Antofagasta Plc · LSE:ANTO
Antofagasta — Investor Presentation (September 2016)
30 slides from Antofagasta's investor presentation, September 2016
Slide 1: Investor Presentation September 2016
Investor Presentation September 2016
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 Operational Review and Cash Investment Overview Growth Management Case Opportunities 3
Slide 4: Overview
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Slide 5: Safety First
Safety First • Unacceptably, a fatality occurred at Antucoya Safety Performance in April 2016 and another in the transport division in July 50% reduction • Committed to zero fatalities target 5 in LTIFR • 50% improvement in injury rate • New safety and occupational health model being extended to con
Slide 6: Investment case - responding to uncertain times
Investment case - responding to uncertain times High Robust Cost Capital quality platform control discipline assets • Strong and growing • Cost and • Strong and flexible • Continuing to production Competitiveness balance sheet optimise mines Programme • Large resource base • Manageable debt • Discip
Slide 7: Positioning for the future
Positioning for the future 2016 Beyond 2017 Group Position Positioned for Enhance Efficiency uncertainty • Strong balance sheet • Competitive operating costs • Cost and Competitiveness • Rebase costs to withstand Programme market weakness • Re-setting community engagement • Capital allocation • Port
Slide 8: H1 2016 Highlights
H1 2016 Highlights Cu Production Revenue Net Cash Cost EBITDA 323,330t $1,448 million $1.26/lb $572 million ↑6.6% compared to last year ↓18.5% compared to last year ↓17.6% compared to last year ↑2.3% compared to last year • Includes production from • Lower realised copper price • 15% is group cash c
Slide 9: Copper market
Copper market Unexpected strength in H1 2016 Scrap market weak o Chinese stimulus measures o 15-20% of refined copper supply o Limited scrap availability o Higher demand elasticity than primary copper o Modest growth in supply, forecast to o Lower copper prices increase in H2 2016 o Lower scrap gene
Slide 10: Copper market outlook
Copper market outlook Optimistic in medium and long term Outlook o Expected demand growth during 2016-2020: 2.0-2.5% pa o Supply is expected to grow modestly during 2016-2020 o Grades decline o Few big copper projects coming o New projects are more complicated and take longer o Small surpluses expec
Slide 11: Operational review and growth opportunities
Operational review and growth opportunities 11
Slide 12: Operations overview
Operations overview Group H1 2015 H1 2016 • Focus on reducing operating and capital costs 303,400t Cu 323,300t Cu • Grow production C1 $1.53/lb C1 $1.26/lb • Maintain capital discipline Los Pelambres H1 2015 H1 2016 Centinela H1 2015 H1 2016 169,400t Cu 172,100t Cu 118,400t Cu 98,100t Cu C1 $1.36/lb
Slide 13: Los Pelambres – El Mauro tailings dam
Los Pelambres – El Mauro tailings dam Outstanding court cases resolved • Two longstanding claims concerning: o Quality and quantity of water in stream o Ability of dam wall to withstand extreme seismic event • Formal and transparent dialogue with community to understand concerns and share views • Ag
Slide 14: Phased growth opportunities
Phased growth opportunities Antucoya(1) Encuentro Oxides(1) Centinela Second Concentrator(3) Cu: 85ktpa(2) Cu: 50ktpa(2) Cu: 140ktpa(2) Capex: $1,900m Capex: $635m Capex: $2,700m 2016 2017 2018 2019 2020+ Centinela 105ktpd(1) Centinela Moly Plant(1) Los Pelambres Phase 1 Los Pelambres Phase 2 Increm
Slide 15: Antucoya – ramp-up
Antucoya – ramp-up Delivering growth • High levels of fine dust slowing ramp-up • Commercial production commenced in April 2016 • Reach design capacity in H2 2016 • Improved dust suppression systems to be completed by the end of the year Antucoya Start of operation: Q3 2015 Change Pic Remaining mine
Slide 16: Zaldívar - integration
Zaldívar - integration Synergies being achieved • Acquired 1 December 2015. Antofagasta operator • Best acquisition opportunity in recent years • Cost synergies achieved: $15-20 million • Recoveries improved: 69% in Q1 2016 vs 59.5% in 2015 • Integration very substantially complete • Production grow
Slide 17: Centinela Mining District - under construction
Centinela Mining District - under construction Three projects - increasing production, lowering unit costs Centinela debottlenecking • Debottlenecking to increase throughput to 105,000 tpd • Includes thickened tailings • Front-end completed in 2015 • Complete installation of tailings thickeners in H
Slide 18: Centinela Mining District - future development
Centinela Mining District - future development District has a series of development options • Planned 2nd concentrator 7 km from Centinela Second current facilities Concentrator • Two-phase growth: o Phase 1 - 90,000 tpd throughput o Phase 2 - +50,000 tpd throughput • Annual production (Phase 1): o
Slide 19: Los Pelambres Incremental Expansion
Los Pelambres Incremental Expansion • Maximising throughput under existing Phase 1 permits • Throughput expansion to 190,000 tpd + desalination plant • New grinding and flotation circuit to counter the increasing hardness of the ore • Capex $1.1 billion including desalination plant and water pipelin
Slide 20: Further growth opportunities - beyond 2020
Further growth opportunities - beyond 2020 • 2.4 billion tonne resource in Twin Metals Project Minnesota containing copper, nickel and PGMs • Optimising pre-feasibility study • Permitting process complex with Change Pic some challenges • Progress rate slowed to reduce costs Exploration • Chile and i
Slide 21: H1 2016 performance and FY guidance
H1 2016 performance and FY guidance Portfolio optimised. Costs control ongoing Cu Au Mo C1 H1 2016 H1 2016 H1 2016 H1 2016 Production (t) Production (oz) Production (t) Net Cash Costs ($/lb) 323,300 109,500 3,300 1.26 2016 Guidance (t) 2016 Guidance (oz) 2016 Guidance (t) 2016 Guidance ($/lb) 710,00
Slide 22: Cash Management
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Slide 23: Unit cash costs
Unit cash costs Cash costs before by-product credits ($/lb) - by cost type ($0.28/lb) $1.88/lb 0.06 $1.60/lb (0.10) (0.04) (0.09) (0.02) (0.11) (1) (2) H1 2015 Adjustment FX & Inflation Input prices TC/RC Production Savings H1 2016 1. Adjustment made to H1 2015 figures based on application of revise
Slide 24: Operating cost savings
Operating cost savings FY target of $160m with $124m of savings to date Mine Site Costs E&E and Corporate Costs Operating Costs • $67(1)m, ($0.11/lb) of savings • $57m of Exploration & • Cost reduction negotiations with a larger group of contractors Evaluation, and Corporate costs • Cumulative savin
Slide 25: Capital expenditure
Capital expenditure Capital expenditure ($m) (1) ($597m) Sustaining capex Development Mine Development Others +$51m 1,800 $1,646m 1,600 97 64 1,400 1,200 $1,049m $1,110m 38 47 1,000 63 1,086 (2) 377 800 600 678 403 $385m 400 13 146 200 399 270 283 161 0 65 2014 actual 2015 actual 2016 E H1 2016 actu
Slide 26: Balance sheet
Balance sheet Resilient Balance Sheet Net Cash/(Debt) Gross Basis ($m) Cash Subordinated debt Net Debt $4,000 2,375 • Strong balance sheet and liquidity $2,000 1,732 2,180 • Low Net Debt/EBITDA ratio $0 (2) • Low cost of funding (1,023) (1,040) • Well positioned to withstand prolonged ($2,000) downt
Slide 27: Investment case
A, \ ANTOFAGASTA PLC Investment case
Slide 28: Investment case - responding to uncertain times
Investment case - responding to uncertain times High Robust Cost Capital quality platform control discipline assets • Strong and growing • Cost and • Strong and flexible • Continuing to production Competitiveness balance sheet optimise mines Programme • Large resource base • Manageable debt • Discip
Slide 29: Antofagasta contacts
Antofagasta contacts Andrew Lindsay alindsay@antofagasta.co.uk alindsay@antofagasta.co.uk Paresh Bhanderi pbhanderi@antofagasta.co.uk Director, London Office Tel: +44 20 7808 0988 Investor Relations Manager Tel: +44 20 7808 0988
Slide 30: www.antofagasta.co.uk
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