CAP Group update - November 2015 Punta Totoralillo Port, Atacama region Fernando Reitich CEO - Raúl Gamonal CFO
Ownership structure Mitsubishi Corporation Pension Funds Invercap Other 19,3% 2,5% 2,0% 31,3% 47,4% 46,9% 49,0% 47,32% 52,68% 51,0% 99,0% 75,0% 99,9% Cleanairtech Tecnocap Compañía Minera del Pacífico Compañía Siderúrgica Huachipato Novacero 25,0% 50,93% 30,56% 11,03% 57,79% Cintac Intasa Infrastructure Iron Ore Mining Steel Production Steel Processing Source: CAP, as of September 2015 1
Iron ore mining 2
Mining sites CAP Mining has three different areas of operation in the north of Chile, located around the cities of: Copiapó Vallenar La Serena El Laco Punta Totoralillo Port Cerro Negro Norte Desalination Plant Copiapó Magnetite Plant Copiapó Valley Cities Mines Huasco Valley Guacolda II Port Pellets Plant Vallenar El Algarrobo Los Colorados Plants Ports El Tofo Cristales Elqui Valley La Serena El Romeral Guayacán Port 3
Cerro Negro Norte mine 4
Magnetite plant 5
Los Colorados mine
Pellets Plant
Iron ore El Romeral mine 8
Mining property Hectares in exploration concessions - Chile N Company Hectares % 1 BHP Chile Inc 1.917.100 11,33 2 Compañía Contractual Minera Los Andes 841.100 4,97 3 CAP 677.700 4,01 4 Teck Exploraciones Mineras Chile Ltda 629.700 3,72 5 Antofagasta Minerals S.A. 514.500 3,04 6 Codelco 435.500 2,57 Hectares in exploitation concessions - Chile N Company Hectares % 1 Soquimich S.A. 2.861.157 20,06 2 Codelco 840.704 5,89 3 Minera Escondida Limitada 363.798 2,55 4 SCM Virginia 252.532 1,77 5 Enami 250.847 1,76 6 Antofagasta Minerals S.A. 231.392 1,62 7 CAP 205.788 1,44 Top 3 position in exploration concessions More than 700.000 meters drilled over the period 2008-2014 Source: SERNAGEOMIN 9
Resources and reserves of magnetic ore As a result of continued successful exploration campaigns, iron ore resources have increased progressively over the years, reaching 7,250 million tons in 2014 8.000 7.000 6.000 5.000 4.000 3.000 2.000 1.000 0 3.249 3.478 Mineral resources (1) 4.716 5.367 6.351 7.250 2009 2010 2011 2012 2013 2014 Mine/Deposits & Grade (% Fe) Tofo 27,7% Pleito Cristales 32,8% Los Colorados Distrito 43,3% El Laco 49,2% El Algarrobo Distrito 30,3% El Algarrobo 45,5 % CNN 31,7% Candelaria 10,0% Romeral 28,2% Los Colorados 34,7% 2.500 2.000 1.500 1.000 500 0 Reserves (2) 2.278 2.214 2.039 2.040 1.403 1.364 2009 2010 2011 2012 2013 2014 Mine/Deposits & Grade (% Fe) Tofo 26,1% El Laco 56,7% El Algarrobo Distrito 35,5% El Algarrobo 49,0% CNN 36,3% Candelaria 10,0% Romeral 30,5% Los Colorados 36,5% (1) Resources: Minerals measured on a geological ore content feasible of being mined. (2) Reserves: Minerals measured on a geological content feasible of being mined economically. (3) CMP has the contract for processing the tailings of the Candelaria copper mine. Source: CAP Minería 10
Mining products BF and DR Pellets (Fe 65% - 67%) Lumps (Fe 62%) Pellet Feed (Fe 66% - 69%) Fines (Fe 62%-63%) 11
Iron ore shipments and markets Shipments (Th.MT) 10.213 11.469 12.246 12.086 12.952 14.396 6.293 1H15 2010 2011 2012 2013 2014 2015 (E) Shipments by markets and products 1H15 Sinter feed, 11% Lumps, 1% Self - fluxing pellets and DR pellets, 28% Japan 9% Bahrein 8% Korea 6% Others 1% Spot, 31% Chile 8% China 68% Pellet feed, 60% Contracts, 69% 12
Main customers Deutsche Bank* Glencore* Posco Koch Cargill* Bahrain Steel Qingdao Iron and Steel Xinyu Iron and Steel RGL Group* JFE Steel Corporation Kobelco Nisshin Steel HBIS Group Wuhu Fuxin Iron & Steel Rizhao Iron and Steel Yaochang Group CAP Acero Fangda Iron and Steel Hangzhou Iron and Steel Jinan Iron and Steel Wanbao Group * Acts as trader Top ten client, by volume, as of June 2015 13
Steel production 14
Th.MT US$/Ton Steel focus on long products Steel business reorganization to produce 700 kt/y, with one blast furnace Strong adjustment in its industrial processes and workforce lowering costs and expenses Sustainable growth in long products demand mainly due to the need of grinding media supply to the mining sector Shipments and prices CAP Acero 2.000 1.800 1.600 1.400 1.200 799 883 811 737 700 611 1.000 900 800 700 600 Talcahuano 1.000 500 800 400 600 400 200 0 1.113 1.124 671 859 701 346 2010 2011 2012 2013 2014 1H15 300 200 100 0 Shipments Prices 15
Recovery of cash generation (EBITDA) Net Income and EBITDA evolution 20 10 0-10 -20-30 -40-10 -7 1 2 2-9 -9-17 -12-22 -14-31 -44 8 7 5 5 3-7 -6-5 -3-3 Impairment Net income EBITDA -50-60 -56 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 Due to the reorganization and adjustment in industrial processes, the steel company has managed to generate positive cash flow over the last eight quarters EBITDA: Gross Margin S&AE + Depreciation and Amortization, over the last twelve months
Steel processing 17
Steel processing Th. MT US$/Ton Creates value-added solutions for the construction, industry and infrastructure sectors in Chile, Peru and Argentina Chile is LATAM s most intensive user of steel in construction Main flat steel importer of the Pacific coast of South America Shipments and prices Sales by Sector June 2015 600,0 500,0 400,0 300,0 200,0 100,0,0 1.199 1.252 1.167 1.119 1.013 988 400 412 370 381 297 189 2010 2011 2012 2013 2014 1H15 1400,0 1200,0 1000,0 800,0 600,0 400,0 200,0,0 Industrial 26% Infrastructure /Roads 8% Other 5% Construction 61% Shipments Price 18
Reorganization and assets availability Steel processing reorganization towards a lighter and lower cost structure 2014 2015 Cac S.A. 99.99% 99.99% 99.99% 100% Cintac S.A. 99.99% 89.48% Cintac SAIC Inmobiliaria Cintac S.A. Centroacero S.A. Steel Trading Company INC. Cintac SAIC Tupemesa S.A. Assets availability for rental (or sale): Centroacero, 55,600 m2, US$1.3 million yearly Varco Pruden, 36,000 m2, US$0.8 million yearly During 2Q15, Tupemesa sold a non strategic real estate asset, generating an income of MUS$ 2,013 19
Infrastructure 20 Desalination plant
Infrastructure 21 Power transmission line
Water desalination and power transmission Cleanairtech (desalination plant) and Tecnocap (power transmission line) started their operations during 2014. As of June 2015, the infrastructure business has contributed to the holding company as follows: US$ million 1H14 1H15 EBITDA 13 30 Net Income 2 6 22
Chile economic outlook 23
Chile economic overview Investment 25% 24,1% 24% 23,8% 23% 22,4% 22% 22,0% 21% 21,0% 20% 19% 2010 2011 2012 2013 2014 Gross fixed capital formation (% of GDP) Inflation Consumption 78% 77% 76% 76% 75% 74% 73% 72% 71% 70% 68% 2010 2011 2012 2013 2014 Final consumption expenditure, etc. (% of GDP) Unemployment 5,0% 4,0% 3,0% 2,0% 1,0% 1,4% 3,3% 3,0% 1,8% 4,4% 10,0% 8,0% 6,0% 4,0% 2,0% 8,2% 7,1% 6,4% 5,9% 6,4% 6,6% 0,0% 2010 2011 2012 2013 2014 Inflation, consumer prices (annual %) Source: IMF and the World Bank 0,0% 2010 2011 2012 2013 2014 2015(e) Unemployment rate (Percent of total labor force) 24
Chile economic overview Imports Exports 36,0% 35,0% 34,0% 33,0% 32,0% 31,0% 35,0% 35,0% 32,0% 33,0% 32,0% 40,0% 38,0% 36,0% 34,0% 32,0% 30,0% 38,0% 38,0% 34,0% 32,0% 34,0% 30,0% 2010 2011 2012 2013 2014 28,0% 2010 2011 2012 2013 2014 Imports of goods and services (% of GDP) Exports of goods and services (% of GDP) Trade balance GDP growth 7,0% 6,0% 5,0% 4,0% 3,0% 2,0% 1,0% 0,0% -1,0% -2,0% 6,4% 3,2% -0,2% 2010 2011 2012 2013-0,7% 2014 1,5% 7,0% 6,0% 5,0% 4,0% 3,0% 2,0% 1,0% 0,0% 5,7% 5,8% 5,5% 4,3% 1,9% 2010 2011 2012 2013 2014 External balance on goods and services (% of GDP) Source: IMF and the World Bank GDP growth 25
Political reforms underway, being implemented by the new administration which reached office in March 2014 Tax reform Educational reform Increase in corporate tax rate from 17% to 27% New VAT applied to the real estate sector Increase in stamp tax from 0.4% to 0.8% Free college/university education Free pre-school, elementary and high school education Focus in improving access to education (regardless of quality) Labor reform Constitutional process Increasing union power No replacement during strike periods allowed, either with internal personnel or outsourcing Complete review of the current constitution, approved by Pinochet and modified under the successive democratic governments 26
Increasing economic uncertainty due to the proposed reforms package Investment as % of GDP forecast 22.3% 22.7% 22.8% 23.0% GDP growth forecast 2.3% 2.5% 2.9% 3.1% Unemployment rate forecast 6.6% 7.0% 7.2% 7.0% Source: IMF, October 2015 2015 2016 2017 2018 27
Global industry update 28
Emerging markets performance and China economic influence worldwide -3.8% -0.6% 1.0% 1.5% 6.8% 6.3% 6.0% 6.1% -3.0% -1.0% 2.3% 2.4% 2.4% 2.9% 3.1% 3.0% Shift in growth strategy in China from investment to consumption Lower demand for commodities push prices down Source: IMF GDP growth estimates, October 2015 2015 2016 2017 2018 29
Seaborne iron ore supply/demand projection Million tonnes Million tonnes 1.800 1.800 1.600 1.600 1.400 1.400 1.200 1.200 1.000 1.000 800 800 600 600 400 400 200 200 0 2009 2010 2011 2012 2013 2014E 2015E 2016E 2017E 2018E Australia Brazil RoW Seaborne demand 0 Source: Goldman Sachs 30
Jan-13 Feb-13 Mar-13 Apr-13 May-13 Jun-13 Jul-13 Aug-13 Sep-13 Oct-13 Nov-13 Dec-13 Jan-14 Feb-14 Mar-14 Apr-14 May-14 Jun-14 Jul-14 Aug-14 Sep-14 Oct-14 Nov-14 Dec-14 Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 Iron ore price evolution Platts IODEX and 1% diff vs Platts IO fines 65% ($/dmt) 185,00 165,00 Platts IO fines 65% Fe IODEX CFR CHINA 62% Fe plus 3* Mid Range Diff 145,00 125,00 105,00 85,00 65,00 45,00 Source: Platts, October 2015 31
Iron ore production cuts: 170 Mtpy in 2014 Cliffs Canada Price/cost related mine closure 1.5 Mtpy JSW/Minera Santa Fe Chile Price related mine closure 2.0 Mtpy Feb 14, US$ 121 per ton Kimberley Metals Australia Price related production cut 1.7 Mtpy Noble Resources Australia Price related mine closure 1.5 Mtpy Jul 14, US$ 96 per ton Jun 14, US$ 93 per ton Northland Resources Sweden Price related production cut 2.0 Mtpy IMX Resources Australia Placed into administration likely closure 1.6 Mtpy Shree Minerals Australia Price related mine closure IRC Russia Lack of finance 1.0 Mtpy MMX Brazil Price related, lack of finance London Mining Sierra Leone Price related, lack of finance 5.0 Mtpy Labrador Iron Mines Canada Price related mine closure 1.7 Mtpy Aug 14, US$ 92 per ton 0.1 Mtpy 6.0 Mtpy Bellzone Guinea Lack of finance 0.5 Mtpy Mt. Gibson Australia Technical failure 4.0 Mtpy African Minerals Oct 14, US$ 81 per ton Sep 14, US$ 83 per ton W Desert Resources Australia Price related mine closure 2.0 Mtpy Pluton Resources Australia Sierra Leone Lack of finance, price related Nov 14, US$ 73 per ton Price related mine closure 0.8 Mtpy 20 Mtpy Dannemora Sweden Lack of finance 1.2 Mtpy Dic 14, US$ 69 per ton Jan 15, US$ 67 per ton Arrium Australia Price related mine closure 3.6 Mtpy Cliffs Canada Price related mine closure 6.0 Mtpy Others China, India, Others* Price related closures 99 Mtpy Source: Platts and The Commodity Manual, Morgan Stanley, February 2, 2015 * Others include Iran, Canada, Malaysia, Peru, Mongolia, Indonesia, Mexico, Russia, Venezuela, USA, New Zealand, Kazakhstan, Serbia CITIC Australia Technical, commissioning issues 4.0 Mtpy Iron Valley Australia Price related mine closure 0.2 Mtpy 32
Iron ore production cuts in 2015 2015 Iron Ore mine production/capacity cuts (price driven) Date Country Company Asset Mt Price Platts 62% CFR China (US$/dmt) Reason/Impact China Various privately owned 100 Price related closures 15-mar USA US Steel Keetac pellet plant 5.5 57.0 Price / demand related 15-ene Australia Arrium Southen Iron 4.0 67.6 Price related mine closure 15-mar Brazil Ferrous 2.2 57.0 Price / demand related 15-sep Argentina MCC Sierra Grande 57.1 Price related cut - vol unknown Total 111.7 2015 Iron Ore mine production/capacity cuts (non-price driven) 15-ene Australia CITIC Sino Iron 4.0 67.6 Technical, commissioning issues 15-jul Australia Rio Tinto Pilbara 10.0 52.1 Weather-Infrastructure related 15-jul South Africa Kumba Thabazimbi 1.0 52.1 Slope failure Total 15.0 Source: Morgan Stanley, October 2015 China s production quantity of iron ore (crude ore) in September surveyed by the National Bureau of Statistics of China was 131,564 thousand tons, down 4.4% from the same month last year. Its cumulative production quantity in the period of January-September was 1,015,999 thousand tons, down 9.0% from the same period last year. The Tex Report, October 29, 2015 33
Iron ore trade balance and price forecast Source: Wood Mackenzie, October 2015 34
Higher supply but lower Fe grade Even though the forecasted increase in iron ore volumes has happened, the global export volumes are showing a decline in Fe grade Source: Wood Mackenzie, July 2015 35
Risk of higher low grade discounts Under a low demand scenario, the discount for sub-60% iron ore could increase, impacting the margins of low grade producers Producers such us Fortescue are highly sensitive to low grade discounts Source: Wood Mackenzie, July 2015 36
CMP produces high quality products Australia Brazil S. Africa Ukraine Iran Peru Chile Russia Mauritania Others US$/t 85 80 75 70 65 60 55 50 Average price (US$/t) 1H15 Source: China Customs Statistics Pellets versus total imports 1H15 50,0% 45,0% 40,0% 35,0% 30,0% 25,0% 20,0% 15,0% 10,0% 5,0% 0,0% 43,5% Source: China Customs Statistics 3,6% 0,7% 5,2% Ukraine Chile S. Africa Brazil 37
International iron ore price adjustment and CMP s cost reduction Premium for higher grades... but most concentrate producers are struggling Source: Platts, December 2014 2013 2014 CMP s cash cost (US$/t) 57,4 49,2 38
International iron ore price adjustment and CMP s cost reduction Premium for higher grades... but most concentrate producers are struggling Source: Platts, August 2015 1Q 2015 1H 2015 CMP s cash cost (US$/t) 37,8 36,4 39
CMP s plan to improve margins has worked US$/t 130 120 110 111,5 The difference between the realized average iron ore price and the average Platts 62% Fe CFR China decreased from 1H14 to 1H15, as a consequence of the change in the product mix 100 90 80 88,8 70 60 50 40 52,2 4,1 3,7 2,3 1,5 0,1 0,5 1,3 3,0 36,4 60,4 57,3 30 0,8 20 Cash cost 1H14 Candelaria Tailings Outsourcing Raw materials Materials Energy Personnel and GE Oil Exchange rate Various (Incl. water) Cash cost 1H15 1H average Platts 62% Fe CFR China (US$ /dmt) 1H realized CMP s average iron ore price Decrease in cash cost Increase in cash cost Cash cost = Cost of sales Depreciation & Amortization [Cost of sales = Operational cost (excl. SG&A)]
Further reduction during 2H15 Cash Cost (US$/t) Magnetite plant 36.8 Cerro Negro Norte mine 36.1 Los Colorados mine 34.4 El Romeral mine 44.2 Average Cash Cost 35.9 41
Freight rates Brazil - China US$/dmt 19/02/2014 12/03/2014 02/04/2014 23/04/2014 14/05/2014 04/06/2014 25/06/2014 16/07/2014 06/08/2014 27/08/2014 17/09/2014 08/10/2014 29/10/2014 19/11/2014 10/12/2014 31/12/2014 21/01/2015 11/02/2015 04/03/2015 25/03/2015 15/04/2015 06/05/2015 27/05/2015 17/06/2015 08/07/2015 29/07/2015 19/08/2015 09/09/2015 30/09/2015 21/10/2015 30 25 20 15 10 5 0 Source: Platts, October 2015 42
Steel price evolution US$ per ton US$per ton Jan 2007 Jan 2007 May 2007 May 2007 Sep 2007 Sep 2007 Jan 2008 Jan 2008 May 2008 May 2008 Sep 2008 Sep 2008 Jan 2009 Jan 2009 May 2009 May 2009 Sep 2009 Sep 2009 Jan 2010 Jan 2010 May 2010 May 2010 Sep 2010 Sep 2010 Jan 2011 Jan 2011 May 2011 May 2011 Sep 2011 Sep 2011 Jan 2012 Jan 2012 May 2012 May 2012 Sep 2012 Sep 2012 Jan 2013 Jan 2013 May 2013 May 2013 Sep 2013 Sep 2013 Jan 2014 Jan 2014 May 2014 May 2014 Sep 2014 Sep 2014 Jan 2015 May 2015 Jan 2015 May 2015 350 300 250 200 150 100 CRUspi North America CRUspi Europe CRUspi Asia 50 00 600 500 400 300 200 100 CRUspi Flats CRUspi Longs CRUmpi 00 Source: CRUspi, July 2015 43
Financial performance 44
CAP s financial highlights in 1H15 USD Million 2010 2011 2012 2013 2014 1H15 Sales 1.994 2.787 2.470 2.297 1.790 723 EBITDA (L12M) 740 1.184 764 708 381 303 EBITDA Margin 37,1% 42,5% 30,9% 30,8% 21,3% 22,0% Net Income 590 442 234 184 56 13 Cash 981 883 711 309 348 398 Gross Financial debt 1.001 628 719 932 1.270 1.297 Net Financial debt 20 (255) 8 623 922 899 Capex 207 282 777 975 450 39 Net Financial Debt/EBITDA - - - 0,88 2,42 2,97 Iron Ore Shipments (Th tons) 10.213 11.469 12.246 12.086 12.952 6.293 Platts 62% Fe CFR China (US$/t) 146,82 169,37 130,08 135,13 96,77 60,35 45
CMP s financial highlights in 1H15 USD Million 2010 2011 2012 2013 2014 1H15 Sales 1.271 1.770 1.406 1.431 942 309 EBITDA (L12M) 782 1116 720 678 309 206 EBITDA Margin 61,5% 63,1% 51,2% 47,4% 32,8% 32,2% Net Income 902 700 355 402 113 21 Cash 558 501 205 46 50 75 Gross Financial debt - - - 159 483 572 Net Financial debt (558) (501) (205) 113 433 497 Capex 121 222 655 911 299 19 Net Financial Debt /EBITDA - - - 0,17 1,40 2,42 Iron Ore Shipments (Th tons) 10.213 11.469 12.246 12.086 12.952 6.293 Platts 62% Fe CFR China (US$/t) 146,82 169,37 130,08 135,13 96,77 60,35 46
EBITDA contribution by business (L12M) 100% 97% 98% 94% 94% 89% 80% 77% 70% 60% 40% 20% 0% 18% 5% 6% 15% 8% 6% 7% 8% 8% 4% 0% 4% 2009 2010 2011 2012 2013 2014 1H15 (L12M) -3% -2% -2% -20% Iron ore Steel Steel Processing Infrastructure 47
Relevant financial updates Flexibilization of financial covenants with CAP and CMP lenders* 6,00x 5,50x 5,00x Net Financial Debt to EBITDA CAP syndicated loan matures in April, 2016 3,00x 2,50x EBITDA to Net Financial Expenses 4,50x 4,00x 3,50x 3,00x 2,50x 2,00x 1,50x 1,00x 0,50x 2,00x 0,00x Old New Old New Additional liquidity available: US$300 million As of today, the CAP group has access to three revolving credit facilities: CMP s, which was negotiated in 2014, and two new facilities for CAP that were closed this year CMP revolving credit facility (BTMU) CAP revolving facility (EDC) CAP Revolving facility (SMBC) Amount Up to US$350 million Up to US$100 million Up to US$50 million Tenor 5 years 5 years 3 years Financial covenants New New New Undrawn amount US$150 million US$100 million US$50 million 48 * Covenants included in CAP s syndicated loan and CMP s revolving credit facility
Credit agencies last review 2013 2014 2015 Fitch Ratings BBB/Stable outlook BBB/Stable outlook BBB-/Stable outlook S&P BBB-/Stable outlook BBB-/Stable outlook BB+/Stable outlook 49
Business outlook 50
Seeking higher margins in CAP Mining Reorientation of product mix Shipments for around 14.3 million MT in 2015 consider an increase in pellets, to a total of 4 million MT The change in the mix should enhance margins, as pellets have a premium over the pellet feed 2014 2015 Others, 14% Others, 14% Pellet feed, 72% Self-fluxing and DR pellets, 14% Pellet feed, 58% Self-fluxing and DR pellets, 28% Continued efforts in reducing costs and expenses, combined with a weaker Chilean Peso, lower oil prices and idle capacity in the mining services industry in Chile will reduce the average 2014 FOB cash cost of US$ 49.2 per ton to approximately US$ 36.1 per ton in 2015 51
New EBITDA from CAP infrastructure in 2015 Cleanairtech (desalination plant) and Tecnocap (electric transmission line) started their operations during 2014 and are projected to contribute to the consolidated 2015 EBITDA and net income as follows: US$ million Cleanairtech Tecnocap EBITDA (E) 43,6 7,4 Net Income (E) 7,1 3,0 52
Protecting CAP s cash flow and liquidity levels US$ million US$ million Current investment plan reached its final stage There are no relevant investments planned for the short-term, therefore pressure on cash disbursements has been diminished. Investment rate has followed a slower pace, of around US$20 million per quarter, mainly related to maintenance CAPEX 1.200 1.000 800 600 400 200 0 975 777 450 282 207 142 18 21 2009 2010 2011 2012 2013 2014 1Q15 2Q15 Drilling and exploration expenses reduction Expenses have averaged US$41 million per year during the last 5 years. As of June, 2015, this concept amounts to US$9.6 million 70 60 50 40 30 20 10 0 60 43 40 33 29 10 2010 2011 2012 2013 2014 1H15 53
US$ million CAPEX limitation 140 120 100 87 115 102 95 80 60 68 Growth Cost reduction Sustainability 40 Maintenance 20 0 2016E 2017E 2018E 2019E 2020E Maintenance for the period 2016 2018 includes the replacement of machinery and equipment at Los Colorados mine, maintenance at the Pellets Plant and the blast furnace lining at CAP Acero, among others The growth CAPEX for the period 2018 2020 considers an increase of sinter feed production at the Huasco Valley 54
Steel safeguards Wire rod accounts for 20% of CAP Acero s production Due to the openness of the Chilean economy, CAP Acero is competing with international steel prices, highly influenced by Chinese imports Chilean authorities imposed a provisional safeguard of 37.8%, which will be in place for 200 days, starting in October 2015 Wire rod FOB prices in China and other markets Wire rod price evolution CAP Acero vs CIF imports of Chinese steel Source: Steel Orbis, CRU Source: CAP Acero, Aduana de Chile 55
Future maximization of EBITDA contribution from our ports Total capacity CAP ports: 34.8 Mt/y Punta Totoralillo: 29 km north of Caldera Iron ore shipping 200,000 dwt Max capacity: 12 million t/y Effective utilization: 4.5 million t/y Guayacán: Herradura bay, Coquimbo Iron ore shipping 165,000 dwt Max capacity: 6 million t/y Effective utilization: 2.7 million t/y Guacolda II: Located in Huasco City Iron ore shipping 300,000 dwt Max capacity: 12 million t/y Effective utilization: 7.2 million t/y Huachipato: San Vicente bay Unloading coal, limestone an iron ore & finished steel shipping Max capacity: 2 million t/y Effective utilization: 1 million t/y Las Losas: Located in Huasco City Multi purpose port Max capacity: 2 million t/y Effective utilization: 0.4 million t/y Note: Weighted average of port utilization: 47% Guarello: Guarello island, south Limestone shipping 800 kt/y Max capacity: 0.8 million t/y Effective utilization: 0.5 million t/y 56
Conclusions Under current market conditions, the protection of the company s cash flow and liquidity levels are of the utmost importance Cost reduction initiatives and productivity improvements are at the center of management efforts CAP Mining Efficiency plans have resulted in significant cash cost reductions, which together with a higher grade product mix are maintaining positive margins Despite the current negative global environment, the company has improved its operational productivity allowing for the projection of a positive long term view. CAP Steel Positive cash generation attained, continuous cost cutting efforts applied towards profitability Studying alternative use of CSH s assets to create more value CAP Steel Processing Largest flat steel processor in the Pacific coast of South America Leader in innovative solutions for industrial and residential construction CAP Infrastructure Stable business supported by long term contracts Potential growth in the port business 57
This information material may include certain forward-looking statements and projections provided by CAP S.A. (the Company ) with respect to the financial condition, results of operations, cash flows, plans, objectives, future performance, and business of the Company. Any such statements and projections reflect various estimates and assumptions by the Company concerning anticipated results and are based on the Company s expectations and beliefs concerning future events and, therefore, involve risks and uncertainties. Such statements and projections are neither predictions nor guarantees of future events or circumstances, which may never occur, and actual results may differ materially from those contemplated (expressed or implied) by such forwardlooking statements and projections. No representations or warranties are made by the Company or any of its affiliates as to the accuracy of any such statements or projections. Whether or not any such forward looking-statements or projections are in fact achieved will depend upon future events, some of which are not within the control of the Company. Accordingly, the recipient of this material should not place undue reliance on such statements. Any such statements and projections speak only as of the date on which they are made, and the Company does not undertake any obligation, and expressly disclaims any obligation, to update or revise any such statements or projections as a result of new information, future events, or otherwise 58
CAP Group update - November 2015 Punta Totoralillo Port, Atacama region