Antofagasta Plc · LSE:ANTO
Antofagasta — H1 2020 Earnings Presentation
40 slides from Antofagasta's earnings presentation, Aug 20, 2020
Slide 1: Antofagasta plc 2020 HY Results
Antofagasta plc 2020 HY Results Iván Arriagada Chief Executive Officer Mauricio Ortiz Chief Financial Officer 20th August 2020
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 1 Overview 2 Financial review 3 Growth opportunities and investment case 3
Slide 4: Overview
Overview Iván Arriagada Chief Executive Officer 4
Slide 5: Operating discipline
Operating discipline Maintaining safe operations Safety: our first priority • 22 months with no fatalities (to August 2020) Safety performance • Lost Time Injury Frequency Rate (LTIFR) decreased in 2020 HY to 0.88 from 1.01 • Mining Division and Transport Division’s LTIFRs 1.61 1.53 1.57 falling to
Slide 6: 2020 HY highlights
2020 HY highlights Strong operating and cost performance in a challenging environment Safety is the Group’s top priority Strong cost and operating performance • The Group continued its period of no fatalities • Net cash costs down $0.07/lb to $1.12/lb • LTIFR1 down to 0.88 • CCP3 savings of $78m, ag
Slide 7: Copper production in line with plans
Copper production in line with plans Group production of 371,700 tonnes at $1.12/lb Los Pelambres Centinela Antucoya Zaldívar Transport Cu production Cu production Cu production Cu production1 Tonnage 183,200 t 121,600 t 40,400 t 26,500 t transported Net cash costs Net cash costs Cash costs Cash cos
Slide 8: COVID-19 response
COVID-19 response Maintaining a safe and healthy environment COVID-19 situation in Chile: ▪ Rate on infections peaked in June ▪ Some local lockdowns still in place ▪ Health system has responded well ▪ High levels of testing and tracking Health of our people and local communities ▪ Social distancing
Slide 9: COVID-19 response
COVID-19 response Sustaining operational continuity Impact on operations ▪ All sites have kept operating ▪ Operating with two-thirds of workforce. The rest are working from home or in preventive quarantine ▪ Mine development and maintenance resumed as operations have adjusted to the new working cond
Slide 10: 2020 guidance
2020 guidance Copper production Copper production (kt) • Lower end of the original 725-755,000t guidance range, assuming no COVID-19 Guidance1 Lower end of related shutdowns during the rest of the 770 725-755 range year 704 725 130 Antucoya & 120 Net cash costs Zaldívar 132 • $1.20/lb, assuming prod
Slide 11: Financial review
Financial review Mauricio Ortiz Chief Financial Officer 11
Slide 12: 2020 HY financial overview
2020 HY financial overview 2020 HY v. 2019 HY REVENUE Lower realised copper prices and expected sales volumes, partially offset $2,139 million (15.3)% by the increase in the realised gold price NET CASH COSTS Reflects tighter cost control, weaker Chilean peso and lower input prices, $1.12/lb (5.9)%
Slide 13: Production and cash costs
Production and cash costs (15.6) kt - (4%) 387.3 kt Copper 6.9 371.7 kt Production 3.1 (3.7) (0.1) kt (21.8) 2019 HY Grades Throughput Recovery Work-in-progress ROM/Others 2020 HY inventories & Payability $(0.15)/lb - (9%) $1.66/lb 0.08 Cash costs 0.01 $1.51/lb (0.09) (0.05) (0.02) by (0.08) $1.12/l
Slide 14: EBITDA
EBITDA EBITDA1 and margin2 2019 HY versus 2020 HY $ million and % 52% (5)ppt 47% $293m $1,306m (111) 8 1 100 3 $1,013m (31) (263) 2019 HY Sales Realised Mine site Exploration Corporate Associates Transport 2020 HY EBITDA volumes prices costs & evaluation costs & JVs division & others EBITDA & TC/RC
Slide 15: Net earnings
Net earnings Net earnings 2019 HY versus 2020 HY $ million $(127)m $302m 57 $175m 111 $135m (40) (262) 43 (57) (19) 2019 HY EBITDA from Depreciation Associates Net Tax Non-controlling 2020 HY Exceptional 2020 HY Net earnings subsidiaries1 and and JVs finance costs2 interests Net earnings items Net e
Slide 16: Capital expenditure
Capital expenditure FY 2020 Capital expenditure1 Guidance $ million Less than $1,300m $1,079m $899m $873m 61 $795m 32 68 279 Other 17 276 144 Development 296 $549m 310 392 23 221 Sustaining 178 210 151 2020 HY Mine development 304 371 352 347 165 2016 2017 2018 2019 2020E Target sustaining 2016 2017
Slide 17: Net cash/(debt)
Net cash/(debt) Net cash / (debt) and Net debt/EBITDA ratio $ million and times $243m 0.23x 0.15x ratio1 ratio1 970 (63) $81m $34m (204) 210 (70) $(320)m (549) (15) (36) $(563)m Net cash/(debt) - Net cash/ EBITDA from Working Tax Capex Net interest Leases, Capital Dividends to Net cash/ Net cash/(de
Slide 18: Capital allocation
Capital allocation Operating Cash Flow • Economic outlook Copper • Stress test forecasts at various copper prices Price Free Sustaining Capex & Mine Development Cash • Future free cash flow generation Flow • Cash buffer DECISION Committed Dividends (35% pay-out) FACTORS Capex • Upcoming capital expe
Slide 19: Growth opportunities and investment case
Growth opportunities and investment case Iván Arriagada Chief Executive Officer 19
Slide 20: Copper market recovering
Copper market recovering Current market position Copper exchange stocks ▪ Supply disruptions during COVID-19 limited - c.500 tonnes c/lb Stocks LME Stocks CMX Stocks Shanghai LME Price kt 350 1,000 ▪ No Group shipments cancelled ▪ Rapid recovery in China, weaker USD and expected recovery in 300 800
Slide 21: Low risk organic growth opportunities
Low risk organic growth opportunities 2019 2020 2021 2022 2023+ LOS PELAMBRES EXPANSION - PHASE 1 (in construction) PHASE 2 (in FS stage) Cu +60 ktpa | Capex $1.3 bn1 (including $0.5 bn1 desalination plant) Cu +35 ktpa | Capex $0.5 bn2 15 year LOM extension Organic CENTINELA 2ND CONCENTRATOR ESPERAN
Slide 22: Growth projects update
Growth projects update Los Pelambres Expansion - Phase I Centinela Second Concentrator 60,000 tonnes of additional copper 180,000 tonnes of additional copper equivalent • Construction suspended since March and now restarting in stages • Optimised feasibility study expected by the end of 2020 • Origi
Slide 23: 100% renewable energy from 2022
100% renewable energy from 2022 Energy strategy Energy consumption by mine ▪ Four pillars: supply security, price, source and energy GWh efficiency 4,500 ▪ Negotiated supply contracts to decarbonise electricity supply, 4,000 Antucoya taking advantage of the lower price of renewable energy Antucoya ▪
Slide 24: Progress on improving water efficiency
Progress on improving water efficiency Los Pelambres ▪ 2019 was the driest year of a 10-year drought in Choapa Valley ▪ Rainfall in H1 2020 was greater than the whole of 2019 ▪ 85% of water used is recirculated and improved by: ⁻ Tight pipeline leakage maintenance ⁻ Covering water storage ponds ⁻ Le
Slide 25: Transformational innovation - key to strategy
Transformational innovation - key to strategy ▪ Leaching of primary sulphides (Cuprochlor-T) industrial scale testing Strategic underway Initiatives ▪ Low cost bulk material movement technologies ▪ Thickened tailings and real time monitoring Online ▪ Open online collaboration platform Collaboration
Slide 26: Our priorities for 2020 and beyond
Our priorities for 2020 and beyond Continuing our record of zero fatalities Protecting employees and communities from COVID-19 Maintaining operating resilience and flexibility Further cost savings Advancing growth projects Progressing innovation portfolio Returns to shareholders 26
Slide 27: Investment case
Investment case Sustainability High quality assets Operating efficiency Financial position ▪ Zero fatalities culture ▪ Strong and growing ▪ Continuous productivity ▪ Strong balance sheet ▪ Safety and health model production improvement ▪ Healthy cash flows ▪ Environment stewardship ▪ Large resource
Slide 28: Appendix
ANTOFAGASTA PLC
Slide 29: Sustainability is central to everything we have and will achieve
Sustainability is central to everything we have and will achieve Economic Social Transparency and People Environment Performance Development Corporate Governance Zero fatalities Long term approach Shared development, not Environmental Risk appetite defined Safety and health model High quality and lo
Slide 30: Antofagasta at a glance
Antofagasta at a glance Group Antucoya • 65% owned by Luksic Group, 35% free float • 70% owned • Market cap: $14.6 billion (August 18th 2020) • Copper production1: 71,900 t • Remaining mine life2: 20 years • FTSE 100 • Reserves3: 687 million t @ 0.33% Cu Mining division1 Centinela • Top 10 copper pr
Slide 31: Chile
28% 29% 49% Chile of global copper production of global copper reserves of exports are copper Strengths and challenges Social situation and following steps ▪ Largest copper endowment in the world ▪ Oct 2019: Social unrest and demonstrations Antucoya Centinela ▪ Copper key contributor to the economy
Slide 32: Revenue
Revenue Revenue 2019 HY versus 2020 HY1 $ million ($387m) $2,526m (268) 35 $2,139m (47) (94) (13) 2019 HY Copper price Copper sales By-products TC/RC Transport division 2020 HY 1 Excludes Zaldívar (JV) 32
Slide 33: Cash flow
Cash flow Cash flow in 2020 HY1 $ million $175m 970 (63) 210 (9) $2,368m $2,193m (549) (204) (15) (70) (95) Cash at EBITDA from Working Capex Tax Net Net Capital Dividends to Others Cash at 1 Jan 2020 subsidiaries capital1 interest drawdowns increase Antofagasta 30 Jun 2020 & repayments from non- sh
Slide 34: 2020 HY production cost breakdown
2020 HY production cost breakdown 0.24 $1.54/lb 0.39 $1.51/lb Labour 12% Services Others 31% (0.21) 9% $1.12/lb $1,259m Spare parts 14% 13% 11% Energy Other inputs 5% 5% Net By-product Gross TC/RC & Mine Production Sulphuric acid Fuel cash cost credits cash cost Shipping development cost HY 2020 HY
Slide 35: Production and metals prices
Production and metals prices Group production Metal prices 2017 2018 2019 2020 HY 2020 E1 2017 2018 2019 2020 HY Copper ('000 tonnes) Copper ($/lb) Los Pelambres 343.8 357.8 363.4 183.2 350-360 Realised 3.00 2.81 2.75 2.46 Centinela Concentrates 163.9 155.5 195.5 74.8 LME 2.80 2.96 2.72 2.49 240-250
Slide 36: Unit cash costs
Unit cash costs Group cash costs 2017 2018 2019 2020 HY 2020 E1 Group cash costs ($/lb) Los Pelambres 1.44 1.52 1.40 1.20 1.45 Centinela 1.81 1.89 1.83 1.84 2.00 Antucoya 1.68 1.99 2.17 1.73 1.90 Zaldívar 1.62 1.94 1.75 1.72 1.70 Cash costs before by-products credits ($/lb) 1.60 1.72 1.65 1.51 1.70
Slide 37: Market data
Market data 340 2,200 320 2,000 300 296 c/lb 280 c/lb 1,800 280 272 c/lb 260 1,600 1,700 US$/oz 240 256 c/lb 1,400 1,269 US$/oz 220 Copper 1,394 US$/oz Gold 1,200 1,258 US$/oz 200 $c/lb $/oz 180 1,000 Jan 2017 Jul 2017 Jan 2018 Jul 2018 Jan 2019 Jul 2019 Jan 2020 Jul 2020 Jan 2017 Jul 2017 Jan 2018
Slide 38: Reserves and resources as of December 2019
Reserves and resources as of 31 December 2019 Tonnage (millions tonnes) Copper (%) Molybdenum (%) Gold (g/t) Attributable Tonnage (millions tonnes) 2019 2018 2019 2018 2019 2018 2019 2018 2019 2018 Ore reserves Los Pelambres 1,072.0 1,132.2 0.60 0.60 0.020 0.019 0.05 0.05 643.2 679.3 Centinela Conce
Slide 39: Antofagasta contacts
Antofagasta contacts Andrew Lindsay alindsay@antofagasta.co.uk Andrés Vergara avergara@antofagasta.co.uk Director, London Office Tel: +44 20 7808 0988 Investor Relations Manager Tel: +44 20 7808 0988 39
Slide 40: www.antofagasta.co.uk
www.antofagasta.co.uk ‘\ ANTOFAGASTA PLC