Slide 1: 2015 Results Presentation
2015 Results Presentation Diego Hernández – CEO IvánArriagada– Mining CEO Alfredo Atucha - CFO
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 2015 Overview Operations review Financial review Investment case and growth opportunities 3
Slide 4: 2015 Overview
NN 2015 Overview ANTOFAGASTA PLC = ey
Slide 5: Safety First Culture
Safety First Culture Safety Performance • Unacceptably, a fatality occurred at Michilla during the year Achieved 38% • Committed to zero fatalities 6 reduction in LTIFR • 38% improvement in injury rate 5 5 • New safety and occupational health model 4 3.2 being extended to contractors 3 2.6 2.1 2.0 1
Slide 6: 2015 Year's Highlights
2015 Year’s Highlights The Group’s position in a challenging environment • Strong balance sheet Position • Competitive operating cost position • Re-setting community engagement • Preserving growth projects Optimise our portfolio • Sale of water division Optimise • Bring Antucoya to full production •
Slide 7: 2015 overview: Reducing costs and building a platform for long-term growth
2015 overview Reducing costs and building a platform for long-term growth vs. 2014 2015(1) • Lower realised copper prices (24% decline), Revenue (34.0)% $3,394.6m disruptions to production in Q1 and heavy rains in the Atacama Desert in Q2 • Revenues declined and lower production lead to EBITDA (58.4
Slide 8: Investment Case: Responding to uncertain times
Investment Case Responding to uncertain times High quality Cost Capital Robust assets control discipline platform • Strong and growing • Focus on operating • Strong and flexible • Continuing to production efficiencies through balance sheet optimise mines innovation and • Large resource base • Manage
Slide 9: Copper market outlook
Copper market outlook • LME copper price averaged $2.50/lb 2015 (2014: $3.11/lb) • Price remains under pressure as mine supply grows modestly China • Small surpluses expected in 2016 and 2017 “New Normal” in China? • Market tightens from 2018 onwards o Consumption led economy • Cost curve pushed dow
Slide 10: Operations review and growth opportunities
Operations review and growth opportunities 10
Slide 11: Strategy
Strategy Existing core business • Constant focus on cost management and compliance • Delivery of production and cash cost guidance • Continue to get the best possible performance from existing assets • Proactive new approach with community and other stakeholders Organic & sustainable growth of the c
Slide 12: Operations overview
Operations overview Los Pelambres 2014 2015 Centinela 2014 2015 391,300t Cu 363,200t Cu 266,600t Cu 221,100t Cu C1 $1.18/lb C1 $1.23/lb C1 $1.63/lb C1 $1.85/lb Lower throughput due to harder Lower grade ore zone of the mine Throughput expansions progressing Highest molybdenum production since 2012 P
Slide 13: Growth opportunities
Growth opportunities Encuentro Centinela Second Antucoya(1) Oxides(1) Concentrator(3) Cu: 85ktpa(2) Cu: 50ktpa(2) Cu: 140ktpa(2) Capex:$1,900m Capex:$636m Capex:$2,700m 2016 2017 2018 2019 2020+ Centinela Centinela 105ktpd(1) Moly Plant(1) Los Pelambres Phase 1 Los Pelambres Phase 2 Cu: 10-12ktpa(2)
Slide 14: Zaldívar acquisition
Zaldívar acquisition • 50% from Barrick for $1.0 billion closed in Q4 2015, • Antofagasta operator of the mine • Rare opportunity to acquire good-quality copper asset in familiar jurisdiction • Production growth as grade increases • $15-20 million of synergies and cost savings targeted • Upside pote
Slide 15: Antucoya – ramp-up
Antucoya – ramp-up Delivering growth on budget • First cathode in Q3 2015 • Commissioning issues in the crushing circuits caused delay in ramp-up • Approximately 7m tonnes of crushed material on the leach pads as at 31 December 2015 • Reach design capacity by mid-2016 Antucoya Start of operation: 20
Slide 16: Centinela Mining District: Under construction
Centinela Mining District Under construction Centinela debottlenecking • Debottlenecking concentrates plant to increase throughput to 105 ktpd • Front-end completed in 2015 • Installation of tailing thickeners in 2016 Molybdenum plant • Construction underway • Completion in 2017 Encuentro Oxides • N
Slide 17: Centinela Mining District: Future development
Centinela Mining District Future development Centinela Second Concentrator • Planned 2nd concentrator 7 km from current facilities o Throughput: 90 ktpd o Annual production: • 140 kt copper • 150 koz gold • 3.0 kt molybdenum • Two-phase growth: o Phase 1 - 90 ktpd o Phase 2 - +50 ktpd • EIA submitte
Slide 18: Los Pelambres Incremental Expansion
Los Pelambres Incremental Expansion Phased development Phase 1 • Maximising throughput under existing permits • Throughput capacity to 190 ktpd + desalination plant • New grinding and flotation circuit to counter the increasing hardness of the ore • Estimated capex of $1.1 billion including desalina
Slide 19: Further growth opportunities: Beyond 2020
Further growth opportunities Beyond 2020 Twin Metals Minnesota Project • 2.4 billion tonne resource containing copper, nickel and PGMs • Optimising pre-feasibility study • Consolidated ownership of project • Advancing permitting process Exploration and evaluation • Chile and internationally • Reduce
Slide 20: 2015 Performance and Guidance
2015 Performance and Guidance Production and cost improvements to offset another challenging year Cu Au Mo $/lb 2015 Production 2015 Production 2015 Production 2015 Net Cash Cost 630,300 t 213,900 oz 10,100 t 1.50/lb 2016 Guidance 2016 Guidance 2016 Guidance 2016 Guidance 710,000 - 740,000 t 245,000
Slide 21: Financial review
Financial review 21
Slide 22: Weaker commodity price environment
Weaker commodity price environment Revenue declined by 34.0% Copper price o Mainly as a result of lower copper prices and sales volumes 340 300 o Lower gold price and volumes 260 o Lower realised moly price (> 50% lower), partly offset by 220 higher volumes 180 31 Dec 13 31 Dec 14 31 Dec 15 30 Jun 1
Slide 23: 2015 Unit cash costs
2015 Unit cash costs Cash costs before by-product credits ($/lb) - by operation ($0.02/lb) $1.83/lb 0.03 $1.81/lb (0.02) (0.02) (0.01) 2014FY Los Pelambres Centinela Michilla Zaldívar 2015FY Cash costs before by-product credits ($/lb) - by cost type ($0.02/lb) 0.02 $1.83/lb (0.07) 0.24 (0.11) $1.81/
Slide 24: EBITDA
EBITDA EBITDA FY 2015 vs FY 2014 ($m) 31.4% 26.2% EBITDA EBITDA Margin Margin $(1,250)m (1) EBITDA FY2015 vs FY2014 - Variance Analysis ($m) 2,141 433 66 891 (1) (5) (1,556) (187) 1. Results of continuing operations only 24
Slide 25: Net earnings
Net earnings Net earnings FY 2015 vs FY 2014 ($m) ($417)m 1,400 297 (1,250) 1,200 1,000 542 800 600 (1) 422 400 200 (28) 25 (3) 5 0 FY 2014 Tax Non-controlling EBITDA Depreciation and Finance costs Others FY 2015 interests amortisation 1. Results of continuing operations only 25
Slide 26: Operating cash flow
Operating cash flow Cash flow in period ($m) $(643)m 858 438 943 2,374 (127) (427) (38) (78) 1,732 (1,048) (973) (191) Net Cash/(Debt) Gross Basis 31 Dec 2015 Net Cash/(Debt) Attributable Basis 31 Dec 2015 2,000 1,732 (2,755) 2,000 1,411 (1,939) 1,000 1,000 (1,023) (525) 0 0 (1,000) (1,000) (2,000)
Slide 27: Operating cost savings
Operating cost savings 2015 2016 $246m of savings achieved $160m of savings targeted Mine Site Costs Corporate Costs Target Areas • $152m ($0.11/lb) of • $94m of Exploration & • Additional $160 million from mine site costs , +6% of savings Evaluation, and Corporate 2015 costs, already included in 20
Slide 28: Capital expenditures
Capital expenditures 2014 -2016 ($m) (1) ($597m) Sustaining capex Development Mine Development Others 1,800 $1,646m ($51m) 1,600 97 64 1,400 1,200 $1,049m $998m 1,000 38 63 1,086 47 800 265 600 678 403 400 200 399 270 283 0 2014 actual 2015 actual 2016 E Sustaining $566/tCu $431/tCu $414/tCu capex r
Slide 29: Investment case
Investment case 29
Slide 30: Investment Case: Responding to uncertain times
Investment Case Responding to uncertain times High quality Cost Capital Robust assets control discipline platform • Strong and growing • Focus on operating • Strong and flexible • Continuing to production efficiencies through balance sheet optimise mines innovation and • Large resource base • Manage
Slide 31: www.antofagasta.co.uk
g AND EBITDA iS FROM MINING “ 9, OF OUR REVENUE ER 519GBp- 2" wor ag "ANNUALAEPOFT \ m4 w Www.antofagasta.co.uk D» ANTOFAGASTA PLC