Antofagasta Plc · LSE:ANTO
Antofagasta — H1 2000 Earnings Presentation
27 slides from Antofagasta's earnings presentation, Sep 5, 2000
Slide 1: Results presentation 2000 first half
Antofagasta plc Results presentation 2000 first half Jean- Jean-Paul Luksic Director & CEO Mining 5 September 2000 1
Slide 2: First half 2000 highlights
First half 2000 highlights • Copper production of 167,700 tons (1999 H1: 30,500 tons ) • Los Pelambres - completion test achieved and planned capacity exceeded • El Tesoro - construction 40% completed by June and over 50% by August • Michilla - mine life extended to 2007 • Exploration - encouraging
Slide 3: First half 2000 highlights
First half 2000 highlights 2000 H1 1999 H1 % Profit before tax 100.0 18.2 + 449% Operating cash flow 91.4 15.2 + 501% Earnings per share 36.4c 8.0c + 355% Interim dividend 3.25p 2.25p + 44% 3
Slide 4: Group Overview
ANTOFAGASTA PLC Group Overview
Slide 5: Group overview operations and ongoing projects
Group overview operations and ongoing projects 1. Michilla (74%) Northern 50,000 tpy Chile Copper cathodes 1 Antofagasta 2 3 2. Tesoro project (61%) 3. Railway (100%) 75,000 tpy 3.3 million Copper cathodes Tons carried 4. Los Pelambres (60%) Los Pelambres 4 300,000 tpy port Copper concentrates 5
Slide 6: 2000 first half Los Pelambres
2000 first half Los Pelambres • Completion test achieved – financial guarantees released • Design capacity of 85,000 tpd exceeded – July 90,000 tpd • First six months • 141,200 tons copper production • 35.4 c/lb average cash cost • US$ 54.6 million contribution to Group PBT of US$ 100m 6
Slide 7: 2000 first half El Tesoro
2000 first half El Tesoro • Construction on budget - 40% completed by June - over 50% by August • Life of mine extended from 18 to 21 years • First production expected on schedule in May 2001 7
Slide 8: 2000 first half Michilla
2000 first half Michilla • New mine plan - life of mine extended to 2007 • First six months • 26,500 tons total production • 59.4 c/lb average cash cost • Ongoing exploration program 8
Slide 9: 2000 first half Railway operations
2000 first half Railway operations • Chile • Tonnage carried increased 7% to 1.6 million tons • Revenues increased 10% • Expansions planned by major mining clients • Bolivia • Control acquired of Andino railway, which connects directly to group’s Chilean network 9
Slide 10: 2000 first half other investments
2000 first half other investments • Quiñenco S.A. (33.6%) – diversified industrial and financial group • Listed in Santiago and New York (LQ) • Market value of Antofagasta share US$ 329 million (August 29) • Book value of US$ 180 million for Antofagasta • Dividend of US$ 31.3 million received in May
Slide 11: Financial Analysis
Financial Analysis 4 ANTOFAGASTA PLC 11
Slide 12: Financial analysis Results 2000 first half
Financial analysis Results 2000 first half Mining Transport Investments 2000 H1 1999 H1 US$m US$m US$m Total Total US$m US$m Revenues 282.3 33.9 - 316.2 70.7 Operating profit 80.3 11.8 - 92.1 3.2 Profit before tax 55.9 12.7 31.4 100.0 18.2 Profit after tax and minorities 30.4 10.1 31.4 71.9 15.2 Ear
Slide 13: Financial analysis profit before tax – 2000 H1 vs 1999 H1
Financial analysis profit before tax – 2000 H1 vs 1999 H1 US$’m 140 25.8 120 87.7 0.2 3.9 100.0 100 (35.8) 80 60 40 18.2 20 0 1999 H1 Mining Railway Asset sales Quiñenco Net interest 2000 H1 PBT PBT 13
Slide 14: Financial analysis cash flow
Financial analysis cash flow Mining Transport Investments 2000 H1 1999 H1 Total Total US$m US$m US$m US$m US$m Operating profit 80.3 11.8 - 92.1 3.2 Depreciation and loss on disposals 54.3 3.2 - 57.5 11.0 Working capital movements (54.2) (4.0) - (58.2) 1.0 Operating cash flow 80.4 11.0 - 91.4 15.2 I
Slide 15: Financial analysis balance sheet
Financial analysis balance sheet Los El 2000 H1 1999 H1 Pelambres Tesoro Other Total Total US$m US$m US$m US$m US$m Cash and time deposits 43 79 222 344 292 Long and short term debt (977) (170) (16) (1,163) (693) Net (debt)/cash (934) (91) 206 (819) (401) Fixed assets and investments 1,410 164 412 1
Slide 16: Looking ahead
Looking ahead ANTOFAGASTA PLC 16
Slide 17: Looking ahead
Looking ahead • Low cost producer • Significant expansion capacity • High potential exploration areas • Strong financial position • Control of key risks • Growth at the right time 17
Slide 18: Low cost operations: cash cost curve
Looking ahead low cost operations Cash cost curve of the copper industry - 2000 100 90 80 70 Cash Cost (c/lb) 60 50 40 30 Antofagasta 20 10 0 0 2,000 4,000 6,000 8,000 10,000 12,000 000's tons fine copper Expected cash costs around 40 c/lb c/lb next five years 18
Slide 19: Looking ahead expansion capacity
Looking ahead expansion capacity • Los Pelambres Mine plan Total resource 1 bn tons 3 bn tons • Expansion alternatives under evaluation • Tesoro - new geological resources in surrounding area • Michilla - extensive unexplored mining properties 19
Slide 20: High potential exploration areas: Esperanza
Looking ahead high potential exploration areas Northern Chile Esperanza Esperanzacopper coppergold goldporphyry porphyry •• 150 150million milliontons tonssulphides sulphides Tesoro 0.81% 0.81%CuCu 0.46 0.46g/ton g/tonAu Au Antofagasta Esperanza •• 10 10million milliontons tonsoxides oxides 0.62% 0.
Slide 21: High potential exploration areas: Magistral and Cotabambas
Looking ahead high potential exploration areas Magistral Magistralcopper copper––moly molyskarn skarn •• Drilling Drillingphase phase22completed completed Magistral •• Group Groupcancanacquire acquire51% 51% Peru Antamina after after33years years Cuzco Cotabambas Cotabambas Cotabambas ••Copper Coppe
Slide 22: Looking ahead strong financial position
Looking ahead strong financial position • Increasing cash flow • Production increase to 425,000 tons in 2002 (1999 - 60,500 tons) tons) • Low cost operations • Decreasing leverage • Peak leverage of 0.7 in 2000 • Expected leverage below 0.3 in 2003 22
Slide 23: Looking ahead control of key risks
Looking ahead control of key risks • High level of demonstrated reserves • 91.5 % in Los Pelambres • 98.6 % in El Tesoro • Management experience - copper mining country • Commodity price risk - low cost operations • Long term sales contracts - mining and railway • Low risk customers • Long term labo
Slide 24: Growth at the right time
Looking ahead growth at the right time Production and copper price 100 400 95 90 300 85 cents / lb 000 tons 80 200 75 100 70 65 0 60 1998 1999 2000 E 2001 E 2002 E Production Avg Copper Price 24
Slide 25: Looking ahead growth at the right time
Looking ahead growth at the right time • World copper consumption growing • Estimated growth of 4.5% in 2000 and 3.5% in 2001 • Inventories declining - 40% decrease from peak in March • Key drivers • Continued growth in both US and Europe • Asian recovery • Positive outlook for copper prices • Curre
Slide 26: Antofagasta summary
Antofagasta summary • Consolidated position as a low cost copper producer • Proven experience in large scale operations • Significant expansion potential • Well positioned to benefit from an improving copper market 26
Slide 27: 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 Alejandro Rivera Chief Financial Officer Officer Tel: +44 20 7374 8091 Tel: +562 240 5068 (Jean-Paul Luks