • The uptrend of this prolonged bull run in the copper price may be reaching its peak but a collapse in prices is unlikely 29
Slide 30: Copper Cathodes Market Outlook
Copper Cathodes Market Outlook • As expected, the annual premium for 2006 in Europe was fixed at US$ 105 per tonne, slightly below 2005 premium of US$ 115 per tonne • Spot premiums have remained at a high level as copper consumption recovers • Currently at around US$ 100 per tonne • Expected to cont
Slide 31: Copper Concentrates Market Outlook
Copper Concentrates Market Outlook Terms are expected to continue improving in favour of producers • Spot TC/RC’s reached an all time high during 2005 • During recent months, spot terms have rapidly improved and this trend should continue in 2006 • More smelting capacity is available and utilisation
Slide 32: Copper Concentrates Market Outlook
Copper Concentrates Market Outlook • Long term contract settlements • 2005 calendar benchmark (set Dec 04) – 85.5 & 8.5 • 2005 mid-year benchmark (set Jun 05) – 112.5 & 11.25 • Volume traded represents less than 15% of the world trade • Los Pelambres does not have mid-year contracts • 2006 calendar
Slide 33: Molybdenum Market Outlook
Molybdenum Market Outlook • Market expected to remain strong in 2006 2002 2003 2004 2005 2006 • Average price (US$/lb) 3.7 5.3 16.2 32 23 (running average) • Prices supported by: • Demand continuing to grow at a rate of 3% or more • Chinese molybdenum consumption expected to continue growing at over
Slide 34: Backup
ANTOFAGASTA @ PLC Backup 34
Slide 35: Group structure
Group structure Mining Transport Water FCAB (Chile) – 100% Aguas de Antofagasta FCA (Bolivia) – 50% 100% El Tesoro – 61% Los Pelambres – 60% Michilla – 74% Listed on the London Stock Exchange (FTSE 100 since March 2004) Market capitalisation: US$ 6.7 billion at 6 March 2006, with a free float of 35%
Slide 36: Group Operations (2005 figures)
Group Operations (2005 figures) Copper mining Los Pelambres (60%) 322,800 tpy in concentrates El Tesoro (61%) 98,100 tpy of cathodes Michilla (74%) 46,400 tpy of cathodes Exploration programmes in Chile and Peru (CVRD) Transportation Chile (FCAB-100%) and Bolivia (FCA-50%) 4.34 million tons carried
Slide 37: Group Overview: Mining Operations and Exploration
Group Overview Mining Operations and Exploration Northern Chile Michilla Peru Conchi- Brujulinas Port of Mejillones Lima Port of Tesoro Cuzco Antofagasta Esperanza Telégrafo Sur Cordillera de las Minas Port for Los Pelambres Los Pelambres 37
Slide 38: 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 39: Growth record and cost base - mining
Growth record and cost base - mining Antofagasta payable copper and cash cost 498 461 472 467 445 351 55.4 39.2 38.8 38.9 36.4 24.3 61 13.9 1999 2000 2001 2002 2003 2004 2005 Copper production (000 tonnes) Cash costs (c/lb) In 2004, Antofagasta was placed in the lowest 15% of the industry cost curve
Slide 40: Growth record – railway
Growth record – railway Railway tonnages (million tons) 4.4 4.5 4.3 4.1 3.9 3.9 3.1 2.8 2.5 2.0 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 40
Slide 41: Reserves & resources at operations
Reserves & resources at operations (at 31 Dec 2004) Reserves and additional resources (million tonnes) 3,420 212 76 3,132 39 57 37 155 1,211 1,115 2,209 2,017 Pelambres Tesoro Michilla Group 41
Slide 42: Cash cost analysis 2004 – 2005 – 2006E
Cash cost analysis 2004 – 2005 – 2006E Los Pelambres: Cash Cost 2004 7.9 Los Pelambres: Cash Cost 2005 (17.1) Increase in TC/RC's 11.1 Increase in TC/RC's 4.3 Increase in freight costs 0.2 Increase in freight costs 2.9 Exchange rate and local inflation 2.1 Exchange rate and local inflation 2.5 Incre
Slide 43: Cash cost curve 2005 by mine
Cash cost curve 2005 by mine Antofagasta plc Los Pelambres 43
Slide 44: Cash cost curve 2005 by corporation
Cash cost curve 2005 by corporation 44
Slide 45: Antofagasta Contacts
Antofagasta Contacts London Santiago de Chile (Antofagasta plc) (Antofagasta Minerals S.A.) Desmond O’Conor Head of UK Alejandro Rivera Vice President of Corporate Finance and Hussein Barma Chief Financial Officer (UK) Development Sebastian Gil Manager – Corporate Finance and Development Tel: +44 20