Antofagasta Plc · LSE:ANTO
Antofagasta — FY2016 Earnings Presentation
29 slides from Antofagasta's earnings presentation, Mar 14, 2017
Slide 1: 2016 FY Results Presentation
2016 FY Results Presentation 14th March 2017 Iván Arriagada – 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 Operating Financial Review & Guidance & Overview Overview Growth Investment Case Opportunities 3
Slide 4: Overview
, ANTOFAGASTA PLC <6 Kt NU PS | gf /u Overview
Slide 5: Safety First
Safety First • Regrettably two fatalities occurred during the Safety Performance year, one at Antucoya and one at the 5 40% reduction in transport division LTIFR • Committed to zero fatalities 2.5 2 2.0 2 • 40% improvement in injury rate since 2012 1.7 1 1 1.9 • New safety and occupational health mo
Slide 6: Framework for sustained value creation
Framework for sustained value creation Creating long Emphasis on Focus on cost term value Positioned for disciplined and operating through growth production reliability sustainability & innovation • Only profitable • Protect margins • Community • Positive copper production • Embedded Cost & engageme
Slide 7: 2016 – strong performance
2016 – strong performance Cu Production Revenue Net Cash Costs EBITDA 709,400t $3,622 million $1.20/lb $1,626 million ↑12.5% compared to last year ↑12.3% compared to last year ↓20.0% compared to last year ↑78.7% compared to last year EBITDA Margin (1) Capital Expenditure Earnings per Share (2) Divid
Slide 8: 2016 - a year of achievement
2016 - a year of achievement Los Centinela Antucoya Zaldívar Pelambres • New community • Completed installation of • Commercial production • Integration complete engagement model paste thickeners started • Higher copper recoveries • Resolved long standing • Approved EIA for Second • Ramp-up complete
Slide 9: Operations focus
Operations focus Los Pelambres Centinela • Next phase of community engagement around • Operate plant at 105ktpd growth • Smooth start up of • Plant reliability Encuentro Oxides and Moly projects • Advance Incremental Expansion project • Advance 2nd Concentrator Antucoya Zaldívar • Increase metallurg
Slide 10: Financial Overview
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Slide 11: Revenue - improving commodity price environment
Revenue - improving commodity price environment Revenue up 12.3% Copper price ($/lb) • Higher copper prices and sales volumes 3.4 o Michilla closed 3.0 o Antucoya sales since April 2016 2.6 o Achieved production guidance 2.2 $2.50/lb • Realised prices higher than average LME prices $2.21/lb 1.8 Dec
Slide 12: Unit cash costs - down significantly
Unit cash costs- down significantly Cash costs before by-product credits and C1 Cost ($/lb) - by operation ($0.27/lb) $1.81/lb $1.54/lb (0.08) $1.20/lb (0.18) (0.01) (0.34) 2015 Los Pelambres Centinela Other Companies (1) 2016 By product 2016 credits Cash costs before by-product credits and C1 Cost
Slide 13: Operating cost savings – target exceeded
Operating cost savings – target exceeded $519 million of total operating cost savings achieved since 2014 Operating Cost Savings of $242 million in 2016 Grade Decline Mine Site Costs E&E and Corporate Costs Between 2014 - 2016 grades fell by 12%, but gross cash costs fell by 16% $176 million saved i
Slide 14: Strong increase in EBITDA and EBITDA Margin
Strong increase in EBITDA and EBITDA Margin EBITDA(1) 2015 vs 2016 ($m) 44.9% 28.2% Margin(2) Margin(2) +$716m 71 58 6 15 $1,626m 244 (66) 92 296 $910m 2015 Copper By-products Mining costs Exploration & Corporate Associates & Others Transport 2016 Evaluation costs JV's 1. Results of continuing opera
Slide 15: Net earnings increased $347 million
Net earnings increased $347 million Net Earnings 2015 vs 2016 ($m) $347m 29 645 (11) (31) (159) 38 $342m (127) $158m (222) $(5)m (1) 2015 EBITDA D&A Associates Net finance Tax Non-controlling 2016 Discontinued (2) Exceptional (3) 2016 Continuing & JVs items interest before operations items operation
Slide 16: Capital Expenditure – fell by $254 million
Capital Expenditure – fell by $254 million Capital expenditure ($m) Others Mine Development $1,646 Sustaining Development 97 64 399 $1,049 38 $900 63 $795 50 270 36 340 304 1,086 178 240 678 277 270 Sustaining 2014 2015 2016 2017 E capex ratio $400-450/ ton Cu(1) $566/tCu $433/tCu $270/tCu $403/tCu
Slide 17: Cash flow
Cash flow Cash flow in period ($m) +$317m 1,522 214 (64) (32) (273) (260) 36 $2,049m $1,732m (795) (31) Cash on (1) EBITDA from Working Tax Net Net Div. non-controlling Capex Dividends Others Cash on (1) 1 Jan 2016 subsidiaries capital borrowing interest interest of to plc 31 Dec 2016 subsidiaries s
Slide 18: Strong Balance Sheet and liquidity
Strong Balance Sheet and liquidity Balance Sheet Net Cash/(Debt) Gross Basis ($m) 4,000 Cash Cash Debt Sub Debt Net Debt $2,375m $2,049m • Low Net Debt/EBITDA ratio 2,000 $1,732m • Low cost of funding 0 (1.6) • Well positioned compared to peers and other (1,024) (1,072) diversified miners (2,000) ($
Slide 19: Operating Review & Growth Opportunities
Operating Review & Growth Opportunities 19
Slide 20: Copper market - Medium and long-term price strength expected
Copper market - Medium and long-term price strength expected Observations Quarterly Annual & Spot TC (RC =TC/10 USc/lb) o China consumption growth estimated to continue at 120 approximately 3%pa 110 100 o This will lead to market deficit sooner than expected 90 80 o Reflationary environment positive
Slide 21: Chile – Supportive mining environment
Chile – Supportive mining environment Topics of interest Antofagasta Labour o Labour productivity compared to other Cost & Competitiveness Programme and established mining jurisdictions new operating model o Recent labour legislation changes do not address History of good labour relations labour pro
Slide 22: Capital allocation – drives decision making
Capital allocation – drives decision making 2016 Decision factors Operating Cash Flow $1,457m Copper • Stress test forecasts at various price copper prices Sustaining Capex & Free cash • Future free cash flow generation $482m Mine Development flow • Cash buffer • Upcoming capital expenditure 35% Cap
Slide 23: Phased growth opportunities
Phased growth opportunities Encuentro Oxides(1) Centinela Second Concentrator(4) Cu: 50ktpa(2) Cu: 140ktpa(2) Capex: $635m Capex: $2.7bn 2017 2018 2019 2020 2021+ Centinela Moly Plant(1) Los Pelambres Phase 1 Los Pelambres Phase 2 Incremental Expansion(1) Incremental Expansion(4) Mo: 2,400tpa(2) Cu:
Slide 24: Los Pelambres Incremental Expansion – FS complete
Los Pelambres Incremental Expansion – FS complete Location Overview • Development in two phases, with separate environmental studies: • Phase I (190ktpd): Desalination plant and a new grinding/concentrator line increasing Los Pelambres copper production and competitiveness to compensate for increase
Slide 25: Zaldívar – integration delivering improvements
Zaldívar – integration delivering improvements Synergies being achieved • Acquired 1 December 2015 (Antofagasta operator) • Well-maintained leaching, solvent extraction and Antofagasta Value Proposition electro-winning facilities with a capacity of 150ktpa • Experienced management team with strong o
Slide 26: Guidance & Investment Case
Guidance & Investment Case 26
Slide 27: 2017 guidance – continued cost control
2017 guidance – continued cost control Cu Au Mo C1 2017 Guidance (t) 2017 Guidance (oz) 2017 Guidance (t) 2017 Guidance ($/lb) 685,000 - 720,000 185,000 - 205,000 8,500 - 9,500 1.30 27
Slide 28: Investment Case
Investment Case High- Cash Cost Capital quality generation control discipline assets • Strong and growing • Cost and • Disciplined capital production Competitiveness allocation Programme • Large resource base • Strong and flexible • Technical innovation balance sheet • Low cost and long- life assets
Slide 29: www.antofagasta.co.uk
ANTOFAGASTA ISA, oo CHILEAN COPPER. {AND EBITDA ISRO MINING MINING | GROUP H OF OR REVENUE! w ww.antofagasta.co.uk DN ANTOFAGASTA PLC