Antofagasta plc

Andrew Lindsay - Director, London Office Diego Hernández - Chief Executive Officer Alfredo Atucha - Chief Financial Officer

Alain Gabriel - Morgan Stanley Fawzi Hanano - Goldman Sachs Anna Mulholland - Deutsche Bank Jason Fairclough - Bank of America Merrill Lynch Tim Huff - RBC Alon Olsha - Macquarie Jatinder Goel - Citigroup Fraser Jamieson - JP Morgan Danielle Chigumira - UBS

Good morning ladies and gentlemen. Welcome to Antofagasta's Full Year Results Presentation.

I would like to welcome here our Chief Executive, Diego Hernández and our CFO Alfredo Atucha, take you through our presentation and then at the end we will have questions. We have a webcast under of this and audio conference as well and audio conference we will give you an opportunity to ask questions at the end.

And obviously the people in the room can ask questions by raising their hands. So with that I will hand over to Diego.

Thank you for the introduction, Andrew, and may I add my welcome to all of you who are here today as well as those attending via the webcast and conference call. I would like to start with an overview of the group, and our operational performance during the year.

Following this I would like to pass over to Alfredo who will walk you through the financials in more detail and who will speak a bit about cost management. I will then run through our growth opportunities and then close with a few words on 2015 priorities and why we believe Antofagasta remains a solid investment.

When we have finished the presentation I will open the floor for questions. Firstly, a quick overview of our 2014 performance.

Despite a challenging copper price environment, we are pleased that our operating performance has been steady and also revenue and earnings are inevitably down, we have been successful in reducing the impact on our operating cash flow while still moving ahead with our various projects. The Group maintains a strong balance sheet with attributable net cash of 315 million at the end of the year and our operating cash flow has only dropped by 150 million; despite 8.5% fall in realized at copper price.

Our EBITDA margin at 42% is still strong compared to our sector. This year we are making a capital return to shareholders of $212 million, representing a payout ratio of 35% based on our net earnings excluding the impact of the increase in our deferred tax provision as a result of the Chilean tax reform.

This is significantly lower than last year when we made a special capital return but it also reflects the current uncertainties of Los Pelambres arising from the protest of the mine and the good ruling of the mine last week, which I will say a bit more about later in the presentation. Sadly during the year there were three incidents at our operation which led to five fatalities.

This is unacceptable and we have investigated the causes of these accidents to ensure that the incidents such as these do not happen again. During the year we introduced a new safety and occupational health model which focuses on early identification of high potential risks, near miss reporting and safety leadership.

One area of achievement has been our record with respect to the lost time injury frequency rate, the benchmark of our industry. I am pleased to present a 40% reduction in this over the last four years.

We are proud that our production of copper, gold and molybdenum and net cash cost all beat the guidance we issued at the beginning of 2014. And that this is the second year running we have done this.

We don’t set guidance conservatively we set it as our best estimate of what we can achieve during the year, considering the vagaries of the mining industry this is not easy. Just to recap on the year, in 2014 we produced approximately 705,000 tonnes of copper, 270,000 ounces of gold, and 7,900 tonnes of moly.

These figures are slightly lower than in 2013 but are as expect. Cash costs before by-product credits were a bit higher at the $1.83 per pound a 2.2% increase on 2013.

Mainly as a result of the one-off signing bonuses paid to employees following the successful negotiations of new labor agreements at all of our operations during the year. This increase was partially offset by savings by the weaker peso and lower input costs.

Our net cash cost for the year were slightly higher than last year at the $1.43 per pound and this put us at the bottom of the second quartile of the cash cost curve. Looking at each of the mines in more detail.

Los Pelambres continues to account for over half of our production for using over 390,000 tonnes of copper last year and with net cash cost of $1.18 per pound it is our lowest cost operating containing it’s cost at almost a same level as achieved in 2013. During the year we brought our Esperanza and El Tesoro mines together into new company called Minera Centinela.

Production at Centinela in 2014 was 277,000 tonnes 3.9% down on 2013, mainly due to lower cathode production. Cash costs before by product credits for copper in concentrate fell to $0.07 per pound in 2014.

As a result of the weaker peso and lower input cost partially offset by the one-off signing bonus during the year following the successful completion of new full year agreement with the labor unions. Copper cathode cash cost were also impacted by this one-off bonus payments and a drop in production as the miner grade decrease.

Michilla has been in operation since 1959 and is our oldest and highest cost operation and is now coming to the end of its mine life and we'll close at the end of the year. I will quickly run through the headline financial figures and our sales, we’ll talk about them in a bit more detail in a few minutes time.

Revenue was impacted by lower realized prices, accompanied by a small fall in sales volume resulting in an 11.4% decrease in revenues. Although our margins have been squeezed with a lower copper price in 2014, our EBITDA margin remains strong at 42% and EBITDA was 2.2 billion.

The fall in revenue also impacted our net earnings as did the deferred tax charge we had to include arising from the tax changes in Chile last year, so our net earnings fell from 660 million to 460 million. However, cash generated by the operations fell by only 5.7%, reflecting the steady operating performance during the year leaving us with an attributable net cash position of 315 million.

The copper price average approximately $3.11 per pound during 2014, 6.3% lower than in 2013. Copper price was impacted by concerns over growth in China, but was supported by good market fundamentals in which the market remain tight due to production disruptions reduce it scrap availability and purchases by SRB.

There was an expectation than the market would be surplus in 2014 this didn’t materialize, also new mines have come on stream in 2014 many have been commissioned late or ramped up slower than had been expected. At the start of 2015, copper price fell sharply before recovering some ground $2.65 per pound level where it is today.

We see the push start to the year as an overreaction with copper price following the falling prices of other commodities and also been effected by the strength of the dollar and the expectation of the surplus. However, we expect the market to remain tight with the copper price improving during 2015.

Scrap availability and supply disruptions should continue to support the copper price as may the SRB. However, we need to see how the market performs now that the Chinese New Year is over to get the clear picture.

For now copper stocks are increasing which also this is not encouraging, they are still at a very low level in terms of number of weeks of consumption. Although with the last few months we have seen some concerns over the slowdown in China particularly in the property sector.

We believe the fundamentals for copper remain strong. China remained the key demand driver and accounts for approximately 45% of global consumption, at nearly 10 million tonnes.

As you can see from the pie chart on the right hand side, copper consumption in China is reasonably well spread between sectors with the building and construction sector accounting for only 21% of Chinese copper consumption. The electrical network infrastructure makes up 27% of Chinese copper consumption and a significant increase in spending by the state grid on electrical infrastructure in China is expected this year, much of it having being delayed from 2014.

As such we don’t have major concerns over China’s overall copper demand in percentage terms. Growth may slow, but a larger base in terms of copper consumption growth is still healthy.

As I have said before, we remain confident about the outlook for copper price in the medium and long-term. I would now like pass over to Alfredo, who will walk you through the financials in more detail and speak a bit about how we will manage our cost going forward.

Alfredo?

Thank you, Diego. Good morning, ladies and gentlemen, I am glad to be here today to present to you the Group financial results and also to discuss our cost savings initiatives.

Well as you can see from these slides our revenues in 2014 was down 11.4% on 2013. This was primarily because of lower realized copper price and slightly lower volume of copper sales.

In addition by further credit from gold decreased with lower realized gold prices and volume. This fall in revenue has impacted our financials and our EBITA and net earnings figure have fallen to as a consequence.

Net earnings have also being impacted by an increasing depreciation charge of Centinela and Chilean of some 87 million which I will speak about in a bit more details later. So our operating cash flow has decreased by 5.7% this is still strong at 2.5 billion.

The Board has recommended a final dividend of $0.098 per share bringing the total dividend for the year to $21.5 per share. This represents a total amount of $212 million which makes the payout ratio for the year 35% compared to 142% payout last year.

Our payout ratio is basic on our earnings excluding the deferred tax provision arising as sole of the Chilean tax reform. Firstly I would like to look at revenues.

The largest impact on revenue was of course the fall in the copper price. Our realized price decline by 8.5% to $2.88 and this reduced revenue by $439 million 64% of the overall decrease.

Sales volumes were also down accounting for another 127 million and gold sales were down and further 46 million. Our realized moly price increases by 10%.

However this was offset by lower volumes. Revenue at both the transport and water divisions was also down bringing group revenue for this year to 5,290 million 11.4% lower than last year.

The top graph shows the movement in our cash cost before by product credit split by operations and the bottom graph shows the split by type of cost. Between 2013 and 2014 we saw a 2.2% or $0.04 increase in cash cost before by product credit to 1.83.

At the operations Centinela cathodes contributed the most to the increase with falling grades and saw lower production. In 2013 we were mining the higher grade Mirador pit.

But in 2014 and this year we are mining Tesoro Central and Noreste with the grade in 2014 from 0.21% of copper lower than in 2013. This trend will continue and it's one of the reasons that we will be developing Encuentro Oxides mine.

Cost also increase at Los Pelambres with lower grade and recovery and so lower production. Looking at the cost by cost type the biggest saving came from the weakening of the Peso during the year.

Some of 35% of our operating costs are in pesos and with the exchange rate against the dollar falling by 15% this reduced group cost by $0.10. However this reduction was offset by inflation the signing bonuses, the drop in production increase in TCRCs and what we call ageing factor.

Inflation in Chile is rising and last year it was 4.6% and this year it is expected to be about the same, this push up our unit cost by some of the $0.04. As you know based on one of signing bonuses to employees last year following the successful negotiation of new labor agreement at all the group's mining operations.

This increased group cash cost by $0.04 per pound and cash cost at Los Pelambres by $0.03 per pound. TCRCs were approximately 30% higher in 2014 than 2013 and these have had $0.03 per pound impact on gross cash cost for the group.

As our mines age it becomes more expensive to extract the copper, [grade fall] haulage distance increases and these leads to higher cost. We call this ageing factors and this increased the group cost by $0.03 per pound in 2014.

2014 was an important inflection year for the group as we were able to materialize complete savings from our various cost saving initiatives. We have been able to achieve approximately 80 million of cost saving which has improved our cash cost for the year by $0.05.

So, we are talking about to cost saving initiatives, in 2014 the Group consolidated the procurement function and created central supply center. As a result, we're able to capture economies of scale and better leverage the suppliers we have across our operations.

This has created a saving of approximately $40 million as we take advantage of volume purchasing particularly, in reagents, mining equipment and tires. And we expect to achieve an additional $40 million of selling this year.

In addition, during the year we completed the merger of Esperanza and El Tesoro to form Minera Centinela. The rationale for this was to capture synergies from sharing operational overheads, the integration of mine plans and sharing of properties and facilities, this result in a saving of $25 million 2014.

2014 was a year of consolidation during which the group created a strong base from which to grow over the coming years. We have focused on increasing our productivity and optimizing the use of our equipment to ensure that highest level of efficiency.

We have been able to achieve a $50 million cost saving due to these effort with particular successes coming from drilling and fuel management. This year 2015, we're targeting saving of strong $130 million representing $0.09 saving on onsite cost.

In addition to the savings, I have just referred to. And these savings are billed in to this guidance figures we announced earlier this year.

In addition to cutting costs that affect our cash costs, we have been working on a number of initiatives that affect our cash balances. We're working hard to reduce our level of inventories across the group, thereby releasing working capital.

This initiative is centered on categorizing our supplies of inventory and creating bespoke purchasing strategies for each category to ensure we're able to achieve the best prices without compromising on quality and availability. We were able to decrease our inventories by 22% of $47 million during 2014 and I know that 30 million in 2015.

We have also been working hard to reduce our sustaining CapEx by 30% in two years and our development CapEx with our new approach to project development. We are starting by reviewing the way in which we manage projects.

And are now using larger Antofagasta led project teams on new projects rather than using EPCM contractors. Encuentro Oxides is the first project we're applying this project management style and we expect to apply it to others in the future.

This ensure that our interest lie ahead of the project and it also reduce our capital cost. We want to be innovative in our approach to cost savings.

We pioneered the use of the sea water and our operations and have made significant investment in renewable energy. EBITDA, EBITDA fell 17.8% or 480 million to 2.2 billion year-on-year, revenue fell by 682 million offset by mining cost reducing by $186 million.

Mining cost in 2014, were 17 million lower as a result of lower production. The fall in exploration and evaluation costs also reduced mining cost by approximately $110 million.

Although, this factor related to a 480 million fall in EBITDA as Diego pointed out. The Group still has a strong EBITDA margin relative to the sector at 42%.

And we're committed to ensuring, we maintain our good margins. Net earnings 2014, net earnings were 459.8 million down 30% compared to 2013.

This included a differed tax charge arising from the tax reform in Chile during 2014. The total charge was 220 million which has an impact of 142 million on 2014 net earnings.

Excluding the charge net earnings would have been $610 million and this was the figure that was used to determine the minimum dividend that we were committed to distribute. The main components for the fall in this year profit were due to the 480 million drop in EBITDA.

In addition there was an additional 87 million of depreciation which I mentioned a bit earlier. Most of this arise from the acquisition cost of Tesoro Central and Tesoro Noreste being depreciated during the year as the pit are being mining.

While 2013 mining was at Mirador which had no acquisition cost. Also at Michilla there is $28 million charge as we are writing its asset down zero in anticipation of the mine closing at the end of this year.

This increases were especially offset by lower corporation tax and royalties and lower [auditory] as profitability dropped. Cash flow despite decrease in revenues the Group operations continue to generate significant cash 2.5 billion during 2014.

As you can see from the top graph, the main reason for cash movement during the year were the payment of $0.861 2014 final dividend which equated to 849 million plus the 2014 interim dividend of $115 million. Secondly, capital expenditure of $1,646 million which includes 707 spent on the Antucoya project and an increase of $1 billion of net borrowings which related to new long-term borrowings at Antucoya, Centinela and transport division.

A new short-term borrowing at Pelambres especially offset by repayment at Centinela and Los Pelambres. This resulted in a closing gross cash position of 2.4 billion at the end of 2014 compared to 2.7 at the start of the year.

After accounting for debt the net debt position was 1.6 million or on an attributable basis we are in the net cash position of $350 million at the end of the year. This slide shows our capital expenditure in 2014.

Total CapEx of 1,580 million includes sustaining CapEx and development CapEx for our different projects. As you can see our sustained CapEx is expected to come down markedly in 2015 and in 2016 we expect to keep it down below 2014 levels.

As we work to achieve a level of CapEx per tonne of production similar to comparable efficient producers. This reduction requires significant effort and discipline.

We are also expecting to reduce our development CapEx over the coming years, due to our new approach to project development and for the integration of our corporate supply model. Dividend; our focus on shareholder value is not new its centre to how we operate.

We have a history of high dividend payouts and last year we simplified our dividend policy. We are committed to paying a minimum annual dividend of 35% of net earnings and to distribute in any excess cash having taking into consideration the Group’s current cash balance and forecast earning under different copper scenarios, free cash flow after a cash buffer, any significant known or expected funding commitment and our level of debt particularly considering potential acquisitions.

We have this policy as a single commodity producer our earnings can be very viable and this year earnings are down and so our total dividend is down as well. However the Board has proposed a final dividend of $0.098 per share bringing the total dividend for the year to $0.2105 per share, or equivalent $212 million.

This is a payout ratio of 35% on our net earnings before the deferred tax charge or 46% of our net earnings after the charge. Antofagasta has a history of returning excess capital of our shareholders, as illustrated last year when we paid down our net cash position as a dividend.

Over the past four year we have returned 2.5 billion shareholders. We continue to generate a strong EBITDA margin, although this has been squeezed this year as a result of the lower copper price and we still have a reasonable return on our capital employed.

We show here on this graph our margin and ROCE over the last five years compared to the constituents of the first 350 mining index and you can see that although our returns are down, they are still strong consistently outperforming our peers. Going forward, our intention is to keep our margin and ROCE strong, not by relying on the copper price which will strengthen, but by concentrating on managing our cost both capital and operating.

And now let me hand back to Diego, who will talk about the growth opportunities. Thank you.

Thank you, Alfredo. Most of you are familiar with our strategy; it has not changed for several years and reflects how we view our industry as a long-term undertaking.

We’re making decisions based on short-term change can often be counter proactive, so just to run through it quickly again. For our existing business, we’ll continue to focus on cost control and management who will deliver on our production and cash cost guidance, we’ll continue to drive operational performance from our assets and we’ll continue to work with communities to maintain and strengthen our license to operate and we will continuously refine our approach to these effort, for growth projects and opportunities in the areas that we already operate.

We will complete Antucoya and the Centinela expansion on time and we will progress Encuentro Oxides, Centinela Second Concentrator and Los Pelambres Expansion projects. And outside of our core business, we will advance the Twin Metals Minnesota project now that we have full control of it.

Commodities are cyclical and our approach is to invest through the site. Copper price is low at the moment and our strategy when prices are lower is to develop higher return lower risk projects such as Brownfield expansions will steadily advancing Greenfield projects ready for future development.

We’ll ensure that our environmental permitting process is adequate and not only is in compliance with all the legal requirements, but also in meeting stakeholders’ expectations in a balanced and permanent way. As you can see in our portfolio road map, we have a number of projects at all stages of development and I would like to touch on each of these.

Antucoya remains on time and on budget for first production in the second quarter of this year with the first full year of production of approximately 85,000 tonnes of copper per annum cathodes in 2016. As at the end of February, the project has reached 99.7% of overall project completion.

The project is currently going through dry commissioning and pre-commissioning for the primary crusher has been completed. The owner's team are now on site working with EPCM contractors towards first production during the second quarter of this year.

We are proud that this project will be the only mine opening in Chile during 2015 and proud also that this is the first project in Chile to come on stream, on time and on budget for some five to six years. Encuentro Oxides, in November we completed the feasibility study for Encuentro Oxides and this project has now been formally approved by the Board.

This project is part of the Centinela mining district development and will provide feet for Centinela solvent-extraction electro-winning plant allowing it to resume full production or hand 2,000 tonnes per annum of copper. First production is expected to be mid-2016 with a first full year of production of approximately 50,000 tonnes per year in 2017.

Importantly Encuentro Oxides acts as the pre-strip for the much larger Encuentro Sulphides deposit which lies below it and will feed the new second concentrator at Centinela. We are using an in-house team to develop the project, which will consist of a mining fleet, new crushing and heap leach facilities, a water pipeline from Centinela and pipelines to transport pregnant solution to the existing Centinela solvent-extraction electro-winning plant and dispense solution back again.

We have been successful in reducing the CapEx for the Encuentro Oxides project at the feasibility stage and have reduced total CapEx for the project by $156 million. The regional pre-feasibility CapEx figure was 756 million, which didn’t include an amount of 36 million relating to the water pipeline.

Initially Centinela wants to bear the cost of this pipeline, but this expense is now part of Encuentro Oxides project CapEx budget, as such the adjusted pre-feasibility figure is 792 million. Part of the overall savings we have captured is thanks to the weaker Chilean peso but we have also made a number of optimizations which have resulted in CapEx saving of 156 million.

These included optimizing the mine fleet and pre-stripping and rethinking our construction strategy. As is usually the case when a project moves from the pre-feasibility to the feasibility stage estimates are updated and omission or underestimating including the CapEx estimate.

For Encuentro Oxides project these have meant an increase in CapEx of approximately 80 million the revised CapEx figure for the project is reduced from 792 million to 636 million. The Centinela mining district has some 7 billion tonnes of resources and includes a portfolio of projects and deposits for near and longer term development and growth and this will be advanced over the coming years.

The first of this will be the completion of the debottlenecking project to reach 105,000 tonnes of ore per day into concentrator plan from 2014 level of 86,000 tonnes. This project is progressing well and we expect it to come on stream late this year.

In addition to this we are also finalizing the feasibility study for the installation of the moly plant at Centinela which would come into production at the end of 2016, producing some 2,400 tonnes of moly here for the first five years, before it increased once the second concentrator is complete. The pre-feasibility for the Second Concentrator Centinela study has just been completed and we expect it to progress to the feasibility study stage if this is approved.

Should the necessary environmental premise we obtain in good time, construction should start by the end of 2016 with production in 2019. Ore will first be sourced from the Esperanza project and then from Encuentro Oxides, once Encuentro Oxides as been mined.

There are nearly 7 billion tonnes of mineral resource in the district under concentrators under oxide plant provide optionality for how these are developed over the coming years and decades. Given the size of the resource base at Los Pelambres, which is more than three times the quantity of ore that is expected to be process under the existing mine plant.

There is significant scope to increase the plant capacity. However the groups focus remains in the near-term on the expansion 205,000 tonnes of ore per day.

The incremental expansion project at Los Pelambres will lift daily throughput by 15% to 205,000 tonnes. As part of the project development we first need to complete an environmental impact assessment and only then will the necessary permits be issued.

The baseline study which is required as part of the environmental impact assessment will commence soon and the AEI submitted in 2016. Completion of the feasibility study has been postponed until the AEI has been approved as the outcome of the AEI may impact the content of the feasibility study.

Much of the technical design and engineering aspect of the feasibility study have been substantially completed and the pre-feasibility study CapEx estimate of 1.2 billion remains reasonable also this estimate doesn’t include a desalination plant the details of which are currently being determined. The AEI approval and the project execution decision first required settlements of all the pending lawsuits.

At Pelambres we have two particular challenges, power and water. We have been talking for some years about how we have gone about resolving our exposure to high and volatile power cost and during 2014 we made further progress.

Two PPAs were signed with solar generators and the El Arrayán wind farms started operations. Currently some 45% of Pelambres power is being provided under lower cost PPAs and by the end of the year or early next year this will rise to 65% of which over half will be from sustainable resources.

By the end of 2018 all of Pelambres power will be from long-term PPAs and 80% of it sustainable. As regard water these has always been a major issue in Chile.

At our mines in the North in the Atacama Desert we use seawater, which makes water a matter of cost not scarcity. Further south at Pelambres we use fresh water and cost and scarcity are issues, located in an agricultural region with other communities nearby water is scarce resource.

This position has deteriorated over recent years with below average rainfall and this has been particularly acute this year which has been the driest for a long time. As I mentioned at the beginning of this presentation last week two issues came to fore was related to water, protest and court decision.

As we have previously announced in late February and early March there were protests on the access road to Los Pelambres about the availability and quality of water in the Choapa Valley which disrupted production of the mine. The protest has now ended and operations have returned to normal.

Total loss production is estimated at 8,000 tonnes some of which maybe recovered over the rest of the year. As part of the settlement with the protesters an agreement was signed under which Los Pelambres agreed to contribute funding for the study of desalination plant project not our own project, which will be developed under private public alliance or public concession scheme.

Pelambres also agreed to contribute funds to complete studies for the construction of a water dam for local use, which if constructed would also be developed under a private public alliance. These two initiatives will benefit local communities and farmers.

Finally Pelambres agreed that it will use sea water for any further expansion of its mining operation that will be our own desalination plant. As regard to court case in October 2014, the Supreme Court by split decision upheld an appeal filed by a section of the Caimanes community and ordered Los Pelambres to submit a plan of works to ensure the operation of the Mauro tailings dam doesn’t affect the normal flow of the waters of the Pupio stream to the Caimanes community.

In November 2014, Los Pelambres submitted this plan to the Civil Court in Los Vilos. Last week the court found that the plant was not sufficient to address the requirements to ensure the normal flow of the Pupio stream and as a consequence Los Pelambres must demolish part of or all of the tailings dam work.

Los Pelambres consider the ruling to be flawed has appealed the court decision and is considering the exercise of all available legal measures that maybe required to overturn this decision and address its potential consequences. However, the addressed ruling from the Civil Court of Los Vilos means that there is some inherent uncertainty as to the potential impact on Los Pelambres for the rest of 2015 and beyond.

I'm sure that you will have more questions about this and I would be pleased to answer them when we get to the end of the presentation in a few minutes time. We continue to develop our portfolio of growth prospect outside Chile.

Twin Metals is a group most advanced international opportunity with a significant resource base. Earlier this year, the group completed the acquisition of Duluth Metals Limited, our partner in the project consolidating the group's ownerships in the project to a 100%.

The group is currently evaluating further optimizations on the pre-feasibility study that was completed in 2014, while advancing the permitting. As the permitting system in America is rigorous, we expect it will be some seven years to 10 years before any mine at Twin Metals will come into production.

Beyond Twin Metals, our portfolio of early stage exploration agreement with various unions mining companies continues to progress. We have dropped several projects during the year and picked up a few others.

Our expenditure on exploration and evaluation in 2014 was 168 million some 102 million less than last year as we reduce our spending on pre-feasibility study. Lastly, I would like to close with our outlook for 2015 and our investment case and then I will open the floor to questions.

Looking forward to 2015, before the events at Los Pelambres, group production was expected to be 5,000 tonnes higher than in 2014, 710,000 tonnes of copper. We'll now work hard to achieve this target, but as I have just mentioned, 8,000 tonnes of production has already been lost of Los Pelambres, which we expect Michilla to produce less copper, Antucoya Chile's only new major copper mine in 2015 will be coming on stream and we expect production from Antucoya to more than compensate for this.

We expect to produce approximately 250,000 ounces of gold and 9,000 tonnes of moly. This year group cash cost before by product credit as previously guided are expected to fall to $1.75 per pound of copper and net cash costs are also expected to be slightly lower at $1.40.

As we benefit from a weaker peso and lower oil price together with some further savings that will be achieved during the year. This could change if we are not able to reach our production target particularly considering the events at Los Pelambres.

We have a portfolio of high-quality long-life assets; we are focused on developing and expanding our two world class mining districts and are well positioned at the bottom of the second quartile of the cash cost curve. We remain focused on cost control and have implemented initiatives to target cost savings at both the operational and project level.

Our portfolio of organic growth projects is strong, we are prioritizing brownfield projects and reengineering projects to ensure we get good returns from our investment. We have a strong balance sheet generating strong operating cash flows and sector leading margins on returns.

Lastly, our strategic has not changed and we continue to invest through the site. We are steadily advancing our portfolio of projects and are well placed to weather the current pool market conditions and to take advantage of turn when it occurs.

Thank you for your time and now Alfredo and I would be happy to take any questions you may have.

This is Alain Gabriel from Morgan Stanley. Two questions on the CapEx, firstly on the desalination plant, what was determined whether you will hit the lower end of the guidance or the upper end of the CapEx budget for the desal plant?

And will it impact the OpEx? And the second question is on the CapEx guidance for 2016, I was surprised by how low it came given that you have substantial spending on Los Pelambres' expansion and the Centinela second concentrator.

So what is included in the development CapEx there?

The second question what is included is for 2016 is the completion Encuentro Oxide is the stay-in business CapEx and is the continuation of the studies for Pelambres and Centinela. The decision to go ahead with the Centinela project, we will not be before the end of 2016.

What we’re doing now there is waiting for some permits that we should obtain soon and then we will apply for the environmental impact study that will take at least 12 months. Meantime, we will proceed with the feasibility study in a way that by the end of next year we should have the approval of the permitting at the same time ready with the feasibility in a way that we can take a sound decision at that time.

The first question was?

On the desalination plant, what will drive your decision?

What will…

What will drive your decision whether it's going to come at the lower end of the guidance or at the upper end of the guidance? There's a 500 million delta.

The size of the desalination plant that we want to build.

So will it be for the entire output at Los Pelambres or just for the expansion?

No, our commitment is to put a desalination plant for any expansion and just for that it will be around -- it will be the lower end of the CapEx.

And will it impact your OpEx by any chance?

Of course, it will impact our OpEx.

Fawzi Hanano with Goldman Sachs, just a quick continuation on the Los Pelambres on desal plant. Given that you will be using seawater, did you explore for given it’s a separate grinding mill and flotation miller circuit, did you explore the option similar to Centinela sulfide to use seawater directly into the plant?

No, I don’t think that’s a good idea because that means that you will be putting seawater in a tailings dam. And then you could have issues with sea pads of salt.

If a tree dries 100k from the tailings dam we'll be accused of putting salt on the ground, it’s a farming land.

And then the second question, something you guys highlighted in late 2013 regarding the increasing hardness of ore Los Pelambres of the net increase from the expansion would be about 50,000 tonnes lower than the gross, could we assume realistically by the end of this decade that Pelambres production falls by about 50,000 tonnes before it increases from the expansion?

Not by the end of the decade and say probably on the average of the next 10 years, say if we don’t do the expansion, the incremental expansion, in 10 years time we will be losing probably 40,000 tonnes to 45,000 tonnes of coal per year compared to what we have now, because of harder ore.

It’s Anna Mulholland from Deutsche Bank. And just another question on the Los Pelambres situation obviously the protests have gone away, you've had good negotiation, you've come up with a settlement.

What are the risks that the process remerged something else happens and potentially perhaps given the time that it will take for you to sort of implement what you’ve agreed? And the second question is on your cash cost guidance you’re talking about a further $0.09 to $0.10 per pound drop that you can deliver from continuing the cost savings given that oil seems to have resumed its downward side, the peso is continuing to weaken, do you think these can be maybe get a little more out of the cash cost base from those benefits?

Okay, clearly if you will answer the second question.

In terms of cash costs, the price of oil, oil price is not relevant nor is in at Los Pelambres probably if you have a $15 change movement in the oil price is affecting $0.01 to $0.015 the cost is not very relevant. So $0.09 in terms of onsite cost is just operational cost is coming from as I said before $130 million to $140 million cost reduction in concrete way basically coming from the supply initiative, the second part of the Centinela merger and some efficiencies in terms of consumption rate.

On the other side, part of the customer will be compensate and by higher TC/RC, so with that reason at the end when you see one cash cost, you need to add two additional factors, one of them is the TC/RCs increasing by 18% during 2015 and the other is lowered by products regarding production. The first part of your question is about well of course, we have reached an agreement with the communities and the local authorities to proceed with those studies and we believe that will answer their expectations.

Of course we can never guarantee that we'll have no protest anymore. But we believe that faced to a potential closure of the tailings dam that means the potential closure of the mine.

Really the community reacted in favor of the company, nobody wants, they have declared that but they don't want Pelambres to stop operating because that means Pelambers represent 25% of GDP for the fourth region and represent, it's the main source of quality jobs on the Choapa Valley area.

Jason Fairclough of Bank of America Merrill Lynch. I have two questions from me.

First just in terms of the lawsuit and the protest. Would you say that as an organization you were surprised by what's happened and to the extent that maybe you could talk about how you're changing the way you do things?

And then just more generally, if I look at the projects you have a lot of growth optionality but it seems that a lot of it is if you like on hold, pending environmental studies and permitting. And I'm just interested to see if that's a Chile thing or if it's Antofagasta thing?

The second question of course is I will not say that this is only Antofagasta or a Chile thing, it's a global issue. I think that you find everywhere the same kind of problems and I think well, what you have to do is to address one thing, that I can't do from here is that all our mines, all our assets there, all our equipment the concentrators, the tailings dam design, all of that has been done according to the world class standards, that mine could be anywhere in the world that will really meet the required standards.

Then I think that the mining business globally to have new projects well the permitting becomes one major issue that we need to address probably differently on the way we addressed to those issues 20 years ago. And there is a process or the same with the communities, we need to change our approach with the way we interface with communities and we have, we're doing that and we have a plan to how we should address our relationships with the local communities from now on.

It's not something new it's something that we have been putting in place for the last couple of years. But it takes time and one particular issue in Chile is that the tax system in Chile is centralized and if you have a project in many place in the country, it doesn't mean that the local area, the municipality or the region will be receiving more money from tax collection.

It's a centralized system where the central government collect the taxes and then they're distributed according to what is called the national budget. And national budget counts for probably 90% of the budget in the country.

The balance being the budget of the municipalities that they collect some taxes. Well if we were surprised or not I think that the surprise was that what we were asked to do is not possible to do.

Of course you cannot demolish the wall of the tailings dam. Unless you build the new tailings dam and you transfer everything that you have in that tailings dam to a new tailings dam.

So I guess the question that is to the extent that, that ruling came out, is this just a judge I use a scheme term going off piste? Or how should we think about this?

Because it does…

I cannot give personal opinions or speculate on that, just need to rely on facts.

It’s Tim Huff from RBC. Just on exactly that note that you mentioned which is the solution that they have offered which is turning down to tailings dam isn’t really feasible.

Can you give us a couple of ideas in terms of what you're thinking in terms of the workarounds, because that was my first impression as well. But I didn’t really have -- we don’t really have the options as to how you work with the local community and what are the options to them instead of turning down the tailings dam.

And then the second thing is I just saw the government comment for you and the local community to work together given your comments on how environmental permitting and community relations need to change going forward. I was just wondering what the either local or national government’s position is the whole Los Pelambres issue right now?

I don’t want to give personal opinions or interpretations of what is going on, because say that’s not my role. First of course there are two different aspects on -- I am talking about the tailings dam issue and the lawsuits.

Of course there is an issue of having more water available for them anyway this is an area that historically you have not too much rain and you go to periods of droughts and then you have some rains and then again it’s not intensive farming there, intensive agriculture, on that area, it’s not a rich farming area, but also there is also there is another aspect of indemnities, asking for monetary indemnities. And they are the two aspects there and we need to deal with both of those.

Certainly you can always do things better, I think that we have done a lot of things and but probably we need to readdress to change the approach and for that well one important issue is to better know what the community wants and not decide with the authorities what the community needs. Then it’s an engagement there with the communities and we need to address that in a different way.

That’s not only a big applicable there it’s applicable I think in Chile and many other projects and also in other countries.

Alon Olsha, from Macquarie. I just had a question on depreciation and then another question on Los Pelambres.

So depreciation went up by about 10% this year and you've outlined the reasons why, I was just wondering if this is the new basis for the depreciation charge we can expect over the next couple of years because included in that as you said was 28 million noted to Michilla which was once down this year. So just some color on that.

And then back to Pelambres, could you give us an indication of on what basis did the Los Vilos court reject the plan of works that you submitted. What were the issues that they raised there?

The depreciation charge in 2014 was higher than the previous year, basically two factors as I mentioned in the presentation. The first and the easier is related to the Michilla, Michilla we decide to accelerate the depreciation according with the accounting standards in order to get the new book value at the end of this year because we have decided to close the company.

But the most important charge in terms of depreciation was related to Centinela, basically because of we're depreciating now at Centinela, Tesoro Central and Tesoro Noreste two deposits. And we are depreciating these because -- we are depreciating the acquisition costs of both deposits.

Tesoro Central and Tesoro Noreste were owned by Antofagasta Minerals and Antofagasta Minerals sold these to Tesoro some years ago. So now we are mining these areas, the zones and of course we need to depreciate the acquisition cost.

Last year, we were concentrating in mining Mirador and Mirador doesn’t have any acquisition cost. This is basically the picture about the depreciation and we will have the same or similar charge in 2015 and in 2016 practically we will be ending the depreciation of the both deposits.

On the other question about Los Vilos judgment. So this is a low street that we were not the first instance in Los Vilos some years ago, then it went up to the Court of Appeal and also we won and then it went up to the Supreme Court.

And the Supreme Court decided that the company should propose a plan to improve the flow of water on the Pupío stream and then ask the judge of the first instance of Los Vilos court where the lawsuit started to manage that, too look after that. Then we presented to the Los Vilos court a plan to improve the water flow, but the plant probably costing around $10 million and then the judge looking after that plan he decide -- the Supreme Court said well, present the plan, if you don’t present the plan or the plan is not good enough then you have to demolish the totally or partially the tailings done work.

Then the judge he decided his judgment is looking after the plan, he decide that the plan was not good enough to ensure -- wasn’t good enough. Then if the plan is not good enough, then you have to switch to the other option that is to demolish and this is his judgment.

And we appeal and could appeal accepted that we can appeal. Now it will take two to four months to have the result of that appeal.

Jatinder Goel from Citigroup. Two questions, firstly on dividends, you mentioned that Los Pelambres situation had an impact to resort to the minimum committed payout ratio.

If things were steady state and there was no change at Los Pelambres situation, could you give an indication what kind of payout would you have thought for this year? And secondly on the desal plant on public, private partnership, what kind of contribution are you expecting from the public side assuming you’ll be the private party to that.

Is the 500 million just your contribution for the baseline desal plant? Or is 500 million total capital expenditure and you're not expecting any CapEx from the public side of it?

First, the second question, there is a confusion. So there are two desalination plants, one is our own for Pelambres incremental expansion and that will cost the number that we put there from 400, depending on the size.

The other plant is not a plant that will be built necessarily is to do fund and to help doing a feasibility study to see if it's feasible economically and technically feasible, technically it will be but economically feasible to put a desalination plant for other users on the value. And that we don’t know how much it costs because we need to agree on the size and is a study that will not be difficult to do because we have the data on our own project that is in feasibility study state.

Let me answer the dividend, if I understand well the question is if we didn’t have had the problems in Pelambres what our dividend distribution will be? Now, I cannot answer, that’s speculation, when the Board met Tuesday last week, well the judge came with the judgment on Monday then -- and we had the protestors still there then that will be speculative answer.

Just a final follow-up on desal plant your own desal plant. How much time do you think will it take for construction because you clearly needed for 1.2 billion expansion because you've committed to using sea water for that?

It will take the same time so you build not in parallel to the expansion product at the mine side. The only delay compared to what we had before is that now we need to include the desalination plant and our environmental impact study and for that we need to capture data on the field in the one year cycle that we started so far that’s why everything is delay one year.

Fraser Jamieson from JP Morgan. Just very high level general question somewhat related to the Los Pelambres stuff.

You clearly have a huge resource there hugely valuable mine under our clearly some issues around the future for expansions et cetera there. How is that changing the way that you're thinking one about international expansion but to just about expansion with Los Pelambres?

Should we -- and is the board on management team starting to think and try to rotate growth plans away from Los Pelambres and come out with more longer term options with Los Pelambres.

I think Los Pelambres is a world class asset it has -- if you compare the current operating plan with the potential the current plant ask for earlier on 40% of the copper content there. There is still room to have a longer life or a bigger operation there.

I think that there is not any technical reason why that should not be developed and doing it with the right standards and that mine will continue to be competitive and so on, just is the matter of what the country wants about the mining developing the future. And I think that the country wants to continue to develop mine.

I think that's just matter of discussing doing things well and have enough patience to continue to persist on that changing the relationship with the communities trying to show that really mining adds value to the region to the local community and to the country. And this is what we have to do, then that would not be changing our efforts.

In terms of international expansion that’s irrespective of Los Pelambres we would like to have something more geographical jurisdiction because of the size of our company it could be time to try to do it and we believe that Twin Metals is a good alternative. But it's not something that we need to try to speed up and do it on the short-term at any price.

Danielle Chigumira from UBS. A couple of questions, firstly around the timeline.

So you mentioned that part of the appeals process will take three to four months. Just wanted to clarify would that be to the end of all possible appeals processes.

And the second question is on the -- where you're doing the study for the desal plant under the public private alliance. Could you give us a broad idea of what kind of signs that desal plant have to be to serve the local community?

I don’t have an answer because you need to do the study. First you need to decide what will be the use of that water?

If you have to desalinate that water and pump that water upstream to use in growing trees or cattle probably it will be not be economic. If it's for other uses portable water for towns and people will eventually it could be economic.

Then we need to look after that. But it doesn’t mean that we are committed to finance and to operate that desalination plant only if it makes sense and that’s why it's a public private partnership there and the government will be involve in.

On the lawsuit -- the next step is the appeal and that can take two to four months and then probably the next step will be Supreme Court and that can take another -- then it's really difficult to say how long that takes. These lawsuits started by 2008 and we have been there for six years.

And it could take a long time, so that's the way it is. Well questions from dialing.

Can we go to that now?

Then we have one here.

Thanks, just a further question. I'm looking at your appendix; you got some useful information on the power costs and the volatility in the prices particularly on the central grid.

Just wondered if given the drought situation has been particularly severe, do you expect the forthcoming so first spot price the forthcoming prices in the first half is normally higher than the second half for power prices. Do you expect it to be particularly steep?

What's happening right now in terms of the sort of impact of the drought?

There are two components there, one is the number of times or where you are at the spot. And say in the spot price start with the lower cost generator and then if there is more demand you go to the next one.

And then if we are exposed in a greater quantity to the spot then that's negative because it could go up, but on the other hand with the worst is when you go to the most expensive one is the diesel generation. And many times you go to the diesel generation as spot price.

And because the oil price is lower now than the diesel is lower then I think that internally we probably we will go more often to the diesel price, but with the as ceiling in terms of cost then that's the equation. Overall, we don’t know but probably not more than last year.

Diego, just a follow-up on Alto Maipo. Could you talk about what you've invested so far?

What's been the cash outflow to that project? And from here, how much more do you spend before you actually start to see power coming in from that?

So our commitment say now the investor in Alto Maipo is Pelambres Company, it is not Antofagasta plc, it's Pelambres Company. Then our partners here the 30%, 40% of that and we share 60% of that investment and the total commitment is 300 million.

I don’t know how much we have….

Yes the project the cost of project is 2,000 million 60% will be financed by financing from the bank and 40% as equity, so 30% equity contribution and we have contributed until now $250 million and we will complete our participation during 2015.

And in terms of the cash flow, I noticed that those seem to be structured as a loan. I was looking at cash flow statement last time last night that's -- so is that actually a loan that converts to equity or because I think the outflow is 120 million in 2014?

No. The equity contribution is equity contribution, and the loan has been obtained at the end of last year.

And we're not thinking to do recourse loan…

It's a non-recourse loan, we don't guarantee the loan. It's a standalone project, like usually it is with power projects.

Just a quick one, any early thoughts on warehousing bans at the ports which we have seen recently? Do you think it's a localized issue or can it expand to other ports of Chile as well?

And what do you think is the solution going forward? Because if everybody is forced into just-in-time inventory management at the ports what kind of volatility can we see in terms of shipments from Chile?

For cathodes?

Yes.

I don't seem that the situation has changed too much, I think that they know that have the power to put pressure. I think it depends on which Chilean port.

In the north of Chile more and more exports of cathodes are in containers and on the container sides probably you have less issues that in others, but in bulk. I don't see any major change compared to the previous years, on why this is going on.

Thank you very much.