Antofagasta Plc · LSE:ANTO
Antofagasta — H1 2018 Earnings Presentation
34 slides from Antofagasta's earnings presentation, Aug 14, 2018
Slide 1: 2018 HY Results Presentation
2018 HY Results Presentation 14th August 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 & Financial Overview Growth Guidance Results Opportunities 3
Slide 4: Overview
A . ANTOFAGASTA PLC Overview
Slide 5: Safety and health first
Safety and health first Safety Performance 5 2 2.0 2 1.7 1.6 1.4 1.9 1 1.5 0 0 2013 2014 2015 2016 2017 2018 HY (1) Fatalities LTIFR • No fatal accidents since April 2016 • Group LTIFR 1.6 in 2018 HY • Mining Division LTIFR 1.0 in 2018 HY 5 1. LTIFR: Lost Time Injury Frequency Rate
Slide 6: Producing profitable tonnes
Producing profitable tonnes How are we What do we External Our focus doing? expect? factors in H2 - As expected - Operating consistently challenging H1 with and using full capacity low grades driving - Guidance unchanged, - Cost inflation financial performance - Growth projects on as grades strength
Slide 7: Capital allocation drives decision making
Capital allocation drives decision making 2018 HY Operating Cash Flow $890m(1) Decision factors Copper • Stress test forecasts at various Sustaining Capex & price copper prices $324m Mine Development Free cash • Future free cash flow generation flow • Cash buffer 35% payout Committed Dividends polic
Slide 8: 2018 HY highlights
2018 HY highlights Safety • Zero fatalities • 317,000t, 8.5% lower than H1 2017 Copper production • Cash cost $1.52 / lb and cash cost • Guidance unchanged • EBITDA down 16% to $904 million Financials • Cash flow from operations 22% lower at $890 million • Successfully concluded at Los Pelambres Lab
Slide 9: Operations 2018 HY
Operations 2018 HY Los Pelambres Centinela Antucoya Zaldívar • Sustained high mine and • Encuentro Oxides ramping • Focused on optimising mine • New power agreement from plant reliability up and plant operations renewables sources signed • Temporary pipeline blockage • Moly plant first sale in July
Slide 10: 2018 HY Financial Results
2018 HY Financial Results 10
Slide 11: 2018 HY financial highlights
2018 HY financial highlights vs. 2018 HY 2017 HY • Higher realised copper prices (+10.3%) Revenue 3.6% $2,121m • Lower copper sales volume (-8.6%) EBITDA (16.2)% $904m • Higher sales cost on expected lower grades • Lower EBITDA, higher depreciation and amortisation, partly offset Earnings per share
Slide 12: EBITDA
EBITDA EBITDA(1) 2017 HY vs 2018 HY ($m) -$175m 239 $1,079m (174) (89) 2 $904m (191) (19) (13) (8) (9) 2017 HY Metal prices Sales volume Mining Exploration & Corporate costs Other non- Transport 2018 HY costs Evaluation operating Division, Assocs expenses & JVs EBITDA 1. Results of continuing operat
Slide 13: Unit cash costs
Unit cash costs Cash costs before by-product credits and C1 Costs ($/lb) - by operation $0.36/lb 0.05 0.02 $1.92/lb 0.18 0.11 $1.56/lb $1.52/lb (0.40) Gross Costs Los Pelambres Centinela Antucoya Zaldivar Gross Costs By-product credits Net Costs 2017 HY 2018 HY 2018 HY Cash costs before by-product c
Slide 14: Continued focus on productivity
Continued focus on productivity Cost and Competitiveness Programme (CCP) Cumulative CCP savings of $579 million $m • Embedded cost culture across operations 54 579 525 • $54m of cost savings and productivity improvements achieved during 2018 HY • Target of $100m for 2018 FY 2014 - 17 2018 HY 2014 –
Slide 15: Capital expenditure
Capital expenditure Capital expenditure ($m) $1,646m 97 64 FY 2018 399 Guidance $1,049m $1,000m 38 $899m Others 63 $795m 32 270 36 Mine Development 371 1,086 320 $422m Sustaining 178 221 28 678 188 276 136 Development 262 70 Sustaining 2014 2015 2016 2017 2018 HY capex ratio $400-450 $566/tCu $433/t
Slide 16: Net debt
Net debt Net debt ($m) (1) $321m (1) 0.18x 0.32x 845 46 (332) (21) (460) (381) (422) (781) (40) -$79m (400) Net Debt EBITDA from Working Tax Net Interest Capex Others Net Debt Dividends Net Debt Dec-17 subsidiaries Capital before Jun-18 Dividens Jun-18 1. Net Debt / LTM EBITDA ratio 16
Slide 17: Market & Growth Opportunities
Market & Growth Opportunities 17
Slide 18: Copper market
Copper market Longer-term demand still strong Long-term supply constraints • China transitioning to sustainable growth Deterioration in quality of deposits - Increasing incomes and urbanisation Lower grades, increased rock hardness, impurities and depth • Copper is key in a low carbon emission world
Slide 19: Timeline - growth projects and asset disposals
Timeline - growth projects and asset disposals Los Pelambres Los Pelambres Incremental Expansion Phase 1 Incremental Expansion Phase 2 Capex: $1.3B ($520m desalination plant) Cu: +55ktpa Cu: +35ktpa Centinela Expansion Alternatives EITHER: Second Concentrator (90ktpd) OR: Existing concentrator (60kt
Slide 20: Guidance
A ANTOFAGASTA PLC Guidance 20
Slide 21: 2018 guidance unchanged
2018 guidance unchanged Cu Au Mo C1 2018 Guidance (t) 2018 Guidance (oz) 2018 Guidance (t) 2018 Guidance ($/lb) 705,000 - 740,000 190,000 - 210,000 11,500 - 12,500 1.35 21
Slide 22: Producing profitable tonnes
Producing profitable tonnes How are we What do we External Our focus doing? expect? factors in H2 - As expected - Operating consistently challenging H1 with - Copper and moly and using full capacity low grades driving prices - Guidance unchanged, financial performance - Growth projects on as grades
Slide 23: Appendix
A \ . ANTOFAGASTA PLC .
Slide 24: 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: $12.4 billion (9 August 2018) o Remaining mine life(2): 19 years Antofagasta o FTSE 100 o Reserves(3): 676 million t @ 0.33% Cu Centinela Mining division(1) o
Slide 25: Revenue – benefiting from improving copper price
Revenue – benefiting from improving copper price Copper price ($/lb) Revenue(1) HY 2017 vs HY 2018 ($m) 3.4 3.0 $3.14/lb 2.6 $2.80/lb $73m 2.2 $2.50/lb $2.21/lb 1.8 Jan 2015 Jun 2015 Dec 2015 Jun 2016 Dec 2016 Jun 2017 Dec 2017 Jun 2018 174 $2,121m Gold price ($/oz) 24 8 1,400 $2,048m (133) 1,300 $1
Slide 26: Net earnings
Net earnings Net Earnings 2017 HY vs 2018 HY ($m) -$97m $291m 43 $194m 83 (7) (166) (35) (15) (1) 2017 HY EBITDA from Depreciation & Net Finance costs Tax Non-controlling Associates & JVs 2018 HY Subsidiaries Amortisation Interest and others 1. Including Zaldívar and discontinued operations 26
Slide 27: Growth projects
Growth projects Los Pelambres Incremental Expansion Centinela Expansion Phase 1 (190ktpd throughput) Antofagasta Either: Second concentrator • Increasing copper production by • 90ktpd throughput 55ktpa from 2021 Centinela • Feasibility study due by end of year • Capex $1.3 billion ($520 million for
Slide 28: Cash cost breakdown
Cash cost breakdown H1 2018 cash costs Overheads Labour Others 8% 15% 2% Explosives 2% Mill balls Energy 5% 14% Consumables 34% Acid Services 4% Diesel 29% 7% Spare parts 14% 28
Slide 29: Market data – recent trends
Market data – recent trends Exchange rate CLP/USD – inverted axis WTI oil price ($/barrel) 550 80 70 600 60 650 50 40 700 30 20 750 10 800 0 Jan 2015 Jun 2015 Dec 2015 Jun 2016 Dec 2016 Jun 2017 Dec 2017 Jun 2018 Jan 2015 Jun 2015 Dec 2015 Jun 2016 Dec 2016 Jun 2017 Dec 2017 Jun 2018 Sulphuric acid
Slide 30: Production and metal prices
Production and metal prices Group production Metal prices (1) 2015 2016 2017 2018 HY 2018E 2014 2015 2016 2017 2018HY Copper ('000 tonnes) Copper ($/lb) Los Pelambres 363.2 355.4 343.8 159.1 345 - 355 Realised 3.00 2.28 2.33 3.00 3.00 Centinela Concentrates 145.2 180.4 163.9 59.6 LME 3.11 2.50 2.21
Slide 31: Unit cash costs
Unit cash costs 2015 2016 2017 2018 HY 2018E (3) Group cash costs ($/lb) Los Pelambres 1.23 1.06 1.02 1.04 1.10 Centinela Concentrates 1.85 1.19 1.36 1.94 1.50 Centinela Cathodes Michilla 2.14 - - - - Antucoya(1) - 1.83 1.68 2.17 1.75 Zaldívar(2) 1.73 1.54 1.62 1.97 1.70 Cash costs before by-product
Slide 32: Reserves and resources – as of 31 December 2017
Reserves and resources – as of 31 December 2017 Tonnage Copper Molybdenum Gold Attributable Tonnage (millions of tonnes) (%) (%) (g/t) (millions of tonnes) 2017 2016 2017 2016 2017 2016 2017 2016 2017 2016 Ore reserves Los Pelambres 1,193.4 1,257.6 0.60 0.61 0.020 0.020 0.05 0.05 716.0 754.6 Centine
Slide 33: Chile at a glance
Chile at a glance Antucoya Key Indicators • Largest copper endowment in the • GDP* : $277bn world Centinela • Population: 17.9 million • Copper key contributor to the Zaldívar • Per Capita GDP (PPP): economy 1970: $2,300 ; 2017: $24,085 • History of stability with robust Los Pelambres • Mining: 9.8%
Slide 34: 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