codelco update april 2013

7/29/2019 Codelco Update April 2013

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Copyrights 2010 by CODELCO-CHILE. All Rights Reserved.Copyrights 2011 CODELCO-CHILE. Todos los Derechos Reservados. Copyrights 2011 by CODELCO-CHILE. All Rights Reserved.

Codelco UpdateApril 2013


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Codelco Highlights

Development Plan & Outlook

Operating & Financial Review

Industry Overview


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Codelco Today

*: IIncludes 49% share in El Abra and 20% in Anglo American Sur.

Copper Reserves andResources(million tons)

Geological Resources 339,5

Mineral Resources 123,2

Reserves 63,6

2012 Financial Results(January-December)(million US$)

Pre-Tax Profit 7,518

EBITDA 9,531

EBITDA Margin 60,1%

Credit Rating

Moodys A1 Stable

S&P A Stable

Fitch A+ Stable

DBRS A Stable

2012 Production* (mft)

Copper 1,758 million

Molybdenum 20 thousands

World Largest Copper Producer: 10% of Market Share


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Smelted & RefinedCopper 83%

Concentrate 17%

- Cathodes 77%

- Anodes/Blister 6%

December 31, Sales Breakdown by Region (mft)December 31, 2012 Sales Breakdown by Product

December 31, 2012 Copper Sales Breakdown (mft)

US$ millions 2012 %

Copper 14,461 91.2%Molybdenum 544 3.4%

Other Products(anodic slimes,sulfuric acid, etc.)

856 5.4%

Total 15,860 100%

Source: Codelco

Well Diversified, Fully Integrated and Stable Operations

41%38%

19% 20%

18% 21%

10% 10%

11% 9%

1% 1%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2012 2011

China Asia (exc. China) Europe

North America South America Oceania


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Codelcos Highlights

Industry Overview




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310

325

340

355

370

385

400

350

400

450

500

550

600

650

700

750

800

850

900

950

Ene-2012 Mar-2012 May-2012 Jul-2012 Sep-2012 Nov-2012 Ene-2013 Mar-2013

2012 Copper Price and Stocks evolution link with globaleconomy

*: London, COMEX and Shanghai metal exchanges

Price

c/lb

Stocks* 000 mft

Stocks*

Spanish and Italian bondsfavorable sale Greater optimism

(Greece, USA, Eurozone).

Higher riskpremium in Spain

G20 provides US$ 450billion to the IMF

Spanish credit rating levelfalls to BBB

Slowdown in China Lower expected growth in

the US

ECB agrees to purchase unlimitedsovereign bonds US starts quantitative easing 3(QE3) China announces new investmentplans.

Negative or disappointing economic data(Japan, US, Eurozone and China) Increased risk aversion: US elections, the

Chinese Communist Party meetings and "tax

cliff" in the US Uncertainty regarding the Chinese dynamic

Copper Price

US: optimism over budget agreement Positive figures in China (corporateprofits, PI, sales) and US.(houses). Greece: adjustment agreements andfinancial aid. Spain: help to banks reduce risk.

Uncertaintydue to "taxcliff" in the US

US and China: betterprospects

US: Avoid much of the taxcliff

US: impaired indicatiors;uncertain on tax cuts. China: figures belowexpectations.

Eurozone: Lower growthexpectations; bailout deal toCyprus.

333

393


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Demand & Supply

Consumption Trend

Sources: CRU, Codelco

Copper Consumption Growth : China willkeep leading copper consumption growth in2013, expecting 6.2% expansion, followedby India and Brazil. Europe is expect todiminish its decrease to an unchangedposition. A positive sentiment world isexpected to lead consumption to a 3.6%growth

Main Copper Uses in China: 45% powergrid, 15% air conditioning, 7% electronics,7% transportation, 7% industry equipment,7% financing.

Copper New Uses Development: Newapplications due to its properties as

antibacterial, and environmentally friendlyare encouraging new growing markets everyday.

Diminishing Ore Grades and Lower ScaleProjects: Existing mine expansions justneutralized diminishing production without areal significant growth. New developmentsusually have a scale under 100k tons of copper per year

Capex and Operational Cost Escalation:Escalating projects and operational costs

have challenged both current and futureoperations delaying start up. Also, lack ofgoods and services impact negatively .

M&A Activities: Important loses throughM&A deals have changed the focus tomanage cost.

Community Issues:An increase in demandof communities and greater difficulty inobtaining permits create entry andexpansion barriers

Production Trend


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Tight Market Balance and Price Outlook

Sources: Codelco; Banks Projections: Consensus Economics, December 2012

c/lb000 tonnes

-100

0

100

200

300

400

500

-100

0

100

200

300

400

500

2013 2014 2015 2016 2017

Price

Balance

2013 2014 2015 2016 2017

ANZ 387 390 316 270 254Commonwealth Bank 373 369 354 331 267

Econ Intelligence Unit 389 413 381 371 362Euromonitor 376 405 417 418 414Macquarie 366 340 326 316 308Metal Bulletin Research 385 392 389 371

Royal Bank of Canada 375 366 309 371 279

Banks average 379 382 356 350 314

Market Balance Price Outlookc/lb

UPSIDE

Disruptions in existing mines

Delay in start up projects

DOWNSIDE

Uncertainty over global economy

Destocking strategy in Chinese stocksWeaker than expected demand in China Europe fails to stabilize its economy

Industry Challenges


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Codelcos Highlights

Industry Overview




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Santiago

Calama

C

H

I

L

E

Antofagasta

Mining Portfolio: 2012Production: 1,758 thousand tons in 2012 v/s 1,796 thousand tons in the same period 2011

Radomiro Tomic 24.3%*Production of Copper (ktpy) 428

Cash Cost 131Gabriela Mistral 7.6%*Production of Copper (ktpy) 133

Cash Cost 200

Salvador 3.6%*Production of Copper (ktpy) 63

Cash Cost 269 Andina 14.2%*

Production of Copper (ktpy) 250

Cash Cost 136

El Teniente 23.7%*Production of Copper (ktpy) 417

Cash Cost 129

Chuquicamata 20.3%*Production of Copper (ktpy) 356

Cash Cost 193

*: Share in Codelcos production

**: Proportional production since acquisition (4 months) and according toCodelcos share

***: Production reflects Codelcos share

El Abra*** 4.3%*Production of Copper (ktpy) 75

Cash Cost 207

Anglo American Sur** 2.0%*Production of Copper (ktpy) 36

Cash Cost 155


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Production v/s Ore Grade 2012

1,466

1,7021,689

1,735

1,647

0.77

0.79

0.84

0.80

0.73

0,68

0,73

0,78

0,83

0,88

0,93

0,98

500

700

900

1.100

1.300

1.500

1.700

1.900

2008 2009 2010 2011 2012

Codelco Production El Abra Production* AAS Production* Codelco Ore Grade

1,547

1,7821,760

1,796 1,758

*: Codelcos share


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Codelco Costs January - December 2012 v/s 2011

c/lb 2012 2011 Dif. (%)

Total Costs & Expenses 264.5 205.6 28.4

Net Cathode Cost (C3) 241.7 171.6 40.9

Direct Cash Cost (C1) 163.5 116.4 40.5

Main Increase Cost Drivers

Lower Production (scheduled decrease ore grade)

Increase in Inputs, Consumables and Maintenance (steel, tires, etc.)

Lower Molybdenum Price and Volume

Increase in Energy Price


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2012 Financial ResultsIFRS

2012 2011 2012/2011

Copper Production (thou. mft)(1)

1,758 1,796 (2.1)%

Cash Cost (US/pound)(2)

163.5 116.4 40.5%

LME Copper price (US/pound) 360.6 399.7 (9.8)%

Metal Week Molybdenum price (US$/kg) 28.1 34.2 (17.8)%

Average Exchange Rate (US$/CLP) 486 484 0.4%

Total Sales $15,860 $17,515 (9.4)%

Gross Profit $5,009 $7,232 (30.7)%

Gross Margin 31.6% 41.3% (23.5)%

Adjusted EBITDA(3)

$9,531 $8,813 8.1%

Adjusted EBITDA Margin 60.1% 50.3% 19.5%

Financial Debt (Includes AAS acquisition debt)

(5)

$9,903 $7,049 40.5%Net Interest Expense

(4)$347 $250 38.8%

Capex (cash flow) $4,293 $2,682 60.1%

(US$ million)

1 Includes Codelcos share of El Abra and Anglo American Sur production

2 Cash cost is always relative to a metal and expressed per unit of production. Itincludes all cash expenses of production net of the revenues from other metals extracted that are not copper

3 Calculated as Net Profit plus Taxes (includes Export Tax), Finance Cost and Depreciations and Amortizations

4 Includes provsions and other financial expenses, net of swap effects

5 Includes Anglo American Sur acquisition debt for US$853.6million.


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Codelco Debt Profile December 2012*

Debt Maturities Schedule US$ million

133 134

688

500 500

600

10001150

1250

500 500

750

208

2013 2014 2015 2016 2019 2020 2021 2022 2025 2035 2036 2042

Local bonds International bonds

950

Bank Debt

*: Does not include Anglo American Sur acquisition debt (total debt of US$853.6 million )


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Industry Overview


Highlights


C d l A U d t d I t t Ch ll


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Codelco: An Unpresedented Investment Challenge2013 currency

Structural Mining Projects

Source Period 2013-2017, Preliminary Business Development Plan 2013.

Under construction In feasibility stage Feasibility studies completed and starting early works

2013Mina

Ministro Hales183,000 mft/yearCapex US$3.1 bn

2021Andina Phase II

(244)343,000 mft/yearCapex US$6.8 bn

2018Chuquicamata

Underground366,000 mft/yearCapex US$4.2 bn

2016-2017RadomiroTomic

Sulphides Phase II343,000 mft/yearCapex N/A

2017El Teniente New

Mine Level434,000 mft/yearCapex US$3.5 bn

Note: Projects production refers to first 10 years average production after ramp up.

Challenges 2013 per Project:

Achieve committed resultsand KPIs

Start detail engineering Continue the executionprogram and achievecommitted performance

Obtain execution stageapproval

Start detail engineering


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Major Projects and Copper Production Forecast000 tons

Source: 2013 Preliminary Business Development Plan

0

500

1.000

1.500

2.000

2.500

2012 2013 2014 2015 2016 2017 2018 2019 2020 2021

Chuquicamata

Radomiro Tomic

Ministro Hales

Salvador

Andina

El Teniente

Gaby

2013 2014 2015 2016 2017 2018 2019 2020 2021

RT Phase II

Quetena ChuquiUnder.

AndinaPhase II

(244)MH Open Pit

Inca OpenPit

Low OreGrade

Sulphides

New MineLevel


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This presentation has been prepared by Corporacin Nacional del Cobre de Chile (Codelco or the Company) This presentation does not constituteor form part of an offer or any solicitation to any other person or to the general public to subscribe for or otherwise acquire securities issued by Codelcoin any jurisdiction or an inducement to enter into investment activity, nor shall it (or any part of it) or the fact of its distribution or availability, form thebasis of, or be relied on in connection with, or act as any inducement to enter into, any contract or commitment or investment decision.The information contained in this independently presentation has not been verified and is subject to change without notice. No representation or

warranty express or implied is made as to and no reliance should be placed on, the fairness, accuracy, completeness or correctness of the informationor the opinions contained herein. None of the Company, any of its respective affiliates, advisers or representatives shall have any liability whatsoever (innegligence or otherwise) for any loss howsoever arising from any use of this presentation or its contents or otherwise arising in connection with thepresentation.This presentation is only for persons having professional experience in matters relating to investments and must not be acted or relied on by peoplewho are not relevant persons.This presentation includes forward-looking statements. These statements may include words such as anticipated, believe, intend, estimate,expect, preliminary and words of similar meaning. All statements other than statements of historical facts included in this presentation, including,without limitation, those regarding the Companys financial position, business strategy, plans and objectives of management for future operations(including development plans and objectives relating to the Companys products and services) are forward-looking statements. Such forward-lookingstatements involve known and unknown risks, uncertainties and other important factors that could cause the actual results, performance orachievements of the Company to be materially different from future results, performance or achievements expressed or implied by such forward lookingstatements. Such forward-looking statements are based on numerous assumptions regarding the Companys present and future business strategiesand the environment in which the Company will operate in the future. These forward-looking statements speak only as at the date of this presentation.The Company expressly disclaims any obligation or undertaking to disseminate any updates or revisions to any forward-looking statements containedherein to reflect any change in the Companys expectations with regard thereto or any change in events, conditions or circumstances on which any suchstatement is based.As is standard in the industry, CODELCO divides its mineral holdings into two categories, reserves and resources. Resources are ore bodies ofeconomic value that have been identified and evaluated through exploration, reconnaissance and sampling. Reserves are the portion of the resourcethat can be extracted based on an economic, environmental and technological analysis set forth in the mining plan. Reserves and resources are bothsubdivided further, based on the degree of knowledge that CODELCO has of their extent and composition. The system used by CODELCO for

categorizing mineral ore is widely used within the mining industry (and codified in such international regulations as the Joint One Reserves Committee(JORC) code of Australia, the South African Mineral Resources Committee (SAMREC), and the Reporting Code of Great Britain). Other systems ofcategorization are also used; one such system is that used by the U.S. Geological Survey. This presentation may not be taken away with you. Thecontents of this presentation may not be reproduced, redistributed or passed on, directly or indirectly, to any other person or published, in whole or inpart, for any purpose.

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codelco update april 2013

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