Slide 1: CAP Group Update Investors meeting
CAP Group Update Investors meeting Fernando Reitich President & CEO April, 2014
Slide 2: Agenda
Global industry update Financial performance Future prospects
Slide 3: Ownership structure
Ownership structure Source: CAP, March. 2014 2
Slide 4: Integrated operations
Integrated operations Mining Steel Steel processing • Production capacity: • Production: 0,7 Mt/y • Production capacity: 15 Mt/y • Nominal capacity: 1.45 400 kt/y • Only large-scale iron Mt/y • Leading steel ore producer in Chile • Focus on grinding processor in Chile • On track to reach 18 media, r
Slide 5: Los Colorados mine
= Se oe eee he Pox : TaN Bi tA ec SS -. ae ex" Los Colorados mine
Slide 6: Mining sites
Mining sites El Laco Punta Totoralillo Port CAP Mining has three Cerro Negro Norte different areas of operation in Desalination Plant Copiapó the north of Chile, Magnetite Plant located around the cities of: • La Serena • Vallenar • Copiapó Los Colorados Guacolda II Port Cities Vallenar Pellets Plan
Slide 7: Mining products
Mining products BF and DR Pellets (Fe 65% - 66%) Lumps (Fe 62%) Pellet Feed (Fe 67% - 68%) Fines (Fe 62%) 6
Slide 8: Mining property
Mining property Ranking 2012 Hectares in exploration concessions - Chile N° Company Hectares % 1 BHP Chile Inc. 2.219.500 12,38 2 Codelco 969.400 5,41 3 Antofagasta Minerals S.A. 736.800 4,11 4 Teck Exploraciones Mineras Chile Ltda. 728.600 4,07 5 CAP 609.400 3,4 Ranking 2012 Hectares in exploitatio
Slide 9: Resources and reserves of magnetite ore
Resources and reserves of magnetite ore As a result of continued successful exploration campaigns, iron ore resources have increased progressively over the years, reaching 6.350 million tons in 2013 Total Mineral Resources Mine / Deposit Reserves (2) (1) Mine Location Ton Grade (% Fe) Ton Grade (% F
Slide 10: Mining shipments and markets
Mining shipments and markets Shipments 14000,0 12.246 12.086 12000,0 11.469 10.145 10.213 10000,0 8000,0 Th. MT 7.251 6000,0 4000,0 2000,0 ,0 2008 2009 2010 2011 2012 2013 Shipments by markets and products (CY 2013) Self - fluxing DR H&L Lumps, 8% pellets, 14% Indonesia, pellets, 4% Sinter feed, 8%
Slide 11: Cash cost curve (2014)
Cash cost curve (2014) Global production cost • CAP Mining is a low cost producer of high grade magnetite concentrate • Mine depletion will lead to higher CAP demand for high grade pellet feed • Environmental and economic constraints support the increased need for magnetite concentrate Pellet feed g
Slide 12: Iron ore mining Cerro Negro Norte mine
Iron ore mining Cerro Negro Norte mine 11
Slide 13: Steel
Steel
Slide 14: Steel focus on long products only
Steel focus on long products only • Reorganization of the plant to produce 700 kt/y, operating with only one blast furnace • Strong adjustment in its industrial processes and workforce • Long products demand underpinned by domestic construction and mining sectors Shipments and prices 2.500 1.117 1.2
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Slide 16: Steel Processing
Steel Processing • Creates value-added solutions for the construction, industry and infrastructure sectors in Chile, Peru and Argentina • Chile is LATAM´s most intensive user of steel in construction • Main flat steel importer on the Pacific coast of South America Shipments and prices 1.300 600 1.25
Slide 17: Agenda
Company overview Financial performance Future prospects 16
Slide 18: Short-term growth in China
Short-term growth in China o GDP growth reached 7.7% in year 2013 o Growth lead by domestic demand should continue, even though fixed assets investment slows. o This divergent development will continue in 2014 Expect 7.5% YoY GDP growth in 2014 17
Slide 19: Demands of the chinese urbanization and development process
Demands of the chinese urbanization and development process 18
Slide 20: Iron ore quality evolution
Iron ore quality evolution • Crude iron ore grade is dropping • Mine depletion will lead to higher demand for high grade concentrates Production from key CISA Chinese iron ore producers (Mt) Magnetite concentrate 70 68 Average grade of hematite fines 66 (Pilbara, Australia) 64 62 60 58 56 1998 2000
Slide 21: Preference for higher quality iron ore
Preference for higher quality iron ore Relative price performance of ores of different grades SOURCE: Macquarie, commodities research 20
Slide 22: Global steel demand growth
Global steel demand growth o Global apparent finished steel demand will grow from 1.5 bn tons in 2014 to 1.7 bn tons by 2018 (implied 3% CAGR) (1) Other Developing includes CIS, MENA, Sub-Saharan Africa, Latin America, India, and Other Asia SOURCE: WSA; McKinsey Steel Demand Model Oliver Ramsbottom,
Slide 23: Global steel capacity utilization
Global steel capacity utilization • However, world capacity utilization has been below 80% for the last 5 years, tightening the margins of the steel production industry • Most of the excess capacity is concentrated in China. Current efforts to diminish this excess capacity have not yielded significa
Slide 24: Agenda
Company overview Global industry update Future prospects 23
Slide 25: CAP - Financial evolution
CAP - Financial evolution USD Million 2008 2009 2010 2011 2012 2013 Sales 1.972 1.375 1.994 2.787 2.470 2.297 EBITDA 534 128 740 1.184 764 708 EBITDA Margin 27,1% 9,3% 37,1% 42,5% 30,9% 30,8% Net Income 291 25 590 442 234 184(1) Cash 379 393 981 883 711 309 Gross Financial debt 880 907 1.001 628 719
Slide 26: EBITDA contribution by business
EBITDA contribution by business 100% 97% 98% 94% 94% 80% 77% 60% 40% 18% 20% 6% 6% 8% 5% 4% 0% 0% 2009 2010 2011 2012 2013 -3% -2% -2% -20% Iron Steel Steel Processing (1) EBITDA: Gross Margin – S&AE + Depreciation and Amortization + Dividends received in cash, over the last twelve months 25
Slide 27: Agenda
Company overview Global industry update Financial performance a —— 26
Slide 28: Mining – Future prospects
Mining – Future prospects El Laco Totoralillo Port Project Production Est. Capex CNN Mt MUS$ Desalination Plant Copiapó Magnetite Plant Magnetite Plant 1 Pf 110 Expansion 6,5 Pf 1.700 Tofo 13,5 Pf 2.900 Guacolda Port Los Colorados Vallenar Pellets Plant 6 Pf 1.600 Alcaparra Alcaparra Algarrobo 135 K
Slide 29: Future prospects - Tofo
Future prospects - Tofo 297 297 500 298 500 000 298 000 E E E E N Investment (E) : 1,700 – 2,900 MUS$ 6765000 • Greenfield N 6764500 N Production: 6.5-13,5 Mt/y of pellet feed 6764000 SIMBOLOGY S Waste 10≤Fe%<15 N 15≤Fe%<26 6763500 26≤Fe%<45 Stage: Conceptual engineering NIVEL 1110 Fe% ≥ 45 0 500 10
Slide 30: Future prospects - Alcaparra Iron/Copper
Future prospects - Alcaparra Iron/Copper Iron ore body Investment (E): 1,600 + 300 MUS$ Simbology Production: 6 Mt/y of pellet feed Topography 135 kt/y of copper concentrate Drilling Fe% ≥ 45 25 ≥ Fe% < 45 Stage: Advanced exploration 15 ≥ Fe% < 25 10 ≥ Fe% < 15 Exploratory metallurgy Núcleos Estéril
Slide 31: Future prospects – Colorados expansion
Future prospects – Colorados expansion Investment : 500 MUS$ • Brownfield Production: 4 Mt/y of fines Stage: Basic engineering Resources Volume Fe Actual final pit LEYENDA 2012 [Mt] [%] Topografía Nov-13 SIMBOLOGY Pit Final 2008 Measured 694 31,5 Actual level Pit Final 2013 Final pit Indicated 343 3
Slide 32: Future prospects - Infrastructure – Desalination plant
Future prospects - Infrastructure – Desalination plant Totoralillo Port Desalination Plant Phase 3 under discussion S/S Totoralillo with Pucobre: up to 130 l/s S/S CNN CNN Photovoltaic Plant Amanecer Solar CAP CNN Aqueduct 120 lt/s CAP transmission line Copiapó Cardones node Tierra Amarilla Aqueduct
Slide 33: Desalination plant
Desalination plant • Desalination Plant and CNN Aqueduct is operating from Feb 2014 and will provide 120 l/s to CNN • Tierra Amarilla Aqueduct will be completed in April 2014 and will transport: • 80 l/s to CMP´s magnetite plant • 170 l/s to Caserones mine • CAP (51%) / Mitsubishi (49%) • Capex: MUS
Slide 34: Future prospects - Infrastructure - Ports
Future prospects - Infrastructure - Ports CAP Ports Punta Totoralillo: Guayacán: • 29 km north of Caldera • Herradura bay, Coquimbo • Iron ore shipping • Iron ore shipping • 200,000 dwt • 165,000 dwt Guacolda II: Huachipato: • Located in Huasco City • Talcahuano bay • Iron ore shipping • Unloading c
Slide 35: Ports – Providing services to third parties
Ports – Providing services to third parties CAP Mining Totoralillo Port • Third-party iron ore loading and storage capacity at Totoralillo port is 3 Mt/y • Loaded tonnages: 2 Mt in 2013 and 2,5 Mt in 2014 • EBITDA generation: 20 MUS$ in 2013 and 22 MUS$ in 2014 • With the addition of 1 Mt/y of coppe
Slide 36: Future prospects - Infrastructure – Solar energy
Future prospects - Infrastructure – Solar energy Totoralillo Port Desalination Plant S/S Totoralillo S/S CNN CNN Photovoltaic Plant Amanecer Solar CAP CNN Aqueduct 120 lt/s CAP transmission line Copiapó Cardones node Tierra Amarilla Aqueduct Caserones 170 lt/s Magnetite Plant 80 lt/s 35
Slide 37: Solar energy
Solar energy • 100 MW Photovoltaic power plant fully committed to CAP (PPA) • Located nearby CNN Mine • CAP retains call option for up to 40% of the equity • Financial hedge • Compliance with NCRE law • Connected to a 142 km long 220 kv transmission line owned by CAP General view of the “Amanecer So
Slide 38: Agenda
Agenda 37
Slide 39: Summary
Summary • CAP Mining • On track for expansion of 50% production capacity to 18 Mt/y • Ample portfolio of future prospects based on abundant reserves; further expansion to be defined in 2014 • Global environmental and economic constraints support the growing need for CAP´s magnetite concentrate • CAP
Slide 40: Final remarks
Final remarks • CAP is advancing through sustainable development based on competitive advantages • Concurrently, cost reduction initiatives and productivity improvements will be at the center of management efforts • CAP Mining: operational improvements • CAP Steel: optimize raw materials and energy
Slide 41: CAP Group Update Investors meeting
CAP Group Update Investors meeting Fernando Reitich President & CEO April, 2014