Slide 1: 2015 Interim Results Presentation
2015 Interim Results Presentation Diego Hernández – CEO, Antofagasta plc Iván Arriagada – CEO, Antofagasta Minerals Alfredo Atucha – CFO, Antofagasta plc 25 August 2015
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 H1 2015 overview Operational update and growth opportunities Financial review Investment case Questions 3 3
Slide 4: H1 2015 Overview
H1 2015 Overview Diego Hernández Centinela
Slide 5: Safety – safety first culture
Safety – safety first culture • Unacceptably, a fatality occurred at Safety Performance Michilla in H1 2015 • We are committed to zero fatalities 5 • Steady improvement in injury rate 3.2 2.6 • New safety and occupational health 2.1 1.9 model introduced 2 1.4 Focus on: 1 1 o Early identification of
Slide 6: H1 2015 review
H1 2015 review Position the Group in a challenging environment • Maintain our financial strength Position • Retain low operating cost position • Strong cash flows and margins Invest in our assets Invest • Focus on delivering Antucoya • Los Pelambres & Centinela operations back to normal • Advance gr
Slide 7: H1 2015 overview
H1 2015 overview vs. H1 2014 (%) H1 2015(1) • Lower realised copper prices, disruptions to Revenue (31.4) $1,785.9m production in Q1 • Shipments delayed over period end EBITDA margin (11.0)(2) 31.4% • Strong compared with FTSE 350 miners • Lower realised copper price and sales Net earnings (73.9) $8
Slide 8: Market environment and outlook
Market environment and outlook • LME copper price averaged $2.69/lb in HY • Market currently unsettled 2015 (HY 2014: $3.14/lb) • Approximately 500,000 tonnes of disruptions • Copper market largely in balance with small so far this year surplus now expected for 2015 • New copper mines encountering d
Slide 9: Strategy
Strategy 1 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 2 Organic & sustainable growth of t
Slide 10: Strategy in action
Strategy in action • January 2015 consolidated • June 2015 completed the sale • August 2015 announced the ownership of Twin Metals of Aguas de Antofagasta acquisition of stake in Project (ADASA) to Empresas Públicas Barrick’s Zaldívar mine de Medellín • Acquired all the shares of • 50/50 JV. Antofag
Slide 11: H1 2015 Operations Overview
H1 2015 Operations Overview Iván Arriagada Antucoya
Slide 12: H1 2015 operations' overview
(1) H1 2015 operations’ overview H1 2014 H1 2015 • H1 2015 production and cash costs impacted by lower Los Pelambres 196,600t Cu 169,400t Cu throughput due to protests in Q1 • New solar and coal PPA’s now providing some 35% of power C1 $1.21/lb C1 $1.36/lb • Adverse court ruling in Q1 2015 appealed
Slide 13: Growth pipeline
Growth pipeline • Focus remains on cost control and efficiency throughout the operations • Focus on higher-return, lower-risk brownfield debottlenecking / expansion projects • Progress greenfield projects steadily for future development Antucoya(1) Encuentro Centinela Second Oxides(2) Concentrator(3
Slide 14: Antucoya – first production Q3 2015
Antucoya – first production Q3 2015 Delivering growth on-budget • First production Q3 2015 • Commissioning issues in the secondary and tertiary crushing circuits. Rectification work underway • Approximately 725,000 tonnes of crushed New photo material on the stacked heap as at 30 June 2015 • Expecte
Slide 15: Zaldívar Acquisition
Zaldívar Acquisition • 50% from Barrick for $1.0 billion • Antofagasta to be operator • Earnings and cash flow accretive • Rare opportunity to acquire good quality copper asset ZALDĺVAR • Procurement and administrative synergies available • Upside potential through exploration of mine’s resources ZA
Slide 16: Centinela Mining District
Centinela Mining District Centinela debottlenecking • Debottlenecking concentrates plant to increase throughput to 105 ktpd (2014: 86 ktpd) • Project completion in late 2015 • Installation of tailing thickeners, crushing equipment, flotation cells and mining equipment • Moly plant construction under
Slide 17: Centinela Mining District - Encuentro Oxides
Centinela Mining District - Encuentro Oxides Next stage in development of Centinela District • Commence production late 2016 Oxides • First full year of production 2017 (8-yr mine life) Remaining oxides – • Provides feed for existing SX-EW plant mined with Sulphides • Exposes the sulphides below Sul
Slide 18: Los Pelambres Mining District
Los Pelambres Mining District Los Pelambres Incremental Expansion • Throughput expansion to 205 ktpd from current 175 ktpd • Utilise existing infrastructure • EIA baseline study underway • Feasibility study to be completed once EIA approved • Pre-feasibility capex estimate of $1.6 billion (including
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 & Evaluation • Prioritised exploration and evaluati
Slide 20: Cost saving initiatives
Cost saving initiatives • Reducing sustaining capex • Merged Esperanza and El Tesoro • Established common maintenance • Shared mining fleet & waste dumps Centinela Capex practices • Single vision for district • Lower capex estimate for Encuentro Oxides 2014 $80m achieved • Inventory categorisation •
Slide 21: The year
The year • Challenging start to the year Cu $/lb • Production performance improving 2014 Production 2014 Net Cash Cost • Strategic acquisitions and disposals 704,800t $1.43/lb • Copper still has strong fundamentals 2015 HY Actual 2015 HY Actual 303,400t $1.53/lb 2015 FY Guidance 2015 FY Guidance 665
Slide 22: Financial Review
Financial Review Alfredo Atucha Centinela
Slide 23: Weaker commodity price environment
Weaker commodity price environment LME Copper price • Revenue declined by 31.4% o Mainly as a result of lower copper prices and sales volumes o Lower gold price and volumes o Lower realised moly price (> 50% lower), partly offset by higher volumes Revenue HY 2015 vs HY 2014 ($m) Gold price $(816)m 2
Slide 24: Operating costs
Operating costs Operating costs HY 2015 vs HY 2014 ($m) $(284)m 1,508 (191) (24) (37) (32) 1,224 H1 2014 Cash operating costs Non-operatingnon- Operations’ costs Corporate and E&E Stock movement H1 2015 excluding TC/RCs operating costs Cash costs before by-product credits ($/lb) +$0.01/lb 0.27 0.02
Slide 25: EBITDA
EBITDA EBITDA HY 2015 vs HY 2014 ($m) 42.0% 31.4% EBITDA EBITDA Margin Margin $(532)m (1) 1,094 (409) (298) 242 37 (11) 562 (6) (8) (41) (38) 1. 25Restated to include results of continuing operations only 25
Slide 26: Net earnings
Net earnings Net earnings HY 2015 vs HY 2014 ($m) $(223)m 148 (532) 600 154 400 (1) 309 200 5 86 (11) 13 0 H1 2014 Tax Non-controlling EBITDA Depreciation and Finance costs Others H1 2015 interests amortisation • Net earnings reduced by lower EBITDA • Offset by lower taxes (due to lower profits) and
Slide 27: Resilient operating cash flow
Resilient operating cash flow Cash flow in period ($m) $845m 808 (191) 169 (97) 947 (78) (40) 3,220 (11) (662) 2,375 Net cash position 30 June 2015 ($m) Gross basis Attributable basis 3,220 (2,476) 2,785 (1,754 ) 1,031 744 Cash balance Debt Net cash Cash balance Debt Net cash 27 27
Slide 28: Capex
Capex Capex 2014 - 2016 ($m) $(281)m 1,800 $(350-500)m $1,581m 1,600 1,400 $1,300m 1,200 150 30 ~$800m - $950m Development 1,000 180 capex Development 800 350 $596m 500-650 capex 600 20 Development 91 112 280 400 capex 203 200 ~300 310 170 0 2014 actual H1 2015 actual 2015E 2016 Sustaining capex Ant
Slide 29: Investment Case
Investment Case Diego Hernández Los Pelambres
Slide 30: Investment case – steady, stable and secure
Investment case – steady, stable and secure High • Strong production, large resource base and long-life assets quality • Focus on two ‘world-class’ mining districts assets • Competitive cash costs • Focus on operating cost Cost • Project cost control control • Strong operating cash flows and margins
Slide 31: Questions
Questions Centinela