Slide 1: Results Presentation First Half 2005
Results Presentation First Half 2005 13 September 2005
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 H1
Highlights 2005 H1 (comparatives vs 2004 H1) • Commodity prices Average LME copper price up 21% to 151 c/lb; Molybdenum price up 193% to US$33.4/lb • Group cash cost Reduced to -8.7 c/lb (-48.1 c/lb at Los Pelambres including by-product credits) • Copper production Reduced 3% to 227,400 tonnes, main
Slide 4: Financial highlights
Financial highlights 2005 H1 2004 H1 % change Realised copper price1 (c/lb) 159.1 133.1 Ç 20% Realised moly price1 (US$/lb) 36.0 14.4 Ç 150% US$m US$m Revenues 1,123.6 753.4 Ç 49% EBITDA 806.4 505.7 Ç 59% ROCE (annualised) 64.5% 37.9% Ç 70% cents cents EPS 186.4 105.2 Ç 77% Interim dividend 16.0 15.
Slide 5: Update and Outlook
ANTOFAGASTA @ PLC Update and Outlook 2005
Slide 6: Los Pelambres – Operational performance
Los Pelambres – Operational performance 126 127 113 105 111 • Plant throughput increased 4% (vs 2004 H1), 93 partially offseting the impact of lower copper grades 1.05% 0.98% 0.91% 0.91% • Moly production increased 27% to 4,700 0.88% 0.78% tonnes, as result of mine plan optimisation 362 351 2000 200
Slide 7: Los Pelambres – Financial update
Los Pelambres – Financial update • EBITDA of US$ 655m (up 75% from 2004 H1) 2005 H1 2004 H1 % change Copper sales (000 tonnes) 150.6 139.8 Ç 8% Realised price (c/lb) 159.8 134.1 Ç 19% Moly sales (000 tonnes) 4.3 3.7 Ç 16% Realised price (US$/lb) 36.0 14.4 Ç 150% Cash cost (c/lb) -48.1 18.0 È n.m (in
Slide 8: Los Pelambres – Outlook and targets
Los Pelambres – Outlook and targets • Production and costs 2005 • Copper: 324,000 tonnes (Cu grade of 0.79% vs 0.88% in 2004) • Moly: 8,300 tonnes, with lower grades in the second half • Cash cost of -10 c/lb • Growth plans • Plant expansion to 140 ktpd initiated • Capex of US$ 182 million • First i
Slide 9: El Tesoro – Operational performance
El Tesoro – Operational performance • Copper production increased 6% (vs H1 2004) 97.8 97.0 92.4 – Metallurgical recoveries improved to 82%, from 78% in H1 2004 84.3 58.9 58.9 52.4 – Plant throughput up 2% 40.8 42.4 49.9 – Copper grades maintained 1.50% 1.46% 1.35% 1.37% • Cash costs affected by1: c
Slide 10: El Tesoro Financial update
El Tesoro Financial update • EBITDA of US$ 110.8m (34% above 2004 H1) 2005 H1 2004 H1 Sales volume (000 tonnes) 50.6 47.1 Ç 7% Realised price (c/lb) 157.9 131.2 Ç 20% Cash cost (c/lb) 58.9 50.5 Ç 17% • Total debt reduced to US$ 74m (from US$ 112m in December 2004) 10
Slide 11: El Tesoro Outlook and targets 2005
El Tesoro Outlook and targets 2005 • Production target of 97,000 tonnes • Cash costs expected to increase to 65 c/lb • Plant optimisation to 10.5 million tonnes per year nearly completed, with start-up expected in Q4 11
Slide 12: Michilla – operational and financial review
Michilla – operational and financial review • Copper production down 4% (vs H1 2004) 52.0 52.7 50.0 46.0 – Operational difficulties in the open pit and underground mine 112 112.2 – Lower than expected copper grades 85.6 69.8 61.4 • Cash costs affected by1 c/lb 1.39% 1.25% 1.11% 1.04% • Stripping rat
Slide 13: Michilla – Outlook and targets
Michilla – Outlook and targets • 2005: 46,000 tonnes at 116 c/lb cash cost • US$ 10m exploration programme underway. Key targets will be explored in the following six months • Plant optimisation for separate treatment of sulphide and oxide ores has been completed. Metallurgical recoveries for sulphi
Slide 14: Esperanza Project
Esperanza Project • Pre-feasibility underway (US$ 15m) • 2.25 km exploration decline with 40% progress (to obtain metallurgical and geotechnical bulk samples) • 40,000 metres infill drilling campaign completed. • Comminution and flotation testwork initiated • Pre-feasibility completion expected in Q
Slide 15: Railway and other transport
Railway and other transport • Rail tonnages increased 4% El Abra Conchi • Total revenues of US$ 44.7 million*. Chuquicamata El Salvador Michilla Calama • EBITDA of US$ 19.8 million Sierra Gorda Mejillones Interacid Terminal El Tesoro • New contracts Lomas Bayas • Spence: 12 years, 400.000 tpa Antofa
Slide 16: Aguas de Antofagasta
Aguas de Antofagasta • Strong operational performance • Revenues of US$ 25.8 million • EBITDA of US$ 17.1 million • 3% growth in water volumes to 16.6 million m3 • Water losses reduced 1%, to 26% • Growth prospects • Spence: water supply for the operation will start in July 2006. In addition, water
Slide 17: Financial analysis
ANTOFAGASTA @ PLC Financial analysis 17
Slide 18: Profit after tax and minorities variances 2005 H1 vs 2004 H1
Profit after tax and minorities Variances 2005 H1 vs 2004 H1 US$m 600 1.5 0.5 11.5 500 312.1 1.5 52.8 400 367.5 111.3 300 207.5 200 100 0 June 2004 Mining Transport Water Share of Net interest Tax Minority June 2005 profit in and other interest associates 18
Slide 19: Cash flow 2005 H1
Cash flow 2005 H1 US$m 1800 767.1 1600 1400 191.5 75.0 1200 1,064.6 124.4 1000 881.4 114.3 79.8 1.1 800 600 400 200 0 Initial Cash Cash flow Income tax Net capex Group Minorities Change in Other Final cash from paid dividends dividend debt operations 19
Slide 20: Group debt (US$ million)
Group debt (US$ million) Consolidated debt 2000-2005 H1 Net cash 2005 H1 1,064.6 1096 1057 965 858 539.9 599 525 Total loans Total cash Net cash (debt) 2000 2001 2002 2003 2004 2005 H1 -524.7 20
Slide 21: Implementation of IFRS
Implementation of IFRS • 2005 H1 financials prepared under International Financial Reporting Standards (“IFRS”) • New requirement for all listed companies in the EU • 2004 comparatives restated • Limited impact on Antofagasta • Mark-to-market of provisionally priced sales • Mark-to-market of all der
Slide 22: Implementation of IFRS
Implementation of IFRS Pro forma Half year Half year Full year 30.06.05 30.06.04 31.12.04 US#039;m US#039;m US#039;m UK GAAP - profit after tax and minorities 388.3 222.3 558.3 Provisional sales - mark to market (17.7) (11.7) 12.0 Derivatives - mark to market (1.9) 4.3 6.2 Exchange taken to income statement
Slide 23: Market outlook
ANTOFAGASTA @ PLC Market outlook 23
Slide 24: Refined Copper Market Overview
Refined Copper Market Overview • Copper fundamentals remain strong. • Mine production during 1H-05 has been lower than during 2H-04. • The refined copper deficit turning into a balance has been delayed to the end of 2005. • Market Balance (´000 tonnes) 2004a 2005e (Bloomsbury –August 05) (850) (300)
Slide 25: Refined Copper Market Overview
Refined Copper Market Overview • Despite the recent increase, stocks remain at critical level. Visible Inventories LME+COMEX+SFE (¢/ l b) ('000 t onnes) 180 1, 600 160 1, 400 1, 200 140 1, 000 120 800 100 600 80 400 60 200 40 0 Jan-80 Jan-84 Jan-88 J an-92 Jan-96 Jan-00 Jan-04 I nvent or i es Copper
Slide 26: 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 –August 05) 7.0% 2.0% 5.5% • 2006 production growth could be based on optimistic projections. Mine Production Change 2004a 2005e 2006f (Bloomsbury
Slide 27: Copper Cathodes Market Outlook
Copper Cathodes Market Outlook • Cathode spot premiums have remained at a high level throughout 2005. - Currently at around US$ 80 per tonne. - Expected to continue at this level or higher during the balance of 2005. • Cathodes annual premium for 2006 is expected to be slightly below 2005 premium of
Slide 28: Copper Concentrates Market
Copper Concentrates Market • Terms are expected to improve in favour of producers. • Spot TC/RC’s reached an all time record high in 2Q05. • During 2005 Q3, spot terms have rapidly improved and should continue improving in favour of producers. • More smelting capacity is available. • No significant
Slide 29: Copper Concentrates Market
Copper Concentrates Market • Long term contract settlements • 2005 calendar benchmark – 85.5 & 8.5. • 2005 mid-year benchmark – 112.5 & 11.25 • Volume traded in mid-year contracts represent less than 15% of the world trade. • Los Pelambres does not have mid-year contracts • Expected reduction in the
Slide 30: Molybdenum Market Outlook
Molybdenum Market Outlook • Strong market in 2005 2002 2003 2004 2005 • Average market price (US$/lb) 3.7 5.3 16.2 32.5 (running average) • Prices supported by: • Supply limitations • Temporary closure of primary mines in China (representing cutbacks of approximately 5% of world production). • Deman
Slide 31: Backup
ANTOFAGASTA @ PLC Backup 31
Slide 32: Group structure
Group structure Mining Transport Water FCAB (Chile) – 100% Aguas de Antofagasta FCA (Bolivia) – 50% 100% El Tesoro – 61% Los Pelambres – 60% Michilla – 74% Listed on the London Stock Exchange (FTSE 100 since March 2004) Market capitalisation: US$ 5.2 billion at 9 Sep 2005, with a free float of 35% 3
Slide 33: Group Operations (2004 figures)
Group Operations (2004 figures) Copper mining Los Pelambres (60%) 350,600 tpy in concentrates El Tesoro (61%) 97,800 tpy of cathodes Michilla (74%) 50,000 tpy of cathodes Exploration programmes in Chile and Peru (CVRD) Transportation Chile (FCAB-100%) and Bolivia (FCA-50%) 4.5 million tons carried f
Slide 34: 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 34
Slide 35: 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 36: Growth record and cost base - mining
Growth record and cost base - mining Antofagasta payable copper and cash cost 498 461 472 445 351 55.4 39.2 38.8 38.9 36.4 61 24.3 1999 2000 2001 2002 2003 2004 Copper production (000 tonnes) Cash costs (c/lb) In 2004, Antofagasta was placed in the lowest 15% of the industry cost curve, with Los Pel
Slide 37: Growth record – railway
Growth record – railway Railway tonnages (million tons) 4.4 4.5 4.1 3.9 3.9 3.1 2.8 2.5 2.0 1.7 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 37
Slide 38: 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 38
Slide 39: Copper Market Data
Copper Market Data World Copper Consumption 1999 2000 2001 2002 2003 2004 (000 tonnes) North America 3,599 3,604 2,951 3,088 2,859 3,184 0% -18% 5% -7% 11% of which US 2,878 2,856 2,296 2,426 2,227 2,464 -1% -20% 6% -8% 11% South & Central America 489 527 536 410 493 549 8% 2% -24% 20% 11% Europe 4,
Slide 40: Copper Market Data
Copper Market Data Copper mine production (000 tonnes) 2000 2001 2002 2003 2004 South & central America 5,398 5,746 5,671 6,018 6,837 Chile 4,665 4,798 4,603 4,967 5,551 Peru 552 719 823 824 997 North America 2,414 2,324 2,002 1,982 2,167 USA 1,467 1,359 1,125 1,111 1,208 Canada 622 637 587 558 567
Slide 41: 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