Antofagasta Plc – Preliminary Results

PRELIMINARY RESULTS FOR THE

YEAR ENDED 31 DECEMBER 2021

Strong EBITDA and balance sheet

Antofagasta plc CEO Iván Arriagada said: “Antofagasta ended the year on a strong footing, generating revenues of $7.5 billion, reflecting the high copper prices during the year, and increasing our EBITDA by 77% to a record of $4.8 billion, yielding an EBITDA margin of 65%. These results illustrate our performance as a reliable and responsible copper producer with the operational and financial strength and balance sheet to deliver on our promises.

“Our mines and plants performed as planned and we can be proud of our achievements, regardless of the challenges of the year including COVID-19 and continued drought conditions in central Chile. Thanks to our team's commitment and motivation, we have been able to continue operating safely while contributing to the national economy in Chile and supporting local communities, socially and economically.

“We have made excellent progress on unlocking the embedded growth options in our portfolio with identified key brownfield developments and incremental growth within our asset portfolio. The expansion of Los Pelambres is now 68% complete and the desalination plant remains on track for completion in H2 2022.  The Chloride Leach project at Zaldívar was completed in January 2022 and at Centinela, pre-stripping advanced over the year at the Esperanza Sur pit ready for mining ore for processing in the first half of 2022.

“Climate change remains a key focus for Antofagasta, and we have expanded our capital allocation framework to include climate risk factors and have set environmental commitments to significantly reduce our continental water consumption and emissions by 2025. By then around 90% of our water use will be sea or recirculated water and our GHG emissions will have reduced by our target of 30%.  We also have clear social commitments to our workers and our communities to make our mines safer and greener

“Following the successful performance of the Company and considering our robust balance sheet and the continued strong copper price, the Board has declared a final dividend of 118.9 cents per share. This brings the total dividend for the year to 142.5 cents per share, equivalent to a pay-out ratio of 100% and an increase of 161% on 2020.

HIGHLIGHTS

Financial performance

• Revenue for the full year was $7,470 million, 46% higher   than in 2020 reflecting a 47% increase in copper realised prices
• EBITDA⁽¹⁾ was $4,836 million , 77% higher than the previous year on higher revenue, partially offset by higher operating costs
• EBITDA margin⁽²⁾ increased to 64.7% from 53.4% in 2020
• Cost and Competitiveness Programme (CCP) generated benefits of $131 million, above the original target of $100 million
• Profit before tax including exceptional items increased by 146% to $3,477 million
• Cash flow from operations was $4,508 million, 85% higher than in 2020 due to higher EBITDA
• Strong balance sheet with net cash of $540 million at the end of 2021, an improvement of $622 million from the net debt position at the end of 2020
• Capital expenditure increased to $1,778 million⁽³⁾,   $470 million higher than in 2020 with increased capital expenditure on the Los Pelambres Expansion project, Centinela's Esperanza Sur pit and higher mine development expenditure at Centinela
• Underlying earnings per share from continuing operations and excluding exceptional items⁽¹⁾ of 142.5 cents, an increase of 161% compared to 2020 with higher EBITDA partly offset by higher non-controlling interests and tax
• Exceptional items after tax for the year were a cost of $87 million, following the impairment of the Company's holding in Twin Metals and the recognition of previously unrecognised deferred tax assets
• Earnings per share from continuing and discontinued operations including exceptional items were 130.9 cents , 155% higher than in 2020
• Final dividend of 118.9 cents per share declared, bringing the total dividend for the year to 142.5 cents per share, equal to 100 % of underlying earnings per share

Operating performance (as previously announced)

• Safety remains our top priority . Regrettably there was a fatal accident at Los Pelambres involving a contractor in July 2021. A full investigation was carried out and all lessons learned have now been fully implemented
• Copper production for the full year was 721,500 tonnes, 1.7% lower than last year mainly on expected higher grades at Centinela Concentrates and record plant throughput, offset by expected lower grades and lower throughput at Los Pelambres due to water supply restrictions resulting from the continuing drought affecting central Chile
• Gold production was above guidance at 252,200 ounces , 23.6% higher than in 2020 on higher grades at Centinela
• Molybdenum production in 2021 was 10,500 tonnes , 16.7% lower than in 2020 and within guidance
• Cash costs before by-product credits⁽¹⁾ for the full year were $1.79/lb, 23c/lb higher than last year due to the stronger Chilean peso (4%), higher input costs, especially energy and diesel prices, and lower production
• Net cash costs⁽¹⁾ for 2021 were $1.20/lb, below guidance and 5.3% higher than in 2020 due to higher cash costs before by-product credits, partially offset by the 17c/lb increase in by-products credits on increased gold production and realised molybdenum prices

2022 Guidance (as previously announced)

• Group production in 2022 is expected to be 660-690,000 tonnes of copper, 170-190,000 ounces of gold and 8,500-10,000 tonnes of molybdenum. The copper and gold production reflect lower expected grades at Centinela Concentrates and the temporarily reduced throughput at Los Pelambres because of the continued drought
• Cash costs in 2022 before and after by-product credits are expected to be $2.00/lb and $1.55/lb respectively reflecting increased input costs, especially sulphuric acid at our cathode operations, and lower production at the Group's two lowest cost operations, namely Los Pelambres, which is temporarily limited by water supply restrictions, and lower grades at Centinela Concentrates, partly offset by CCP savings. By-product credits are also expected to decrease as gold and molybdenum production falls
• Capital expenditure in 2022 is expected to be $1.7-1.9 billion⁽³⁾ as sustaining and mine development expenditure increase for the year to approximately $1.0 billion, and development expenditure continues on the Los Pelambres Expansion project and at Centinela, including the ongoing study and review work on the second concentrator. The final estimated capital expenditure to complete the Los Pelambres Expansion remains under review due primarily to COVID-19 which has impacted input and logistics costs, and project workers' absenteeis

Note: The financial results are unaudited and prepared in accordance with UK-adopted International Accounting Standards, unless otherwise noted below.

(1)  Non IFRS measures. Refer to the alternative performance measures on page 64 of this preliminary results announcement

(2)  Calculated as EBITDA/Revenue. If Associates and JVs revenue is included the EBITDA margin was 61.1% in 2021 and 50.3% in 2020.

(3)  On a cash basis