FURTHER PROGRESS ON COST REDUCTIONS AND IMPROVING MARGINS

Antofagasta plc CEO Iván Arriagada said: “A 24.7% reduction in operating costs offset the decline in the copper price and lower sales volumes resulting in EBITDA of $571.6 million, 2.3% higher than in the same period last year.

“Continued management actions to reduce costs and preserve cash contributed to our EBITDA margin strengthening to 39.5%, from 26.2% in the full year 2015. While reducing costs in absolute terms is important we are focused on achieving improved efficiencies in a sustainable manner to ensure long-term shareholder value.

“Given the current economic uncertainty we are cautious in our outlook and remain conservative in our approach to managing capital. The Board has declared a dividend of 3.1 cents per share equal to 35% of net earnings at the interim, in line with our policy to pay a minimum of 35% of full year net earnings which remains unchanged.

“At Los Pelambres, following the agreement reached with the Caimanes community in April, the two longstanding court cases relating to the Mauro tailings dam have recently been resolved. Although an appeal is possible, it is unlikely to be accepted and Los Pelambres and the Antofagasta group now move into a new era of community engagement.”

Financial performance

• Revenue 18.5% lower at $1,448.0 million, on lower copper prices and sales volumes, and the closure of Michilla at the end of 2015
• EBITDA ⁽¹⁾ increased 2.3% to $571.6 million despite the fall in revenue, reflecting a 24.7% reduction in operating costs and a first time EBITDA contribution from Zaldívar and other associates
• EBITDA margin ⁽²⁾ strengthened to 39.5%, up from 31.5% in the same period last year
• Operating cost reductions of $124 million achieved, contributing to savings of $0.11/lb in cash costs
• Operating profit and earnings per share fell by 9.2% and 3.3% respectively
• Operating cash flow generation of $774.1 million in the period, 4.2% less than in the first half of 2015
• Capital expenditure of $385.4 million, $276.9 million lower than in the first half of 2015. Full year expenditure expected to be lower than original guidance
• Interim dividend of 3.1 cents per share. Dividend policy to pay a minimum pay-out ratio of 35% of net earnings for the full year remains unchanged
• Group net debt of $1,039.7 million, almost unchanged since the end of 2015

Operational performance

• Group copper production in H1 2016 was 323,300 tonnes, 6.6% higher than in the same period last year with the inclusion of production from Antucoya and attributable production from Zaldívar offset by the closure of Michilla and lower production from Centinela
• Group cash costs before by-product credits were $1.60/lb, 14.9% lower than 2015 primarily due to higher production, improved cost performance and the weaker Chilean Peso
• Group net cash costs were $1.26/lb, down 17.6% compared to 2015 reflecting lower cash costs before by-product credits

Outlook

• Group copper production for the year is expected to be at the lower end of the 710-740,000 tonnes guided in January and unit costs $0.05/lb lower with cash costs before by-product credits of $1.60/lb and net cash costs of $1.30/lb
• Production for the year is weighted to the second half of the year with the completion of the Centinela Concentrates expansion and Antucoya, and an increase in grade at Centinela

Other

• Outstanding court cases concerning Los Pelambres’ Mauro tailings dam resolved. The company will now proceed with the plans presented to the courts and the community to invest in future water supply solutions, additional safety measures, community development projects and to provide access to benefits for families in the community.

^{Note: The financial results are prepared in accordance with IFRS, unless otherwise noted below.}

^{(1)       EBITDA refers to Earnings Before Interest, Tax, Depreciation and Amortisation and is a non-GAAP measure comprising of 100% of the EBITDA from the Group´s subsidiaries and the Group´s proportional share of the EBITDA of its associates and JVs.}

^{(2)       Calculated as EBITDA/Group revenue. If Associates and JVs revenue is included EBITDA Margin was 35.5% in H1 2016 and 30.8% in H1 2015.}

^{(3)       Includes 37,400 tonnes of sales by Zaldívar, which is equity accounted, and Antucoya pre commercial production.}

^{(4)       Cash cost is a non-GAAP measure used by the mining industry to express the cost of production in US dollars per pound of copper produced and is further explained in the notes to the production and sales statistics in the 2016 half yearly financial report below.}

Investors – London
Andrew Lindsay
alindsay@antofagasta.co.uk

Paresh Bhanderi
pbhanderi@antofagasta.co.uk

Telephone: +44 20 7808 0988

Investors – Santiago
Alfredo Atucha
aatucha@aminerals.cl

Telephone: +56 2 2798 7000

Media – London
Carole Cable
antofagasta@brunswickgroup.com

Will Medvei
antofagasta@brunswickgroup.com

Telephone: +44 20 7404 5959

Media – Santiago
Pablo Orozco
porozco@aminerals.cl

Carolina Pica
cpica@aminerals.cl

Telephone: +56 2 2798 7000