Investor presentation: Merrill Lynch conference ... - Antofagasta plc

Investor PresentationMay 2006

CompanyOverview4

Group operationsTransportMiningWaterEl Tesoro – 61% owned Los Pelambres – 60% ownedMichilla – 74% owned• All mining operations in Chile• Accounts for approximately 10% of total copper production in Chile• Listed on the London Stock Exchange (Free float of 35%)- FTSE 100 since March 2004- Market capitalisation (28 April 2006): US$ 8.4 billionFCAB (Chile) – 100% ownedFCA (Bolivia) – 50% ownedAguas de Antofagasta100% owned5

Mining – production, cost and reserves• In 2005 Antofagasta cash cost was inthe lowest 30% of the copper industry• Los Pelambres cash cost wasnegative 17.1 c/lb, being among thelowest worldwide55.461Antofagasta payable copper and cash cost498445461 47246735139.2 38.8 38.9 36.424.313.91999 2000 2001 2002 2003 2004 2005Copper production('000 tonnes) Cash costs (c/lb)Reserves and additional resources at existing operations (at 31 Dec 2005)65.2%Reserves(million tonnes)Additionalresources(million tonnes)Totalresources(million tonnes)ReservesAdditional resources34.8%Pelambres 2,012 1,064 3,076Tesoro 123 56 180Michilla 32 36 68Total 2,168 1,156 3,3247

Financial strengthGroup EBITDA and Margin43%46%54%70%1,35768%1,674• EBITDA margin among thehighest in the mining industry• ROCE 2005 over 60%2833505242001 2002 2003 2004 2005EBITDA (US$m) EBITDA / Sales (%)Group total and net (debt) / cash852• Debt profile steadily declining• Project loans refinanced in 2004 tounsecured debt• Group in net cash position2792001 2002 2003 2004 2005(465)(603)(713) (662)(809)(858)(965)(1,057)Total debt (US$m)Net (debt)/cash (US$m)Note: 2001 – 2003 numbers are presented under UK GAAP and 2004 - 2005 numbers are presented under IFRS8

Financial strengthOrdinary dividends (cents/share) excluding special dividends28.035.039.0 40.0• Ordinary dividend steadilyincreased since 198019.322.010.211.5 12.0 12.81996 1997 1998 1999 2000 2001 2002 2003 2004 2005Ordinary dividend (cents/share)Special dividends (cents/share) paid2000 2001 2002 2003 2004 200518 10 - 111* 40 70• Special dividend paid inseveral years* Cash redemption value on demerger9

Mining business10

Los Pelambres – Performance93105111 113126 128• Plant throughput steadily increased since2000, offsetting the impact of lower grades0.98%1.05%0.91% 0.91%0.88%0.80%• Best safety record of the Chilean miningindustry for three consecutive years• ISO 14001 certification obtained in October20052000 2001 2002 2003 2004 2005Throughput (000 tonnes per day) Copper grade %299362325327351323• Cash cost among the lowest 15% of theworld– by2004)by-product credit of 91.8 c/lb in 2005 (45.8 c/lb in35.6 35.3 34.929.37.9• EBITDA up 32% in 2005 to US$1,420mand total debt reduced to US$396m (fromUS$477m in Dec 2004)-17.12000 2001 2002 2003 2004 2005Copper production (000 tonnes)Cash cost (c/lb)11

Los Pelambres – Outlook and targets• Production target for 2006:• Copper: 308,000 tonnes (Cu grade of 0.77% vs 0.80% in 2005)• Moly: : 10,800 tonnes (Mo(grade of 0.030%Mo grade of 0.030% vs 0.022% in 2005)• Moly price (US$/lb) 17 20 23Cash cost target (c/lb) 40 20 5Growth plans• Plant expansion to 140 ktpd initiated– Capex US$ 182 million– All key contracts assigned– Project expected to be completed on time by Q2 2007• Mauro tailing dam under construction, with 25%progress. Start-up expected by the end of 2007, tosupport the reserves of 2 bn tonnes• Exploration programme to identify additional deposits12

El Tesoro• Increasing copper production up to 2005despite declining copper gradesSince 2002:- plant throughput has increased on average by10% per year- 3% annual average increase of metallurgicalrecovery since 2002• 45–monthlabour agreement reached inAugust 2005• ISO 14001 certification obtained in April2005• EBITDA up 13% to US$203m and total debtreduced to US$56m in 2005 (fromUS$112m in Dec 2004)• Plant optimisation to 10.5 Mtpa completed,with start-up in January 200684.340.81.50%92.442.497.852.498.166.12002 2003 2004 2005Copper production (000 tonnes)Cash cost (c/lb)1.46%1.35%1.23%Copper grade %• Production target for 2006 of 91,600tonnes at 78 c/lb cash cost, 11 c/lbincrease due to:• Higher stripping ratio• Impact of lower production on unit costs13

Michilla• 2006: 41,900 tonnes at 127 c/lb cash cost(mainly due to lower production)• New mine plan to be completed this year, which mightresult in a reduced but sustainable copper productionlevel• Antofagasta Minerals is acquiring the Antucoyadeposit– Located 45 km north-east from Michilla– 322 Mtons @ 0.4% copper, with low stripping ratio– Antucoya is part of the same orebody as Buey Muerto,(138 Mtons @ 0.43% copper) controlled by Antofagasta– After completing geological and engineering studies, thecombined resource could extend the life of Michilla14

Transport business15

Railway and other transportNorthern ChileChile’s second region• Located in world’s largest copper mining regionMejillonesAntofagastaEl AbraChuquicamataMichillaSierraGordaInteracidTerminalLomas BayasEl SalvadorCalamaEl TesoroConchi• 2005 operational and financial data:– Rail volumes: 4.3 million tons (2004 – 4.5 million tons)– Total revenues of US$92.5m 1 and EBITDA of US$38.2m in 2005• 9% annual average growth rate on rail volumessince 1996, based on long term contracts with majormining clients 2AltoNorteAugustaVictoriaZaldivarEscondida• Growth prospects (35% increase in volumes overthe next 2 years- Spence: 450,000 tpa 12-year contract from January 2007- San Cristóbal (Bolivia): 630,000 tpa in the first five years. 17-year contract from April 2007- Escondida sulphide leach: 450,000 tpa in the first three years(from H2 2006), going up to 580,000 tpa(1) Represents third party revenues, stated after eliminating sales to Antofagasta’s mining division of US$8.8m (2004 – US$6.9m)(2) Codelco-ChuquicamataChuquicamata, Escondida, , El Abra, Zaldivar, Mantos Blancos, , Alto Norte, Tesoro, Michilla, Lomas Bayas16

Water business17

Aguas de AntofagastaNorthern ChileMichillaChile’s second regionTocopillaCalama• Strong operational performance in second year ofoperations in 2005– Revenues up 19.6% to US$ 53.7 million– EBITDA up 12.3% to US$ 33.9 million– Water volumes up 3% to 33.1 million m 3– Water losses reduced 3% in the last 2 years, being nowclose to 26%MejillonesAntofagastaEl TesoroSan Pedrode Atacama• Process to fix new domestic tariffs for the next fiveyears will be completed by end May 2006– New tariffs will be applicable from July 2006• Growth prospects– Spence: 15-year contract from July 2006Taltal– Expected volumes of 4.7 million m 3 / year foroperations(14% growth in total current volumes)– Water is being provided for the construction period– Collahuasi expansion: Option agreement until 2008(15.8 million m 3 / year)18

Portfolio of other projects19

Esperanza Project• Updated drill inferred sulphide resource (unchanged 0.3%cut off grade)– 42% increase in copper resource– 70% measured and indicatedUpdatedPreviousCopper 786 Mt @ 0.53% 469 Mt @ 0.63%Gold0.20 g/t 0.27 g/tMolybdenum 0.012% -• Feasibility underway: US$ 16.8m budget (board approval obtained in March, 2006)– 2.25 km exploration decline with 85% progress, expected to be completed in June, 2 monthsahead of schedule (to obtain metallurgical and geotechnical bulk samples)– 10,000 metres drilling program for feasibility initiated and to be completed by July (to obtaingeotechnical information and infill drilling)– Comminution and flotation testwork: : 70% progress, with positive results– Selection of engineering company for feasibility study underway– Feasibility completion expected by the end 2006 – beginning 200720

Exploration – 2005 review and outlook2005 review• “Target-generation” generation” programme (announced in March 2005), was carried out duringthe year in Chile and Argentina– 20 targets reviewed in Chile and 3 in Argentina– 4 targets drilled– Programme will continue in 2006• Active search of early stage exploration projects in Latin America and Asia– Resulted in the takeover bid of Tethyan Copper Company (Reko(Diq project, Pakistan)Outlook• 2005-2009 2009 exploration programme initiated• Focus in copper and copper-gold porphyries• 2006 budget: US$ 11m for exploration in Chile, Latin America and rest of the world21

Tethyan Copper / Reko Diq• Tethyan Copper acquired the Reko Diq projectfrom BHP in 1999• Resource estimate (updated January 2006)• 2.4 billion tonnes @ 0.51% Copper and 0.27g/t Gold• Contains 12.3 million tonnes of copper and 20.9 millionounces of gold• Antofagasta announced a revised 100% takeoverbid in March at A$1.40/share (approximatelyUS$160m for 100% of the company)• Acceptances exceeded 90% on 28 April enablingAntofagasta to compulsorily acquire the remainingTethyan shares• Agreement to acquire BHP Billiton’s clawback rightover Tethyan’s mining assets for US$ 60m• Agreement with Barrick Gold to form a 50/50 jointventure22

Market outlook23

Copper Market OutlookStrong fundamentals keep supporting the high copper price(¢/ lb)3903402902401901409040('000 tonnes)1,6001,4001,2001,0008006004002000Jan-80 Jan-84 Jan-88 Jan-92 Jan-96 Jan-00 Jan-04LME+COMEX+SFEInventor iesCopper Pr ice• Inventories of refined copper remain very low at around 160,000 metric tonnes24

Copper Market Outlook• Demand is expected to recover during 2006 as re-stocking takes placeGlobal Demand Change2004a2005e2006f(Bloomsbury – March 06) 7.2% (0.3%) 5.6%– During 2005 there was no growth in world apparent consumption due e to de-stocking• 2006 production growth could be based on optimistic projectionsMine Production Change2004a2005e2006f(Bloomsbury – March 06) 4.2% 3.0% 6.7%– The risk of supply-side side disruptions remains• Most analysts agree that the refined copper balance will not move e from deficit to surplusuntil the second half of 2006, with risk on the downsideMarket Balance (´000 tonnes)2004a2005e2006fBloomsbury April 06 (1,048) (306) (185)Brook Hunt April 06 (1,024) (192) 78CRU April 06 (831) (282) 6925

Copper Market Outlook• Macroeconomic forecasts also support commodity prices– Global industrial production is slowing down but still expected to be about 4.5%(down from 6% in 2005)– Although there is no clear trend in currency value, a weak dollar r is likely• Hedge & pension funds increasing investment in commodities as new w asset class– Commodity indexes continue to attract large capital inflows• Positive outlook for copper prices– Consensus forecast is around 245 c/lb for 2006 and over 220 c/lb for 2007– The uptrend of this prolonged bull run in the copper price may be reaching its peak but a collapsein prices is unlikely– Wide price volatility is expected26

Copper Cathodes Market OutlookInventories remain at critically low levels and supply is not reacting quicklyenough to cover the robust increase in demand• Supply disruptions and strong demand have moved forward the surplus of refined rcopper into 2H-06• Annual premium for 2006 in Europe was fixed at US$ 105 per tonne, , slightly below2005 premium of US$ 115 per tonne• Copper cathodes demand in Europe has exceeded expectations for the ttraditionalseasonal recovery during the second quarter– Regional deficit exacerbated by the lack of inventory in the European LME warehouses• Spot premiums have increased over the annual value– Currently over US$ 150 per tonne for prompt delivery in Europe27

Copper Concentrates Market OutlookMarket trend has changed and terms are quickly improving in favour ofproducers• Current supply-demand deficit is expected to remain during 2007 and 2008– Falling grades and production problems (Indonesia, Mexico, Chile, , etc) have anticipated themarket deficit to 1Q-06– Stocks accumulated during 2004 & 2005 are being rapidly consumed by smelters– More smelting capacity is available and utilisation rates have increased i– No significant additional production of concentrates is expected for 2006• Spot TC/RC’s have sharply decreased in line with the market deficit– TC/RC of 140 & 14 in Dec-05 have dropped to the current 75 &7.5 level• High risk of additional supply disruptions throughout 2006– Labor negotiations, shortage of spare parts and mine equipments, power shortages28

Copper Concentrates Market Outlook• Long term contract settlements– 2005 calendar benchmark (set Dec 04) – 85.5 & 8.5– 2005 mid-year benchmark (set Jun 05) – 112.5 & 11.25• Volume traded represents less than 15% of the world trade• Los Pelambres does not have mid-year contracts– 2006 calendar benchmark (set Dec 05) – 95 & 9.5• Lower TC & RCs are expected for 2006 mid-year and year-end end negotiations29

Molybdenum Market Outlook• Market expected to remain strong in 20062002 2003 2004 2005 2006Average price (US$/lb) 3.7 5.3 16.2 32323 (running average)• Prices supported by:– Demand continuing to grow at a rate of 4% or more• Chinese molybdenum consumption expected to continue growing at over o10% during 2006• Investment in the oil & gas sector accelerating with a higher molybdenum mintensity of use– Supply limitations• Stocks still remain at low levels• No significant increases in production from primary mines are expected and 2005 disruptions in primarymines in China are likely to continue during 2006• Production problems in secondary mines continue to affect the supply (strike at Grupo Mexico, lower gradesat Codelco)• Grade maximisation of molybdenum through “selective mining” by by-product bproducers is not expected toincrease from 2005 levels, and could be difficult to sustain over r a long time• General market consensus is that prices could remain at current levels and overUS$20/lb throughout the remainder of 200630

Backup31

Brief history• 1888 Antofagasta Railway incorporated and listed in London• 1979 Luksic Group acquires controlling interest and beginsinvesting in mining, financial and industrial sectors in Chile• 1996 Financial and industrial interests exchanged for 33.6%interest in Quiñenco• 1997 Development of large-scalemining projects commences• 2000 Start of low-costcopper production with Los Pelambres• 2003 Demerger of 33.6% interest in QuiñencoAcquisition of Aguas de Antofagasta32

Geographic location of operationsSouth AmericaNorthern ChileTransportand WaterEl TesoroCity ofAntofagastaMichillaLos Pelambres33

Financial highlights2005 2004 % changeRealised copper price 1 (c/lb) 185.2 140.2 32%Realised moly price 1 (US$/lb) 31.4 21.5 46%US$mUS$mRevenues 2 2,4451,942 26%EBITDA 1,6741,357 23%Profit before tax 1,536 1,199 28%Net earnings 725.8 579.5 25%(after tax and minorities)US$ centsUS$ centsEPS (US$ cents) 368.1 293.9 25%Total Dividend 110.0 79.0 39%(1) Determined by comparing revenues with sales volume(2) Revenues presented net of Treatment and Refining Charges (TC/RC’s) and Molybdenum roasting charges of US$ 193m(US$ 127.3m in 2004)34

Cash cost analysis 2004 – 2005 – 2006ELos Pelambres: Cash Cost 2004 7.9Increase in TC/RC's 11.1Increase in freight costs 0.2Exchange rate and local inflation 2.1Increase in energy, oil and others 1.7Lower ore grade 4.1Other cost increases 1.9Higher by-product credits (46.0)Los Pelambres: Cash Cost 2005 (17.1)Los Pelambres: Cash Cost 2005 (17.1)Increase in TC/RC's 4.3Increase in freight costs 2.9Exchange rate and local inflation 2.5Lower ore grade 1.7Other cost increases 1.6Lower by-product credits 44.2Los Pelambres: Cash Cost 2006E 40.1El Tesoro: Cash Cost 2004 52.4Exchange rate and Inflation 2.2Acid, fuel, energy and others input costs 3.9Higher stripping ratio 6.2Other cost increases 1.4El Tesoro: Cash Cost 2005 66.1El Tesoro: Cash Cost 2005 66.1Exchange rate and Inflation 2.8Acid, fuel, energy and others input costs (0.2)Higher stripping ratio 3.4Lower copper grades 4.8Other cost increases 1.3El Tesoro: Cash Cost 2006E 78.3Michilla: Cash Cost 2004 85.6Exchange rate and Inflation 3.6Increase in acid, fuel and shipments costs 4.7Higher stripping ratio 3.3Lower production (impact on unit costs) 6.6Increase in operating costs 14.9Michilla: Cash Cost 2005 118.8Michilla: Cash Cost 2005 118.8Exchange rate and Inflation 3.1Lower acid price and others (2.5)Lower production (impact on unit costs) 8.0Michilla: Cash Cost 2006E 127.435

Copper Market Data (Consumption)World Copper Consumption 1999 2000 2001 2002 2003 2004 2005('000 tonnes)North America 3,599 3,604 2,951 3,088 2,862 3,141 30420% -18% 5% -7% 10% -3%of which US 2,878 2,856 2,296 2,426 2,218 2,392 2,293-1% -20% 6% -9% 8% -4%South & Central America 489 527 536 410 493 534 5468% 2% -24% 20% 8% 2%Europe 4,185 4,381 4,276 4,070 3,932 4,078 3,9995% -2% -5% -3% 4% -2%of which West. Europe 3,812 4,002 3,854 3,676 3,580 3,710 3,6175% -4% -5% -3% 4% -3%CIS 238 270 378 451 511 694 77113% 40% 19% 13% 36% 11%Asia 5,375 5,993 6,031 6,610 7,231 7,953 8,22911% 1% 10% 9% 10% 3%of which China 1,540 1,900 2,256 2,557 3,056 3,463 3,75423% 19% 13% 20% 13% 8%of which Japan 1,293 1,349 1,145 1,164 1,202 1,279 1,2404% -15% 2% 3% 6% -3%Australasia 171 173 171 190 164 169 1711% -1% 11% -14% 3% 1%Africa 110 132 170 200 202 209 20920% 29% 18% 1% 3% 0%World Total 14,168 15,079 14,512 15,019 15,464 16,777 16,9676.4% -3.8% 3.5% 3.0% 8.5% 1.1%Source: CRU International Ltd, Jan 200636

Copper Market Data (Production)Copper mine production ('000 tonnes) 2000 2001 2002 2003 2004 2005South & central America 5,398 5,746 5,670 5,994 6,784 6,910Chile 4,665 4,798 4,600 4,942 5,477 5,537Peru 552 719 833 824 1,025 1,004North America 2,414 2,324 2,004 1,960 2,134 2,250USA 1,467 1,359 1,124 1,102 1,179 1,275Canada 622 637 589 545 566 581Asia 2,030 2,057 2,142 2,008 1,981 2,367China 595 587 568 604 690 725Indonesia 1,006 1,047 1,163 1,003 842 1,101CIS 1,132 1,171 1,247 1,252 1,270 1,293Russia 602 634 636 632 656 675Australasia 1,072 1,077 1,087 1,040 1,032 1,201Australia 869 871 875 844 858 1,010Central and east. Europe 569 590 619 615 642 596Africa 522 551 534 577 626 696Western Europe 247 239 228 227 256 244World Total 13,384 13,754 13,529 13,673 14,727 15,557Source: CRU International Ltd, Jan 200637

Antofagasta ContactsLondon(Antofagasta plc)Desmond O’Conor Chief Executive Officer (UK)Hussein Barma Chief Financial Officer (UK)Santiago de Chile(Antofagasta Minerals S.A.)Alejandro Rivera Vice-president ofCorporate Finance andDevelopmentSebastian Gil Manager – Corporate Financeand DevelopmentTel: +44 20 7808 0988Fax: +44 20 7808 0986E-mail: nwakefield@antofagasta.co.ukdoconor@antofagasta.co.ukhbarma@antofagasta.co.ukTel: +562 377 5145Fax: +562 377 5345E-mail: arivera@aminerals.clsgil@aminerals.clwww.antofagasta.co.uk38