Antofagasta plc

Thank you, Ivan, and welcome to everyone joining us today. My name is Mauricio Ortiz and I will take you through our financial performance.

2023 was a good year for Antofagasta, we deliver 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 of our main figures in 2023.

With the ramp up of the expansion of Los Pelambres and further optimization of our operations at Centinela, our copper mining 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 primary driver of our production increased to more than 660,000 tonne 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 Pales. On grades, the second largest factor impacting production and costs, we had a decrease at Los Pelambres and Centinela CapEx, 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 costs flat year-over-year at 1.61 cents per pound. This was mainly driven by higher gold and molybdenum production, generating 70 cents per pound credit for byproducts and savings were also delivered through our Cost and Competitiveness Program which I will explain in the next slide.

With regards to our Cost and Competitiveness Program, we saw excellent results in 2023 with 28 million 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 9 cents per pound, helping to keep costs in line year-on-year and partially offsetting the lower grade. On the back of this result as well as 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 EBITDA and margin, we were able to translate the sales volume and realized price increases completely offsetting the cost movement into a healthy 5% higher EBITDA than in 2022 and keeping our margins in line year-on-year.

[Indiscernible] increased gold and moly production by 18% and 13% respectively, with our revenue streams from byproducts being key features of both Centinela 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 few minutes on our capital allocation framework, as this provides clear definitions of how best to balance growth, the 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, as 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 be 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 net earnings or 72 cents per share and the proposed final dividend reflects our disciplined approach providing right balance between the investments 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 getting into the next phase. Our net debt-to-EBITDA ratio is low at 0.38 times.

Our asset assets continue to generate the strong EBITDA, 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 copper producers.

As shown on the left, our portfolio has consistently delivered EBITDA 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 Centinela with a second concentrator.

This product portfolio and our financial discipline allows us to deliver shareholder returns to investors seeking exposure to cover the metal for electrification to enable the energy transition. And with this, and now I'll hand it over to Rene, who will take us through our work on sustainability.

Rene?

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 lagging 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 advance in their careers at Antofagasta. Another highlight to note is regarding our permit approval of Los Pelambres and Zaldívar, 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 liters 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 Zaldívar, we have now received the DIA permit, which aligns both our water and mining permits, and allow us to keep operating until 2025.

The DIA to extend the mining and environmental permits until 2051 has been submitted and is in the next permitting step to secure operational continuity at Zaldívar after 2025. We continue to make progress on decarbonising 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 targets for the first time. The targets shown here are the culmination of a year's work to determine our decarbonisation pathway.

First of all, we have said our new Scope 1 and 2 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 renewal of Scope 3 emissions target of reducing emissions by 10% by 2030. It is worth noting that Scope 3 considers 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 look into 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 circulator water sources.

As mentioned previously, we received approval for our DIA late last year for this particular project. On communities, we have a 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 assessment 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 can 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 medals and as you can see in the photo, we put copper in the center of the medal illustrating that copper is at the heart of Chilean and the heart of Antofagasta.

Protecting nature and biodiversity within and run 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 a still 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 Assisting 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 ICMM’s 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 core belief that copper should be produced responsibly in a safe and sustainable way that is central to our purpose.

I will now hand over back to Ivan who will take us through our growth portfolio and innovation.

Okay. So thank you, Rene; 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 a growth portfolio and the future. That picture that you see here is in Encierro, which is a project that we announced a made in mineral resource estimate in 2022.

Work here and at Cachoro 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 at Los Pelambres and Centinela. Before doing that, I mean moving to what we expect in 2024.

Here we have the same information that we provided in a production report in January, so I won't spend too long. The key message is 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-on-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 Centinela in 2024, adding a further 170,000 tons per year for a total copper production once this project is completed towards the end of 2026. Finally, in this morning announcement, we disclosed that at the end of last month, during a scheduled cleaning activities, we detected material in Los Pelambres concentrate pipeline that was topping 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 remainder 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 slide illustrates how we're going to achieve our ambitious to grow to 900,000 tonnes of profitable copper production. And a recent announcement to proceed with the Centinela second concentrator is a significant step in us achieving this goal.

More broadly, our focus remains on copper in the Americas where we see significant potential. For 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, the bulk of the investment is in the Centinela district, the bottom dark blue area, and Los Pelambres, the top two light blue areas. They're the two key long-term growth prospects in our portfolio.

While investment at Centinela has began and forms the lion's share of the CapEx, you can see that it will peak in 2025. The structure of financing for this project reflects the long-term nature of this operation.

On Centinela, note that the numbers shown here did 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 by $400 million. That's separate to the revenue obtained from selling 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 Centinela. We think this is a great enabler for the mine life extension at Los Pelambres, so positions basically the asset 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 estimate or guidance for this year, and then providing for 2025 some reference, which will be the peak year for capital expenditure, according to our plants. I want to talk a little bit about Los 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 great 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 the El 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 Centinela 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 our requirements for ore from higher grade in Encuentro Sulphide, which was otherwise scheduled to be developed later in our mine plans.

As shown in the CapEx light 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 Centinela’s water supply.

This could result in a reduction of CapEx by 400 million, and that's receiving proceeds of up to 600 million to the sale of existing infrastructure. A final decision on whether to proceed on the water assets will be taken in tandem with significant deficit 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 to 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 Cuprochlor-T, our in-house technology for the leaching of primary swordfights. We achieved encouraging results in 2023 at industrial scale and we're now in discussions with third parties to trial this technology and 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 Centinela, we are developing an optimization for the sequencing of loading whole tracks of the experience or should be, 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 driven, also productivity improvements, which is part of our cost savings expected for 2024. Finally, leave I would like to leave you with a few thoughts.

Antofagasta is a pure play 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 discipline 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 is Jason Fairclough, Bank of America.

You’ve touched on it very briefly there but I wanted to just explore your decision to invest into Buenaventura. There's 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 we have a strategy, the center of our strategy is around development of our 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 a jurisdiction that we know, we've been in Peru for several years doing exploration. If you look at the portfolio, and this is something that they disclose 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 do 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 sit in the company in the Board, seeking representation, which is sort of the next step. So there's a lot of, therefore, links, and elements that we see are interesting from an opportunity, and a value point of view that we can harvest, but it's early days yet, we're just seeking the representation of the Board.

We've obviously done several reviews ourselves about 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, we've done a lot of innovation around processing minerals, especially low grade ore with [Indiscernible].

And that's an interesting technology that we're now looking to sort of eventually test in other ore bodies with third parties. That could provide an opportunity, which 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 years. The mining is a business that has long cycles, I've learned.

We've been in Peru, someone was reminding me probably for over 10 years now we're doing exploration. This is a good add on to the footprint that we have.

So we will look at things with a long-term perspective.

Okay.

Good morning. Ian Rossouw from Barclays.

Just on this CapEx slide and the Indicative guidance you've given, we've obviously -- in 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 1.5 for the next few years.

So just once these some of these projects like [Indiscernible] and some of the other one-off rolls off, what is the right sustaining CapEx for this business going forward? Because it seems like that number has always maintained around 600 to 800 but it never seems to come down to those levels.

That's the first question. Now, let's leave it at that.

Thanks.

Yeah. So on sustaining CapEx I'll say a few things and then just allow Mauricio to expand but, yeah, we've sort of guided for the next 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 this inflation that's sort of involved in this numbers.

The other thing is that the asset base that we have is changing. I mean, we've invested recently in the Pelambres expansion one project, which has been completed, over $2 billion, but this is providing extra value for the company.

And we're just initiating a $4.4 billion project at Centinela. So our acid base is growing and, therefore, our sustaining CapEx in absolute terms, 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 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 has got over 20 years and, therefore, it's associated to that as well. So that is the range that we think is relevant to think about sustaining CapEx for the next few years.

Thanks. Can I just push on that?

I mean, what would you say is the new base after Centinela then comes on stream?

Do you want to?

Just to wrap up what Ivan said and then jump to your specific question, Ian. So basically, we are -- the rationale behind investing in sustaining CapEx is to preserve our ability to keep delivering copper, according to our main 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, yeah. 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 Centinela, if we take out the water, we're going to reduce that number, be clear on that, we're going to have an expanded asset base and also greater mines, so larger amount of mine movement.

So if you want to build a proxy, I will suggest that you use that as a proxy in order 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 CapEx going forward.

Thanks. And just this follow-up question on minority dividends, how should we think about the project funding of Centinela?

Will you use some of the operations on cash flow or do you expect to raise some debts 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 did when we announced the Centinela second concentrator project, we have two main basket of financing at Centinela. The first one is using the operating company balance sheet, that is the cornerstone of the financing at Centinela.

That allows us to go in for a break 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 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. Alright.

The key feature there is that we have long-term financing for a long life of mine project that allows us to wisely manage the cash flow out of the operation.

Okay. Thanks.

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

What happened is basically doing preventive maintenance, so preventive maintenance is intended to achieve this sort of anticipatory diagnosis. So, it happened and therefore we were able basically to start the cleanup and in fixing of the event.

Now, in this case, particularly, we are investigating exactly why is it that we've got this concentrate material stuck in 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 in this infrastructure in the way it did. I mean, there's been no incident, in the sense that there's been no leakage of pipe of concentrate, there's been no social incident.

This was completely within a planned maintenance activity and which is intended there to detect 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 there’s nothing which would make us think that this is something that would be recurring.

Okay, thank you.

And as I say, just on that point, I just want to reiterate that there's no impact in production. We continue to produce copper at the Los Pelambres.

So, we've got the water and we've got the plant running and, there, we stockpile this production in Pelambres 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 -- our guidance for the year unchanged, yeah.

Hi, it is 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 the probably it's safe to assume that will be about half of that in 2024 and half in 2025.

Clear. Thanks.

And the second question just on your chart that takes you out to 900,000, specifically on Los Pelambres, what the targeted throughput and grade as you get to kind of normalize in three or four years time? I know grades were a little bit lower this year.

Where would Los Pelambres be in that kind of scenario to take to that target?

Yeah, so what we expect that Pelambres is, with respect to throughput, that we will be able to run at around 190,000 tonne a day with the sort of expanded capacity that we have. Even though nominally it is bigger than that that's the sort of average throughput that we're thinking of and with the ore getting harder 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 0.6. So we see a drop this year; next year, slightly reversal; but then back to higher grades for 2026, and for a few years thereafter.

Okay, thanks. And just follow up on that, in that waterfall slide, there're other projects, are they mainly around Los Pelambres de-bottlenecking in the medium term to get to the 900 or [Multiple Speakers]?

I think you've got a -- the other projects there are a blend, which involve almost activities in all of our assets marginal projects or satellite deposits that we've identified. There is [Indiscernible], which is a deposit at Centinela, which is included in there.

There's some added tonnage at Pelambres, at Centinela, a little bit in silver. So it's basically continuing to monetize some of the resources on the edges of our existing to the main districts.

Okay, thanks. One more if I may.

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

I mean, we expect that that should be largely concluded in the course of this calendar year and therefore it's quite critical that in the course of that timeframe we get 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 is 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 said, materially significantly concluded with a clear indication by the end of this calendar year.

Super thanks.

Patrick Jones with JP Morgan. Just a question on the new project --

[Multiple Speakers]

Patrick Jones with JP Morgan. Just a question on the new emissions reduction targets you put out last week.

For the Scope 1 and 2 emissions reduction targets for the 50% by 2035, can you just talk a little bit have you defined the pathway to achieve that and 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, we have a pathway. And in essence, what we're doing there is focusing on the fleet, the fleet conversion is a 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 at pilot testing at Pelambres where we think we will be able to move into that solution.

And that will then be combined with some form of battery assist. So it's trolley, known technology but which has new releases if you want in terms of versions, combined with battery.

And as I say, our first pilot testing is actually now being implemented in Pelambres. So that's going to be the focus of most of the decarb that we expect to achieve a reduction in Scope 1 and 2 going forward.

And it is 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 the time in which we were cycled to replace those fleets in any case, so that's the way that we're looking at it.

And 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 was included in 2024, 2025, 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 2025 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 2024 and 2025 CapEx, can 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 in terms of range in the range of between 500 million to 700 million, up until 2035.

Great, thanks for that. Maybe just a question another topic, forgive me if I missed this earlier, but I think obviously on the Los Pelambres 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, we've -- in December, remember that during ramp up, we've got to stop for a few days, but when running, it was actually getting closer to 400 liters 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 ramp up, review some of the operating conditions. During January, we've actually -- and February, we're doing quite well, the plant is performing well, according to its design and close to the 400 liters per second and 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.

Just actually a clarification on Dan's question around the CapEx in Centinela. The 50/50 distribution between 2024 and 2025, is that just for the CapEx avoidance, and then if you monetize it, that'd be a bullet in the particular year?

Yeah.

Right. Okay.

And then second, as you think about growing attributable copper tonnes, what's the thinking around Zaldívar, an increasing interest there medium term?

Increasing what? Do you mean production there or what?

Ownership.

Ownership, yeah, look, I think in the case of Zaldívar, we own 50% and we operate the mine, and therefore, there's nothing that we would substantially different if we own 100%, from an operating point of view, and therefore, it boils down to an economic decision, does it make sense from an economic point of view or not to own more. And from that point of view, we will have to -- that decision sort of runs up with other possibilities of investment, we've invested now and are committing capital to the Centinela second expansion, to Pelambres with our high return investments for us, and therefore when any of that opportunity comes we will look at it in the context of how it runs 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 we could take proceeds down the balance sheet to fund CapEx as opposed to any distribution to shareholders?

Sorry, I didn’t understand that. We have a single capital allocation framework, and all proceeds go into that logic with Mauricio explained, and we balanced as decision keeping a strong balance sheet growth opportunities and return to shareholders.

And I think those proceeds went in there and followed that same sequence and logic. And with respect to that, I mean, one of the things that we do 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 is 50% and that's the way that we look at Pelambres in terms of the expansion that we need to fund and that's a way that we look at Centinela else as well, as has been explained, where we have a funding which spans several years, which combines debt and 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 face of growth that we're going into, I mean, we've got a rich resource endowment in Centinela and Pelambres, and we're basically essentially developing those, so we will be able to get new tonnage into the future. And it's that balance between performing and growth, which is really what was striking here, we think in the right way, in terms of enabling these opportunities.

We will not be able to get to 900,000 tonnes of profitable tonnage, if we did not 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 we're able to do it with less risk and more efficiently.

And in terms of CapEx 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 the growth opportunities that we have, and that others don't or 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 in the way that best fits the interest of our shareholders.

Thank you.

Ioannis Masvoulas from Morgan Stanley. Couple of questions left from my side.

The first one, the Centinela second concentrate, 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 on 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 de-risked by means of a level of engineering that we have. Now, 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 fixed 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 we're in good shape to deliver on this on this figure.

Great. Thank you.

Second question, on an earlier stage project, if we look at the Los Pelambres phase two, given again, all the inflation we've seen over the years, what would you say is a reasonable CapEx estimate for this project once your project decision in the coming years, is it still within the $1 billion range or could 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 Pelambres.

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 are still within the number that you quote about in our building 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 the last one on the Cuprochlor-T technology, you sounded a bit more confident today talking about potentially rolling out this trial, this technology in third party projects. Can you talk about maybe the milestones from here on, when to expect to get a more substantial update and perhaps how does it 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 Zaldívar, the primary sulphite there, I think we are thinking of this technology as being the potential to be able to develop low capital intensive path there for growth and using the existing SX-EW 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 ore which is lower grade in Centinela and Antucoya, which would use this technology.

Now, we have some tonnage included in our mine plans 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 state in which we're now are going to add to our mine plans, not in 2024, not in 2025, but beyond 2026 onwards.

So, now, testing it with third parties provides an added element of assurance around how attractive is this technology and we're starting to make those engagements and we've seen significant interest. So 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 something we knew about, but it's the other one and it's a combination of tool which makes this really powerful.

Yeah.

Thank you. Srivathsan Manoharan from RBC.

The question is on Zaldívar water. So is there third party water readily available in the region for you to purchase or is there plans to build a desal 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 is not desalinating 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 are the design of our permit is then that we will be able to do that, there will be an extension of the mine life, which will take mining at Zaldívar to 2051 but we will need a transition period between 2025 and 2028, where we will continue to extract the continental water that we're using today, and then bridge that timing. We extract around 200 liters 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 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 in detail. We've been working at cost savings for quite some time and, obviously, it gets every year, it's 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 innovation. We've created these remote operating centers in Antofagasta and Santiago for Centinela and Pelambres respectively, with automated fleet, with 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.

It is Ian Rossouw, just to follow up on that, actually. So at Zaldívar, obviously, when you acquire the assets, in the initial years, you've had great progress and sort of improving recoveries.

In the last few years that seem to have sort of gone the other way which seems like metallurgy is getting more difficult. The grades almost double at Antucoya, yet it's 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 Zaldívar, Zaldívar was built originally 20 plus, or 20 years ago, to leach oxides and those minerals have changed over time.

And we're in fact now leaching sulfides, mixed ore and mostly sulfide with low solubility right. Now, we did make some changes and invested in changing the circuit, so that we have chloride leach, basically in place, which is a version of Cuprochlor and we're working, therefore, to consolidate that new processing root at Zaldívar and that's why we've seen actually the recoveries improving.

We started -- and when this change took place with recoveries, 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 need to acknowledge that this is not the same mineral, it is not the same feed that we had originally for which this plant was designed but we're actually talking about sulfites.

And with the change to chloride leaching 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 reliability.

And for that we have, for now, the second year, a program about changing some of the key pieces and equipment, some of which were obsolete and, therefore, we're also ramping up our changes in that space to ensure that reliability of the plant in other areas as well beyond recoveries. So we think 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 we are committed to seeing it through.

Thanks.

How are you doing for time?

But yeah, no, I think we've got one question more and then we're -- yeah.

Okay, a level one for you then please. 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 were a lot of heated constitutional discussions. I mean, over the last couple of years.

I think in Chile, we must be -- the country, 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. There's been an increase out of immigration activities and other factors on this 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 -- we were able to close the discussion on the royalty, and on the back of that the government committed to actually overhauling the permitting system for mining, which would have been difficult to think of for a government with the agenda that they came up initially.

And therefore, this is 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 to the country and those are the focus.

I think the discussion around the Constitution has been really taking backstage now. Okay, so with that, we're not going to take them questions on the -- or maybe we can if -- I mean, is there someone -- is there a question?

How do we know?

Okay. Then we will close it.

Okay, no question. We're up to time.

Okay, thank you very much. Thank you.