Slide 1: 2003 Results Presentation
2003 Results Presentation 9 March 2004
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 2003
Highlights 2003 • Group cash cost reduced 6% to 36.4 c/lb • Copper production increased 2% to 472 thousand tonnes • Los Pelambres record low cash cost of 29.3 c/lb • El Tesoro LME grade A certification obtained in July • Michilla significant progress in development plan • Non-core assets Quiñenco in
Slide 4: Financial highlights (1)
Financial highlights (1) 2003 2002 c/lb c/lb LME copper price 80.7 70.7 + 14% Realised copper price 83.9 71.6 + 17% US$m US$m Revenues 1,076.2 863.1 + 25% EBITDA 524.3 349.7 + 50% Net income 180.7 96.8 + 87% ROCE 16.8% 9.1% + 85% 4
Slide 5: Financial highlights (2)
Financial highlights (2) 2003 2002 cents cents EPS 91.5 49.0 + 87% Dividends: Interim 11.0 10.0 Final 24.0 18.0 Total 35.0 28.0 + 25% Special (in specie*) 111.0 – * Redemption value of shares in Andsberg Limited distributed on demerger of Quiñenco. 5
Slide 6: Group 2003 Update and Outlook
Group 2003 Update and Outlook 6
Slide 7: Los Pelambres Operational performance
Los Pelambres Operational performance 1.05% 111 113 • Continuing optimisation with throughput 0.98% 105 in 2003 up 22% since first year 93 • Plant upgrade (US$ 44m) completed in 0.91% 0.91% September: throughput increased to over 120,000 tonnes per day 362 325 327 299 2000 2001 2002 2003 Throughput
Slide 8: Los Pelambres Financial update
Los Pelambres Financial update • EBITDA of US$ 402.9m (57% above 2002) 2003 2002 Sales volume (000 tonnes tonnes)) 332.8 318.2 +4.6% Realised price (c/ (c/lb lb)) 84.6 71.2 +18.8% Cash cost (c/lb (c/ lb)) 29.3 34.9 -16.0% • Project debt reduced by US$ 109.1m to US$ 594.9m - Total repayments of US$ 3
Slide 9: Los Pelambres Outlook and targets
Los Pelambres Outlook and targets Production and costs 2004 • Copper production of 338,000 tonnes (payable) • Moly production of 7,000 tonnes • Cash costs of 35 c/lb Growth prospects • Decision on Environmental Impact Study (EIA) expected in the first half of 2004 – Increase in ore reserves to 2.1 b
Slide 10: El Tesoro Operational performance
El Tesoro Operational performance 92 84 Second full year of operation • Copper production increased 10% to 92 k tonnes 78.2% 74.4% • Production target of 85 k tonnes exceeded • Copper recoveries increased to 78.2% (2002 full year - 74.4%) 2002 2003 Copper production (000 tonnes) Recovery % • LME cer
Slide 11: El Tesoro Financial update
El Tesoro Financial update • EBITDA of US$ 78.8m (34% above 2002) 2003 2002 Sales volume (000 tonnes tonnes)) 92.0 83.4 +10.3% Realised price (c/ (c/lb lb)) 82.5 72.0 +14.5% Cash cost (c/lb (c/ lb)) 42.4 40.8 +3.9% • Principal repayments – US$ 28.1m in February and August – Bank senior debt reduced
Slide 12: El Tesoro Outlook and targets
El Tesoro Outlook and targets 92 93 84 • Production target of 93,000 tonnes 1.50% • Cash costs expected to increase to 1.46% 1.32% around 48 c/lb, resulting from: – Significant increase in extraction of material – Higher sulphuric acid prices 2002 2003 2004E Copper production (000 tonnes) grade% – S
Slide 13: Michilla – 2003 review
Michilla – 2003 review 50 52 53 • Production levels increased to 52,700 tonnes 69.8 • Operating costs affected by: 64.5 61.4 – Lower copper grades – Higher waste to ore ratio 2001 2002 2003 15.6 13.4 copper production (000 tonnes) cash cost (c/lb) 12.2 1.49% • EBITDA of US$ 14m 1.39% 1.25% • Low deb
Slide 14: Michilla Outlook and targets
Michilla Outlook and targets New mine plan under review • Total reserves Previous mine plan: 25.6 million tonnes of 1.4% copper New (estimate): 44.9 million tonnes of 1.25% copper • Life of mine extended to 2011 • Engineering studies expected to be completed in 2004 H1, allowing recoveries to reach
Slide 15: Exploration in Chile
Exploration in Chile Sierra Gorda - Esperanza • Drilling programme of 47,000 metres Northern completed in 2003 Chile Michilla Conchi • Drill inferred resources in Telégrafo Sur Port of increased to: Mejillones – 898 million tonnes @ 0.45% Copper Port of Tesoro (from 356 million tonnes tonnes)) Antof
Slide 16: Exploration in Peru
Exploration in Peru Cordillera de las Minas • 50-50 exploration joint venture with CVRD Peru • 3-year timeframe (since August 2002) • Target area of 60,000 sq kms • Current progress Lima – Aero Aero-- magnetic flights completed Cuzco – 7 targets drilled this year – 1 target showed attractive results
Slide 17: Railway and other transport
Railway and other transport • Rail tonnages increased 6% Northern Chile (4.4 million tons) • Higher tonnages on Bolivian network (16% up) • Total revenues of US$ 75.8 million* • Letter of intent signed with San Cristobal mining project in Bolivia (Apex silver mines) * Represents third party revenues
Slide 18: Aguas de Antofagasta
Aguas de Antofagasta Northern • Serves the second administrative region of Chile Chile • 30 year concession to operate water rights and facilities previously controlled by ESSAN City of Michilla Antofagasta (state-owned company) Tesoro • Sales of US$ 41m and EBITDA of US$ 25m in 2003 (prior to acqui
Slide 19: Financial analysis
ANTOFAGASTA ZS) PLC Financial analysis 19
Slide 20: Profit after tax and minorities Variances 2003 vs 2002
Profit after tax and minorities Variances 2003 vs 2002 US$m 300 8.2 7.2 165.0 250 34.5 200 180.7 62.0 150 100 96.8 50 0 2002 Mining Transport Net interest Tax Minority 2003 and other interest 20
Slide 21: Cash flow 2003
Cash flow 2003 US$m 510.2 800 26.9 600 86.3 193.8 400 252.4 111.4 58.4 195.7 200 81.7 8.4 0 Initial Cash Op. Cash flow Net interest Net capex Water Change in Group Minorities Tax and other Final cash paid concession debt dividends dividend acquisition 21
Slide 22: Group net debt
Group net debt US$m Consolidated net debt Attributable net debt US$m 1,000 1,000 857.5 800 800 661.8 600 600 195.7 518.0 400 400 344.6 173.4 200 200 0 0 Total loans Total cash Net debt Attrib. loans Attrib. cash Attrib. net debt Dec 03 Dec 02 Dec 03 Dec 02 Net Debt Net Debt Equity + Minority Interes
Slide 23: Market outlook and conclusion
Market outlook and conclusion 23
Slide 24: Market outlook and conclusion
Market outlook and conclusion • Strong fundamentals for copper • Overall visible inventories have decreased 60% to 600 k tonnes, from a peak of 1.5 million tonnes in May 2002. • Total stocks are rapidly approaching the “critical level" of 5 weeks consumption • Growth in copper consumption -Demand in
Slide 25: Additional information Handout
Additional information Handout 25
Slide 26: Quiñenco demerger
ANTOFAGASTA @ PLC Quinenco demerger 26
Slide 27: Quiñenco demerger - Background
Quiñenco demerger - Background Quiñenco • Diversified industrial and financial group based in Chile • Listed in Santiago and in ADR form in New York (NYSE – LQ) Antofagasta’s 33.6% investment • Acquired in 1996 through merger of industrial and financial assets • Held through Andsberg, a wholly owned
Slide 28: Group structure
Group structure Before After Shareholders Shareholders Shareholders OR Redemption Right Antofagasta Antofagasta Andsberg plc plc Limited Transport Mining Andsberg 33.6% Transport Mining Quiñenco 33.6% Quiñenco • Transaction structure approved by Extraordinary Meeting (October 2003) • Demerger comple
Slide 29: Quiñenco demerger - reasons
Quiñenco demerger - reasons Demerger strategy • Consistent with strategy to focus on mining and transportation • Quiñenco investment no longer relevant to Antofagasta’s activities or valuation • Demerger enhanced value for all Antofagasta shareholders Demerger structure • Created choice for sharehol
Slide 30: Group overview
ANTOFAGASTA @ PLC Group overview 30
Slide 31: Group Overview Brief History
Group Overview 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 • 1
Slide 32: Group Operations
Group Operations Copper mining Los Pelambres (60%) : 326,700 tpy in concentrates El Tesoro (61%) : 92,400 tpy of cathodes Michilla (74%) : 52,700 tpy of cathodes Exploration programmes in Chile and Peru (CVRD) Transport Chile (FCAB-100%) and Bolivia (FCA-50%) 4.4 million tons carried in 2003 Water A
Slide 33: Group Overview Mining Operations and Exploration
Group Overview Mining Operations and Exploration Northern Chile Michilla Peru Conchi Port of Mejillones Lima Port of Tesoro Cuzco Antofagasta Esperanza Telégrafo Sur Proyecto Sur Port for Los Pelambres Los Pelambres 33
Slide 34: Group Operations Los Pelambres
Group Operations Los Pelambres • 3.1 billion tonnes sulphide resource • Open pit • 30 year mine plan • Year 2003 – Payable copper: 326.7 ktonnes – Cash cost: 29.3 c/lb – EBITDA: US$ 402.9m 34
Slide 35: Group Operations El Tesoro
Group Operations El Tesoro • 220 million tonnes oxide resource • Open pit • 21 year mine plan • Year 2003 – Payable copper: 92.4 k tonnes – Cash cost: 42.4 c/lb – EBITDA: US$ 78.8m 35
Slide 36: Group Operations Michilla
Group Operations Michilla • 75 million tonnes oxide and sulphide resource • Open pit and underground mine • Mine plan extended to 2011 • Year 2003 – Payable copper: 52.7 k tonnes – Cash cost: 69.8 c/lb – EBITDA: US$ 14.0m 36
Slide 37: Antofagasta contacts
Antofagasta contacts London Santiago de Chile (Antofagasta plc) (Antofagasta Minerals S.A.) Philip Adeane Managing Director Jean-Paul Luksic Chief Executive Officer Hussein Barma Chief Financial Officer Alejandro Rivera Chief Financial Officer Sebastian Gil Head of Investor Relations Tel: +44 20 780