Anglo American plc · LSE:AAL
Anglo American — Investor Presentation (March 2006)
59 slides from Anglo American's investor presentation, Mar 27, 2006
Slide 1: Overview of AngloBase Metals
Overview of AngloBase Metals 27 March 2006 1
Slide 2: Copper Assets
Copper Assets Collahuasi z Moly plant commissioned Mantos Blancos Los Bronces z Expansion under review z Cash cow Mantoverde z Consistent performer El Soldado z Pit extension project in progress Chagres z Smelter expansion project completed 2
Slide 3: Nickel / Niobium Assets
Nickel / Niobium Assets Loma de Niquel Barro Alto z Solid performance under difficult z FS nearing completion conditions Codemin Catalão z Codemin II project ramped up to capacity z Scalping project completed with increased production 3
Slide 4: Zinc / Mineral Sands Assets
Zinc / Mineral Sands Assets Lisheen z Bog Zone project completed Skorpion z Ramped up to capacity Namakwa Sands Black Mountain z Expansion project approved z Deeps shaft completed; gaining access to Deeps ore 4
Slide 5: Underlying Earnings (US$M)
5 Underlying Earnings (US$M) Ba $0 $200 $400 $600 $800 $1,000 $1,200 se M et al s 1,036 1,240 Fe rr ou s 476 757 Co al 357 Pl 724 at in um 240 2004 Di 483 am on ds 380 430 2005 M In on du st di 367 ria lM 296 in er al s 288 267 G ol d 139 105 AAplc Group Results
Slide 6: AngloBase Financial Results
AngloBase Financial Results Operating Profit EBITDA Underlying earnings ROCE 2,500 45% 40% 1,990 2,000 35% 1,625 1,678 Earnings (US$M) 30% 1,500 1,276 25% ROCE 1,240 1,036 20% 1,000 15% 569 500 10% 330 286 206 5% 133 69 0 0% 2002 2003 2004 2005 6
Slide 7: AngloBase Revenue
AngloBase Revenue Revenue by Commodity Revenue by Location Moly Niobium 4% 1% Other Brazil Ireland Mineral 3% 5% 4% Sands Namibia 5% 6% Venezuela Zinc 7% 10% South Africa Nickel 7% 11% Copper 66% Chile 71% Note: Other includes lead, gold, silver and acid 7
Slide 8: Rising Cost Pressures in 2005
Rising Cost Pressures in 2005 z CI cost savings of $38M limited the increase in direct costs to $69M z Total increase in costs of $351M over prior year $351M $189M $69M 400 350 300 250 200 150 100 50 0 37 56 161 37 (9) 32 14 24 FX Infl TC/RC Fuels Other Supplies Contracts & Other marketing Power con
Slide 9: Focus on Continuous Improvement
Focus on Continuous Improvement z Overall objective is to – Develop ingrained culture of Continuous Improvement at all levels across the Division – Involve all employees in generation and implementation of improvement ideas z How will we get there – Targets and Performance Measurement – Recognition
Slide 10: Safety
Safety z Last fatal incident – 28th September 2004 - 542 days fatality free – Zero mindset – Eliminate repeat incidents – Simple non-negotiable rules z LTIFR – 22% improvement 2004 to 2005 Fatalities LTIFR 25 0.7 20 0.6 Fatalities 15 LTIFR 0.5 10 21 0.4 5 9 6 6 0 0.3 2001 2002 2003 2004 2005 10
Slide 11: Sustainable Development
Sustainable Development z All operations ISO 14001 certified z 11 operations OHSAS 18001 certified – Skorpion Q2 2006 z 11 operations have completed SEAT - focus on developing the community forums and integrating SEAT learning into CEPs z Roll-out of Integrated Risk Management z Energy, water & CO2
Slide 12: Delivering Growth
AN aN Delivering Growth
Slide 13: Project Update
Project Update z Codemin II - Ramp up achieved in Q1 2005 z Collahuasi Moly plant - Completed 6 weeks ahead of schedule and under budget z Chagres expansion - Refurbishment/expansion shut-down successfully completed within schedule and budget z Skorpion - Sustainable ramp up to full production achie
Slide 14: Project Pipeline
Project Pipeline z Barro Alto - FS for 33ktpa project to be completed and US$1000M approval sought during 2006 z Los Bronces - Potential expansion to over 400ktpa, FS underway US$750M for completion in 2007, permit applications in process z Collahuasi - Potential debottlenecking to increase producti
Slide 15: Project Pipeline
Project Pipeline z Gamsberg - New discovery at Gamsberg East 40m @ 7.7%Zn US$1000M and 10g/tAg, further targets to be tested z Should all the foregoing projects be approved, AngloBase could - Increase nickel production by 120% - Increase copper production by 60% - Increase zinc production by 80% z O
Slide 16: Track Record of Delivery
Track Record of Delivery z Namakwa (S Africa) Greenfield Zircon/Ti slag 1995 – US$265M z Mantoverde (Chile) Greenfield Cu SX/EW 1997 – US$171M z Mantos Blancos (Chile) Brownfield Cu SX/EW 1997 – US$138M z Collahuasi (Chile) Greenfield Cu conc./SX/EW 1998 – US$1800M z Lisheen (Ireland) Greenfield Zn
Slide 17: Creating Options for Growth
Creating Options for Growth Options for Growth Acquisitions Technology Exploration z Intense competition for z Targeted programs z Focused approach assets – Dormant deposits – Active in 13 countries, z AngloBase analysis of – Safety & SD monitoring 6 others targets is ongoing – New metals – Range fr
Slide 18: Options for Growth – M&A
Options for Growth – M&A z Period 2000 – 2004 largely directed at re-structuring the portfolio z Strong multi-disciplinary Business Development teams z High scan rate z High turnover rate : some 10 - 20 valuations ongoing at any particular time ranging from detailed on-site due diligence to desktop
Slide 19: Options for Growth - Technology
Options for Growth - Technology z Available resources worldwide becoming more difficult (i.e. lower grade/higher cost/technically complex) z AngloBase maintains a team of experienced professionals (Jhb and Santiago) continually looking for technological edge as well as driving operational excellence
Slide 20: Options for Growth - Technology
Options for Growth - Technology z Dormant deposit monitoring z Ore upgrading / ore sorting z Microwave / radio frequency z Brine leaching (ARNi) z Bioleaching z Comminution z Energy efficient processing 20
Slide 21: Options for Growth - New Metals
Options for Growth - New Metals z Anglo Base is developing novel processes for Ti and Mg metal production z These light metals have significantly superior strength/mass ratios and corrosion resistant compared to Al and many grades of stainless steel z Current high production costs and security of qu
Slide 22: Options for Growth - Exploration
Options for Growth - Exploration 22
Slide 23: Options for Growth - Exploration
Options for Growth - Exploration 2006 Exploration Expenditure $50M Spend by Commodity Spend by Location Niobium Zinc South 1% 9% Copper America 23% 29% Technical Specialists North & Central America- Support Europe 20% 26% Nickel 40% Copper- gold 27% Africa-Asia- Pacific 25% 23
Slide 24: Options for Growth - Copper
Options for Growth - Copper Recent Successes z Additional drilled resources in Chile – Los Bronces 700Mt @ 0.8% Cu – El Soldado 70Mt @ 0.8% Cu z Further drilling at Boyongan, Philippines to extend known resource of 219Mt @ 0.81% Cu eq z Initial drilling in Mexico at Baja – 31m @ 0.96% Cu 24
Slide 25: Options for Growth - Nickel
Options for Growth - Nickel Recent Successes z Brazil – Advancing to resource definition at Jacare - estimate 430Mt @ 1.33% Ni – Pre-FS study underway at Morro Sem Bone – estimate 47Mt @ 1.76% Ni z Canada – Encouraging intersections at West Raglan and Goldbrook – Best intersection 7.8m @ 2.2% Ni, 1.
Slide 26: Options for Growth – Zinc & Niobium
Options for Growth – Zinc & Niobium Recent Successes z Economic intersections at Gamsberg East – 40m @ 7.7% Zn, 10g/t Ag – Further targets to be tested z Significant resource additions at Catalao, Brazil – 6Mt 1.5% Nb2O5 – 40Mt @ 11.5% P2O5 26
Slide 27: Skorpion Zinc
AN aN Skorpion Zinc
Slide 28: Overview of Skorpion Zinc
Overview of Skorpion Zinc z Zinc oxide/silicate/carbonate deposit z $450M investment z Open pit mine z New technology zinc refinery z 150ktpa low cost producer with a 15 year LOM 28
Slide 29: Location
AMERICAN Location Spiergebiet (Diamond Area) WROSH PINAH , i"
Slide 30: History of the Project
History of the Project October 2000 February 2003 30
Slide 31: Capital Cost
Capital Cost z Total capital cost $454M (N$3,178M) Other Civils etc 13% 10% Casting 3% Infrastructure EW 24% 14% Acid Plant Mining 6% 5% SX Leach 9% 16% 31
Slide 32: Project Management
Project Management z Project team led by owner appointed Project Manager z Project implementation statistics – Safety: LTIFR 0.38 – Peak manpower strength: 5000 – 62km of piping – 2,100 valves – 800 drives – 220 tanks – 75,000m3 concrete – 6,000t steel 32
Slide 33: Operating Costs
Operating Costs 70 2005 C1 Composite Costing 60 C1 cash costs (c/lb paid Zn) 50 40 Skorpion 30 20 10 0 0 20 40 60 80 100 Cumulative production (percentile) Source: Brook Hunt (except Skorpion – AngloBase) 33
Slide 34: Operating Costs
Operating Costs z YTD operating cost (C1) 30.1c/lb Zn Realisation Water 3% 3% Admin & overheads 20% Maintenance 18% Other reagents & consumables Power & fuel 9% 18% Sulphur Labour 11% 18% 34
Slide 35: Key Challenges Skorpion Faced
Key Challenges Skorpion Faced z Complex and variable mineralogy z Variable ore grades z Oxide ore could not be processed by flotation process used for conventional sulphides z Readily leachable by sulphuric acid but – Neutralisation could result in formation of silica gel (process fails!) – A number
Slide 36: Technology Development & Piloting
Technology Development & Piloting z Technology partners – Tecnicas Reunidas (SX) – Umicore Engineering (formerly Union Miniere) – Anglo Research Labs z Previous work all on bench scale – Process risk remained high z Pilot plant built at AR 1999 – 2000 – Significant process refinements 36
Slide 37: Technology Development & Piloting
Technology Development & Piloting z Further risk reduction through the construction of a training plant on site – Better understanding of total process and control – Further refinements to process design – Exposure of operating staff to the process – Development of control philosophies – Remains ava
Slide 38: New Technology for Zinc Processing
New Technology for Zinc Processing z Mild leaching with sulphuric acid z Solvent extraction (SX) of zinc (key process) z Zinc electrowinning/casting to ingot z SX is an excellent barrier to impurities (core advantage) z Well researched and piloted z Well trained operators 38
Slide 39: Skorpion Geology
Skorpion Geology z Reserves: 20Mt @ 11% Zn Primary ZnS LEGEND mineralisation ZnOx Ore > 4% Zn Limestone - Calcarenite Arkose (Volcaniclastic) SSS – Shear zone Banded siliciclastics – shale, quartzite schist Bimodal Volcanics – Bi schist, sericite schist, amphibolite 39
Slide 40: Skorpion Flowsheet
Skorpion Flowsheet Mining Crushing Leach & Solvent Milling Thickening Neutralisation Extraction Electrowinning BZS Filtration Casthouse Residue SHG Zinc 40
Slide 41: Mining
Mining z Average mining rate – 1.5Mtpa ROM ore – 7.5Mtpa waste – Average strip ratio 5:1 z 10m high benches z Conventional ANFO explosives z Limestone also mined from pit for use in refinery z Outsourced activities – Equipment maintenance and repair – Fuel and lubricants – Explosives – Management of
Slide 42: Mining
Mining z NPV Scheduler software used to optimise mining schedule z 180t class excavators z 90t payload trucks for hauling z $6M support fleet 42
Slide 43: Crushing and Milling
Crushing and Milling z Crushing – Primary (-125mm) – Secondary (-12mm) z Homogenising stockpile – Blending for consistent feed to the refinery z Milling (Ball mills) – 100% -500micron 43
Slide 44: Leaching and Neutralisation
Leaching and Neutralisation z Dissolution of zinc oxides to zinc sulphate using sulphuric acid z Neutralisation and precipitation of deleterious elements – Strict control of conditions to prevent formation of silica gel z Pregnant liquor purified with Zn dust to remove copper,cobalt, cadmium and nic
Slide 45: Solid Liquid Separation
Solid Liquid Separation z Thickeners to recover pregnant liquor solution z Filtration recovers re-acidified basic zinc sulphate (BZS) for re-processing z Bleed and effluent treatment to maintain water balance – Belt filtrate and PLS – Zn precipitated as BZS 45
Slide 46: Solvent Extraction
Solvent Extraction z Ore has high levels of halides z Solvent extraction process is an effective means to cater for chlorine and other impurities fluorine, calcium, copper z D2EHPA extractant is used – phosphoric acid based z Pregnant solution is upgraded in SX from 30g/l to 90g/l in loaded electrol
Slide 47: Electrowinning
Electrowinning z Zinc metal deposited from zinc sulphate solution on 3.6m2 aluminium cathodes Special care required to keep organics out of electrolyte z Oxygen released at the anodes combines with H+ and SO42- to form H2SO4 which is recycled to SX as spent electrolyte z High current efficiency and
Slide 48: Casting
Casting z Cathodes are fed into an induction furnace to produce molten Zn metal for casting z Designed for ingots: 25kg,1&2t SHG jumbo, 1&2t CGG jumbo z Alloys an option for the future z Dross removal – Metallic dross recycled to the furnace – Oxide dross recycled via the leach 48
Slide 49: Acid Plant
Acid Plant z Sulphur burning technology z 1,200tpd 98.5% H2SO4 acid z Emissions well below accepted norms z Produces steam (1,200tpd) used in the process 49
Slide 50: Tailings and Effluent Disposal
Tailings and Effluent Disposal z 1.5Mtpa tailings produced from vacuum belt filters z Consists of unleached gangue, gypsum, oxides, hydroxides z Effluent is disposed in HDPE lined evaporation ponds 50
Slide 51: Quality Zinc
Quality Zinc Elements ppm Pb 5 - 10 Al <1 Cu <5 Cd <1 Sn <1 Fe 5 - 10 Total impurities 20 - 25 51
Slide 52: People
People Project Phase z Acute skill shortage in Namibia z High requirement for expat skilled labour z Relationship with Namibian Govt. Departments excellent z Impact of construction industry strike and supplier liquidation Commissioning Phase z 600 employees – maximum 50 expats z Skills development a
Slide 53: People
People z Emphasis on skills development – Complement of 600 and a target of 50 expats maximum – Expect Namibians to progress up the ranks – 20 bursars in various tertiary institutions in South Africa z Investment in training plant z Training also took place in Belgium, Canada and South Africa z Mini
Slide 54: Sustainable Development
Sustainable Development z Skorpion lies within the Succulent Karoo biome – Variable weather and fragile desert environment – On the edge of the “Sperregebiet” – pristine wilderness z How has SD been applied to Skorpion? – Skorpion project was developed with closure in mind – Workers are bussed in an
Slide 55: Summary
AN aN Summary == ae
Slide 56: Key Successes
Key Successes z Skorpion project has ramped up to full capacity z Technology is working – Efficiently controlled chemistry – silica, ferric iron, aluminium – Electrolyte purity excellent z Zinc product exceeds LME specifications z Skorpion has integrated well into the Namibian context z Capable well
Slide 57: Ramp-Up Profile
Ramp-Up Profile Ramp-Up vs McNulty Curves 120% Series 1 = Mature technology, prior licenses, equipment similar to other ops, thorough piloting done, complete process development and eng 100% Series 2 = New technology, prototype equipment, severe process conditions 80% Design Production Series 3 = Se
Slide 58: Project Timing
Project Timing Skorpion production Zn price (nominal) Project Construction Production Design FS started approval started started capacity 110 16,000 100 14,000 Zn production (t) 90 Zn price (US$/lb) 12,000 80 10,000 70 8,000 60 6,000 50 40 4,000 30 2,000 20 - 9 Ja 0 Ja 1 Ja 2 Ja 3 Ja 4 Ja 5 9 0 01 0
Slide 59: Delivery
Delivery z Skorpion has been operating at or over design throughput of 150,000 tpa on a consistent basis for 10 months z At design throughput, a cash cost of 30c/lb is being achieved placing Skorpion at the lowest decile of the industry (and as predicted in the feasibility study) z Performance 2005