13th Jun 2007 11:16
Antofagasta PLC13 June 2007 For immediate release 5 Princes Gate Telephone: + 44 20 7808 0988London Fax: + 44 20 7808 0986SW7 1QJ [email protected] Kingdom COMMENTS MADE BY MR. JEAN-PAUL LUKSIC, CHAIRMAN, AT THE 2007 ANNUAL GENERAL MEETING London, 13 June 2007 We have had a year of record copper prices and strong molybdenum prices and thishas enabled us to show record results for 2006. This is clearly reflected in theturnover and EBITDA figures of the Group where, in the former case, turnovernearly quadrupled from US$978 million in 2003 to almost US$3.9 billion in 2006.In the case of EBITDA, growth was some four and a half times over the same years- US$524 million in 2003 rising to US$2.9 billion in 2006. The current strength in the copper price has continued into 2007 with an averageprice to date of 303.0 US cents per pound versus an average 305.3 US cents perpound in 2006. Similarly the average price of molybdenum has moved higher andhas averaged US$27.9 per pound to date against an average US$24.8 last year. Antofagasta has benefited enormously during this period and in each of the lastthree years we have felt it appropriate to pass this on to shareholders in theform of special dividends. I would reiterate what I mentioned last year - yourBoard, when considering the level of dividend to be paid, considers that theordinary dividends (both interim and final) should be a reflection of how thecompany is doing but at a sustainable long term level. Any special dividend thatwe recommend would reflect favourable market conditions after taking intoaccount expected future capital expenditure and potential acquisition activity. Later in this meeting we hope, therefore, that you will approve the finalordinary dividend of 5.0 US cents and the special dividend of 38.0 US centswhich makes a total dividend for 2006, including the interim, of 48.2 US cents -which is a historical high. This compares with total dividends paid of 22.0 UScents relating to 2005, 15.8 US cents to 2004 and 7.0 US cents to 2003 beforethe commodity price surge. During 2006, Philip Adeane retired from the Board having served as ManagingDirector from 1982 to 2005 and as Non-Executive Director thereafter. On yourbehalf, I would like to thank him for his enormous contribution over a longperiod of time. He continues to act as a senior advisor to the Board and we areglad to be able to continue to draw on his experience. I am also pleased towelcome Bill Hayes, who joined the Board as an independent Non-ExecutiveDirector last September. Bill was previously a senior executive with Placer Domeand a former president of the Chilean Mining Council. He has extensiveexperience of the mining industry both in Chile and globally which will benefitthe Group in its future development. I believe your Company now has a strong andwell balanced Board to support the management team led by Marcelo Awad since2004. It would be appropriate, therefore, for me to give you a brief update of wherewe are as a Group today. The current strength in the copper and molybdenummarkets is that there has been no visible decline in demand worldwide forcommodities even after some lower construction indicators in the United Statestowards the end of last year, something that rather surprised the market whichhad expected a consequential downward adjustment in the copper price. Growth inChinese demand has, for example, comfortably exceeded the drop in US demand,while Japan and Europe have also performed well. We are not aware of anysignificant stock building and neither are we aware of any substantial growth inproduction, hence our belief that the copper price will remain firm in theforeseeable future. We continue to look cautiously at these exceptionally strong prices but theredoes seem now to be a consensus these should remain high compared to historicallevels well into next year. We also believe these are partly supported by higherproduction costs and that historical cost levels are no longer a fair measure ofwhere these may eventually return. One result of these high prices andconsequent high profits is a rise in the prices of mining assets. For this reason we tend to focus on earlier stage acquisitions which inevitablyhave long production gestation periods but where we know we can add value evenwhen the copper market settles below where it is today. It is in this light thatwe entered into prospective mine projects in Pakistan, Colombia and Ecuadorduring 2006 and are continuing to look at many other similar opportunities. Weare progressing with our exploration programmes in these areas and inparticular, expect to complete a new resource estimate by the end of this yearat Reko Diq in Pakistan, where we have a joint venture with Barrick GoldCorporation. A pre-feasibility study is expected to be completed next year. Itis perhaps worth mentioning here that I recently took the Board to visitPakistan and the mine site in Baluchistan and we were all very encouraged bywhat we saw and our progress to date. Our focus on Chile continues and we are seeking to expand existing operationsand develop new opportunities. We are now reviewing the feasibility study forthe Esperanza copper-gold project about which you are already aware and theBoard is expected to decide on the outcome of the feasibility study in the nextfew weeks. We are also progressing with the feasibility study for a possibleexpansion of Los Pelambres by 25% from the current 140,000 tonnes per daythroughput capacity. In addition, the technical studies at Antucoya and theexploration programme in the Sierra Gorda district could extend or enhanceoperations at Michilla and El Tesoro respectively. Growth prospects for thetransport and water divisions also remain good with the start-up of new miningprojects in Northern Chile. We believe it makes sense to conserve some of our earnings for the potentialinvestment this all implies, and I might mention here that over the next fiveyears this could amount to approximately US$3 billion. I should also perhaps touch here on the El Mauro tailings dam project at LosPelambres where the construction stage is now nearly complete. As previouslyreported, we have faced a series of court cases - not directly against LosPelambres - but which could have a possible impact on us. We remain confidentthat these will all in the end be satisfactorily resolved because we havecomplied with all the required processes and permits needed. Another area of concern affecting our business is energy supply. We, along withothers in the Chilean mining industry, have made all the necessary arrangementsto support the generators and are confident that the Government is taking thenecessary steps to assure the general integrity of the power grids. The Group's projects and opportunities I referred to earlier should be seenagainst a background of solid performances by the Group's existing operations.As indicated by our production and financial results for the first quarter of2007 released during May, we expect to meet our full year production target of456,000 tonnes of copper with costs in line with expectations. I want to emphasise again that we are extremely conscious of our environmentaland community responsibilities throughout the Group and in the countries inwhich we are working. We are certain that in the long run this has to be ofgreat benefit to the Group both for our existing operations and new projects. Similarly and most importantly we take safety very seriously indeed. The Group'srecord has been well earned and awards have been made by various authoritiesover several years recognising this. We are always looking for improvement andwe shall always strive for this, both by procedures but also by training. We donot believe in financial results coming at the expense of safety. Finally, labour relations across the Group remain excellent. I am pleased toreport that Los Pelambres and Michilla, both of which had labour contractsexpiring in the last quarter of this year, were able to conclude new agreementswith their respective unions well ahead of time by the end of May. Los Pelambreshas entered into a new 45 month agreement with its mine-port union whileMichilla has concluded a 48 month agreement with its labour union. The nextnegotiations in the Group are not due until 2008. In conclusion, we expect 2007 to be another good year for the Group with goodoperational performances supported by favourable market conditions and a soundbalance sheet. We will also continue to progress with the opportunities we haveassembled over the years with the help of this strong financial position. Ithink you will agree that we have a lot to be getting on with and I believethese projects could substantially enhance the current production profile in themedium to longer term. -------------------------------- ----------------------------------Enquiries Issued byAntofagasta plc Bankside ConsultantsTel: +44 20 7808 0988 Tel: +44 20 7367 8873www.antofagasta.co.uk Keith IronsDesmond O'Conor Email: [email protected]: [email protected] Oliver WintersHussein Barma Email: [email protected]: [email protected] This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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