Investor Presentation: Merrill Lynch Conference - Antofagasta plc

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Investor Presentation: Merrill Lynch Conference - Antofagasta plc

Bank of America Merrill Lynch2012 Global Metals, Mining and Steel Conference16 May 2012


Cautionary StatementThis presentation has been prepared by Antofagasta plc and consists of the slides for a written presentationconcerning Antofagasta plc. By reviewing and/or attending this presentation you agree to be bound by the followingconditions.This presentation includes forward-looking statements that express expectations of future events or results. Allstatements based on future expectations rather than on historical facts are forward-looking statements that involve anumber of risks and uncertainties, and the company cannot give assurance that such statements will prove to becorrect.Nothing in this presentation should be interpreted to mean that future earnings per share of Antofagasta plc willnecessarily match or exceed its historical published earnings per share.Certain statistical and other information about Antofagasta plc included in this presentation is sourced from publiclyavailable third party sources. Such information presents the views of those third parties and may not necessarilycorrespond to the views held by Antofagasta plc.This presentation is for information purposes only and does not constitute an offer to sell or the solicitation of an offerto buy shares in Antofagasta plc in any jurisdiction. Further it does not constitute a recommendation by Antofagastaplc or any other person to buy or sell shares in Antofagasta plc or any other securities.


Our business and strategy3. Growth beyondthe Core Business2. Organic &sustainable growth ofthe Core Business• Focused copper producer with high quality low-cost assetbase in Chile• Delivering on significant production growth1. Our existingCore Business• Additional low cost production offsetting industry costpressures to keep costs stable123• Los Pelambres• Esperanza• El Tesoro• Michilla• Centinela district• Los Pelambres district• Antucoya• Twin Metals• Reko Diq• Early-stage exploration• Energy• Consistent record of capital returns to shareholders• Major growth projects in existing core districts in Chile• Extensive exploration programme for longer-term Chileanand international growth• Social and environmental strategy to support strategic planlong term objectives3


Our existing Core Business


Realising strong production growthCopper production 2010 – 2012E (‘000 tonnes)34%80700906413(22)(2)52127 2 12010 Los Pelambres(412)El Tesoro(97)Michilla(42)Esperanza(90)2011 Los Pelambres(390)El Tesoro(100)Michilla(40)Esperanza(170)*2012EMolybdenum (‘000 tonnes)Gold (‘000 ounces)8.825%9.911.0700%197280*2010 2011 2012E352010 2011 2012E* Represents mid-point of initialforecast range of 160k-175k tonnesof copper for Esperanza and 270k-290k ounces of gold for Group.Current expectations are for 2012production to be at the low er end ofthese indicated ranges.5


Esperanza• Start-up of operations at the beginning of 2011, withsignificant progress in plant performance over thecourse of that year• During 2011 focus was on maximising general plantreliability and optimising the milling process1401201008060144.927.1114.153.365.372.476.559.170.461.7807060504030• Current focus on testing of ore hardness and theperformance of the tailings thickeners in addition tooverall reliability40200Q1 '11 Q2 '11 Q3 '11 Q4 '11 Q1 '12Throughput (‘000 tpd) Cash Cost (cents per pound)20100• 2012 forecasts:• 160,000 – 175,000 tonnes copper (2011 – 90,000 tonnes)and 240,000 – 260,000 ounces gold (2011 – 157,000ounces), currently expected to be at lower end of indicatedranges• Net cash costs: 55 – 65 c/lb• Reflects forecast plant throughput of 80,000 – 86,000tonnes per day6


Pricing environment and outlookLME Copper Price London Gold Price Molybdenum Price5004504003503002502002.0001.9001.8001.7001.6001.5001.4001.3001.2001.1001.0002019181716151413121110• Average LME copper price in 2012 Q1 of 377 c/lb (2011 Q4 – 340 c/lb)• Antofagasta’s average realised copper price in 2012 Q1 - 430 c/lb (2011 Q4 – 361 c/lb)o Reflected positive provisional pricing adjustments in both quarters• Copper inventories still at low levels with overall stocks nearly 10% below those reported at the beginning of 2011• Analysts forecast a deficit of about 200,000 tonnes for 2012 based on supply constraints and a reduction in theChinese demand growth rate• Price forecast consensus is 380 c/lb for 2012 and a similar level for 2013• Long term fundamentals remain healthy7


Weighted average cash cost including by-productcredits 2010 – 2012E (c/lb)Competitive and stable cost position104.013.16.5 3.4 3.2(5.0)(23.3)101.93.44.1 4.8(9.2)105.0201074%Esperanza on-sitecostsOthersTurnover (US$m), EBITDA (US$m)and EBITDA margin (%)56% 57%Exchange rate &inflation effectAcid costEnergy61% 60%6,076By-product credits &tolling charges2011400OthersPelambres decreasein gradeBy-product credits &tolling chargesEsperanza on-sitecosts2011 copper cost curve (ranked by C1)2012E2,8243,8273,3732,9632,7724,5773,6613002001,9001,6811002007 2008 2009 2010 2011EBITDA (US$m) Turnover (US$m) EBITDA/Turnover (%)00% 50%100%ESP MLP MET MIC Antofagasta-1008


Sustainability• Social and environmental strategy to support strategicplan long term objectives• High commitment to health and safety• 2011 LTIFR of 3.2 for Group and 2.1 for Mining Division (3.1 forChilean mining industry)• Solid labour relations• Labour agreements successfully reached at all four mines between2010-2011• Focus on sustainable environmental practices• For example use of sea-water at Michilla and Esperanza, also to beused at Antucoya• Development of long-term relationships with localcommunities• E.g. creation of the Los Pelambres Foundation in 2002 to supportlong-term development of the Choapa Valley beyond the life ofmining operations9


Consistently strong capital returnsDividends per share (cents) and payout ratio• Consistent record of capital returns toshareholders over several years109%• 2011 dividend of 44 cents per share representstotal distribution of US$434 million and a payoutratio of 35%35% 35% 35%35%100.041.051.024.014.08.6 9.0 9.416.0 20.02007 2008 2009 2010 2011o Payout ratio for the year of 35% of net earnings,consistent with recent yearso 2010 special (paid in June 2011) reflected thesuccessful completion of the two key growthprojects – the Los Pelambres expansion and theEsperanza mine development – in that yearOrdinary dividends Special dividends Payout ratio• 2012 marks initiation of Antucoya constructionand then other potential organic growth projects10


Growth Opportunities


Growth opportunitiesGroup exploration andevaluation expenditure (US$ m)300.0Mineral Resources(including ore reserves)(billion tonnes)13.4 13.7215.49.26.454.967.199.03.24.42008 2009 2010 2011 2012E2006 2007 2008 2009 2010 2011(The above mineral resources relates only to the Group’s subsidiaries anddo not include amounts relating to the Group’s joint venture at Reko Diq)Indicativeprojecttimeline12


Challenges for new projectsMining industry investment in Chile• Forecast investment in mining projects c. US$92 billion over next 8 years• Expected to increase production to 7.5 million tonnes by 2020 (2011 –5.2 million tonnes)• Challenges likely to include:Energyo65% increase in current mining sector electricity requirements,requiring capital investment of c. US$8 billionLabourooMore than 50% increase in current operational labour force requiredby 2020 compared with 2012 levelsWaterBy 2014 projects in construction will need 190,000 additional workersoExpect general industry move towards use of sea water13


Antucoya• Board approval for project in December 2011• Construction is expected mainly between 2012 and 2013with first production in the course of 2014• SX-EW operation with an annual cathode production ofapproximately 80,000 tonnes• Project capex of $1.7 billion• Estimated mine life of over 20 years• Environmental approvals received June 2011• Definitive agreements signed in April 2012 with Marubeni tobecome a 30% partner for a total consideration of US$350million with closing expected in 2012 H214


Centinela Mining District(formerly the Sierra Gorda District)15


Centinela Mining District(formerly the Sierra Gorda District)• Feasibility study for Telégrafo and Caracoles in progresso US$109 million expenditure programme approved in September 2011o Study expected to be completed in H1 2013• Telégrafo and Caracoles could each potentially support a 100ktpd plant -comparable to Esperanzao Telégrafo – potential for production from 2017o Caracoles sulphide – potential for initial production from oxides followed by sulphides• Continuing exploration and drilling programmeo Highly prospective area with only a fraction of the potential fully defined to date16


Los Pelambres• Total mineral resources of 6.0 billion tonnes@ 0.51% copper plus molybdenum and goldcreditsoExisting 26 year mine plan includes orereserves of 1.5 billion tonnes• Potential to more than double existingcapacity• Pre-feasibility study at a cost of just underUS$100 million now in progress• Key challenges likely to include watersupply, community engagement and tailingsdisposal17


Potential developmentprospects outside ChileTwin Metals project• 40% interest in Twin Metalsproject in Minnesota• Incorporation of propertiesformerly held by FranconiaMinerals Corp• Pre-feasibility studyinitiated in October 2011following completion ofconceptual studyEarly-stage earn-inagreements• Long-term optionalitythrough earn-inagreements with juniormining companies• Earn-ins in place in theAmericas, Europe, Africaand AustraliaReko Diq project• Joint venture with BarrickGold Corporation• Currently subject toarbitration proceedings withfederal and provincialgovernments of Pakistan18


Conclusion• Focused copper producer with high quality low-cost assetbase in Chile• Delivering on significant production growth• Additional low cost production offsetting industry costpressures to keep costs stable• Consistent record of capital returns to shareholders• Major growth projects in existing core districts in Chile• Exploration programme for longer-term Chilean andinternational growth19


Bank of America Merrill Lynch2012 Global Metals, Mining and Steel Conference16 May 2012


Brief History1888Antofagasta RailwayCompany incorporatedand listed in London1979Luksic Group acquirescontrolling interest andbegins investing inmining, financial andindustrial sectors in Chile1996Financial and industrialinterests exchanged for33.6% interest inQuiñenco1997Development of largescalemining projectscommences2000Start of low-cost copperproduction with LosPelambres2003Demerger of 33.6%interest in QuiñencoAcquisition of Aguas deAntofagasta2011• Early stage earn-inagreements inSweden, Turkey,Portugal, Namibiaand Canada• Incorporation ofFranconia assets inTwin MetalsMinnesota• Approval of Antucoyaproject and inclusionof Marubeni as apartner in the project2010• Commissioning of LosPelambres expansion• Nokomis: agreementwith Duluth Metals• Commissioning ofEsperanza• Early stage earn-inagreements in Alaskaand Australia2009• Esperanza ProjectFinance US$1.05bn• Los Pelambres expansionfinance US$750m• Early stage earn-inagreements in Europe,Africa and Latin America• Underground coalgasification prospect2008• Inclusion of Marubenias a partner inEsperanza and ElTesoro• Initiation of Esperanzaconstruction• Energía Andina S.A.,joint venture withENAP for geothermalopportunities2006• Acquisition ofexploration interests inPakistan• Acquisition ofEquatorial Mining toconsolidate control ofthe Sierra Gordadistrict21


OverviewLUKSICGROUP65%LSE-FREEFLOAT35%• FTSE 100 since March 2004• Market cap (04 May 2012): US$17.0bnTRANSPORTFCAB (Chile)FCA (Bolivia)Combined rail and roadtonnages of approx.8.3 million tons per yearMININGOperating assets (Chile)Los Pelambres – Esperanza – El Tesoro – Michilla• 700,000 tonnes of copper in concentrate and cathodes• 280,000 ounces of gold.• 11,000 tonnes of molybdenum in concentrateExploration and evaluation studies in Chile, the United States and Pakistan Earn-inagreements in Europe, Africa, the Americas and AustraliaWATERAguas de Antofagasta(Chile)Approx. 48 million m 3sold per year(Volumes represent 2012 forecasts)22


Geographical locationsOperations and exploration765328 911 1012131Chile:Operations, projectsand exploration234United KingdomRegistered office,LondonToronto OfficePeru Exploration411415171618567USA ExplorationTwin Metals: Agreementwith Duluth Metals Ltd.Canada ExplorationAgreement withRiversideResourcesUSA ExplorationPyramid – Agreement withFullmetals Minerals Ltd.89109Portugal ExplorationIberian Pyrite Belt:MoU with AVRUPASpain ExplorationLa Zarza: Agreement withOrmonde Mining plcFinland ExplorationAgreement withMagnus Minerals Limited11121314Sweden ExplorationJoint venture withEurasian MineralsTurkey ExplorationAgreement with StratexInternational PLCPakistan Project andExploration: Joint venturewith Barrick Gold in RekoDiqNamibia ExplorationAgreement with EisebExploration and Mining Ltdand Manica Minerals Ltd15161718Zambia ExplorationAgreement with ManicaMinerals LtdSouth AustraliaExploration Punt Hill:Agreement with Monax Ltd.Western Australia:Sipa Resources Ltd.Queensland, Australia:Agreement with ChalcophileResources Pty Ltd.23


Chile: Operations• Esperanza(160,000-,175000 tonnescopper and 240,000-260,000 ounces gold) *• El Tesoro(100,000 tonnes copper)• Michilla(40,000 tonnes copper)• Transport and WaterdivisionsChile: Projects andExplorationEnergía Andina S.A., jointventure with Origin forgeothermal opportunitiesMulpun project, undergroundcoal gasificationGeographical locationsChile• Los Pelambres(390,000 tonnes copper,11,000 tonnes moly and28,000 ounces gold)Volumes for each operation represent 2012 forecasts* Current expectations are for Esperanza 2012production to be at the low er end of the indicatedranges.AntucoyaExploration in CentinelaDistrictJoint venture with New Gold(Río Figueroa)Joint venture with Codelco(Cumbres)Hornitos thermoelectricalpower plantMichillaDistrictLos PelambresDistrictCentinelaDistrictRío FigueroaProject24


Financial highlights2011 2010 2011 vs 2010Turnover (US$m) 6,076 4,577 ▲ 33%EBITDA (US$m) 3,661 2,772 ▲ 32%Earnings per share before exceptional items (cents) 139.7 100.6 ▲ 39%Earnings per share (cents) 125.4 106.7 ▲ 18%Total dividends per share (cents) 44.0 116.0 ▼ (62%)Special dividends per share (cents) 24.0 100.0 ▼ (76%)Ordinary dividends per share (cents) 20.0 16.0 ▲ 25%25


EBITDA reconciliationEBITDA 2011 v/s 2010 – Variance analysis (US$ million)272591,019(10)(38)(387)(129)54(116) (9)23 3,6612,772151Copper RevenuesBy Product RevenuesMining CostsOthersUS$ 1,132 mUS$ 321 mUS$ (516) mUS$ (48) m26


Net income reconciliationNet income 2011 v/s 2010 – Variance analysis (US$ million)88927(160)(250) (3)1,052(194)(125)1,23727


Financial history74%Turnover (US$m), EBITDA (US$m) and EBITDAmargin (%)Capital expenditure (US$m)56% 57%61% 60%6,0761,1901,3351,3864,5772,8243,8273,3732,9632,7723,6617731,9001,6814662007 2008 2009 2010 2011EBITDA (US$m) Turnover (US$m) EBITDA/Turnover (%)2007 2008 2009 2010 2011Commodity prices and cash costsNet cash position (US$ million)3273593732,919267 2711,9471111291201371551,5961,3451,14032 8796 104 1022007 2008 2009 2010 20112007 2008 2009 2010 2011Realised copper price (c/lb) Pre-credit cash costs (c/lb) Cash Cost28


Cash flow 2011 (US$ million)3,553(32) (59) (115)(667)(741)(1,018)3,542(1,183)3,280Net cash position – Gross basis (US$ million)Net cash position – Attributable basis (US$ million)3,2803,0411,585(2,140)1,140(1,456)Cash balance Debt Net cash positionCash balance Debt Net cash position2010 Cash flow fromoperationsOtherNet interest,exchange andassociatedividendsChange in debtPurchase ofproperty, plant,equipment &intangiblesMinority interestdividendsIncome tax paidShareholdersdividends201129


Debt analysis (US$m)2,197 2,140494845(1)(4)297(100)2966255251,2251,27431/12/2010 Esperanza El Tesoro Other LosPelambres31/12/2011Esperanza Los Pelambres El Tesoro Other30


Effective tax rate29.2%3.3%0.4%0.1%30.8%0.1%(2.1%)4.1%6.3%6.5%6.1%20.1%16.8%31/12/2010Corporate tax(deferred andcurrent)Royalty Exchange rate Withholding tax31-12-2011Corporate tax (deferred and current) Royalty Withholding tax Exchange rate31


Production and realisedprices analysis – 2011Copper, molybdenum and gold productionRealised copper (c/lb), molybdenum (US$/lb)& gold price (oz/lb)Copper (‘000 tonnes)2009 2010 2011 2012ELos Pelambres 311.6 384.6 411.8 390Esperanza - - 90.1 170 *El Tesoro 90.2 95.3 97.1 100Michilla 40.6 41.2 41.6 40Group total 442.5 521.1 640.5 700Molybdenum (‘000 tonnes)Los Pelambres 7.8 8.8 9.9 11.0Gold (‘000 ounces)Los Pelambres 23.5 35.1 39.8 28Esperanza - - 157.1 252 *Group total 23.5 35.1 196.8 280.0Copper 2009 2010 2011Los Pelambres 286.8 371.7 371.1Esperanza - - 354.7El Tesoro 246.3 351.9 391.2Michilla 195.7 263.8 381.6LME price 234.2 342.0 399.7MolybdenumLos Pelambres 11.3 16.2 15.1Market price 11.1 15.7 15.5GoldLos Pelambres 1003.4 1,236.5 1,610.6Esperanza - - 1643.4Market price 973.5 1,226.3 1,572.0* Represents mid-point of initial forecast range of 160k-175 k tonnesof copper and 240k-260k ounces of gold. Current expectations arefor 2012 production to be at the lower end of these indicated ranges.32


Cash cost (c/lb)Cash cost analysis – 20112009 2010 2011 2012ELos Pelambres 80.4 79.3 78.3 90.0Esperanza - - 83.2 60.0 *El Tesoro 123.4 169.2 171.6 160.0Michilla 157.6 183.8 213.3 285.0Group weighted average net of byproducts96.3 104.0 101.9 105.0Group weighted average (beforededucting by products)120.3 137.3 155.2 165.0Los Pelambres cash cost (c/lb)2009 2010 2011 2012EOn-site and shipping 95.3 106.8 110.0 123.0Tolling charges 19.2 17.6 18.0 17.00Before by-product credits 114.5 124.4 128.0 140.0By-product credits (34.1) (45.1) (49.7) (50.0)After by-product credits 80.4 79.3 78.3 90.0Esperanza cash cost (c/lb)2011 2012EOn-site and shipping 219.4 178.0Tolling charges 15.5 17.00Before by-product credits 234.9 195.0 **By-product credits (151.7) (135.0)After by-product credits 83.2 60.0 ** Represents mid-point of estimated range of 55–65 cents per pound** Represents mid-point of estimated range of 190–200 cents per pound33


Cash cost analysis: 2010actual vs. 2011 actualEl TesoroLos Pelambrescents/lb2010 FY Actual 79.3Inflation effect 2.7Other costs 2.4Higher engineering cost 2.4Higher labour costs 2.1Increased transport and drilling contract costs 2.0Increased maintenance 1.8Stronger Chilean Peso exchange rate 1.2Higher steel balls costs 0.5Shipping costs (1.2)Higher production impact on unit costs (2.9)Lower energy consumption (7.8)Change in onsite and shipping costs 3.2Increase in tolling charges 0.4Increase in by-product credits (4.6)2011 FY Actual 78.32010 FY Actual 169.2Higher acid price and consumption 17.2Higher mine cost 11.5Stronger Chilean Peso exchange rate 3.2CobreNorte Royalty payment 1.2Higher production impact on unit costs (1.1)Energy (price and consumption) (1.3)Fuel (price and consumption) (1.5)Other costs (9.8)Variation of inventory (17.0)2011 FY Actual 171.6Michillacents/lb2010 FY Actual 183.8Incorporation of Aurora ore 9.6Higher acid price 8.7Stronger Chilean Peso exchange rate 5.4Higher energy price 3.9Other costs 1.92011 FY Actual 213.334


Cash cost analysis: 2011actual vs. 2012 forecastLos PelambresEl Tesorocents/lb2011 FY Actual 78.3Lower production impact on unit costs 7.3Inflation effect 2.3Other costs 1.7Shipping cost 0.9Higher energy cost 0.4Increased maintenance 0.4Change in onsite and shipping costs 13.0Decrease in tolling charges (1.0)Increase in by-product credits (0.3)2012 Forecast 90.0cents/lb2011 FY Actual 171.6Increased maintenance servicesEnergy (price and consumption)2.52.4Other costs 2.2Higher labour costs 1.3Weaked Chilean Peso exchange rate (0.5)CobreNorte Royalty payment (3.7)Variation of inventory (6.0)Lower acid cost (9.8)2012 Forecast 160.035


Cash cost analysis: 2011actual vs. 2012 forecastEsperanzaMichillacents/lb2011 FY Actual 83.2Variation of inventory 12.5Higher labour costs 3.7Other costs (0.4)Weaker Chilean Peso exchange rate (0.3)Increased maintenance (5.0)Fuel and lubricants (6.0)Lower energy cost (10.6)Lower services cost (12.8)Higher production impact on unit costs (22.5)Change in onsite and shipping costs (41.4)Increase in tolling charges 1.5Decrease in by-product credits 16.72012 Forecast 60.0cents/lb2011 FY Actual 213.3Higher strip ratio at Núcleo and Lince pits 27.8Higher cost of spent ore 20.7Higher labour costs 6.7Other costs 15.3Higher acid price 1.8Weaker Chilean Peso exchange rate (0.6)2012 Forecast 285.0Lower2012 For36


Cash operating cost 2011Los PelambresTolling charges,14%GroupExplosives &reagents, 3%Labour, 7%Energy, 9%Maintenance,14%EsperanzaEnergy, 20%Tolling charges,7%Sulphuric acid,5%Explosives &reagents, 3%Energy, 12%Shipping &Tolling charges,14%Fuel, 4%Steel millingballs, 6%Maintenance,10%Services, 14%Shipping , 8%Other, 21%Explosives &reagents, 5%Labour, 16%Maintenance, 8%Other, 15%Labour, 11%Other, 21%El TesoroFuel, 10%Steel millingballs, 6%Services, 8%Shipping , 5%Fuel, 6%Steel millingballs, 4%Services, 14%Fuel, 7%Labour, 11%Explosives &reagents, 3%Energy, 13%Explosives &reagents, 3%MichillaEnergy, 9%Sulphuric acid,25%Labour, 16%Sulphuric acid,12%Services, 18%Purchased ore,17%Other, 13%Maintenance,10%Services, 20%Commercial, 2%Other, 21%37


Market cost – recent trends400Exchange rate (CLP/USD)Inverted axis120WTI oil price (US$/barrel)4201104401004604805005202010 Av: 5102011 Av: 4839080702010 Av: 792011 Av: 95540Source: Central Bank of Chile5602009-12 2010-06 2010-12 2011-06 2011-1260Source: Bloomberg502009-12 2010-06 2010-12 2011-06 2011-12150140130Monthly prices of sulphuric acid(US$/tonnes – CIF Mejillones)250200Chilean central and northern grid spot energyprices (US$/MWh)Northern grids (NG)Central grids (CG)1201102011 Av: 1181502010 CG Av: 1352011 CG Av: 18210090802010 Av: 761002010 NG Av: 1212011 NG Av: 95705060Source: Chilean Custom – only imports502009-12 2010-06 2010-12 2011-06 2011-12Source: SIC & SING02009-12 2010-06 2010-12 2011-06 2011-1238


Realised pricesand mark-to-marketCopper price (US$ cents)(US cents/pound) 2008 2009 2010 2011400LME average copper price 315.3 234.2 342.0 399.7315342359373Realised copper price 266.7 270.6 359.3 372.6267 271234Effects on results (US$ million) 2008 2009 2010 2011Provisional pricing – copper (1) (582.0) 423.2 303.5 (286.2)Realised hedging gains (losses) – copper (2) 30.0 (65.8) (81.4) (15.1)Period end mark-to-market * (US$million)31 Dec200831 Dec200931 Dec201031 Dec2011Provisional pricing – copper (1) (258.2) 64.5 129.8 (14.1)2008 2009 2010 2011LME copper priceRealised copper priceHedge instruments – copper (2) 51.7 (77.8) (78.3) 58.9* Pre-tax and minorities(1) Provisional pricing: both actual realisations and mark-to-market arereflected in the income statement.(2) Hedge instruments: only actual realisations and ineffective hedges arereflected through the income statement. Unrealised mark-to-market foreffective hedges are reflected through reserves.39


Operations and projectsLos Pelambres• Open pit operation located in Chile’s Coquimbo Region,producing copper and molybdenum concentrates since2000• US$1 billion brownfield plant expansion completed during2010o Additional 90,000 tonnes annual copper production (first 15years annual average)• 2011 production and costso Copper – 411,800 tonneso Molybdenum – 9,900 tonneso Net cash costs 78.3 c/lb – pre-credit costs 128.0 c/lb• 2012 forecast production and costso Copper – 390,000 tonneso Molybdenum – 11,000 tonneso Net cash costs 90.0 c/lb – pre-credit costs 136.6 c/lb• Significant resource base could further enhance mine planin the future40


Operations and projectsEl Tesoro and MichillaSX-EW operations in Chile’s Antofagasta Region producingcopper cathodes• El Tesoro• Michillao 2011 production of 97,100 tonnes, and cash costs of 171.6 c/lbo 2012 forecast production of 100,000 tonnes, and cash costs of160 c/lbo Ore feed from Tesoro Central, Tesoro North-East and Run-of-Mine leachingo Mirador oxides being processed from H2 2011, increasingproduction to approximately 100,000 tonnes per annumbetween 2012 and 2014, reducing cash costs and extendingthe life of El Tesoro’s operation to 2022o 2011 production of 41,600 tonnes, and cash costs of 213.3 c/lbo 2012 forecast production of 40,000 tonnes, and cash costs of285 c/lbo Mine plan extended to 2015 during 2011 H1, with explorationplan to further extend mine life to 201841


Chile’s AntofagastaRegionTransport andWater businessesTocopillaEl AbraConchiTransportMejillonesAntof agastaChuquicamataMichillaInteracidTerminalSierraGordaLomas Bay asEl Salv adorCalamaEl TesoroEsperanzaGaby• 2011 total volumes - 8.3 million tons(rail volumes - 6.4 million tons;road volumes - 1.9 million tons)• 2011 revenue - US$179 millionAltoNorteAugustaVictoriaZaldiv ar• 2011 EBITDA - US$76 millionEscondidaWater• 2011 water volumes - 48.3 million m 3Rail stationCity / portMineOwned MineRail Network• 2011 revenue - US$115 million• 2011 EBITDA - US$74 million42


Exchange inventories (days of consumption)Price (cent/lb)Refined copper market3530252015105Copper price and exchange inventories2012RunningAverage01980 1983 1986 1989 1992 1995 1998 2001 2004 2007 2010Exchange inventories as days of consumption at the end of each year and at the end of Apr 2012Price in 2011 money (cents/lb) adjusted by USA PPI for industrial commoditiesSource: Reuters & Antofagasta Minerals450400350300250200150100500• During 2011, the annual average for copper was400 c/lb, historically the highest in nominalterms.• Even though Chinese demand growth isslowing down, it is doing so from a higherconsumption level. Representing around 40% ofthe copper demand, and with limited internalmine production, China will continue increasingits dependence from imported copper.• European copper consumption is facingdownside risks especially in the southerncountries, but the slowdown is in some waybeing compensated by a strengthening in theAmerican copper market.• Mine supply is expected to recover this yearfrom nearly nil growth in 2011. However lowergrades and several disruptions continue toconstrain the expected supply growth.• For 2012 most market analysts forecast adeficit of about 200,000 tonnes and an averageprice of around 380 c/lb.43


Market balance ('000 tonnes contained Cu)(Combined discount in cent/lb)Copper concentrates market• Deficit market in 2011 is expected to continueduring 2012, mainly supported by supplyconstraints that continue to impact the availabilityof concentrates.• Long-term market fundamentals are still strong.Market balance and termsSignificant additional smelting capacity in Chinaand India with limited and/or uncertain growth in40production from greenfield projects.70030• Annual negotiations between smelters and minershave concluded without the setting of one clearbenchmark.200-3002001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 201220100-10• Different TC/RC’s were settled depending on thecontractual conditions, the geographic area andthe quality of the concentrates. According tomarket reports, most of the agreements were-800-1,300Market balance ('000 tonnes contained Cu)Annual (calendar+mid-year) TC+RC+PP (combined in cent/lb)Spot TC/RC (combined in cent/lb)-20-30-40-50-60between 57/6 to 63.5/6.35.-1,800-70• Spot market getting tighter during 2012 withSource : Antofagasta Mineralscommercial discounts trending down and duringApril reaching the level of 20/2’s for high gradeand clean quality concentrates.44


Market balance (m lbs)Price (US$/lb)Molybdenum market• Supply & demand balance in surplusduring 2011 expected to continue this year.Molybdenum price and market balanceo Consumption growing at 4% worldwideo Low level of inventories605040Market balance (m lbs)Nominal price (US$/lb)40353025• Molybdenum price very steady aroundUS$ 14 per pound during the first monthsof 2012, similar to the level seen during2H-11.3020100-10-202012RunningAverage2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012201510Source : Antofagasta Minerals -1050-5• High marginal cost of production at primarymines limits the supply growth andprovides a support to prices.• Most of the large projects have (again)been delayed or postponed with limitedadditional supply in the short term.• For 2012 market consensus is for anaverage price of US$15 within the range ofUS$13 to US$18 per pound.45


Gold (US$/oz)End-use gold consumption (tonnes)US 10 year TIPS yieldGold market• Gold performed better than expected in 2011 due to stronginvestment demand and central bank purchases, littleresolution on the Euro zone crisis, and low global interest rates.In 2012 it has traded back to reach an average price ofUS$1,690 in Q1.• Demand for gold is supported by a diverse range of buyersfrom Indian and Chinese jewellers, electronics manufacturers inAsia, global dentistry and medicine sectors, to Central banksand retail investors.• Jewellery demand continues to be strong, especially in Indiaand China. Physical demand from those markets doubled eachyear since 2008.• Demand for bars and coins remains robust, especially in Asia• Many global central banks remain under allocated to gold andseek to diversify their USD reserves.• Continued weakening of US Dollar and Euro vs emergingcurrencies• Low volatility compared to the world’s commodities benchmark,makes gold an attractive asset for long-term allocations inportfolios.1,9251,8251,7251,6251,5251,4251,325Jan-114,5004,0003,5003,0002,5002,0001,5001,000Gold price and 5-year real ratesMar-11May-11Jul-11Gold (US$/oz)Sep-11Nov-11Jan-12Gold demandMar-12US 10 year TIPS yield-0.6-0.4-0.200.20.40.60.811.21.41.6500-2002 2003 2004 2005 2006 2007 2008 2009 2010 2011JewelleryTotal bar & coin demandIndustrial & dentalETF & similar products46


Reserves and resources(at 31 December 2011)Tonnage Copper MolybdenumGold Attributable Tonnage(millions of tonnes) (%) (%) (g/tonne) (millions of tonnes)2011 2010 2011 2010 2011 2010 2011 2010 2011 2010Ore ReservesGroup subsidiariesLos Pelambres (see note (a)) 1,479 1,433 0.62 0.64 0.02 0.02 0.03 0.03 887 860Esperanza Sulphides (see note (b)) 600 587 0.54 0.55 0.01 0.01 0.22 0.22 420 411El Tesoro (see note (c)) 228 233 0.58 0.62 - - - - 160 163Open pit, Tesoro North-East and Mirador 121 130 0.80 0.83 - - - - 85 91El Tesoro ROM (Esperanza Oxides) 107 102 0.32 0.35 - - - - 75 72Antucoya (see note (d)) 642 - 0.35 - - - - - 642 -Michilla (see note (e)) 12 6 1.28 1.53 - - - - 9 4Group Total 2,961 2,259 0.55 0.62 2,118 1,438Mineral Resources (including ore reserves)Group subsidiariesLos Pelambres (see note (a)) 6,006 5,818 0.51 0.53 0.01 0.01 0.03 0.04 3,604 3,491Esperanza Sulphides (see note (b)) 2,019 1,923 0.36 0.39 0.01 0.01 0.12 0.11 1,413 1,346El Tesoro (see note (c)) 260 276 0.58 0.59 - - - - 182 193Open pit, Tesoro North-East and Mirador 153 155 0.77 0.80 - - - - 107 108El Tesoro ROM (Esperanza Oxides) 108 121 0.32 0.33 - - - - 75 85Michilla (see note (d)) 67 56 1.57 1.78 - - - - 50 42Antucoya (see note (e)) 1,106 1,509 0.31 0.27 - - - - 1,106 1,509Telégrafo (see note (f)) 2,965 2,728 0.34 0.35 - - - - 2,076 1,910Oxides 64 51 0.21 0.21 - - - - 45 36Sulphides 2,901 2,677 0.34 0.36 0.01 0.01 0.11 0.10 2,031 1,874Caracoles (see note (h)) 1,301 1,129 0.41 0.45 - - - - 1,301 1,129Oxides 212 132 0.40 0.50 - - - - 212 132Sulphides 1,089 996 0.41 0.45 0.01 0.02 0.15 0.18 1,089 996Group Subsidiaries total 13,725 13,439 0.43 0.44 9,732 9,619Group Joint VenturesReko Diq (see note (i)) 5,868 5,868 0.41 0.41 - - 0.22 0.22 2,200 2,200Total Group 19,593 19,307 0.43 0.43 - - - - 11,933 11,82047


Safety statisticsLost TimeInjury Frequency Rate (LTIFR)All InjuryFrequency Rate (AIFR)Number of Fatalities2011 2010 2009 2008 2007 2006 2011 2010 2009 2008 2007 2006 2011 2010 2009 2008 2007 2006Chilean mining industry 3.1 3.6 4.0 5.8 5.9 5.8 n/a n/a n/a n/a n/a n/a 26.0 45 35 43 40 31Los Pelambres 1.8 0.9 1.3 1.3 1.7 2.3 4.6 2.6 3.6 6.6 5.3 7.5 - 2 4 – – –El Tesoro 2.1 0.5 1.7 2.0 1.2 2.2 5.6 4.6 6.0 6.6 13.1 19.4 - - 1 – – –Michilla 3.1 4.2 3.2 4.4 2.6 1.3 6.7 8.8 9.9 12.1 12.8 12.7 - - - – 1 1Esperanza 2.4 1.6 1.5 1.6 n/a n/a 16.8 14.7 15.0 8.2 n/a n/a - - - – n/a n/aAMSA including exploration 1.3 3.2 6.0 5.4 n/a n/a 24.9 13.6 23.0 13.1 – – - - - 1 n/a n/aMining 2.1 1.6 1.7 2.2 1.8 2.0 9.2 10.1 8.5 8.2 9.0 11.6 - 2 5 1 1 1FCAB 9.6 9.5 12.0 13.9 19.2 15.3 28.3 26.4 33.9 37.1 35.9 37.5 1.0 - - – – 3ADASA 5.5 5.6 7.0 11.5 8.6 9.1 8.2 22.4 16.8 21.6 28.7 29.9 - - - – – –Group 3.2 1.9 2.8 4.4 5.6 4.9 11.5 11.0 11.0 12.9 17.1 17.5 1 2 5 1 1 4Definitions:LTIFR – Number of accidents with lost time during the year per million hours worked.AIFR – Number of accidents with and without lost time during the year per million hours worked.Chilean mining industry source – Servicio Nacional de Geología y Minería. Comparative figures for 2009 have been updated to reflect the full year; 2010 full yearfigures have not yet been released by Servicio Nacional de Geología y Minería and therefore are not shown above.48


Antofagasta contactsLondon(Antofagasta plc)Santiago de Chile(Antofagasta Minerals S.A.)Desmond O’Conordoconor@antofagasta.co.ukAlejandro Riveraarivera@aminerals.clHussein BarmaPhilip Holdenhbarma@antofagasta.co.ukpholden@antofagasta.co.ukEduardo TagleLuis Eduardo Bravoetagle@aminerals.cllbravo@aminerals.clTel: (+44-20) 7808-0988Fax: (+44-20) 7808-0966Tel:: (+56-2) 798-7145Fax: (+56-2) 798-744549


Bank of America Merrill Lynch2012 Global Metals, Mining and Steel ConferenceMarch 2012

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