Antofagasta Plc · LSE:ANTO
Antofagasta — H1 2004 Earnings Presentation
29 slides from Antofagasta's earnings presentation, Sep 7, 2004
Slide 1: Results Presentation First Half 2004
Results Presentation First Half 2004 7 September 2004
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 – 2004 H1 (vs. 2003 H1)
Highlights – 2004 H1 (vs. 2003 H1) • Commodity prices LME copper price up 67% to 125.2 c/lb; Molybdenum price up 148% to US$11.40/lb • Group cash cost Reduced 17% to 31.2 c/lb (18.0 c/lb at Los Pelambres including by-product credits) • Copper production Increased 4.6% to 235,400 tonnes • Los Pelambr
Slide 4: Financial highlights
Financial highlights 2004 H1 2003 H1 % change Copper price1 (c/lb) 136.6 77.5 + 76% Moly price1 (US$/lb) 14.6 4.7 + 210% US$m US$m Revenues 819.8 471.9 + 74% EBITDA 524.6 218.6 + 140% ROCE (annualised) 40.4% 12.4% + 226% cents cents EPS 112.7 34.0 + 231% Interim dividend 15.0 11.0 + 36% (1) Realised
Slide 5: Update and Outlook First Half 2004
Update and Outlook First Half 2004 5
Slide 6: Los Pelambres – Operational performance
Los Pelambres – Operational performance 121 113 111 105 93 • Throughput increased after completion of plant upgrade in September 2003 1.05% • Production maintained despite lower grades 0.98% 0.91% 0.91% 0.88% 362 350 2000 2001 2002 2003 2004 H1 327 325 299 Throughput (000 tonnes per day) Copper grad
Slide 7: Los Pelambres Financial update
Los Pelambres Financial update • EBITDA of US$ 397.3m (149% above 2003 H1) 2004 H1 2003 H1 % change Copper sales (000 tonnes) 139.8 160.8 - 13% Realised price (c/lb) 141.8 77.6 + 83% Moly sales (000 tonnes) 3.7 3.8 + 3% Realised price (US$/lb) 14.6 4.7 + 210% Cash cost (c/lb) 18.0 31.5 + 43% (includ
Slide 8: Los Pelambres Outlook and targets
Los Pelambres Outlook and targets • Production targets increased for 2004 (payable) • Copper: 350,000 tonnes • Moly: 7,500 tonnes • Growth prospects • Environmental Impact Assessment (EIA) approved in March 2004: – Increase in mineable ore reserves to 2.1 billion tonnes (from 0.9 0.9 billion tonnes
Slide 9: El Tesoro – Operational performance
El Tesoro – Operational performance 46.9 46.9 45.5 • Plant throughput increased 14% (from 2003 H1) offseting the decrease in copper grades 50.5 43.8 41.0 • Copper production and metallurgical recoveries maintained despite lower grades 1.54% 1.38% 1.34% • Cash costs affected by 2003 H1 2003 H2 2004 H
Slide 10: El Tesoro Financial update
El Tesoro Financial update • EBITDA of US$ 83.5m (132% above 2003) 2004 H1 2003 H1 Sales volume (000 tonnes) 47.1 45.3 + 4% Realised price (c/lb) 132.0 77.6 + 70% Cash cost (c/lb) 50.5 41.0 + 23% • Principal repayments – US$15.7m in February, with further repayment of US$15.7m in August – Bank senio
Slide 11: El Tesoro Outlook and targets
El Tesoro Outlook and targets 96.0 92.4 • Production target for 2004 increased to 84.3 96,000 tonnes 53.0 42.4 40.8 • Cash cost: 53 c/lb 1.50% 1.46% 1.32% • Expand plant throughput rate to 9.7 million tonnes per year, to offset the decrease in copper grades 2002 2003 2004E Copper production (000 ton
Slide 12: Michilla – 2003 review
Michilla – 2003 review 28.3 • Lower copper production as result of 24.4 23.5 decreasing copper grades 84.7 • Partial offset achieved with 10% increase 69.9 69.7 in throughput (vs 2003 H1) 1.29% 1.21% 1.08% • Cash costs affected by • Grades 2003 H1 2003 H2 2004 H1 • Stronger Chilean peso Copper produ
Slide 13: Michilla – Outlook and targets
Michilla – Outlook and targets • 2004: 50,000 tonnes at 82 c/lb cash cost • Exploration plan to increase mine reserves and improve costs N NIA EFA ST TE TE E ES ES NCE PLANT LI s me LINCE Ta e ell us Mu Mitit a st Vi a en Bu PLANTA MICHILLA FLORIDA 13
Slide 14: Exploration in Chile
Exploration in Chile Esperanza • US$ 15m to complete pre-feasibility • 2.2 km exploration decline to obtain metallurgical and geotechnical bulk samples Conchi • 40,000 metres of additional drilling Michilla • Engineering studies including mine plan and environmental, plant and tailings design City o
Slide 15: Exploration in Peru
Exploration in Peru Cordillera de las Minas • 50-50 exploration joint venture with CVRD Peru • 3-year timeframe (since August 2002) • Target area of 60,000 sq kms • Drilling in progress Lima Cuzco 15
Slide 16: Railway and other transport
Railway and other transport • Rail tonnages maintained (2.1 million tons) El Abra Conchi Chuquicamata El Salvador • Total revenues of US$ 39.9 million*. Michilla Calama Sierra Gorda Mejillones • EBITDA of US$ 19.0 million Interacid Terminal El Tesoro Lomas Bayas • Growth prospects Antofagasta • Esco
Slide 17: Aguas de Antofagasta
Aguas de Antofagasta Northern • Serves the Second Region Chile • Operates facilities and water rights previously controlled by ESSAN (state-owned company) City of Michilla Antofagasta Tesoro • First six months of operation: • Revenues of US$ 22.1 million • EBITDA of US$ 14.1 million • 4.5% growth in
Slide 18: Financial analysis
ANTOFAGASTA @ PLC Financial analysis 18
Slide 19: Profit after tax and minorities Variances 2004 H1 vs 2003 H1
Profit after tax and minorities Variances 2004 H1 vs 2003 H1 US$m 400 287.1 8.1 10.4 350 4.8 300 52.4 222.3 250 200 93.3 150 67.2 100 50 0 2003 Mining Transport Water Net interest Tax Minority 2004 concession and other interest 19
Slide 20: Cash flow 2004 H1
Cash flow 2004 H1 US$m 800 517.3 4.5 600 31.2 491.3 112.9 47.1 18.8 7.2 400 195.7 200 0 Initial Cash Op. Cash Net interest Net capex Change in Group Minorities Tax and Final cash flow paid debt dividends dividend other 20
Slide 21: Group net debt (US$ million)
Group net debt (US$ million) Total debt Consolidated net debt 745.4 1096 1057 965 858 745 254.1 491.3 2000 2001 2002 2003 2004 H1 Total loans Total cash Net debt Jun 04 Jun 03 Net Debt Equity + Minority Interests = 0.17 0.45 21
Slide 22: Market outlook
ANTOFAGASTA @ PLC Market outlook 22
Slide 23: Market Overview
Market Overview • Strong fundamentals for copper • Overall inventories of refined copper remain very low • Growth in copper consumption remains strong • Mine production growth limited by capacity and investment • Significant supply-demand deficits expected for 2004 and 2005 • Positive outlook for co
Slide 24: Copper Market Overview
Copper Market Overview • Inventories (¢/ l b ) ('0 0 0 t o n n e s ) 180 1, 6 0 0 160 1, 4 0 0 1, 2 0 0 140 1, 0 0 0 120 800 100 600 80 400 60 200 40 0 Ene-80 Ene-84 Ene-88 Ene-92 Ene-96 Ene-00 Ene-04 Inve n t o r i e s Copper P r ice • Overall inventories of refined copper remain very low • Visible
Slide 25: Copper Market Overview
Copper Market Overview • Consumption - growth remains strong 2003A 2004E 2005E Global 3% 7+% 4% China 20% 9% 9-10% US (13%) 6% 3% Japan 2% 5% 3% • Supply / demand deficits expected (numbers in thousand tonnes) 2003A 2004E 2005E Main 3 market analysts (372) (884) (375) (CRU - Brook Hunt - Bloomsbury)
Slide 26: Copper Cathodes Market Outlook
Copper Cathodes Market Outlook • Strong fundamentals for cathode market • Supported by: - Low inventory levels in Europe and United States - High transportation costs • High current spot premia - Currently between US$ 90 to 110 per tonne - Expected to continue into 2005 H1 • Annual contract premia e
Slide 27: Copper Concentrates Market Outlook
Copper Concentrates Market Outlook • Spot terms have recovered in favour of the smelters • Fundamentals for TC/RCs • Increases in mine production mainly in form of concentrate • Delays in start-up of new capacity in India and Thailand • Reduced smelter capacity utilisation in China • High level of c
Slide 28: Molybdenum Market Outlook
Molybdenum Market Outlook • Very strong market in 2004 2002 2003 2004H1 • Average market price (US$/lb) 3.7 5.3 11.4 • Prices supported by: • Stainless steel production – currently growing at 6%, expected to continue at 4-5% in 2005-2006 • Non-metallurgical applications e.g. catalyst sector due to e
Slide 29: Antofagasta contacts
Antofagasta contacts London Santiago de Chile (Antofagasta plc) (Antofagasta Minerals S.A.) Philip Adeane Managing Director Jean-Paul Luksic Chief Executive Officer Hussein Barma Chief Financial Officer Alejandro Rivera Chief Financial Officer Sebastian Gil Head of Investor Relations Tel: +44 20 780