Antofagasta plc

a CEO of Antofagasta. And here with me, we have our CFO, Mauricio Piz, whom you will know, and also our Vice President of Corporate Affairs and Sustainability, René Aguilar. So what we plan to do today is to follow the sort of usual format. We're going to provide additional color and comment on our results and our growth plans. And of course, then after the presentation, leave times for questions. So I ask that you look at this cautionary statement as it is important. Okay, so what we plan then is four main areas. We're going to address a number of topics that are closely linked to our purpose, which is developing mining for a better future, which is a purpose that is at the heart of our business model. We focus on a safe and responsible production of copper. We believe that we can create a more sustainable planet while generating value for all our stakeholders. This includes our workforce, our local communities, and our partners, as well as our shareholders all over the world. And successfully operating our long-life assets depends on positive relationship with all of these stakeholders. So this is the plan of topics that we're intending to cover. So I would like to here review our strategy. We have, I think, today announced a strong set of performance results across our portfolio of assets in 2023 with a lot of focus on cost control and strong margins, as you would have seen. We believe, as I've mentioned before, in the responsible production of copper, which enables us to operate safely and sustainably and continue to deliver both shareholder returns and disciplined growth. And as we will discuss in detail today, we feel this is now the right time to advance our growth ambitions with the world needing more and more copper to fuel the energy transition and structural deficits in supply beginning to emerge. So strong financial performance delivering on our results, continuing to commit to strong shareholder returns and positioning us for the next phase of disciplined growth. by sanctioning some of our key projects. Moving on, I think it is important that we take a moment to reflect on our safety performance in 2023, which I think is probably one of our records in terms of positive and favorable performance. As we sort of continue the journey that we've undertaken over the past 10 years, as health and safety is paramount in our industry and for us as a company. Throughout this period, we have taken steps across our business to ensure that our workforce understands the significance of safety with the right culture embedded in our organization. As a result, you can see our safety progress in the chart to the left with our performance relative to the wider mining sector. And on the right, we have highlighted a few important safety metrics, including another year of zero fatalities. We will continue to prioritize safety, recognizing that this is a key to operating a successful business model. In fact, I would say that from our four operations, three of them have completed almost nine years without a fatality. And therefore, that's the sort of performance that we want to continue to see. Now, turning to the numbers, we would like to point a few key highlights. We've announced that our EBITDA increased by 5% over the year. And through cost control, we have maintained our margins in line with last year at close to 50%. We have delivered a lot of the construction of the phase one expansion, which was completed last year. And we have also announced the approval of the Centinela Center concentrator, which will help us to drive the next phase of growth. Thanks to a strong performance and balance sheet, we remain committed to shareholder returns with a proposed final dividend of twenty four point three cents with a full year total equivalent to 50 percent of our earnings, which is in line with our dividend policy. A brief word on the market. I think we saw in 2023 a greater degree of price stability, and especially in the second half, with our average realized copper price rising by 1% to 3.98 cents per pound compared to 2022. We are committed to copper and see fundamental value in its critical role in the energy transition and decarbonization. And with resilient demand coming from an increasing range of sectors and supply side constraints, such as declining copper grades and supply disruptions, we see a material deficit emerging in the medium term. And this is something that we can touch on during the Q&A with more detail. So in terms of our growth projects and portfolio, here you will see a summary of our pipeline with a focus on value-accreated growth opportunities. In Chile, we have large-scale brownfield projects and existing operations like Los Pelambres and Sentinela to longer-dated opportunities such as Cachorro and Encierro, which we've shared with you. In Peru, we have a presence there. We've been exploring in Peru for many years and we are seeking and looking at some exploration targets of our own, but we've also increased our footprint by means of acquiring an interest in Buenaventura, a company with a range of production and exploration assets in a part of the world that we see as highly prospective. So by focusing on copper in the Americas, we offer a range of opportunities to deliver performance and growth from the near term to the longer term. And we seek to grow our business towards our ambition of 900,000 tons per year of copper production. Brief word on Chile. 2023 stands out as a pivotal year because two key debates in the country were settled. On the revised mining royalty, we now have a conclusion to this process. With the new royalty enacted by the President of Chile in August, we now have an opportunity to move forward into a more stable business environment with respect to tax changes. Through this process, we have identified as well areas where we hope to see progress in supporting the business environment in Chile, particularly in inducing the permitting and administrative burden on companies. were continuing to engage as an industry on this topic with the relevant authorities. There was a commitment, in fact, made by the government when the royalty discussion was settled to actually overhaul the permitting system for mining, and that's in progress and under revision in Congress right now. So on the constitutional reform, on the other hand, the vote in December concluded with a rejection of the proposed text, meaning Chile will continue with the constitution that has been in place many decades and with that i will hand over now to mauricio who will take you through the financial review of the year thank you and welcome to everyone joining us today my name is mauricio ortiz and i will take you through our financial performance

2022-2023 was a good year for Antofagasta. We delivered a strong set of numbers and we are moving forward with our growth projects, always with a balance of financial discipline and returns to shareholders. Let's have a look at our main figures in 2023. With the ramp-up of the expansion at Los Pelambres and further optimization of our operations at Sentinella, our copper, moly and gold production increased explaining an 8% revenue increase in comparison with 2022. We were able to translate this higher revenue into a strong set of financial results, increasing our EBITDA by 5% and our underlying net earnings by 21% to 72 cents per share. Increased production and rigorous cost control protected our margins despite the inflationary cost pressures facing by the global mining industry. delivering an 11% increase in our cash flow from operations. Finally, through a strong balance sheet with low levels of net debt to EBITDA, we are able to propose a final dividend today of 24.3 cents per share. The total dividend for the year will therefore be equivalent of 50% of our underlying net earnings, which is in line with our dividend policy and reflects our confidence in our business looking forward. Moving to our production and cash costs, we can see in the top chart that throughput was the primary driver of our production increase to more than 660,000 tons of copper in 2023. This result was delivered through the successful commencement of the water production from the first phase of our desalinization plan at Los Pelambres. On grades, The second largest factor impacted production and costs. We had a decrease at Los Pelambres and Centinela cathodes, which was partially offset by higher grades at Centinela concentrates. Despite the inflationary pressures and lower annual grades during the year, we managed to maintain our net cash cuts flat year on year at 161 cents per pound. This was mainly driven by higher gold and moly production, generating a 70 cents per pound credit for byproducts. And savings were also delivered through our cost and competitiveness program, which I explain in the next slide. With regards to our cost and competitiveness program, we saw excellent results in 2023, with 28 millions due to operating our assets safely above design capacity, and over 100 million of operational efficiencies and contract management initiatives. These are not only savings, but also a platform to promote innovation and continuous improvement throughout our organization. During the year, we reduced our cost base by $0.08 per pound, helping to keep costs in line year on year and partially upsetting the lower grade. On the back of this result as well, the years of accumulated benefit from investment in both innovation and operational efficiencies. We have set an ambitious target for the years ahead, raising this goal to 200 million in 2024. With this, we expect to contribute to keep costs in line year on year. In terms of FTA and margin, we were able to translate the sales volume and realize price increases, completely upsetting the cost movement into a healthy 5% higher EBITDA than in 2022, and keeping our margins in line year on year. E.ON Copper increased gold, moly, and moly production by 18% and 13% respectively, with our revenue streamed with our revenue streams from byproducts being key features of both Sentinella and Los Pelambres. And this, in turn, is a fundamental feature of the robust cash generation from our portfolio, underpinning our capital allocation framework, which is central to all our financial decisions. Now, I would like to spend a few minutes on our capital allocation framework, as these provide clear definitions of how best to balance growth a strong balance sheet and returns to our shareholders throughout the cycle. We start this process by allocating capital to sustain and develop our mines and to pay our shareholder a minimum of 35% of earnings while maintaining a strong balance sheet. Following this, we then review further investment and distributions using a range of factors shown here, including our overall financial position and the macro environment. On the right, you can see how this works in practice. Through our disciplined approach, we have been able to pay attractive returns in excess of our committed dividends, even during periods of growth, whilst keeping our balance sheet strong. Today, we announced a 21% higher underlying attorneys, or 72 cents per share, and the proposed final dividend reflects our disciplined approach, providing right balance between the investment required for our next phase of growth and shareholder returns. Looking at the balance sheet, and as I mentioned earlier, our strong balance sheet underpins our confidence in our business, and we look forward to our future growth plans heading into the next phase. Our net debt to EBITDA ratio is low at 0.38 times. Our assets continue to generate a strong FDA, which drives our ability to invest in our assets and deliver shareholder returns. And finally, ending this section of our financial performance, I would like to highlight the margins of our portfolio of corporate assets and our strong relative position within our peer group of corporate producers. As shown on the left, our portfolio has consistently delivered a VDA margin tracking at the top end of our peer group, having Los Pelambres and Centinela as our cornerstones, which enable us to deliver on our capital allocation framework. Secondly, the chart on the right demonstrates the consistency of our portfolio. Throughout the cycle, we have generated strong operating cash flow. Again, this gives us the confidence to continue to invest in our assets enabling and enhancing the future of Los Pelambres, along with increasing work production out of Sentinella with a second concentrator. This project portfolio and our financial discipline allows us to deliver shareholder returns to investors seeking exposure to copper, the metal for electrification, to enable the energy transition. And with this, and now I'll hand it over to René, who will take us through our work on sustainability. René.

Thank you, Mauricio, and good morning, everyone. In this section in particular, I would like to focus on a number of sustainability issues that support our purpose of developing mining for a better future, and which underpin our results announced today. Moving to the highlights for the year, Ivan has covered safety already, so I will not spend too much time on it, but it's important to emphasize our record performance in 2023. with zero fatalities and further improvements in both leading and landing indicators of safety. This is a result that we are all proud of, and our focus remains on maintaining this performance going forward. I would like to highlight the improvement in gender diversity across the company, which continues to move towards our 30% goal by 2025. And in order to reach that goal, we have successfully implemented and will continue to roll out a number of initiatives. such as a clear recruitment plan to attract women into operational roles and a mentoring program to support promising candidates and vans in their careers at Antofagasta. Another highlight to note is regarding our permit approval at Los Pelambres and Saldívar, which are critical for the future of the business. At Los Pelambres, we received approval on our Environmental Impact Assessment, or EIA, to double our desalination plant capacity to 800 liters per second, The first phase of the initial plan was 400 litres per second, which we have delivered and is having a material impact on our water sourcing and therefore production. By doubling the capacity, we expect to see further material positive impact. At Saldívar, we have now received the DIA permit, which aligns both our water and mining permits and allow us to keep operating until 2025. EIA to extend the mining and environmental permits until 2051 has been submitted and is in the next permitting step to secure operational continuity at Saldívar after 2025. We continue to make progress on decarbonizing our business and have announced a new and ambitious target of reducing scope 1 and 2 emissions. In addition, we have set a scope 3 target for the first time The targets shown here are the culmination of a year's work to determine our decarbonization pathway. First of all, we have set our new scope one and two target, which is a 50% reduction on our absolute emissions by 2035. This incorporates our planned production increase over the period. We have also published our inaugural scope three emissions target of reducing emissions by 10% by 2030. It is worth noting that scope three consider both upstream and downstream activities. For us to reach this goal, we are working with our suppliers, many of which are Chilean businesses, to ensure our goals are understood and 100% aligned. Moving onto water, here we can see a picture of our desalination plant at Los Pelambres, where construction was completed during the year and ramp-up continues as expected. As you can see from the chart on the left, this facility has already had a significant impact on our water sourcing, representing approximately a third of Los Pelambres water withdrawals in 2023, despite only commencing its ramp up during the middle of the year. And finally, looking to the future, the doubling of this facility capacity to 800 liters per second will substantially move us towards our ambition of 90% of water coming from seawater or recirculated water sources. As mentioned previously, we received approval for our EIA late last year for this particular project. On communities, we have well-established programs built in collaboration with local organizations and authorities over many years. In 2023, in particular, we formally assessed 18 of our programs with 100% of these assessments found to be delivering positive impacts on local communities. But we will not stop there. Through these social impact assessments, we are using the feedback we have received to help shape our engagement in 2024. We continue then to adapt and evolve our approach to ensure that we continue to deliver positive impact with local communities. One of the key highlights for 2023 was sponsoring the Pan American and Parapan American Games, a major sporting event in the Americas, and as Chile hosted the Games, a major event for the country. Our involvement in the Games was to showcase our role in Chile as a major employer, copper producer, and contributor to the country's GDP. We provided the copper for all metals, and as you can see in the photo, we put copper in the center of the metal, illustrating that copper is at the heart of Chile and the heart of Antofagasta. Protecting nature and the biodiversity within and around our operation is and always has been a key focus for us. We have teams of scientists and specialists working to protect nature across all our sites. More recently, we have been instrumental on steering recent discussions with ICMM, who just recently issued a commitment to work to deliver positive nature outcomes, announcing a plan for a nature positive roadmap. Shown here is the five-point plan, which we are committed to and which guides our existing biodiversity programs, especially at Los Pelambres, where we protect six times the land footprint of our operations, but also across all our operations. In the north, in the Antofagasta region, where the Atacama Desert is, we operate in a very different environment, with different but no less important flora and fauna, with the ICMS five-point plan applicable to this work as well. Finally, as the world looks for increasing amount of copper to fuel the energy transition, we remain focused on our co-belief that copper should be produced responsibly in a safe and sustainable way. That is central to our purpose. I will now, however, back to Ivan, who will take us through our growth portfolio and innovation.

Okay, so thank you, René. I think some great examples related to our purpose, connecting our efforts in sustainability to how we operate our business model. Here we now move to our growth portfolio and the future. The picture that you see here is Encierro, which is a project that we announced a maiden mineral resource estimate in 2022. Work here and at Cachorro has continued during this last year. And while we don't have any further updates, I'm happy to take questions after the presentation. So today I would like to focus on our near-term growth projects, Los Pelambres and Sentinela. Before doing that, I mean, moving to what we expect in 2024. Here we have the same information that we provided in our production report in January. So I won't spend too long. The key messages are simple. We expect an increase in production as a result of the ramp up of projects at Los Pelambres. And we expect net cash costs to remain in line year and year, despite industry-wide inflation, thanks to the cost and competitiveness program plus other initiatives. CapEx will be 2.7 billion as we start construction of the second concentrator at Sentinella in 2024, adding a further 170,000 tons per year for total copper production once this project is completed towards the end of 2026. Finally, in this morning's announcement, we disclosed that at the end of last month, during scheduled cleaning activities, we detected material in Los Pelambres concentrate pipeline that was stopping the normal transit of concentrate, This material has now been cleared and we expect sales of around 20,000 tons of concentrate to be rescheduled during the reminder of the year. Our full year guidance, however, remains unchanged as before. So we continue producing, but this was about moving some of the concentrate to the port only. So let me now focus on our growth pipeline. Our growth pipeline is strong and this illustrates how we're going to achieve are ambitious to grow to 900,000 tons of profitable copper production. And a recent announcement to proceed with the Sentinella second concentrator is a significant step in us achieving this goal. More broadly, our focus remains on copper and the Americas where we see significant potential. Through these areas, we're focused on disciplined growth and delivering stakeholder value. So we remain committed to that growth path as per the steps that we've taken recently. So capital investment. So we wanted to give you more color on our growth pipeline and the associated investments required. You can see from the chart that the bulk of the investment is in the Sentinela district, the bottom dark blue area, and Los Pelambres, the top two light blue areas. They are the two key long-term growth prospects in our portfolio. While investment at Sentinella has begun and forms the lion's share of the CapEx, you can see that it will peak in 2025. The structure of the financing for this project reflects the long-term nature of this operation. On Sentinella, note that the numbers shown here do not include the impact from any decision to outsource the water infrastructure for this operation, which would reduce the total capital cost of the second concentrator significantly. by $400 million. That's separate to the revenue obtained from selling the existing infrastructure. The investment at Los Pelambres is for doubling of the desalination plant and a new concentrate pipeline and all of its associated systems, which are both necessary to secure the long-term future of the mine. And this work will take place in parallel to the work at Sentinella. We think this is a great enabler for the mine life extension at Los Pelambres, so positions basically the assets you know, to continue to operate for over 20 years on. Please note that this chart is illustrative only, so you can see the CapEx trajectory over the next few years. Formal CapEx guidance is provided to the market each year, and we will continue with that practice as we normally do. So this is an important breakdown of the sort of components that we expect for capital expenditure going forward, reaffirming our estimates or guidance for this year, and then providing for 2025 some reference, which would be the peak year for capital expenditure, according to our plans. I want to talk a little bit about Pelambres in a bit more detail. So turning to the details at Los Pelambres, we have finished construction of the phase one expansion, and the ramp up of this work is successfully advancing, and we're already seeing the results in our production numbers. The key at this site is to create stability and effective planning for the future, Ore hardness is an issue facing all copper mines, and water availability is a key issue in Chile. Our work here will protect the long-term future of Los Pelambres. Looking beyond this, we have the phase two expansion, which consists of work at Del Mauro tailings dam and the relevant permits to continue operating. In the case of the Centinela Second Concentrator, another of our key projects, and for those of us that missed our announcement in December, Here are the key headlines items for our investment in the second concentrator, which will add 170,000 tons of copper equivalent production. Through this 4.4 billion investment, we will be able to move the Centinella district towards the first quarter of the global cost curve to an increased focus on modern technology and the production of byproducts. In taking the decision on the second concentrator, this has brought forward a requirement for ore from higher grade encuentro sulfide pitch, which was otherwise scheduled to be developed later in our mine plans. As shown in the CAPEX slide, mine development of the sulfides will start in 2025 and will span a period of three to four years. In parallel to the second concentrator, as I've mentioned, we're considering a potential outsourcing of Sentineta's water supply. This could result in a reduction of CAPEX by 400 million and us receiving proceeds of up to 600 million through the sale of existing infrastructures. A final decision on whether to proceed on the water assets will be taken in tandem with significant definite financing documents for the second concentrator, which is expected to take place at the end of March. So in finalizing now, a few words on innovation. Here we have a range of initiatives that we're implementing through our business, ranging from short-term projects that will improve efficiencies and maintaining our competitiveness through to long-term projects that will either add incremental tons of production or extend the mine life of assets. And I want to focus especially on Cuproclorti, our in-house technology for the leaching of primary sulfites. We achieved encouraging results in 2023 at industrial scale, and we're now in discussions with third parties to trial this technology at other mines. This represents a significant movement, and we look forward to seeing how our technology works on a broader range of ores. Finally, on a project at Sentinella, We are developing an optimization for the sequencing of loading hold tracks at the Esperanza Surpit. And following this development, we're now looking to expand this project to our other mines. So we're starting to see how technology, automation, remote operations are actually delivering also productivity improvements, which is part of our cost savings expected for 2024. Finally, I would like to leave you with a few thoughts. Antofagaste is a pure plate copper producer. with high-quality assets in the Americas. We have a strong track record of delivering responsible and sustainable production, with high margins and consistent cash generation. We invest in growth for the long term in a disciplined way while maintaining a strong balance sheet, and this allows us to provide attractive returns to our shareholders and deliver on our purpose. So thanks for your attention, and we will now be happy to answer any questions that you may have.

Thanks for the presentation, Ivan. It's Jason Fairclough, Bank of America. You touched on it very briefly there, but I wanted to just explore your decision to invest into Buena Ventura. There's a sort of a theory that says if somebody wants exposure to a stock, they can just go and buy the shares themselves. So I guess the question is, what does Antofagasta bring to the table that makes those shares more valuable when owned by you?

Yeah. Look, I would say, first of all, you know, we have a strategy, the center of our strategies around development are two key districts, and of mining in the Americas and for copper. And this is an opportunistic move, which is consistent with our strategy. Now, it's in a region and in jurisdictions that we know, we've been in Peru, you know, for several years doing explorations. If you look at the portfolio, and this is something that they've disclosed and the way they see their assets, they're transitioning several of them from gold into copper. And therefore, there's an attractiveness element to this. And we saw their evaluation opportunity. Now, we've been looking at some of these assets and looking at how we can add incremental value in the way that we look at this business, both operations and projects. And that's something that we will further evaluate as we sort of, you know, sit in the company, in the board, you know, seek representation, which is sort of the next step. So that's, you know, there's a lot of therefore links and elements that we see, you know, are interesting from an opportunity and a value point of view that we can harvest. But it's early days yet, you know, we're just seeking, you know, the representation of the board. We've obviously done you know, several reviews ourselves about, you know, the portfolio. And we want to further evaluate those opportunities as we go there and understand more the operations and the projects that they have. To illustrate this, and I'm thinking this as we sort of speak, you know, we've done a lot of innovation around processing minerals, and especially low-grade ore with cuproclor-T. And that's an interesting technology that we're now looking to sort of eventually test in other ore bodies, you know, with third parties. And that could provide an opportunity, which, you know, would be an interesting extension of the work that we've been doing in-house. So it's those kinds of things that we're going to be looking at.

How do you think about a timeline for that investment to come good?

As I say, it's still early days. I wouldn't want to be too specific. about the sort of, you know, mining is a business that, you know, has long cycles that we've learned. You know, we've been in Peru. Someone was reminding me probably for over 10 years now doing exploration. This is a good add-on to the footprint that we have. So, you know, we look at things with a long-term perspective.

Morning, Ian Rousseau from Barclays. Just on this CapEx slide and the indicative guidance you've given, we've obviously, the past few years, you've seen quite a bit of CapEx inflation coming into your sustaining CapEx. Obviously, you've guided that that seems now to be elevated around one and a half for the next few years. So just once some of these projects like POW and some of the other one-offs rolls off, what is the right sustaining CapEx for this business going forward? Cause it seems like that number is always maintained around 600 to 800, but it never seems to come down to those levels. Um, that's the first question. Um, no, let's leave it at that. Thanks.

Yeah. So, so on, uh, sustaining CapEx and I'll, I'll say a few things and then just, uh, allow Mauricio to expand, but the, um, yeah, we've sort of guided to, uh, you know, for, you know, the next, uh, uh, few years of a level between 1 and 1.5. And I think one needs to contemplate a few things. One is, obviously, these are updated nominal terms, and therefore, you know, there's inflation that's sort of involved in these numbers. The other thing is that the asset base that we have is changing. I mean, we've invested recently, you know, in the Belamris Expansion 1 project, which has been completed. over, you know, $2 billion. But this is providing, you know, extra value for the company. And, you know, we're just initiating a $4.4 billion project at Sentinella. So our asset base, you know, is growing and therefore our sustaining CapEx in absolute terms, you know, it grows in line with that. So that is the range that we see in the next few years. Now, we are going through some... sustaining capex, like, you know, the expansion of the water plant or the replacement of the pipeline, which are one-offs. I mean, we do that once, we won't do that on a recurring basis. So some of that has also to do with the cycles that some of these assets has. Pelambres, you know, it's got over 20 years and therefore it's associated to that as well. So that is the range, you know, that we think is relevant to think about sustaining CapEx, you know, for the next few years.

Thanks. Can I just push on that? I mean, what would you say is the new base after Centinella then comes on stream?

Just to wrap up what Ivan said and then jump to your specific question here. So basically we are the rationale behind investing in sustaining CapEx is to preserve our ability to keep delivering copper according to our mind plan. So that is the thing that we are doing with sustaining CapEx and that's why it's so important. So I wouldn't commit a number going forward rather than saying that the rationale behind that figure that we used to provide between 600 to 800 was according to our asset base by then. And as Ivan mentioned, After we go through the investment process that we are undertaking now, including the $2 billion investment in water and the $4.4 billion investment in Sentinella, if we take out the water, we're going to reduce that number, be clear on that. We are going to have an expanded asset base and also greater mines, so larger amount of movement, mine movement. If you want to build a proxy, I would suggest that you use that as a proxy in order that the previous other asset base using this range, 600 to 800, and the future asset base, assuming that the investment that we have disclosed, and of course, factoring in inflation. I think that will provide you a good proxy of our sustaining capital going forward.

Thanks. And just this follow-up question on minority dividends. how should we think about the project funding of Centinella? Will you use some of the operations on cash flow or do you expect to raise some debt at the asset? And therefore you could see a scenario where you actually pay out minority dividends. So there's some leakage of cash, but then you inject more project debt into that asset.

As we explained when we announced the Centinella second conservator project, We have two main baskets of financing at Sentinella. The first one is using the operating company balance sheet. That is the cornerstone of the financing at Sentinella that allows us to go in for a project finance, which is a long-term financing, 12 years, which is almost matching the life of mine of the project for 2.5 billion. And the balance, we are going to finance... from different sources. We need to, we need to fine tune that. But of course we have opened the capital markets at Antofagasta level. And also we have the operating cash flow from the company. Okay. The key feature there is that we have a long-term financing for a long life of mine project that allow us to wisely manage the cash flow out of the operation.

Okay.

Thanks. Yeah. BMO capital markets. Maybe can you elaborate a little bit on the pipeline issue in Los Palambros and what caused the concentrate blockage in the first place? And is there a risk of that happening again?

What happened is basically during preventive maintenance. So preventive maintenance is intended to achieve this sort of anticipatory diagnosis. So you know, it happened and therefore, you know, we were able basically to start, you know, the cleanup and, you know, fixing of the event. Now, we, in this case, particularly, we are, you know, investigating exactly, you know, why is it that, you know, we've got this concentrate material stacking there. We don't think, I mean, there are some unique features around the concentrate that was being chipped then. We don't think it's something that will recur. And we think it's good news that this was identified, you know, and this is for structure in the way it did. I mean, there's been no incident in the sense that there's been no leakage of pipe of, you know, of concentrate. There's been no social incident. This was completely within a planned maintenance activity and which is intended there to detect, you know, issues or problems in an anticipatory way. So from that point of view, the issue has been now resolved. It was detected in that way. And, The information that we've got now is that there's nothing which would make us think that this is something that would be recurring.

Okay, thank you.

And as I said, just on that point, I just want to reiterate that there's no impact in production. We continue to produce copper at Belambre. So we've got the water, we've got the plant running, and there we stockpile this production. in Palambres, and we're now starting to move that concentrate down. So this is about filtering production, but not production per se. And that's why we remain with our guidance for the year and change.

Yeah. Hi, it's Dan Major from UBS. A few questions. The first one, can you speak a little bit about the CAPEX scheduling, how that would change with the sell-down of the water assets, specifically your 3.5 to 3.9, how much would that come down in the event of selling the water?

Yeah, so I think probably it's safe to assume that it'll be about half of that in 2024 and half in 2025.

Very clear, thanks. And the second question, just on your chart that takes you out to 900,000, specifically on Lospen Ambrose, what the targeted throughput and grade as you get to kind of normalize in three or four years' time? Because I know grades are a little bit lower this year. And where would Los Palambres be in that kind of scenario to take you to that target?

Yeah, so what we expect at Palambres is, with respect to throughput, that we will be able to run at around 190,000 ton a day, you know, with the sort of expanded capacity that we have. Even though nominally it is bigger than that, you know, that's the sort of average throughput that we're thinking of. And with the ore getting harder, you know, that essentially yields the sort of level of production that we expect. And with respect to grade, yeah, we've seen a drop of grade in 2024, and that will slightly reverse in 2025. But then in 2026, we do expect grades to be back above, you know, 0.6, you know. So we see a drop this year, next year, slightly reversal, but then back to higher grades, you know, for 2026 and for a few years thereafter.

OK, thanks. And just just follow up on that in that waterfall slide. There's other projects. Are they mainly around Los Palambres de-bottlenecking in the medium term to get to the 900?

I think you've got the other projects there are a blend which involve almost everything. activities in in all of our assets you know marginal projects or satellite deposits that we've identified there is you know polo sur which is a deposit at sentinella which is included in there there's some added tonnage at pelambres at sentinella a little bit in saldiva so it's basically continuing to monetize some of the resources on the edges of our existing two main districts okay thanks and one more for my um

The Zaldivar permit to extend the life beyond 2025, what's your approximate timeline for expecting to receive that approval?

We, I mean, we expect that that should be largely concluded in the course of this calendar year. And therefore, you know, it's quite critical that in the course of, you know, this time frame, you know, we get, you know, that clear indication about that extension. And that's what we're working for. The permit is due, if I recall exactly, I think it's May 2025. So that's when actually the permit that we have in place today finishes. But we would expect this to be, as I say, materially significantly concluded with a clear indication by the end of this calendar year.

Super, thanks. Patrick Jones, JP Morgan. Just a question on the new... Where is it at? Just a question on the new emissions reduction targets you put out last week. For the scope one and two emissions reduction target for the 50% by 2035, can you just talk a little bit about how you define the pathway to achieve that, the different components to get to that? And also, is there any kind of associated CapEx that you see that would be required to deliver that?

Yeah. Yeah, we have a pathway. And in essence, what we're doing there, is focusing on the fleet. The fleet, you know, conversion is the key element there to be able to achieve that target. And what we will be doing is essentially progressing a solution that involves electrifying or electrification of the fleet through the use of trolleys in an upgraded version. And we're actually starting now a pilot testing at Pelambres where we think, you know, we would be able to move into that solution. And that would then be combined with some form of battery assist. So it's Trolley, known technology, you know, but, you know, which has new releases, if you want, in terms of, you know, versions combined with battery. And as I say, our first pilot testing is actually now being implemented in Palambres. So that's going to be the focus of most of the DCARB that we expect to achieve a reduction in scope one. and two, going forward. And it's an absolute reduction, so it does also contemplate the fact that we will be increasing our industrial footprint by means of a second concentrator, but a lot of the focus is going to be there. Now, in terms of capital expenditure, there is capital expenditure associated to this transition. That's included in the estimates that we have provided, so it's already factored into the numbers that we've seen for 2024 and 2025. And a lot of this is about replacing fleet, and therefore we are replacing the fleet with trolley assist, but at a time in which we were cycled to replace those fleets in any case. So that's the way that we're looking at it. So we're moving ahead by means of replacing the fleet, which was expected to be or scheduled to be replaced, and that capital expenditure is included in the estimates that we've given.

Great, thank you. Maybe just a follow-up to that. If that's all that's included in 24-25, can we basically sort of assume that there's going to be a bit of a linear spend for that fleet replacement out to 2035? And within that 24-25 capex, can you give kind of a rough idea as to how much is up for fleet replacement?

Sorry, I didn't get the last part.

Just within that 24-25 capex, could you just give a rough indication as to how much of that is related to fleet replacement?

I don't have a specific, I think, figures here, but the logic is, again, the bulk of this is replacement of fleets, which is an element in our sustaining CapEx, which will happen at the time it is scheduled to be replaced, but we're going to be incorporating new technology as we do that. Now, the overall capital cost of this transition plan is probably, you know, in terms of range, in the range of between 500 to 700 mil up until 2035.

Great, thanks for that. Maybe just a question on another topic. Forgive me if I missed this earlier, but I think obviously on the Los Palambros desalination plant, that's been ramping up. I think in Q4 December, in the Q4 release, it was mentioned that was running at just above 300 liters per second. Can you give a bit of an update as to what that's been running in January? Is that reaching full capacity now?

Yeah, it is. I mean, in December, remember that during run pump, you've got to stop for a few days. But when, you know, running, it was actually getting closer to 400 litres per second. But the average in the month does include the sort of stoppages for five or six days that are required to be able to during Rumpop review some of the operating conditions. During January, we've actually, and February, we've been doing quite well. The plant is performing well according to its design and close to the 400 litres per second, which is very important because the dry season in Chile is January and February, and therefore that's where the critical test of this infrastructure is actually being performed. So it's going according to plan and essentially producing to capacity now.

Great, thank you.

So in fact, we've closed the sort of ramp up.

Good morning, Alan Spence from BNP Paribas. And just first actually a clarification on Dan's question around the CapEx and Centinella. The 50-50 distribution between 24 and 25, is that just for the CapEx avoidance? And then if you monetize it, that'd be a bullet in the particular year? Right, okay. And then second, as you think about growing attributable copper tons, What's the thinking around Zaldivar and increasing interest there medium term?

Increasing what? Do you mean production there or what? Ownership. Ownership. Yeah, look, I think in the case of Zaldivar, we own 50% and we operate the mine. Therefore, there's nothing that we would substantially do different if we owned 100% from an operating point of view. And therefore, it boils down to an economic you know, decision, you know, does it make sense from an economic point of view or not, uh, to own more? And, and, um, uh, you know, from that point of view, it will have to, you know, uh, that decision sort of rungs up with other possibilities of investment we've invested now and are committing capital to the second expansion, you know, which, you know, are high return investments, you know, uh, for us. And therefore, um, you know, when and if that opportunity comes, you know, we will look at it in the context of how it ranks, you know, from an economic point of view, via these other alternatives.

Thanks. And the last one, just having gone through the year-end process now, I assume we can take the final assumption that RICO-D proceeds stay on the balance sheet, the funds, CapEx, as opposed to any distribution of shareholders?

Sorry, I didn't understand that. Yeah, we have a single capital allocation framework and, and, uh, All proceeds, you know, go into that logic, which Mauricio explained. And we balance, you know, as a decision, keeping a strong balance sheet, growth opportunities and return to shareholders. And I think, you know, those proceeds went in there and, you know, followed that same sequence and logic. And with respect to that, I mean, one of the things that we do is, focus in and i think this was mentioned before is to be able to fund the projects mostly at asset level in a way that we retain the ability to return funds to shareholders that's why our distribution this year you know is is 50 and and that's the way that we look at the lambers in terms of the expansion that you know we need to fund and that's the way that we look at sentinel as well as has been explained where we have you know a funding which spans you know several years which combines debt and an equity contribution. So we fund them in that way to be able to keep that distribution to shareholder capability going forward, because it's one of the key balancing elements in our capital allocation. Strong balance sheet, return to shareholders, growth. But I think it's also important, and I would say to mention, that we are facing an opportunity with the phase of growth that we're going into. I mean, we've got a rich resource endowment in Sentinela and Pelambres. And we're basically essentially developing those so we will be able to get new tonnage. you know, into the future. And it's that balance between performing and growth, which is really what we're striking here. We think, you know, in the right way in terms of enabling these opportunities. We would not be able to get to 900,000 tons of profitable tonnage if we did not, you know, put the capital in. And we've got the opportunity to do it at a lower capital intensity. These are brownfield operations and expansions. And therefore, you know, we're able to do it with less risk and more efficiently. And In terms of capital execution, the capital investment decisions that we're making are being made with a lot of studies supporting them, 70% engineering, contracts committed in terms of the commercial terms under which these contraction packages will take place, a strengthened execution team, and integrating and incorporating the lessons from projects like the one that we've just finished at Pelambres. So we think this is the right moment to move the company in the direction of monetizing, you know, the growth opportunities that we have and that others don't, you know, will struggle to see. We've got great two districts which will allow us to increase production going forward. And I think we're striking that balance between performance and growth, you know, in the way that best fits the interest of our shareholders.

Thank you. Yanis Mansfoula from Morgan Stanley. A couple of questions left from my side. The first on the Sentinella second concentrate or We've seen two CapEx hikes over the years. Now you're at 4.4 billion of overall CapEx. Can you remind us what proportion of that CapEx has been locked in and how much is exposed to inflation? Because we spend a lot of time today talking about inflationary pressures and ultimately how confident are you in constraining or maintaining CapEx within that range during execution? Thank you.

Yeah, so we've done a lot of work in trying to de-risk the execution of this project. In terms of what's contracted out, key equipment, key construction contracts, the coverage is over 65% in terms of prices. And as I was mentioning before, the other element, which is not all price, but it's quantities, it's been also the risk by means of the level of engineering that we have. Again, this construction is done also in a site which is operating today, so we have a lot of the facilities there available to construct. So advanced detail engineering fixes quantities. Contractual arrangements and equipments fix orders for a scope which is close to 60% to 65%. And a team which is coming from projects that have been recently built integrating those lessons. I think, you know, I think we're in good shape to deliver on this figure.

Great, thank you. Second question, on an earlier stage project, if we look at the Los Palambres Phase 2, given, again, all the inflation we've seen over the years, what would you say is a reasonable capex estimate for this project once, you know, you approach a decision in the coming years? Is it still within the $1 billion range or Could it be even higher?

Yeah, the phase two, just to be clear, is the extension of the mine life and potentially adding another ball mill in the existing mill. So it's a very critical phase because it allows us basically to extend the mine life for 20 years and therefore convert into reserves. resources that we have today at the Lambres. But it's not a capital-intensive phase of growth because we basically use the mine that we have with some expansion. We basically use the plant that we have and the infrastructure that we have. So, I mean, the sort of estimates that we have, you know, are still within the number that you quote about, you know, or billion or thereabout. We don't expect that to be increased because, again, there's not a lot of complexity and capital-intensity by design in that phase. It's adding a ball mill, there's more mining equipment in the mine, and a few other things, but there's no fundamental change to the industrial footprint that we have today.

Very clear. And very last one on the nuclear tea technology. You sounded a bit more confident today talking about potentially rolling out this or trying this technology in third-party projects. Can you talk about maybe the milestones from here on? When do we expect to get a more substantial update and perhaps how does that fit into the Zaldivar extension option?

Yeah, we are more confident and progressively more confident as we sort of conclude our testings and industrial scale piloting. I think there are two elements to this technology. I mean, one is the metallurgical recovery. And I think that's something that we've been quite comfortable for a long time. The other one has been working on a cost-efficient solution to get the temperature up to the levels that we require. And I think that's where we've made significant progress over the last year. So combining those two is, I think, what we're very happy about. Now, we are, I would say, when we think about Salbibar, the primary sulfide there, I think we're thinking of this technology as being the potential to be able to develop a low capital intensive path there for growth and using the existing SXEW infrastructure. So certainly that's a case in which this is something that we see as being deployed and utilized. In a similar way, we're starting to look at. which is lower grade in Sentinella and Tucoya, which would use this technology. Now, we have some tonnage included in our mine plants already, so some of that is making its way through. We're going to go through our annual revision this year and see how much is the stage in which we're now going to add to our mine plants. Not in 2024, not in 2025, but beyond 2026 onwards. So now testing it with third parties, you know, provides an added element of assurance around, you know, how attractive is this technology? And, you know, we're starting to make those engagements and we've seen, you know, significant interest. So, you know, we'll tell you more as this evolves, but that's basically where we are today. And the main achievement in 2023 is, as I say, maturing the temperature solution. The metallurgical side was great. something we knew about, but it's this other one. And it's a combination of two, which makes this really powerful.

Yeah. Thank you, Sri, from RBC. The question is on Zaldivar water. So is there third-party water readily available in the region for you to purchase, or is there plans to build a diesel plant in the medium term? Thanks.

Yeah. So there is no... water availability in the area. I think that's why it's very important that what we've said is that we can develop a water solution. It's not desalinated water. It's seawater, an alternative, or water from third parties. There are others who are actually moving projects alternative projects to bring water to that area, which is in fact needed for other industries besides copper like lithium. So there's other projects that are being worked. But in our case, we could build a water system, which would be seawater, but not desalinated water. And the strategy there, the design of our permit is then that we would be able to do that with an extension of the mine life, which would take mining at Saldívar to 2051, but that we would need a transition period between 2025 and 2028, where we would continue to extract the continental water that we're using today and then bridge that timing. We extract around 200 litres per second, which is well below the natural recharge of that water system, And therefore, our studies and the discussions that we're having with the authority are based on that premise, that from an environmental point of view, from an impact on the environment. ecosystem there. It's completely feasible to be able to extend this for three years, have a transition period, have an expansion then eventually as a lever of its mine life with its own water solution, be it a water system that we build or one of the projects that third parties are moving and pushing.

Okay. And the second question is on the cost savings program. It looks quite ambitious compared to the previous years. So what are the key building blocks to achieve this cost savings? Thanks.

Yeah. And I think that's something that we've looked at, you know, in detail. We've been working at cost savings, you know, for quite some time. And obviously it gets, you know, every year it gets a bit more difficult. And that's why the amounts have been coming down. But this time they're going up. So why? I think that the one thing that we've seen is working to our advantage. We've made, and I mentioned, several changes in terms of innovations. You know, we've created this remote operating centers in Antofagasta and Santiago for Sentinel and Pelambres, respectively. We've automated fleet, we've automated our drilling rigs. And therefore, I would say it's basically as we consolidated these changes in technology, we're seeing productivity improvements come through. So that's the new element here. So it's not only about renegotiating our contracts and looking at ways of being more efficient as we conventionally do, but it's about harvesting a dividend from the technology that we've invested and the innovation. We've done over the past few years, increasing remote operations, automation, and we're seeing the benefits come through. And that's what we expect to be able to harvest at the level of 200 million for this coming year.

Hi, it's Ian Rousseau, just to follow up on that, actually. So at Zeldivar, I mean, obviously, when you acquired the assets in the initial years, you had great progress and sort of improving recoveries. In the last few years, that seemed to have sort of gone the other way with, it seems like metallurgy is getting more difficult. The grades almost double Antikoya, yet its cash cost is 45 cents higher. Could you maybe just talk about, I guess, what the reason is for that and if there is a pathway to improve recoveries and bring that cost down?

Yeah, we think there is. I mean, in the case of Saldívar, Saldívar was built originally, you know, 20 plus or 20 years ago to leach oxides. And those minerals have changed over time. And we're in fact now leaching sulfites, mixed ore and mostly sulfite with a low solubility rate. Now, we did make some changes and invest it. in changing the circuit so that we have chloride leach basically in place, which is a version of, you know, cuprochlor. And we're working therefore to consolidate that new processing route at Saldívar. And that's why we've seen actually the recoveries improving. We started And when this change took place, we'd recover, which were probably close to the sort of mid 50s. And we're now around mid 60s for that type of ore. And we expect to be able to get them or take them closer to 70. So one needs to acknowledge that this is not the same mineral. It's not the same feed that we had originally for which, you know, this plant was produced. but we're actually talking about sulfites. And with the change to chloride leaching, you know, we expect to continue to see those recoveries come up, as we did in 2023. Now, I think on top of that, and we did have a change in the team there, I think we need to ensure that the asset plant operates to the required reliabilities. And for that, we have a, for now, the second year, a program about changing some of the key pieces and equipment, some of which were, you know, obsolete. And therefore, we're also ramping up our changes in that space to ensure, you know, the reliability of plants in other areas as well beyond recoveries. So we think, you know, that this is an asset that has long tenure in terms of operation from the point of view of the ore that we have today and the primary resource that lies below and therefore you know we we are committed to seeing it through thanks okay how are you doing for time but yeah no i think we've got we've got maybe one question more and then we're yeah okay high level one for you then please yeah i don't

You talked a little bit about the constitution being rejected. Obviously, we've got the new taxation in Chile. I think when the new president came in, there was a lot of question marks, lots of excitement. He had some strong policies, but it all seems to have calmed down a little bit. What's your read today on the temperature of the politics?

I think that there was a lot of... heated constitutional discussions. I mean, over the last couple of years, I think in Chile, we must be the countries which has got this highest sort of average knowledge about constitutional matters, because we've been discussing it for the last four years. But I think today, politics is mostly centered around two things. One is security, so public order. You know, there's been an increase out of, you know, immigration activities and other factors, on the sentiment around public safety, security. And therefore, public order from that point of view is a heartfelt priority for people. And therefore, there's a lot of focus on this government on addressing that issue and reinforcing policy and public order. And the other one is economic growth. I think that's the other key element. which is taking the priority from a political point of view. And that's why we've seen, you know, we were able to close, you know, the discussion on the royalty. And on the back of that, you know, the government committed to actually overhauling the permitting system for mining, which would have been difficult to think of, you know, for a government, you know, with the agenda that they came up initially. And therefore, this is, you know, it's good news. So those are the priorities today from a political point of view. It's about security and about economic growth and bringing back investment. you know to the country and those are the focus I think the discussion around the constitution is really taking backstage now okay so with that we're not going to take any questions on the on the or maybe we can I mean is there someone is there a question how do we know Hello. And then we will close it. OK, no question. We're up to time. OK. Thank you very much. Thank you.