Lse Anto 2009

Antofagasta plc Annual Report and Financial Statements 2009

Overview
Antofagasta
5 Princes Gate
London
SW7 1QJ
United Kingdom
Antofagasta is a Chilean-based copper mining group with
Antofagasta at a Glance
interestsin transport and water distribution. It is listed on
theLondon Stock Exchange and has been a constituent
of theFTSE-100 index since 2004.
Antofagasta aims to be a significant and profitable enterprise
byinternational standards. Its focus is on high-potential mining
deposits and it seeks to realise value principally by developing
andoperating such deposits in order to produce copper and
related by-products.
Sustainable development considerations form an integral part
ofAntofagastas decision-making process. In the conduct of
itsactivities, it places great importance on health and safety,
management ofhuman resources, community relations and
environmental matters.
Today, Antofagastas activities are mainly concentrated in Chile
where it owns and operates three copper mines with a total
production in 2009 of 442,500 tonnes of copper in cathode
andconcentrate and 7,800 tonnes of molybdenum in concentrate.
Itisalso the principal provider of cargo transport and water
distribution in the Antofagasta Region in the north of Chile.
Asaresult of the Los Pelambres expansion and Esperanza
projectthe Group is expected to increase total copper production
to over 700,000 tonnes per year by 2011. Antofagasta also
hasexploration and evaluation or feasibility programmes in
NorthAmerica, Latin America, Asia andAfrica.
Visit www.antofagasta.co.uk
for up-to-date investor information including
our past financial results. To see this report online go to:
www.antofagasta.co.uk

Overview
Antofagasta
5 Princes Gate
London
SW7 1QJ
United Kingdom
Antofagasta plc Annual Report and Financial Statements 2009 121
Overview
Antofagasta at a Glance Directors and Advisors
Mining Transport Water
Overview
Antofagasta Minerals S.A. (AMSA) is the corporate centre for the Directors Company Secretary
mining division, based in Santiago, Chile. During 2009 its operations
produced 442,500 tonnes of copper in concentrate (containing a small
J-P Luksic Chairman Petershill Secretaries Ltd
amount of gold and silver) and copper cathode as well as 7,800 tonnes CH Bailey Non-Executive Plumtree Court, London EC4A 4HT
of molybdenum in concentrate. Production is expected to increase to GS Menndez Non-Executive
543,000 tonnes in 2010 and exceed 700,000 tonnes in 2011. > Page 17 Auditors
RF Jara Non-Executive
Deloitte LLP
DE Yarur Non-Executive
The Antofagasta Railway Company plc, founded in 1888, is the Aguas de Antofagasta S.A. holds the concession for water
1 Securing and strengthening the Core Business Solicitors
Business Review
main cargo transport system in Chiles Antofagasta Region, distribution in Chiles Antofagasta Region. It produces and GA Luksic Non-Executive
Current operations: Los Pelambres El Tesoro Michilla with a network of over 900 kilometres in Chile and a controlling distributespotable water to customers and untreated water JW Ambrus Non-Executive (resigned 14.10.2009) Clifford Chance LLP
interest in the Ferrocarril Andino network in Bolivia. It has a toindustrial customers. > Page 31
Shareholders: 60% Antofagasta plc, 70% Antofagasta plc, 74% Antofagasta plc, JG Claro Non-Executive
40% Japanese consortia 30% Marubeni Corporation 26% other Chilean investors 40% interest in Inversiones Hornitos S.A., a power plant under Financial Advisors
construction in Mejillones. > Page 30 WM Hayes Non-Executive
2009 copper production: 311,600 tonnes payable copper 90,200 tonnes 40,600 tonnes N M Rothschild & Sons
Forecast for 2010: 407,000 tonnes payable copper 96,000 tonnes 40,000 tonnes
Shareholders: 100% Antofagasta plc Shareholders: 100% Antofagasta plc HSBC Investment Bank
2009 molybdenum production: 7,800 tonnes
Forecast for 2010: 9,500 tonnes 2009 volume transported: 6.3 million tons by rail in Chile and 2009 volume sold: 43.7 million cubic metres
Stockbrokers
Boliviaand 1.5 million tons by road (including 1.1 million cubic metres
Financial Review
2009 cash costs: 80.4 cents per pound (114.5 cents 123.4 cents per pound 157.6 cents per pound
per pound excluding by-products) inChile of water transported) Merrill Lynch International
Forecast for 2010: 81 cents per pound (114 cents 156 cents per pound 162 cents per pound 2009 EBITDA: US$ 56.6 million 2009 EBITDA: US$ 60.2 million J.P. Morgan Cazenove
per pound excluding by-products)
2009 EBITDA: US$1,408.9 million US$231.7 million US$27.9 million Banker
Proved and probable reserves: 1.5 billion tonnes @ 0.64% copper 211.6 million tonnes 9.5 million tonnes
with molybdenum @ 0.57% copper @ 1.35% copper Antofagasta around the world The Royal Bank of Scotland plc
Development projects:
Los Pelambres expansion The US$1.0 billion plant expansion is now Esperanza The US$2.3 billion, 70% owned project located in Chiles
Governance
beingcommissioned and will increase plant throughput by approximately Antofagasta Region which will produce on average approximately 191,000
30%,from the current 130,000 tonnes per day level to a 175,000 tonnes tonnes of payable copper and 215,000 ounces of payable gold per year.
perday level in 2010, increasing payable copper production by approximately The project is 65% complete at 31 December 2009 with commissioning
90,000 tonnes per year from 2010. > Page 17 expected to begin bythe end of 2010. > Page 24
2 Organic and sustainable growth of the Core Business

Sierra Gorda District Los Pelambres District Michilla/Antucoya
Promising results from drilling programmes Successful exploration programme Examining the potential to further extend
Financial Statements
Design and Production
atCaracoles, Mirador and Telgrafo deposits. conductedbetween 2006-2008. thelife ofMichilla through to 2018. Radley Yeldar www.ry.com
Mineral inventory is estimated to be in the Total mineral resources of 6.2 billion tonnes Antucoya feasibility study for a stand-alone Printing
range of2.6 to 4.1 billion tonnes with grades withan average copper grade of 0.52%. heapleach SX-EW project to be completed Royle Corporate Print
in the rangeof 0.50% to 0.41% copper. > Page 27 bymid-2011. Royle Corporate Print is FSC and ISO 14001 certified
> Page 26 > Page 27 with strict procedures in place to safeguard the
environment through all processes.
3 Growth beyond the Core Business This Report has been printed on Cocoon Silk which
is 50% recycled and FSC certified.
Reko Diq Other exploration Early-stage exploration agreements
Other Information
37.5% effective interest in exploration and evaluation activities inplacefor prospects in the Americas, Incorporated in the United Kingdom Key FSC Forest Stewardship Council. This ensures
that there is an audited chain of custody from the
licences in Baluchistan, Pakistan. Exploration and evaluation activities both EuropeandAfrica. Listed on the London Stock Exchange (ANTO.L) Operations and development projects tree in the well-managed forest through to the finished
Feasibility study and environmental inChile and internationally, through own Heads of agreement signed with Duluth Metals FTSE-100 constituent since March 2004 Exploration and evaluation activities document in the printing factory.
and socialimpact study in final stages. exploration effortsand partnerships with Limited in January 2010 to acquire an interest Level One ADR in United States (ANFGY) Registered office ISO 14001 A pattern of control for an environmental
Negotiations continuing for agreements other companies. in the Nokomis deposit in the United States. management system against which an organisation can
Market capitalisation at 31 December 2009 of US$15.7 billion be credited by a third party.
withrelevant authorities. > Page 28
65% of ordinary share capital controlled by Luksic family
> Page 28
of Chile with 35% free float
Overview
Antofagasta at a Glance Directors and Advisors
Mining Transport Water
Overview
Antofagasta Minerals S.A. (AMSA) is the corporate centre for the Directors Company Secretary
mining division, based in Santiago, Chile. During 2009 its operations
produced 442,500 tonnes of copper in concentrate (containing a small
J-P Luksic Chairman Petershill Secretaries Ltd
amount of gold and silver) and copper cathode as well as 7,800 tonnes CH Bailey Non-Executive Plumtree Court, London EC4A 4HT
of molybdenum in concentrate. Production is expected to increase to GS Menndez Non-Executive
543,000 tonnes in 2010 and exceed 700,000 tonnes in 2011. > Page 17 Auditors
RF Jara Non-Executive
Deloitte LLP
DE Yarur Non-Executive
The Antofagasta Railway Company plc, founded in 1888, is the Aguas de Antofagasta S.A. holds the concession for water
1 Securing and strengthening the Core Business Solicitors
Business Review
main cargo transport system in Chiles Antofagasta Region, distribution in Chiles Antofagasta Region. It produces and GA Luksic Non-Executive
Current operations: Los Pelambres El Tesoro Michilla with a network of over 900 kilometres in Chile and a controlling distributespotable water to customers and untreated water JW Ambrus Non-Executive (resigned 14.10.2009) Clifford Chance LLP
interest in the Ferrocarril Andino network in Bolivia. It has a toindustrial customers. > Page 31
Shareholders: 60% Antofagasta plc, 70% Antofagasta plc, 74% Antofagasta plc, JG Claro Non-Executive
40% Japanese consortia 30% Marubeni Corporation 26% other Chilean investors 40% interest in Inversiones Hornitos S.A., a power plant under Financial Advisors
construction in Mejillones. > Page 30 WM Hayes Non-Executive
2009 copper production: 311,600 tonnes payable copper 90,200 tonnes 40,600 tonnes N M Rothschild & Sons
Forecast for 2010: 407,000 tonnes payable copper 96,000 tonnes 40,000 tonnes
Shareholders: 100% Antofagasta plc Shareholders: 100% Antofagasta plc HSBC Investment Bank
2009 molybdenum production: 7,800 tonnes
Forecast for 2010: 9,500 tonnes 2009 volume transported: 6.3 million tons by rail in Chile and 2009 volume sold: 43.7 million cubic metres
Stockbrokers
Boliviaand 1.5 million tons by road (including 1.1 million cubic metres
Financial Review
2009 cash costs: 80.4 cents per pound (114.5 cents 123.4 cents per pound 157.6 cents per pound
per pound excluding by-products) inChile of water transported) Merrill Lynch International
Forecast for 2010: 81 cents per pound (114 cents 156 cents per pound 162 cents per pound 2009 EBITDA: US$ 56.6 million 2009 EBITDA: US$ 60.2 million J.P. Morgan Cazenove
per pound excluding by-products)
2009 EBITDA: US$1,408.9 million US$231.7 million US$27.9 million Banker
Proved and probable reserves: 1.5 billion tonnes @ 0.64% copper 211.6 million tonnes 9.5 million tonnes
with molybdenum @ 0.57% copper @ 1.35% copper Antofagasta around the world The Royal Bank of Scotland plc
Development projects:
Los Pelambres expansion The US$1.0 billion plant expansion is now Esperanza The US$2.3 billion, 70% owned project located in Chiles
Governance
beingcommissioned and will increase plant throughput by approximately Antofagasta Region which will produce on average approximately 191,000
30%,from the current 130,000 tonnes per day level to a 175,000 tonnes tonnes of payable copper and 215,000 ounces of payable gold per year.
perday level in 2010, increasing payable copper production by approximately The project is 65% complete at 31 December 2009 with commissioning
90,000 tonnes per year from 2010. > Page 17 expected to begin bythe end of 2010. > Page 24

Promising results from drilling programmes Successful exploration programme Examining the potential to further extend
Design and Production
atCaracoles, Mirador and Telgrafo deposits. conductedbetween 2006-2008. thelife ofMichilla through to 2018. Radley Yeldar www.ry.com
Mineral inventory is estimated to be in the Total mineral resources of 6.2 billion tonnes Antucoya feasibility study for a stand-alone Printing
range of2.6 to 4.1 billion tonnes with grades withan average copper grade of 0.52%. heapleach SX-EW project to be completed Royle Corporate Print
in the rangeof 0.50% to 0.41% copper. > Page 27 bymid-2011. Royle Corporate Print is FSC and ISO 14001 certified
> Page 26 > Page 27 with strict procedures in place to safeguard the
environment through all processes.
3 Growth beyond the Core Business This Report has been printed on Cocoon Silk which
is 50% recycled and FSC certified.
Reko Diq Other exploration Early-stage exploration agreements
Other Information
37.5% effective interest in exploration and evaluation activities inplacefor prospects in the Americas, Incorporated in the United Kingdom Key FSC Forest Stewardship Council. This ensures
that there is an audited chain of custody from the
licences in Baluchistan, Pakistan. Exploration and evaluation activities both EuropeandAfrica. Listed on the London Stock Exchange (ANTO.L) Operations and development projects tree in the well-managed forest through to the finished
Feasibility study and environmental inChile and internationally, through own Heads of agreement signed with Duluth Metals FTSE-100 constituent since March 2004 Exploration and evaluation activities document in the printing factory.
and socialimpact study in final stages. exploration effortsand partnerships with Limited in January 2010 to acquire an interest Level One ADR in United States (ANFGY) Registered office ISO 14001 A pattern of control for an environmental
Negotiations continuing for agreements other companies. in the Nokomis deposit in the United States. management system against which an organisation can
Market capitalisation at 31 December 2009 of US$15.7 billion be credited by a third party.
withrelevant authorities. > Page 28
65% of ordinary share capital controlled by Luksic family
> Page 28
of Chile with 35% free float
Overview 1
Overview
The strategy for growing our mining business Antofagasta at a Glance
Highlights
1
2
is based around three pillars: Chairmans Statement
Strategy for the Mining Business
3
6
Marketplace 9
Key Performance Indicators 12
Principal Risks and Uncertainties 14
Business Review 16
Business Review
Mining 17
3 Growth beyond Securing and strengthening the Core Business 17
the Core Business Organic and sustainable growth of the Core Business 26
Growth beyond the Core Business 28
Transport 30
Water 31
2 Organic and Corporate Sustainability 32
sustainable growth of
the Core Business
Financial Review 42
Financial Review
1 Securing and
strengthening the
Core Business
Governance 50
Governance
Directors Report 50
Corporate Governance Report 54
> More information on page 6 Remuneration Report 59
Strategic enablers
Financial Statements 62
Quality of Strong Experienced Extensive Statement of Directors Responsibilities 62 Financial Statements
existing assets financial management mineral Independent Auditors Report 63
position team resource base Consolidated Income Statement 64
Consolidated Statement of Comprehensive Income 65
Commitment Strong labour Community Efficient Consolidated Statement of Changes in Equity 65
to health and relations relations environmental Consolidated Balance Sheet 66
Consolidated Cash Flow Statement 67
safety management Notes to the Financial Statements 68
Other Information 106

Other Information
Five Year Summary 106

> More information on page 8
Ore Reserves and Mineral Resources Estimates 108
Mining Production and Sales, Transport
and Water Statistics 114
Glossary and Definitions 116
Shareholder Information 120
Directors and Advisors 121
2 Antofagasta plc Annual Report and Financial Statements 2009
Overview
Highlights
Group turnover (US$m) Strong operating performance with copper production

2008: 3,372.6
of 442,500 tonnes, ahead of the original forecast
2,962.6 forthe year. Molybdenum production unchanged
at7,800 tonnes.
Year-end net cash (US$m)
2008: 2,919.1 Reduced operating costs, with weighted average
1,595.7 cashcosts excluding by-product credits down
7% to120.3 cents1.
Earnings per share (US cents)
2008: 85.5 (excluding exceptional items); Financial position further strengthened in challenging
173.1 (including exceptional items)2
market conditions, with US$1.8 billion raised in two
67.7 major financings.
Total dividends per ordinary share3 Continued progress with capital projects. The plant
(US cents)
2008: 60.0 (reflecting the exceptional gain on expansion at Los Pelambres was substantially complete
disposal in that year)
by the end of 2009, and the Esperanza project is due
23.4 to start commissioning by the end of 2010.
Increased potential through successful exploration

from the Groups internal team and growing
portfolio of international early-stage exploration
and evaluation agreements.
1
ash costs are a measure of the cost of operational production expressed in terms of US cents per pound of payable
C
copper produced. Further details are given in Note (c) on page 115.
2
T here were no exceptional items in the year ended 31 December 2009. Details of the 2008 exceptional items are set
out in Note 5 to the financial statements.
3
Total dividends represent dividends proposed in relation to the year.
Chairmans Statement
Overview
The Group achieved a strong operational performance All three of the Groups business divisions performed well. Group copper
during 2009 and, as a result of its strong asset base production at the mining division was 442,500 tonnes, which was ahead of
the original forecast for the year of 433,000 tonnes. Molybdenum production
andsound financial position, has been able to continue at Los Pelambres was 7,800 tonnes, in line with 2008. The transport and
its growth strategy without interruption in spite of the water divisions both achieved increased volumes. The Groups net earnings
economic and financial pressures during the year. in2009 were US$667.7 million compared with US$842.9 million in 2008
(excluding exceptional items in 2008). The decrease mainly reflects the
expected reduction in copper volumes and lower molybdenum market prices
Business Review
in 2009. The Groups already strong financial position was further improved
through the raising of US$1.8 billion in two major financings at Esperanza
and Los Pelambres. At 31 December 2009 the Groups net cash balance
was US$1,595.7 million.
Strategy
The mining division has achieved considerable progress in line with its
strategic plan, which was established in 2008. The first pillar of the strategy
Financial Review
J-P Luksic, Chairman is to secure and strengthen the core business of the Group. During 2009
theplant expansion at Los Pelambres was substantially completed, with the
increased plant throughput level of 175,000 tonnes per day expected to be
reached during the second quarter of 2010. Esperanza expects to complete
construction and start commissioning of its new mine by the end of 2010.
The second strategic pillar is to grow this core business by further developing
the areas around its existing asset base. The Groups primary focus remains
the Sierra Gorda district, which provides a range of excellent opportunities
forgrowth in the medium and longer term. The Group intends in the medium
Governance
term to assess how best to utilise the large resource base at Los Pelambres.
Near Michilla, a feasibility study is in progress at the Antucoya deposit.
Thefinal element of the strategy is to develop and search for additional
opportunities including early stage growth in copper both in Chile and
abroad.At Reko Diq the feasibility study and the environmental and social
impact assessment study are in their final stages. Discussions with the
relevant authorities remain in progress, as agreements concerning a mining
lease andmineral agreement have not yet been reached. During 2009 the
Group has entered into a number of early-stage exploration agreements Financial Statements
tofurther develop its portfolio of international exploration prospects.
InJanuary 2010 italso entered into an agreement to acquire an interest
inthe Nokomis deposit in the United States.
Sustainable development
The Group recognises that achieving its strategic plan depends on effective
management of social and environmental issues, and during 2009 the
Other Information
mining division approved a social and environmental strategy which is integral

to its business plan. This sets out the Groups objective to create economic,
social and environmental value as a participant of the mining sector.
Itisfounded on the principle that managing sustainability performance
iskeytomaintaining the Groups social licence to operate and grow.
Overview
Chairmans Statement continued
Health and safety Recent events and outlook

The Board deeply regrets the death of five of its workforce who lost their Despite its severity and the very serious impact on parts of the country,
livesduring the year at the Groups mining operations. The Board has a therecent major earthquake in Chile of 27 February 2010 is not expected
cleartarget of zero fatalities and considers any fatality to be unacceptable. tohave any material impact on the Groups existing operations, and none
Eachincident was investigated by the relevant authorities and the Group, ofour employees or contractors has suffered any injury at our sites as
andwe have taken action to prevent a recurrence. aresult. However, some employees and many contractors at the Los
Pelambres and Esperanza projects have families in the affected areas, and
Health and safety is one of the Groups key priorities and work to improve
we have assisted them in temporarily returning home. There has also been
performance will continue over the year. The Groups lost time injury
some impact on power facilities for the expanded capacity at Los Pelambres
frequency rate improved in 2009 to an average of 2.8 injuries per million
and the supply ofsome steel structures for Esperanza which are fabricated
hours worked, from 4.4 in the previous year.
inthe damaged zone in the south of Chile. As a result, the commissioning
ofthe Los Pelambres plant expansion is now expected to be completed
Dividends in thesecond quarter of 2010, while the commissioning of Esperanza is
expected to start by the end of the year. The earthquake has clearly caused
The Board recommends a final dividend for 2009 of 20.0 cents per ordinary
great loss to some of our stakeholders in the country and we are working
share, comprising an ordinary dividend of 6.0 cents and a special dividend
with them to provide support.
of14.0 cents. The final dividend amounts to US$197.2 million, and if
approved at the Annual General Meeting will be paid on 10 June 2010. In January 2010 Sebastin Piera was elected as the new president
Including the interim dividend which was paid on 8 October 2009 this gives ofChileand will take office on 11 March. While this represents a change
total dividends for the year of 23.4 cents per ordinary share, amounting from the coalition which has governed since 1990, Chile is expected
toUS$230.7 million and representing a distribution of 35% of 2009 net toremain both one of the most financially and politically stable countries
earnings. This is the same payout ratio as in 2008, when the total dividends inSouth America, and also one of the most favourable countries in which
of 60.0 cents in part reflected the exceptional profits realised in that year. to conductmining operations.
As we have previously stated, our policy is to establish an ordinary dividend
The near-term outlook for copper has improved significantly compared with
which can be maintained or progressively increased and to pay special
early 2009, although prices could still remain volatile. Over the medium term
dividends when appropriate, taking into account the profit earned,
the outlook for copper is positive, with the potential for significant supply side
theGroups cash position and expected funding commitments.
pressures over the forthcoming years.
TheBoardbelieves this years dividend payment combines the Groups
desireto continue to return cash to shareholders with the ability to
developthe Groupsexisting growth portfolio and to take advantage
ofopportunitiesthatmay arise.
Earnings per share Dividends per share

US cents US cents
175 60
150 50
125
40
100
30
75
50 20
25 10
0 0
2005 2006 2007 2008* 2009 2005 2006 2007 2008 2009
73.6 137.4 140.2 173.1/85.5 67.7 22.0 48.2 49.6 60.0 23.4
*Earnings per share excluding exceptional items in 2008 were 85.5 cents. 8.0 8.2 8.6 9.0 9.4
Including special dividend Excluding special dividend

Overview
For 2010, Group copper production from the existing three operations
isexpected to increase by approximately 23% to 543,000 tonnes, mainly
asaresult of the completion of the plant expansion at Los Pelambres.
Molybdenum production at Los Pelambres is expected to be 9,500
tonnescompared with 7,800 tonnes in 2009, again due to the increased
plant throughput as a result of the expansion. With the commissioning
of Esperanza expected to start by the end of 2010, Group copper
production in2011 is expected to be over 700,000 tonnes.
Business Review
The Groups sizeable exploration prospects in Chile, together with
itsincreasing portfolio of international exploration projects, could provide
further opportunities for long-term growth. The Group intends to use
its sound financial position to continue to advance its existing assets
and properties while continuing to seek opportunities globally to
secure further world-classmining assets.
Board composition
Financial Review
Jozsef Ambrus retired from the Board on 14 October 2009. Jozsef had
been a Non-Executive Director of Antofagasta plc since 2005, as well as
for several years a Non-Executive Director of Antofagasta Minerals S.A. and
Minera Michilla S.A. We are very grateful for his significant contribution to the
Group over this period and would like to wish him every success for the future.
Antofagastas team
The Group has an extremely strong and experienced management team,
Governance
who have done a very impressive job of delivering such a positive operational
performance in a very demanding environment during 2009. The chief
executives of the Groups three divisions Marcelo Awad in the mining
division, Miguel Seplveda at the transport business and Marco Ktulas
in the water division have between them a wealth of experience both
with theGroup and in their respective industries. I would like to take this
opportunity on behalf of the Board to thank them and all our staff for the
commitment they have shown during a very challenging year, and for
helpingto ensure that the Group is well positioned for ongoing growth. Financial Statements
J-P Luksic
Other Information
Chairman
8 March 2010
Overview
Strategy for the 3 Growth beyond

the Core Business
Mining Business
2 Organic and
sustainable growth of
the Core Business
1 Securing and
strengthening the
Core Business
1 Securing and strengthening the Core Business

The first pillar of our strategy for the mining business is to optimise and enhance
our existing core business our operating assets and development projects.
Los Pelambres El Tesoro Michilla
Completion of the Los Pelambres plant During 2009 the El Tesoro plant began Michilla has approved an extension of its
expansion is expected to increase plant processing material from the Tesoro mine plan through to 2012 with expected
throughput by approximately 30%, from North-East deposit, and run-of-mine production of 40,000 tonnes in 2010.
the current 130,000 tonnes per day level processing of the Esperanza oxide cap also
> Page 23
to a 175,000 tonnes per day level in 2010. commenced. These additional resources
As a result, the production of payable extend the mine life to 2019. As a result
copper is expected to be 407,000 ofthe full year impact of these additional Esperanza
tonnesin 2010, compared with resources, production in 2010 is expected
Esperanza is expected to complete
311,600tonnes in 2009. to increase to 96,000 tonnes from the
construction and begin commissioning
90,200 tonnes produced in 2009.
> Page 17 bythe end of 2010. Over itsfirst 10 years
> Page 20 of operation it is expected toproduce on
average 191,000 tonnes ofpayable copper
in concentrate containing 215,000 ounces
of payable goldannually.
> Page 24

The second aspect of the strategy is to achieve sustainable, organic growth
from further developing the areas around our existing asset base in Chile.
The Groups primary focus for exploration Los Pelambres has total mineral The Group is currently carrying out studies
in Chile remains the Sierra Gorda district, resourcesof 6.2 billion tonnes with an to examine the potential to further extend
where El Tesoro and Esperanza are average copper grade of 0.52% which the life of Michilla through to 2018.
located. Promising exploration results have issignificantly greater than the 1.5 billion In August 2009 a decision was taken to
been obtained from drilling programmes tonnes of proven and probable reserves progress with a full feasibility study for a
atthe Caracoles, Mirador and Telgrafo currently incorporated in Los Pelambres stand-alone heap leach SX-EW operation
deposits. These could eventually provide mine plan. This presents opportunities for at Antucoya, located approximately 45km
further mineral resources to extend the longer term planning either by providing east of Michilla. The feasibility study is
lifeor scale of the existing El Tesoro additional material in future years to extend expected to be completed by mid-2011.
andEsperanza plants, or for additional the existing mine life, or by enabling Los
> Page 27
stand-alone operations in the future. Pelambres in the longer term to consider
possibilities for future growth.
> Page 26
> Page 27
Overview
3 Growth beyond the Core Business
The third aspect of the strategy is to look for growth beyond the areas of its existing operations
both in Chile and internationally. The primary focus is on potential early-stage developments.
Business Review
Reko Diq Other exploration and
The feasibility study and the environmental evaluation activities
and social impact assessment study are The Group is undertaking extensive
in their final stages with negotiations exploration work throughout the world.
continuing for agreements with relevant TheGroups internal team conducts
authorities for a mineral agreement and exploration on its own account principally
mining lease. The mineralresource inChile. The Group has also been growing
Financial Review
estimate at Reko Diq is 5.9 billion tonnes its portfolio of international early-stage
with an average copper grade of 0.41% exploration agreements.
and an average gold grade of 0.22g/t.
In January 2010 a Heads of Agreement
> Page 28 was signed with Duluth Metals Limited to
acquire an interest in the Nokomis deposit
in the United States.
> Page 28
Governance
Other Information
Overview
Strategy for the Mining Business continued

The Group uses the following
enablers to support our strategy:
Quality of existing assets Strong financial position Experienced Extensive mineral
The Group has a high-quality, The Group has a strong balance management team resource base
low-costportfolio of operating assets sheet, with net cash of $1.6 billion The Groups stable, well-established The Group has substantial mineral
and development projects, with a atthe end of 2009. Its strong management team has an excellent resources, well in excess of the ore
weighted average net cash cost of financial position has allowed it track record of delivering on planned reserves incorporated in existing
96.3 cents/lb in 2009. This means to maintain its growth plans in full, production growth and operational mine plans, which could provide
itis well positioned to perform despite the difficult financial markets. performance. thepotential for expansions in
strongly throughout the commodity It further strengthened itsposition production volumes or extensions
price cycle. The Esperanza project through two major financings > Page 5
ofexisting mine lives.
will add additional new production for a total of US$1.8billion.
also with a low net cash cost. > Page 26 to 29 and Page 108 to 113
> Page 48
> Page 17 to 25
Commitment to Strong labour relations Community relations Efficient environmental

health and safety The Group values the importance The Group seeks to manage management
Management of health and safety ofits workforce. The Group provides thesocial impact of its activities, The Group recognises the
is a key priority for the Group. its employees with training and andaims to make use of its importance of the effective
The Group aims to work to the opportunities to fulfil their potential, operations as a platform for the management of the environmental
highest standards to safeguard and with fair remuneration which social and economic development impacts of its activities, from
its employees, contractors reflects their contribution. This has ofits localcommunities. exploration through to closure.
and communities. been reflected in the good history Itpromotes efficient management
> Page 38
oflabour relations across the Group. ofnatural resources, in particular
> Page 36
> Page 36 and 37
energy efficiency and responsible
water use.
> Page 39 to 41
Social and environmental strategy

The Group recognises that achieving its strategic plan depends on effective management of social
and environmental issues, and during 2009 the mining division approved a social and environmental
strategy which is integral to its business plan. This sets out the Groups objective tocreate economic,
social and environmental value as a participant of the mining sector. > Page 33
Marketplace
Overview
The Groups businesses, and in particular the Los Pelambres also produces molybdenum, a metal which is primarily used
mining division, are heavily dependent on the copper in the production of high-quality steel alloys, and to a lesser extent in the
catalyst sector. This is sold in concentrate form to molybdenum roasters for
andmolybdenum markets which in turn are significantly further processing and refining. These sales are priced in accordance with
influenced by the international economy. market prices, and as with copper concentrate are subject to final pricing
adjustments (on average one month from the month of shipment).
Our products The transport division provides rail and road services, with its main business
The principal product of the Groups mining business is copper. being the transportation of copper cathodes from and sulphuric acid to mines
Business Review
TheLosPelambres mine produces copper concentrate, through a milling in Chiles Antofagasta Region. These services are typically provided to
andflotationprocess. The El Tesoro and Michilla mines produce refined customers under long-term contracts, often with agreed pricinglevels which
copper cathodes, using heap-leaching processes (and in the case of El are subject to adjustments for inflation and movementsin fuel prices.
Tesoro also arun-of-mine leaching process) and then solvent-extraction The water division operates a 30-year concession for the distribution of
electro-winning (SX-EW). The Groups Esperanza mine, which is due waterin Chiles Antofagasta Region, which it acquired in 2003. It consists
tostart operating at the end of 2010, will produce copper concentrate. oftwo businesses a regulated business supplying approximately 144,000
LosPelambres copper concentrate is normally sold to smelters for further domestic customers and an unregulated business serving mines and other
processing and refining into copper cathodes. El Tesoro and Michillas industrial users. Sales to domestic customers are priced in accordance with
Financial Review
coppercathodes are typically sold to copper fabricators, for processing regulated tariff structures, while sales to industrial customers are generally
intoapplications including copper wiring and tubing for use by industrial priced in accordance with contractually agreed levels.
end-users. The principal end markets for refined copper are construction
andelectrical and electronic products, which account for more than 60% Global copper consumption by market sector
ofglobal copper demand, followed by industrial machinery, transport %
andconsumer products. A Construction 33 E

B Electronic and electronic products 33
C Industrial machinery 12 D A
Sales of copper are typically priced in line with London Metal Exchange D Transport 11
(LME) market prices. A deduction is made from LME prices in the case E Consumer products 11 C
ofconcentrate, to reflect treatment and refining charges (TC/RCs) the TOTAL 100
Governance
smelting and refining costs necessary to process the concentrate into copper B
cathodes. Cathodes of a certain quality or from certain locations may attract
Source: Brook Hunt, A Wood MacKenzie company (December 2009)
a premium above the LME price. In addition, prices realised by the Group
during a specific period will differ from the average market price for that Global molybdenum consumption by market sector
period because, in line with industry practice, concentrate andcathode sales %
agreements generally provide for provisional pricing at the time of shipment A Constructional steel 35
F
G
with final pricing based on the average market price for future periods B Stainless steel 25
E
C Chemicals 14 A
(normally about one month from the month of shipment inthe case of D Tools and highspeed steel 9 D
cathode sales and on average three months from the month of shipment E MoMetals 6 Financial Statements
F Cast Iron 6
inthe case of concentrate sales). G Superalloys 5
C
TOTAL 100 B
A significant proportion of the Groups sales of copper concentrate are made
under long-term framework agreements. These framework contracts will Source: IMOA (2008 data)
typically set out the annual volumes to be supplied, with the pricing of the
contained copper in accordance with market prices as explained above,
Global economy
and the TC/RCs to bedetermined annually, normally in line with industry
benchmark terms. Asignificant proportion of the Groups copper cathode There was a pronounced, global downturn in industrial activity during 2009
which began in the second half of 2008. The decrease in global industrial
Other Information
sales are made underannual contracts, which again specify volumes to

besupplied, andwithpricing in line with market prices as explained above. production (IP) in 2009 has been estimated at approximately 7%, with the
decrease particularly sharp in OECD countries, which experienced an average
fall of around 11%. Some emerging economies, though, continued to grow, with
Chinese IP growth estimated at approximately 11%. Prospects for 2010 are
more positive, with initial forecasts for IP growth of approximately 4% in this year.
Overview
Marketplace continued
World copper consumption In the first two months of 2010 LME copper prices have averaged 323
Millions of tonnes centsper pound, just slightly below the position at 31 December 2009.
18.0
16.0
Tradefigures from China remain encouraging and several commentators
14.0 expect Chinese demand to remain robust in 2010, while there are tentative
12.0
signs of a recovery of demand in Europe and the United States. Current
10.0
8.0 consensus estimates are for the copper price to average over 300 cents per
6.0 pound in 2010, with the market expected to be in balance or possibly a small
4.0
2.0
surplus. Nevertheless, concerns remain about the extent and sustainability
0 ofa recovery in the OECD, possible monetary tightening in China and the
2001 2002 2003 2004 2005 2006 2007 2008 2009
impact of eventual withdrawal of fiscal stimulus measures taken last year.
14.8 14.9 15.6 17.0 17.0 17.5 18.0 18.0 17.1
Source: Brook Hunt, A Wood Mackenzie company (December 2009) With increased levels of financial investment in commodity markets, prices
could remain sentiment-driven and therefore volatile through the year.
World molybdenum consumption Over the medium term the outlook for copper is positive. Copper faces supply
000 tonnes of molybdenum content
225
side pressures over the forthcoming years, which have been increased by the
200 project delays and cancellations seen in the second half of 2008 and early
175
2009. Limited major new production coming on stream, combined with
150
125 declining ore grades at existing mature mines, could result in a tight copper
100 market, particularly if a sustained recovery in demand occurs in the OECD.
75
50
Consensus views are for the copper market to move into deficit in 2011.
25
0 LME copper price
2001 2002 2003 2004 2005 2006 2007 2008 2009
US cents per pound
141.7 143.5 156.4 173.4 186.7 201.6 219.8 228.6 186.1
300
Source: IMOA
250
200
Refined copper market 150

100
After three years of very strong prices, the copper price suffered a sharp 50
fallin the second half of 2008 as a result of the global financial crisis and 0
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010*
ensuing economic downturn. By the end of 2008 the copper price had fallen 71.6 70.7 80.7 130.0 167.1 305.3 323.3 315.3 234.1 322.8
to approximately 130 cents per pound, its lowest level for more than four *Represents first two months of 2010 only.
years, prompting production cuts and project delays across the industry.
However, the relative speed and extent of the recovery in the copper price Copper concentrate market
during 2009 was stronger than many had envisaged at the start of the year. The concentrate market has continued to be in deficit, with available
This was driven mainly by strong demand from China as a result of underlying smeltingcapacity significantly in excess of mine supply, resulting in low
growth, restocking and support from the government-led fiscal stimulus treatment and refining charges (TC/RCs) which favour mine producers.
package, but also an increased level of financial investment in commodities Current consensus estimates are for a deficit of approximately 1.5 million
particularly in the second half of the year. The price rose relatively steadily tonnes of contained copper in 2010, with a deficit expected to continue
throughout most of 2009, and by 31 December 2009 hadreached 333.2 for anumber of years. This has been reflected in improved terms for
cents per pound despite rising visible inventory levels particularly in the final miners withsettlements for the annual negotiations for 2010 at the level
quarter. Over the course of 2009 the LME copper price averaged 234.2 of US$46.5 per dry metric tonne of concentrate for smelting and 4.65 cents
cents per pound, compared with an average of 315.3 cents per pound in per pound ofcopper for refining, compared with US$75 and 7.5 cents
2008. However, the Groups average realised copper price actually increased respectively agreed for 2009. However, the impact of this improvement in
by 1.5% to 270.6 cents per pound (2008 266.7 cents), despite this annual terms isstaggered by the brick system in many contracts whereby
decrease in the average LME price. This was mainly due to the positive the benchmark is often averaged over two years.
impact of adjustments to provisionally priced sales which offset the lower
market prices and the impact of realised hedging losses. The general
increase in the copper price during 2009 resulted in positive provisional
pricing adjustments; conversely, the sharp fall in the copper price in the
second half of 2008 had resulted in negative adjustments in that year.
Overview
Molybdenum market The Group enters into medium and long-term contracts for a range of key
Realised molybdenum prices in 2009 were US$11.3 per pound, which inputs to help ensure continuity of supply and in some cases to guarantee
wasbroadly in line with the average market price of US$11.1 per pound cost levels. Labour agreements are in place at all of the Groups mining
butsignificantly lower than the average 2008 realised price of US$23.9 operations, generally covering periods of between three to four years.
perpound and average market price of US$28.9 per pound. Poor demand InMay2009 Esperanza reached a two-year collective agreement with its
inEurope and the United States for most of the year was mitigated, like labour union, and now all of the labour agreements in the mining business
copper, by a strong supply response through production cuts and project run until at least 2011. The Group has long term electricity supply contracts
deferrals in late 2008 and a high level of imports into China, which had in place at each of its mines. In most cases the cost of electricity under
Business Review
previously been a net exporter of this metal. thesecontracts will be linked to some degree to the current cost of electricity
on the Chilean grids or the costs of generation of the particular supplier.
The first two months of 2010 have seen a further recovery in the price,
reaching over US$17.0 per pound at the end of February 2010. Europe and The Group also normally contracts for the majority of its sulphuric acid
the United States have shown an improvement in the level of spot activity requirements for future periods of a year or longer, at specified rates.
following a poor year for demand in 2009, with little current sign of the Theaverage price per tonne of acid for the Group during 2009 was
returnof excess supplies for export from China. Consensus estimates approximately 20% lower than in 2008, reflecting the general easing
suggest prices close to the current level could be sustainable during 2010. oftheacid market. Spot acid prices were starting to rise towards the end
Nevertheless, prices remain well below the peak levels of 2007 and early of2009 and at the start of 2010. However, the Group has been able to
contractfor its 2010 requirements at rates significantly below those
Financial Review
2008. While several molybdenum projects were put on hold during 2008
and have not been re-initiated, some idled production capacity could become achievedin 2009, which could further reduce the average price per tonne
available should prices strengthen. The LME started trading three-month ofacid by approximately 30% compared with 2009.
molybdenum futures in February 2010. This new market still remains at The Group benefitted from the reduction in oil prices in 2009. The average
anearly stage, but could provide greater depth and transparency to market price for oil during 2009 was US$62 per barrel (WTI), compared with
molybdenum prices in the longer term as it develops. US$100 in 2008, a decrease of approximately 40%. Again, though, prices
were rising during 2009 and into 2010, increasing from US$45 per barrel
Molybdenum market price at the start of 2009 to US$80 per barrel by 31 December 2009, with prices
US dollars per pound
remaining at these levels in the first two months of 2010.
Governance
30.0
25.0
The Groups costs are also impacted by the Chilean peso exchange rate, as
20.0
15.0
on average across the Groups mining operations approximately 35% of costs
10.0 are denominated in Chilean pesos. However, the economic exposure to
5.0
fluctuations in the Chilean peso exchange rate is partly mitigatedby a natural
0
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010* hedge, as the copper industry is a major componentof the Chilean economy,
2.4 3.7 5.3 16.2 32.0 24.8 30.2 28.9 11.1 14.7 and movements in the copper price andChilean peso tend to be correlated.
*Represents first two months of 2010 only. The exchange rate at the start of 2009 was Ch$640/US$ a weakening in
the Peso of almost 50% from its high point during 2008 of Ch$430/US$.
Key inputs Financial Statements
However, the peso strengthened relatively steadily throughout 2009, finishing
The Groups mining operations are dependent on a range of key inputs, such the year at Ch$507/US$, andthe average exchange rate during 2009 of
as mining equipment (including the supply and maintenance of vehicles and Ch$560/US$ was only 7%weaker than the 2008 average of Ch$522/US$.
replacement parts such as tyres), electricity, labour and fuel. In the case of
a copper concentrate producer such as Los Pelambres, steel balls used in 2009 Group weighted average cash cost excluding
by-products credits by type
the milling process are also a significant input cost. With cathode producers %
using the SX-EW process, such as El Tesoro and Michilla,sulphuric acid is A Energy 12
B Administration 11 L
a key input. The availability and cost of these inputscan be key operational C Equipment rental 11 J
K A
issues, particularly during times of strong demand for commodities. D Labour

Other Information
11 I
E Maintenance 11 B
F Explosives and reactives 10 H
There was a general easing of market cost pressures in the latter part of G Sulphuric acid 8
C
H Other consumables 6 G
2008 and early 2009, in line with the general economic downturn and fall I Shipping & TC/RC 5
J Steel milling balls 4
indemand for commodities. The improvement in the commodity markets K Services 3
F
E
D
seen during the course of 2009 and into 2010 has, however, also seen a L Other costs
TOTAL
8
100
return of market cost pressures. % breakdown of weighted average cash costs excluding by-product credits of 120.3 cents per pound.
Overview
Key Performance Indicators

The Group uses the following KPIs to assess
progress against our strategy:
Financial KPIs
Turnover US$2,962.6m Earnings per share US67.7 cents > An analysis of Financial KPIs is
includedwithin the Financial Review
Turnover represents the value of goods and services Earnings per share is calculated as the net profit
onpages42 to 49.
supplied to third parties during the year. attributable to equity holders of the Company, divided
by the number of ordinary shares in issue.
US$ million US cents
3,500 175
3,000 150
2,500 125
2,000 100
1,500 75
1,000 50
500 25
0 0
2005 2006 2007 2008 2009 2005 2006 2007 2008* 2009
2,445.3 3,870.0 3826.7 3,372.6 2,962.6 73.6 137.4 140.2 173.1 67.7
*Earnings per share excluding exceptional items in 2008 were 85.5 cents
EBITDA US$1,680.7m Capital expenditure US$1,335.4m

EBITDA refers to Earnings Before Interest, Tax, Capital expenditure refers to amounts capitalised in
Depreciation and Amortisation. EBITDA is calculated respect of the purchase of property, plant and equipment.
by adding back depreciation, amortisation and profit
US$ million
orloss on disposals of property, plant and equipment 1,225
andimpairment charges to operating profit from 1,050
subsidiaries and joint ventures. 875
700
525
US$ million
350
2,625 175
2,250 0
1,875 2005 2006 2007 2008 2009
1,500
186.3 539.0 466.0 1,189.6 1,335.4
1,125
750
375
0 Net cash US$1,595.7m
2005 2006 2007 2008 2009 Net cash represents cash and cash equivalents
1,674.1 2,957.3 2,824.0 1,899.8 1,680.7
less borrowings.
US$ million
2,625
2,250
1,875
1,500
1,125
750
375
0
2005 2006 2007 2008 2009
851.5 1,446.8 1,946.5 2,919.1 1,595.7
Operational KPIs
Overview
Copper production 442,500 tonnes Molybdenum production 7,800 tonnes > An analysis of the Groups copper and
molybdenum production are included within
Copper production comprises the concentrate and Molybdenum production is the concentrate output
the review of each operation in the Business
Business Review
cathode output of the Groups three operating mines, fromthe Groups Los Pelambres mine. These production Review on pages 17 to 24 and within the
Los Pelambres, El Tesoro and Michilla. Los Pelambres figures are expressed in terms of payable metal Financial Review on pages 42 and 43.
produces copper concentrate, and its figures are expressed contained in concentrate.
in terms of payable metal contained in concentrate.
000 tonnes 000 tonnes
525 14
450 12
375 10
300 8
Financial Review
225 6
150 4
75 2
0 0
2005 2006 2007 2008 2009 2005 2006 2007 2008 2009
467.3 465.5 428.1 477.7 442.5 8.7 9.8 10.2 7.8 7.8
Lost time injury Cash costs US96.3 cents > An analysis of the Groups cash costs are
frequency rate (LTIFR) 2.8 Cash costs are a measure of the cost of operational included within the review of each operation
in the Business Review on pages 17 to 24
The safety and health of employees and contractors production expressed in terms of US cents per pound
and within the Financial Review on pages
isapriority to the Group. The lost time injury frequency of payable copper produced. Cash costs are stated
Governance
42 and 43.
rateis the number of accidents with lost time during net of by-product credits and include tolling charges
theyear per million hours worked. for concentrates at Los Pelambres. Cash costs exclude > An analysis of the lost time injury
depreciation, financial income and expenses, hedging frequency rate is set out within the
Corporate Sustainability report on page 36.
Accidents per million hours worked gains and losses, exchange gains and losses, and
7
6
corporation tax.
5
4 US cents per pound 1
3 105
2 90
1 75 Financial Statements
0 60
2005 2006 2007 2008 2009 45
3.9 4.9 5.6 4.4 2.8 30
15
0
2005 2006 2007 2008 2009
13.9 40.2 31.6 87.3 96.3
1
ash costs are an industry measure of the cost of production and
C
are further explained in Note (c) on page 115.
Other Information
Overview
Principal Risks and Uncertainties
The Group faces a variety of risks which could negatively impact > Further information about the Groups risk management
its performance, earnings, financial position, reputation and systems are given in the Corporate Governance Report on pages
future prospects. Over the past year we have refined the process 56 and 57 and in the Sustainability Report on page 35. Further
of identifying, evaluating and monitoring strategic risks in order detailed disclosure in respect of financial risks relevant to the
to focus on the most significant events that could impact the Group are set out in Note 25(c) to the financial statements and
Groups performance. Set out below are the principal risks and on pages 46 and 47 of the Financial Review.
uncertainties identified and the steps the Group has taken to
mitigate each of them. There may be additional risks unknown
tothe Group and other risks, currently believed to be insignificant,
could turn out to be significant. These risks, whether they
materialise individually or simultaneously, could significantly
affect the Groups business and financial results.
Risk Mitigation
Commodity prices The Group considers exposure to commodity price fluctuations within > The sensitivity of Group earnings to
The Groups results are heavily dependent on commodity prices reasonable boundaries to be an integral part of the Groups business, movements in commodity prices is set out
principally copper and to a lesser extent molybdenum. The prices of and its usual policy is to sell its products at prevailing market prices. in the Financial Review on page 47.
these commodities are strongly influenced by world economic growth, The Group monitors the commodity markets closely to determine
and may fluctuate widely and have a corresponding impact on the the effect of price fluctuations on earnings and cash flows, and uses Details of hedging arrangements put in place
Groups revenues. derivative instruments to manage its exposure to commodity price by the Group are included within the Financial
fluctuations where appropriate. Review on page 46 and in Note 25(e) to the
financial statements.
Strategic resources Contingency plans are in place to address potential short-term > Information on the Groups arrangements
Disruption to the supply of any of the Groups key strategic inputs such disruptions to strategic resources such as electricity. The Group for the supply of key inputs are included
as electricity, water, sulphuric acid and mining equipment could have a entersinto medium and long-term supply contracts for a range within the Marketplace section on page 11,
negative impact on production volumes. Longer term restrictions could ofkeyinputs to help ensure continuity of supply. and details of significant operational or cost
impact opportunities for the growth of the Group. factors related to key inputs are included
Technological solutions, such as increased use of sea water in the
within the Business Review on pages
A portion of the Groups input costs are influenced by external market Groups mining processes, can help address long-term limitations
17 to 31.
factors and are not entirely within the control of the Group. onscarce resources such as fresh water.
Political, legal and regulatory risks The Group assesses political risk as part of its evaluation of potential > Details of any significant political, legal
The Group may be affected by political instability and regulatory projects, including the nature of foreign investment agreements or regulatory developments impacting the
developments in the countries in which it is operating, pursuing in place. Political, legal and regulatory developments affecting the Groups operations are included within the
development projects or conducting exploration activities. groups operations and projects are monitored closely. review of operations in the Business Review
Thewithdrawal or variation of permits already granted and changes on pages 17 to 31.
toregulations or taxation could adversely affect the Groups
operationsand development projects.
Community relations The Group is committed to managing the social impact of its activities > Details of the Groups community relations
Failure to adequately manage relations with local communities by utilising several instruments to ensure clear communication with activities are included in the Corporate
couldhave a direct impact on the Groups reputation and ability local stakeholders, such as local perception surveys, local media and Sustainability report on page 38.
to operate at existing operations and the progress and viability community meetings.
ofdevelopment projects.
Overview
Risk Mitigation
Growth opportunities The Group has teams conducting active exploration programmes > A review of the Groups exploration
The Group needs to identify new mineral resources and development both within Chile and elsewhere. The Group has also entered into activities, its exploration agreements and
opportunities in order to ensure continued future growth. The Group early-stage exploration agreements with third parties in a number other growth opportunities are set out in
seeks to identify new mineral resources through exploration. There of countries throughout the world. the Business Review on pages 26 to 29.
is a risk that exploration activities may not identify viable mineral
The Group assesses a wide range of potential growth opportunities,
resources. The Group may fail to identify attractive acquisition
both from its internal portfolio and external opportunities, to maximise
opportunities, or may select inappropriate targets. The long-term
the growth profile of the Group. A rigorous assessment process is
Business Review
commodity price forecasts used when assessing potential projects
followed to evaluate all potential business acquisitions.
and other investment opportunities are likely to have a significant
influence on the forecast return on investment.
Ore reserves and mineral The Groups reserves and resources estimates are updated annually > The ore reserves and mineral resources
resources estimates to reflect material extracted during the year, the results of drilling estimates, along with supporting explanations,
programmes and updated assumptions. The Group follows the are set out on pages 108 to 113.
The Groups ore reserves and mineral resources estimates are subject
JORC code in reporting its ore reserves and mineral resources
to a number of assumptions and estimations, including geological,
which requires that the reports are based on work undertaken
metallurgical and technical factors, future commodity prices and
byaCompetent Person.
Financial Review
production costs. Fluctuations in these variables may result in lower
grade reserves being deemed uneconomic, and could lead to a
reduction in reserves.
Operational risks The key operational risks relating to each operation are identified as > Details of the operational performance
Mining operations are subject to a number of circumstances not part of the regular risk review process undertaken by the individual of each of the Groups operations isincluded
wholly within the Groups control, including damage to or breakdown operations. This process also identifies appropriate mitigations for within the Business Review on pages17to31.
of equipment or infrastructure, unexpected geological variations or each of these specific operational risks.
technical issues, extreme weather conditions and natural disasters,
The Group has appropriate insurance to provide protection from
which could adversely affect production volumes and costs.
Governance
some,but not all, of the costs that may arise from such events.
Development projects Prior to project approval a detailed feasibility process is followed to > Details of the progress of the Groups
A failure to effectively manage the Groups development projects assess the technical and commercial viability of the project. Detailed development projects is included within the
could result in delays in the commencement of production and cost progress reports on the ongoing development projects are regularly Business Review on pages 17 to 31.
overruns. Demand for supplies, equipment and skilled personnel reviewed, including assessments of the progress of the key project
could affect capital and operating costs. Increasing regulatory and milestones and actual performance against budget.
environmental approvals and litigation could result in delays in
construction or increases in project costs.
Employees and contractors There are long-term labour contracts in place at each of the > Details of the Groups relations with
The Groups skilled workforce is essential both to maintain its current Groupsmining operations which help to ensure labour stability. itsemployees and contractors are set out
operations and to successfully complete the Groups development The Group maintains appropriate and transparent dialogue with withinthe Corporate Sustainability report
projects. The loss of skilled workers and failure to recruit new staff itsemployees, and invests in employee training and development. onpages36 and 37 and within the review
may lead to increased costs or delays. Labour disputes may lead to oftheoperations in the Business Review
Contractors employees are an important part of the Groups
operational interruptions and higher costs and could have a negative onpages 17 to 31.
workforce, and under Chilean law are subject to the same duties and
impact on the Groups earnings.
responsibilities as the Groups own employees. The Groups approach
is to treat contractors as strategic associates.
Other Information
Health, safety and the environment The Group attaches a very high priority to health, safety and > Further information in respect of
The Group operates in an industry that is subject to numerous health, environmental matters. The Group monitors relevant legislation theGroups activities in respect of health,
safety and environmental laws and regulations as well as community andregulations relating to health, safety and the environment to safetyand the environment is set out in
expectations. Non-compliance could result in harm to the Groups ensure continued compliance. The Group provides for future site theCorporate Sustainability report on
workers, the environment and the communities in which the Group closure and remediation costs, based on analysis produced by pages36 and 39 to 41.
operates, disruption to the Groups operations, as well as fines and external expert advisors.
penalties and damage to its reputation.
Business Review
Business Review
Mining
Transport
Water
Corporate sustainability
LA PAZ National highway

A GUAQUI VIACHA AMSAs operations, projects and principal
PERU COCHABAMBA
exploration prospects
Towns and cities

ORURO
BOLIVIA PERU Other mines and projects
SUCRE Plants
POTOSI Other railways

RIO MULATO
8090 Pound Rail
UYUNI
UJINA ATOCHA 6575 Pound Rail BOLIVIA
TUPIZA 5060 Pound Rail

AMINCHA OLLAGUE
VILLAZON
TOCOPILLA ADASA facilities
ANTUCOYA CALAMA LAQUIACA Distribution line for untreated water
MICHILLA EL TESORO ESPERANZA Distribution line for potable water
MEJILLONES
B AQ SIERRA GORDA
ANTOFAGASTA PR
AT
UED
A NO DISTRICT
SOCOMPA
Water Water
AUGUSTA Catchment Catchment
Quinchamale
VICTORIA
TOCOPILLA Lequena
TALTAL Water
Chuquicamata Catchment
~ Toconce
CHANARAL Filter Plant
ANTUCOYA Cerro Topater Mixer Tank
MICHILLA Water Catchment
Spence Puente Negro
COPIAPO
MEJILLONES SQM
Mantos EL TESORO
CHILE Desalination Plant Blancos ESPERANZA
Water
Supply SIERRA GORDA
Filter Plant Line DISTRICT
ANTOFAGASTA Salar del
Carmen
EL TESORO ESPERANZA
LA SERENA ARGENTINA CHILE

OVALLE
TALTAL Agua Verde Wells
COMBARBALA
Desalination Plant
ILLAPEL LOS PELAMBRES Filter Plant Taltal
LOS VILOS
Mining
Los Pelambres
Overview
Los Pelambres is a sulphide deposit located in Chiles Coquimbo Region,
240 km north-east of Santiago. It produces copper concentrate (containing
Completion of the Los Pelambres plant expansion is gold and silver) and molybdenum concentrate, through a milling and
flotation process.
expected to increase plant throughput by approximately
Revenue at Los Pelambres in 2009 was US$2,081.5 million, slightly
30%, from the current 130,000 tonnes per day level to below the US$2,172.0 million achieved in 2008. The reduction reflected
a 175,000 tonnes per day level in 2010. As a result, the a decrease in copper volumes and the lower molybdenum price, largely
production of payable copper is expected tobe 407,000 offset by an increase in the realised copper price.
Business Review
tonnes in 2010, compared with 311,600 tonnes in 2009. Los Pelambres produced 311,600 tonnes of payable copper in 2009,
areduction compared to the 2008 full year production of 339,200 tonnes,
although ahead of the original forecast for the year of 300,000 tonnes.
Thedecrease in production compared to 2008 was mainly due to lower
plant throughput due to the higher level of harder primary ore and a
marginal decrease in ore grades. Ore throughput averaged 129,200 tonnes
per day (2008 136,800 tonnes per day), while the ore grade in the area
of the open pit mined during the year was 0.74% copper (2008 0.76%).
Financial Review
Molybdenum production was unchanged from 2008 at 7,800 tonnes, with
marginally higher ore grades and metallurgical recoveries offsetting the
lower plant throughput.
Realised copper prices at Los Pelambres were 286.8 cents per pound,
16% higher than the 2008 realised price of 246.5 cents per pound.
Thiswas despite the average LME price for the year of 234.2 cents per
pound actually being 26% lower than in the previous year (2008 315.3
cents per pound). The general increase in the copper price during 2009
Governance
resulted in positive pricing adjustments of US$380.3 million, reflecting both
the settlement of open sales in the year and the impact of mark-to-market
adjustments at the beginning and end of the year. Conversely, the sharp
fallin the copper price in the second half of 2008 resulted in negative
adjustments of US$541.9 million in 2008. Realised molybdenum prices
were US$11.3 per pound (2008 US$23.9 per pound) which was broadly
in line with the average market price of US$11.1 per pound (2008
US$28.9 per pound). Further details of pricing adjustments for both copper
and molybdenum are given in the Financial Review on pages 42 and 43
Key data for 2009 and inNote 25(d) to the financial statements. Financial Statements
311,600 80.4
Payable copper (tonnes) Cash costs
2008: 339,200 (US cents per pound)
2008: 57.3
Location: Chiles Coquimbo Region, 240km northeast of Santiago

Shareholders: 60% Antofagasta plc
Other Information
40% Japanese Consortia

Ore Reserves: 1,502.6 million tonnes @ 0.64% copper,
0.018% molybdenum and 0.03 g/tonne gold
Mineral Resources: 6,164.9 million tonnes @ 0.52% copper,
0.011% molybdenum and 0.03 g/tonne gold
Los Pelambres open pit
Business Review
Mining continued

Cash costs for 2009, which are stated net of by-product credits and The Mauro tailings dam, which started up in November 2008, became fully
includetolling charges, were 80.4 cents per pound compared with 57.3 operational in the first quarter of 2009. As previously disclosed, in late 2008
cents per pound for 2008, an increase of 23.1 cents. This was mainly due Los Pelambres became aware of legal proceedings which had been initiated
toa 25.1 cents per pound decrease in by-products credits as a result in first instance courts in Santiago and in Los Vilos by certain members of the
oflower molybdenum market prices. There was a decrease of 4.2 cents Caimanes community located near the Mauro valley. These claims, several
inon-site and shipping costs compared with 2008, mainly due to lower of which have now been rejected by the relevant courts, seek to prevent the
shipping costs and energy prices offset by the effect of the lower production. continued operation of the Mauro tailings dam. Los Pelambres continues to
Tolling charges were 2.2 cents per pound higher than in 2008. The individual take necessary steps to protect its position and remains confident of its
components ofLos Pelambres cash costs are set out on page 114. rightsto continue the operation of the dam.
Los Pelambres achieved an operating profit of US$1,280.7 million in 2009, Total capital expenditure during 2009 was US$475 million. This expenditure
5.0% below 2008, reflecting the lower copper production and reduced predominantly related to the expansion of the plants throughput capacity
molybdenum prices as well as increased depreciation charges, partly offset to175,000 tonnes per day, through additional infrastructure including a third
by higher realised copper prices and lower on-site and shipping costs. SAG mill and sixth ball mill. The construction work on the expansion was
substantially complete by the end of 2009. The expansion remains on budget
Between December 2009 and January 2010 Los Pelambres entered
at approximately US$1 billion. Cumulative expenditure on this projectat
intonew corporate loan facilities for US$750 million, partly to fund costs
the end of 2009 was approximately U$920 million, of which US$400 million
associated with the plant expansion and also to refinance existing short-term
was incurred in 2009. The capitalised expenditure in respectof the plant
facilities. This comprised a five-year commercial bank facility for US$505
expansion will start to be depreciated during 2010, resulting in increased
million in December 2009 and a seven-year facility with Japan Bank for
depreciation at Los Pelambres. The additional throughput is expected to
International Cooperation (JBIC) in January 2010, which is expected to
increase production of payable copper by an annual average of 90,000
bedrawn down during the first quarter of 2010. Total borrowings (net of
tonnes over the next 15 years.
deferred financing costs) at the end of 2009 were US$821.9 million
(2008US$376.6 million). As explained below Los Pelambres is also continuing to review options for
thelong-term development of the mine. The total mineral resources base
forLos Pelambres is 6.2 billion tonnes, compared with the 1.5 billion tonnes
of ore reserves reported. This will present opportunities for longer-term
planning either to extend the existing mine life or by enabling Los Pelambres
to consider possibilities for long-term future growth.
Los Pelambres port facility at Punta Chungo

Overview
During the recent earthquake near Concepcin on 27 February 2010, Los On-site and shipping costs are expected to remain broadly stable in 2010
Pelambres suffered a brief stoppage to production as a result of interruption atapproximately 95 cents per pound compared with 95.3 cents in 2009,
to power supply, but operations were successfully restarted the following day. with economies of scale from the plant expansion expected to offset general
Repairs are required to facilities which provide the power requirements for the cost inflation. Tolling charges are also expected to remain largely flat at
additional production at the plant expansion. Some workers and contractors approximately 19 cents against 19.2 cents in 2009, with the lower
involved in the commissioning process who have families in affected areas benchmark terms for 2010 offset by the averaging effect of the brick system,
have also been given assistance in temporarily returning home. Accordingly although tolling charges in a small portion of contracts will be impacted by
the 175,000 tonnes per day level is expected to be reached in the second changes in the copper price. Cash costs before by-product credits are,
Business Review
quarter of this year rather than at the end of the first quarter as was originally therefore, expected to remain largely unchanged at approximately 114 cents
anticipated. Nevertheless, the plant is expected to be able to run in excess of per pound compared with the 114.5 cents per pound in 2009. Based on a
this level in the second half of the year, and hence the ore processing level is molybdenum price of approximately US$13 per pound, by-product credits
expected to average 175,000 tonnes per day for the year as a whole, which areexpected to be around 33 cents per pound, compared with 34.1 cents
represents the annual limit under existing environmental permits. in2009, which would give net cash costs of approximately 81 cents in
2010,compared with 80.4 cents in 2009.
The ore grade for the year is expected to average 0.72%. Accordingly,
forecast production of payable copper for 2010 is expected to remain at
approximately 407,000 tonnes, a 30% increase on 2009.
Financial Review
Molybdenum production is also expected to be significantly higher than
2009at 9,500 tonnes, due to the higher plant throughput, although the
increased throughput is expected to be partly offset by slightly lower
molybdenum grades of approximately 0.019%.
Governance
Production and cost data for Los Pelambres
000 tonnes Ktpd
175
400
150
116.5 114.5 114.0 125
300 105.9
96.1
74.7 80.4 81.0 100
200 75
57.3
50 0.80 0.81 0.76 0.74 0.72
100 16.4
(17.1) (10.8) 25 0.71
0 0
Other Information
2005 2006 2007 2008 2009 2010 E 2005 2006 2007 2008 2009 2010 E
000 tonnes 322.8 324.2 289.9 339.2 311.6 407.0 ktpd 128.1 127.4 126.3 136.8 129.2 175.0
000 tonnes 8.7 9.8 10.2 7.8 7.8 9.5
Copper production (000 tonnes) Pre-credit cash costs (US cents per pound) Plant throughput (000 tonnes per day of ore (ktpd)) Copper grade (%)
Molybdenum production (000 tonnes) Cash costs (US cents per pound)
Business Review
Mining continued

El Tesoro El Tesoro is a deposit located in Chiles Antofagasta Region, 1,350 km
northof Santiago. It now comprises two open-pit mines feeding a heap-leach
During 2009 the El Tesoro plant began processing operation and a run-of-mine (ROM) leaching operation, which produces
copper cathodes using a solvent-extraction electro-winning process.
material from the Tesoro North-East deposit, and
Revenue at El Tesoro was US$487.6 million in 2009, compared with
run-of-mine processing ofthe Esperanza oxide cap US$632.4 million in 2008, as a result of a lower realised copper price.
also commenced. These additional resources extend
Copper cathode production for 2009 was 90,200 tonnes compared with
the mine life to 2019. As a result of the full year impact 90,800 tonnes in 2008. During the year production commenced from both
of these additional resources production in 2010 is the Tesoro North-East deposit and the ROM processing of the Esperanza
expected to increase to 96,000 tonnes, from the oxide cap. These projects mitigate the decline in grades that would
otherwiseoccur from mining exclusively from the original open pit and
90,200 tonnes produced in 2009. extendthe life of the operation to 2019.
The heap-leach operation processed 9.8 million tonnes of ore during 2009.
Of this, 8.3 million tonnes was feed from El Tesoro and Tesoro North-East
open pits and 1.5 million tonnes was feed of sufficiently high grade oxide ore
from the pre-stripping of the Esperanza open pit. The ore grade of this
combined heap-leach feed averaged 1.25% copper, an increase on the
1.16% grade in 2008. This higher average grade was a result of the blend
ofore from the three sources, with better grades at El Tesoro and Tesoro
North-East offsetting the comparatively lower grades of the feed from the
Esperanza open pit. Plant throughput of ore averaged 26,200 tonnes per day,
compared with 28,500 tonnes per day in 2008. Metallurgical recoveriesat
the SX-EW plant were also slightly below 2008.
Construction work for ROM processing of the Esperanza oxide cap was
substantially completed during 2009, with the only work remaining being
thereplacement of pump impellers required to reach design pumping
capacity, which is expected to be achieved in the first quarter of 2010.
Production from the ROM commenced in the second half of 2009, and by
December had reached over 1,000 tonnes of copper in cathode per month.
Key data for 2009

90,200 123.4
2008: 144.7
Location: Chiles Antofagasta Region, 1,350 km north

of Santiago
Shareholders: 70% Antofagasta plc, 30% Marubeni Corporation
Ore Reserves: 211.6 million tonnes @ 0.57% copper
Mineral Resources: 270.3 million tonnes @ 0.56% copper
El Tesoro open pit
Overview
Realised copper prices at El Tesoro were 246.3 cents per pound compared Operating profit at El Tesoro was US$177.9 million, compared with US$124.9
with 315.6 cents per pound in 2008. This decrease was mainly due to the million in 2008. The prior year results included a one-off impairment charge
reduction in the average LME copper price, which in 2009 averaged 234.2 of US$160 million. The 2008 results excluding this charge were a profit of
cents per pound, compared with 315.3 cents in 2008. The increasing US$284.9 million. The reduction in the underlying profit, excluding the effects
priceenvironment during 2009 also resulted in positive provisional pricing of the prior year impairment, was mainly the result of the lower realised copper
adjustments of US$31.1 million in 2009, although these were partly offset price, partly offset by the reduced cash costs.
byrealised losses on hedging instruments which matured in the year of
Capital expenditure in the year was US$65.2 million. This included US$43.1
US$20.0 million. Further details of the effects of commodity hedging
million related to the ROM operation (resulting in total cumulative spend of
Business Review
instruments in place are given in the Financial Review under Treasury
US$65.4 million) and US$11.5 million related to the final pre-stripping at the
Management and Hedging and in Note 25(e) to the financial statements.
Tesoro North-East deposit (resulting in total cumulative spend for that project
Cash costs for 2009 were 123.4 cents per pound compared with 144.7 of US$80.8 million). The full year effect of depreciation in respect of the
cents per pound in 2008. This was mainly due to lower sulphuric acid and capitalised costs relating to Tesoro North-East and the ROM will result in
electricity prices, as well as the impact of the cost reduction programme increased depreciation at El Tesoro from 2010. Capital expenditure in 2010
implemented from the start of 2009. Given the sharp down-turn in the is estimated at approximately US$45 million.
copper market in the latter part of 2008 El Tesoro implemented measures
tominimise costs during 2009. This included the deferral of non-essential
material movement and waste removal not required for current production
Financial Review
tominimise the volume of material moved at the open pit. There will be a
resultant increase in material movement, and related costs, during 2010
asthis deferred activity is implemented.
Governance
Production and cost data for El Tesoro
000 tonnes Ktpd
80 144.7
156.0 25
123.4 20
60
109.8 15
40 1.25 1.23
10 1.23 1.23
66.1 78.6 1.16 1.16
20
Other Information
5
0 0
2005 2006 2007 2008 2009 2010 E 2005 2006 2007 2008 2009 2010 E
000 tonnes 98.1 94.0 93.0 90.8 90.2 96.0 ktpd 27.2 28.7 26.8 28.5 26.2 24.3
Copper production (000 tonnes) Cash costs (US cents per pound) Plant throughput (000 tonnes per day of ore (ktpd)) Copper grade (%)
The above throughput and grade figures relate to the El Tesoro and Tesoro North-East open pits,
and do not include the ROM processing.
Business Review
Mining continued

For 2010, cathode production is expected to be approximately 96,000
tonnes due to the full year impact of production from the Tesoro North-East
deposit and the ROM processing. Production from the ROM is expected to
reach nearly 2,000 tonnes per month by the last quarter of 2010, and to
contribute almost 20% of El Tesoros total production of cathodes in 2010.
The Tesoro North-East deposit is forecast to be responsible for approximately
60% of El Tesoros total production in 2010, with the balance from the
original El Tesoro pit. Average ore grades from the original open pit and the
Tesoro North-East deposit (but excluding the ROM operation) are expected
toremain relatively stable at approximately 1.24% copper.
Cash costs at El Tesoro for 2010 are expected to average approximately
156cents per pound, largely as a result of higher levels of material
movement, partly reflecting the work deferred from 2009 as part of the
costreduction programme, partially offset by a significantly lower contracted
sulphuric acid price.
Under its updated mine plan which was approved in 2009 El Tesoro should
be able to maintain annual production at approximately the 90,000 tonnes
level until at least 2013, when lower ore grades under the existing mine plan
cause output to decrease. As explained in the Sierra Gorda section below,
theGroup has an ongoing exploration programme in the Sierra Gorda district
to identify further oxide deposits that could in future years provide additional
ore to the El Tesoro plant. In particular, feasibility work is being performed in
respect of the Mirador oxide deposit, as a potential source of higher grade Maximising the potential
ore. Such deposits could be used to both offset reductions in production
levels due to declining grades, as well as to potentially extend the life of of El Tesoro
theoperation beyond the current mine plan which runs until 2019. The start-up of production from the Tesoro North-East deposit and the
run-of-mine (ROM) operation during the year represented a significant
step in the development of the Sierra Gorda mining district the area
surrounding El Tesoro and Esperanza where the Group also owns or
controls a number of other mining properties. Itdemonstrates the
synergies and opportunities which can arise from having operations and
mining properties located in close proximity to each other in this area.
The oxide ore which had to be removed as part of the pre-stripping
of the main sulphide deposit at Esperanza is already being profitably
processed through the El Tesoro plant. Along with the additional
resources from the Tesoro North-East pit it should be possible to
maintain production at the El Tesoro plant at around the 90,000 tonnes
level until at least 2013. The original mine plan for ElTesoro envisaged
production of approximately half that volume over the same period.
Once the Esperanza plant is operational by the end of 2010 the Group
will also have a concentrate plant processing sulphide ore in the area.
The combination of the oxide and sulphide plants gives important
optionality to the Group, particularly as the Group continues to conduct
exploration and evaluation work on its mining properties in the Sierra
Gorda district such as Caracoles and Mirador, which contain both
sulphide and oxide deposits.
Michilla
Overview
Revenue at Michilla for 2009 was US$170.5 million, against US$332.7
million in 2008, as a result of a lower realised copper price and reduced
Michilla has approved an extension of its mine plan production volumes.
through to 2012 with expected production of 40,000
Total annual production in 2009 was 40,600 tonnes of copper cathodes,
tonnes in 2010. Michilla is a sulphide and oxide deposit ahead of the original forecast for the year of 38,000 tonnes, although lower
located in Chiles Antofagasta Region, 1,500 km north than the 2008 production of 47,700 tonnes. The reduction compared with
of Santiago. It produces copper cathodes using a heap- the prior year was mainly due to the decision at the start of 2009 to suspend
operations at the higher cost Lince open pit mine and certain third-party
leach and solvent-extraction electro-winning process.
Business Review
workings, given the weak copper price environment at that point. Accordingly,
ore throughput averaged 15,100 tonnes per day compared to 15,500 tonnes
in 2008. Ore grades were 0.96% compared with 1.06% in 2008, partly
due to the decision to process lower-grade ore stockpiles which became
economic as the copper price strengthened during the year.
Realised copper prices in the period were 195.7 cents per pound, a significant
reduction compared with the 317.7 cents per pound realised in 2008. This
was predominantly due to the lower average LME copper price over the course
Financial Review
of the year, which in 2009 averaged 234.2 cents per pound, compared with
315.3 cents in 2008. In addition, realised losses of US$45.8 million in respect
of copper derivatives which had been put in place in late 2008 and early 2009,
and which matured during the course of the year, also decreased the realised
price. These effects were partly offset by positive provisional pricing adjustments
of US$11.8 million. Further details of the effects of commodity hedging
instruments in place are given in the Financial Review under Treasury
Management and Hedging and in Note 25(e) tothe financial statements.
Governance
Cash costs averaged 157.6 cents per pound during 2009, compared
with191.1 cents in 2008. This was mainly due to cost savings from the
suspension of the Lince open pit, lower electricity prices and the weakening
of the Chilean peso. Costs increased during the course of the year, partly
asa result of the improving copper price. Michilla purchases a portion of
theore which it processes through its plant from third parties and the price
paid for some of those materials was linked to the market value of the
containedcopper. High copper prices in the year accordingly resulted in
higher materials cost. The decision to process lower-grade ore stockpiles
given the increasing copper price also resulted in higher operating costs.
Key data for 2009
40,600 157.6
2008: 191.1
Other Information

of Santiago
Shareholders: 74% Antofagasta plc, 26% other Chilean investors
Ore Reserves: 9.5 million tonnes @ 1.35% copper
Mineral Resources: 42.8 million tonnes @ 2.27% copper
Copper cathodes in the electro-winning plant at Michilla
Business Review
Mining continued

Operating profit at Michilla was US$21.7 million, compared with US$71.3 Esperanza
million in 2008. The prior year results included a one-off impairment charge
of US$28.3 million, and the 2008 results excluding this charge were a profit
Esperanza is expected to complete construction and
of US$99.6 million. The lower profit in 2009 reflected the reduction in the begin commissioning bythe end of 2010. Over its first
realised copper price and the lower production volumes, partly offset by the 10 years of operation it is expected to produce on average
lower cash costs.
191,000tonnes ofpayable copper in concentrate
Cathode production in 2010 is expected to be approximately 40,000 tonnes. containing 215,000 ounces of payable gold annually.
80% of this expected 2010 production was hedged during the first half of
2009 through futures and min-max instruments. Further details are given
inNote 25(e) to the financial statements. During the year Michilla approved
an extension of its mine plan through to 2012, which includes the remnant
reserves from the final stage of the Lince pit. Michilla is currently carrying out
studies to examine the potential to extend the life of the operation to 2018.
In 2010 cash costs are expected to be approximately 162 cents per
pound,aslight increase compared with the 157.6 cents per pound in
2009.Increased costs due to the reopening of the Lince open pit and
otheroperational and market factors are expected to be largely offset by
asignificant reduction in the contracted price for sulphuric acid.
Production and cost data for Michilla

000 tonnes
40 191.1
157.6 162.0
30
118.8 143.5
20 126.4
10
0
2005 2006 2007 2008 2009 2010 E
000 tonnes 46.4 47.3 45.1 47.7 40.6 40.0
Copper production (000 tonnes) Cash costs (US cents per pound)
Ktpd
14 Project data
12
10
of Santiago
8
6 1.10 1.05 1.03 1.06 1.14 Shareholders: 70% Antofagasta plc, 30% Marubeni Corporation
0.96
4 Estimated total
2 development costs: US$2.3 billion
0 Ore reserves: 5 83.3 million tonnes @ 0.54% copper, 0.22 g/tonne
2005 2006 2007 2008 2009 2010 E gold and 0.010% molybdenum
Ktpd 14.9 15.2 14.8 15.5 15.1 12.3 Mineral resources: 1,204.4 million tonnes @ 0.45% copper,
Plant throughput (000 tonnes per day of ore (ktpd)) Copper grade (%) 0.15 g/tonne gold and 0.012% molybdenum
Overview
Esperanza is a copper-gold sulphide deposit located in Chiles Antofagasta In May 2009, Esperanza signed definitive agreements for a 12-year
Region approximately five kilometres south of the Groups El Tesoro mine. US$1.05billion project financing facility with a consortium of senior
Itwill produce copper concentrate containing gold and silver by-product lendersincluding governmental agencies and commercial banks. Up to 31
credits through a conventional milling and flotation process, with ore December 2009 US$716.1 million had been drawn down under this facility.
throughput expected to average approximately 98,000 tonnes per day. The Group is responsible for its 70% share of the development costs not
TheEsperanza deposit includes an oxide resource that is part of the covered by this facility and its partner Marubeni is responsible for the
overburden removed through pre-stripping and which, as explained in the remaining 30%.
ElTesoro section above, has started being processed by the El Tesoro plant
While the recent earthquake has not had any direct impact on Esperanzas
Business Review
during 2009 through ROM leaching. In August 2009 Esperanza was
facilities or its employees which were on site, some employees and many
awarded the Avonni prize in Chile for the most innovative mining operation,
contractors have families in the affected areas of the south of Chile and the
reflecting in particular Esperanzas efficiency in water usage, through its use
company has assisted them in temporarily returning home. Supply of some
of sea water and its thickened tailings system.
key steel structures for Esperanza fabricated in the damaged zone may also
The mine life given current reserves is 16 years. In its first ten years of be affected. This may delay some of the construction activities from the
operation Esperanza is projected to produce on average per year original schedule but Esperanza expects to start commissioning the mine
approximately 714,000 tonnes of concentrate containing 191,000 tonnes bythe end of this year. Group forecasts for 2010 do not take into account
ofpayable copper; although with lower grades in its initial year production in anyproduction from Esperanza.
2011 will be below this average level. In addition, the concentrate is expected
Financial Review
to contain an annual average of 215,000 ounces of payable gold, as well as
silver which is treated as a by-product credit. Cash costs before by-product
credits are currently estimated to be approximately 136 cents perpound over
the same period. The gold by-product is expected to reduce cash costs on
average during this period by approximately five cents per pound per US$100
in the gold price. There is potential for molybdenum production from 2015
ata rate of 2,000 tonnes per year over the following ten years. The adjacent
Telgrafo Sur and Telgrafo Norte deposits could utilise the Esperanza plant
Governance
and facilities well beyond Esperanzas mine life.
All key contracts relating to the construction are in progress. As at
31 December 2009 overall construction was approximately 65% complete,
with construction of the plant more than 40% complete. Pre-stripping has
progressed as planned, with a total of 108 million tonnes of material moved
by the end of 2009.
Capital expenditure during 2009 was US$716 million. Cumulative Financing our growth
expenditure up to the end of 2009 was US$1,218 million. Total development The Group has been able to raise US$1.8 billion in two major sets of
costs, including working capital and financing but before exchange impacts, financings, despite extremely challenging financial markets. In May 2009
remain estimated at US$2.3 billion. Esperanza signed a 12-year US$1.05 billion project financing facility,
Esperanza reached a two-year collective agreement with its labour union in andbetween December 2009 and January 2010 Los Pelambres entered
May 2009, with the next labour negotiation not expected to be due until the into new corporate loan facilities for a total of US$750 million. The ability
mine is fully operational. to raise these amounts during very difficult market conditions is testament
both to the quality of these assets and also the wider financial strength
of the Group. The achievement of the Esperanza project financing was
recognised in London by Project Financial International, who named the
transaction Mining Deal of the Year for the Americas for 2009, as well
Other Information
asin New York by Project Finance Magazine who named it as Mining

Dealof the Year.
Business Review
Mining continued

Sierra Gorda District Caracoles is situated approximately 10 kilometres south-east of Esperanza,
and was identified by the Groups exploration team in 2007. In February
The Groups primary focus for exploration in Chile 2009, the Group consolidated its interest in Caracoles to 100% by acquiring
the remaining 18.5% interest from Compaa Minera Milpo of Peru S.A.A.
remains the Sierra Gorda District, where El Tesoro and fora cash consideration of US$25.0 million. During 2009 total exploration
Esperanza are located. Promising exploration results spend amounted to US$14.3 million. The total mineral inventory at the
have been obtained from drilling programmes atthe deposit is estimated at between 0.71.1 billion tonnes, withacorresponding
copper grade of between 0.60% and 0.49%. Itisanticipated that a
Caracoles, Mirador and Telgrafo deposits. These could pre-feasibility study in respect of the deposit could commence later in 2010,
eventually provide further resources to extend the life following the incorporation of the results of the 2009 drilling programme into
or scale of the existing El Tesoro and Esperanza plants, a block model and potentially into a mineral resources estimate by the first
half of this year. Depending on the results of this work, itwill be possible to
or for additional stand-alone operations in the future. evaluate whether the deposit could provide additional feed for the Esperanza
plant, or support a stand-alone project.
The Group owns or controls a number of properties
The Mirador oxide deposit, located approximately five kilometres east of
in the Sierra Gorda District and during 2009 a total of Tesoro North-East and 100% owned by the Group, was identified by the
US$20.4 million of exploration expenditure was incurred Groups exploration team in 2008. Following completion of in-fill drilling
in respect of this district, predominantly in respect of work in April 2009, the decision was taken to proceed with a feasibility
study,evaluating the potential for processing the oxides from this deposit
the Caracoles deposit. atthe ElTesoro plant. It is expected that this feasibility study could be
completed during the first half of 2010. The deposit has total mineral
resources of 32 million tonnes, with an average copper grade of 1.04% at
acut-off grade of 0.20%. There is a relatively limited amount of overburden
above the deposit, and so only a comparatively low level of pre-stripping is
likely to be required to exploit the deposit. Mirador could provide additional
higher grade feed for the El Tesoro plant, to supplement the existing ore
reserves at the original El Tesoro pit and the Tesoro North-East satellite
deposit, which have an average grade of 0.77% copper. Work is also
continuing to explore for sulphide potential at Mirador.
Tesoro NE Llano
El Tesoro Paleocanal
Esperanza Mirador
Telgrafo Sur Telgrafo
Norte
Caracoles
Centinela
PERU
BOLIVIA
Polo-Sur
Types of interest
Operation
Project under construction
ARGENTINA
CHILE
Exploration/mineral inventory
Drilling work in the Sierra Gorda District

Michilla/Antucoya
Overview
The mineral inventory at Telgrafo Sur is estimated at between
1,1001,600million tonnes, with a corresponding copper grade of
between0.45%and 0.38%, and at Telgrafo Norte is estimated at between
Michilla district
330660 million tonnes, with a corresponding copper grade of between
0.44% and 0.34%, along with gold and molybdenum credits. The Telgrafo Michilla is currently carrying out studies to examine thepotential to utilise
Sur andTelgrafo Norte deposits are adjacent to Esperanza and, as explained its existing mineral resources to further extend the life of the operation from
above, could extend the life of Esperanza beyond its current mine plan. 2012 through to 2018. The Group has also conducted exploration at Michilla
Thesedeposits are owned through Minera Esperanza and hence the Groups in previous years which has identified some prospects which could eventually
supplement the existing mineral resources at Michilla. The mineral inventory
Business Review
interest is 70%. A drilling programme totalling 24,100 metres was carried
outduring 2009, which will allow the completion of the geological model at these deposits is currently estimated at between 20 to 33 million tonnes,
andthe calculation of a mineral resource estimate which is expected with a corresponding average copper grade of between 1.25% and 1.02%.
inthefirst half of 2010. Additional drilling work will continue throughout
2010witha view to further recategorisation of any mineral resources Antucoya
whichcouldpotentially lead to the initiation of pre-feasibility work during Antucoya is an oxide deposit located approximately 45 kilometres east
the courseof 2011. ofMichilla. The deposit has a mineral resource of 1.5 billion tonnes, with
anaverage copper grade of 0.27% at a cut-off grade of 0.10%.
Exploration work is also continuing at other targets and potential deposits
inthe district. With combined total mineral resources for Esperanza, Studies initially intended to bring the Antucoya project to feasibility stage
Financial Review
ElTesoroand Mirador of over 1.5 billion tonnes and a mineral inventory were started in 2008, which to date have examined a number of options
forotherprospects in the range of 2.6 to 4.1 billion tonnes, the Sierra which included a ROM operation to produce enriched copper solution which
Gordadistrict provides a range of good opportunities for growth in the could be processed at Michillas SX-EW plant as well as a stand-alone
medium andlonger term. SX-EW project to produce copper cathodes. In August 2009 a budget of
US$19.8 million was approved to progress with a full feasibility study for a
Los Pelambres District stand-alone project, based on a combination of heap leaching on dynamic
pads and ROM leaching on permanent pads.
Los Pelambres has total mineral resources of 6.2 billion tonnes with an The environmental permitting process for the feasibility study is currently
Governance
average copper grade of 0.52%. This includes mineral resources at the inprogress. It is expected that during 2010 a test pit will be constructed
existing open pit, and neighbouring deposits including the Frontera deposit, atthe deposit, to allow the extraction of ore for metallurgical testwork.
which were identified following an exploration programme between 2006 Thefeasibility study is expected to be completed by mid-2011.
and 2008. The increase in mineral resources from the amounts reported
in2008 (4.9 billion tonnes with an average copper grade of 0.56%) is
principally due to a reduction in the cut-off grade from 0.40% to 0.35%,
aswell as the incorporation of low grade stockpiles (42 million tonnes)
andupdates to the block model. These mineral resources are significantly
greater than the 1.5 billion tonnes of ore reserves currently incorporated Financial Statements
inLos Pelambres mine plan.
Group exploration expenditure
While the scale of the mineral resource has no immediate impact on the
existing mine plan for Los Pelambres, it presents opportunities for longer US$ million
term planning either by providing additional material in future years to extend 60
the existing mine life, or by enabling Los Pelambres in the longer term to 50
consider possibilities for future growth. 40
30
Other Information
20
10
0
2005 2006 2007 2008 2009
22.4 21.5 38.1 54.9 67.1
Including core business areas, share of Reko Diq and international exploration.
Business Review
Mining continued

Reko Diq Exploration and
evaluation activities
The Group holds a 50% interest in Tethyan Copper The Group is also undertaking exploration and
Company Limited (Tethyan), its joint venture with evaluation work in a number ofother countries.
BarrickGold Corporation (Barrick) established in Normally when the Group wishes to engage in
2006.Tethyans principal assets are a 75% interest early-stageexploration work in areas outside of its
intheexploration licence encompassing the Reko Diq traditional areas of deepest experience, namely Chile
prospects in the Chagai Hills region of South-West and in previous years Peru, ittypically doesso through
Pakistan (in which the Government of Baluchistan holds partnerships with other companies already established
the remaining 25%) including the Western Porphyries, inthose locations or otherwise with significant
and a 100% interest in certain other licences in the region. international experience.
The mineral resource at Reko Diq is estimated at 5.9 billion tonnes with an
average copper grade of 0.41% and an average gold grade of 0.22 g/tonne United States Nokomis deposit/Duluth Metals Limited
at a cut-off grade of 0.20% copper equivalent (2008 4.1 billion tonnes Subsequent to the year end, on 14 January 2010 the Group signed a legally
withan average copper grade of 0.50% and an average gold grade of binding Heads of Agreement (HoA) with Duluth Metals Limited (Duluth
0.298g/tonne), and the Groups attributable share of this joint venture Metals), acompany listed on the Toronto Stock Exchange (TSX) toacquire
interest amounts to 2.2 billion tonnes (2008 1.5 billion tonnes). an interest in Duluth Metals Nokomis copper-nickel-platinum group metal
Theincrease compared with 2008 is primarily due to the inclusion of three (PGM) deposit (Nokomis).
neighbouring deposits H13, Tanjeel (also referred to as H4) and H8
intothe resource estimate, along with the existing H14 and H15 deposits. Nokomis is a potentially world-class base and precious metal deposit located
in the highly prospective Duluth Complex in north-eastern Minnesota.
The Groups 50% share of expenditure relating to Tethyan during 2009 DuluthMetals published a NI 43-101 compliant resource estimate for
amounted to US$36.6 million. This includes US$32.5 million relating to Nokomis in October 2009 which consisted of 550 million tonnes of indicated
exploration and pre-feasibility costs which have been expensed and US$4.1 resources with average grades of 0.639% for copper, 0.200% for nickel and
million relating to the costs of the feasibility study which have been capitalised. 0.660 grams per tonne for platinum, palladium and gold, plus an additional
Work on the feasibility study and the related environmental and social impact 274 million tonnes of inferred resources with average grades of 0.632% for
assessment study is in its final stages. Discussions for agreements with the copper, 0.207% for nickel and 0.685 grams per tonne for platinum,
relevant authorities in Pakistan are continuing, as agreement has not yet palladium and gold.
been reached concerning a mineral agreement and the conversion of the The Group will initially become a 40% partner in Nokomis by committing
exploration licence encompassing Reko Diq (which currently expires in tofund a total of US$130 million of further exploration and feasibility study
February 2011) into a mining lease. expenditure over a three year period. The Group will have the option to
acquire an additional 25% interest in Nokomis (to own in aggregate 65%)
atthe then net present value of the project based on operating parameters
outlined in the bankable feasibility study, which will become exercisable and
payable upon receipt of the required permits to develop the project. The
Group has also subscribed for approximately 6.55 million new ordinary
shares in DuluthMetals by way of a private placement and a subsequent
anti-dilution pre-emptive subscription at Cdn$2.00 per share in cash, to
become an approximately 7% shareholder in Duluth Metals.
The Group and Duluth Metals expect to establish the project company and
conclude a definitive Participation and Shareholder Agreement in the second
quarter of 2010.
Chagai Hills region of South-West Pakistan
Overview
Other international exploration agreements Opportunities in geothermal and coal exploration
The Group has made significant progress during 2009 inexpanding its and generation
portfolio of early-stage international exploration interests through a number The Group is also continuing with its exploration and development activities
ofexploration agreements. relating to geothermal and coal energy prospects.
In November 2009 the Group entered into an agreement with International Energa Andina S.A, the joint venture between the Group and the Chilean
Base Metals Limited (IBML) of Australia in respect of its Kopermyn mining state-owned Empresa Nacional del Petrleo (ENAP), is continuing with its
property in northern Namibia. The Group can earn up to a 60% interest in activities for the exploration and development of geothermal energy prospects
the property over a two year period by funding up to US$1.8 million of in Chile. Following initial exploration work Energa Andina opted to apply for
Business Review
exploration activities, with a minimum commitment of US$0.5 million. further concessions, and during 2009 was granted the Puchuldiza Sur 1
The Group entered into an agreement with Ormonde Mining plc (Ormonde) concession, increasing its total number of concessions to eight. The company
in respect of its La Zarza deposit in southern Spain during October 2009. is currently engaged in the application process for additional concessions,
The Group has the right to earn a 51% interest in the deposit over a three which could further enhance its exploration portfolio. During 2010 the
year period by funding US$7 million of exploration and subsequent evaluation company intends to continue its exploration activities, both to evaluate its
activities, with a minimum commitment of US$1 million in the first year. existing concessions, with a view to commencing drilling work, and also to
Antofagasta will have the right to increase further its interest in the La Zarza identify further potential concessions.
project to 75% by funding a feasibility study for the project. Work is continuing on the potential underground coal gasification project
Financial Review
In September 2009 the Group entered into an agreement with Sunridge Gold atthe Mulpun coalfield, situated near Valdivia in southern Chile. The Group
Corp (Sunridge). The Group can earn an initial 60% interest in Sunridges acquired an option over this deposit in 2008. During 2009 the Group
Asmara project in Eritrea by funding US$10 million of exploration work over a completed its initial hydrology studies for the project, which included the
five year period, and a further 15% interest (for an aggregate 75% interest in drilling of six wells. In December 2009 the Group entered into an agreement
the project) by delivering a feasibility study on the project. In October 2009 with Carbon Energy Limited (Carbon Energy) of Australia in respect of the
the Group acquired approximately 18% of the issued share capital of project. Carbon Energy can earn a 30% stake in the deposit through
Sunridge under a private placement for a consideration of US$5.0 million. contributing its underground coal gasification technology to the project,
andwillfund 30% of the development costs of a trial project. During 2010
During March 2009 the Group entered into an agreement with Almaden
Governance
theGroup is planning to undertake engineering studies in relation to the
Minerals Ltd (Almaden) in respect of the Tuligtic copper-gold project in trialproject, and commence environmental permitting.
Mexico. Following the review of initial drilling results, the Group has decided
not to proceed further with this project.
In 2008 the Group entered into an agreement with TEAL Exploration &
Mining Incorporated (TEAL) to acquire an initial interest in two of TEALs
exploration licences on the Zambian Copperbelt, and the Group is continuing
to review the potential of these deposits.
Other Information
Business Review
Transport
In Chile, the Antofagasta Railway Companys (FCAB) The rail businesses in Chile and Bolivia had a solid operational performance
main business continues to be the transport of copper during 2009 with rail volumes increasing by 12.2% to 6.3 million tons.
Thiswas due to the full-year effect of increased volumes from the San
cathodes from and sulphuric acid to mines in the Cristbal mine in Bolivia, which achieved full tonnage volumes in the second
Antofagasta Region, one of the main copper mining half of 2008, as well as increases from other mining customers. Train Ltda.,
districts in the world. It has benefited in recent years FCABstrucking subsidiary, increased volumes by 11.2% during 2009 to
1.5million tons.
from the new mines and expansions of existing mines.
Combined turnover at the transport division in 2009 was US$139.4 million,
FCABs trucking service, Train Ltda., is a key part of compared to US$151.0 million in the prior year. This decrease mainly
FCABs bi-modal transport service. Train Ltda.s main reflected tariff adjustments, partly due to rates indexed to inflation and fuel
business continues to be the transport of sulphuric acid costs. As a result, operating profit also decreased to US$41.3 million
(2008 US$50.4 million).
from transfer terminals operated by FCAB, as well as
other supplies such as the transport of quicklime from In July 2009 the FCAB exercised an option to acquire a 40% interest in
Inversiones Hornitos S.A. (Inversiones Hornitos) from GDF SUEZ, which
Inacesas cement plant to various mines. In Bolivia, continues to hold the remaining 60% interest. Inversiones Hornitos is the
FCAB has a 50% controlling interest in the Ferrocarril owner of the 150 MW Hornitos thermoelectric power plant which is being
Andino, with the remainder held by Bolivian pension constructed in Mejillones, in Chiles Antofagasta Region. The Hornitos plant,
which is expected to begin commercial operation in 2011, will provide energy
funds. The Ferrocarril Andino connects to the Chilean to Minera Esperanza under a long-term supply agreement. The FCAB is
network at Ollague. responsible for its 40% share of the estimated total US$0.4 billion
development costs of the Hornitos plant, and during 2009 has
contributed atotal of US$109.5 million.
The Antofagasta port, which is managed by the Groups 30% associate
Key data for 2009 investment Antofagasta Terminal Internacional S.A. (ATI) contributed
6,335 1,505
US$1.5 million to Group results (2008 US$2.3 million). ATI is a strategic
investment for FCAB and complements its principal business as the main
Rail tonnage Road tonnage transporter of cargo within Chiles Antofagasta Region.
transported (000 tons) transported (000 tons)
2008: 5,644 2008: 1,353 FCAB also owns Forestal S.A., which manages the Groups forestry assets.
Forestals two properties, Releco-Puir and Huilo-Huilo, comprise 26,295
hectares of native forest near the Panguipulli and Neltume lakes, in Chiles
Location: Chiles Antofagasta Region
Region de Los Lagos. During 2009, Forestal continued with its ongoing
Shareholders: 100% Antofagasta plc forestation, fertilisation and thinning programme to maintain these assets.
Transport Division
(combined road and rail transport volumes)
millions of tons
7
6
5
4
3
2
1
0
2005 2006 2007 2008 2009
5.8 6.0 6.3 7.0 7.8
FCABs workshop in Antofagasta
Water
Overview
Aguas de Antofagasta (ADASA) operates a Combined domestic and industrial water sales in 2009 amounted to
30-year concession for the distribution of water in Chiles 43.7million cubic metres, a 2.3% increase on the 42.7 million cubic metres
in 2008. Domestic sales remained relatively stable, increasing by 1.3% to
Antofagasta Region which it acquired from the state- 30.5 million cubic metres. Industrial sales increased 5.3% to 13.2 million
owned Empresa Concesionaria de Servicios Sanitarios cubic metres.
S.A. (ECONSSA) in 2003. ADASAs operation consists Turnover decreased by 1.1% to US$83.6 million, with a slight reduction
of two businesses, a regulated water business supplying inaverage tariffs and the weaker Chilean peso offsetting the improvement in
volumes. Reduced operating costs, however, saw operating profit increase by
approximately 144,000 domestic customers and an
Business Review
7.1% to US$45.3 million in 2009, from US$42.3 million in the previous year.
unregulated business serving mines and other industrial
In March 2009 ADASA acquired the desalination plant located in the city
users. It also provides sewage and treatment services ofAntofagasta from the previous owner, Desalant S.A. (Desalant), for
in a number of cities in the Region. apurchase price of US$52.5 million. As part of this agreement, ongoing
arbitration proceedings between ADASA and Desalant were also terminated.
As ADASA is presently the sole customer of the plant the acquisition will have
no direct impact on water volumes or sales. Nevertheless, the acquisition has
consolidated ADASAs position by placing it in full control of the plant, which
Financial Review
provided it with 21.2% of its water for its distribution business in 2009.
Thedesalination plant is held under the terms of the concession acquired
from ECONSSA for a 30-year period from 2003.
ADASA is forecasting a slight increase in volumes in 2010. The companys
revenues and profits are predominantly in Chilean pesos, and will be
impacted by the relative strength or weakness of that currency against
the USdollar, the currency in which the Group reports its results.
Key data for 2009
Governance
43.7
Water volume sold
(million cubic metres)
2008: 42.7
Location: Chiles Antofagasta Region

Shareholders: 100% Antofagasta plc
Water Division
(water volumes sold by ADASA)
million m3
40
30
Other Information
20
10
0
2005 2006 2007 2008 2009
33.1 37.8 39.9 42.7 43.7
Inspection of water tank
Business Review
Corporate Sustainability
As explained in the Chairmans Statement on pages Strategy
3 and 4, the Board continues to place importance on As set out in more detail on pages 6 to 8, the Group adopted a strategic plan
arange of considerations including health and safety, for its mining operations in 2008 to cover the period 20092015. The plan
is based on three pillars:
management of human resources, environment and
securing and strengthening the core business of the Group in Chile,
community relations. Sustainable development forms comprising its existing operations and new projects under development
anintegral part of the Groups decision-making process. (Los Pelambres expansion and Esperanza);
continuing to grow this core business in the longer term with particular focus
on the significant Sierra Gorda, Los Pelambres and Michilla districts; and
continuing to develop and search for additional opportunities beyond the
core business for early-stage growth in copper both in Chile and abroad,
such as the Groups interests in Reko Diq in Pakistan, Nokomis in the
United States and the international exploration programme.
The Group recognises that achieving its strategic plan depends on effective
management of social and environmental issues and maximising the benefits
the Group provides. Achieving good sustainability performance is a key part of
meeting the expectations of the Groups stakeholders and complying with
current and future regulation.
> For more information on the Groups strategic plan see pages 6 to 8, and for more
information on the Groups stakeholders see page 35.
Sustainable Development Principles

The Board has approved ten Sustainable Development Principles to guide the
decision making and actions of its employees and contractors. The principles
underpin the Groups approach to gaining the approval of its stakeholders
and maintaining its social licence to operate and grow.
The Principles were adopted during 2008 together with Social and
Environmental Policies for the mining division and have been framed within
the context of the Groups strategic plan. Employees and contractors can
review these in a single document, The Way We Think, The Way We Act
which is available on the Groups website.
Since the adoption of the Principles, the Group has continued to enhance
itsgovernance structure from corporate level to operations to ensure
their implementation.
Workforce at Esperanza
Group social and
Overview
The social and environmental strategy sets out the Groups objective
to create economic, social and environmental value as a participant of the
environmental strategy mining sector. It is founded on the principle that managing sustainability
performance is key to maintaining the Groups social licence to operate
During 2009, the Group achieved another important and grow.
milestone in its sustainability efforts when the Board of This strategy defines how the Group intends to generate social
and environmental value. The strategy has two core elements:
Antofagasta Minerals S.A. (AMSA), approved a social
Business Review
and environmental strategy for the mining division Social Responsibility defined as building relationships of trust and
mutual benefit with stakeholders. This will be achieved by taking action
which is integral to the Groups business plan. in three areas:
Behaving responsibly by prioritising the health and safety of employees
and contractors, maintaining a beneficial work environment, preventing
adverse impacts on society, engaging with key stakeholders, creating
local employment opportunities for local suppliers.
Managing risk by identifying and managing socio-political risk and
Financial Review
managing crises.
Developing human capital by providing development opportunities to
workers, contractors and suppliers, contributing to local development
in the communities within an operations area of influence, supporting
education and training, implementing initiatives to improve local life quality
and supporting other economic activities (see the description of Fundacin
Minera Los Pelambres on page 38).
Environmental Responsibility defined as using natural resources
efficiently and where possible more economically and adding environmental
Governance
benefit. This will be achieved by taking action in three areas:
Achieving operational efficiencies including managing waste, water,
electricity, fuel consumption and land use.
Controlling environmental impacts including air and water quality,
water availability, biodiversity, greenhouse gas emissions and
environmental incidents.
Providing environmental benefits by providing environmental
education, using renewable energy, enhancing biodiversity and protecting Financial Statements
cultural heritage and developing beneficial new technologies.
The Group is working further to embed sustainability issues into management
systems and decision making to ensure delivery of its strategy. It is developing
key performance indicators through social and environmental performance
assessments and defining social and environmental criteria for project due
diligence and design.
Other Information
The Choapa Valley near Los Pelambres

Business Review
Corporate Sustainability continued
Corporate sustainability Ethics

governance
The corporate sustainability governance arrangements are part of the overall The Group seeks to maintain high ethical standards in all its activities.
Group governance arrangements described in the Corporate Governance It has an Ethics Committee comprising the Vice-Presidents of Risk, Human
Report on pages 54 to 58. The Board has put in place corporate procedures, Resources and Corporate Affairs and it monitors compliance with the Groups
management structures and risk management procedures at both Group and Ethics Code, which is described below.
business unit level to ensure the implementation of its sustainable development
The Committee reports to the Chief Executive Officer of AMSA, with
principles and social and environmental strategy.
oversight by the Audit Committee, and its responsibilities include investigating
The Directors responsibilities, including those relating to risk management allegations of breaches of the Ethics Code. The Ethics Committee met four
and control, are described in the Statement of Directors Responsibilities times during 2009. It focused on approving a revised Ethics Code and its
onpage 62. dissemination and communication to the Group.
The Board established a Corporate Sustainability Committee in 2008, The Groups Ethics Code emphasises the Boards commitment to carry
comprising two Non-Executive Directors, RF Jara and GS Menndez, out business in a responsible and transparent manner. The Code demands
andJ-P Luksic, the Group Chairman (see Directors biographies on pages honesty, integrity and responsibility from all employees and contractors.
50and51). Thecommittee met once in 2009 to review performance and Italso establishes the requirement to respect human rights, local customs
establish futurestrategic direction. As part of this process, it reviewed and values and the rights of neighbouring communities. In addition,
andapproved the2008 Sustainability Report. itestablishes a procedure to identify and manage potential conflicts
ofinterest.Employees may report any unethical behaviour, anonymously
A second executive committee, the Corporate Sustainability Reporting
ifnecessary, via the intranet.
Committee, comprises the Chief Executive Officer of AMSA, the General
Managers of Antofagasta Railway Company plc and Aguas de Antofagasta During 2009 four reports were made. The reports referred to the Ethics
S.A., the Vice-President of Corporate Affairs and the Corporate Managers Committee, were fully investigated and dealt with in an appropriate manner.
responsible for environmental and external affairs. The committee In 2010 the Group will conduct training for all employees and contractors
oversawpublication of the Groups 2008 sustainability reports and toraise awareness of the revised Ethics Code.
continuesto steerthe businesses towards best practice in performance
measurement and reporting.
The Group reports sustainability performance to different stakeholders
through a range of reports: Group Annual Report, Group Summary
Sustainability Report and the Group Full Sustainability Report. The Groups
two largest mines, Los Pelambres and El Tesoro, also produce annual site
reports. AMSA provides information for the Social and Environmental Report
published by the Chilean Mining Council, a national industry organisation.
Workforce at El Tesoro
Risk assessment and Stakeholder engagement
Overview
management systems
The Group recognises the importance of stakeholder engagement at the
Risk assessment local, national and international levels. Together with continual monitoring
The Group has a risk management system to monitor centrally the risks of national and international trends, this dialogue enables the Group and its
relevant to each operating company, including social and environmental operating divisions to identify and address the most material sustainability
risks,and to enable its management to prevent or mitigate possible
Business Review
issues and maximise its opportunities to contribute to local development.
situationsand incidents that might have a negative effect on business It enables the Group to understand the perspectives of others, explain its
objectives. Thefindings of the stakeholder engagement activity (see below) operations and plans, and build relationships of trust and mutual benefit.
are fed intothe risk identification process. Risk maps are prepared to identify
themain areas of risk in each division and risk management processes The Group has identified its key stakeholders as: investors, employees and
areincorporated at each level of the Groups operations and projects. contractors, communities, local and national governments and regulators,
and the media.
> More may be read about key risks on pages 14 and 15 and the Groups internal control
systems on pages 56 and 57. Examples of stakeholder engagement in 2009 included:
client satisfaction surveys in ADASA and FCAB; and a buyers survey
Financial Review
Safety and environmental management systems conducted at Los Pelambres for copper and molybdenum concentrates;
Each operating division has implemented management systems for safety community engagement programmes by all operating companies.
and the environment. The major copper mining operations have independent For example Los Pelambres has developed a formal procedure to allow
certification to both the environmental management standard ISO 14001 participation of the neighbouring communities in operational decisions such
and the safety management standard OHSAS 18001. Antofagasta Railway as the eventual closure plan for the Quillayes tailings dam (see case study
Company is also certified to OHSAS 18001. on page 38);
All the mining operations and Antofagasta Railway Company are certified to an annual reputation survey conducted by mining companies among their
the ISO 9001 quality standard.
Governance
principal stakeholders including local communities and authorities, workers
Certification ISO 14001 ISO 9001 OHSAS 18001 and contractors, and the media;
Los Pelambres investor meetings to gain feedback on the Groups sustainability reporting
El Tesoro and performance; and
Michilla
engagement with government and regulatory authorities through direct
Antofagasta Railway Company dialogue and through industry associations such as the Sociedad Nacional
At each operating company, an Environmental Manager and a Public de Minera and the Consejo Minero, and other representative bodies.
AffairsManager are responsible for management of sustainability issues. Financial Statements
Both report directly to the Chief Executive Officer of their respective
companies. Operatingcompanies have established internal reporting
systems tomonitorperformance.
Sites are frequently audited to review operational, environment, health
and safety, labour and legal compliance performance against Group and
certification standards every two to three months. Third-party auditors
conduct certification audits every six months at El Tesoro, Michilla and the
Antofagasta Railway Company and every 12 months at Los Pelambres.
Other Information
Community engagement in the Sierra Gorda district

Business Review
Activity in 2009
Workforce Health and safety is one of the Groups key priorities and work to improve
performance will continue over the year. The Groups lost time injury
Safety frequency rate improved in 2009 to an average of 2.8 injuries per million
Safety is a major priority for the Group given the inherent risks in the different hours worked, from 4.4 in the previous year (see below).
operations and development projects and hence requires constant vigilance.
The Groups goal is to create a safety culture through regular training and Employee development and labour relations
awareness campaigns for employees, contractors, families and local
The Group applies an equal opportunities policy throughout its operations
communities. Focus areas also include road safety training and awareness
andbelieves that all employees and contractors should have opportunities
toprevent transport accidents.
fordevelopment and receive fair reward for their contribution and potential.
The Group investigates serious incidents and implements action plans to In 2009 the Group reviewed and strengthened its employment policies.
prevent recurrence. Safety performance is reviewed at regular divisional
Contractors form a significant element of the Groups total workforce and
board meetings. Safety and health management systems are established
under Chilean law are subject to the same obligations and responsibilities
across the Group, and its major mining operations and railway are certified
as employees.
toOHSAS 18001.
At the end of 2009 the Groups mining division workforce in Chile comprised
The Group invests in preventative health programmes, including health
approximately 2,500 employees and 19,000 contractors. Of the total number
examinations and risk awareness and accident prevention training.
of contractors, 14,000 worked on specific projects including construction at
Occupational health issues among employees and contractors are relatively
Los Pelambres and Esperanza.
rare, but the Group provides support for affected people, even if the illness
was contracted before working for the Group. The Group continues to make a significant investment in employee training
and development. Programmes include:
The Board deeply regrets the death of five of its workforce who lost their
livesduring the year at the Groups operations as a result of three separate the AMSA talent management programme to develop leadership ability and
incidents. Three people lost their lives in a driving accident within the promote high performance and site level training programmes;
LosPelambres open pit; one person lost his life at the Los Pelambres the ADASA management and technical skills programme to develop
concentrator plant and another lost his life at El Tesoro. specific competencies within teams; and
The Board has a clear target of zero fatalities and considers any fatality the FCAB leadership training programme and sponsorship of pre- and
tobeunacceptable. Each incident was investigated by the authorities post-graduate training courses.
concerned, as well as by AMSA and mine management which took
actiontoprevent a recurrence.
Lost Time Injury Frequency Rate All Injury Frequency Rate
(LTIFR) (AIFR) Number of Fatalities
2009 2008 2007 2006 2009 2008 2007 2006 2009 2008 2007 2006
Chilean mining industry * 5.8 5.9 5.8 n/a n/a n/a n/a * 43 40 31
Los Pelambres 1.3 1.3 1.7 2.3 3.6 6.6 5.3 7.5 4
El Tesoro 1.7 2.0 1.2 2.2 6.0 6.6 13.1 19.4 1
Michilla 3.2 4.4 2.6 1.3 9.9 12.1 12.8 12.7 1 1
Esperanza 1.5 1.6 n/a n/a 15.0 8.2 n/a n/a n/a n/a
AMSA including exploration 6.0 5.4 n/a n/a 23.0 13.1 1 n/a n/a
Mining 1.7 2.2 1.8 2.0 8.5 8.2 9.0 11.6 5 1 1 1
FCAB 12.0 13.9 19.2 15.3 33.9 35.7 44.3 37.5 3

ADASA 7.0 11.5 8.6 9.1 16.8 21.6 28.7 29.9
Group 2.8 4.4 5.6 4.9 11.0 12.9 17.1 17.5 5 1 1 4

Definitions:
LTIFR Number of accidents with lost time during the year per million hours worked.
AIFR Number of accidents with and without lost time during the year per million hours worked.
*Chilean mining industry source Servicio Nacional de Geologa y Minera. 2009 full year figures have not yet been released by Servicio Nacional de Geologa y Minera and therefore are not shown above.
Overview
The Group respects freedom of association and union membership by its
workforce. Labour relations are managed at operating company level with
management working to maintain compliance with the requirements of the
Chilean Labour Codes. There are 13 labour unions across the Group.
In 2009 Esperanza agreed a two-year contract with employees with its
recently formed union, with the result that collective agreements are in place
in all mining operations until 2011. These agreements cover remuneration
levels as well as terms and conditions of employment.
Business Review
The Group was not involved in any labour disputes in 2009.
The Group aims to keep employees informed about the business and uses
a range of channels including a company intranet, newsletters, bulletin boards
and social events. In 2009 it held training and awareness sessions to inform
employees about Group strategy and its plan to face the economic crisis.
Boosting gender
The downturn in the global economy and the sharp drop in commodity
diversity at El Tesoro
pricesat the end of 2008 significantly affected the mining industry. In 2009, El Tesoro completed a three-year project to increase the
Financial Review
Despitethe economic crisis, AMSA continued with the Esperanza project proportion of women in its workforce.
andthe Los Pelambres plant expansion project as scheduled and increased In 2007, it launched the project by becoming the first privately owned
employee and contractor numbers at these sites during 2009. company in Chile to adhere to the Good Practice Code for Non
120employees were made redundant at El Tesoro and Michilla in early Discrimination developed by the National Women Service (Sernam).
2009as a result of the decision to stop production at the high-cost The Code aims to overcome gender inequality by promoting womens
open-pitat Michilla and to defer operational stripping at El Tesoro in access to the job market, ensuring better working conditions, opportunities
responseto low copper prices. These workers were provided with and equal salaries for women.
supportand benefits beyond legal requirements.
In the second year, El Tesoro developed a training plan for local women
Governance
The Group complies with legal requirements contained within employment to give them the skills needed to work at the mine. It hired 22 women
laws in Chile, including those relating to child labour, discrimination and to operate mining equipment. By the end of 2009, 10% of El Tesoros
equalopportunity. Human rights considerations form part of human capital workforce were women.
management programmes. As in previous years, no cases of human rights
breaches have been identified in 2009. The success of the project inspired the Esperanza project to launch
its own programme, which resulted in 64 women joining its workforce.
Both companies have received recognition for their initiative from
the Chilean President.
Recognition for labour relations
In 2009 Los Pelambres became the first mining company to win the
Carlos Vial Espantoso national award for best practice in labour relations.
75 companies in Chile were nominated for the award. Los Pelambres was
selected from the shortlisted companies by a jury comprising public and
private sector professionals.
The award recognises the companys efforts to build strong working
Other Information
relations based on trust between employees and business partners,

its high level of staff training and the close working relationship between
the companys top executives and workers.
The award is a reflection of the value Los Pelambres places on ensuring
thedevelopment and wellbeing of every employee.
Business Review
Society Socio-economic development

The Group places importance on good community relations through
The Group aims to manage the social impact of its activities and maximise respecting local people and cultures, building local capacity and hold
benefits it can provide. The social and environmental strategy (see page 33), constructive dialogue with local stakeholders. It gains feedback from local
launched in 2009, sets out how it will achieve this objective. people through perception surveys and engages with communities through
It sets out how the Group intends to maintain its social licence to operate various means including meetings, radio programmes and newsletters
andto establish its reputation as a socially responsible company capable (see case study on Los Pelambres below).
ofestablishing relationships based on trust and mutual benefits with Through its role as taxpayer, employer, and purchaser of local goods and
itsstakeholders. services, the Group aims to have a positive socio-economic impact on the
AMSA is developing criteria to monitor performance and to assist in communities in which it operates. The Groups Social Relations Policy commits
implementation of the social and environmental strategy. In 2009 the companies to help local people access job opportunities by training local
business launched guidelines setting out best social and environmental people in the skills needed at sites (see case study on Esperanza at page 39).
practice in exploration projects. Key initiatives in 2009 included:
an ADASA programme to teach young people the skills they need to
succeed in the workplace and to encourage them to start their own
businesses. The entrepreneurship education programme will target third
and fourth grade high school students in the regions major cities.
support for the Fundacin Minera Los Pelambres (the Foundation) efforts
to contribute to sustainable development in the Choapa Valley near Los
Pelambres. The Foundation is working to create 1,500 metres of irrigation
channels to reduce water losses, and is providing resources and expertise
to help farmers boost productivity; and
an Esperanza project to strengthen family values among residents of the
nearby towns of Sierra Gorda and Michilla.
Other AMSA initiatives in 2009 included:
support for music concerts near Michilla, El Tesoro and Esperanza, as
wellas the national ballet in the Choapa valley near Los Pelambres;
Consulting the the provision of free internet access for communities around
LosPelambres; and
Cuncumen community a project to improve the local fishermens wharf in Michilla.
Los Pelambres has been working closely with the residents of Cuncumen,
the community closest to its old Quillayes tailings dam.
The site established a forum in 2008, with representatives from the
community and the company, to discuss residents concerns about
the closure of Quillayes.
The residents had concerns about the stability of the dam, and dust and
water quality. Through the forum, Los Pelambres and the community jointly
developed a closure plan for the dam. This included a commitment to
provide the community with independent technical advice and to include
them in all future closure proposals.
Los Pelambres also agreed to use fitostabilisation in the old Quillayes
tailings dam, a technique that uses vegetation to stop dust being caught
by the wind and to make it blend in more with the landscape.
Community initiatives at Esperanza

Environment
Overview
The Group takes into account the environmental impact of its activities
including mine planning, construction, operation and closure and
endeavours to prevent negative impacts where possible. Where impacts
cannot be avoided the Group implements mitigation and compensation
programmes in accordance with legal and international standards.
The mining operations have the most significant environmental impact within
Business Review
the Group and AMSA management continued to implement its management
plan in 2009 insupport of the divisions environmental policy.
As explained above, the Board agreed the Group social and environmental
strategy in 2009.
In order to implement the strategy, the Group has focused on strengthening
Creating local skills AMSAs team of environmental managers and empowering them to promote
a culture of environmental protection in their respective companies and to
and employment at Esperanza embed environmental thinking into decision making.
Financial Review
Esperanza is determined to ensure that the project benefits local people The mining division developed a performance assessment tool called
as much as possible and it has set a goal for at least 30% of construction Assessment of Environmental Performance based on key performance
and operational workers to come from the Antofagasta Region. indicators for the three environmental focus areas identified in the
Esperanza has launched an extensive training programme in surrounding environmental and social strategy: operational efficiency, impact control
villages to give 800 residents the skills they need to be recruited to work andenvironmental benefit. Using this framework, each company set its
at the mine. owngoals reflecting its main impacts and priorities.
The programme includes: In 2009, the AMSA team of environmental managers conducted gap
Governance
analyses to review implementation of its environmental policy, implemented
training for 800 people, mainly school leavers, in the Antofagasta area the Assessment of Environmental Performance and measured AMSAs
in safety, quality, the environment and community relationships; and carbon footprint.
training for 200 people selected from previous courses on specific
construction areas. The team also completed the Groups submission to the Carbon Disclosure
Project for the first time in 2009.
Additionally, the company has developed a competency training
programme for operators and maintenance personnel for the mine
and plant areas:
training for 150 people in the region as mine operators. Financial Statements
90 of them currently work at Esperanza; and
training for 270 school graduates in the area of plant maintenance.
70 of them now work at Esperanza.
Esperanza offers training for up to 100 people in how to prepare social
projects and how to manage trade services and deal with local suppliers.
Other Information
Fundacon Minera Los Pelambres Agricultural project El Manque

Business Review
Audits and assessments The Group continues to work towards securing alternative energy supplies
The Group conducted an environmental performance assessment of its and establishing longer term agreements and contracts with energy suppliers.
principal operations in 2009, evaluating their environmental management In 2009 AMSA signed an agreement with Carbon Energy of Australia
against performance indicators in three areas: operational efficiency, impact to assess jointly and eventually develop a coal deposit in Mulpun, Chile,
control and benefits to the environment. using Underground Coal Gasification (UCG) technology. If trial projects
The Group established a reporting system that companies can use to report are successful, the project will generate energy from gasified coal.
against environmental performance indicators. The Group acquired a 40% stake in Inversiones Hornitos S.A., the owner
It conducted two internal environmental audits of mining operations in ofthe Hornitos thermoelectric power plant which is being constructed in
2009,which were coordinated by AMSAs environment team and conducted Mejillones in the Antofagasta Region. The power plant is expected to begin
in partnership with site environment teams. The teams assessed whether commercial operation in 2011 and will supply up to 150MW to the Esperanza
sites are managing environmental issues in a proactive, prioritised and project, under a long-term supply agreement. This will be a coal-powered
risk-preventive way and assessed the implementation of 2009 environmental plant also capable of burning biomass and other fuels.
programmes (including at the Esperanza mine due to start production at Together with Empresa Nacional del Petrleo (ENAP), the Chilean
the end of 2010). state-owned oil company, AMSA created Energa Andina, a new company
with aims to acquire concessions and explore for and eventually develop
Environmental incidents geothermal power stations.
During 2009, the Group implemented new protocol for identifying and
reporting environmental incidents at its mining operations. The protocol Water management and supply
records all operational incidents including those with no environmental Using water efficiently is key to ensuring the availability of water for local
consequence. Two operational incidents were reported at Los Pelambres communities and our operations. The Group closely monitors its water
during the year. These incidents were of serious concern to both the consumption and quality to ensure it complies with legislative requirements
Group and the local communities. and community expectations.
In February 2009 a crack in one of the valves of the energy generator station All operating companies implement water management plans that seek
caused minor discharge to a local stream. The authorities were informed and tominimise demand on local water resources, in particular through water
subsequent monitoring did not identify any environmental damage. recycling. Los Pelambres recycles approximately 85% of the water it uses
The second operational incident occurred in August 2009 when a faulty and El Tesoro recycles the majority of the water it uses. Michilla uses 100%
monitoring valve at Los Pelambres caused a spill of copper concentrate into seawater as will Esperanza when it commences operations.
the River Choapa in the locality of Panguesillo. The incident was notified to ADASA is seeking to increase the supply of desalinated water for domestic
the authorities who initiated an investigation. Los Pelambres performed consumption in the Antofagasta Region. As part of this strategy it acquired
amonitoring and a full technical analysis to ensure there was no the desalination plant located in the city of Antofagasta in March 2009 for
environmentaldamage. which it was previously the sole customer.
No other operational incidents were reported.
Energy security, management and carbon emissions

The Group recognises the need to conserve energy and develop a suitable
response to climate change which recognises the needs of the business.
Operations implement energy efficiency projects and look for ways to use
renewable energy where possible.
Operations also invest in innovative technology to reduce energy use.
Forexample at Los Pelambres, the concentrator plant is located 1,600
metres below the mine site and the loaded conveyor belt system between
thetwo points uses the height difference to generate around 10% of the
power used at the operation.
Desalination plant at ADASA

Overview
Waste management Developments in environmental regulation
The Group implements solutions to enable waste reduction and reuse where REACH
possible. The Groups operations have arrangements in place to dispose of The European Union (EU) has introduced the Regulation, Evaluation and
waste according to applicable legal requirements. Authorisation of Chemicals (REACH) to control risks to human health and
At Los Pelambres, the Mauro tailings dam is now operational, providing the environment. REACH requires companies involved in manufacturing
sufficient waste disposal capacity for the remaining life of the existing mine. or importing chemicals into the EU to collect or generate toxicity data on
thesubstances.
Due to Esperanzas geographical and meteorological location, it will be
Antofagastas molybdenum and copper products are covered by REACH.
Business Review
ableto use thickened tailings technology, which will reduce water
consumption and improve evaporation, mitigating the risk of soil Through the Consortia of Copper and Molybdenum Producers and
contamination. The technology will also ensure a high level of stability Manufacturers, AMSA has been working to conduct research and to
forthetailings during operations and after the mine has closed. prepareclassification dossiers. The Group has met its pre-registration
andison track to meet the November 2010 registration deadline.
Biodiversity Global Harmonising System
The Group recognises the importance of maintaining existing ecosystems The Global Harmonising System (GHS) will be implemented jointly with
and biodiversity and minimising habitat disturbance. The Group takes into REACH in the EU by the end of 2010. The GHS is intended to create an
Financial Review
account the interests and concerns of different groups when dealing with internationally consistent system of chemical hazard management and
biodiversity issues, including farmers and landowners, local communities reporting through standard product labelling and Safety Data Sheets.
andnon-governmental organisations. All mining operations have formal
closure plans for the restoration of land. It will require industry to classify hazards and modify current labelling
systems. The Group is on track to meet all GHS requirements.
Sites implement biodiversity plans in compliance with legislative requirements
and planning conditions. At Los Pelambres there are more than 25,000
hectares of protected areas, including the Laguna Conchal, a Ramsar
Convention area. The site implements mitigation and compensation plans,
internal management procedures to reduce environmental impact and
Governance
monitoring programmes.
Los Pelambres manages a nature sanctuary at the Laguna Conchal wetlands
which has significant biological diversity, variations in forest structure and
provides a habitat for endangered species. Los Pelambres conducted basic
research on the area and after consulting with local people established a
conservation zone with an information centre with the objective of improving
the use of this area in a more sustainable way.
Closure provisions
The group has prepared Closure Plans for all its operations according to local
regulations, and provisions have been allocated for these plans accordingly.
These plans and provisions will be routinely updated. All new projects contain
outlines for closure plans within the Environmental Impact Assessment report
submitted to authorities.
Other Information
Wildlife at Laguna Conchal

Financial Review
Financial Review
Basis of preparation Realised copper prices also reflect the impact of realised losses or gains of
The Groups financial statements on page 64 to 102 have been prepared commodity derivative instruments hedge accounted in accordance with IAS
inaccordance with International Financial Reporting Standards (IFRS). 39 Financial Instruments: Recognition and Measurements.
Theaccounting policies followed are set out in Note 2 to the financial In 2009 there were significant positive close-out and mark-to-market
statements. The presentation currency of the Group and the functional adjustments to provisionally invoiced sales as a result of the significant
currency of the Company is the US dollar, the principal currency in which increase in the LME copper price during the year. In the case of Los
theGroup operates and in which assets and liabilities are denominated. Pelambres, pricing adjustments increased initially invoiced sales (before
adjusting for tolling charges) by US$380.3 million in 2009, compared with
Review of performance aUS$541.9 million reduction of sales in 2008. The adjustments in 2009
A detailed segmental analysis of the components of the income statement comprised an uplift of US$78.0 million in respect of sales invoiced in 2008
is contained in Note 6 to the Financial statements. (net of the reversal of mark-to-market adjustments made at the end of 2008)
which were finally priced in 2009, and an uplift of US$302.3 million in
respect of sales invoiced in 2009 (including a positive mark-to-market
Turnover provision for open sales at the end of the year of US$62.1 million). Pricing
Year ended Year ended adjustments in 2009 at El Tesoro and Michilla increased revenues by
31.12.09 31.12.08 US$31.1 million (2008 reduced revenues by US$27.9 million) and
US$m US$m
US$11.8million (2008 reduced revenues by US$12.2 million) respectively.
Turnover 2,962.6 3,372.6
Further details of provisional pricing adjustments are given in Note 25(d) to
Group turnover in 2009 was US$2,962.6 million, 12.2% below the the financial statements.
US$3,372.6 million achieved in 2008. This mainly reflected decreased sales In 2009 turnover also included a loss of US$65.8 million (2008 gain of
at the mining division in respect of both copper and molybdenum, and to a US$30.0 million) on commodity derivatives at El Tesoro and Michilla which
lesser extent also at the transport and water divisions. matured during the year. Further details of hedging activity in the year are
given in Note 25(e) to the financial statements.
Turnover from the mining division Realised prices are analysed by mine in the Business Review on pages 17
Turnover from copper concentrate and copper cathodes to24. The movement in the LME copper price during the year is described
Turnover from copper concentrate and copper cathode sales from the inthe Marketplace section on page 10.
Groups three mines decreased by 6.9% to US$2,516.1 million, compared (ii) Copper volumes
with US$2,702.9 million in 2008. The decrease mainly reflected the impact Copper sales volumes decreased by 7.5% from 479,000 tonnes in 2008
of lower copper volumes and to a lesser extent increased tolling charges, to442,900 tonnes this year. Sales volumes differed slightly from production
partly offset by the effect of increased realised prices. each year mainly due to differences in shipping and loading schedules.
(i) Realised copper prices Production volumes are analysed by mine in the Business Review on pages
The Groups average realised copper price increased by 1.5% to 270.6 17 to 24. The lower production volumes in the year were mainly due to lower
cents per pound (2008 266.7 cents), despite the fact that the average production at Los Pelambres due to reduced throughput as expected due to
LME copper price decreased to 234.2 cents per pound (2008 315.3 harder ore quality and to a lesser extent lower production at Michilla due to
cents). This was mainly due to the positive impact of adjustments to the decision to suspend production at the Lince open pit mine due to low
provisionally priced sales which offset lower market prices and the impact commodity prices at the start of the year.
ofrealised hedging losses.
(iii) Tolling charges
Realised copper prices are determined by comparing turnover (gross of Tolling charges for copper concentrate at Los Pelambres increased from
tolling charges for concentrate sales) with sales volumes in the year. Realised US$113.1 million in 2008 to US$125.1 million in 2009, reflecting the
copper prices differ from market prices mainly because, in line with industry increased level of annual treatment and refining charges (partly mitigated
practice, concentrate and cathode sales agreements generally provide for bythe brick system under which terms are often averaged over two years)
provisional pricing at the time of shipment with final pricing based on the and the impact of increased realised copper prices on certain contracts.
average market price for future periods (normally about 30 days after delivery Tolling charges are deducted from concentrate sales in reporting turnover
to the customer in the case of cathode sales and an average of about and hence the increase in these charges has had a negative impact on
90days after delivery to the customer in the case of concentrate sales). turnover compared with 2008.
Overview
Turnover from molybdenum and other by-products EBITDA and operating profit from subsidiaries and joint ventures
Turnover from by-products at Los Pelambres, which relate mainly to Year ended Year ended
molybdenum, decreased by 48.5% to US$223.5 million in 2009 compared 31.12.09 31.12.08
US$m US$m
with US$434.2 million in 2008, mainly due to lower molybdenum realised
EBITDA 1,680.7 1,899.8
and market prices. Molybdenum revenues (net of roasting charges) were
Depreciation and amortisation (217.5) (180.2)
US$180.1 million (2008 US$394.8 million).
Loss on disposals (4.2) (5.3)
(i) Realised molybdenum prices Operating profit from subsidiaries and joint
The realised molybdenum price decreased by 52.7% to US$11.3 per pound ventures excluding exceptional items 1,459.0 1,714.3
Business Review
in 2009 (2008 US$23.9 per pound), compared to a 61.6% decrease in Impairments (188.3)
the average market price to US$11.1 per pound (2008 US$28.9 per Operating profit from subsidiaries and joint
pound). Molybdenum concentrate sales are also subject to provisional pricing ventures including exceptional items 1,459.0 1,526.0
with an average open period of up to approximately 90 days. As prices have
increased slightly during 2009, realised prices were marginally higher than
EBITDA
the average market price. In contrast, during 2008 prices weakened sharply
EBITDA (earnings before interest, tax, depreciation, and amortisation) from
during the fourth quarter, resulting in a realised price that was significantly
subsidiaries and joint ventures decreased by 11.5% to US$1,680.7 million
lower than the average market price.
(2008 US$1,899.8 million).
Financial Review
(ii) Molybdenum volumes
EBITDA at the mining division decreased by 12.2% from US$1,781.8 million
Molybdenum sales volumes were 7,700 tonnes in both 2008 and 2009.
to US$1,563.9 million, due to the reduction in turnover as explained in
Small differences with production in each year reflected shipping and
greater detail above, partly offset by lower operating costs as a result of both
loadingschedules.
lower copper volumes and the cost reduction programme. At Los Pelambres,
Production volumes for Los Pelambres are analysed in the Business Review EBITDA decreased from US$1,429.7 million in 2008 to US$1,408.9 million
on page 17. this year. EBITDA at El Tesoro decreased by US$111.1 million to US$231.7
million. At Michilla, EBITDA decreased by US$90.5 million to US$27.9 million.
(iii) Gold and silver credits in copper concentrate sales
Credits received from gold and silver contained in copper concentrate sold Excluding by-product credits (which are reported as part of turnover) and
Governance
increased to US$43.4 million (2008 US$39.4 million). This was mainly tolling charges for concentrates (which are deducted from turnover), weighted
due to the increase in gold content from 19,700 ounces in 2008 to 23,500 average cash costs for the Group (comprising on-site and shipping costs in
ounces in 2009, and the increase in average gold prices in this period, partly the case of Los Pelambres and cash costs in the case of the other two
offset by lower silver volumes. operations) decreased from 117.2 cents per pound in 2008 to 106.7 cents
per pound. This decrease partly reflected the thorough cost reduction
Turnover from the transport and water divisions
programme implemented from the start of 2009 as well as a general easing
Turnover from the transport division (FCAB) decreased by US$11.6 million
of market costs, although cost pressures began to return in the second half
or 7.7% to US$139.4 million, mainly due to normal tariff adjustments under
of the year. Cash costs are analysed by mine in the Business Review on
contracts in line with reduced costs. This was partly offset by an increase in Financial Statements
pages 17 to 24.
transport volumes which reflected the full year effect of the San Cristbal
and Gaby contracts which came fully on stream in the second half of 2008, Exploration costs increased from US$54.9 million in 2008 to US$67.1
as well as increases in volumes from other customers. million, reflecting the increased level of exploration activity across the Group.
Net costs in respect of corporate and other items were lower at US$37.5
Turnover at Aguas de Antofagasta, which operates the Groups water
million (2008 US$54.2 million) mainly as a result of the cost reduction
business, decreased by US$0.9 million or 1.1% to US$83.6 million in 2009,
programme implemented from the start of 2009.
despite a 2.5% increase in volumes. This mainly reflected the impact of the
weaker Chilean peso on the companys peso denominated revenues and a EBITDA at the transport division decreased by US$7.6 million to US$56.6
slight decrease in average tariffs. 2008 also benefitted from sundry income million, with the decreased revenue as explained above partly offset by
Other Information
from installation and construction services which were not repeated in 2009. loweroperating costs. Aguas de Antofagasta contributed US$60.2 million
compared to US$53.8 million last year, mainly reflecting the increased
volumes and decrease in costs which were partly offset by the decreased
revenues discussed above.
Financial Review
Financial Review continued
Depreciation, amortisation and impairments Profit on part-disposal of subsidiaries

Depreciation and amortisation increased by US$37.3 million to US$217.5 During 2008 the Groups disposal of its 30% interest in both Esperanza and
million in 2009, mainly due to higher charges at Los Pelambres (as a result El Tesoro to Marubeni Corporation for a consideration of US$1,401.2 million
ofcommencement of depreciation of amounts capitalised at the Mauro resulted in a profit before tax of US$1,024.9 million. Further details of this
tailings dam and some elements of the expansion) partly offset by a reduction exceptional profit are set out in Note 5 to the financial statements.
at Michilla due to its reduced carrying value. The loss ondisposal of property,
There were no comparable exceptional items in 2009.
plant and equipment in 2009 was US$4.2 million, compared with US$5.3
million in the prior year.
Net finance (expense)/income
During 2008 an impairment charge of US$188.3 million relating to property,
plant and equipment at El Tesoro (US$160.0 million) and Michilla (US$28.3 Year ended Year ended
31.12.09 31.12.08
million) was recorded within operating profit, following an impairment review Net finance income US$m US$m
undertaken in light of the commodity market environments during the last Investment income 13.2 78.9
quarter of 2008. There have been no impairments during 2009. Interest expense (24.0) (13.7)
Other finance items (15.1) (8.9)
Operating profit from subsidiaries and joint ventures Net finance (expense)/income (25.9) 56.3
As a result of the above factors, operating profit from subsidiaries and joint Net finance expense in 2009 was US$25.9 million, compared with an
ventures (excluding 2008 exceptional items) decreased by 14.9% to income of US$56.3 million in 2008.
US$1,459.0 million. Including 2008 exceptional items, operating profit
fromsubsidiaries and joint ventures decreased by 42.8%. Interest receivable decreased from US$78.9 million in 2008 to
US$13.2million in 2009, reflecting the lower market interest rates
and lower yields on securities held.
Share of income from associates
Interest expense increased from US$13.7 million in 2008 to US$24.0 million,
Year ended Year ended mainly due to additional short-term loans taken out at Los Pelambres.
31.12.09 31.12.08
US$m US$m
Other finance items comprised a loss of US$15.1 million (2008 loss of
Share of income from associates 4.5 2.3
US$8.9 million). A loss of US$1.1 million (2008 loss of US$1.6 million)
The Groups share of net profit from its associates was US$4.5 million hasbeen recognised in respect of the time value element of changes in the
(2008 US$2.3 million), comprised of a net profit of US$3.2 million fair value of commodity derivative options, which is excluded from the
(2008 nil) from its 40% interest in Inversiones Hornitos S.A. (Inversiones designated hedging relationship, and is therefore recognised directly in the
Hornitos), a net profit of US$1.5 million (2008 US$2.3 million) from its income statement. Foreign exchange gains included in finance items were
30% interest in Antofagasta Terminal Internacional S.A. (ATI) and a net US$1.2 million in 2009, compared with a loss of US$3.9 million in the
loss of US$0.2 million (2008 nil) from its 17.8% interest in Sunridge previous year. A loss on foreign exchange derivatives of US$12.4 million
Gold Corp (Sunridge). (2008 loss of US$1.4 million) is also included in other finance items and
partly offsets exchange gains on cash balances included within the overall
foreign exchange gains of US$1.2 million. An expense of US$2.8 million
(2008 US$2.0 million) has been recognised in relation to the unwinding
ofthe discount on provisions.
Profit before tax
The resulting profit before tax for the period was US$1,437.6 million
compared to US$2,609.5 million in 2008, reflecting the reduction in turnover
and the net finance expense compared with net finance income in 2008, and
the one-off profit on part disposal of subsidiaries in 2008. This was partly
offset by the decrease in operating costs.
Overview
Income tax expense Minority interests
Year ended Year ended Year ended Year ended
31.12.09 31.12.08 31.12.09 31.12.08
US$m US$m US$m US$m
Total tax charge (Income tax expense) (317.7) (519.7) Minority interests 452.2 383.3
The rate of first category (i.e. corporation) tax in Chile was 17% for both Profit for the financial year attributable to minority shareholders was
2009 and 2008. Los Pelambres, El Tesoro and Michilla are also subject to US$452.2 million, compared with US$383.3 million in 2008. The increase
amining tax (royalty) which imposes an additional tax of 4% of tax-adjusted is mainly due to the effect of the disposal of the 30% interest in El Tesoro to
operating profit. Production from the Tesoro North-East deposit and the Marubeni Corporation in August 2008. Weak commodity prices and the
Business Review
run-of-mine processing at El Tesoro is subject to the mining tax at a rate impairment provision resulted in a loss for El Tesoro in the final four months
of5% of tax-adjusted operating profit. of 2008 (although it remained profitable for the 2008 year as a whole),
significantly reducing the overall minority share of Group profit for that year.
In addition to first category tax and the mining tax, the Group incurs
By contrast, all operations with minorities remained profitable in 2009 and
withholding taxes on the remittance of profits from Chile. Withholding tax
there were no changes in the share of minority interests in each operation
islevied on remittances of profits from Chile at 35% less first category
during this year.
taxalready paid. Accordingly, the effective tax rate of withholding tax for
thepurpose of paying dividends to Group shareholders is approximately Earnings per share
18%ofthe amount remitted or expected to be remitted. Year ended Year ended
Financial Review
31.12.09 31.12.08
The tax charge for the year was US$317.7 million and the effective tax rate US$m US$m
was 22.1%. This rate varies from the standard rate principally due to the Earnings per share including exceptional items 67.7 173.1
provision of withholding tax of US$28.1 million, the effect of the mining Earnings per share excluding exceptional items 67.7 85.5
tax which resulted in a charge of US$55.1 million, exchange gains of Earnings per share calculations are based on 985,856,695 ordinary shares.
US$18.3 million on Chilean peso denominated tax prepayments due to the As a result of the factors set out above, profit for the 2009 financial year
strengthening ofthe Chilean peso during the year, and the effect of items attributable to equity shareholders of the Company was US$667.7 million
which are not subject to or deductible from first category tax. In 2008 the compared with US$1,706.5 million in 2008. Accordingly, basic earnings per
total tax charge was US$519.7 million and the effective tax rate was 19.9%. share were 67.7 cents in 2009 compared with 173.1 cents for 2008. Basic
Governance
This was principally due to the provision of withholding tax of US$72.1 earnings per share excluding exceptional items (detailed in Note 5 of the
million, and theeffect of the mining tax, which resulted in a charge of financial statements) were 85.5 cents for 2008. During 2009 there were
US$66.2 million, exchange losses of US$66.3 million on Chilean-peso noexceptional items.
denominated tax prepayments due to the weakening of the US dollar during
the year and the effect of items which are not subject to or deductible from
first category tax.
Dividends
Year ended Year ended Year ended Year ended
31.12.09 31.12.08 31.12.07 31.12.06 09 v 08 08 v 07 07 v 06
US cents US cents US cents US cents change change change
Ordinary
Interim 3.4 3.4 3.2 3.2
Final 6.0 5.6 5.4 5.0
9.4 9.0 8.6 8.2 4.4% 4.7% 4.9%
Special
Interim 3.0 3.0 2.0
Other Information
Final 14.0 48.0 38.0 38.0

14.0 51.0 41.0 40.0
Total dividends to ordinary shareholders 23.4 60.0 49.6 48.2 (61.0%) 21.0% 2.9%
Dividends as percentage of profit
attributable to equity shareholders 35% 35% 35% 35%
Dividends represent dividends proposed in relation to the year.

Financial Review
The Board recommends a final dividend of 20.0 cents per ordinary share At 31 December 2009 the Group had min/max instruments for 22,200
payable on 10 June 2010 to shareholders on the Register at the close of tonnes of copper production and futures for 9,800 tonnes at Michilla covering
business on 7 May 2010. The final dividend comprises an ordinary dividend a total period up to 31 December 2010. The weighted average remaining
of 6.0 cents and a special dividend of 14.0 cents. Including the interim period covered by the min/max hedges calculated with effect from 1 January
dividend, this represents a distribution of approximately 35% of net earnings 2010 is 6.5 months. The instruments have a weighted average floor of 186.8
(profit attributable to equity holders of the Company). The Boards policy is cents per pound and a weighted average cap of 237.8 cents per pound.
toestablish an ordinary dividend which can be maintained or progressively Theweighted average remaining period covered by the futures hedges
increased at conservative long-term copper prices and through the economic calculated with effect from 1 January 2010 is 6.4 months. The instruments
cycle. The Board recommends special dividends when it considers these have a weighted average price of 199.9 cents per pound. The total hedged
appropriate after taking into account the level of profits earned in the period amount of 32,000 tonnes represents approximately 80% of Michillas
under review, the existing cash position of the Group and significant known forecast production for 2010, and the Groups exposure to the copper price
or expected funding commitments. The Board has continued to increase its will be limited to the extent of these instruments.
ordinary dividend and has adjusted its total recommended dividends in line
At 31 December 2009 the Group also had futures for 6,500 tonnes at
with profits by means of special dividends in the years of high copper prices.
ElTesoro to both buy and sell copper production, with the effect of swapping
The cost of the final dividend is US$197.2 million and the cost of total
COMEX prices for LME prices without eliminating underlying market price
dividends for the year is US$230.7 million. The board considers that this
exposure, covering a period up to 31 January 2011. The remaining weighted
levelof distribution retains adequate working capital and provides sufficient
average period covered by these instruments calculated with effect from
flexibility for the Group to progress with capital projects and its portfolio of
1January 2010 is 7.0 months. Between 31 December 2009 and 28
early-stage prospects as well as to take advantage of opportunities which
February 2010 the Group entered into further futures instruments of this type
may arise in the current economic environment.
for 100 tonnes of copper production at El Tesoro covering a total period up to
Capital expenditure 31 March 2010 with a remaining weighted average period covered by these
Details of capital expenditure during the year are set out in the cash flow instruments calculated with effect from 1 January 2010 of two months.
summary below on pages 47 and 48. Details of the mark-to-market position of these instruments at 31 December
2009, together with details of any interest and exchange derivatives held by
Treasury management and hedging the Group, are given in Note 25(e) to the financial statements.
The Group periodically uses derivative financial instruments to reduce
The Group periodically uses foreign exchange derivatives to reduce its
exposure to commodity price movements. The Group does not use such
exposure to fluctuations in the fair value of non-US dollar denominated assets
derivative instruments for speculative trading purposes. The impact of
or liabilities. At 31 December 2009 the Group had cross currency swaps with
derivative instruments on the Groups results for the period is set out above
a principal value of US$102.8 million (of which US$68.8 million relates to the
inthe sections on turnover, operating profit from subsidiaries and net finance
Railway and other transport services, US$24.7 million relates to Corporate
income, and in Note 25(e) to the financial statements.
and other items and US$9.3 million relates to the Water concession) to swap
The Group has applied the hedge accounting provisions of IAS 39 Financial Chilean pesos for US dollars, at an average rate of Ch$510.3/US$, covering
Instruments: Recognition and Measurement to its commodity derivatives. a total period up to 1 April 2010. The weighted average remaining period
Changes in the fair value of derivative financial instruments that are covered by these hedges calculated with effect from 1 January 2010 is
designated and effective as hedges of future cash flows have been 1.3months. Between 31 December 2009 and 28 February 2010 the
recognised directly in equity, with such amounts subsequently recognised Group entered into further cross currency swaps with a principal value of
inthe income statement in the period when the hedged item affects profit US$134.8million (of which US$56.8 million relates to the Railway and other
orloss. Any ineffective portion is recognised immediately in the income transport services, US$10.0 million relates to Corporate and other items and
statement. Realised gains and losses on commodity derivatives recognised US$68.0million relates to Corporate and other items) to swap Chilean pesos
inthe income statement have been recorded within turnover. The time value for USdollars, at an average rate of Ch$532.7/US$, covering a total period
element of changes in the fair value of derivative options is excluded from upto 2 June 2010.
thedesignated hedging relationship, and is therefore recognised directly
The Group also periodically uses interest rate swaps to swap floating
inthe income statement within other finance items.
rate interest for fixed rate interest. At 31 December 2009 the Group had
entered into contracts in relation to the Esperanza financing for a maximum
notional amount of US$787.8 million at a weighted average fixed rate
of1.353% maturing in February 2011 and a maximum notional amount
ofUS$840.0million at a weighted average fixed rate of 3.372% maturing
inFebruary 2018.
Overview
Commodity price sensitivities Cash flows from operations were US$1,167.8 million in 2009 compared
Based on 2009 production volumes and without taking into account the withUS$2,454.3 million last year, reflecting the operating results adjusted
effects of provisional pricing and any hedging activity, a ten cent change in fordepreciation, amortisation, impairments and disposals gains and losses
the average copper price would affect turnover and profit before tax by ofUS$221.7 million (2008 US$373.8 million) and a net working capital
US$97.5 million and earnings per share by 5.0 cents. Similarly, a one-dollar increase of US$513.0 million (2008 decrease of US$554.5 million).
change in the average molybdenum price would affect turnover and profit Thesignificant working capital movements relate mainly to changes in the
before tax by US$17.2 million and earnings per share by 0.8 cents. levels of trade debtors as a result of copper prices and provisional pricing
mark-to-market adjustments at the end of each period, and to a lesser
Business Review
extentincreased inventory levels with the start-up of Tesoro North-East
Cash flows
andthe ROM project.
The consolidated cash flow statement is presented on page 67. The key
features are summarised in the following table. A dividend of US$0.7 million (2008 US$1.8 million) was received from
theGroups investment in ATI.
Year ended Year ended
31.12.09 31.12.08 Cash tax payments in the year were US$135.2 million (2008 US$561.4
US$m US$m
Cash flows from operations 1,167.8 2,454.3
million), comprising corporation tax of US$95.0 million (2008 US$399.5
million), mining tax of US$40.1 million (2008 US$41.7 million) and
Income tax paid (135.2) (561.4)
withholding tax of US$0.1 million (2008 US$120.2 million). These amounts
Financial Review
Net interest (paid)/received (11.2) 66.3
differ from the current tax charge in the consolidated income statement of
Acquisition of minority interest
US$185.1 million (2008 US$541.7 million) because cash tax payments
in subsidiary (25.0) (243.1)
partly comprise lower monthly payments on account in respect of current
Acquisition of associates and
subsequent capital contributions (114.5) year profits as compared with the previous year and partly comprise refunds
Part-disposal of subsidiaries 1,401.2
of amounts due to the Group on the settlement of the outstanding balance
Purchases of property,
for the previous year.
plant and equipment (1,323.6) (1,135.0) The cash outflow for the acquisition of the minority interest in Minera
Purchases of intangible assets (52.5) (10.7) Caracoles amounted to US$25.0 million. In 2008 the cash outflow for the
Governance
Dividends paid to equity holders acquisition of the minority interest in Antomin Limited amounted to US$243.1
of the Company (561.9) (491.0)
million. The cash outflow for the acquisition of the interests in Inversiones
Dividends paid to minority interests (310.0) (495.6)
Hornitos S.A. and Sunridge Gold Corp amounted to US$85.9 million and
Capital increase from minority interest 57.7
subsequent capital contributions to Inversiones Hornitos S.A. amounted
Other items 0.5 6.9
toUS$28.6 million. In 2008, cash proceeds from the part-disposal of
Changes in net cash relating to cash flows (1,365.6) 1,049.6
subsidiaries, relating to the disposal of a 30% interest in Esperanza and
Exchange and other non-cash movements 42.2 (77.0)
ElTesoro to Marubeni Corporation, amounted to US$1,401.2 million.
Movement in net cash in the year (1,323.4) 972.6
Net cash at the beginning of the year 2,919.1 1,946.5 Cash disbursements relating to capital expenditure in 2009 was US$1,323.6
Net cash at the end of the year million compared with US$1,135.0 million in 2008. This included expenditure Financial Statements
(analysed on page 48) 1,595.7 2,919.1 of US$716.4 million relating to the Esperanza project (2008 US$460.6
million), US$399.4 million (2008 US$272.7 million) relating to the plant
expansion at Los Pelambres, US$11.5 million (2008 US$69.3 million)
relating to the Tesoro North-East deposit and US$43.1 million (2008
US$19.8 million) at El Tesoro relating to the project for the Run-of-Mine
(ROM) leaching of low-grade oxides from Esperanza.
Other Information
Financial Review
Purchase of intangibles in 2009 was US$52.5 million relating to acquisition Balance sheet
of the desalination plant by ADASA. In 2008, purchase of intangibles of Net equity (i.e. equity attributable to ordinary shareholders of the Company)
US$10.7 million related to exploration licences and related rights in Pakistan increased from US$5,266.8 million at 1 January 2009 to US$5,338.6
and Zambia. million at 31 December 2009, relating mainly to profit after tax and minority
Dividends (including special dividends) paid to ordinary shareholders of the interests for the period less ordinary dividends declared and paid in the year.
Company this year were US$561.9 million (2008 US$491.0 million), which Other changes relate mainly to movements in the fair value of hedges and
related to the final dividend declared in respect of the previous year and the available for sale investments and the currency translation adjustment; these
interim dividend in respect of the current year. Dividends paid by subsidiaries are set out in the Consolidated Statement of Changes in Equity.
to minority shareholders were US$310.0 million (2008 US$495.6 million), Minority interests increased from US$1,165.8 million at 1 January 2009 to
principally due to decreased distributions by LosPelambres. US$1,278.8 million at 31 December 2009. This principally reflected the
New borrowings in the year amounted to US$2,051.6 million (2008 minoritys share of profit after tax less the minoritys share of the dividends
US$229.5 million), mainly due to drawdowns from the Esperanza Project paid by subsidiaries in the year. Other movements affecting minority interest
finance facility and the short term loans and new corporate facilities taken are also set out in the Consolidated Statement of Changes in Equity.
out by Los Pelambres. Repayments of borrowings and finance leasing Long-term provisions increased from US$18.0 million at 31 December 2008
obligations in the year, were US$874.5 million relating mainly to repayment to US$127.9 million at 31 December 2009. New assessments of the closure
ofthe Los Pelambres short-term borrowings taken out during the year and provisions for all mining operations were performed by external consultants,
toa lesser extent regular repayments on existing loans (2008 US$109.5 resulting in a US$105.1 million increase to the capitalised decommissioning
million mainly relating to regular repayments on existing loans). and restoration provision. The increase in the provision balance is mainly due
Details of other cash inflows and outflows in the year are contained in the to the significant amount of construction work at Esperanza since the
Consolidated Cash Flow Statement on page 67. previous assessments.
Financial position
At 31.12.09 At 31.12.08
US$m US$m
Cash and cash equivalents 3,222.3 3,358.0
Total borrowings (1,626.6) (438.9)
Net cash at the end of the year 1,595.7 2,919.1
At 31 December 2009 the Group had cash and cash equivalents of

US$3,222.3 million (2008 US$3,358.0 million). Excluding the minority
share in each partly owned operation, the Groups attributable share of
total cash and cash equivalents was US$2,934.3 million (2008
US$3,085.7 million).
Total Group borrowings at 31 December 2009 were US$1,626.6 million
(2008 US$438.9 million). Of this, US$1,067.6 million (2008 US$282.3
million) is proportionally attributable to the Group after excluding the minority
shareholdings in partly owned operations. The increase in debt is mainly
due to draw downs on the Esperanza and Los Pelambres facilities entered
into during the year and new short-term borrowings at Los Pelambres,
offsetting further principal repayments on existing borrowings principally
at Los Pelambres.
Overview
Foreign currency exchange differences Cautionary statement about forward-looking statements
The principal subsidiaries with a functional currency other than the US dollar The Financial Statements contain certain forward-looking statements with
are Chilean peso denominated, of which the most significant is Aguas de respect to the financial position, results of operations and business of the
Antofagasta S.A. Exchange rates used to translate the results of such Group. Examples of forward-looking statements include those regarding ore
subsidiaries are given in Note 36 to the financial statements. reserve and mineral resource estimates, anticipated production or
construction commencement dates, costs, outputs, demand, trends in
In 2009 the currency translation adjustment gain to net equity of US$46.1
commodity prices, growth opportunities and productive lives of assets or
million resulted mainly from the strengthening in the Chilean peso during
similar factors. The words intend, aim, project, anticipate, estimate,
theyear from Ch$636/US$ at the start of 2009 to Ch$507/US$ at the end
Business Review
plan, believe, expect, may, should, will, continue, or similar
of 2009. In 2008 the currency translation adjustment charge to net equity
expressions, commonly identify such forward-looking statements.
ofUS$41.8 million resulted mainly from the weakening in the Chilean peso
during the year from Ch$497/US$ at the start of 2008 to Ch$636/US$ Forward-looking statements involve known and unknown risks, uncertainties,
at the end of 2008. assumptions and other factors that are beyond the Groups control.
Forexample, future ore reserves will be based in part on long-term price
Going concern assumptions that may vary significantly from current levels. These may
materially affect the timing and feasibility of particular developments.
The Groups business activities, together with those factors likely to affect
Otherfactors include the ability to produce and transport products profitably,
itsfuture performance, are set out in the Business Review, and details on
Financial Review
demand for products, the effect of foreign currency exchange rates on
thePrincipal Risks and Uncertainties relevant to the Group are set out on
market prices and operating costs, activities by governmental authorities,
pages 14 and 15. Details of the cash flows of the Group during the year,
such as changes in taxation or regulation, and political uncertainty.
along with its financial position at the year-end are set out in this Financial
Review. TheDirectors Report includes details of the Groups capital Given these risks, uncertainties and assumptions, actual results could be
structure, as wellas significant medium and long-term contracts with materially different from any future results expressed or implied by these
customers and suppliers. The financial statements includes details of forward-looking statements which speak only as at the date of this report.
theGroups cash and cash equivalent balances in Note 22, and details Except as required by applicable regulations or by law, the Group does not
ofborrowings are set out in Note 23. Details of the Groups financial risk undertake any obligation to publicly update or revise any forward looking
management including details ofthe management of liquidity and statements, whether as a result of new information or future events.
Governance
counterparty risk, are set out in Note 25(c) to the financial statements. TheGroup cannot guarantee that its forward-looking statements will not
differ materially from actual results.
In assessing the Groups going concern status the Directors have taken
intoaccount the above factors, including the financial position of the Group
and inparticular its significant net-cash position, the current copper price
and market expectations in the medium term, and the Groups capital
expenditure and financing plans.
After making appropriate enquiries, the Directors consider that the Company
and the Group have adequate resources to continue in operational existence Financial Statements
for the foreseeable future and that it is appropriate to adopt the going
concern basis in preparing the financial statements.
Other Information
Governance
Directors Report
The Directors present their Annual Report, together with the audited financial Landincludedin investment properties relates to forestry properties
statements for the year ended 31December 2009. whichthe Group maintains but does not use in any of its existing operations.
The land is held for long-term real estate development and recreational
potential and is held in the financial statements at cost. The fair value of
Principal group activities suchland is disclosed in Note 15 to the financial statements.
The principal activities of the Group are copper mining (including exploration
and development), the transportation of freight by rail and road and
thedistribution of water. These activities are mainly based in Chile. Results and dividends
TheCompanys principal activity is to act as a holding company. Group The consolidated profit before tax has decreased from US$2,609.5 million
operations are carried out through subsidiaries, associates and joint ventures. in2008 to US$1,437.6 million in 2009.
The principal subsidiaries, associates and joint ventures that make up
The Board has recommended a final dividend of US 20.0 cents (2008
theGroup are set out in Notes 16 to 18 to the financial statements.
US 53.6 cents) per ordinary share, comprising an ordinary dividend of
Onesubsidiary, the Antofagasta Railway Company plc, has a branch in
US 6.0 cents (2008 US 5.6 cents) and a special dividend of US 14.0
Chile(known as the FCAB) which provides rail freight services.
cents(2008 US 48.0 cents). An ordinary interim dividend of US 3.4 cents
was paid on 8October 2009 (2008 ordinary dividend US 3.4 cents, 2008
special dividend US 3.0 cents). This gives total dividends per share
Business review proposed in relation to 2009 of US 23.4 cents (2008 US 60.0 cents),
The Company is required by section 417 of the Companies Act 2006 to including the special dividend. The total cost of dividends to ordinary
provide a business review in this Report. The requirements of the business shareholders (including special dividends) proposed in relation to 2009
review are fulfilled in the disclosures contained within the Chairmans will be US$230.7 million, compared with US$591.5 million in 2008.
Statement on page 3 to 5, the Marketplace section on pages 9 to 11,
the Business Review (including information on expected future developments) Preference shares carry the right to a fixed cumulative dividend of 5%
on pages 16 to 41, the Financial Review on pages 42 to 49 and the perannum. The preference shares are classified within borrowings, and
Corporate Governance Report on pages 54 to 58. A summary of the key preference dividends are included within finance costs. The total cost of
performance indicators considered most relevant to the Group is on pages dividends paid on preference shares and recognised as an expense in
12and 13. A description of the principal risks and uncertainties facing the theincome statement was US$0.2 million (2008 US$0.2 million).
Group is on pages 14 and 15. Information on environmental, employee and Further information relating to dividends is set out in the Financial Review
social and community matters is included within the Corporate Sustainability on pages 45 and 46, and in Note 12 to the financial statements.
report on pages 32 to41. Information on significant contractual and other
arrangements which are essential to the business of the Group is included
within this Directors Report on pages 50 and 53. A description of the Directors
financial risk management objectives and policies of the Group, together
The Directors who served during the year are set out on page 121. Mr. JW
withthe principal risks to which the Group is exposed, is contained in the
Ambrus resigned as an Independent Non-Executive Director on 14 October
Financial Review on pages 46 and 47 and in Note 25(c) to the financial
2009. No Director has a service contract with the Company which cannot
statements. Significant events since the balance sheet date requiring
beterminated within 12 months.
disclosure are set out in Note 39 to the financial statements. All the above
matters are incorporated into this reportby reference. Biographical details of those Directors seeking re-election are set out below.
The reasons why the Board considers that these Directors should be re-elected
are set out in the Corporate Governance statement on pages 54 to 58 and in
Value of land particular in the sections headed Performance Evaluation and Re-election.
Land included within property, plant and equipment in the financial Mr. CH Bailey was appointed a Non-Executive Director in 1987 and is the
statements is mainly held at cost. It is not practicable to estimate the value Senior Independent Non-Executive Director. Mr. Bailey is a Chartered
ofsuch land and mineral rights, since these principally depend on product Accountant, and a director of General Oriental Investment Limited and RIT
prices over the long-term and will vary with market conditions. Capital Partners plc. Mr. Bailey will be aged 76 at the date of the Annual
General Meeting.
Overview
Mr. WM Hayes was appointed a Non-Executive Director in 2006. He is a Mr. RF Jara was appointed a Non-Executive Director in 2003. He is a lawyer
director of Royal Gold Inc. He was previously a senior executive with Placer and a director of Empresa Nacional del Petrleo. He is deputy chairman of
Dome Inc. from 1988 to 2006. Mr. Hayes is a former president of the the Sociedad Nacional de Minera (Sonami), an organisation which represents
Consejo Minero, the industry body representing the largest international a number of mining companies in Chile. He is chairman of the Fundacin
mining companies operating in Chile. He holds a M.A. degree in International Minera Los Pelambres and a director of Fundacin Andrnico Luksic A. and
Management from the American Graduate School of International Fundacin Pascual Baburizza, all of which are charitable foundations in Chile.
Management. Mr. Hayes is aged 65. Mr. Jara will be aged 57 at the date of the Annual General Meeting.
Mr. GS Menndez was appointed a Non-Executive Director in 1985.
Business Review
Heholdsa degree in business administration from the Universidad de Chile Directors interests
and is a public accountant. He is a director of Quienco S.A., Banco de Chile, The interests of the persons (including the interests of their families) who
Telfonica del Sur S.A. and is chairman of the board of directors of Banco were Directors at the end of the year, in the preference and ordinary share
Latinoamericano de Comercio Exterior S.A. (Bladex). He is also the capital of the Company are shown on page 60.
Vice-chairman of Fundacin Andrnico Luksic A. and Fundacin Pascual
Baburizza, both of which are charitable foundations in Chile.
Mr.Menndezisaged 61. Directors indemnities and insurance
In accordance with the Companys Articles of Association and to the extent
Mr. DE Yarur was appointed a Non-Executive Director in 2004. Mr. Yarur permitted by the laws of England and Wales, Directors are granted an
Financial Review
isadirector of several Chilean companies including Banco de Crdito e indemnity from the Company in respect of liabilities incurred as a result
Inversiones S.A., Sociedad Qumica y Minera de Chile S.A. and Invertec oftheir office. In respect of those matters for which the Directors may or
Pesquera Mar de Chilo. He holds a M.Sc. degree in Finance from the maynot be indemnified, the Company maintained a Directors and Officers
London School of Economics and completed the Advanced Management liability insurance policy throughout the financial year. This policy has been
Program at Harvard Business School. He is a qualified accountant, and a renewed for the next financial year. Neither the Companys indemnity nor
former Chairman of the Chilean Securities and Exchange Commission. theinsurance provides cover in the event that the Director is proven to have
Mr. D E Yarur is aged 53. acted dishonestly or fraudulently.
Biographical details of the other Directors are given below:
Governance
Mr. J-P Luksic is Executive Chairman. He was appointed a Director in 1990 Conflicts of interest
and Deputy Chairman in 2000. He holds a B.Sc. degree in management and The Companies Act 2006 requires that a Director must avoid a situation
science from the London School of Economics. He was also Chief Executive where he has, or can have, a direct or indirect interest that conflicts, or
Officer of Antofagasta Minerals S.A. until his appointment as Chairman of the possibly may conflict, with the Companys interests. The Company has
Group in 2004. He is a non-executive director of Quienco S.A. and Madeco undertaken a process to identify, and, where appropriate, authorise and
S.A. He is vice-chairman of the Consejo Minero, the industry body manage potential and actual conflicts. The Directors of the Company have
representing the largest international mining companies operating in Chile. identified all interests which may constitute conflicts, including for example,
Mr. J-P Luksic will be aged 46 at the date of the Annual General Meeting. directorships in other companies. The Board has considered the potential
Mr. GA Luksic was appointed a Non-Executive Director in 2005. Mr. Luksic is andactual conflict situations of each of the Directors and decided in relation
a director of Nexans and Banco de Chile and chairman of Quienco S.A., to each situation whether to authorise it and the steps, if any, that need to be
Compaa Cerveceras Unidas S.A., Vina San Pedro S.A. and Madeco S.A. taken to manage it. The authorisation process is not regarded as a substitute
Mr. GA Luksic is aged 54. for managing an actual conflict of interest if one arises. The monitoring and,
ifappropriate, authorisation of actual and potential conflicts of interest is an
Mr. JG Claro was appointed a Non-Executive Director in 2005. He is on-going process. Directors are required to notify the Company of any
currently chairman of Embotelladora Andina S.A. He is a director of several material changes in those positions or situations that have already been
other companies in Chile, including Entel Chile S.A., Empresas CMPC S.A., considered, as well as to notify the Company of any other new positions
Red Televisiva Chilevison S.A. and Empresas Lafarge Chile S.A. He is also a orsituations that may arise. In addition to considering any new situations
Other Information
member of the governing boards of Universidad Adolfo Ibez and Centro de asthey arise, the Board considers the conflict position of all Directors
Estudios Pblicos, a non-profit academic foundation in Chile. He is a former formally each year.
chairman of the Sociedad de Fomento Fabril (Chilean Society of
Industrialists), the Confederacin de la Produccin y del Comercio
(Confederation of Chilean Business) and the Consejo Binacional de Negocios
Chile-China (Council for Bilateral Business Chile-China). Mr. Claro is aged 59.
Governance
Directors Report continued
Significant relationships the transport division has long-term contracts with a number of customers,
The Group has a number of significant contractual or other arrangements which typically govern volumes and pricing structures;
which are essential to its operations and projects: the Group has shareholder agreements in place governing its relationship
the Group holds a number of mining and exploration rights in Chile and with its partners at its operations and development and exploration
other countries in which it has exploration or development activities, projects. The Group also has a number of earn-in agreements in respect
normally granted by the relevant national government; of exploration and development projects; and
a significant proportion of the Groups sales of copper concentrate (and the Group has a number of borrowing facilities in place to provide financing
other payable elements) and molybdenum concentrate are made under for it its operations and projects. For example:
long-term framework agreements with a number of customers. These during 2009 Minera Esperanza signed a 12-year US$1.05 billion
framework contracts will typically set out the minimum annual volumes to projectfinancing facility with a consortium of senior lenders including
be supplied, with the tolling charges determined annually and the pricing governmental agencies and commercial banks. Antofagasta plc, as a
ofcontained material to be in accordance with market prices. A significant sponsor to the facility, has provided certain guarantees for the financing
proportion of the Groups copper cathode sales are made under annual until the Esperanza project has satisfied certain specified completion
contracts with a number of customers. These contracts will typically tests, at which point the financing will become non-recourse to
specify the volumes to be supplied, with the pricing to be in accordance Antofagasta plc; and
with market prices. Further details of such arrangements are given in
Note25(d) to the financial statements; in December 2009 and January 2010 Minera Los Pelambres entered
into new corporate loan facilities totalling US$750 million for a period of
there are collective labour agreements with each of the labour unions at up to seven years provided by a group of commercial banks and export
theGroups mining operations. These agreements are typically of between credit agencies.
three and four years duration. Several of these labour unions are affiliated
with the Federacin Minera de Chile;
the Group has contracts with a number of suppliers to sub-contract certain Capital structure
services at each of its mine sites, including vehicle and equipment Details of the authorised and issued ordinary share capital, including details
maintenance and other logistical services. In addition, the Group has a of any movements in the issued share capital during the year, are shown in
number of medium and long-term contracts for the supply of key inputs Note 29 to the financial statements. The Company has one class of ordinary
such as electricity, sulphuric acid, oil and explosives with a number of shares, which carry no right to fixed income. Each ordinary share carries one
suppliers; vote at any general meeting of the Company. Details of the preference share
capital are shown in Note 23 to the financial statements. The preference
the Group has a number of engineering, construction and supply contracts
shares are non-redeemable and are entitled to a fixed cumulative dividend
in respect of the development of the Esperanza project, including an
of5% per annum. Each preference share carries 100 votes on a poll at any
Engineering, Procurement and Construction Management (EPCM) contract
general meeting of the Company. The nominal value of the issued ordinary
with Aker Solutions;
share capital is 96.1% of the total sterling nominal value of all issued share
the contract for the feasibility study at the Reko Diq project, which has capital, and the nominal value of the issued preference share capital is 3.9%
been assigned to SNC Lavalin; of the total sterling nominal value of all issued share capital.
foreign investment agreements with the Chilean government (known as There are no specific restrictions on the transfer of shares or on their voting
DL600 agreements) are in place in respect of Los Pelambres and rights beyond those standard provisions set out in the Companys Articles of
Esperanza. These agreements provide a stable legal, and in some cases Association and other provisions of applicable law and regulation (including,
tax, framework for a specified period of time, ensuring non-discriminatory in particular, following a failure to provide the Company with information
and non-discretionary treatment for foreign investors; about interests in shares as required by the Companies Act 2006). The
Company is not aware of any agreements between holders of the Companys
in 2003 the Group was awarded a 30-year concession to operate the
shares that may result in restrictions on the transfer of securities or on voting
water rights and facilities in the Antofagasta Region of Chile, supplying
rights. Details of significant holdings in the Companys shares are set out in
domestic and industrial users. The domestic tariffs are controlled by
the Substantial Shareholdings section below.
the Chilean Water Regulator. Further details are given in Note 35 to the
financial statements;
Overview
The Company has the authority to purchase up to 98,585,669 of its own Auditors
ordinary shares, representing 10% of the issued ordinary share capital. With In the case of each of the persons who is a Director at the date of approval
regard to the appointment and replacement of Directors, the Company is ofthis Annual Report:
governed by its Articles of Association, the Combined Code 2006, the
Companies Act 2006 and related legislation. The Articles of Association may so far as he is aware, there is no relevant audit information of which the
be amended by special resolution of the shareholders. There are no significant Companys auditors are unaware; and
agreements in place which take effect, alter or terminate upon a change of he has taken all steps that he ought to have taken as a Director in order
control of the Company. There are no agreements in place between the tomake himself aware of any relevant audit information and to establish
Business Review
Company and its Directors or employees which provide for compensation that the Companys auditors are aware of that information.
forloss of office resulting from a change of control of the Company.
For these purposes, relevant audit information means information needed
by the Companys auditors in connection with preparing their report.
Thisstatement is made and should be interpreted in accordance with
Donations
theprovisions of section 418 of the Companies Act 2006.
The Group made charitable donations of US$2.2 million during the year ended
31 December 2009 (2008 US$11.3 million). This includes US$32,000 A resolution to re-appoint Deloitte LLP as the Companys auditor will be
(2008 US$0.1 million) of charitable donations in the United Kingdom, proposed at the forthcoming Annual General Meeting.
principally related to educational studies with a focus on Chile. The Group made
Financial Review
political donations of US$2.2 million during the year ended 31December
Substantial shareholdings
2009, in relation to Chilean presidential and parliamentary elections (2008
As at the date of this report, the following significant holdings of voting rights
US$1.0 million in relation to Chilean municipal elections). These donations
in the share capital of the Company have been disclosed to the Company
were made in accordance with the Chilean legislation which governs the
under Disclosure and Transparency Rule 5:
financing of political parties and candidates in order to facilitate the democratic
process of the country. The donations were made via the Chilean Electoral Ordinary Share Preference Share Total Share
Table of substantial Capital Capital Capital
Management Body, which transfers funds to political parties and candidates. shareholdings % % %
Metalinvest Establishment 50.72 94.12 58.04
Governance
Kupferberg Establishment 9.94 8.27
Supplier payment policy and creditor days Aureberg Establishment 4.26 3.54
The Company acts as a holding company and does not trade in the United Metalinvest Establishment and Kupferberg Establishment are both controlled
Kingdom or elsewhere. Creditor days for the Group have been calculated by the E. Abaroa Foundation, in which members of the Luksic family are
at40 days (2008 39 days). Each operating company is responsible for interested. As explained on page 102, Metalinvest Establishment is the
agreeing terms of payment with each of their suppliers. It is Group policy immediate parent company of the Group and the E. Abaroa Foundation
thatpayments to suppliers are made in accordance with agreed terms. is the ultimate parent company. Aureberg Establishment is controlled by
Mr. J-P Luksic, the Chairman of the Company.
Environment
Annual General Meeting
The Group seeks to ensure that its operations and products cause minimal
The Annual General Meeting of the Company will be held from 10.30 a.m. on
harm to the environment. Care is taken to limit discharges of environmentally
9 June 2010 at Church House Conference Centre, Deans Yard, Westminster,
harmful substances and to dispose of waste material in a safe manner.
London SW1P 3NZ. The Notice of the Meeting, together with an explanation
Contingency arrangements and plans exist to reduce the risk and limit the
of the business to be dealt with at the Meeting, is included in a separate
effect of any accidental spillage. The Groups policy is that all its operations
document sent to shareholders with this Annual Report.
should comply fully with or exceed applicable Chilean regulations. Further
information regarding the Groups environmental performance and activities By Order of the Board
Other Information
is given in the Corporate Sustainability report on pages 32 to 41.
For and on behalf of

Petershill Secretaries Limited
Company Secretary
8 March 2010
Governance
Corporate Governance Report
Introduction Directors
Antofagasta plc (Antofagasta) has an uncommon ownership structure for The Board
acompany listed on the London Stock Exchange. The E. Abaroa Foundation, The Directors collectively have responsibility for the conduct of the Groups
an entity in which members of the Luksic family are interested, controls business. The Board, which met five times during 2009, comprises an
60.66% of the ordinary share capital and 94.12% of the preference share Executive Chairman and seven Non-Executive Directors, five of whom are
capital of the Company through two investment vehicles, Metalinvest considered by the Board to be independent. Prior to his resignation in
Establishment and Kupferberg Establishment. Aureberg Establishment, which October 2009, the Board also included Mr. JW Ambrus, who was considered
is controlled by Antofagastas Chairman, Mr. J-P Luksic, holds 4.26% of the by the Board to be independent. There is a schedule of matters specifically
ordinary share capital of the Company. Although incorporated in the United reserved for the Board. The Board is responsible for:
Kingdom and listed on the London Stock Exchange, the Groups businesses,
providing leadership;
which comprise mining, transport and water distribution, are principally
located in Chile, the largest copper producing country in the world. setting the Groups strategic objectives and key policies;
Antofagastas Board is committed to managing the operations of the Group ensuring that appropriate resources are in place to enable the Group to
with a view to maximising value for all shareholders. The Board currently has meet its objectives;
eight members, comprising an Executive Chairman and seven Non-Executive
reviewing the Groups performance; and
Directors. Two of the eight Directors (including the Chairman) are members of
the Luksic family. Six of the Directors, including the Chairman, are based in overseeing the Groups internal control systems.
Chile, where the Groups operations are principally located; one Director is
The Chairman will always attempt to persuade the Board to act as a single
based in the United Kingdom, where the Company is incorporated and listed
team by obtaining consensus at Board meetings but, in exceptional
on the London Stock Exchange; and one Director is based in the United States.
circumstances, decisions may be taken by majority. The agenda for Board
The day-to-day operations of the Group are carried on through the boards meetings are set by the Chairman in consultation with the other Directors.
ofeach division of the Group, Antofagasta Minerals S.A. (mining),
Responsibility for developing and implementing the Groups strategic and
Antofagasta Railway Company plc (FCAB railway and other transport
financial objectives is delegated to the senior management of the Group.
services) and Aguas de Antofagasta S.A. (water distribution). Each division
Accordingly, the boards of Antofagasta Minerals S.A. (mining), the Antofagasta
isheaded by a chief executive officer who reports to his divisional board
Railway Company plc (railway and other transport services) and Aguas de
andthe Chairman of the Group. The Antofagasta Board oversees these
Antofagasta S.A. (water distribution) meet regularly to consider strategic,
divisional boards and provides strategic direction.
operational and risk management issues in more detail. There is substantial
In its consideration of Corporate Governance matters, the Board is mindful overlap between membership of the Board of Antofagasta plc and these
ofthe principles set out in the Combined Code on Corporate Governance three divisional boards. The chief executive officer of each division reports to
issued by the Financial Reporting Council in June 2008 (the Combined his divisional board and to the Chairman of the Group; the Board oversees
Code). However, given the ownership structure and asset base of the Group, these divisional boards and provides strategic direction. The Board is also
the Board believes that full adherence to the Combined Code is not responsible for reviewing the performance of management. The Non-
practicable. Nevertheless, the Board considers that its structure and balance Executive Directors scrutinise the performance of management in meeting
(as set out in more detail below under the heading Directors) provide an goals and objectives and also monitor the reporting of performance, through
appropriate basis for ensuring its effectiveness and the protection of the the activities of the Remuneration Committee and the Audit Committee.
interests of all shareholders in the Company.
The Directors of the Company as at 8 March 2010 are set out on page 121.
The Board describes below how it applied the corporate governance As noted above, Mr. JW Ambrus resigned as a Director on 14 October 2009.
principles contained in the Combined Code during 2009. Two areas where
The recognised senior independent Non-Executive Director is Mr. CH Bailey,
the Company did not comply with the detailed Combined Code provisions are
who is also Chairman of the Audit Committee. Mr. GS Menndez is Chairman
set out at the end of this report under the heading Statement of Compliance
of the Remuneration and Nomination Committees. The Board does not have
with the Detailed Provisions of the Combined Code.
a Director formally designated as Chief Executive.
Overview
The role of the Chairman The Board does not consider Mr. RF Jara or Mr. GA Luksic to be independent.
Mr. J-P Luksic is Chairman of the Board. His role is that of a full-time Mr. RF Jara provides advisory services to the Group, as explained
Executive Chairman, and he has no other significant commitments that intheRemuneration Report on page 60. Mr. GA Luksic is the brother of
prevent him from devoting sufficient time to this role. As explained above, Mr.J-PLuksic, the Chairman of Antofagasta plc. Mr. GA Luksic is chairman
theGroup does not have a Board member who is designated as Chief of Quienco S.A. and chairman or a director of Quiencos other listed
Executive. Mr. Marcelo Awad is chief executive officer of Antofagasta subsidiaries. Mr. J-P Luksic and Mr. GS Menndez are also non-executive
Minerals S.A.; Mr. Miguel Seplveda is chief executive officer of the directors of Quienco and some of its listed subsidiaries. Like Antofagasta,
Antofagasta Railway Company plc; and Mr. Marco Ktulas is the chief Quienco is also controlled by the Luksic family.
Business Review
executive officer of Aguas de Antofagasta S.A.
The Board believes that the Company is not at risk from a concentration Appointments to the Board
ofpower by Mr. J-P Luksic having executive responsibilities as Chairman. The Nomination Committee currently comprises Mr. GS Menndez
Inreaching this conclusion, it has taken into consideration the strong (Chairman), Mr. CH Bailey and Mr. RF Jara. As explained above,
presence of Non-Executive Directors on the Board, the structure of the Audit, Mr.CHBailey and Mr. GS Menndez are considered by the Board
Remuneration and Nomination Committees designed to devolve away from to be independent Non-Executive Directors.
the Chairman responsibility and control of certain key areas of Board
The Nomination Committee periodically reviews the composition of the
responsibility, and the delegation of management responsibility to the chief
Boardincluding the balance between Executive and Non-Executive Directors
executive officer of each division.
Financial Review
andconsiders succession planning for both Executive and Non-Executive
Directors and the Groups senior management. It is also responsible for the
Board balance and independence process for new Board appointments and makes recommendations to the
The Board considers five of its seven Non-Executive Directors to be Board on the appointment of new Directors and is responsible for ensuring
independent Mr. CH Bailey, Mr. GS Menndez, Mr. DE Yarur, Mr. JG Claro that appointments are made on merit and against objective criteria. In
and Mr. WM Hayes. The Board is satisfied that this balance limits the scope fulfilling these responsibilities, the Nomination Committee consults the
for an individual or small group of individuals to dominate the Boards Chairman, Mr. J-P Luksic. The Nomination Committee meets as necessary
decision-making. The Directors Report sets out biographical details of and, in any case, at least once a year. Its terms of reference are available
eachDirector and identifies those Directors standing for re-election on from the Companys registered office and may be viewed on the Companys
Governance
pages50 and 51. website www.antofagasta.co.uk.
Mr. Yarur, Mr. Claro and Mr. Hayes meet the independence criteria set In making appointments to the Board, the Nomination Committee considers
out in Combined Code provision A.3.1 and the Board is satisfied as to the skills, experience and knowledge of the existing Directors and assesses
their independence. which of the potential candidates would most benefit the Board. It considers
the potential candidates knowledge and experience of Chile, the mining
The Board is satisfied that Mr. Bailey remains independent in character and industry, Latin America, capital markets and the regulatory environment, and
judgement, notwithstanding that he has served on the Board for more than that they have sufficient time to devote to the role. The Chairman ensures
nine years, since he does not receive any remuneration from the Company that any new Directors are provided with a full induction on joining the Board.
other than Non-Executive Directors fees, nor does he have any other Financial Statements
relationships with the Company or its majority shareholder. The Board is All Non-Executive Directors have letters of appointment with the Company
alsosatisfied that Mr. Menndez remains independent in character and for an initial period of three years from the date of their appointment, subject
judgement, notwithstanding that he has also served on the Board for more to reappointment at the Annual General Meeting. These letters require the
than nine years and notwithstanding that he is a non-executive director of Non-Executive Directors to undertake that they will have sufficient time to
Quienco S.A. (a Chilean-listed company also controlled by the Luksic family) discharge their responsibilities. The letters of appointment are available for
and some of its subsidiaries, including Banco de Chile and Telefnica del Sur inspection at the Companys registered office during normal business hours
S.A. This is because he does not receive any remuneration from the Group and at the Annual General Meeting (for 15 minutes prior to and during
other than in a non-executive capacity. His position in the Quienco group is the meeting).
Other Information
also solely as a non-executive director. The Board considers that Mr. Baileys
and Mr. Menndezs length of service is of considerable benefit to the
Information and professional development
Board given their wealth of knowledge and experience of the Group and
The Directors receive information for review ahead of each Board or
of Latin America and of the mining industry, and therefore proposes
Committee Meeting. In addition, they receive regular reports and forecasts
bothforre-election.
for the Group and each significant operation to ensure that they remain
properly briefed about the performance and financial position of the Group
Governance
Corporate Governance Report continued
throughout the year. All Directors have access to management and to Re-election
suchfurther information as is needed to carry out their duties and Each Director is elected by shareholders at the Annual General Meeting
responsibilities fully and effectively. Furthermore, all Directors are entitled to following his first appointment. The Companys Articles of Association
seek independent professional advice concerning the affairs of the Group provide that not less than one-third of the Directors must retire by rotation
atthe Companys expense. each year and that each Director is re-elected at least once every three
The Company also provides Directors with the necessary resources to years. Non-Executive Directors who have served for more than nine years
develop and update their knowledge and capabilities. In particular, the are subject to annual re-election in accordance with provision A.7.2 of the
Directors are regularly updated on the Groups business, the competitive Combined Code.
and regulatory environment in which it operates and other changes affecting The Directors retiring and standing for re-election at this years Annual
the Group as a whole. The Directors based outside Chile visit the country General Meeting are Mr. CH Bailey, Mr. WM Hayes, Mr GS Menndez and
regularly and at least once a year, and the Directors based outside the United Mr. DE Yarur. Biographical details of these Directors are set out in the
Kingdom also regularly visit this country, again normally at least once a year. Directors Report on pages 50 and 51.
Group management in the United Kingdom and Chile is responsible for The Chairman confirms that the Board is satisfied that each of the Directors
ensuring that Board procedures and applicable rules and regulations are proposed for re-election continues to be effective and continues to
complied with and for advising the Board, through the Chairman, on all demonstrate commitment to his role.
governance matters. Company secretarial advice is provided by Petershill
Secretaries Limited.
Remuneration
Performance evaluation The membership of the Remuneration Committee, a statement of the
The Board periodically considers its performance and effectiveness. Companys policy on remuneration, and the remuneration details and
Aperformance evaluation of the Board, its committees and its individual shareholding interests of each Director are contained in the Remuneration
members was conducted during 2009 by Mr. GS Menndez, with the Report on pages 59 to 61.
assistance of senior management. Mr. CH Bailey, as the senior independent
Non-Executive Director was responsible for the evaluation of the Chairman.
The results were discussed with the Chairman and considered by the Board Accountability and audit
and were taken into account in the decision to recommend re-election of the Internal control
retiring Directors at the forthcoming Annual General Meeting during 2010. The Board has applied principle C.2 of the Combined Code by establishing a
The Board is satisfied that each Director continues to contribute effectively continuous process for identifying, evaluating and managing the significant
and to demonstrate commitment to his role. risks the Group faces. The Board regularly reviews the process, which is an
Directors attendance at meetings in 2009

The number of Board and Committee meetings held during 2009, together with details of each Directors attendance, is set out below:
Board Audit Committee Nomination Committee Remuneration Committee
Number Maximum Number Maximum Number Maximum Number Maximum
attended possible attended possible attended possible attended possible
J-P Luksic 5 5
CH Bailey 3 5 3 3 1 1 2 2
GS Menndez 5 5 3 3 1 1 2 2
RF Jara 5 5 1 1
DE Yarur 5 5 3 3 2 2
GA Luksic 3 5
JW Ambrus1 4 4
JG Claro 5 5
WM Hayes 5 5
1
Mr. JW Ambrus resigned from the Board as a Non-Executive Director on 14 October 2009.
All Directors in office at the time of the Annual General Meeting in June 2009 attended that meeting.
Each Director withdrew from any meeting when his own position was being considered.
Overview
ongoing activity from the start of each financial year to the date of approval of Whistleblowing procedures
this report and which is in accordance with revised guidance on internal The Audit Committee, whose other functions are described below, is
control published in October 2005 (the Turnbull Guidance). The Board is responsible for reviewing arrangements by which employees of the Group
responsible for the Groups system of internal control and for reviewing its may, in confidence, raise concerns about possible improprieties in matters
effectiveness. Such a system is designed to manage rather than eliminate offinancial reporting or other matters. An Ethics Code is in place across the
the risk of failure to achieve business objectives, and can only provide Group, which includes a procedure to enable employees to raise concerns,
reasonable and not absolute assurance against material misstatement or loss. anonymously if necessary. An Ethics Committee, comprising members of
In compliance with Provision C.2.1 of the Combined Code, the Board senior management, is responsible for implementing, developing and
Business Review
regularly reviews the effectiveness of the Groups system of internal control. updating the Ethics Code and investigating any allegations of impropriety.
The Boards monitoring covers all controls, including financial, operational The Ethics Committee reports directly to the Chief Executive of Antofagasta
and compliance controls and risk management. It is based principally on Minerals S.A. The Audit Committee considers the results of this work and
reviewing reports from management to consider whether significant risks theoperation of the Ethics Code as part of its annual review of the
areidentified, evaluated, managed and controlled and whether any effectiveness of internal control.
significant weaknesses are promptly remedied and indicate a need for more
extensive monitoring. The Board has also performed a specific assessment Audit Committee and auditors
for the purpose of this Annual Report. This assessment considers all The Audit Committee currently comprises Mr. CH Bailey (Chairman),
significant aspects of internal control arising during the period covered by
Financial Review
Mr.GSMenndez and Mr. DE Yarur, all of whom are considered by the
thereport including the work of internal audit. The Audit Committee assists Boardto be independent Non-Executive Directors. All three members are
the Board in discharging its review responsibilities. considered to have recent and relevant financial experience.
During the course of its review of the system of internal control, the Board The Audit Committee meets at least twice a year with the external auditors
has not identified nor been advised of any failings or weaknesses which it inattendance. The Audit Committees purpose is to assist the Board in
has determined to be significant. Therefore a confirmation in respect of meeting its responsibilities relating to financial reporting and control matters.
necessary actions is not required. In particular, it reviews the scope and nature of the audit and issues arising
Further information relating to the Groups risk and management systems from it and is responsible for ensuring the independence of the external
auditors (including their objectivity and effectiveness), monitoring the
Governance
isgiven in the Corporate Sustainability report on page 35.
provision of any non-audit services and for making recommendations to the
Board for the appointment, reappointment or removal of the external auditors.
Going concern The Audit Committee periodically reviews if it is necessary to re-tender the
The Boards statement on going concern is included in the Financial Review audit engagement. It reviews the internal control and risk assessment
on page 49. procedures adopted by the Group described in the section under the heading
Internal Controls above, including a review of the effectiveness of the
internal audit function. The internal audit function is responsible for reviewing
Corporate sustainability
the adequacy of the internal control environment across the Group and for
The Board takes into account the community, social, environmental and reporting the findings of the internal audit work to the audit committee on a Financial Statements
ethical impact of its decisions and is responsible for the relevant policies of regular basis. The Audit Committee also monitors the integrity of the financial
the Group. A Corporate Sustainability committee, comprising Mr. J-P Luksic, statements and Directors statements on internal controls and reviews the
Mr. GS Menndez and Mr. RF Jara, was formed in 2008 to assist the Board going concern basis prior to its endorsement by the Board. The Committee
in its responsibilities with respect to the Groups social responsibility. also reviews thepreliminary announcement, the half yearly financial report
The Committee met once in 2009, with all three members in attendance. and any otherpublic reports relating to the Groups financial performance.
Key issues of social responsibility are identified and assessed through the The termsof reference of the Audit Committee are available from the
Groups risk management processes described under Internal Control Companysregistered office and may be viewed on the Companys
above. During 2009 the Group also published its second separate website www.antofagasta.co.uk.
Other Information
Sustainability Report to provide further information on its social and

environmental performance in respect of 2008. More information on The Audit Committee is authorised by the Board to investigate any activity
corporate sustainability is given on pages 32 to 41. within its terms of reference. It is authorised to seek any information it
requires from any employees and all employees are directed to co-operate
with any request made by the Audit Committee.
Governance
Corporate Governance Report continued
The Companys external auditors, Deloitte LLP, have provided non-audit Statement of compliance with the detailed provisions of
services to the Company, which amounted to US$106,000. This comprised the Combined Code
the provision of services relating to the preparation for the adoption of As explained above, the Company complied with the detailed code provisions
IFRSby the Groups Chilean subsidiaries, tax compliance and other contained in the Combined Code throughout 2009 and to the date of this
consultancy services. report except as follows:
The Audit Committee has reviewed the level of these services in the course the Board does not have a separately identified Chief Executive and hence
of the year and is confident that the objectivity and independence of the at Board level there is no formal separation of the functions of Chairman
auditors are not impaired by reason of such non-audit work. The Audit and Chief Executive (provision A.2.1). As explained above, the Group has
Committee has also considered the effectiveness of the external audit separate chief executives for its mining, transport and water distribution
function through the year through meetings with Deloitte LLP, a review of divisions who report to their respective divisional boards and to the
their audit plan and a consideration of the results of work performed by the Chairman of the Group. The Board considers that its predominantly
external auditors prior to release of the half year and full year results. non-executive composition combined with the delegation of management
responsibility to the chief executive officer of each division achieves an
appropriate balance and prevents a concentration of power in its Executive
Relations with shareholders Chairman; and
Directors and senior management regularly meet with institutional
shareholders and analysts in the United Kingdom, Europe, Chile and the performance related pay measures did not apply to Board members
United States. The senior independent Non-Executive Director, Mr. CH Bailey, (provision B.1.1). The Board considers this appropriate given its
also attends meetings with major shareholders when required. Other predominantly Non-Executive composition and the role of the only
Non-Executive Directors are given the opportunity to meet with major Executive Director, who is a member of the controlling family, as Chairman
shareholders and attend meetings if requested to do so by shareholders. of the Board. Performance related bonuses are paid to senior management
These meetings ensure that the Board is able to develop and maintain an in the Group based on a combination of personal, divisional and Group
understanding of the views of several of the Companys major investors. performance assessed against targets set at the start of each year.
The Company carries out a formal programme of presentations to update

institutional shareholders and analysts on developments in the Group after
the announcement of the half year and full year results. In addition, quarterly
production figures and financial results are published for the mining,
transport and water divisions. Copies of these results and production
announcements, presentations and other press releases issued by the
Company are available on its website. As noted above, during the year the
Group also published a separate Sustainability Report in respect of 2008
toprovide further information on its social and environmental performance.
The Companys Annual General Meeting (AGM) is also used as an
opportunity to communicate with both institutional and private shareholders;
the Board of Directors encourages all shareholders to attend. The notice of
the AGM is sent to shareholders at least 20 working days in advance of the
meeting. At the meeting, the Company complies with the Combined Code as
it relates to voting, including votes withheld, the separation of the resolutions
and the attendance of committee chairmen.
Remuneration Report
Overview
This report has been prepared in accordance with Schedule 8 of the Large Company policy on Directors pay and bonuses
and Medium-sized Companies and Groups (Accounts and Reports) The Companys policy is to ensure that Directors are fairly rewarded with
Regulations 2008. It also meets the relevant requirements of the Listing regard to responsibilities undertaken, and considers comparable pay levels
Rules of the Financial Services Authority and describes how the Board has inthe United Kingdom, in Chile, and in the international mining industry.
applied the principles of good governance as set out in the Combined Code Corporate and individual performance is taken into account in setting the pay
on Corporate Governance issued by the Financial Reporting Council in June level for the Chairman as an Executive Director, and this is reviewed on an
2008 (the Combined Code) relating to Directors remuneration. annual basis to ensure it remains in line with companies of a similar nature,
During the year under review, the Company complied with the detailed code size and complexity. Remuneration levels for Non-Executive Directors are
Business Review
provisions set out in Section B of the Combined Code except, as explained on based on comparable levels for companies of a similar nature, size and
page 58, performance related pay measures did not apply to the Chairman, complexity, and take into account specific responsibilities undertaken.
who was the only Executive Director (provision B.1.1). Remuneration includes fees paid for non-executive directorships of subsidiary
companies and joint ventures within the Group. The Board does not consider
The Companies Act 2006 requires the auditors to report to the Companys it appropriate to make regular performance-related pay awards such as
members on certain parts of this report and to state whether in their opinion bonuses to the only Executive Director, Mr. J-P Luksic, given his role as
those parts have been properly prepared in accordance with the Companies Chairman of the Board and his interest in the Companys shares both directly
Act 2006. The report has therefore been divided into separate sections for and as a member of the Luksic family. The Group has paid Mr. RF Jara for
unaudited and audited information. advisory services to the Group. The Board has taken these payments into
Financial Review
account in determining his fees as a Non-Executive Director. No Director
currently receives pension contributions.
Unaudited information
Remuneration Committee
Non-Executive Directors fees
Membership
The fees payable to Non-Executive Directors in respect of Antofagasta plc
The Remuneration Committee currently comprises Mr. GS Menndez were as follows:
(Chairman), Mr. CH Bailey and Mr. DE Yarur, all of whom are considered by
2009 2008
the Board to be independent Non-Executive Directors. US$000 US$000
Governance
Responsibilities Base fee 100 100
Audit Committee chairman 20 20
The responsibilities of the Remuneration Committee are fully set out in its
Audit Committee member 10 10
Terms of Reference which are available from the Companys registered office Remuneration Committee chairman 16 16
and may be viewed on the Companys website www.antofagasta.co.uk. Remuneration Committee member 10 10
The Committee is responsible for setting remuneration policy and for Nomination Committee chairman 10 10
reviewing the remuneration of any Executive Directors and, where appropriate, Nomination Committee member 4 4
it consults the Chairman, Mr. J-P Luksic. The Committee used benchmarking
data from various sources, but did not appoint external consultants to advise These fee levels will be unchanged for 2010.
on Directors remuneration during the year. The Remuneration Committee In addition to the above amounts, Non-Executive Directors also receive Financial Statements
isalso responsible for monitoring the level and structure of remuneration fees in their capacity as Non-Executive Directors of the principal operating
ofGroup senior management and evaluating management performance. subsidiary companies and joint ventures within the Group. As some of these
Theremuneration of Non-Executive Directors is determined by the Board as a fees are set in Chilean pesos, the US dollar payments made in respect of
whole. No Director participates in the determination of his own remuneration. such fees may vary depending on the applicable exchange rate from time
totime. These additional fees are included within the amounts attributable
tothe Non-Executive Directors within the table of Directors remuneration
onpage 61.
Other Information
Governance
Remuneration Report
Service contracts and letters of appointment The Directors had no interests in the shares of the Company during the
Mr. J-P Luksic has a contract for services with both the Antofagasta Railway yearother than the interests in the table set out above. No Director had any
Company plc and Antofagasta Minerals S.A. Both contracts for services can material interest in any other contract with the Company or its subsidiary
be terminated by either party on one months notice. There is also a contract undertakings during the year other than in the ordinary course of business.
between Antofagasta Minerals S.A. and Asesoras Ramn F Jara Ltda for the No changes took place in the interests of the Directors between 31
provision of advisory services by Mr. R F Jara which can also be terminated December 2009 and the date of this report.
on one months notice. The amounts payable under these contracts for
services are denominated in Chilean pesos and as is typical for employment
Performance graph
contracts or contracts for services in Chile, are adjusted in line with Chilean
The following graph shows the Companys performance compared to the
inflation, and are also reviewed periodically in line with the Companys policy
performance of the FTSE All Share Index over a five-year period, measured
on Directors pay although no changes were made in 2009 as compared
by total shareholder return (as defined below). The FTSE All Share Index has
with previous years. Amounts paid during 2008 and 2009 have been
been selected as an appropriate benchmark as it is the most broadly based
included in the table of Directors remuneration on page 61.
index to which the Company belongs and which relates to the London Stock
All Non-Executive Directors have letters of appointment with the Company, Exchange, the market where the Companys ordinary shares are traded.
for an initial period of three years from the date of their appointment, subject Total shareholder return is calculated to show a theoretical growth in the
to reappointment at the Annual General Meeting (AGM). These letters value of a shareholding over a specified period, assuming that dividends are
require the Non-Executive Directors to undertake that they will have sufficient reinvested to purchase additional shares at the closing price applicable on
time to discharge their responsibilities. The appointments may be terminated the ex-dividend date. Total shareholder return for the FTSE All-Share Index
by either party on one months notice. The letters of appointment are is calculated by aggregating the returns of all individual constituents of the
available for inspection at the Companys registered office during normal FTSE at the end of the five-year period.
business hours and at the AGM (for 15 minutes prior to and during the
Total Shareholder Return*
meeting). The service contracts and letters of appointment do not provide for Antofagasta plc vs FTSE All Share Index
any compensation for loss of office beyond payments in lieu of notice, and 600%
therefore the maximum amount payable upon termination of these contracts 500%
is limited to one months payment. 400%
300%
200%
Share options and long-term incentive schemes 100%
No arrangements exist to enable Directors to acquire benefits through the 0%
acquisition of shares in the Company or any of its subsidiary undertakings, Jan 2005 Jan 2006 Jan 2007 Jan 2008 Jan 2009 Jan 2010
Antofagasta plc FTSE All Shares
tobenefit through profit-related pay or share option schemes or to participate Total Return Basis Index 1 January 2005 = 100
in any long-term incentive schemes. * Total Shareholder Return represents share price growth plus dividends reinvested over the
period Total Return Basis Index 1 January 2005 = 100
Directors interests Source: Datastream
The Directors interests in the shares of the Company at the beginning and
end of the year were as follows:
Ordinary shares of 5p each
31 December 1 January
2009 2009
J-P Luksic1 41,963,110 41,963,110
CH Bailey 32,000 32,000
1
r. J-P Luksics interest relates to shares held by Aureberg Establishment, an entity which he
M
controls.
Overview
Audited Information
Directors remuneration
The remuneration of the Directors in the year is set out below in US dollars. Amounts paid in Chilean pesos have been translated at average rates for the
relevant year, which are set out in Note 36 to the financial statements.
Base salary and fees Benefits Total remuneration
2009 2008 2009 2008 2009 2008
US$000 US$000 US$000 US$000 US$000 US$000
Executive Chairman
Business Review
J-P Luksic1 3,116 3,154 67 77 3,184 3,231
Non-Executive Directors
CH Bailey 134 131 134 131
GS Menndez 320 327 320 327
RF Jara2 770 767 770 767
DE Yarur 144 142 144 142
GA Luksic 124 122 124 122
JW Ambrus3 123 146 123 146
JG Claro 196 134 196 134
Financial Review
WM Hayes 178 150 178 150
5,105 5,073 67 77 5,172 5,150
1
uring 2009, remuneration of US$1,000,000 (2008 US$981,000) for the provision of services by Mr. J-P Luksic was paid to Goldstream Finance Limited. This amount is included in the
D
amounts attributable to Mr. Luksic of US$3,116,000 (2008 US$3,154,000). The benefits expense represents the provision of car usage to Mr. J-P Luksic.
2
uring 2009, remuneration of US$462,000 (2008 US$467,000) for the provision of services by Mr. RF Jara was paid to Asesoras Ramn F Jara Ltda. This amount is included in the
D
amounts attributable to Mr. Jara of US$770,000 (2008 US$767,000).
3
Mr. JW Ambrus resigned from the Board on 14 October 2009, and the amounts shown above for 2009 represent the fees payable up to this date.
4
r. PJ Adeane retired from the Board in 2006. Following retirement, Mr. PJ Adeane has continued to serve the Board as a Senior Advisor under a contract for services at the rate of 10,000
M
Governance
per annum. This contract can be terminated on one months notice. Mr. Adeane was paid 10,000 (approximately US$15,590) under this contract for services during 2009 (2008 10,000
(approximately US$18,400)).
Approved on behalf of the Board
GS Menndez
Chairman of the Remuneration Committee
8 March 2010
Other Information
Statement of Directors Responsibilities
The Directors are responsible for preparing the Annual Report and the The Directors are responsible for keeping proper accounting records which
financial statements. The Directors are required to prepare financial disclose with reasonable accuracy at any time the financial position of the
statements for the Group in accordance with International Financial Reporting Company, for safeguarding the assets, for taking reasonable steps for the
Standards (IFRS) as adopted by the European Union and have chosen to prevention and detection of fraud and other irregularities and for the
prepare Company financial statements in accordance with United Kingdom preparation of the Directors Report and the Remuneration Report which
Generally Accepted Accounting Principles (UK GAAP). In the case of the comply with the requirements of the Companies Act 2006. The Directors
Groups IFRS financial statements, International Accounting Standard 1 areresponsible for the maintenance and integrity of the Companys website.
requires that financial statements present fairly for each financial year Legislation in the United Kingdom governing the preparation and dissemination
theGroups financial position, financial performance and cash flows. of financial statements differs from legislation in other jurisdictions.
Thisrequires the faithful representation of the effects of transactions,
otherevents and conditions in accordance with the definitions and
recognition criteria for assets, liabilities, income and expenses set out in the Directors Responsibility Statement
International Accounting Standards Boards Framework for the Preparation We confirm to the best of our knowledge:
and Presentation of Financial Statements. In virtually all circumstances, a the Group financial statements have been prepared in accordance with
fairpresentation will be achieved by compliance with all applicable IFRS. International Financial Reporting Standards as adopted by the European
Directors are also required to: Union, and give a true and fair view of the assets, liabilities, financial
properly select and apply accounting policies; position and profit of the Company and the undertakings included in
theconsolidation taken as a whole;
present information, including accounting policies, in a manner that
provides relevant, reliable, comparable and understandable information; the Company financial statements have been prepared in accordance with
and UK GAAP, and give a true and fair view of the assets, liabilities, financial
position and profit of the Company; and
provide additional disclosures when compliance with the specific
requirements in IFRS is insufficient to enable users to understand the the Directors Report, including those sections incorporated therein by
impact of particular transactions, other events and conditions on the reference, includes a fair review of the development and performance
entitys financial position and financial performance. ofthe business and the position of the Company and the undertakings
included in the consolidation taken as a whole, together with a description
In the case of the Companys UK GAAP financial statements, the Directors of the principal risks and uncertainties they face.
are required to prepare financial statements for each financial year which
give a true and fair view of the state of affairs of the Company and of the By order of the Board
profit and loss of the Company for that period. In preparing these financial
statements, the Directors are required to:
select suitable accounting policies and then apply them consistently;
make judgements and estimates that are reasonable and prudent;
J-P Luksic CH Bailey
state whether applicable accounting standards have been followed, Chairman Director
subject to any material departures disclosed and explained in the
financial statements; and 8 March 2010
prepare the financial statements on the going concern basis unless it is
inappropriate to presume that the Company will continue in business.
Independent Auditors Report to the Members of Antofagasta plc
Overview
We have audited the financial statements of Antofagasta plc for the year ended the Parent Company financial statements have been properly prepared in
31 December 2009 which comprise Consolidated Income Statement, the accordance with United Kingdom Generally Accepted Accounting Practice;
Consolidated Statement of Comprehensive Income, the Consolidated and and
Parent Company Balance Sheets, the Consolidated Cash Flow Statement,
the financial statements have been prepared in accordance with the
the Consolidated Statement of Changes in Equity, and the related Notes 1 to requirements of the Companies Act 2006; and, as regards the Group
41. The financial reporting framework that has been applied in the preparation financial statements, Article 4 of the IAS Regulation.
of the Group financial statements is applicable law and International Financial
Reporting Standards (IFRSs) as adopted by the European Union. The financial
Opinion on other matters prescribed by the Companies
Business Review
reporting framework that has been applied in the preparation of the Parent
Company financial statements is applicable law and United Kingdom Accounting Act 2006
Standards (United Kingdom Generally Accepted Accounting Practice). In our opinion:
This report is made solely to the Companys members, as a body, in the part of the Directors Remuneration Report to be audited has been
accordance with Chapter 3 part 16 of the Companies Act 2006. Our audit properly prepared in accordance with the Companies Act 2006; and
work has been undertaken so that we might state to the Companys
members those matters we are required to state to them in an auditors the information given in the Directors Report for the financial year for
report and for no other purpose. To the fullest extent permitted by law, we which the financial statements are prepared is consistent with the
donot accept or assume responsibility to anyone other than the Company financial statements.
Financial Review
and the Companys members as a body, for our audit work, for this report,
orfor the opinions we have formed. Matters on which we are required to report by exception
We have nothing to report in respect of the following:
Respective responsibilities of directors and auditors Under the Companies Act 2006 we are required to report to you if, in our opinion:
As explained more fully in the Directors Responsibilities Statement, the adequate accounting records have not been kept by the Parent Company,
Directors are responsible for the preparation of the financial statements and or returns adequate for our audit have not been received from branches not
for being satisfied that they give a true and fair view. Our responsibility is to visited by us; or
audit the financial statements in accordance with applicable law and International
Governance
Standards on Auditing (UK and Ireland). Those standards require us to comply the Parent Company financial statements and the part of the Directors
with the Auditing Practices Boards (APBs) Ethical Standards for Auditors. Remuneration Report to be audited are not in agreement with the
accounting records and returns; or
certain disclosures of Directors remuneration specified by law are not made; or
Scope of the audit of the financial statements
An audit involves obtaining evidence about the amounts and disclosures we have not received all the information and explanations we require for
inthe financial statements sufficient to give reasonable assurance that the our audit.
financial statements are free from material misstatement, whether caused Under the Listing Rules we are required to review:
byfraud or error. This includes an assessment of: whether the accounting the Directors statement contained within the Financial Review in relation Financial Statements
policies are appropriate to the Groups and the Parent Companys togoing concern; and
circumstances and have been consistently applied and adequately disclosed;
the reasonableness of significant accounting estimates made by the the part of the Corporate Governance Statement relating to the Companys
Directors; and the overall presentation of the financial statements. compliance with the nine provisions of the June 2008 Combined Code
specified for our review.
Opinion on financial statements

In our opinion:
Other Information
the financial statements give a true and fair view of the state of the Groups Carl Hughes (Senior Statutory Auditor)
and of the Parent Companys affairs as at 31 December 2009 and of the for and on behalf of Deloitte LLP
Groups profit for the year then ended; Chartered Accountants and Statutory Auditors
London, United Kingdom
the Group financial statements have been properly prepared in accordance
with IFRSs as adopted by the European Union;
8 March 2010
Consolidated Income Statement

For the year ended 31 December 2009
2009 2008
Notes US$m US$m
Group turnover 4,6 2,962.6 3,372.6
Total operating costs (including 2008 exceptional items*) (1,503.6) (1,846.6)
Operating profit from subsidiaries and joint ventures 4,6 1,459.0 1,526.0
Profit on part-disposal of subsidiaries (2008 exceptional item*) 1,024.9
Share of income from associates 4,6,17 4.5 2.3
Total profit from operations and associates 4,6 1,463.5 2,553.2
Investment income 13.2 78.9
Interest expense (24.0) (13.7)
Other finance items (15.1) (8.9)
Net finance (expense)/income 9 (25.9) 56.3
Profit before tax 6 1,437.6 2,609.5
Income tax expense 10 (317.7) (519.7)
Profit for the financial year 6 1,119.9 2,089.8
Attributable to:
Minority interests 30 452.2 383.3
Equity holders of the Company (net earnings) 11 667.7 1,706.5
US cents US cents
Basic earnings per share 11 67.7 173.1
Dividends to ordinary shareholders of the Company

Per share 12 US cents US cents
Dividends per share proposed in relation to the year
ordinary dividend (interim) 3.4 3.4
ordinary dividend (final) 6.0 5.6
special dividend (interim) 3.0
special dividend (final) 14.0 48.0
23.4 60.0
Dividends per share paid in the year and deducted from net equity
ordinary dividend (interim) 3.4 3.4
ordinary dividend (final) 5.6 5.4
special dividend (interim) 3.0
special dividend (final) 48.0 38.0
57.0 49.8
In aggregate 12 US$m US$m

Dividends proposed in relation to the year 230.7 591.5
Dividends paid in the year and deducted from net equity 561.9 491.0
Turnover and operating profit are derived from continuing operations.

There was no potential dilution of earnings per share in either year set out above, and therefore diluted earnings per share did not differ from basic earnings per share as disclosed above.
* T here were no exceptional items in the year ended 31 December 2009. Exceptional items included in the consolidated income statement in respect of 2008 comprise: (i) an impairment charge
of US$188.3 million relating to property, plant and equipment at El Tesoro and Michilla, which has been recorded within Total operating costs and (ii) a profit of US$1,024.9 million relating to
the sale of a 30% interest in Esperanza and El Tesoro to Marubeni Corporation, which has been recorded within Profit on part-disposal of subsidiaries. Excluding these items, operating profit
from subsidiaries and joint ventures is US$1,714.3 million and profit before tax is US$1,772.9 million. Further details of these exceptional items are set out in Note 5.
Consolidated Statement of Comprehensive Income

Overview
2009 2008
Notes US$m US$m
Profit for the financial year 6 1,119.9 2,089.8
(Losses)/gains in fair value of cash flow hedges deferred in reserves 25 (177.9) 82.6
Gains/(losses) in fair value of available for sale investment 19 0.5 (2.6)
Currency translation adjustment 29 46.2 (41.8)
Deferred tax effects arising on cash flow hedges deferred in reserves 25 34.0 (14.1)
Total (expense)/income recognised in equity (97.2) 24.1
Business Review
Gains in fair value of cash flow hedges transferred to the balance sheet 25 (22.0)
Losses/(gains) in fair value of cash flow hedges transferred to the income statement 25 65.8 (30.0)
Deferred tax effects arising on cash flow hedges transferred to the income statement 25 (11.2) 5.1
Total transferred to the income statement 32.6 (24.9)
Total comprehensive income for the year 1,055.3 2,089.0
Attributable to:
Minority interests 30 421.6 396.2
Equity holders of the Company 11 633.7 1,692.8
Financial Review
Consolidated Statement of Changes in Equity
Governance
Share Share Hedging Fair value Translation Retained Net Minority
capital premium reserves reserves reserves earnings equity interests Total
US$m US$m US$m US$m US$m US$m US$m US$m US$m
At 1 January 2008 89.8 199.2 (0.2) (0.5) 25.8 3,750.9 4,065.0 841.5 4,906.5
Total comprehensive income for the year 30.7 (2.6) (41.8) 1,706.5 1,692.8 396.2 2,089.0
Capital increase from minority interest 57.7 57.7
Part-disposal of subsidiaries 366.0 366.0
Dividends (491.0) (491.0) (495.6) (986.6)
At 31 December 2008
and 1 January 2009 89.8 199.2 30.5 (3.1) (16.0) 4,966.4 5,266.8 1,165.8 6,432.6
Total comprehensive income for the year (80.6) 0.5 46.1 667.7 633.7 421.6 1,055.3
Acquisition of minority interest 1.4 1.4
Dividends (561.9) (561.9) (310.0) (871.9)
At 31 December 2009 89.8 199.2 (50.1) (2.6) 30.1 5,072.2 5,338.6 1,278.8 6,617.4
Other Information
Consolidated Balance Sheet

At 31 December 2009
2009 2008
Notes US$m US$m
Non-current assets
Intangible assets 13 311.2 233.6
Property, plant and equipment 14 4,873.2 3,679.7
Investment property 15 3.4 2.7
Investment in associate 17 121.3 3.0
Trade and other receivables 21 36.6 34.1
Available for sale investments 19 1.2 0.7
Deferred tax assets 27 31.1 12.7
5,378.0 3,966.5
Current assets
Inventories 20 240.1 155.9
Trade and other receivables 21 608.6 313.8
Current tax assets 59.8 109.0
Derivative financial instruments 25 1.7 51.7
Cash and cash equivalents 22 3,222.3 3,358.0
4,132.5 3,988.4
Total assets 9,510.5 7,954.9
Current liabilities
Short-term borrowings 23 (431.8) (319.0)
Derivative financial instruments 25 (81.2) (1.4)
Trade and other payables 24 (437.6) (594.4)
Current tax liabilities (45.0) (59.9)
(995.6) (974.7)
Non-current liabilities
Medium and long-term borrowings 23 (1,194.8) (119.9)
Derivative financial instruments 25 (4.5)
Trade and other payables 24 (12.3) (12.6)
Post-employment benefit obligations 26 (48.2) (29.0)
Long-term provisions 28 (127.9) (18.0)
Deferred tax liabilities 27 (509.8) (368.1)
(1,897.5) (547.6)
Total liabilities (2,893.1) (1,522.3)
Net assets 6,617.4 6,432.6
Equity
Share capital 29 89.8 89.8
Share premium 29 199.2 199.2
Hedging, translation and fair value reserves 29 (22.6) 11.4
Retained earnings 29 5,072.2 4,966.4
Equity attributable to equity holders of the Company 5,338.6 5,266.8
Minority interests 30 1,278.8 1,165.8
Total equity 6,617.4 6,432.6
Approved by the Board and signed on its behalf on 8 March 2010.

Chairman Director
Consolidated Cash Flow Statement

For year ended 31 December 2009
Overview
2009 2008
Notes US$m US$m
Cash flows from operations 33 1,167.8 2,454.3
Interest paid (27.0) (12.5)
Dividends from associate 17 0.7 1.8
Income tax paid (135.2) (561.4)
Net cash from operating activities 1,006.3 1,882.2
Investing activities
Business Review
Acquisition of and capital contributions to associates 31 (114.5)
Disposal and part-disposal of subsidiaries 1,401.2
Acquisition of minority interest in subsidiary 31 (25.0) (243.1)
Recovery of Chilean VAT paid on purchase of water concession 5.3
Purchases of property, plant and equipment (1,323.6) (1,135.0)
Purchases of intangible assets (52.5) (10.7)
Interest received 15.8 78.8
Net cash (used in)/generated from investing activities (1,499.8) 96.5
Financing activities
Financial Review
Dividends paid to equity holders of the Company 12 (561.9) (491.0)
Dividends paid to preference shareholders of the Company 12 (0.2) (0.2)
Dividends paid to minority interests (310.0) (495.6)
Capital increase from minority interest 57.7
Net proceeds from issue of new borrowings 33 2,051.6 229.5
Repayments of borrowings 33 (863.6) (99.7)
Repayments of obligations under finance leases 33 (10.9) (9.8)
Net cash generated from/(used in) financing activities 305.0 (809.1)
Governance
Net (decrease)/increase in cash and cash equivalents (188.5) 1,169.6
Cash and cash equivalents at beginning of the year 3,358.0 2,212.5
Net (decrease)/increase in cash and cash equivalents (188.5) 1,169.6
Effect of foreign exchange rate changes 52.8 (24.1)
Cash and cash equivalents at end of the year 22,33 3,222.3 3,358.0
Other Information
Notes to the Financial Statements
1 Basis of Preparation IAS 38 (amended 2008) Intangible Assets

a) Accounting standards applied IAS 39 (amended) Financial Instruments: Recognition and Measurement eligible
hedgeditems
The financial statements have been prepared in accordance with International Financial
Reporting Standards (IFRS) and with those parts of the Companies Act 2006 applicable IAS 40 (amended 2008) Investment Property
tocompanies reporting under IFRS. For these purposes, IFRS comprise the Standards issued IFRIC 13 Customer Loyalty Programmes
by the International Accounting Standards Board (IASB) and Interpretations issued by the IFRIC 15 Agreements for the Construction of Real Estate
International Financial Reporting Interpretations Committee (IFRIC) that have been endorsed
IFRIC 16 Hedges of a Net Investment in a Foreign Operation
by the European Union (EU).
IFRIC 18 Transfers of Assets from Customers
The financial statements have been prepared on the going concern basis. Details of the factors
which have been taken into account in assessing the Groups going concern status are set out
on page 49 of the Financial Review. 2 Principal Accounting Policies
At the date of authorisation of these financial statements, the following Standards and a) Accounting convention
Interpretations which have not been applied in these financial statements were in issue but These financial statements have been prepared under the historical cost convention
notyet effective: asmodified by the use of fair values to measure certain financial instruments, principally
Improvements to IFRSs (April 2009) provisionally priced sales as explained in Note 2(d) and financial derivative contracts as
IFRS 3 (revised 2008) Business Combinations explained in Note 2(s).
IAS 27 (revised 2008) Consolidated and Separate Financial Statements b) Basis of consolidation
IAS 28 (revised 2008) Investments in Associates The financial statements comprise the consolidated financial statements of Antofagasta plc
IFRIC 17 Distributions of Non-cash Assets to Owners (the Company) and its subsidiaries (collectively the Group).
The Directors anticipate that the adoption of these Standards and Interpretations in future (i) Subsidiaries A subsidiary is an entity over which the Group has power to govern
periods will have no material impact on the financial statements of the Group except for: theoperating and financial policies in order to obtain benefits from its activities.
Theconsolidated financial statements include all the assets, liabilities, revenues,
IFRS 3 (revised 2008) Business Combinations. This standard will affect the treatment of
expensesand cash flows of the Company and its subsidiaries after eliminating
business combinations which take place in periods commencing on or after 1 July 2009,
inter-company balances and transactions. For partly-owned subsidiaries, the net assets
when the revised standard comes into effect.
and net earnings attributable to minority shareholders are presented as Minority Interests
IAS 27 (revised 2008) Consolidated and Separate Financial Statements. This standard will in the consolidated balance sheet and consolidated income statement.
affect the accounting for transactions or events that result in a change in the Groups
(ii) Associates An associate is an entity over which the Group is in a position to exercise
interests in its subsidiaries.
significant influence, but not control or jointly control, through the power to participate
b) Adoption of new accounting standards inthe financial and operating policy decisions of that entity. The Groups share of the net
assets, the results post tax and post acquisition reserves of associates are included in the
In the current financial year the Group has adopted the following standards that have affected
financial statements. This requires recording the investment initially at cost to the Group
the presentation and disclosure in these financial statements:
and then, in subsequent periods, adjusting the carrying amount of the investment to reflect
IFRS 8 Operating Segments. In the current year the Group has adopted IFRS 8. The standard the Groups share of the associates results less any impairment of goodwill and any other
requires operating segments to be identified on the basis of internal reports about changes to the associates net assets such as dividends.
components of the Group that are regularly reviewed by the Antofagasta plc board to allocate
(iii) Jointly controlled entities A jointly controlled entity is an entity in which the Group
resources to the segments and to assess their performance. The adoption of IFRS 8 has not
holds a long-term interest and shares joint control over the operating and financial
resulted in any changes to segments previously disclosed, but has resulted in further
decisions with one or more other venturers under a contractual arrangement.
disclosures on each of these segments and these are set out in Note 4.
Jointly controlled entities are accounted for using proportionate consolidation, which
IAS 1 (Revised) Presentation of Financial Statements. In the current year the Group has
combines the Groups share of the results of the jointly controlled entity on a line by line
adopted IAS 1 (revised), which separates owner and non-owner changes in equity.
basis with similar items in the Groups financial statements.
Thestatement of changes in equity details transactions with owners, with all non-owner
changes in equity presented as a single line. In addition, the Standard introduces a statement (iv) Other investments The accounting treatment of investments which are not subsidiaries,
of comprehensive income, which presents all items of income and expense which are not associates or jointly controlled entities is set out in Note 2(s) relating to other financial
recognised in the income statement. instruments.
The following standards and interpretations are effective but have not had any significant (v) Acquisitions and disposals Acquisitions and disposals are treated as explained in
impact on the financial statements: Note2(e) relating to business combinations and goodwill.
IFRS 1 (amended)/IAS 27 (amended) Cost of an Investment in a Subsidiary, Jointly c) Currency translation
Controlled Entity or Associate
The functional currency for each entity in the Group is determined as the currency of the
IFRS 2 (amended) Share-based Payment Vesting Conditions and Cancellations primary economic environment in which it operates. Transactions other than those in the
IFRS 7 (amended) Financial Instruments: Disclosures functional currency of the entity are translated at the exchange rate ruling at the date of the
transaction. Monetary assets and liabilities denominated in currencies other than the functional
IAS 20 (amended 2008) Accounting for Governments and Disclosure of Government
currency are retranslated at year end exchange rates. Gains and losses on retranslation are
Assistance
included in net profit or loss for the period within other finance items.
IAS 23 (revised) Borrowing Costs
The presentational currency of the Group and the functional currency of the Company is the
IAS 32 (amended)/IAS 1 (amended) Puttable Financial Instruments and Obligations USdollar. On consolidation, income statement items for entities with a functional currency
Arisingon Liquidation other than the US dollar are translated into US dollars at average rates of exchange. Balance
sheet items are translated at period end exchange rates. Exchange differences on translation f) Intangible assets
ofthe net assets of such entities are taken to equity and recorded in a separate currency (i) Concession right In 2003, the Groups wholly owned subsidiary, Aguas de Antofagasta
translation reserve. Cumulative translation differences arising after the transition date to IFRS S.A., was awarded a 30-year concession to operate the water rights and facilities in the
are recognised as income or as expenses in the income statement in the period in which an Antofagasta Region of Chile previously controlled by Empresa Concesionaria de Servicios
operation is disposed. Sanitarios S.A. (ECONSSA).
On consolidation, exchange gains and losses which arise on balances between Group All infrastructure assets relating to the Water concession are recorded within intangible
entitiesare taken to reserves where that balance is, in substance, part of the net investment assets, as part of the concession right. The concession right also includes an amount
ina foreign operation, i.e. where settlement is neither planned nor likely to occur in the recognised in respect of the right to use those assets not recognised as their lives extend
foreseeable future. All other exchange gains and losses on Group balances are dealt with substantially beyond the period of the concession. The concession right is measured as
intheincome statement.
Overview
thedifference between the cost of the concession and the fair values of the assets and
Fair value adjustments and any goodwill arising on the acquisition of a foreign entity are treated liabilities recognised on acquisition plus the fair value of any further assets transferred
as assets of the foreign entity and translated at the period end rate. tothe Group by way of concession subsequent to acquisition.
d) Revenue recognition (ii) Exploration licences In 2006, the Group acquired Tethyan Copper Company Limited
(Tethyan), a company with copper-gold interests in Pakistan, and entered into a joint
Turnover represents the value of goods and services supplied to third parties during the year.
venture over Tethyans mineral interests with Barrick Gold Corporation through the disposal
Turnover is measured at the fair value of consideration received or receivable, and excludes
of a 50% interest in Tethyan. An intangible asset has been recognised for the Groups
any applicable sales tax.
proportionate share of the full unencumbered value attributed to the interest in the
A sale is recognised when the significant risks and rewards of ownership have passed. This is exploration licences held by Tethyan in Pakistan, along with related rights acquired
generally when title and any insurance risk has passed to the customer, and the goods have subsequently. In addition, the intangible asset balance also includes amounts relating
been delivered to a contractually agreed location or when any services have been provided. tointerests in other prospecting licences.
Business Review
Turnover from mining activities is recorded at the invoiced amounts with an adjustment for
g) Exploration and evaluation expenditure
provisional pricing at each reporting date, as explained below. For copper and molybdenum
concentrates, which are sold to smelters and roasting plants for further processing, the Exploration and evaluation are expensed in the year in which it is incurred. When a decision
invoiced amount is the market value of the metal payable by the customer, net of deductions istaken that a mining project is commercially viable (normally when the project has reached
for tolling charges. Turnover includes revenues from the sale of by-products. thepre-feasibility stage) all further directly attributable pre-production expenditure
iscapitalised. Capitalisation of pre-production expenditure ceases when commercial levels
Copper and molybdenum concentrate sale agreements and copper cathode sale agreements
ofproduction are achieved.
generally provide for provisional pricing of sales at the time of shipment, with final pricing based
on the monthly average London Metal Exchange (LME) copper price or the monthly average h) Property, plant and equipment
market molybdenum price for specified future periods. This normally ranges from 30 to 180 The costs of mining properties and leases, which include the costs of acquiring and developing
days after delivery to the customer. Such a provisional sale contains an embedded derivative
Financial Review
mining properties and mineral rights, are capitalised as property, plant and equipment in the
which is required to be separated from the host contract. The host contract is the sale of year in which they are incurred.
metals contained in the concentrate or cathode at the provisional invoice price less tolling
The cost of plant, property and equipment comprises the purchase price and any costs directly
charges deducted, and the embedded derivative is the forward contract for which the
attributable to bringing the asset to the location and condition necessary for it to be capable of
provisional sale is subsequently adjusted. At each reporting date, the provisionally priced metal
operating in the manner intended. Once a project has been established as commercially viable,
sales together with any related tolling charges are marked-to-market, with adjustments (both
related development expenditure is capitalised. This includes costs incurred in preparing the
gains and losses) being recorded in turnover in the consolidated income statement and in trade
site for mining operations, including pre-stripping costs. Capitalisation ceases when the mine
debtors in the balance sheet. Forward prices at the period end are used for copper concentrate
is capable of commercial production, with the exception of development costs which give rise
and cathode sales, while period-end average prices are used for molybdenum concentrate
to a future benefit.
sales due to the absence of a futures market.
Interest on borrowings directly related to construction or development of projects is capitalised,
Interest income is accrued on a time basis, by reference to the principal outstanding and the
Governance
until such time as the assets are substantially ready for their intended use or sale which, in the
effective interest rate applicable, which is the rate that exactly discounts estimated future cash
case of mining properties, is when they are capable of commercial production.
receipts through the expected life of the financial asset to that assets net carrying amount.
Dividend income from investments is recognised when the shareholders right to receive i) Depreciation of property, plant and equipment and amortisation of intangible
payment has been established. assets
Property, plant and equipment is depreciated over its useful life, or over the remaining life
e) Business combinations and goodwill
oftheoperation if shorter, to residual value. The major categories of property, plant and
(i) Acquisitions The results of businesses acquired during the year are brought into the equipment are depreciated as follows:
consolidated financial statements from the effective date of acquisition. The identifiable
(i) Land Freehold land is not depreciated. Any leasehold land is depreciated on a
assets, liabilities and contingent liabilities of a subsidiary, joint venture entity or an associate
straight-line basis over the life of the lease.
which can be measured reliably are recorded at their provisional fair values at the date of
acquisition. Provisional fair values are finalised within 12 months of the acquisition date. (ii) Mining properties mining properties, including capitalised financing costs, are Financial Statements
depreciated on a unit of production basis, in proportion to the volume of ore extracted in
(ii) Goodwill Goodwill represents the difference between the cost of acquisition and the fair
the year compared with total proven and probable reserves at the beginning of the year.
value of the identifiable net assets acquired. Any goodwill on the acquisition of subsidiaries
isseparately disclosed, while any goodwill on the acquisition of associates is included within (iii) Buildings and infrastructure straight-line basis over 10 to 25 years.
investments in equity accounted entities. Internally generated goodwill is not recognised. (iv) Railway track (including trackside equipment) straight-line basis over 20 to
Where the fair values of the identifiable net assets acquired exceed the cost of the 25years.
acquisition, the surplus (which represents the discount on the acquisition) is credited to (v) Wagons and rolling stock straight-line basis over 10 to 20 years.
theincome statement in the period of acquisition.
(vi) Machinery, equipment and other assets straight-line basis over 5 to 10 years.
(iii) Disposals The results of businesses sold during the year are included in the
(vii) Assets under construction no depreciation until asset is available for use.
consolidated financial statements for the period up to the effective date of disposal.
Other Information
Gainsor losses on disposal are calculated as the difference between the sales proceeds (viii) Assets held under finance lease are depreciated over the shorter of the lease term
(netofexpenses) and the net assets attributable to the interest which has been sold. and their useful life.
Whereadisposal represents a separate major line of business or geographical area of Residual values and useful lives are reviewed, and adjusted if appropriate, at least annually,
operations,the net results attributable to the disposed entity are shown separately in and changes to residual values and useful lives are accounted for prospectively.
theincome statement. The concession right is amortised on a straight-line basis over the life of the concession,
ortheuseful life of any component part if less.
Notes to the Financial Statements continued
2 Principal Accounting Policies continued accounted for using the balance sheet liability method and is provided on all temporary
differences with certain limited exceptions as follows:
j) Impairment of property, plant and equipment and intangible assets (excluding
goodwill) (i) tax payable on undistributed earnings of subsidiaries, associates and joint ventures is
provided except where the Group is able to control the remittance of profits and it is
Property, plant and equipment and finite life intangible assets are reviewed for impairment if
probable that there will be no remittance of past profits earned in the foreseeable future;
there is any indication that the carrying amount may not be recoverable. If any such indication
exists, the recoverable amount of the asset is estimated in order to determine the extent of the (ii) deferred tax is not provided on the initial recognition of an asset or liability in a transaction
impairment (if any). Where the asset does not generate cash flows that are independent from that does not affect accounting profit or taxable profit and is not a business combination;
other assets, the Group estimates the recoverable amount of the cash-generating unit to which nor is deferred tax provided on subsequent changes in the carrying value of such assets
the asset belongs. Any intangible asset with an indefinite useful life is tested for impairment and liabilities, for example where they are depreciated; and
annually and whenever there is an indication that the asset may be impaired. (iii) the initial recognition of any goodwill.
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing Deferred tax assets are recognised only to the extent that it is probable that they will be
value in use, the estimated future cash flows are discounted to their present value, using a recovered through sufficient future taxable profit. The carrying amount of deferred tax assets
pre-tax discount rate that reflects current market assessments of the time value of money and isreviewed at each balance sheet date.
the risks specific to the asset for which estimates of future cash flows have not been adjusted. Deferred tax is calculated at the tax rates that are expected to apply in the period when the
For mining properties, estimates of future cash flows are based on assumptions as to expected liability is settled or the asset is realised. Deferred tax is charged or credited in the income
production levels, commodity prices, cash costs of production and capital expenditure. IAS 36 statement, except when it relates to items charged or credited directly to equity, in which
Impairment of Assets includes a number of restrictions on the future cash flows that can be casethe deferred tax is also taken directly to equity.
recognised in respect of future restructurings and improvement related expenditure. When
n) Provisions for decommissioning and site restoration costs
calculating value in use, it also requires that calculations should be based on exchange rates
current at the time of assessment. For operations with a functional currency other than the US An obligation to incur decommissioning and site rehabilitation costs occurs when
dollar, the impairment review is conducted in the relevant functional currency. environmental disturbance is caused by the development or ongoing production of a mining
property. Costs are estimated on the basis of a formal closure plan and are subject to regular
If the recoverable amount of an asset or cash-generating unit is estimated to be less than its
formal review.
carrying amount, the carrying amount is reduced to the recoverable amount. An impairment
charge is recognised in the income statement immediately. Where an impairment subsequently Such costs arising from the installation of plant and other site preparation work, discounted to
reverses, the carrying amount is increased to the revised estimate of recoverable amount, but their net present value, are provided and capitalised at the start of each project, as soon as the
so that the increased carrying amount does not exceed the carrying value that would have obligation to incur such costs arises. These decommissioning costs are charged against profits
been determined if no impairment had previously been recognised. A reversal is recognised over the life of the mine, through depreciation of the asset and unwinding or amortisation of the
inthe income statement immediately. discount on the provision. Depreciation is included in operating costs while the unwinding of
the discount is included as financing costs. Changes in the measurement of a liability relating
k) Investment property to the decommissioning of plant or other site preparation work are added to, or deducted from,
Investment property is property held to earn rentals and/or for capital appreciation and includes the cost of the related asset in the current period.
land held for a currently undetermined future use. The Group has elected to adopt the cost The costs for restoration of site damage, which is created on an ongoing basis during
model in IAS 40 Investment Property. Accordingly, investment property is measured initially production, are provided for at their net present values and charged against operating profits
at cost, which includes transaction costs for the acquisition of the property and, as detailed in asextraction progresses. Changes in the measurement of a liability relating to site damage
Note 2(i) relating to property, plant and equipment, is not depreciated. created during production is charged against operating profit.
l) Inventory o) Provision for termination of Water concession
Inventory and work-in-progress are valued at the lower of cost and net realisable value. Under the terms of the Water concession from ECONSSA, certain items of working capital
Netrealisable value represents estimated selling price less all estimated costs of completion recognised by Aguas de Antofagasta (as described in Note 2(f) above) are to be transferred to
and costs to be incurred in marketing, selling and distribution. The production cost of inventory the state-owned operator ECONSSA at the end of the concession period for nil consideration.
includes an appropriate proportion of depreciation and production overheads. Raw materials Provision is made for the estimated net present value of these assets and liabilities which are
and consumables are valued at cost on a weighted average basis. Finished products are valued expected to be in existence when the concession comes to an end. The unwinding of the
at raw material cost, plus labour cost and a proportion of manufacturing overhead expenses discount is charged within financing costs.
including depreciation.
p) Post-employment benefits
m) Taxation
The Group operates defined contribution schemes for a limited number of employees.
Tax expense comprises the charges or credits for the period relating to both current and Forsuchschemes, the amount charged to the income statement is the contributions paid
deferred tax. orpayable in the year.
Current tax is based on taxable profit for the year. Taxable profit may differ from net profit Employment terms may also provide for payment of a severance indemnity when an
asreported in the income statement because it excludes items of income or expense that employment contract comes to an end. This is typically at the rate of one month for each year
aretaxable and deductible in different years and also excludes items that are not taxable of service (subject in most cases to a cap as to the number of qualifying years of service) and
ordeductible. The liability for current tax is calculated using tax rates for each entity in the based on final salary level. The severance indemnity obligation is treated as an unfunded
consolidated financial statements which have been enacted or substantively enacted at defined benefit plan, and the calculation is based on valuations performed by an independent
thebalance sheet date. actuary using the projected unit credit method which are regularly updated. The obligation
Deferred tax is the tax expected to be payable or recoverable on temporary differences (i.e. recognised in the balance sheet represents the present value of the severance indemnity
differences between the carrying amount of assets and liabilities in the financial statements obligation. Actuarial gains and losses are immediately recognised in the income statement
and the corresponding tax basis used in the computation of taxable profit). Deferred tax is within operating cost.
q) Cash and cash equivalents (vi) Derivative financial instruments As explained in Note 25(e), the Group uses
Cash and cash equivalents comprise cash on hand, deposits held on call with banks, highly derivative financial instruments to reduce exposure to foreign exchange, interest rate and
liquid investments that are readily convertible into known amounts of cash and which are commodity price movements. The Group does not use such derivative instruments for
subject to insignificant risk of changes in value, net of bank overdrafts which are repayable on trading purposes.
demand. Cash and cash equivalents normally have a maturity period of three months or less. The Group applies the hedge accounting provisions and changes in the fair value of
derivative financial instruments that are designated and effective as hedges of future cash
r) Leases
flows are recognised directly in equity, with such amounts subsequently recognised in the
Rental costs under operating leases are charged to the income statement account in equal income statement in the period when the hedged item affects profit or loss. Any ineffective
annual amounts over the term of the lease. portion is recognised immediately in the income statement. Realised gains and losses on
Assets under finance leases are recognised as assets of the Group at inception of the lease commodity derivatives recognised in the income statement are recorded within turnover.
Overview
atthe lower of fair value or the present value of the minimum lease payments derived by The time value element of changes in the fair value of derivative options is excluded from
discounting at the interest rate implicit in the lease. The interest element is charged within the designated hedging relationship, and is therefore recognised directly in the income
financing costs so as to produce a constant periodic rate of interest on the remaining balance statement within other finance items.
of the liability.
Derivatives embedded in other financial instruments or other host contracts are treated as
s) Other financial instruments separate derivatives when their risks and characteristics are not closely related to those of
host contracts and the host contracts are not carried at fair value. Changes in fair value are
Financial assets and financial liabilities are recognised on the Groups balance sheet when
reported in the income statement for the period. The treatment of embedded derivatives
theGroup becomes a party to the contractual provisions of the instrument.
arising from provisionally-priced commodity sales contracts is set out in further detail in
(i) Investments Investments which are not subsidiaries, associates or joint ventures are Note 2(d) relating to turnover.
initially measured at cost, including transaction costs.
Business Review
(vii) Impairment of financial assets Financial assets, other than those at fair value through
Investments are classified as either held for trading or available for sale, and are normally profit or loss, are assessed for indicators of impairment at each balance sheet date.
measured at subsequent reporting dates at fair value. Fair value is determined in the Financial assets are impaired where there is objective evidence that as a result of one or
manner described in Note 25(b). Investments in equity instruments that do not have a more events that occurred after the initial recognition of the financial asset the estimated
quoted market price in an active market and whose fair value cannot be reliably measured future cash flows of the investment have been impacted. For loans and receivables the
are measured at cost. amount of the impairment is the difference between the assets carrying value and the
Securities are classified as held-for-trading when they are acquired principally for the present value of estimated future cash flows, discounted at the original effective interest
purpose of sale in the short term, and gains and losses arising from changes in fair value rate. Any impairment loss is recognised in the income statement immediately.
are included in the income statement for the period. Other investments are classified as The carrying amount of the financial asset is reduced by the impairment loss directly for
available-for-sale, and gains and losses arising from changes in fair value are recognised allfinancial assets with the exception of trade receivables.
directly in equity, within the Fair value reserve, until the security is disposed of or is
Financial Review
With the exception of available-for-sale equity instruments, if, in a subsequent period,
determined to be impaired, at which time the cumulative gain or loss previously recognised
theamount of the impairment loss decreases and the decrease can be related objectively
in equity is included in the income statement for the period.
to anevent occurring after the impairment was recognised, the previously recognised
Dividends on available-for-sale equity investments are recognised in the income statement impairment loss is reversed through the income statement immediately to the extent that
when the right to receive payment is established. the carrying amount of the investment at the date the impairment is reversed does not
(ii) Trade and other receivables Trade and other receivables do not generally carry any exceed what the amortised cost would have been had the impairment not been
interest and are normally stated at their nominal value less any impairment. Impairment recognised. In respect of available-for-sale equity instruments, any increase in fair value
losses on trade receivables are recognised within an allowance account unless the Group subsequent to an impairment loss is recognised directly in equity.
considers that no recovery of the amount is possible, in which case the carrying value of
the asset is reduced directly.
Governance
(iii) Trade and other payables Trade and other payables are generally not interest bearing
and are normally stated at their nominal value.
(iv) Borrowings (loans and preference shares) Interest-bearing loans and bank
overdrafts are initially recorded at the proceeds received, net of direct issue costs. They are
subsequently measured at amortised cost using the effective interest method, with interest
expense recognised on an effective yield basis. The effective interest method is a method
of calculating the amortised cost of a financial liability and of allocating interest expense
over the relevant period. The effective interest rate is the rate that exactly discounts
estimated future cash payments through the expected life of the financial liability,
or,whereappropriate, a shorter period.
Finance charges, including premiums payable on settlement or redemption and direct Financial Statements
issue costs, are accounted for on an accruals basis using the effective interest rate
method. Amounts are either recorded as financing costs in the income statement or
capitalised in accordance with the accounting policy set out in Note 2(h). Finance charges
are added to the carrying amount of the instrument to the extent that they are not settled
inthe period in which they arise.
The sterling-denominated preference shares issued by the Company carry a fixed rate of
return without the right to participate in any surplus. They are accordingly classified within
borrowings and translated into US dollars at period end rates of exchange. Preference
share dividends are included within finance costs.
Other Information
(v) Equity instruments Equity instruments issued are recorded at the proceeds received,
net of direct issue costs. Equity instruments of the Company comprise its sterling-
denominated issued ordinary share capital and related share premium.
As explained in Note 2(c), the presentational currency of the Group and the functional
currency of the Company is US dollars, and ordinary share capital and share premium are
translated into US dollars at historical rates of exchange based on dates of issue.
3 Critical Accounting Judgements and Key Sources of Estimation c) Provisions for decommissioning and site restoration costs
Uncertainty As explained in Note 2(n), provision is made, based on net present values, for decommissioning
Determining many of the amounts included in the financial statements involves the use of and site rehabilitation costs as soon as the obligation arises following the development or
judgement and/or estimation. These judgements and estimates are based on managements ongoing production of a mining property. The provision is based on a closure plan prepared
best knowledge of the relevant facts and circumstances having regard to prior experience, but with the assistance of external consultants.
actual results may differ from the amounts included in the financial statements. Information Management uses its judgement and experience to provide for and (in the case of capitalised
about such judgements and estimates is included in the principal accounting policies in Note 2 decommissioning costs) amortise these estimated costs over the life of the mine. The ultimate
or the other notes to the financial statements, and the key areas are set out below. cost of decommissioning and site rehabilitation cost is uncertain and cost estimates can vary
a) Useful economic lives of property, plant and equipment and ore reserves in response to many factors including changes to relevant legal requirements, the emergence
estimates of new restoration techniques or experience at other mine sites.
As explained in Note 2(i), mining properties, including capitalised financing costs, are The expected timing and extent of expenditure can also change, for example in response
depreciated in proportion to the volume of ore extracted in the year compared with total proven tochanges in ore reserves or processing levels. As a result, there could be significant
and probable reserves at the beginning of the year. adjustments to the provisions established which would affect future financial results.
There are numerous uncertainties inherent in estimating ore reserves, and assumptions that d) Post employment benefits
were valid at the time of estimation may change when new information becomes available. As explained in Note 2(p), the expected costs of severance indemnities relating to
These include assumptions as to grade estimates and cut-off grades, recovery rates, employeeservice during the period are charged to the income statement. Any actuarial
commodity prices, exchange rates, production costs, capital costs, processing and gainsor losses, which can arise from differences between expected and actual outcomes
reclamation costs and discount rates. The actual volume of ore extracted and any changes orchanges in actuarial assumptions, are recognised immediately within operating costs
inthese assumptions could affect prospective depreciation rates and carrying values. intheincome statement.
The majority of other items of property, plant and equipment are depreciated on a straight-line Assumptions in respect of the expected costs are set in consultation with an independent
basis over their useful economic lives. Management reviews the appropriateness of useful actuary. These include the selection of the discount rate used, service lives and expected
economic lives at least annually and, again, any changes could affect prospective depreciation ratesof salary increases. While management believes the assumptions used are appropriate,
rates and asset carrying values. a change in the assumptions used would impact the earnings of the Group.
b) Impairment of assets e) Deferred taxation
As explained in Note 2(j), the Group reviews the carrying value of its intangible assets and As explained in Note 2(m), deferred tax is not provided for future tax payable on undistributed
property, plant and equipment to determine whether there is any indication that those assets earnings where the Group is able to control the remittance of profits and it is probable that
are impaired. In making assessments for impairment, assets that do not generate independent there will be no remittance of past profits earned in the foreseeable future.
cash flows are allocated to an appropriate cash generating unit (CGU). The recoverable
Management uses its judgement in estimating the probability of such remittances. These are
amount of those assets, or CGU, is measured at the higher of their fair value less costs to sell
based on Group forecasts and include assumptions as to future profits and cash flows (which
and value in use.
depend on several factors including commodity prices, operating costs, production levels,
Management necessarily applies its judgement in allocating assets to CGUs, in estimating capital expenditures, interest costs, debt repayment and tax rates) and cash requirements
theprobability, timing and value of underlying cash flows and in selecting appropriate discount (which may also depend on several factors including future dividend levels). A change in the
rates to be applied within the value in use calculation. The key assumptions are set out in Note assumptions used or in the estimate as to the probability that past profits will be remitted
2(j) and Note 5. Subsequent changes to CGU allocation or estimates and assumptions in the would impact the deferred tax charge and balance sheet provision.
value in use calculation could impact the carrying value of the respective assets.
4 Revenue and Total Profit from Operations and Associates

An analysis of the Groups total revenue is as follows:
2009 2008
US$m US$m
Sales of goods 2,827.8 3,229.0
Rendering of services 134.8 143.6
Group turnover 2,962.6 3,372.6
Other operating income 10.0 9.8
Investment income 13.2 78.9
Overview
Total revenue 2,985.8 3,461.3
Operating profit from subsidiaries and joint ventures and total profit from operations and associates is derived from Group turnover by deducting operating costs as follows:
2009 2008
Notes US$m US$m
Turnover 2,962.6 3,372.6
Cost of sales (including 2008 exceptional items) (i) (1,166.8) (1,496.8)
Gross profit 1,795.8 1,875.8
Administrative and distribution expenses (244.2) (274.1)
Business Review
Closure provision (2.2) (5.0)
Severance charges (13.3) (10.6)
Exploration and evaluation expenditure (67.1) (54.9)
Other operating income 10.0 9.8
Other operating expenses (20.0) (15.0)
Operating profit from subsidiaries and joint ventures 1,459.0 1,526.0
Profit on part-disposal of subsidiaries (2008 exceptional item) (ii) 1,024.9
Share of income from associates 4.5 2.3
Financial Review
Total profit from operations and associates 1,463.5 2,553.2
(i) In 2008, cost of sales includes an impairment charge of US$188.3 million relating to property, plant and equipment at El Tesoro and Michilla (see Note 5(a)).
(ii) In 2008, profit on part-disposal of subsidiaries comprises a profit of US$1,024.9 million relating to the sale of a 30% interest in Esperanza and El Tesoro to Marubeni Corporation
(see Note 5(b)).
5 Exceptional Items
Operating profit Profit before tax Earnings per share
2009 2008 2009 2008 2009 2008
US$m US$m US$m US$m US$m US$m
Governance
Before exceptional items 1,459.0 1,714.3 1,437.6 1,772.9 67.7 85.5
Impairments (188.3) (188.3) (11.1)
Marubeni transaction 1,024.9 98.7
After exceptional items 1,459.0 1,526.0 1,437.6 2,609.5 67.7 173.1
There were no exceptional items in 2009. Exceptional items in 2008 and the impact on results are set below:
a) Total operating costs Impairments
In 2008, an impairment charge of US$188.3 million relating to property, plant and equipment at El Tesoro (US$160.0 million) and Michilla (US$28.3 million) was recorded within total operating
costs, following an impairment review undertaken in light of the commodity market environment. The recoverable amounts in the impairment review were determined by a value in use
calculation prepared using managements forecasts as to future commodity prices, operating costs and production volumes. The present value of the forecast future cash flows was calculated Financial Statements
using a discount rate of 9.9%.
b) Profit on part-disposal of subsidiaries Marubeni transaction
In August 2008 the Group disposed of a 30% interest in both Esperanza and El Tesoro to Marubeni Corporation for a consideration of US$1,401.2 million, resulting in a profit before tax of
US$1,024.9 million.
Other Information
6 Segment Information
The Groups reportable segments are as follows:
Los Pelambres
El Tesoro
Michilla
Esperanza
Exploration and evaluation
Railway and other transport services
Water concession
Corporate and other items
For management purposes, the Group is organised into three business divisions based on their products Mining, Railway and other transport services and the Water concession. The mining
division is split further for management reporting purposes to show results by mine and exploration activity. Los Pelambres, El Tesoro and Michilla are all operating mines and Esperanza is a
mine currently under construction. Los Pelambres produces primarily copper concentrate and molybdenum as a by-product. El Tesoro and Michilla both produce copper cathodes. The transport
division provides rail cargo (based in Chile and Bolivia) and road cargo (based in Chile) together with a number of ancillary services (based in Chile). The water division produces and distributes
potable water to domestic customers and untreated water to industrial customers in Chiles Antofagasta Region. The Exploration and evaluation segment incurs exploration and evaluation
expenses. Exploration costs relating to Tethyan Copper Company Limited (Tethyan) are included within the Exploration and evaluation segment, and all other Tethyan related costs are included
within Corporate and other items. Corporate and other items also comprise costs incurred by the Company and Antofagasta Minerals S.A., the Groups mining corporate centre, that are not
allocated to any individual business segment. Consistent with its internal management reporting, the Groups corporate and other items are included within the mining division.
Management monitors the operating results of business segments separately for the purpose of making decisions about resources to be allocated and of assessing performance.
Segmentperformance is evaluated based on the operating profit of each of the segments.
a) Segment revenues and results
Exploration Corporate Railway and
Los and and other other transport Water
Pelambres El Tesoro Michilla Esperanza evaluation items Mining services concession Total
US$m US$m US$m US$m US$m US$m US$m US$m US$m US$m
Revenue 2,081.5 487.6 170.5 2,739.6 139.4 83.6 2,962.6
EBITDA 1,408.9 231.7 27.9 (67.1) (37.5) 1,563.9 56.6 60.2 1,680.7
Depreciation and amortisation (128.1) (52.3) (5.5) (2.2) (188.1) (14.8) (14.6) (217.5)
Loss on disposals (0.1) (1.5) (0.7) (1.1) (3.4) (0.5) (0.3) (4.2)
Operating profit 1,280.7 177.9 21.7 (67.1) (40.8) 1,372.4 41.3 45.3 1,459.0
Share of income from associates (0.2) (0.2) 4.7 4.5
Investment income 1.9 2.7 0.2 6.6 11.4 1.6 0.2 13.2
Interest expense (19.1) (0.2) (4.1) (23.4) (0.6) (24.0)
Other finance items (15.6) 11.1 (4.1) (2.6) (11.2) (5.0) 1.1 (15.1)
Profit before tax 1,247.9 191.5 17.8 (67.1) (41.1) 1,349.0 42.0 46.6 1,437.6
Tax (249.3) (40.8) 6.1 (16.8) (300.8) (9.8) (7.1) (317.7)
Minority interests (399.5) (46.5) (6.0) (452.0) (0.2) (452.2)
Net earnings 599.1 104.2 17.9 (67.1) (57.9) 596.2 32.0 39.5 667.7
Additions to non-current assets
Capital expenditure 475.4 65.2 12.2 716.4 38.9 1,308.1 21.1 6.1 1,335.3
Additions to intangibles 52.5 52.5
Segment assets and liabilities
Segment assets 3,494.9 759.5 130.0 1,815.8 2,364.6 8,564.8 703.4 242.3 9,510.5
Segment liabilities (1,350.5) (109.4) (130.2) (966.2) (247.4) (2,803.7) (41.7) (47.7) (2,893.1)

Exploration Corporate Railway and
Los and and other other transport Water
Pelambres El Tesoro Michilla Esperanza evaluation items Mining services concession Total
US$m US$m US$m US$m US$m US$m US$m US$m US$m US$m
Revenue 2,172.0 632.4 332.7 3,137.1 151.0 84.5 3,372.6
EBITDA 1,429.7 342.8 118.4 (54.9) (54.2) 1,781.8 64.2 53.8 1,899.8
Depreciation and amortisation (81.5) (55.5) (17.6) (1.5) (156.1) (12.6) (11.5) (180.2)
Loss on disposals (0.5) (2.4) (1.2) (4.1) (1.2) (5.3)
Overview
Impairments (160.0) (28.3) (188.3) (188.3)
Operating profit 1,347.7 124.9 71.3 (54.9) (55.7) 1,433.3 50.4 42.3 1,526.0
Profit on part-disposal of subsidiaries 1,024.9 1,024.9 1,024.9
Share of income from associate 2.3 2.3
Investment income 10.8 15.4 1.9 41.9 70.0 8.2 0.7 78.9
Interest expense (11.1) (0.6) (1.3) (13.0) (0.7) (13.7)
Other finance items (1.3) (9.7) (0.8) (0.1) (11.9) 3.6 (0.6) (8.9)
Profit before tax 1,346.1 130.0 72.4 (54.9) 1,009.7 2,503.3 63.8 42.4 2,609.5
Tax (326.0) (27.9) (22.2) (124.4) (500.5) (11.4) (7.8) (519.7)
Business Review
Minority interests (408.4) 37.5 (11.7) 1.4 (381.2) (2.1) (383.3)
Net earnings 611.7 139.6 38.5 (54.9) 886.7 1,621.6 50.3 34.6 1,706.5
Additions to non-current assets
Capital expenditure 463.9 125.7 21.0 460.6 65.4 1,136.6 38.5 14.5 1,189.6
Additions to intangibles 10.7 10.7 10.7
Segment assets and liabilities
Segment assets 2,830.1 788.0 88.8 1,055.6 2,722.5 7,485.0 322.0 147.9 7,954.9
Segment liabilities (983.1) (92.8) (46.2) (68.7) (255.0) (1,445.8) (44.4) (32.1) (1,522.3)
Financial Review
Notes to segment revenues and results
(i) The accounting policies of the reportable segments are the same as the Groups accounting policies. Operating profit excludes the share of income from associates of US$4.5 million
(yearended 31 December 2008 US$2.3 million). Operating profit is shown before and after exceptional items (see Note 5).
(ii) Inter-segment revenues are eliminated on consolidation. Turnover from the Railway and other transport services is stated after eliminating inter-segmental sales to the mining division of
US$10.3 million (year ended 31 December 2008 US$13.2 million). Turnover from the Water concession is stated after eliminating inter-segmental sales to the mining division of US$8.6
million (year ended 31 December 2008 US$2.7 million) and after eliminating sales to the Railway and other transport services of US$0.2 million (year ended 31 December 2008 US$0.2
million).
(iii) Turnover includes the effect of both final pricing and mark-to-market adjustments to provisionally priced sales of copper and molybdenum concentrates and copper cathodes. Further details
of such adjustments are given in Note 25(d).
Governance
(iv) Turnover includes a realised loss on commodity derivatives at El Tesoro of US$20.0 million (year ended 31 December 2008 gain of US$16.1 million) and a realised loss at Michilla of
US$45.8 million (year ended 31 December 2008 gain of US$13.9 million). Further details of such gains or losses are given in Note 25(e).
(v) The copper and molybdenum concentrate sales are stated net of deductions for tolling charges. Tolling charges for copper and molybdenum concentrates are detailed in Note 25(d).
(vi) Exceptional items affecting operating profit in 2008 relate to impairments at El Tesoro and Michilla (see Note 5).
(vii) Capital expenditure represents purchases of property, plant and equipment stated on an accruals basis (see Note 14) and may therefore differ from the amount included in the cash flow
statement.
(viii) The assets of the Railway and transport services segment includes US$3.8 million relating to the Groups 30% interest in Antofagasta Terminal International S.A. (ATI), which operates
aconcession to manage installations in the port of Antofagasta and US$112.7 million relating to the Groups 40% interest in Inversiones Hornitos S.A. (Inversiones Hornitos), which owns
the 150MW Hornitos thermoelectric power plant in Mejillones, in Chiles Antofagasta Region. The assets of the Corporate and other items segment includes US$4.8 million relating to the
Groups approximately 18% interest in Sunridge Gold Corp (Sunridge), which has a base and precious metals project in Eritrea. Financial Statements
Other Information
6 Segment Information continued

b) Entity wide disclosures
Revenue by product
2009 2008
US$m US$m
Copper
Los Pelambres 1,858.0 1,737.8
El Tesoro 487.6 632.4
Michilla 170.5 332.7
Molybdenum
Los Pelambres 180.1 394.8
Silver
Gold
Total Mining 2,739.6 3,137.1
Railway and transport services 139.4 151.0
Water concession 83.6 84.5
2,962.6 3,372.6
Revenue by location of customer

2009 2008
US$m US$m
Europe
United Kingdom 148.1 3.7
Switzerland 348.1 373.9
Rest of Europe 377.5 603.0
Latin America
Chile 278.2 419.6
Rest of Latin America 166.1 250.6
North America
United States 151.8 382.3
Rest of North America 11.7 16.5
Asia
Japan 784.9 707.5
China 392.8 353.5
Rest of Asia 303.4 262.0
2,962.6 3,372.6
Information about major customers

Included in revenues arising from Los Pelambres for the year ended 31 December 2009 are revenues of approximately US$720.5 million (year ended 31 December 2008 US$ 663.4 million)
which arose from sales to two of the Groups largest customers, which are the only customers that individually account for more than 10% of the Groups revenues.
Non-current assets by location of assets
2009 2008
US$m US$m
Chile 5,159.7 3,774.2
Bolivia 33.7 34.9
Overview
Pakistan 141.3 137.8
Other 11.0 6.2
5,345.7 3,953.1
Non-current assets balance disclosed by location of asset and excludes financial instruments and deferred tax assets.
7 Profit for the Year

Profit for the year is stated after crediting/(charging):
2009 2008
US$m US$m
Business Review
Foreign exchange gains/(losses)
included in net finance costs 0.4 (3.9)
included in income tax expense 18.3 (66.3)
Amortisation of intangible asset included in cost of sales (12.4) (10.0)
Depreciation of property, plant and equipment
owned assets (203.0) (169.8)
assets held under finance leases (2.1) (0.4)
Property and equipment written-off (4.2) (5.3)
Impairments of property, plant and equipment (exceptional items) (188.3)
Financial Review
Cost of inventories recognised as expense (906.3) (1,020.0)
Employee benefit expense (181.8) (183.1)
Auditors remuneration
audit services (0.6) (0.6)
non-audit services (0.1) (0.2)
A more detailed analysis of auditors remuneration on a worldwide basis is provided below:

2009 2008
US$000 US$000
Governance
Audit fees
Fees payable to the companys auditors for the audit of the companys annual accounts (103) (86)
Fees payable to the companys auditors and their associates for other services to the Group
the audit of the companys subsidiaries pursuant to legislation (201) (189)
the audit of the companys subsidiaries as part of the audit of the consolidated financial statements (126) (119)
the review of the companys half yearly financial report pursuant to legislation (215) (197)
Total audit fees (644) (592)
Non-audit services
Tax services (44) (42)
Other consultancy services (62) (183)
(750) (817)
Other Information
8 Employee Benefit Expense

a) Average number of employees
2009 2008
Number Number
Los Pelambres 715 697
El Tesoro 475 534
Michilla 491 524
Esperanza 379 282
Exploration and evaluation 31 28
Corporate and other employees
Chile 149 121
United Kingdom 8 7
Other 132 39
Mining 2,380 2,232
Railway and other transport services 1,562 1,509
Water concession 276 264
4,218 4,005
(i) The average number of employees for the year includes all the employees of subsidiaries and the Groups share of employees of jointly controlled entities. The average number of employees
does not include contractors who are not directly employed by the Group.
(ii) The average numbers of employees does not include employees from associates.
(iii) The average number of employees includes the Executive Director but does not include Non-Executive Directors.
b) Aggregated remuneration
The aggregated remuneration of the employees included in the table above was as follows:
2009 2008
US$m US$m
Wages and salaries (193.3) (176.5)
Social security costs (7.0) (3.2)
Post-employment benefits severance charge in the year (13.3) (10.6)
(213.6) (190.3)
The amount relating to Esperanza of US$31.8 million (2008 US$7.2 million) has been capitalised.
c) Key management personnel
In accordance with IAS 24, key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of the Group, directly or indirectly,
including any Directors (Executive and Non-Executive) of the Company.
Compensation for key management personnel (including Directors) was as follows:
2009 2008
US$m US$m
Salaries and short-term employee benefits (7.3) (7.5)
Post-employment benefits severance charge in the year (0.1) (0.1)
(7.4) (7.6)
Disclosures on Directors remuneration required by Schedule 8 of the The Large and Medium-sized Companies and Group (Accounts and Reports) Regulations 2008 including those specified for
audit by that Schedule are included in the Remuneration Report on pages 59 to 61.
9 Net Finance (Expense)/Income

2009 2008
US$m US$m
Investment income
Interest receivable from cash and cash equivalents 13.2 78.9
Interest expense
Interest payable (23.4) (13.1)
Amortisation of deferred finance costs (0.4) (0.4)
Preference dividends (0.2) (0.2)
Overview
(24.0) (13.7)
Other finance items
Time value effect of derivatives (1.1) (1.6)
Foreign exchange derivatives not hedge accounted for under IAS 39 (12.4) (1.4)
Unwinding of discount on provisions (2.8) (2.0)
Foreign exchange 1.2 (3.9)
(15.1) (8.9)
Net finance (expense)/income (25.9) 56.3
Business Review
An income of US$8.7 million (2008-expense of US$6.2 million) relating to the net interest expense and other finance items at Esperanza was capitalised within the development expenditure of
that project during the year, and is consequently not included within the above table.
10 Taxation
2009 2008
US$m US$m
Current tax charge
Corporate tax (principally first category tax in Chile) (161.6) (284.8)
Mining tax (Royalty) (41.4) (70.3)
Financial Review
Withholding tax provision (0.4) (120.3)
Exchange gains/(losses) on corporate tax balances 18.3 (66.3)
(185.1) (541.7)
Deferred tax (charge)/credit
Corporate tax (principally first category tax in Chile) (91.2) (30.3)
Mining tax (Royalty) (13.7) 4.1
Withholding tax provision (27.7) 48.2
(132.6) 22.0
Governance
Total tax charge (Income tax expense) (317.7) (519.7)
The current tax charge of US$185.1 million (2008 US$541.7 million) comprises Chilean taxes of US$184.4 million (2008 US$540.8 million) and other overseas taxes of US$0.7 million
(2008 US$0.9 million).
Current tax is based on taxable profit for the year. Deferred tax is the tax expected to be payable or recoverable on temporary differences (i.e. differences between the carrying amount of assets
and liabilities in the financial statements and the corresponding tax basis used in the computation of taxable profit). Deferred tax is accounted for using the balance sheet liability method and is
provided on all temporary differences with certain limited exceptions. The Group incurs withholding taxes on the remittance of profits from Chile and the other countries in which it operates and
deferred tax is provided on undistributed earnings to the extent that remittance is probable in the foreseeable future.
The rate of first category (i.e. corporation) tax in Chile was 17% for both 2009 and 2008. Los Pelambres, El Tesoro and Michilla are also subject to a mining tax (royalty) which imposes an
additional tax of 4% of tax-adjusted operating profit. Production from the Tesoro North East deposit is subject to the mining tax at a rate of 5% of tax-adjusted operating profit. The mining tax is
tax deductible (i.e. an allowable expense in determining liability to first category tax). Financial Statements
In addition to first category tax and the mining tax, the Group incurs withholding taxes on the remittance of profits from Chile. Withholding tax is levied on remittances of profits from Chile at 35%
less first category tax already paid. Accordingly, the effective tax rate of withholding tax for the purpose of paying dividends to Group shareholders is approximately 18% of the amount remitted
or expected to be remitted.
Other Information
10 Taxation continued
2009 2008
US$m % US$m %
Profit before tax 1,437.6 2,609.5
Tax at the Chilean corporation tax rate of 17% (244.4) 17.0 (443.6) 17.0
Tax effect of share of results of associate (1.0) 0.1 (0.4)
Deferred tax assets not recognised in the year (5.9) 0.2
Effect of items not subject to or deductible from first category tax (7.4) 0.5 134.8 (5.2)
Royalty (55.1) 3.8 (66.2) 2.5
Withholding taxes provided in year (28.1) 2.0 (72.1) 2.8
Exchange differences 18.3 (1.3) (66.3) 2.6
Tax expense and effective tax rate for the year (317.7) 22.1 (519.7) 19.9
The tax charge for the year was US$317.7 million and the effective tax rate was 22.1%. This rate varies from the standard rate principally due to the provision of withholding tax of
US$28.1 million, the effect of mining tax which resulted in a charge of US$55.1 million, exchange gains of US$18.3 million on Chilean peso denominated tax prepayments due to the
strengthening of the US dollar during the year, and the effect of items which are not subject to or deductible from first category tax.
In 2008 the total tax charge was US$519.7 million and the effective tax rate was 19.9%. This was principally due to the provision of withholding tax of US$72.1 million, and the effect of the
mining tax, which resulted in a charge of US$66.2 million, exchanges losses of US$66.3 million on Chilean peso denominated tax prepayments due to the weakening of the US dollar during
theyear, and the effect of items which are not subject to or deductible from first category tax.
11 Earnings Per Share

2009 2008
US$m US$m
Profit for the year attributable to equity holders of the Company (Net earnings) 667.7 1,706.5
Profit for the year attributable to equity holders of the Company (Net earnings) excluding exceptional items 667.7 842.9
2009 2008
Number Number
Ordinary shares in issue throughout each year 985,856,695 985,856,695
2009 2008
cents cents
Basic earnings per share 67.7 173.1
Basic earnings per share excluding exceptional items 67.7 85.5
Basic earnings per share is calculated as profit after tax and minority interest, based on 985,856,695 ordinary shares.
There was no potential dilution of earnings per share in either year set out above, and therefore diluted earnings per share did not differ from basic earnings per share as disclosed above.
In 2008 basic earnings per share excluding exceptional items is calculated on profit after tax and minority interest excluding exceptional items giving net earnings excluding exceptional items
of US$842.9 million. Further details together with the reconciliation of earnings per share to earnings per share excluding exceptional items is giving in Note 5.
12 Dividends
Amounts recognised as distributions to equity holders in the year:
2009 2008
2009 2008 US cents US cents
US$m US$m per share per share
Final dividend paid in June (proposed in relation to the previous year)
ordinary 55.2 53.3 5.6 5.4
special 473.2 374.6 48.0 38.0
528.4 427.9 53.6 43.4
Overview
Interim dividend paid in October
ordinary 33.5 33.5 3.4 3.4
special 29.6 3.0
33.5 63.1 3.4 6.4
561.9 491.0 57.0 49.8
The proposed final dividend for each year, which is subject to approval by shareholders at the Annual General Meeting and has therefore not been included as a liability in this financial
statements, is as follows:
2009 2008
2009 2008 US cents US cents
Business Review
US$m US$m per share per share
Final dividend proposed in relation to the year
ordinary 59.2 55.2 6.0 5.6
special 138.0 473.2 14.0 48.0
197.2 528.4 20.0 53.6
This gives total dividends proposed in relation to 2009 (including the interim dividend) of 23.4 cents per share or US$230.7 million (2008 60.0 cents per share or US$591.5 million).
In accordance with IAS 32, preference dividends have been included within interest expense (see Note 9) and amounted to US$0.2 million (2008 US$0.2 million).
Further details relating to dividends for each year are given in the Directors Report on page 50.
Financial Review
13 Intangible Assets
Total Total
Concession Exploration intangible intangible
right licences assets assets
2009 2009 2009 2008
US$m US$m US$m US$m
Cost
Balance at the beginning of the year 144.3 125.7 270.0 299.8
Additions 52.5 52.5 10.7
Governance
Foreign currency exchange difference 48.3 48.3 (40.5)
Balance at the end of the year 245.1 125.7 370.8 270.0
Amortisation
Balance at the beginning of the year (36.4) (36.4) (36.2)
Charge for the year (12.4) (12.4) (10.0)
Foreign currency exchange difference (10.8) (10.8) 9.8
Balance at the end of the year (59.6) (59.6) (36.4)
Carrying amount
Balance at the end of the year 185.5 125.7 311.2 233.6 Financial Statements
The concession right relates to the 30-year concession to operate the water rights and facilities in the Antofagasta Region of Chile which the Groups wholly-owned subsidiary, Aguas de
Antofagasta S.A., acquired in December 2003. This intangible asset is being amortised on a straight-line basis over the life of the concession, or the useful life of any component part if less.
Amortisation is included within operating costs.
At 31 December 2009, US$125.7 million of the exploration licences mainly relate to the value attributed of US$120.7 million acquired in the Reko Diq area of south-west Pakistan.
TheremainingUS$5.0 million relates to the acquisition of an initial interest in prospecting licences in Zambia from TEAL Exploration & Mining Limited. This intangible asset will be amortised
inaccordance with the Groups policy for mining properties when the related mining properties enter into production.
Other Information
14 Property, Plant and Equipment

Land and Machinery,
mining Buildings and Railway Wagons and equipment Assets under
properties infrastructure track rolling stock and others construction Total
US$m US$m US$m US$m US$m US$m US$m
Cost
At 1 January 2008 632.8 1,078.6 45.1 97.2 1,128.1 731.2 3,713.0
Acquisitions 243.1 243.1
Additions 28.1 18.4 6.2 316.2 820.7 1,189.6
Reclassifications (6.5) 719.5 3.1 11.8 144.8 (872.7)
Asset disposals (22.6) (7.2) (3.2) (13.3) (15.8) (62.1)
Foreign currency exchange difference 0.3 (9.6) (1.7) (0.9) (1.8) (13.7)
At 31 December 2008 and 1 January 2009 875.2 1,799.7 48.2 110.3 1,574.9 661.6 5,069.9
Additions 30.1 5.9 3.6 83.3 1,212.4 1,335.3
Provisions capitalised 105.1 105.1
Reclassifications 241.6 7.1 121.0 (369.7)
Asset disposals (1.0) (9.8) (2.0) (6.5) (19.3)
Foreign currency exchange difference 0.9 5.2 3.2 10.6 1.5 21.4
At 31 December 2009 905.2 2,042.6 48.2 122.2 1,894.9 1,499.3 6,512.4
Accumulated depreciation and impairment
At 1 January 2008 (170.9) (346.9) (7.6) (44.9) (514.8) (4.0) (1,089.1)
Charge for the year (39.7) (43.3) (1.6) (8.0) (77.6) (170.2)
Depreciation capitalised (6.9) (6.9)
Impairment loss (see Note 5) (69.9) (55.9) (62.5) (188.3)
Asset disposals 13.1 2.1 41.6 56.8
Foreign currency exchange difference 5.8 1.0 0.7 7.5
At 31 December 2008 and 1 January 2009 (280.5) (427.2) (9.2) (49.8) (619.5) (4.0) (1,390.2)
Charge for the year (76.8) (87.3) (1.7) (9.2) (30.1) (205.1)
Depreciation capitalised (0.7) (47.6) (48.3)
Asset disposals 2.4 1.5 11.2 15.1
Foreign currency exchange difference (8.1) (1.6) (1.0) (10.7)
At 31 December 2009 (357.3) (520.9) (10.9) (59.1) (687.0) (4.0) (1,639.2)
Net book value

At 31 December 2009 547.9 1,521.7 37.3 63.1 1,207.9 1,495.3 4,873.2
At 31 December 2008 594.7 1,372.5 39.0 60.5 955.4 657.6 3,679.7
Assets under finance leases included in the totals above

Net book value
At 31 December 2009 40.6 6.9 47.5
At 31 December 2008 57.3 1.8 59.1
The Group has pledged assets with a carrying value of US$403.6 million (2008 US$12.5 million) as security against bank loans provided to the Group.
At 31 December 2009 the Group had entered into contractual commitments for the acquisition of property, plant and equipment amounting to US$495.1 million (2008 US$447.0 million).
Commitments at 31 December 2009 included US$428.5 million (2008 US$221.3 million) relating to the Esperanza project and US$49.2 million (2008 US$167.6 million) relating to the plant
expansion project at Los Pelambres.
Compensation from insurance companies related to property, plant and equipment included in the consolidated income statement was US$6.9 million in 2009 (2008 US$5.0 million).
At 31 December 2009, depreciation capitalised includes US$24.2 million (2008 US$6.9 million) in respect of assets relating to the Esperanza project which have been capitalised within the
development expenditure of that project and US$24.1 million (2008 nil) of depreciation in respect of assets relating to the ROM and Tesoro North East projects which have been capitalised
within inventories, and accordingly is excluded from the depreciation charge recorded in the income statement as shown in Note 6(a).
15 Investment Property
2009 2008
Cost US$m US$m
Balance at the beginning of the year 2.7 3.5
Foreign currency exchange difference 0.7 (0.8)
Balance at the end of the year 3.4 2.7
Investment property represents the Groups forestry properties, which are held for long-term potential and accordingly classified as investment property and held at cost as permitted by IAS 40.
The fair value of the Groups investment property at 31 December 2009 was US$11.0 million (2008 US$11.0 million), based on an independent valuation carried out during 2008 by Gabriel
Overview
Durn, who is not connected with the Group. Mr. Durn is a Forestry Engineer, Valuer and Assessor of forestry properties for Banco Itau in Chile, with extensive experience of valuation in the
region where the assets are located. The valuation was based on market evidence of transaction prices for similar properties.
Direct operating expenses (principally on-going maintenance costs) arising on these properties amounted to US$0.2 million (2008 US$0.1 million).
16 Investments in Subsidiaries
The principal subsidiaries of the Group and the percentage of equity owned are set out below. These interests are consolidated within these financial statements. The Group has restricted the
information to its principle subsidiaries as full compliance with Section 410 of the Companies Act 2006 would result in a statement of excessive length.
Country of incorporation Country of operations Nature of business Economic interest
Direct subsidiaries of the Parent Company
Business Review
Antofagasta Railway Company plc Great Britain Chile Railway 100%
Minera Anaconda Per S.A. Peru Peru Mining 100%
Chilean Northem Mines Limited Great Britain Chile Investment 100%
Sierra Gorda Investment Company Limited Jersey Jersey Investment 100%
Indirect subsidiaries of the Parent Company

Antofagasta Minerals S.A. Chile Chile Mining 100%
Minera Los Pelambres Chile Chile Mining 60%
Minera El Tesoro Chile Chile Mining 70%
Financial Review
Minera Michilla S.A. Chile Chile Mining 74.2%
Minera Esperanza Chile Chile Mining 70%
Equatorial Mining Limited Australia Chile Mining 100%
Antofagasta Services Limited Great Britain Great Britain Group services 100%
Los Pelambres Investment Company Limited Jersey Jersey Investment 100%
Inversiones Los Pelambres Chile Limitada Chile Chile Investment 100%
Aguas de Antofagasta S.A. Chile Chile Water distribution 100%
Servicios de Transportes Integrados Limitada Chile Chile Road transport 100%
Governance
Empresa Ferroviaria Andina S.A. Bolivia Bolivia Railway 50%
Forestal S.A. Chile Chile Forestry 100%
The Group exercises management control over and has the right to appoint the majority of the board of Empresa Ferroviaria Andina S.A. Accordingly, this investment is treated as a subsidiary
and is consolidated in these Group financial statements.
17 Investment in Associates
Inversiones Total Total
Hornitos ATI Sunridge associates associates
2009 2009 2009 2009 2008
US$m US$m US$m US$m US$m
Balance at the beginning of the year 3.0 3.0 2.5
Acquisitions 80.9 5.0 85.9
Capital contributions 28.6 28.6
Share of profit before tax 3.9 1.8 (0.2) 5.5 2.7
Share of tax (0.7) (0.3) (1.0) (0.4)
Share of income from associates 3.2 1.5 (0.2) 4.5 2.3
Dividends received (0.7) (0.7) (1.8)
Balance at the end of the year 112.7 3.8 4.8 121.3 3.0
Other Information
The investments which are included in the US$121.3 million balance at 31 December 2009 are set out below:
(i) The Groups 40% interest in Inversiones Hornitos S.A. (Inversiones Hornitos), which owns the 150MW Hornitos thermoelectric power plant in Mejillones, in Chiles Antofagasta Region.
(ii) The Groups 30% interest in Antofagasta Terminal Internacional S.A. (ATI), which operates a concession to manage installations in the port of Antofagasta.
(iii) The Groups 17.8% interest in Sunridge Gold Corp (Sunridge), which has a base and precious metals project in Eritrea. Although the Group holds less than a 20% interest in Sunridge, the
Groups representation on the board of directors of Sunridge gives it significant influence over the entity and it is therefore accounted for as an associate. The fair value of the Groups interest
in Sunridge at 31 December 2009 was US$6.0 million.
17 Investment in Associates continued

The Groups share of the summarised financial information of investment in associates, is as follows:
Inversiones Total Total

Hornitos ATI Sunridge Associates Associates
2009 2009 2009 2009 2008
Total assets (net of fair value adjustments) 135.9 5.0 5.0 145.9 4.3
Total liabilities (23.2) (1.2) (0.2) (24.6) (1.3)
Turnover 8.6 8.6 9.5

Profit after tax and minorities 3.2 1.5 (0.2) 4.5 2.3
18 Joint Venture Agreements

a) Tethyan Copper Company Limited
In 2006 the Group acquired 100% of the issued share capital of Tethyan Copper Company Limited (Tethyan) for cash consideration (including transaction costs) of US$170.4 million. In the
same year, the Group subsequently entered into a joint venture agreement with Barrick Gold Corporation (Barrick Gold), to establish a 50:50 joint venture in relation to Tethyans mineral
interests in Pakistan.
From the date of incorporation to 2009, Tethyan was wholly engaged in mineral exploration and evaluation activities and did not generate any revenue. Tethyans operating loss resulting during
the year was US$59.6 million (2008 US$54.6 million), which relates mainly to exploration and evaluation costs expensed in accordance with the Groups accounting policy and of which 50%
is attributable to the Group.
The following amounts represent the Groups 50% share of the assets and liabilities, and results of the jointly controlled entity, and are included in the consolidated balance sheet and in the
consolidated income statement of the Group under the proportionate consolidation method:
2009 2008
US$m US$m
Total non-current assets 137.7 137.7
Total current assets 4.6 5.9
Total current liabilities (5.2) (8.0)
Total non-current liabilities (0.2) (0.2)
Groups share of jointly controlled entitys net assets 136.9 135.4
Operating loss (29.8) (27.3)
Net finance income 1.5
Tax
Groups share of jointly controlled entitys results (29.8) (25.8)
In addition to these amounts, the Group incurred US$3.5 million (2008 US$2.7 million) relating to Tethyan which is included in Corporate and other items.
b) Energa Andina S.A.
In October 2008 Energa Andina S.A. (Energia Andina) was formed as a vehicle for the exploration and exploitation of potential sources of geothermal energy. The company is 60% owned by
the Group and 40% owned by Empresa Nacional del Petrleo (ENAP) of Chile. Control over the key operational and financial decisions in respect of the company are jointly exercised by the
Group and ENAP, and accordingly the company is accounted for as a jointly controlled entity, with results included in the consolidated balance sheet and in the consolidated income statement
ofthe Group under the proportionate consolidation method.
In 2009 and 2008, Energa Andina was wholly engaged in geothermal exploration and evaluation activities and did not generate any revenue in the period after its incorporation. The operating
loss resulting from Energa Andina for the year was US$2.4 million (2008 US$0.7 million), which relates mainly to exploration and evaluation costs expensed in accordance with the Groups
accounting policy, and of which 60% is attributable to the Group.
The following amounts represent the Groups 60% share of the assets and liabilities, and results of the jointly controlled entity, and are included in the consolidated balance sheet and in the
consolidated income statement of the Group under proportional consolidated method:
2009 2008
US$m US$m
Total current assets 7.3 8.6
Groups share of jointly controlled entitys net assets 7.3 8.6
Operating loss (1.5) (0.4)
Groups share of jointly controlled entitys results (1.5) (0.4)
In addition to these amounts, at 31 December 2008 the Group incurred US$0.1 million relating to Energa Andina S.A. which is included in Corporate and other items.
19 Available-for-Sale Investments
Available-for-sale investments represent those investments which are not subsidiaries, associates or joint ventures and are not held for trading purposes.
The movement in available-for-sale assets during the year was as follows:
2009 2008
US$m US$m
Balance at the beginning of the year 0.7 3.3
Movements in fair value 0.5 (2.6)
Balance at the end of the year 1.2 0.7
Overview
At 31 December 2009, the balance of US$1.2 million comprises mainly the market value of Panoro Minerals Limiteds shares which were acquired as part consideration for the disposal of the
Groups share of the joint venture entity Cordillera de las Minas S.A in 2007. The fair value of these shares increased by US$0.5 million during the year (2008 decrease of US$2.6 million).
The fair value of the remaining available-for-sale investments of less than US$0.1 million held by the Group at 31 December 2009 are mainly Chilean peso denominated and did not differ
materially from cost at the year end.
20 Inventories
2009 2008
US$m US$m
Raw materials and consumables 57.5 49.6
Work in progress 166.0 87.1
Business Review
Finished goods 16.6 19.2
240.1 155.9
Work in progress includes the following balances which are expected to be processed more than 12 months after the balance sheet date:
(i) US$30.0 million (2008 US$30.1 million) relating to long-term inventories are Los Pelambres
(ii) US$5.2 million (2008 US$6.6 million) relating to high carbonate ore inventories at El Tesoro.
Work in progress includes US$33.8 million (2008 nil) relating to Tesoro North East and US$50.9 million (2008 nil) relating to the ROM project at El Tesoro.
During 2008 a write-off of US$0.9 million was recorded at Michilla in order to reduce inventories to their expected net realisable value.
Financial Review
21 Trade and Other Receivables
Due in one year Due after one year Total
2009 2008 2009 2008 2009 2008
Trade debtors 401.0 79.5 0.9 0.7 401.9 80.2
Other debtors 207.6 234.3 35.7 33.4 243.3 267.7
608.6 313.8 36.6 34.1 645.2 347.9
There is no significant concentration of credit risk with respect to trade receivables as the exposure is spread over a large number of customers. The average credit period given on sale of goods
Governance
and rendering of service is 49 days (2008 37 days). There is no material element which is interest-bearing. Trade debtors include mark-to-market adjustments in respect of provisionally priced
sales of copper and molybdenum concentrates which remain open as to final pricing; where these have resulted in credit balances, these have been reclassified to trade creditors as disclosed in
Note 25(d).
Movements in the provision for doubtful debts were as follows:
2009 2008
US$m US$m
Balance at the beginning of the year (2.3) (3.1)
Charge for the year (0.6) (0.2)
Amounts written-off 0.5
Unused amounts reversed 0.1 0.5 Financial Statements
Foreign currency exchange difference (0.2)
Balance at the end of the year (3.0) (2.3)
Other Information
21 Trade and Other Receivables continued

The ageing analysis of the trade receivables balance is as follows:
Past due but not impaired
Neither past Up to 3 36 More than 6
due nor months months months
impaired past due past due past due Total
2009 635.7 6.8 2.6 0.1 645.2
2008 338.2 6.9 0.2 2.6 347.9
With respect to the trade receivables that are neither past due nor impaired, there are no indications that the debtors will not meet their payment obligations. The carrying value of the trade
receivables recorded in the financial statements represents the maximum exposure to credit risk. The Group does not hold any collateral as security.
Other debtors include US$52.9 million (2008 US$46.1 million) relating to prepayments for the purchase of property, plant and equipment.
22 Cash and Cash Equivalents

Cash and cash equivalents comprise cash in hand, deposits held on call with banks and highly liquid investments that are readily convertible into known amounts of cash and which are subject
to an insignificant risk of changes in value.
Cash and cash equivalents had a maturity period of three months or less from the date of acquisition at both 31 December 2009 and 31 December 2008, and carried floating rates of interest.
The fair value of cash and cash equivalents is not materially different from the carrying values presented. The credit risk on cash and cash equivalents is limited because the counterparties are
banks with high credit ratings assigned by international credit-rating agencies.
The currency exposure of cash and cash equivalents was as follows:
2009 2008
US$m US$m
US dollars 3,006.4 3,017.6
Chilean pesos 190.8 289.6
Australian dollars 23.2 49.3
Sterling 1.2 1.0
Other 0.7 0.5
3,222.3 3,358.0
Details of cross-currency swaps in place at the end of the year end are given in Note 25(e)(ii).
23 Borrowings
a) Analysis by type of borrowing
Borrowings may be analysed by business segment and type as follows:
2009 2008
Notes US$m US$m
Los Pelambres
Corporate loans (i) (576.9) (152.6)
Short-term loans (ii) (245.0) (224.0)
Overview
El Tesoro
Finance leases (iii) (0.3) (0.4)
Michilla
Finance leases (iv) (1.5)
Esperanza
Corporate loans (v) (677.6)
Subordinated loans (vi) (66.1)
Finance leases (vii) (11.8) (19.5)
Corporate and other items
Business Review
Finance leases (viii) (37.6) (32.4)
Railway and other transport services
Loans (ix) (6.6) (7.1)
Other
Preference shares (x) (3.2) (2.9)
(1,626.6) (438.9)
(i) Corporate loans at Los Pelambres are unsecured and US dollar denominated. The balance of US$576.9 million comprises:
a) US$76.3 million in respect of syndicated loans of US$76.7 million less deferred financing costs of US$0.4 million. These loans are repayable in semi-annual instalments with 1 year
Financial Review
remaining and carry interest at approximately LIBOR six-month rate plus 0.24%.
b) US$500.6 million in respect of syndicated loans of US$505.0 million less deferred financing costs of US$4.4 million. This loan is for a term of 5 years and has an interest rate of
LIBORplus 1.6%.
During January 2010 Los Pelambres entered into an additional loan of US$245.0 million with Japan Bank for International Cooperation (JBIC), which is expected to be drawn down
during the first quarter of 2010. This loan is for a term of approximately 7 years and has an interest rate of approximately LIBOR plus 0.9%.
(ii) Short-term loans at Los Pelambres have an average duration of 1.5 month and a weighted average interest rate average of 0.8%, comprising LIBOR plus spread. These loans are expected
tobe repaid when the JBIC loan is drawn down
(iii) Finance leases at El Tesoro are US dollar denominated, and are fixed rate with an average interest rate of 1.09%.
(iv) Finance leases at Michilla are US dollar denominated, and are fixed rate with an average interest rate of 6.25%.
Governance
(v) On 15 May 2009 the Group signed an agreement for US$1,050 million of project financing for Esperanza. The project financing facility is being provided by a consortium of senior lenders
including Japan Bank for International Cooperation (US$400 million), Export Development Canada (US$200 million), KfW IPEX-Bank (US$50 million) and a commercial bank syndicate
(US$400 million). The financing is for a term of approximately 12 years and over the life of the loan the borrowing interest is payable at an interest rate of LIBOR six-month rate plus margins
of between 1.375%3.000%. Financial closing and satisfaction of conditions to borrowing for this facility were achieved on 29 June 2009, and the first drawdown made on 9 July 2009.
The balance of US$677.6 million represents the US$716.1 million drawn down net of deferred financing costs of US$38.5 million.
The Group has used interest rate swaps to swap the floating rate interest for fixed rate interest. At 31 December 2009 the Group had entered into contracts for a maximum notional amount
of US$787.8 million at a weighted average fixed rate of 1.353% maturing in February 2011 and a maximum notional amount of US$840.0 million at a weighted average fixed rate of 3.372%
maturing in February 2018.
(vi) This balance includes long term subordinated debt provided to Esperanza by Marubeni Corporation with a duration of eight years and weighted average interest rate of 4.3%, comprising
LIBOR plus spread. Long term subordinated debt provided by Group companies to Esperanza has been eliminated on consolidation. Financial Statements
(vii) Finance leases at Esperanza are denominated in US dollars, Chilean Pesos and Unidades de Fomento (i.e. inflation-linked Chilean pesos) with a maximum duration of 5 years and fixed rate
with an average interest rate of 2.8%.
(viii) Finance leases at Corporate and other items are denominated in Unidades de Fomento (i.e. inflation-linked Chilean pesos) and have a duration of 20 years and a fixed rate of 5.29%.
(ix) Railway and other transport services includes a balance of US$6.4 million denominated in US dollars which is partly floating rate and partly fixed rate. The weighted average floating interest
rate (Bolivian Reference Interest Rate Index) of 7.7% which is repayable over 1.4 years. The balance at 31 December 2009 also includes US dollar customer advances of US$0.2 million.
(x) The preference shares are sterling denominated and issued by the Company. There were 2,000,000 shares of 1 each authorised, issued and fully paid at 31 December 2009.
Thepreference shares are non-redeemable and are entitled to a fixed cumulative dividend of 5% per annum. On winding up they are entitled to repayment and any arrears of dividend
inpriority to ordinary shareholders, but are not entitled to participate further in any surplus. Each preference share carries 100 votes in any general meeting of the Company.
Other Information
23 Borrowings continued
b) Analysis of borrowings by currency
The exposure of the Groups borrowings to currency risk is as follows:
2009
Pesos Sterling US dollars Total
At 31 December 2009 US$m US$m US$m US$m
Corporate loans (1,254.5) (1,254.5)
Other loans (including short-term loans) (317.7) (317.7)
Finance leases (43.3) (7.9) (51.2)
Preference shares (3.2) (3.2)
(43.3) (3.2) (1,580.1) (1,626.6)
2008
Pesos Sterling US dollars Total
At 31 December 2008 US$m US$m US$m US$m
Corporate loans (152.6) (152.6)
Finance leases (46.1) (6.2) (52.3)
(46.1) (2.9) (389.9) (438.9)
c) Analysis of borrowings by type of interest rate

The exposure of the Groups borrowings to interest rate risk is as follows:
2009
Fixed Floating Total
At 31 December 2009 US$m US$m US$m
Corporate loans (1,254.5) (1,254.5)
Finance leases (51.2) (51.2)
(54.4) (1,572.2) (1,626.6)
2008
Fixed Floating Total
At 31 December 2008 US$m US$m US$m
Corporate loans (152.6) (152.6)
Finance leases (52.3) (52.3)
(55.2) (383.7) (438.9)
As set out in note 23 (a) the corporate loans of US$1,254.5 million at 31 December 2009 include US$677.7 million relating to the Esperanza project financing facility. As disclosed in note 23(a)
the Group has used interest rate swaps to swap the floating rate interest on this facility for fixed rate interest.
d) Maturity profile
The maturity profile of the Groups borrowings is as follows:
Within Between Between After 2009
1 year 12 years 25 years 5 years Total
At 31 December 2009 US$m US$m US$m US$m US$m
Corporate loans (76.3) (527.0) (150.6) (753.9)
Other loans (including short-term loans) (350.2) (101.7) (300.3) (66.1) (818.3)
Finance leases (5.3) (8.5) (7.5) (29.9) (51.2)
Overview
(431.8) (110.2) (834.8) (249.8) (1,626.6)
Within Between Between After 2008

Corporate loans (76.3) (76.3) (152.6)
Other loans (including short-term loans) (229.8) (1.3) (231.1)
Finance leases (12.9) (6.4) (33.0) (52.3)
Business Review
(319.0) (84.0) (33.0) (2.9) (438.9)
The amounts included above for finance leases are based on the present value of minimum lease payments.
The total minimum lease payments for these finance leases may be analysed as follows:
Within Between Between After
2009
Finance leases (5.3) (8.5) (7.5) (29.9) (51.2)
Financial Review
2008
Finance leases (9.6) (6.4) (36.3) (52.3)
All leases are on a fixed payment basis and no arrangements have been entered into for contingent rental payments.
e) Borrowings facilities
The undrawn committed borrowing facilities available at the end for each year, in respect of which all conditions precedent had been met at those dates, were as follows:
2009 2008
US$m US$m
Expiring in one year or less 1,139.4 456.4
Governance
Expiring in more than one but not more than two years 2.0 2.0
Expiring in more than two years
1,141.4 458.4
The available facilities comprise the undrawn element of the Esperanza project finance facility, as described in note 23(a), and general working capital facilities at the Groups operating
subsidiaries. Of the general working capital facilities, US$688.9 million (2008 US$379.2 million) are denominated in US dollars, US$20.6 million (2008 US$16.9 million) in Unidades de
Fomento (i.e. inflation-linked Chilean pesos), US$3.0 million (2008 US$7.9 million) in Euro and US$93.0 million (2008 US$54.4 million) in Chilean pesos.
Other Information
24 Trade and Other Payables

Due in one year Due after one year Total
2009 2008 2009 2008 2009 2008
Trade creditors (254.4) (415.1) (254.4) (415.1)
Other creditors and accruals (183.2) (179.3) (12.3) (12.6) (195.5) (191.9)
(437.6) (594.4) (12.3) (12.6) (449.9) (607.0)
Trade creditors and accruals principally comprise amounts outstanding for trade purchases and ongoing costs. The average credit period taken for trade purchases is 40 days (2008 39 days).
At 31 December 2008, trade and other creditors includes US$274.2 million related to amounts to be reimbursed to clients as a result of mark-to-market adjustment on provisional sales of
copper and molybdenum concentrates and copper cathodes.
25 Financial Instruments and Financial Risk Management

a) Categories of financial instruments
The Groups financial instruments, grouped according to the categories defined in IAS 39 Financial instruments: Recognition and Measurement, were as follows:
2009 2008
US$m US$m
Financial assets
Derivatives in designated hedge accounting relationships 1.7 51.7
Available-for-sale investments 1.2 0.7
Loans and receivables (including cash and cash equivalents) 3,867.5 3,705.9
Financial liabilities
Derivatives in designated hedge accounting relationships (85.7) (1.4)
Financial liabilities measured at amortised cost (2,076.5) (1,045.9)
1,712.7 2,711.0
b) Fair value of financial instruments

The fair values of financial assets and financial liabilities are determined as follows:
the fair values of financial assets and financial liabilities with standard terms and conditions and traded on active liquid markets are determined with reference to quoted market prices;
the fair values of other financial assets and financial liabilities (excluding derivative instruments) are determined in accordance with generally accepted pricing models based on discounted cash
flow analysis using prices from observable current market transactions; and
the fair values of derivative instruments are calculated using quoted prices. Where such prices are not available, use is made of discounted cash flow analysis based on the applicable yield
curve for the duration of the instruments for non-optional derivatives, and option pricing models for optional derivatives.
The fair value of each category of financial asset and liability is not materially different from the carrying values presented for either 2009 or 2008.
The following table provides an analysis of the financial instruments that are measured subsequent to initial recognition at fair value, grouped into levels 1 to 3 based on the degree to which the
fair value is observable:
Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical assets or liabilities;
Level 2 fair value measurements are those derived from inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (i.e. as prices) or
indirectly (i.e. derived from prices); and
Level 3 fair value measurements are those derived from valuation techniques that include inputs for the asset or liability that are not based on observable market data (unobservable inputs).
Total
Level 1 Level 2 Level 3 2009
US$m US$m US$m US$m
Financial assets at fair value through profit and loss
Derivatives in designated hedge accounting relationships 1.7 1.7
Debtors mark to market 62.8 62.8
Available-for-sale investments 1.2 1.2
Financial liabilities
Derivatives in designated hedge accounting relationships (85.7) (85.7)
1.2 (16.7) (15.5)
There were no transfers between level 1 and 2 during the year.

c) Financial risk management The currency exposure of the Groups cash and cash equivalents is given in Note 22, and the
The Groups activities expose it to a variety of financial risks: market risk (including commodity currency exposure of the Groups borrowings is given in Note 23. The effect of exchange gains
price risk, currency risk, interest rate risk and other price risk), credit risk and liquidity risk. and losses included in the income statement are given in Note 7. Exchange differences on
TheGroup uses derivative financial instruments to reduce exposure to commodity price, translation of the net assets of entities with a functional currency other than the US dollar
foreign exchange and interest rate movements. The Group does not use such derivative (themost material of which is Aguas de Antofagasta S.A.) are taken to the currency translation
instruments for speculative trading purposes. reserve and are disclosed in the Consolidated Statement of Changes in Equity on page 65.
The Board of Directors is responsible for overseeing the Groups risk management framework. Currency sensitivity
The Board has established the Risk Management Committee, which is responsible for The sensitivity analysis below shows the impact of a movement in the US dollar/Chilean peso
developing and monitoring the Groups risk management policies. Internal Audit undertakes exchange rate on the financial instruments held as at the reporting date.
Overview
both regular and ad hoc reviews of risk management controls and procedures, the results of
The impact on profit or loss is as a result of the retranslation of monetary financial instruments
which are reported to the Risk Management Committee.
(including cash, trade receivables, trade payables, current tax balances and borrowings).
(i) Commodity price risk Theimpact on equity is as a result of changes in the fair value of derivative instruments
The Group generally sells its copper and molybdenum concentrate and copper cathodes output whichare effective designated cash flow hedges, and changes in the fair value of available
at prevailing market prices, subject to final pricing adjustments which may be 30 to 180 days forsale equity investments. The calculation assumes that all other variables, such as interest
after delivery to the customer, and it is therefore exposed to changes in market prices for rates, remain constant.
copper and molybdenum both in respect of future sales and previous sales which remain open If the US dollar had strengthened by 10% against the Chilean peso as at the reporting date, net
as to final pricing. In 2009, sales of copper and molybdenum concentrate and copper cathodes earnings would have decreased by US$4.0 million (2008 US$6.8 million); there would have
represented 90.8% of Group turnover and therefore revenues and earnings depend been no additional impact on equity. If the US dollar had weakened by 10% against the Chilean
significantly on LME and realised copper prices. peso as at the reporting date, net earnings would have increased by US$4.9 million (2008
Business Review
The Group uses futures, min-max instruments and options to manage its exposure to copper US$8.3 million increase); there would have been no additional impact on equity.
prices. These instruments may give rise to accounting volatility due to fluctuations in their (iii) Interest rate risk
fair value prior to the maturity of the instruments. Details of those copper and molybdenum
The Groups policy is generally to borrow and invest cash at floating rates. Fluctuations in
concentrate sales and copper cathode sales which remain open as to final pricing are given
interest rates may impact the Groups net finance income or cost, and to a lesser extent on
in Note 25(d). Details of commodity rate derivatives entered into by the Group are given in
thevalue of financial assets and liabilities. The Group occasionally uses interest rate swaps
Note 25(e).
andcollars to manage interest rate exposures on a portion of its existing borrowings.
Commodity price sensitivity Detailsofany interest rate derivatives entered into by the Group are given in Note 25(e).
The sensitivity analysis below shows the impact of a movement in the copper price on the The interest rate exposure of the Groups cash and cash equivalents is given in Note 22, and
financial instruments held as at the reporting date. A movement in the copper forward price the interest rate exposure of the Groups borrowings is given in Note 23.
Financial Review
asat the reporting date will affect the final pricing adjustment to sales which remain open at
Interest rate sensitivity
that date, impacting the trade receivables balance and consequently the income statement.
A movement in the copper forward price will also affect the valuation of commodity derivatives, The sensitivity analysis below shows the impact of a movement in interest rates in relation
impacting the hedging reserve in equity if the fair value movement relates to an effective tothe financial instruments held as at the reporting date. The impact on profit or loss is as
designated cash flow hedge, and impacting the income statement if it does not. The calculation aresult of the effect on interest expense in respect of floating rate borrowings, and interest
assumes that all other variables, such as currency rates, remain constant. income in respect of cash and cash equivalents. The impact on equity is as a result of changes
in the fair value of derivative instruments which are effective designated cash flow hedges.
If the copper forward price as at the reporting date had increased by 10 cents, net earnings
Thecalculation assumes that all other variables, such as currency rates, remain constant.
would have increased by US$0.2 million (2008 US$0.1 million) and hedging reserves in
equity would have decreased by US$13.8 million (2008 US$3.6 million). If the interest rate increased by 1%, based on the financial instruments held as at the reporting
date, net earnings would have increased by US$12.3 million (2008 US$22.5 million) and
If the copper forward price as at the reporting date had decreased by 10 cents, net earnings
hedging reserves in equity would have increased by US$13.6 million (2008 nil).
Governance
would have decreased by US$0.4 million (2008 US$0.1 million) and hedging reserves in
equity would have increased by US$13.0 million (2008 US$3.6 million). (iv) Other price risk
In addition, a movement in the average copper price during the year would impact revenue The Group is exposed to equity price risk on its available-for-sale equity investments.
andearnings. A 10 cents change in the average copper price during the year would affect net
earnings by US$48.8 million (2008 US$52.7 million) and earnings per share by 5.0 cents Equity price sensitivity
(2008 5.3 cents), based on production volumes in 2009, without taking into account the The sensitivity analysis below shows the impact of a movement in the equity values of the
effects of provisional pricing and hedging activity. A US$1 change in the average molybdenum available-for-sale financial assets held as at the reporting date.
price for the year would affect net earnings by US$8.2 million (2008 US$8.2 million), and If the value of the available-for-sale investments had increased by 10% as at the reporting date,
earnings per share by 0.8 cents (2008 0.8 cents), based on production volumes in 2009, equity would have increased by US$0.1 million (2008 US$0.1 million). There would have
and without taking into account the effects of provisional pricing. been no impact on the income statement.
(ii) Currency risk (v) Cash flow risk
The Group is exposed to a variety of currencies. The US dollar, however, is the currency in The Groups future cash flows depend on a number of factors, including commodity prices,
which the majority of the Groups sales are denominated. Operating costs are influenced by production and sales levels, operating costs, capital expenditure levels and financial income
thecountries in which the Groups operations are based (principally in Chile) as well as those and costs. Its cash flows are therefore subject to the exchange, interest rate and commodity
currencies in which the costs of imported equipment and services are determined. After the price risks described above as well as operational factors and input costs. Further information
US dollar, the Chilean peso is the most important currency influencing costs and to a lesser on production and sales levels and operating costs are given in the Business Review on
extent sales. pages 17 to 24.
Given the significance of the US dollar to the Groups operations, this is the presentational
(vi) Credit risk
currency of the Group for internal and external reporting. The US dollar is also the currency for
borrowing and holding surplus cash, although a portion of this may be held in other currencies, Credit risk arises from trade and other receivables, cash and cash equivalents and derivative
Other Information
notably Chilean pesos and sterling, to meet short-term operational and capital commitments financial instruments. The Groups credit risk is primarily to trade receivables. The credit risk
and dividend payments. oncash and cash equivalents and on derivative financial instruments is limited as the
counterparties are banks with high credit ratings assigned by international credit agencies.
When considered appropriate, the Group uses forward exchange contracts and currency
swaps to limit the effects of movements in exchange rates in foreign currency denominated All customers are subject to credit review procedures, including the use of external credit
assets and liabilities. The Group may also use these instruments to reduce currency exposure ratings where available. Credit is provided only within set limits, which are regularly reviewed.
on future transactions and cash flows. Details of any exchange rate derivatives entered Outstanding receivable balances are monitored on an ongoing basis.
bytheGroup in the year are given in Note 25(e).
25 Financial Instruments and Financial Risk Management continued

The carrying value of financial assets recorded in the financial statements represents the maximum exposure to credit risk. The amounts presented in the balance sheet are net of allowances for
any doubtful receivables.
(vii) Liquidity risk
The Group manages liquidity risk by maintaining adequate cash reserves and financing facilities, through the review of forecast and actual cash flows.
The Group typically holds surplus cash balances in either demand deposits or short-term deposits, while the majority of borrowings comprise corporate loans at Los Pelambres, repayable over
periods of up to five years, and corporate loans at Esperanza, repayable over approximately 12 years.
At the end of both 2009 and 2008, the Group was in a net cash position, as disclosed in Note 33. Details of cash and cash equivalents are given in Note 22, while details of borrowings including
the maturity profile are given in Note 23. Details of undrawn committed borrowing facilities are also given in Note 23(e).
The following table analyses the maturity of the Groups contractual commitments in respect of its financial liabilities and derivative financial instruments. The table has been drawn up based on
the undiscounted cash flows on the earliest date on which the Group can be required to pay. The table includes both interest and principal cash flows.
Between
Less than 6 months Between After 2009
6 months to 1 year 12 years 2 years Total
Corporate loans (252.9) (199.8) (142.9) (1,229.7) (1,825.3)
Finance leases (5.4) (3.8) (10.1) (54.4) (73.7)
Preference shares (0.1) (0.1) (0.2) (*) (0.4)
Trade and other payables (431.1) (6.5) (7.6) (4.7) (449.9)
Derivative financial instruments (41.0) (41.1) (5.7) 2.1 (85.7)
(731.9) (252.7) (169.1) (1,288.0) (2,441.7)
Between
Less than 6 months Between After 2008
6 months to 1 year 12 years 2 years Total
Corporate loans (76.7) (76.6) (153.3)
Finance leases (1.9) (1.9) (7.8) (43.5) (55.1)
Preference shares (0.1) (0.1) (0.2) (*) (0.4)
Trade and other payables (593.8) (3.3) (7.0) (3.0) (607.1)
Derivative financial instruments (1.4) (1.4)
(827.8) (82.8) (92.9) (46.6) (1,050.1)
* The preference shares pay an annual dividend of 100,000 (US$155,910) in perpetuity, and accordingly it is not possible to determine total amounts payable for periods without a fixed end date.
(viii) Capital risk management

The Groups objective when managing its capital is to safeguard the Groups ability to continue as a going concern while maximising the return to stakeholders through the optimal capital
structure.
The capital structure of the Group consists of debt, which includes the borrowings disclosed in Note 23, cash and cash equivalents as disclosed in Note 22 and equity attributable to minority
interest and equity holders of the Company, comprising issued capital, reserves and retained earnings as disclosed in Note 29.
The Group reviews its capital structure on a regular basis. Based on this, the Group will balance its overall capital structure through the payment of ordinary and special dividends, the issue of
new shares or repurchase of existing shares, the raising of additional debt or the redemption of existing debt. The Groups overall strategy remains unchanged from the prior year.
d) Embedded derivatives provisionally priced sales

Copper and molybdenum concentrate sale agreements and copper cathode sale agreements generally provide for provisional pricing of sales at the time of shipment, with final pricing being
based on the monthly average London Metal Exchange copper price or monthly average molybdenum price for specified future periods. This normally ranges from 30 to 180 days after delivery
to the customer.
Under IFRS, both gains and losses from the marking-to-market of open sales are recognised through adjustments to turnover in the income statement and to trade debtors in the balance sheet.
The Group determines mark-to-market prices using forward prices at each period end for copper concentrate and cathode sales, and period-end month average prices for molybdenum
concentrate sales due to the absence of a futures market for that commodity.
The mark-to-market adjustments at the end of each period and the effect on turnover in the income statement for each period are as follows:
Balance sheet
Overview
net mark to market
effect on debtors
2009 2008
US$m US$m
Los Pelambres copper concentrate 62.1 (257.6)
Los Pelambres tolling charges for copper concentrates (0.6) 4.5
Los Pelambres molybdenum concentrate (1.1) (13.3)
El Tesoro copper cathodes 2.0 (0.8)
Michilla copper cathodes 0.4 0.2
Business Review
62.8 (267.0)
(i) Copper sales

Los Los
Pelambres El Tesoro Michilla Pelambres El Tesoro Michilla
Copper Copper Copper Copper Copper Copper
concentrate cathodes cathodes concentrate cathodes cathodes
2009 2009 2009 2008 2008 2008
Provisionally invoiced gross sales 1,602.8 476.5 204.5 2,392.8 644.2 331.0
Effects of pricing adjustments to previous year invoices
Financial Review
Reversal of mark-to-market adjustments at the end of the previous year 257.6 0.8 (0.2) 72.8 1.0 (0.1)
Settlement of copper sales invoiced in the previous year (179.6) 0.6 1.3 58.3 1.9 1.0
Total effect of adjustments to previous year invoices in the current year 78.0 1.4 1.1 131.1 2.9 0.9
Effects of pricing adjustments to current year invoices
Settlement of copper sales invoiced in the current year 240.2 27.7 10.3 (415.4) (30.0) (13.3)
Mark-to-market adjustments at the end of the current year 62.1 2.0 0.4 (257.6) (0.8) 0.2
Total effects of adjustments to current year invoices 302.3 29.7 10.7 (673.0) (30.8) (13.1)
Total pricing adjustments 380.3 31.1 11.8 (541.9) (27.9) (12.2)
Governance
Realised (losses)/gains on commodity derivatives (20.0) (45.8) 16.1 13.9
Turnover before deducting tolling charges 1,983.1 487.6 170.5 1,850.9 632.4 332.7
Tolling charges (125.1) (113.1)
Turnover net of tolling charges 1,858.0 487.6 170.5 1,737.8 632.4 332.7
i) Copper concentrate
At 31 December 2009 copper concentrate sales at Los Pelambres had an average settlement period of approximately three months after shipment date. Sales totalling 73,700 tonnes
remainedopen as to price, with an average mark-to-market price of US334.0 cents per pound compared with an average provisional invoice price of US295.8 cents per pound.
At 31 December 2008 copper concentrate sales at Los Pelambres had an average settlement period of approximately four months after shipment date. Sales totalling 123,800 tonnes
remainedopen as to price, with an average mark-to-market price of US138.9 cents per pound compared with an average provisional invoice price of US233.3cents per pound.
Tolling charges include a mark-to-market loss for copper concentrate sales open as to price at 31 December 2009 of US$5.1 million (31 December 2008 mark-to-market gain
of US$1.9 million).
ii) Copper cathodes
At 31 December 2009 and 31 December 2008 copper cathode sales at El Tesoro and Michilla had an average settlement period of approximately one month after shipment date.
At 31 December 2009, sales totalling 10,400 tonnes remained open as to price, with an average mark-to-market price of US 333.5 cents per pound compared with an average provisional
invoice price of US322.9 cents per pound.
At 31 December 2008 sales totalling 13,200 tonnes remained open as to price, with an average mark-to-market price of US138.3 cents per pound compared with an average provisional
invoiceprice of US140.3 cents per pound.
Other Information

(ii) Molybdenum sales
Los Los
Pelambres Pelambres
Molybdenum Molybdenum
concentrate concentrate
2009 2008
US$m US$m
Provisionally invoiced gross sales 189.2 508.2
Effects of pricing adjustments to previous year invoices
Reversal of mark-to-market adjustments at the end of the previous year 13.3 (0.1)
Settlement of molybdenum sales invoiced in the previous year (15.5) 2.7
Total effect of adjustments to previous year invoices in the current year (2.2) 2.6
Effects of pricing adjustments to current year invoices
Settlement of molybdenum sales invoiced in the current year 6.4 (90.5)
Mark-to-market adjustments at the end of the current year (1.1) (13.3)
Total effects of adjustments to current year invoices 5.3 (103.8)
Total pricing adjustments 3.1 (101.2)
Turnover before deducting tolling charges 192.3 407.0
Tolling charges (12.2) (12.2)
Turnover net of tolling charges 180.1 394.8
At 31 December 2009 molybdenum sales at Los Pelambres had an average settlement period of approximately two months after shipment date. Sales totalling 1,400 tonnes remained open
asto price, with an average mark-to-market price of US$11.3 per pound compared with an average provisional invoice price of US$11.6 per pound.
At 31 December 2008 molybdenum concentrate sales at Los Pelambres had an average settlement period of approximately three months after shipment date. Sales totalling 2,000 tonnes
remained open as to price, with an average mark-to-market price of US$9.5 per pound compared with an average provisional invoice price of US$12.5 per pound.
e) Derivative financial instruments
The Group periodically uses derivative financial instruments to reduce its exposure to commodity price, foreign exchange and interest rate movements. The Group does not use such derivative
instruments for speculative trading purposes.
The Group has applied the hedge accounting provisions of IAS 39 Financial Instruments: Recognition and Measurement. Changes in the fair value of derivative financial instruments that are
designated and effective as hedges of future cash flows have been recognised directly in equity, with such amounts subsequently recognised in the income statement in the period when the
hedged item affects profit or loss. Any ineffective portion is recognised immediately in the income statement. Realised gains and losses on commodity derivatives recognised in the income
statement have been recorded within turnover. The time value element of changes in the fair value of derivative options is excluded from the designated hedging relationship, and is therefore
recognised directly in the income statement within other finance items. Realised gains and losses and changes in the fair value of exchange and interest derivatives are recognised within
otherfinance items.
Total balance
sheet impact of
Impact on mark-to-market
Impact on income statement reserves adjustments
Gains/(losses) Gains/(losses)
resulting from resulting from
mark-to-market mark-to-market
adjustments on adjustments on
Realised hedging Total hedging Net financial
losses instruments net loss instruments asset/(liability)
2009 2009 2009 2009 2009
Overview
Commodity derivatives
El Tesoro (20.0) 0.9 (19.1) (52.5) 0.1
Michilla (45.8) (2.0) (47.8) (75.9) (77.9)
Exchange derivatives
Corporate and other items (0.8) (0.2) (1.0) (0.2)
Railway and other transport services (8.4) 1.6 (6.8) 1.6
Water concession (2.7) (1.9) (4.6) (1.9)
Interest derivatives
Business Review
Esperanza (5.7) (5.7)
(77.7) (1.6) (79.3) (134.1) (84.0)
Total balance
sheet impact of
Impact on mark-to-market
Impact on income statement reserves adjustments
Gains/(losses) Gains/(losses)
resulting from resulting from
Financial Review
mark-to-market mark-to-market
adjustments on adjustments on
hedging hedging Net financial
Realised gains instruments Total net gain instruments asset/(liability)
2008 2008 2008 2008 2008
Commodity derivatives
El Tesoro 16.1 (1.1) 15.0 52.6 51.7
Michilla 13.9 (0.5) 13.4
Exchange derivatives
Governance
Railway and other transport services (1.4) (1.4) (1.4)
30.0 (3.0) 27.0 52.6 50.3
The gains/(losses) recognised in reserves are disclosed before minority interest and tax.
The net financial asset/(liability) resulting from the balance sheet mark-to-market adjustments are analysed as follows:
2009 2008
US$m US$m
Analysed between:
Current assets 1.7 51.7
Current liabilities (81.2) (1.4)
Non-current liabilities (4.5)
(84.0) 50.3
Outstanding derivative financial instruments

(i) Commodity derivatives
(a) Min/max instruments
000 tonnes of copper production hedged For instruments held at 31.12 .09
Weighted
average
Other Information
remaining period
Entered into post Matured post from 1 January Weighted Weighted
At 31.12.2009 period end period end At 28.02.10 2010 Covering a average floor average cap
000 tonnes 000 tonnes 000 tonnes 000 tonnes Months period up to US cents US cents
Michilla 22,200 (1,850) 20,350 6.5 31/12/2010 186.8 237.8
In 2009, 61,400 tonnes of 2009 Group copper production was hedged either during or before the start of 2009, all of which matured in the year.

Up to 28 February 2010, 22,200 tonnes of 2010 Group copper production has been hedged with min-max options of which 1,850 tonnes matured by 28 February 2010 and 20,350 tonnes
remain outstanding and will mature by the end of the year.
(b) Futures copper production
000 tonnes of copper production hedged For instruments held at 31.12.09
Weighted average
remaining period
Entered into post Matured post from 1 January Weighted
At 31.12.2009 period end period end At 28.02.10 2010 Covering a average price
000 tonnes 000 tonnes 000 tonnes 000 tonnes Months period up to US cents
Michilla 9,800 (1,000) 8,800 6.4 31/12/2010 199.9
In 2009, 17,850 tonnes of 2009 Group copper production was hedged either during or before the start of 2009, all of which matured in the year.
Up to 28 February 2010 9,800 tonnes of 2010 Group copper production has been hedged with futures of which 1,000 tonnes matured by 28 February 2010 and 8,800 tonnes remain
outstanding and will mature by the end of the year.
(c) Combined min-max instruments and futures-copper production
In total, in 2009, 79,250 tonnes of 2009 Group copper production was hedged either during or before the start of 2009, all of which matured in the year.
In total, up to 28 February 2010 32,000 tonnes of 2010 Group copper production has been hedged with either min-max options or futures of which 2,850 tonnes matured by 28 February 2010
and 29,150 tonnes remain outstanding and will mature by the end of the year.
(d) Futures arbitrage
The Group also has futures for copper production, to buy and sell copper production with the effect of swapping COMEX prices for LME prices without eliminating underlying market price exposure.
000 tonnes of copper production hedged For instruments held at 31.12.09
Weighted
average
remaining period
At 31.12.2009 period end period end At 28.02.10 2010 Covering a average price
000 tonnes 000 tonnes 000 tonnes 000 tonnes Months period up to US cents
El Tesoro 6,500 100 (500) 6,100 7.0 31/01/2011 278.7
(ii) Exchange derivatives

The Group periodically uses foreign exchange derivatives to reduce its exposure to fluctuations in the fair value of non-US dollar denominated assets or liabilities.
The Group has used cross currency swaps to swap Chilean pesos for US dollars:
Principal value of cross currency swaps held For instruments held at 31.12.09
Weighted
average
remaining period
At 31.12.2009 period end period end At 28.02.10 2010 Covering a average rate
US$m US$m US$m US$m Months period up to Ch$/US$
Esperanza 68.0 68.0
Corporate and other items 24.7 10.0 30.2 4.5 2.0 01/04/2010 511.0
Railway and other transport services 68.8 56.8 68.8 56.8 1.0 31/01/2011 496.8
Water concession 9.3 6.2 3.1 2.0 31/01/2011 608.5
102.8 66.8 105.2 64.4 1.9 510.3
(iii) Interest derivatives

The Group periodically uses interest derivatives to reduce its exposure to interest rate movements.
The Group has used interest rate swaps to swap the floating rate interest relating to the Esperanza financing for fixed rate interest. At 31 December 2009 the Group had entered into the
contracts outlined below:
Maximum notional Weighted average
amount fixed rate
Phase Start date Maturity date US$m %
Esperanza 1 15/02/2010 15/02/2011 787.8 1.353
Esperanza 2 15/02/2011 15/02/2018 840.0 3.372
Overview
26 Post-Employment Benefit Obligations
a) Defined contribution schemes

The Group operates defined contribution schemes for a limited number of employees.
The amount charged to the income statement in 2009 was US$0.1 million (2008 less than Amounts included in the income statement in respect of severance provisions are as follows:
2009 2008
US$0.1million), representing the amount paid in the year. There were no outstanding amounts US$m US$m
which remain payable at the end of either year.
Current service cost (charge to operating profit) (3.8) (10.1)
b) Severance provisions Actuarial losses (charge to operating costs) (9.5) (0.5)
Business Review
Employment terms at some of the Groups operations provide for payment of a severance Interest cost (charge to interest expenses) (1.3) (1.2)
indemnity when an employment contract comes to an end. This is typically at the rate of one
Foreign exchange (charge)/credit to other finance items (8.4) 9.4
month for each year of service (subject in most cases to a cap as to the number of qualifying
years of service) and based on final salary level. The severance indemnity obligation is treated Total charge to income statement (23.0) (2.4)
as an unfunded defined benefit plan, and the obligation recognised is based on valuations
Movement in the present value of severance provisions were as follows:
performed by an independent actuary using the projected unit credit method, which are
regularly updated. The obligation recognised in the balance sheet represents the present value 2009 2008
US$m US$m
of the severance indemnity obligation. Actuarial gains and losses are immediately recognised
inthe income statement within operating cost. Balance at the beginning of the year (29.0) (29.1)
The most recent valuation was carried out in 2009 by Ral Benavente, a qualified actuary in Current service cost (3.8) (10.1)
Financial Review
Santiago, Chile who is not connected with the Group. The main assumptions used to determine Actuarial gains and losses (9.5) (0.5)
the actuarial present value of benefit obligations were as follows: Charge capitalised (0.4) (0.5)
2009 2008 Reclassification (0.4)
Average nominal discount rate 5.5% 5.5% Interest cost (1.3) (1.2)
Average rate of increase in salaries 1.5% 2.0% Paid in the year 4.6 3.0
Average staff turnover 3.5% 3.0% Foreign currency exchange difference (8.4) 9.4
Governance
27 Deferred Tax
The following are the major deferred tax liabilities and assets recognised by the Group and movements thereon during 2008 and 2009:
Accelerated Timing
capital differences Withholding Short-term Mining tax
allowances on provisions tax differences (Royalty) Tax losses Total
At 1 January 2008 (234.9) 21.1 (155.4) (1.1) (0.1) 9.5 (360.9)
(Charge)/credit to income (67.2) 37.9 48.2 6.2 4.1 (2.5) 26.7
Charge capitalised (12.2) (12.2)
Charge deferred in equity (9.0) (9.0)
At 1 January 2009 (314.3) 59.0 (107.2) (3.9) 4.0 7.0 (355.4)
Charge to income (37.3) (37.2) (27.7) (22.5) (12.9) (0.1) (137.7)
Charge capitalised (8.4) (8.4)
Credit deferred in equity 22.8 22.8
At 31 December 2009 (360.0) 21.8 (134.9) (3.6) (8.9) 6.9 (478.7)
The charge to the income statement of US$137.7 million (2008 US$26.7 million credit) includes a charge for foreign exchange differences of US$5.1 million (2008 includes a credit of
US$4.7 million).
Other Information
27 Deferred Tax continued a) Decommissioning and site rehabilitation

Certain deferred tax assets and liabilities have been offset. The following is the analysis of the Decommissioning and restoration costs relate to the Groups mining operations. Costs are
deferred tax balance (after offset): estimated on the basis of a formal closure plan and are subject to regular independent
2009 2008 formal review.
US$m US$m New assessments of the closure provisions for all mining operations have been performed
Deferred tax assets 31.1 12.7 byexternal consultants, resulting in a US$105.1 million increase to the capitalised
Deferred tax liabilities (509.8) (368.1) decommissioning and restoration provision. The capitalised provision balances are depreciated
over the life of the corresponding asset or mine life if shorter. The increase in the provision
Net deferred tax balances (478.7) (355.4)
balance is mainly due to the significant amount of construction work at Esperanza since the
At 31 December 2009, the Group had unused tax losses of US$40.8 million (2008 previous assessments.
US$41.2million) available for offset against future profits. A deferred tax asset has been It is estimated that the provision will be utilised over a period of up to 27 years based on current
recognised in respect of the full US$40.8 million (2008 US$41.2 million). In 2008, mine plans.
theselosses may be carried forward indefinitely.
b) Termination of water concession
At 31 December 2009, there were no other deductible temporary differences, for which
nodeferred tax assets were recognised in the balance sheet. Equal situation occurred at A provision for the termination of the water concession relates to the provisions for items
31 December 2008. of property, plant and equipment and working capital items under Aguas de Antofagastas
ownership to be transferred to the previous state-owned operator ECONSSA at the end
At 31 December 2009, the aggregate amount of temporary differences associated with
of theconcession period. The provision is based on the net present value of the estimated
undistributed earnings of subsidiaries for which deferred tax liabilities have not been
value of these assets and liabilities expected to be in existence at the end of the concession.
recognised was US$4,047.3 million (2008 US$3,440.9 million). No liability has been
recognised in respect of these differences because the Group is in a position to control The release of the discount applied in establishing the net present value of future costs is
thetiming of the reversal of the temporary differences and it is likely that such differences charged to the income statement in each accounting period and is disclosed within other
willnotreverse in the foreseeable future. finance items.
Temporary differences arising in connection with interests in associates are insignificant.
29 Share Capital and Other Reserves
28 Long-term Provisions a) Share capital
2009 2008 The ordinary share capital of the Company is as follows:
US$m US$m
2009 2008 2009 2008
Balance at the beginning of the year (18.0) (10.9) Number Number US$m US$m
Charge to operating profit in the year (2.2) (5.0) Authorised
Release of discount to net interest in the year (1.5) (0.8) Ordinary shares
Change in estimates (105.1) of 5p each 1,300,000,000 1,300,000,000 118.9 118.9
Reclassification 0.4 (0.7)
Charge capitalised (1.3) (0.7) 2009 2008 2009 2008
Number Number US$m US$m
Foreign currency exchange difference (0.2) 0.1
Issued and fully paid
Ordinary shares
of 5p each 985,856,695 985,856,695 89.8 89.8
Analysed as follows:
The Company has one class of ordinary shares which carry no right to fixed income.
Decommissioning and restoration (127.1) (17.5)
Eachordinary share carries one vote at any general meeting.
Termination of water concession (0.8) (0.5)
There were no changes in the authorised or issued share capital of the Company in either
Balance at the end of the year (127.9) (18.0) 2008 or 2009. Details of the Companys preference share capital, which is included within
borrowings in accordance with IAS 32, are given in Note 23.
b) Other reserves
Details of the share premium account, hedging, fair value and translation reserves and retained
earnings for both 2008 and 2009 are included within the Consolidated Statement of Changes
in Equity on page 65.
30 Minority Interests
The minority interests of the Group are as follows:
Share of Acquisition of
profit for the minority Share of Hedging Exchange
At 01.01.09 financial year interests dividends reserves differences At 31.12.09
Los Pelambres 743.4 399.5 (280.0) 862.9
El Tesoro 229.5 46.5 (30.0) (13.1) 232.9
Michilla 10.3 6.0 (16.3)
Overview
Esperanza 169.6 (1.3) 168.3
Caracoles (1.4) 1.4
Railway and other transport services 14.4 0.2 0.1 14.7
Total 1,165.8 452.2 1.4 (310.0) (30.7) 0.1 1,278.8
The minority share of movements in reserves was US$30.7 million.
31 Acquisitions 32 Other Transactions

There have been no business combinations that would require disclosures under IFRS3 In March 2009 Aguas de Antofagasta S.A. (Aguas de Antofagasta) acquired the desalination
Business Combinations during the year ended 31 December 2009. This note sets out a plant located in the city of Antofagasta from the current owner, Desalant S.A. (Desalant)
Business Review
summary of other transactions that occurred during the year ended 31 December 2009 forapurchase price of US$52.5 million. As part of this agreement, on-going arbitration
which resulted in the acquisition of an interest in various assets. proceedings between Aguas de Antofagasta and Desalant were also terminated. The
desalination plant will be held under the terms of the 30-year concession from the previous
Acquisition of minority interest in Caracoles
state-owned operator Empresa Concesionaria de Servicios Sanitarios S.A. (ECONSSA).
In February 2009 the Group acquired the 18.5% minority interest in its subsidiary Compaa
In March 2009 the Group entered into an agreement with Almaden Minerals Ltd (Almaden)
Contractual Minera Caracoles from Compaa Minera Milpo of Per, for consideration of
to acquire an interest in the Tuligtic copper-gold project in Mexico. Following the review of initial
US$25.0 million.
drilling results, the Group has decided not to proceed further with this project.
Acquisition of interest in Inversiones Hornitos S.A. In October 2009 the Group entered into an agreement with Ormonde Mining plc (Ormonde)
On 3 July 2009, the Group, through its wholly-owned subsidiary Antofagasta Railway Company in respect of its La Zarza deposit in southern Spain. The Group has the right to earn a 51%
Financial Review
plc, exercised an option to acquire a 40% interest in Inversiones Hornitos S.A. (Inversiones interest in the deposit over a three-year period by funding US$7 million of exploration and
Hornitos) from GDF SUEZ, which will continue to hold the remaining 60% interest. Inversiones subsequent evaluation activities, with a minimum commitment of US$1 million in the first year.
Hornitos is the owner of the 150MW Hornitos thermoelectric power plant which is being Antofagasta will have the right to further increase its interest in the La Zarza project to 75%
constructed in Mejillones, in Chiles Antofagasta Region. The Hornitos thermoelectric power byfunding a feasibility study for the project.
plant, which is expected to begin commercial operation in 2011, will provide energy to Minera In November 2009 the Group entered into an agreement with International Base Metals
Esperanza to meet its energy requirements, under a long-term supply agreement signed at the Limited (IBML) of Australia in respect of its Kopermyn mining property in northern Namibia.
end of 2007 between GDF SUEZ and Antofagasta Minerals S.A. (Antofagasta Minerals), the The Group has the right to earn up to a 60% interest in the property over a two-year period
Groups mining division. The acquisition of the 40% interest in Inversiones Hornitos took place by funding up to US$1.8 million of exploration activities, with a minimum commitment
under an option granted to Antofagasta Minerals S.A. when the long-term supply agreement of US$0.5 million.
was signed. Under the acquisition, the Group is responsible for its 40% share of the estimated
In December 2009 the Group entered into an agreement with Carbon Energy Limited
total US$0.4 billion development costs of the Hornitos thermoelectric power plant. This include
Governance
(CarbonEnergy), whereby Carbon Energy can earn a 30% stake in the Mulpun deposit,
an initial payment made on 15 July 2009 of US$80.9 million to GDF SUEZ, representing the
through applying its underground coal gasification technology to the project and through
Groups share of costs already incurred plus interest to the date of acquisition. Further capital
funding 30% of the development costs of a trial project.
contributions of US$28.6 million were made by the Group to Inversiones Hornitos between
15 July 2009 and the date of this report.
Acquisition of interest in Sunridge Gold Corp
In September 2009 the Group entered into an exploration and evaluation agreement with
Sunridge Gold Corp (Sunridge). Under this agreement the Group can earn an initial 60%
interest in Sunridges Asmara project in Eritrea by funding US$10 million of exploration and
evaluation work over a five-year period, and a further 15% interest (for an aggregate 75%
interest in the project) by delivering a feasibility study on the project. In October 2009 the Financial Statements
Group acquired approximately 18% of the issued share capital of Sunridge under a private
placement for a consideration of US$5 million.
Other Information
33 Notes to the Consolidated Cash Flow Statement

a) Reconciliation of profit before tax to net cash inflow from operating activities
2009 2008
US$m US$m
Profit before tax 1,437.6 2,609.5
Depreciation and amortisation 217.5 180.2
Loss on disposal of property, plant and equipment 4.2 5.3
Asset impairments 188.3
Profit on part-disposal of subsidiaries (1,024.9)
Net finance expense/(income) 25.9 (56.3)
Share of profit of associate (4.5) (2.3)
Increase in inventories (59.8) (26.0)
(Increase)/decrease in debtors (266.2) 133.0
(Decrease)/increase in creditors and provisions (186.9) 447.5
Cash flows from operations 1,167.8 2,454.3
b) Analysis of changes in net cash

At 1.1.09 Cash flows Other Exchange At 31.12.09
Cash and cash equivalents 3,358.0 (188.5) 52.8 3,222.3
Bank borrowings due within one year (306.0) (43.3) (77.1) (0.1) (426.5)
Bank borrowings due after one year (77.6) (1,144.7) 76.6 (1,145.7)
Finance leases due within one year (13.0) 10.9 (3.5) 0.3 (5.3)
Finance leases due after one year (39.4) 0.1 (6.6) (45.9)
Preference shares (2.9) (0.3) (3.2)
Total borrowings (438.9) (1,177.1) (3.9) (6.7) (1,626.6)
Net cash 2,919.1 (1,365.6) (3.9) 46.1 1,595.7
At 1.1.08 Cash flows Other Exchange At 31.12.08

Cash and cash equivalents 2,212.5 1,169.6 (24.1) 3,358.0
Bank borrowings due within one year (101.6) (129.8) (74.8) 0.2 (306.0)
Bank borrowings due after one year (160.2) 82.6 (77.6)
Finance leases due within one year (0.2) 9.8 (22.6) (13.0)
Finance leases due after one year (38.2) (1.2) (39.4)
Preference shares (4.0) 1.1 (2.9)
Total borrowings (266.0) (120.0) (53.0) 0.1 (438.9)
Net cash 1,946.5 1,049.6 (53.0) (24.0) 2,919.1
c) Net cash
2009 2008
US$m US$m
Cash and cash equivalents 3,222.3 3,358.0
Total borrowings (1,626.6) (438.9)
1,595.7 2,919.1
34 Operating Lease Arrangements 37 Related Party Transactions

2009 2008 Transactions between the Company and its subsidiaries, which are related parties, have been
US$m US$m eliminated on consolidation and are not disclosed in this note. Transactions between the Group
Minimum lease payments under operating leases and its associate are disclosed below.
recognised in income for the year 14.8 11.4
The transactions which Group companies entered into with related parties who are not
members of the Group are set out below.
At the balance sheet date, the Group had outstanding commitments for future minimum lease
payments under non-cancellable operating leases, which fall due as follows: a) Quienco S.A.
2009 2008 Quienco S.A. (Quienco) is a Chilean financial and industrial conglomerate the shares
US$m US$m of which are traded on the Santiago Stock Exchange. The Group and Quienco are both
Overview
Within one year 10.8 9.1 under the control of the Luksic family, and three Directors of the Company, Mr. J-P Luksic,
In the second to fifth years inclusive 18.1 10.7 Mr. GA Luksic and Mr. GS Menndez, are also directors of Quienco.
After five years 5.4 The following material transactions took place between the Group and the Quienco group
34.3 19.8 ofcompanies, all of which were on normal commercial terms:
the Group sold copper cathodes during the year for US$2.3 million (2008 US$8.9 million)
Operating lease payments relate mainly to rental of plant and equipment by operating to Madeco S.A., a subsidiary of Quienco. The balance due from Madeco at the end of the
subsidiaries of the Group. year was nil (2008 US$0.8 million);
the Group bought copper wire from Madeco for less than US$0.1 million
35 Concession Arrangements (2008 US$0.3million);
Business Review
In 2003, the Group was awarded a 30-year concession to operate the water rights and the Group earned interest income of US$0.1 million (2008 US$0.3 million) during the year
facilities in the Antofagasta Region of Chile previously controlled by Empresa Concesionaria on deposits with Banco de Chile, a subsidiary of Quienco. Deposit balances at the end of
deServicios Sanitarios S.A. (ECONSSA). The concession consists of two businesses, one the year were US$31.7 million (2008 nil); and
anunregulated business supplying mines and other industrial users and the other a regulated
the Groups transport division did not provided trucking services for beverages (2008
water business supplying domestic customers. The concession contract was signed and
US$1.3 million) to Compaia Cervecens Unidas S.A., an associate of Quienco.
control of the assets and operation assumed on 29 December 2003 by Aguas de Antofagasta,
The balance due from CCU S.A. atthe end of the year was nil (2008 US$0.1 million).
a wholly-owned subsidiary of the Group.
Under the concession contract, certain assets and liabilities (mainly certain specific tangible b) Compaa de Inversiones Adritico S.A.
fixed assets and working capital items) were transferred to Aguas de Antofagasta by way of In 2009, the Group leased office space on normal commercial terms from Compaa
sale. Other assets (mainly water rights and infrastructure) were transferred by way of de Inversiones Adritico S.A., a company controlled by the Luksic family, at a cost of
Financial Review
concession and will devolve to ECONSSA at the end of the 30-year period. US$0.7million (2008 US$0.6 million).
Aguas de Antofagasta will also be required to transfer to ECONSSA any tangible fixed assets c) Compaa Antofagasta Terminal Internacional S.A.
andworking capital items under its ownership at the end of the 30-year concession period.
Aprovision for the termination of the water concession has been created for the fixed assets As explained in Note 17, the Group acquired a 30% interest in Antofagasta Terminal
and working capital items under Aguas de Antofagastas ownership to be transferred to Internacional S.A. (ATI) on 16 December 2004, which has been treated in these financial
ECONSSA at the end of the concession period. The provision is based on the net present value statements as an associate. During 2009, the Group received a dividend of US$0.7 million
of the estimated value of these assets and liabilities in existence at the end of the concession. from ATI (2008 US$1.8 million).
Therelease of the discount applied in establishing the net present value of future costs is d) Antomin Limited, Antomin 2 Limited and Antomin Investors Limited
charged to the income statement in each accounting period and is disclosed as a financing
In August 2008 the Group acquired Mineralinvest Establishments (Mineralinvest) interest
cost. Further details of this provision are given in Note 28(b).
in mining properties required for the Marubeni transaction together with certain other
Governance
The Chilean Water Regulator (Superintendencia de Servicios Sanitarios) sets domestic properties. Prior to the completion of this transaction these properties were held in Antomin
tariffsevery five years following a regulatory review including representations from the Limited (Antomin), in which the Group held an approximately 51% interest and Mineralinvest
operatorof theconcession. The last regulatory review was completed during 2006, which held an approximately 49% interest. The consideration payable by the Group to Mineralinvest
resulted in anaverage reduction in tariffs (compared with previous levels) of approximately under the terms of this agreement was US$243 million. Mineralinvest is an entity ultimately
5%from July2006. controlled by the Luksic family.
The Group acquired its original interest in Antomin pursuant to an agreement in 2001 for
36 Exchange Rates in US Dollars anominal consideration from Mineralinvest. Under the terms of the acquisition agreement,
The principal exchange rates expressed in US dollars used in the preparation of the 2009 theGroups committed to meet in full the exploration and evaluation costs relating to those
financial statements are as follows: properties held by Antomin. The cumulative amount incurred to 31 December 2008
2009 2008 (includingexpenditure relating to those properties wholly acquired by the Group during
theyear) was US$11.8 million. Financial Statements
Year end rates US$1.6062 = 1; US$1.4428 = 1;
US$1 = Ch$507 US$1 = Ch$636 The remaining properties owned by Antomin which were not to be 100% acquired by the
Average rates US$1.5591 = 1; US$1.8386 = 1; Group under the terms of this agreement were separated into newly created indirect
US$1 = Ch$559 US$1 = Ch$522 subsidiaries of Antofagasta (Antomin 2 Limited (Antomin 2) and Antomin Investors Limited
(Antomin Investors)), which will continue to be owned approximately 51% by the Group and
approximately 49% by Mineralinvest. With respect to Antomin 2 and Antomin Investors,
Antofagasta will have the exclusive right to acquire at fair value under certain conditions,
theshareholding of Mineralinvest in those entities, or the underlying properties, for a period
offive years from August 2008. The Group has also committed to meet in full any exploration
costs relating to the properties held by these entities. No exploration and evaluation
Other Information
expenditurewas incurred in respect of these properties during year (2008 nil).

Furtherdetailsof the mining properties held by Antomin 2 and Antomin Investors are
includedwithin the Ore Reserves and Mineral Resources Estimates.
37 Related Party Transactions continued 38 Contingent Assets and Contingent Liabilities

e) Tethyan Copper Company Limited There are a number of claims currently outstanding to which Antofagasta plc or its subsidiaries
(the Group) is a party, for which no provision has been made in the financial statements
As explained in Note 18(a), during 2006 the Group entered into a joint venture agreement with
andare currently not expected to result in any material loss to the Group. Details of the
Barrick Gold Corporation (Barrick Gold) to establish a 50:50 joint venture over Tethyans
principal claims in existing either during or at the end of the year and their current status are
mineral interests in Pakistan.
setout below:
During the year the Group contributed US$31.1 million (2008 US$46.1 million) to Tethyan,
toprovide funds for Tethyans on-going exploration and evaluation programme. The balance a) Los Pelambres Mauro tailings dam
due from Tethyan to Group companies at the end of the year was US$0.5 million (2008 As previously announced, during 2008 Los Pelambres entered into binding settlements in
US$1.4 million). Details of amounts relating to Tethyan included in the consolidated financial respect of litigation relating to the Mauro tailings dam. In December 2008, Los Pelambres
statements of the Group under the proportionate consolidation method are set out in became aware of further legal proceedings of which had been initiated in first instance courts
Note18(a). in Santiago and Los Vilos by certain members of the Caimanes community located near the
f) Energa Andina S.A. Mauro valley. These claims, some of which have already been rejected by the relevant courts,
sought to prevent the operation of the Mauro tailings dam. Los Pelambres is continuing to take
In October 2008 Energa Andina S.A. was formed, a joint venture between the Group and
necessary steps to protect its position and remains confident of its rights to continue operation
Empresa Nacional del Petrleo (ENAP) of Chile. During 2008 the Group contributed
of the dam.
US$9.0million to Energa Andina S.A. to provide funds for its operations (comprising
US$8.5million in cash and US$0.5 million relating to exploration licences and other expenses b) Tethyan Copper Company Limited Chagai Hills Exploration Joint Venture
incurred by the Group). The balance due from Energa Andina S.A. to the Group at the end of On 26 June 2007 the High Court of Baluchistan at Quetta dismissed a petition which had
2009 was US$0.2 million (2008 US$0.2 million). sought to declare that the Chagai Hills Exploration Joint Venture of 1993 and the exploration
g) Ingeniera y Servicios Computacionales Geovectra S.A. licences granted to Tethyan were null and void and overturned an injunction passed earlier by
the Court. The petition had been filed in November 2006 and was directed at several parties
In 2009, the Group did not paid fees (2008 US$66,771) for geological and technology
including the Group, the Government of Pakistan and the Government of Baluchistan.
services to Ingeniera y Servicios Computacionales Geovectra S.A. (Geovectra), a company
controlled by Mr. J W Ambrus. Mr. Ambrus was a Director of the Company in both 2008 and The petitioners have filed a Civil Petition for Leave to Appeal (CPLA) against the judgement
2009 until 14 October 2009. These services were on normal arms length commercial terms and this will be heard by the Supreme Court to decide whether the appeal should be heard on
for services performed by employees of Geovectra. its merits.
h) Minera Cerro Centinela S.A.
39 Events After the Balance Sheet Date
Minera Cerro Centinela S.A. (Centinela), an entity ultimately controlled by the Luksic family,
has an interest of 7.973% in Minera Michilla S.A. (Michilla), a shareholding it has held since a) Duluth Metals Limited
Michilla was created through the merger of two predecessor companies on 31 December On 14 January 2010, the Group signed a legally binding Heads of Agreement (HoA) with
1993. During the year ended 31 December 2009 Centinelas share of dividends received from Duluth Metals Limited (Duluth Metals), a company listed on the Toronto Stock Exchange
Michilla were nil (31 December 2008 (US$7.0 million) (TSX), pursuant to which Antofagasta will initially become a 40% partner in Duluth Metals
Nokomis copper-nickel-platinum group metal (PGM) deposit (Nokomis), located in the
i) Directors and other key management personnel
highly prospective Duluth Complex in northeastern Minnesota, USA by committing to fund a
Information relating to Directors remuneration and interests are given in the Remuneration total of US$130.0 million of further exploration and evaluation and feasibility study expenditure
Report on pages 59 to 61. Information relating to the remuneration of key management over a three-year period. The Group will also have the option to acquire an additional 25%
personnel including the Directors is given in Note 8. interest in Nokomis under certain conditions. The Group also subscribed for six million new
j) Inversiones Hornitos S.A. ordinary shares in Duluth Metals by way of a private placement and a subsequent anti-dilution
pre-emptive subscription of 550,939 shares at Cdn$2.00 per share in cash, to become an
In July 2009, the Group acquired a 40% interest in Inversiones Hornitos S.A. (Inversiones
approximate 7% shareholder in Duluth Metals.
Hornito) from GDF SUEZ. Thisinterest is accounted for as an associate. The Group made an
initial payment on 15 July 2009 of US$80.9 million to GDF SUEZ, representing the Groups b) Los Pelambres financing
share of costs already incurred plus interest to date of acquisition. During the year ended During January 2010 Los Pelambres entered into an additional loan of US$245.0 million with
31December 2009 theGroup made further capital contributions of US$28.6 million to Japan Bank for International Cooperation (JBIC), which is expected to be drawn down during
Inversiones Hornitos. Thebalance due from Inversiones Hornitos to the Group at the first quarter of 2010. This loan is for a term of approximately seven years and has an
31 December 2009 was US$22.5million (31 December 2008 nil). interest rate of approximately LIBOR plus 0.9%.
k) Sunridge Gold Corp
In October 2009 the Group acquired 17.84% of the issued share capital of Sunridge Gold 40 Ultimate Parent Company
Corp(Sunridge) under aprivate placement. This interest is accounted for as an associate. The immediate parent of the Group is Metalinvest Establishment, which is controlled by
TheGroup paid US$5million for investment and during the year ended 31 December 2009 E. Abaroa Foundation, in which members of the Luksic family are interested.
has not made capital contributions. The balance due from Sunridge to the Group at Both Metalinvest Establishment and the E. Abaroa Foundation are domiciled in Liechtenstein.
31December 2009 wasnil (31 December 2008 nil). Information relating to the interest of Metalinvest Establishment and the E. Abaroa Foundation
are given in the Directors Report on page 53.
Parent Company Financial Statements
Overview
41 Antofagasta plc Balance Sheet of the Parent Company and Related Notes
Parent Company Balance Sheet

At 31 December 2009
2009 2008
Notes US$m US$m
Fixed assets
Investment in subsidiaries 41D 666.2 665.7
Current assets
Business Review
Debtors amounts falling due within one year 0.5 0.3
amounts owed by subsidiaries 41D 760.1 993.6
Current asset investments (term deposits) 9.6 8.1
Cash at bank and in hand 1.6 1.3
771.8 1,003.3
Creditors amounts falling due within one year
Other creditors (1.2) (0.9)
Amounts owed to subsidiaries (299.5) (299.5)
Financial Review
(300.7) (300.4)
Net current assets 471.1 702.9
Total assets less current liabilities 1,137.3 1,368.6
Creditors amounts falling due after more than one year
Preference shares 41E (3.2) (2.9)
Total assets less total liabilities 1,134.1 1,365.7
Capital and reserves
Called up shares capital
Ordinary shares equity 41F 89.8 89.8
Governance
Reserves
Share premium account 41F 199.2 199.2
Profit and loss account 41F 845.1 1,076.7
Shareholders funds 1,134.1 1,365.7
Approved by the Board and signed on its behalf on 8 March 2010.

Chairman Director
Other Information
Parent Company Financial Statements continued
41A Basis of Preparation of the Balance Sheet and Related Notes f) Borrowings preference shares
of the Parent Company The sterling-denominated preference shares issued by the Company carry a fixed rate of return
The Antofagasta plc Parent Company balance sheet and related notes have been prepared without the right to participate in any surplus. They are accordingly classified as borrowings
inaccordance with United Kingdom generally accepted accounting principles (UK GAAP) and translated into US dollars at period end rates of exchange. Preference share dividends are
andin accordance with UK company law. The financial information has been prepared on a included within finance costs.
historical cost basis. The financial statements have been prepared on a going concern basis.
g) Equity instruments ordinary share capital and share premium
The functional currency of the Company and the presentational currency adopted is US dollars.
Equity instruments issued are recorded at the proceeds received, net of direct issue costs.
A summary of the principal accounting policies is set out below. There were no changes in
Equity instruments of the Company comprise its sterling-denominated issued ordinary share
accounting policies in 2009.
capital and related share premium.
The preparation of financial statements in conformity with UK GAAP requires the use of
As explained above, the presentational and the functional currency of the Company
estimates and assumptions that affect the reported amounts of assets and liabilities at the
is US dollars, and ordinary share capital and share premium are translated into US dollars
dateof the financial statements and the reported amounts of revenues and expenses during
at historical rates of exchange based on dates of issue.
the period. Although these estimates are based on managements best knowledge of the
amount, event or actions, following implementation of these standards, actual results may h) Cash flow statement
differ from those estimates.
The Companys individual financial statements are outside the scope of FRS 1 Cash Flow
As permitted by section 408 of the Companies Act 2006, the profit and loss account of the Statements because the Company prepares publicly available consolidated financial
Parent Company is not presented as part of these financial statements. The profit after tax for statements which include a consolidated cash flow statement. Accordingly, the Company
the year of the Parent Company amounted to US$330.3 million (2008 US$922.5 million). does not present an individual company cash flow statement.
i) Related party disclosures
41B Principal Accounting Policies of the Parent Company
The Companys individual financial statements are exempt from the requirements of FRS 8
a) Currency translation Related Party Disclosures because its individual financial statements are presented together
The Companys functional currency is the US dollar. Transactions denominated in other with its consolidated financial statements. Accordingly, the individual financial statements do
currencies, including the issue of shares, are translated at the rate of exchange ruling on not include related party disclosures.
the date of the transaction. Monetary assets and liabilities, including amounts due from or
to subsidiaries, are translated at the rate of exchange ruling at the end of the financial year. 41C Employee Benefit Expense
Exchange differences are charged or credited to the profit and loss account in the year in
which they arise. a) Average number of employees
The average number of employees was 8 (2008 7).
b) Revenue recognition
Interest is accounted for on an accruals basis. Dividends proposed by subsidiaries are b) Aggregate remuneration
recognised as income by the Company when they represent a present obligation of the The aggregate remuneration of the employees mentioned above was as follows:
subsidiaries, i.e. in the period in which they are formally approved for payment. 2009 2008
US$m US$m
c) Dividends payable
Wages and salaries 1.6 1.8
Dividends proposed are recognised when they represent a present obligation, i.e. in the
periodin which they are formally approved for payment. Accordingly, an interim dividend Social security costs 0.2 0.2
isrecognised when paid and a final dividend is recognised when approved by shareholders. Post-employment benefits severance charge in the year 0.1 0.1
1.9 2.1
d) Investments in subsidiaries
Investments in subsidiaries represent equity holdings in subsidiaries and long-term amounts The above employee figures exclude Directors who receive Directors fees from Antofagasta plc.
owed by subsidiaries. Such investments are valued at cost less any impairment provisions. Details of fees payable to Directors are set out in the Remuneration Report.
Investments are reviewed for impairment if events or changes in circumstances indicate
thatthe carrying amount may not be recoverable. When a review for impairment is conducted,
therecoverable amount is assessed by reference to the net present value of expected future
cash flows of the relevant income-generating unit or disposal value if higher.
As explained in Note 41D, amounts owed by subsidiaries due in foreign currencies are
translated at year end rates of exchange with any exchange differences taken to the profit
and loss account.
e) Current asset investments and cash at bank and in hand
Current asset investments comprise highly liquid investments that are readily convertible
into known amounts of cash and which are subject to insignificant risks of changes in value,
typically maturing within 12 months.
Cash at bank and in hand comprise cash in hand and deposits repayable on demand.
Overview
41D Subsidiaries 41F Reconciliation of Movement in Shareholders Funds
a) Investment in subsidiaries Called up Share Profit
ordinary premium and loss
2009 2008 share capital account account Total
Shares in subsidiaries at cost 57.6 57.6 At 1 January 2008 (equity) 89.8 199.2 645.2 934.2
Amounts owed by subsidiaries due after more than one year 608.6 608.1 Profit for the financial year 922.5 922.5
666.2 665.7 Dividends paid (491.0) (491.0)
At 31 December 2008
and 1 January 2009 89.8 199.2 1,076.7 1,365.7
Business Review
Shares Loans Total
US$m US$m US$m Profit for the financial year 330.3 330.3
1 January 2009 57.6 608.1 665.7 Dividends paid (561.9) (561.9)
Loans made 0.5 0.5 31 December 2009 (equity) 89.8 199.2 845.1 1,134.1
31 December 2009 57.6 608.6 666.2 The ordinary shares rank after the preference shares in entitlement to dividend and on a
winding up. Each ordinary share carries one vote at any general meeting.
b) Amounts owed by subsidiaries due within one year
At 31 December 2009, amounts owed by subsidiaries due within one year were
US$760.1 million (2008 US$993.6 million).
Financial Review
41E Borrowings Preference Shares
The authorised, issued and fully paid preference share capital of the Company comprised
2,000,000 5% cumulative preference shares of 1 each at both 31 December 2009 and
31 December 2008. As explained in Note 41B(f), the preference shares are measured in
thebalance sheet in US dollars at period end rates of exchange.
The preference shares are non-redeemable and are entitled to a fixed 5% cumulative dividend,
payable in equal instalments in June and December of each year. On a winding up, the
preference shares are entitled to repayment and any arrears of dividend in priority to ordinary
shareholders, but are not entitled to participate further in any surplus. Each preference share
Governance
carries 100 votes (see Note 23(x)) at any general meeting.
Other Information
Other Information
Five Year Summary
2009 2008 2007 2006 2005

Consolidated Balance Sheet
Intangible assets(1) 311.2 233.6 263.6 205.3 97.7
Property plant and equipment(1) 4,873.2 3,679.7 2,623.9 2,373.7 1,820.0
Investment property 3.4 2.7 3.5 3.2 3.4
Investment in associates 121.3 3.0 2.5 3.5 2.8
Trade and other receivables 36.6 34.1 32.0 39.3
Derivative financial instruments 1.4
Available for sale investments 1.2 0.7 3.3 6.2 0.1
Deferred tax assets 31.1 12.7 14.7 3.1 6.6
Non-current assets 5,378.0 3,966.5 2,944.9 2,634.3 1,930.6
Current assets 4,132.5 3,988.4 2,910.6 2,450.7 1,849.0
Current liabilities (995.6) (974.7) (366.6) (513.9) (389.1)
Non-current liabilities (1,897.5) (547.6) (582.4) (623.0) (627.5)
6,617.4 6,432.6 4,906.5 3,948.1 2,763.0
Share capital 89.8 89.8 89.8 89.8 16.6
Share premium 199.2 199.2 199.2 199.2 272.4
Reserves (retained earnings and hedging, translation and fair value reserves) 5,049.6 4,977.8 3,776.0 2,866.1 1,752.7
Equity attributable to equity holders of the Company 5,338.6 5,266.8 4,065.0 3,155.1 2,041.7
Minority interests 1,278.8 1,165.8 841.5 793.0 721.3
6,617.4 6,432.6 4,906.5 3,948.1 2,763.0
2009 2008 2007 2006 2005

Consolidated Income Statement
Group turnover 2,962.6 3,372.6 3,826.7 3,870.0 2,445.3
Total profit from operations and associates 1,463.5 2,553.2 2,654.8 2,805.2 1,507.3
Profit before tax(2) 1,437.6 2,609.5 2,750.2 2,859.0 1,536.3
Income tax expense (317.7) (519.7) (638.4) (664.9) (308.1)
Minority interests (452.2) (383.3) (729.7) (839.8) (502.4)
Net earnings (profit attributable to equity holders of the Company)(2) 667.7 1,706.5 1,382.1 1,354.3 725.8
EBITDA(3) 1,680.7 1,899.8 2,824.0 2,957.3 1,674.1
2009 2008 2007 2006 2005

cents cents cents cents cents
Earnings per share(4)
Basic earnings per share 67.7 173.1 140.2 137.4 73.6
Dividends to Ordinary Shareholders of the Company(4)
2009 2008 2007 2006 2005

cents cents cents cents cents
Dividends per Share Proposed in relation to the Year
Ordinary dividends (interim and final) 9.4 9.0 8.6 8.2 8.0
Special dividends 14.0 51.0 41.0 40.0 14.0
23.4 60.0 49.6 48.2 22.0
Dividends per share paid in the year and deducted from equity 57.0 49.8 49.2 24.0 16.0
See footnotes on page 107.

Overview
2009 2008 2007 2006 2005
Consolidated Cash Flow Statement
Cash flow from operations 1,167.8 2,454.3 2,817.7 2,810.1 1,647.5
Interest paid (27.0) (12.5) (20.2) (24.6) (23.3)
Dividends from associates 0.7 1.8 2.4 0.4 1.0
Income tax paid (135.2) (561.4) (806.0) (498.2) (343.8)
Net cash from operating activities 1,006.3 1,882.2 1,993.9 2,287.7 1,281.4
Business Review
Investing activities
Acquisition and disposal of subsidiaries, joint venture, associates
and available for sale investment and recovery of VAT (139.5) 1,163.4 36.3 (394.5) 7.7
Purchases and disposals of intangible assets, property, plant, and equipment (1,376.1) (1,145.7) (481.7) (506.6) (218.9)
Interest received 15.8 78.8 111.3 77.6 37.9
Net cash used in investing activities (1,499.8) 96.5 (334.1) (823.5) (173.3)
Financing activities
Dividends paid to equity holders of the Company (561.9) (491.0) (485.0) (236.6) (155.4)
Dividends paid to preference holders and minorities (310.2) (495.8) (681.4) (630.8) (385.8)
Financial Review
New borrowings less repayment of borrowings and finance leases 1,177.1 177.7 (93.2) (107.6) (139.4)
Net cash used in financing activities 305.0 (809.1) (1,259.6) (975.0) (680.6)
Net (decrease)/increase in cash and cash equivalents (188.5) 1,169.6 400.2 489.2 427.5
2009 2008 2007 2006 2005

Consolidated Net Cash
Cash and cash equivalents 3,222.3 3,358.0 2,212.5 1,805.5 1,316.8
Governance
Short-term borrowings (4)
(431.8) (319.0) (101.8) (97.6) (97.2)
Medium and long-term borrowings(5) (1,194.8) (119.9) (164.2) (261.1) (368.1)
(1,626.6) (438.9) (266.0) (358.7) (465.3)
Net cash at the year-end 1,595.7 2,919.1 1,946.5 1,446.8 851.5
(1) IFRIC 12 Service Concession Arrangements was adopted in 2008, which required that all infrastructure assets relating to the Water concession to be recorded within intangible assets. Previously, certain infrastructure assets were recorded within
property, plant and equipment. Accordingly, the 2008 figures have been prepared on this basis, and the comparatives for 2007 have been restated to reclassify these assets. The comparatives for 2005 and 2006 have not been restated.
(2) In 2008 exceptional items included in the consolidated income statement comprise: (i) an impairment charge of US$188.3 million relating to property, plant and equipment at El Tesoro and Michilla, which has been recorded within Total operating
costs and (ii) a profit of US$1,024.9 million relating to the sale of a 30% interest in Esperanza and El Tesoro to Marubeni Corporation, which has been recorded within Profit on part-disposal of subsidiaries. Excluding these items, profit before tax
isUS$1,772.9 million net earnings is US$842.9 million and earnings per share 85.5 cents. Further details of these exceptional items are set out in Note 5.
(3) EBITDA refers to Earnings Before Interest, Tax, Depreciation and Amortisation. EBITDA is calculated by adding back depreciation, amortisation and profit or loss on disposals of property, plant and equipment and impairment charges to operating Financial Statements
profitfrom subsidiaries and joint ventures. EBITDA for 2008 and 2009 is reconciled to operating profit in the Financial Review on page 43.
(4) Earnings per share and dividends per share have been restated for the effects of the 4-for-1 bonus issue on 19 June 2006.
(5) Borrowings under IFRS include amounts due under finance leases and preference shares.
Other Information
Other Information
Ore Reserves and Mineral Resources Estimates

At 31 December 2009
Introduction Definitions and Categories of Ore Reserves and Mineral Resources

The ore reserves and mineral resources estimates presented in this report comply with the A Mineral Resource is a concentration or occurrence of material of intrinsic economic interest
requirements of the Australasian Code for Reporting of Exploration Results, Mineral Resources in or on the Earths crust in such form, quality and quantity that there are reasonable prospects
and Ore Reserves 2004 edition (the JORC Code) which has been used by the Group as for eventual economic extraction. The location, quantity, grade, geological characteristics and
minimum standard for the preparation and disclosure of the information contained herein. continuity of a Mineral Resource are known, estimated or interpreted from specific geological
The definitions and categories of Ore Reserves and Mineral Resources are set out below. evidence and knowledge. Mineral Resources are sub-divided, in order of increasing geological
The information on ore reserves and mineral resources was prepared by or under the confidence, into Inferred, Indicated and Measured categories.
supervision of Competent Persons as defined in the JORC Code. The Competent Persons An Inferred Mineral Resource is that part of a Mineral Resource for which tonnage, grade
have sufficient experience relevant to the style of mineralisation and type of deposit under and mineral content can be estimated with a low level of confidence. It is inferred from
consideration and to the activity which they are undertaking. The Competent Persons consent geological evidence and assumed but not verified geological and/or grade continuity.
to the inclusion in this report of the matters based on their information in the form and context It is based on information gathered through appropriate techniques from locations such
in which it appears. The Competent Person for Exploration Results and Mineral Resources as outcrops, trenches, pits, workings and drill holes which may be limited or of uncertain
is Jorge Artal (MAusIMM), Senior Geologist for Antofagasta Minerals S.A.. The Competent quality and reliability.
Person for Ore Reserves is Murray Canfield (P.Eng. Ontario), Technical Manager Operations An Indicated Mineral Resource is that part of a Mineral Resource for which tonnage,
for Antofagasta Minerals S.A. densities, shape, physical characteristics, grade and mineral content can be estimated with a
The Groups operations and projects are subject to a comprehensive programme of audits reasonable level of confidence. It is based on exploration, sampling and testing information
aimed at providing assurance in respect of ore reserves and mineral resources estimates. gathered through appropriate techniques from locations such as outcrops, trenches, pits,
The audits are conducted by suitably qualified Competent Persons from within a particular workings and drill holes. The locations are too widely or inappropriately spaced to confirm
division, another division of the Company or from independent consultants. geological and/or grade continuity but are spaced closely enough for continuity to be assumed.
The ore reserves and mineral resources estimates represent full reserves and resources, A Measured Mineral Resource is that part of a Mineral Resource for which tonnage,
not the Groups attributable share for each mine. The Groups economic interest in each mine densities, shape, physical characteristics, grade and mineral content can be estimated with a
is disclosed in the notes following the estimates on pages 111 to 113. The totals in the table high level of confidence. It is based on detailed and reliable exploration, sampling and testing
may include some small apparent differences as the specific individual figures have not information gathered through appropriate techniques from locations such as outcrops,
been rounded. trenches, pits, workings and drill holes. The locations are spaced closely enough to confirm
geological and grade continuity.
An Ore Reserve is the economically mineable part of a Measured and/or Indicated Mineral
Resource. It includes diluting materials and allowances for losses, which may occur when the
material is mined. Appropriate assessments and studies have been carried out, and include
consideration of and modification by realistically assumed mining, metallurgical, economic,
marketing, legal, environmental, social and governmental factors. These assessments
demonstrate at the time of reporting that extraction could reasonably be justified. Ore Reserves
are sub-divided in order of increasing confidence into Probable Ore Reserves and Proved
Ore Reserves.
A Probable Ore Reserve is the economically mineable part of an Indicated, and in some
circumstances, a Measured Mineral Resource. It includes diluting materials and allowances
for losses which may occur when the material is mined. Appropriate assessments and studies
have been carried out, and include consideration of and modification by realistically assumed
mining, metallurgical, economic, marketing, legal, environmental, social and governmental
factors These assessments demonstrate at the time of reporting that extraction could
reasonably be justified.
A Proved Ore Reserve is the economically mineable part of a Measured Mineral Resource.
It includes diluting materials and allowances for losses which may occur when the material is
mined. Appropriate assessments and studies have been carried out, and include consideration
of and modification by realistically assumed mining, metallurgical, economic, marketing, legal,
environmental, social and governmental factors. These assessments demonstrate at the time
of reporting that extraction could reasonably be justified.
Overview
Tonnage Copper Molybdenum Gold Attributable Tonnage
(millions of tonnes) (%) (%) (g/tonne) (millions of tonnes)
2009 2008 2009 2008 2009 2008 2009 2008 2009 2008
Ore reserves
Los Pelambres (see note (a))
Proved 613.6 606.0 0.66 0.68 0.022 0.022 0.03 0.034 368.2 363.6
Probable 889.0 845.0 0.63 0.65 0.016 0.016 0.03 0.032 533.4 507.0
Total 1,502.6 1,451.0 0.64 0.66 0.018 0.019 0.03 0.033 901.6 870.6
Business Review
El Tesoro (see note (b))
Open pit and Tesoro North-East
Proved 99.0 113.0 0.76 0.84 69.3 79.1
Probable 6.5 5.3 0.94 0.30 4.6 3.7
Sub-total 105.5 118.3 0.77 0.81 73.9 82.8
El Tesoro ROM (Esperanza Oxides)
Proved 49.6 19.9 0.37 0.37 34.7 13.9
Probable 56.4 84.3 0.36 0.37 39.5 59.0
Financial Review
Sub-total 106.0 104.2 0.36 0.37 74.2 72.9
Total 211.6 222.5 0.57 0.60 148.1 155.8
Michilla (see note (c))
Proved 3.4 5.3 1.27 0.64 2.5 3.9
Probable 6.1 2.6 1.40 1.46 4.5 1.9
Total 9.5 7.9 1.35 0.91 7.0 5.9
Esperanza sulphides (see note (d))
Proved 207.2 207.2 0.52 0.52 0.010 0.010 0.21 0.210 145.0 145.0
Probable 376.1 376.1 0.56 0.56 0.010 0.010 0.23 0.230 263.3 263.3
Governance
Total 583.3 583.3 0.54 0.54 0.010 0.010 0.22 0.223 408.3 408.3
Group Total 2,307.0 2,264.7 0.61 0.63 1,465.0 1,440.5
Mineral resources (including ore reserves)
Los Pelambres (see note (a))
Measured 687.0 645.0 0.65 0.67 0.021 0.021 0.03 0.033 412.2 387.0
Indicated 1,225.0 1,130.0 0.60 0.62 0.015 0.015 0.03 0.030 735.0 678.0
Measured + Indicated 1,912.0 1,775.0 0.62 0.64 0.017 0.017 0.03 0.031 1,147.2 1,065.0
Inferred 4,252.9 3,085.0 0.48 0.52 0.008 0.008 0.04 (*) 2,551.7 1,851.0
Total 6,164.9 4,860.0 0.52 0.56 0.011 0.011 0.03 (*) 3,698.9 2,916.0 Financial Statements
El Tesoro (see note (b))
Open pit and Tesoro North-East
Measured 104.6 122.8 0.78 0.78 73.3 86.0
Indicated 28.0 25.4 0.72 0.70 19.6 17.8
Measured + Indicated 132.6 148.2 0.77 0.77 92.8 103.7
Inferred 5.7 2.5 0.52 0.78 4.0 1.8
Sub-total 138.3 150.7 0.76 0.77 96.8 105.5
El Tesoro ROM (Esperanza Oxides)
Other Information
Measured 49.6 19.9 0.37 0.37 34.7 13.9

Indicated 56.4 84.3 0.36 0.37 39.5 59.0
Inferred 26.0 31.6 0.30 0.31 18.2 22.1
Sub-total 132.0 135.8 0.35 0.36 92.4 95.1
Total 270.3 286.5 0.56 0.57 189.2 200.6
Other Information
Ore Reserves and Mineral Resources Estimates continued

At 31 December 2009
Tonnage Copper Molybdenum Gold Attributable Tonnage

(millions of tonnes) (%) (%) (g/tonne) (millions of tonnes)
2009 2008 2009 2008 2009 2008 2009 2008 2009 2008
Mineral resources (including ore reserves) continued
Michilla (see note (c))
Measured 11.3 16.7 2.30 1.42 8.4 12.4
Indicated 21.4 29.3 2.43 1.57 15.9 21.7
Inferred 10.1 15.9 1.87 1.28 7.5 11.8
Total 42.8 61.9 2.27 1.46 31.8 45.9
Esperanza sulphides (see note (d))
Measured 233.8 233.8 0.51 0.51 0.011 0.011 0.20 0.200 163.7 163.7
Indicated 565.8 565.8 0.50 0.50 0.012 0.012 0.18 0.180 396.1 396.1
Measured + Indicated 799.6 799.6 0.50 0.50 0.012 0.012 0.19 0.186 559.7 559.7
Inferred 404.8 404.8 0.35 0.35 0.012 0.012 0.07 0.070 283.4 283.4
Total 1,204.4 1,204.4 0.45 0.45 0.012 0.012 0.15 0.147 843.1 843.1
Reko Diq (see note (e))
Measured 1,738.2 1,406.0 0.54 0.52 0.31 0.290 651.8 527.3
Indicated 1,244.6 964.0 0.39 0.49 0.20 0.270 466.7 361.5
Measured + Indicated 2,982.8 2,370.0 0.48 0.51 0.26 0.282 1,118.6 888.8
Inferred 2,885.0 1,746.0 0.35 0.50 0.18 0.320 1,081.9 654.8
Total 5,867.9 4,116.0 0.41 0.50 0.22 0.298 2,200.4 1,543.5
Mirador (see note (f))
Measured 5.4 3.00 5.4
Indicated 25.1 0.66 25.1
Measured + Indicated 30.5 1.07 30.5
Inferred 1.3 0.30 1.3
Sub-total 31.8 1.04 31.8
Antucoya (see note (g))
Measured 497.3 0.31 497.3
Indicated 656.0 0.26 656.0
Measured + Indicated 1,153.4 0.28 1,153.4
Inferred 355.7 0.24 355.7
Sub-total 1,509.1 0.27 1,509.1
Group total
Measured + Indicated 7,149.7 5,243.0 0.50 0.57 4,200.7 2,724
Inferred 7,941.6 5,285.8 0.42 0.50 4,303.7 2,825
Total 15,091.3 10,528.8 0.46 0.54 8,504.4 5,549
Overview
Notes to Ore Reserves and Mineral Resources Estimates c) Michilla
The ore reserves mentioned in this report were determined considering specific cut-off grades Michilla is 74.2% owned by the Group and its operations comprise an open pit mine, an
for each mine and using a long-term copper price of 170 cents per pound (190 cents per underground mine and other workings. The cut off grade applied to the determination of ore
pound in 2008) and US$650 per gold ounce (US$600 per gold ounce in 2008). Unless reserves and mineral resources is 0.40% Cu for the open pit, 1.2% Cu for the underground
otherwise noted, these same values have been used for copper equivalent (CuEq) estimates. mine and 1.0% Cu for other workings. During the first quarter of 2009, operations were
suspended at the high-cost Lince open-pit, as a reaction to the significant drop in copper prices.
a) Los Pelambres
The most significant change to the ore reserves and mineral resources estimates has been
Los Pelambres is 60% owned by the Group. The cut-off grade applied to the determination
the change in the expectation of mineral resources potentially exploitable by open pit methods.
of ore reserves and mineral resources for 2009 was 0.35% Cu (vs. 0.40% Cu in 2008).
This, along with investment in in-fill drilling of 302 drill holes for a total of 24,117 metres and
For 2009 there have been two important changes, the first is a decrease in the cut-off
Business Review
evaluation studies to upgrade mineral resources to ore reserves, has resulted in a significant
gradeused for estimation of both ore reserves and mineral resources to 0.35% Cu from
change in both ore reserves and mineral resources estimates.
the0.40% Cu cut-off used in 2008, while the second is the incorporation of low grade
stockpiles into the estimates. Despite depletion of 5.3 million tonnes of ore reserves as feed to the Michilla plant, ore
reserves have increased by 1.6 million tonnes. While previous ore reserves estimates included
Partially as a result of these changes, the proved and probable ore reserves have increased
an expansion to the open-pit, 2009 ore reserves include only remnant reserves in the existing
by 52 million tonnes, despite depletion through the year of 47 million tonnes (as mill feed).
pit phases that have not yet been exploited. The reduction in open-pit reserves has been
The difference consists of an additional 34 million tonnes in stockpiled ore reserves, an
morethan offset by an increase in underground reserves both at the Estefana deposit
additional 33 million tonnes due to a change in cut-off grade and the remaining difference
(whichincludes the Lince open-pit) and also an increase in ore reserves in other workings
attributable to updates to the block model with the inclusion of in-fill drilling of 27 drill holes
(satellite deposits mined by third-party operators).
for a total of 7,615 metres.
Total mineral resources have decreased by 19.1 million tonnes, but there has also been a
The increase in total mineral resources of 1,305 million tonnes is primarily due the decrease
Financial Review
corresponding increase in grade, to 2.27% Cu from 1.46% Cu. This reflects the reduction in
in cut-off grade (1,121 million tonnes), as well as the incorporation of low grade stockpiles
mineral resources potentially exploitable by open-pit methods, with a cut-off grade of 0.40%,
(42 million tonnes) and updates to the block model, offset by depletion of 47 million tonnes.
and an inclusion of this portion of the deposit in the mineral resources potentially exploitable
The (*) in the Resource Table indicates that the gold grades for the Inferred Resource Category by underground methods, with a cut-off grade in this case of 1.0% Cu. Part of the decrease
were still under review at the time of publication for the 2008 estimate. An additional change isalso associated with the depletion of 5.3 million tonnes of feed to the Michilla plant.
for the 2009 estimates is the elimination of the silver estimates from the table and a reduction
in significant figures used in the gold estimates. This is to better reflect the accuracy of the d) Esperanza sulphides
orereserves and mineral resources estimates. Esperanza is 70% owned by the Group. The cut-off grade applied to the determination of ore
reserves and minerals resources in 2009 was 0.20% equivalent copper.
b) El Tesoro
There have been no changes to either the mineral resources or ore reserves estimates during
El Tesoro is 70% owned by the Group. The ore reserves and mineral resources are made up
the year for Esperanza, which is currently in the pre-stripping phase, preparing for start of
Governance
of the El Tesoro and Tesoro North-East deposits, which are processed by heap leaching, and
operations at the end of 2010.
the Run-of-Mine (ROM) Oxide ore reserves and mineral resources from the Esperanza Project,
located five kilometres south-east of El Tesoro. An agreement was entered into in 2008 e) Reko Diq
whereby the Esperanza Oxide mineral resources were purchased by El Tesoro for a one-time The Group holds a 50% interest in Tethyan Copper Company Limited (Tethyan), its joint
payment. Esperanza will deliver the ROM ore released during the pre-stripping and operating venture with Barrick Gold Corporation established in 2006. Tethyans principal assets are a
phases of the Esperanza Project to a permanent leach pad constructed and operated by the 75% interest in the exploration licence encompassing the Reko Diq prospects in the Chagai
El Tesoro mine. Hills region of South-West Pakistan (in which the Government of Balochistan holds the
The cut-off grade used for estimation of both ore reserves and mineral resources for the remaining 25%) including the Western Porphyries, and a 100% interest in certain other
El Tesoro open pits is 0.41% Cu. Proved and probable ore reserves for the El Tesoro open licences in the region.
pits decreased by 12.8 million tonnes, reflecting depletion of 8.3 million tonnes (mill feed from A feasibility study was initiated in February 2008. The feasibility study is now under review
El Tesoro pits and stockpiles) plus additional adjustments to the block models and pit designs by the joint venture partners and efforts to work with the government to advance the project Financial Statements
for Tesoro and Tesoro North-East pits with the inclusion of in-fill drilling of 17 drill holes for remain in progress, although agreement concerning a mining licence and mineral agreement
atotal of 2,812 metres. has not yet been reached.
The cut-off grade used for estimation of both ore reserves and mineral resources for the The cut-off grade applied to the determination of mineral resources is 0.20% copper
El Tesoro ROM (Esperanza Oxides) is 0.20% Cu. Proved and probable ore reserves for the equivalent. For Reko Diq, copper equivalent values are calculated based on a copper price
El Tesoro ROM increased by 1.8 million tonnes, with a significant increase in proved reserves, of 190 cents per pound and a gold price of US$725 per gold ounce. The mineral resources
primarily as a result of the increase in confidence due to the blast hole assay information arethose contained within un-smoothed optimised pit shells using the same prices.
generated during the pre-stripping operations of the Esperanza pit. During the year, 39.8
For 2009, the orebody H13, which is contiguous with H14 and H15 and known collectively
million tonnes of oxide ore reserves were extracted from the Esperanza pit, of which 1.5 million
as Western Porphyries, has been incorporated into the mineral resources estimate, along with
tonnes were delivered directly to the El Tesoro heap leach pads and subsequently depleted,
two other satellite deposits, Tanjeel (also referred to as H4) and H8. The increase in mineral
Other Information
7.8 million tonnes were delivered to the ROM leach pads and have been partially leached and
resources of 1,752 million tonnes is principally due to the incorporation of these deposits
a further 30.5 million tonnes have been delivered to the ROM leach pads or stockpiles and
(764 million tonnes for H13, 148 million tonnes for Tanjeel and 841 million tonnes for H8).
have not yet been put under leach.
Total mineral resources for El Tesoro open pits decreased by 12.4 million tonnes, while total
mineral resources for El Tesoro ROM decreased by 3.8 million tonnes for a total decrease of
16.2 million tonnes. The decrease in mineral resources is a result of the same impacts as the
decrease in ore reserves, depletion of 9.7 million tonnes (feed to the Tesoro heap leach
operation) plus adjustments to the block models.
Other Information
Ore Reserves and Mineral Resources Estimates continued

At 31 December 2009
f) Mirador
Mirador is a project which was reported in 2008 in Other Mineral Inventory and is owned 100% by the Group. Since then, a feasibility study has been started, which is expected to be
completed in the first quarter of 2010. With a total of 304 drill holes for a total of 78,323 metres, the mineral resources in the table are slightly higher in both tonnes and grade than the ranges
reported in 2008. The cut-off grade applied to the mineral resources estimate is 0.20% Cu and include those mineral resources contained within an un-smoothed, optimized pit shell using a
copper price of 250 cents per pound.
Both the feasibility study and the mineral resources in the table are focused on the known oxide resources. There is an ongoing exploration programme targeted on the underlying sulphide resources.
g) Antucoya
Antucoya is a project which was reported in 2008 in Other Mineral Inventory and is owned 100% by the Group. Since then, a feasibility study has been started and is expected to take another
year and a half to complete. The concept for processing is a combination of heap leaching on dynamic pads and run-of-mine (ROM) leaching on permanent pads.
The cut-off grade applied to the mineral resources estimate is 0.10% Cu and include those mineral resources contained within an un-smoothed, optimised pit shell using a copper price of
250 cents per pound. The mineral resources estimate is significantly higher in tonnage than the range reported in 2008 mostly due to the application of a lower cut-off grade, which is
consistent with the ROM leach processing concept. The grade estimate is below the range reported in 2008, reflecting the impact of a lower cut-off grade.
h) Other Mineral Inventory
In addition to the Mineral Resources noted above, the Group has interests in other deposits located in the Antofagasta Region of Chile, some of them containing gold and/or molybdenum.
At the moment they are in exploration or in the process of resource estimation. The potential quantity and grade of each of the deposits is conceptual in nature, there has been insufficient
exploration to define these deposits as mineral resources, and it is uncertain if further exploration will result in the termination of a mineral resource. These include:
(i) In the Sierra Gorda District
In the Sierra Gorda district the Group has one operation (El Tesoro) and one project under construction (Esperanza) and others in exploration or under study, such as: Llano-Paleocanal, Telegrafo
Norte and Telegrafo Sur (70% owned by the Group); Centinela (51% owned by the Group); and Polo Sur and Caracoles (100% owned by the Group). The Mineral Inventory of these deposits is
estimated to be in the range of 2.6 to 4.1 billion tonnes with grades in the range of 0.5% to 0.4% copper. An in-fill drilling programme, consisting of 39 drill holes totalling 24,122 metres, was
carried out during 2009 to provide input for a mineral resources estimate for the Telgrafo Sur deposit as part of an ongoing pre-feasibility study. It is expected that a mineral resources estimate
for Telgrafo Sur will be ready for publication by the end of the first quarter of 2010. At Caracoles during 2009 a further 91,700 metres of drilling in 128 drill holes was carried out (which are not
included in the table below). It is anticipated that a pre-feasibility study could commence during 2010, including the incorporation of the results from the 2009 drilling campaign into a block
model and potentially into a mineral resources estimate.
The table below lists each of the mineral deposits with its associated tonnage and grade ranges, the number of drill holes and associated metres drilled, as well as the Groups ownership interest:
Ownership
Tonnes range Grade range Number Total interest
Mineral deposit (million tonnes) (% Cu) drill holes metres (%)
Llano Paleocanal 90 140 0.51 0.41 67 12,400 70.0
Telgrafo Norte 330 660 0.44 0.34 20 8,500 70.0
Telgrafo Sur 1,100 1,600 0.45 0.38 90 52,300 70.0
Centinela 60 100 0.76 0.63 36 9,900 51.0
Polo Sur 300 450 0.50 0.41 200 50,500 100.0
Caracoles 700 1,100 0.60 0.49 133 62,900 100.0
Total 2,580 4,050 0.50 0.41 546 196,500
(ii) In the Michilla District

In the Michilla district there are several satellite deposits to the main Michilla orebody that have been included in the Mineral Resources Table. However, there are other two mineral deposits
within a potentially economic radius of the Michilla mine: Aurora (within the Michilla property) and Rencoret. Rencoret and Aurora are mantle-style deposits with associated high-grade copper
brechas, similar to the main Michilla orebody.
The Mineral Inventory of these mineral deposits is estimated to be in the range of 20 to 33 million tonnes with grades in the range of 1.2% to 1.0% copper. The table below lists each of the
mineral deposits with its associated tonnage and grade ranges, as well as The Groups ownership interest:
Ownership
Tonnes range Grade range Number Total interest
Mineral deposit (million tonnes) (% Cu) drill holes metres (%)
Rencoret 15 25 1.22 1.00 31 8,300 100.0
Aurora 5 8 1.36 1.11 38 13,400 74.2
Total 20 33 1.25 1.02 69 21,700
Overview
(iii) In the El Abra District
The Group has two mineral deposits within a few kilometres of the El Abra orebody, located near Calama in the Antofagasta Region of Chile. Conchi is a porphyry copper mineral deposit and
Brujulina is an exotic-style mineral deposit. The Mineral Inventory of these mineral deposits is estimated to be in the range of 0.5 to 0.7 billion tonnes with grades in the range of 0.7% to 0.5%
copper. The table below lists each of the mineral deposits with its associated tonnage and grade ranges, as well as the Groups ownership interest:
Tonnes range Grade range Number Total Ownership
Mineral deposit (million tonnes) (% Cu) drill holes metres interest (%)
Conchi 440 660 0.67 0.55 123 30,950 51.0
Brujulina 50 80 0.65 0.53 159 15,300 51.0
Total 490 740 0.67 0.55 282 46,250
Business Review
i) Antomin 2 and Antomin Investors
The Group has an interest of approximately 51% interest in two indirect subsidiaries, Antomin 2 Limited (Antomin 2) and Antomin Investors Limited (Antomin Investors), which own anumber
of copper exploration properties in Chiles Antofagasta Region and Coquimbo Region. These include (but are not limited to) Centinela (see Note h(i) above) and Brujulinas and Conchi (see Note
h(iii) above). The remaining approximately 49% of Antomin 2 and Antomin Investors Limited is owned by Mineralinvest Establishment (Mineralinvest), a company controlled by the Luksic family.
The Group has the exclusive right to acquire, at fair value under certain conditions, the shareholding of Mineralinvest in Antomin 2 and Antomin Investors, or the underlying properties, fora
period of five years from August 2008. The Group also has committed to meet in full any exploration costs relating to the properties held by these two entities.
Further details are set out in Note 37(d) to the financial statements.
Financial Review
Governance
Other Information
Other Information
Mining Production and Sales, Transport and Water Statistics

Production Sales Cash costs Realised prices

2009 2008 2009 2008
Production and sales volumes, 000 000 000 000 2009 2008 2009 2008
realised prices and cash costs by mine tonnes tonnes tonnes tonnes US cents US cents US cents US cents
Copper
Los Pelambres 311.6 339.2 313.6 340.6 80.4 57.3 286.8 246.5
El Tesoro 90.2 90.8 89.8 90.9 123.4 144.7 246.3 315.6
Michilla 40.6 47.7 39.5 47.5 157.6 191.1 195.7 317.7
Group total 442.5 477.7 442.9 479.0
Group weighted average (net of by-products) 96.3 87.3 270.6 266.7
Cash costs at Los Pelambres comprise

On-site and shipping costs 95.3 99.5
Tolling charges for concentrates 19.2 17.0
Cash costs before deducting by-product credits 114.5 116.5
By-product credits (principally molybdenum) (34.1) (59.2)
Cash costs (net of by-product credits) 80.4 57.3
LME average 234.2 315.3
Molybdenum
Los Pelambres 7.8 7.8 7.7 7.7 11.3 23.9
Market average price 11.1 28.9
2009 2008
Quarterly information Q1 Q2 Q3 Q4 Year Year
Group Total
Total copper production volume (000 tonnes) 111.9 106.3 109.9 114.4 442.5 477.7
Total copper sales volume (000 tonnes) 106.9 102.9 113.0 120.1 442.9 479.0
Total molybdenum production volume (000 tonnes) 1.7 2.0 2.1 2.0 7.8 7.8
Total molybdenum sales volume (000 tonnes) 1.7 1.9 2.2 1.9 7.7 7.7
Weighted average realised copper price (cents per pound) 207.3 246.5 294.5 324.9 270.6 266.7
Realised molybdenum price (dollars per pound) 7.8 11.1 15.8 9.7 11.3 23.9
Weighted average cash costs (cents per pound)
excluding by-product credits and tolling charges 99.5 104.5 105.0 117.7 106.8 117.2
excluding by-product credits 112.1 120.0 118.3 130.4 120.3 129.3
net of by-product credits 97.5 97.5 81.7 107.6 96.3 87.3
2009 2008
Quarterly information Q1 Q2 Q3 Q4 Year Year
Los Pelambres (60% owned)
Daily average ore treated (000 tonnes) 131.5 132.6 125.0 127.8 129.2 136.8
Average ore grade (%) 0.77 0.72 0.73 0.75 0.74 0.76
Average recovery (%) 93.2 91.9 91.1 92.1 92.1 92.1
Concentrate produced (000 tonnes) 249.1 243.2 226.5 232.3 951.1 1,135.2
Average concentrate grade (%) 33.9 32.9 33.9 34.9 33.9 30.9
Overview
Fine copper in concentrate (000 tonnes) 83.0 80.1 76.8 82.8 322.6 351.1
Payable copper in concentrate production volume (000 tonnes) 80.2 77.3 74.2 80.0 311.6 339.2
Payable copper in concentrate sales volume (000 tonnes) 75.6 72.8 83.3 81.9 313.6 340.6
Average moly ore grade (%) 0.019 0.020 0.022 0.021 0.020 0.019
Average moly recovery (%) 79.7 83.2 81.1 80.2 81.1 80.1
Payable moly in concentrate production volume (000 tonnes) 1.7 2.0 2.1 2.0 7.8 7.8
Payable moly in concentrate sales volume (000 tonnes) 1.7 1.9 2.2 1.9 7.7 7.7
Copper realised price (cents per pound) 217.1 261.2 311.2 349.2 286.8 246.5
On-site and shipment costs (cents per pound) 87.5 94.2 94.8 104.7 95.3 99.5
Business Review
Tolling charges for concentrates (cents per pound) 17.6 21.4 19.7 18.3 19.2 17.0
Cash costs (before by-product) (cents per pound) 105.0 115.6 114.5 123.0 114.5 116.5
By-product credits (cents per pound) (20.4) (30.9) (53.9) (32.6) (34.1) (59.2)
Cash costs (cents per pound) 84.7 84.7 60.6 90.4 80.4 57.3
El Tesoro (70% owned; 100% until 25 August 2008)

Financial Review
Copper cathodes production volume (000 tonnes) 20.4 19.7 25.8 24.3 90.2 90.8
Copper cathodes sales volume (000 tonnes) 20.3 20.4 21.3 27.8 89.8 90.9
Michilla (74.2% owned)

Governance
Copper cathodes production volume (000 tonnes) 11.4 9.3 9.9 10.1 40.6 47.7
Copper cathodes sales volume (000 tonnes) 11.0 9.7 8.4 10.4 39.5 47.5
Transport (100% owned)

Rail tonnage transported (000 tonnes) 1,548 1,545 1,658 1,584 6,335 5,644
Road tonnage transported (000 tonnes) 358 350 368 428 1,505 1,353
Water (100% owned)
Water volume sold potable and untreated (000m3) 11,187 10,870 10,679 11,000 43,736 42,674
Notes
a) The production figures represent the total amounts produced for each mine, not the Groups attributable share for each mine.
b) Los Pelambres produces copper and molybdenum concentrates, and the figures for Los Pelambres are expressed in terms of payable metal contained in concentrate. The copper concentrate also contains gold and silver, for which Los Pelambres
is credited when the concentrate is sold. El Tesoro and Michilla produce copper cathodes with no by-products.
c) Cash costs are a measure of the cost of operational production expressed in terms of cents per pound of payable copper produced. Cash costs are stated net of by-product credits and include tolling charges for concentrate for Los Pelambres.
Cash costs exclude depreciation, financial income and expenses, hedging gains and losses, exchange gains and losses and corporation tax for all three operations. By-product calculations do not take into account unrealised mark-to-market gains
for molybdenum at the beginning or end of each period.
Other Information
d) Water volumes include water transportation of 343,000m3 in Q1; 302,000m3 in Q2; 242,000m3 in Q3, 240,000m3 in Q4 and total for 2009 of 1,128,000m3 (353,000m3 in Q1 2008; 333,000m3 in Q2 2008; 327,000m3 in Q3 2008; 338,000m3
in Q4 and total for 2008 of 1,351,000m3).
e) The totals in the table may include some small apparent differences as the specific individual figures have not been rounded.
Other Information
Glossary and Definitions
Business, Financial and Accounting Chilean Peso

ADASA Chilean currency.
Aguas de Antofagasta S.A., a wholly-owned subsidiary of the Group incorporated in Chile 2008 Combined Code
and operating the water concession in Chiles Antofagasta Region acquired from ECONSSA. The revised Combined Code on Corporate Governance published by the Financial Reporting
ADR Council in June 2008 and applicable to listed companies for reporting years beginning on or
after 29 June 2008.
American Depositary Receipt.
Companies Act 2006
AIFR
Principal legislation for United Kingdom company law.
All Injury Frequency Rate.
Compaa Minera Milpo
AMSA
Compaa Minera Milpo S.A.A. of Peru is a former owner of a 18.5% interest in Caracoles,
Antofagasta Minerals S.A., a wholly-owned subsidiary of the Group incorporated in Chile which
acquired by the Group in February 2009.
acts as the corporate centre for the mining division.
Company
Antucoya
Antofagasta plc.
Copper project located approximately 45 kilometres east of Michilla.
Desalant
Antomin
Desalant S.A., former owner of a desalination plant located in Antofagasta and acquired by the
Antomin Limited, a wholly-owned subsidiary of the Group incorporated in Jersey
Group through ADASA.
(a 51%-owned subsidiary until 25 August 2008).
Directors
ATI
The Directors of the Company.
Antofagasta Terminal Internacional S.A., a 30%-owned associate of the Group incorporated
in Chile and operating the port in the city of Antofagasta. Duluth
Annual Report Duluth Metals Limited, incorporated in Canada which owns the Nokomis deposit in
Minnesota, United States.
The Annual Report and Financial Statements 2009 of Antofagasta plc.
EBITDA
Australian Dollars
Earnings Before Interest, Tax, Depreciation and Amortisation.
Australian currency.
ECONSSA
Banco de Chile
Empresa Concesionaria de Servicios Sanitarios S.A., the Chilean state-owned company which
Banco de Chile, a subsidiary of Quienco.
previously operated the regulated and non-regulated water distribution business in Chiles
Barrick Gold Antofagasta Region (formerly known as ESSAN).
Barrick Gold Corporation, the joint venture partner of the Group in Tethyan. El Tesoro
Board Minera El Tesoro, a 70%-owned subsidiary of the Group incorporated in Chile (a wholly-owned
subsidiary of the Group until 25 August 2008, before the Marubeni transaction).
The Directors of Antofagasta plc who collectively have responsibility for the conduct of the
Groups business. ENAP
Capex Empresa Nacional del Petrleo, the 40% joint venture partner of the Group in Energa Andina S.A.
Capital expenditure(s). Energa Andina S.A.
Caracoles Energa Andina S.A., a 60%-owned joint venture entity of the Group incorporated in Chile.
Compaa Contractual Minera Caracoles, a wholly-owned subsidiary of the Group incorporated EPS
in Chile (81.5% owned prior to February 2009 see Note 31).
Earnings per share.
Cash Costs
Equatorial
A measure of the cost of operational production expressed in terms of cents per pound of
Equatorial Mining Limited, a wholly-owned subsidiary of the Group incorporated in Australia.
payable copper produced. Cash costs are stated net of by-product credits and include tolling
charges for concentrates for Los Pelambres. Cash costs exclude depreciation, financial income Esperanza
and expenses, hedging gains and losses, exchange gains and losses and corporation tax. Minera Esperanza, a 70%-owned subsidiary of the Group incorporated in Chile (a wholly-
CCU owned subsidiary of the Group until 25 August 2008, before the Marubeni transaction).
Compaa de Cerveceras Unidas S.A., an associate of Quienco. ESSAN
CGU Empresa de Servicios Sanitarios S.A., former name of ECONSSA.
Cash Generating Unit.
Overview
EU LIBOR
European Union. London Inter Bank Offer Rate.
FCA LME
Empresa Ferroviaria Andina S.A., a 50%-owned subsidiary of the Group incorporated in Bolivia. London Metal Exchange.
FCAB Los Pelambres
Ferrocarril de Antofagasta a Bolivia, the Chilean name for the Antofagasta Railway Company Minera Los Pelambres, a 60%-owned subsidiary of the Group incorporated in Chile.
plc, a wholly-owned subsidiary of the Group incorporated in the United Kingdom and operating
LSE
a rail network in Chiles Antofagasta Region.
Business Review
London Stock Exchange.
FSA
LTIFR
Financial Services Authority.
Lost Time Injury Frequency Rate.
FTSE-100 Index
Madeco
A market-capitalisation weighted index representing the performance of the 100 largest
UK-domiciled blue chip companies. Madeco S.A., a subsidiary of Quienco.
FTSE All-Share Index Marubeni

A market-capitalisation weighted index representing the performance of all eligible companies Marubeni Corporation, the Groups 30% minority partner in El Tesoro and Esperanza.
listed on the London Stock Exchanges main market.
Financial Review
Metallica Resources Chile Limitada
GAAP Minera Metallica Resources Chile Limitada, a subsidiary of New Gold Inc. (formerly Metallica
Generally Accepted Accounting Practice or Generally Accepted Accounting Principles. Resources Inc.), a company with exploration interests in the Ro Figueroa Project.
Government Michilla
The Government of the Republic of Chile. Minera Michilla S.A., a 74.2%-owned subsidiary of the Group incorporated in Chile.
Group Mirador
Antofagasta plc and its subsidiaries companies. Copper prospect located in the Sierra Gorda district.
Hedge Accounting Mulpun
Governance
Accounting treatment for derivatives financial instrument permitted under IAS 39 Financial Coal gasification project located near Valdivia in southern Chile.
Instruments: Recognition and Measurement, which recognises the offsetting effects on profit
Provisional Pricing
or loss of changes in the fair values of a hedging instrument and the hedged item.
A sales term in several copper and molybdenum concentrate sale agreements and cathodes
IAS sale agreements which provides for provisional pricing of sales at the time of shipment,
International Accounting Standards. with final pricing being based on the monthly average LME copper price or monthly average
molybdenum price for specific future periods, normally ranging from 30 to 180 days after
IASB delivery to the customer. For the purposes of IAS 39, the provisional sale is considered
International Accounting Standards Board. to contain an embedded derivative (i.e. the forward contract for which the provisional
sale is subsequently adjusted) which is separated from the host contract (i.e. the sale
IFRIC
of metals contained in the concentrate or cathode at the provisional invoice price less
International Financial Reporting Interpretations Committee. tolling charges deducted).
IFRS Quienco
International Financial Reporting Standards. Quienco S.A., a Chilean financial and industrial conglomerate under the control of the Luksic
family and listed on the Santiago Stock Exchange.
Inversiones Hornitos
Inversiones Hornitos S.A., a 40%-owned associate of the Group incorporated in Chile which Realised Prices
owns the 150MW Hornitos thermoelectric power plant in Mejillones under construction in Effective sale price achieved comparing revenues (grossed up for tolling charges for concentrate)
Chiles Antofagasta Region. with sales volumes.
IVA Reko Diq
Other Information
Impuesto al Valor Agregado, or Chilean Value Added Tax (Chilean VAT). Reko Diq is a substantial copper-gold porphyry district in south-west Pakistan which is held
through Tethyan Copper Company Limited, a 50-50 joint venture with Barrick Gold Corporation
Key Management Personnel
of Canada, with the Government of Balochistan holding a 25% interest in the main exploration
Persons with authority and responsibility for planning, directing and controlling the activities licence, giving the Group an effective 37.5% interest.
of the Group.
Ro Figueroa
KPI
Ro Figueroa, an exploration project located in Chiles Atacama Region.
Key performance indicator.
Other Information
Glossary and Definitions continued
Sierra Gorda district Concentrate

Copper district located in the Antofagasta Region of Chile, where El Tesoro and Esperanza are The product of a physical concentration process, such as flotation or gravity concentration,
located. which involves separating ore minerals from unwanted wasted rock. Concentrates require
subsequent processing (such as smelting or leaching) to break down or dissolve the ore
Sterling
minerals and obtain the desired elements, usually metals.
United Kingdom currency.
Contained Copper
Sunridge
The proportion or quantity of copper contained in a given quantity of ore or concentrate.
Sunridge Gold Corp, an 18%-owned associate of the Group which has a base and precious
metals project in Eritrea. Cut-off Grade
The lowest grade of mineralised material considered economic to process and used in the
SVS
calculation of ore reserves and mineral resources.
Superintendencia de Valores y Seguros de Chile, the Chilean securities regulator.
Grade A Copper Cathode
TEAL
Highest quality copper cathode (LME registered and certificated in the case of Michilla and El
Teal Exploration & Mining Incorporated, a company listed on the Toronto Stock Exchange with Tesoro).
exploration and project interests on the Zambian Copper belt in Africa.
Greenfield Project
Telgrafo
The development or exploration of a new project not previously examined.
Copper prospect located in the Sierra Gorda district held through Esperanza.
Flotation
Tethyan
A process by which chemicals are added to materials in a solution which are attracted to
Tethyan Copper Company Limited, a 50%-owned joint venture entity of the Group incorporated bubbles and float, whilst other materials sink, resulting in the production of concentrate.
in Australia.
Heap Leaching
TSR
A process for the recovery of copper from ore. The crushed material is laid on a slightly sloping,
Total Shareholder Return, being the movement in the Companys share price plus reinvested impermeable pad and leached by uniformly trickling (gravity fed) chemical solution through the
dividends. beds to ponds. The metal is then recovered from the solution through the SX-EW process.
Turnbull Guidance JORC
The revised guidance on internal control for directors on Combined Code issued by the Turnbull Joint Ore Reserves Committee of Australia.
Review Group in October 2005.
Leaching
UK
The process by which a soluble mineral can be economically recovered by dissolution.
United Kingdom.
LOM or Life Of Mine
UKLA
The remaining life of a mine expressed in years, calculated by reference to scheduled
United Kingdom Listing Authority. production rates (i.e. comparing the rate at which ore is expected to be extracted from the mine
to current defined reserves).
US
United States. Mineral Resources
Material of intrinsic economic interest occurring in such form and quantity that there are
US Dollars
reasonable prospects for eventual economic extraction. Mineral resources are stated inclusive
United States currency. of ore reserves, as defined by JORC.
MW
Mining Industry
Megawatts (one million watts).
Brownfield Project
A development or exploration project in the vicinity of an existing operation. Open Pit
Mine working or excavation which is open to the surface.
By-products (credits in copper concentrates)
Products obtained as result of copper processing. The Los Pelambres mine produces Ore
molybdenum concentrate and also receives credit for the gold and silver content in the copper Rock from which metal(s) or mineral(s) can be economically and legally extracted.
concentrate sold.
Ore Grade
Copper Cathode The relative quantity, or the percentage, of metal content in an ore body or quantity of
Refined copper produced by electrolytic refining of impure copper by electro-winning. processed ore.
Overview
Ore Reserves Tolling Charges
Part of Mineral Resources for which appropriate assessments have been carried out to Charges or margins for converting concentrate into finished metal. These include TC/RCs,
demonstrate at a given date extraction could be reasonably justified and which include price participation and price sharing for copper concentrate and roasting charges for
consideration of and modification by realistically assumed mining, metallurgical, economic, molybdenum concentrate.
marketing, legal, environmental, social and governmental factors.
Underground Mine
Oxide and Sulphide Ores Natural or man-made excavation under the surface of the Earth.
Different kinds of ore containing copper. Oxide ore occurs on the weathered surface of ore-rich
lodes and normally results in the production of cathode copper through a heap-leaching Currency Abbreviations
process. Sulphide ore comes from unweathered parent ores process and normally results in
Business Review
US cents Cents of US Dollars.
the production of concentrate through a flotation process which then requires smelting and
refining to produce cathode copper. US$ US Dollar.
US$000 Thousand US Dollars.
Payable Copper
US$m Million US Dollars.
The proportion or quantity of contained copper for which payment is received after
metallurgical deduction. Pounds Sterling.
000 Thousand Pounds Sterling.
Porphyry
m Million Pounds Sterling.
A large body of rock which contains disseminated chalcopyrite and other sulphide minerals.
Such a deposit is mined in bulk on a large scale, generally in open pits, for copper and its P Pence.
by-product molybdenum. Ch$ Chilean Peso.
Financial Review
Price Participation CH$000 Thousand Chilean Pesos.
Part of the tolling charges for copper concentrate under a sales agreement, usually in addition Ch$m Million Chilean Pesos.
to TC/RCs and calculated a percentage of the difference between the copper price at final A$ Australian Dollars.
pricing and an agreed reference copper price, and which may result in an increase or A$000 Thousand Australian Dollars.
decreaseto TC/RCs.
A$m Million Australian Dollars.
Price Sharing
Tolling charges calculated under a sales agreement as an agreed percentage of the price for Definitions and Conversion of Weights and Measures
the metal contained in copper concentrate, as an alternative to TC/RCs and/or price participation. g/t grammes per tonne.
Governance
Run-Of-Mine (ROM) lb pound.
A process for the recovery of copper from ore, typically used for low-grade ores. The mined, Ounce or oz a troy ounce.
uncrushed ore is leached with a chemical solution. The metal is then recovered from the 000 m3 thousand cubic metres.
solution through the SX-EW process.
000 tonnes thousand tonnes.
Stockpile 1 kilogramme = 2.2046 pounds.
Material extracted and piled for future use. 1 metric tonnes = 1,000 kilogrammes.
SX-EW 1 kilometre = 0.6214 miles.
Solvent Extraction and Electro Winning. A process for extracting metal from an ore and 1 troy ounce = 31.1 grammes.
producing pure metal. First the metal is leached into solution; the resulting solution is then Financial Statements
purified in the solvent extraction process; the solution is then treated in an electro chemical Chemical Symbols
process (electro winning) to recover cathode copper. Cu Copper.
Tailings Dam Mo Molybdenum.
Construction used to deposit the rock waste which remains as a result of the concentrating Au Gold.
process after the recoverable minerals have been extracted in concentrate form. Ag Silver.
TC/RCS
Treatment and refining charges, being terms used to set the smelting and refining charge or
margin for processing copper concentrate and normally set either on an annual basis or on
Other Information
aspot basis.
Tpd
Tonnes per day, normally with reference to the quantity of ore processed over a given period
oftime expressed as a daily average.
Other Information
Shareholder Information
Annual General Meeting Registered Office

The Annual General Meeting will be held at Church House Conference Centre, Deans Yard, 5 Princes Gate, Knightsbridge,
Westminster, London SW1P 3NZ from 10.30 a.m. on Wednesday, 9 June 2010. London SW7 1QJ, United Kingdom
Tel: +44(0) 207 808 0988
Shareholder Calendar 2010
Fax: +44(0) 207 808 0986
5 May 2010 Quarterly Production Report Q1 2010
Santiago Office
5 May 2010 Ex Dividend Date for 2009 Final Dividend
Antofagasta Minerals S.A.
7 May 2010 Record Date for 2009 Final Dividend
Av. Apoquindo 4001 piso 18,
12 May 2010 Sterling Date for 2009 Final Dividend Santiago, Chile
27 May 2010 Quarterly Financial Report Q1 2010 Tel: +562 (02) 798 7000
Fax: +562 (02) 798 7445
9 June 2010 Annual General Meeting
10 June 2010 Payment Date for 2009 Final Dividend Registered Number
4 August 2010 Quarterly Production Report Q2 2010 1627889
24 August 2010 Interim Results Announcement Half Year 2010 Website
15 September 2010 Ex Dividend Date for 2010 Interim Dividend www.antofagasta.co.uk
17 September 2010 Record Date for 2010 Interim Dividend Additional information can be found in the Shareholder Information section of the Notice
of Annual General Meeting and on the Groups website.
22 September 2010 Sterling Date for 2010 Interim Dividend
7 October 2010 Payment Date for 2010 Interim Dividend
3 November 2010 Quarterly Production Report Q3 2010
25 November 2010 Quarterly Financial Report Q3 2010
Date are provisional and subject to change.
Dividends
Details of dividends proposed in relation to the year are given in the Directors Report on
page50, and in Note 12 to the financial statements.
Dividends are declared in US dollars but may be paid in either dollars or sterling. Shareholders
on the register of members with an address in the United Kingdom receive dividend payments
in sterling, unless they elect to be paid in dollars. All other shareholders are paid by cheque
indollars, unless they have previously instructed the Companys registrar to pay dividends
bybank transfer to a sterling bank account, or they elect for payment by cheque in sterling.
The Companys registrar must receive any such election before the close of business on
therecord date of 7 May 2010.
Dividends are paid gross without deduction of United Kingdom income tax. Antofagasta plc
isnot resident in the United Kingdom for tax purposes and dividends paid by Antofagasta are
treated the same way as dividends received from any other foreign company.
If approved at the Annual General Meeting, the final dividend of US 20 cents per ordinary
share will be paid on 10 June 2010 to shareholders on the register at the close of business
on 7 May 2010.
The conversion rate for final dividends to be paid in sterling will be set on 12 May 2010.
Share Capital
Details of the Companys share capital are given in Note 29 to the financial statements.
London Stock Exchange Listing
The Companys ordinary shares are listed on the London Stock Exchange (LSE; company code:
ANTO). The Company is a constituent of the FTSE 100 share index. The Companys American
Depositary Receipts (ADRs) also trade on the over-the-counter market in the United States.
Each ADR represents the right to receive two ordinary shares.
Registrars and Transfer Office
Computershare Investor Services PLC
PO Box 82, The Pavilions,
Bridgwater Road, Bristol BS13 8AE
Tel: +44(0) 870 702 0159
www.computershare.com

Overview
Antofagasta
5 Princes Gate
London
SW7 1QJ
United Kingdom

Lse Anto 2009

Uploaded by

Copyright:

Available Formats

Lse Anto 2009

Uploaded by

Document Information

Original Description:

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Lse Anto 2009

Uploaded by

Copyright:

Available Formats

Antofagasta plc Annual Report and Financial Statements 2009

Antofagasta plc Annual Report and Financial Statements 2009

Antofagasta is a Chilean-based copper mining group with

Antofagasta plc Annual Report and Financial Statements 2009

Antofagasta is a Chilean-based copper mining group with

Antofagasta at a Glance Directors and Advisors

Mining Transport Water

2 Organic and sustainable growth of the Core Business

Antofagasta at a Glance Directors and Advisors

Mining Transport Water

2 Organic and sustainable growth of the Core Business

Other Information 106

Five Year Summary 106

Group turnover (US$m) Strong operating performance with copper production

Increased potential through successful exploration

mining division approved a social and environmental strategy which is integral

Chairmans Statement continued

Health and safety Recent events and outlook

Earnings per share Dividends per share

Including special dividend Excluding special dividend

Strategy for the 3 Growth beyond

1 Securing and strengthening the Core Business

2 Organic and sustainable growth of the Core Business

Strategy for the Mining Business continued

Commitment to Strong labour relations Community relations Efficient environmental

Social and environmental strategy

andconsumer products. A Construction 33 E

sales are made underannual contracts, which again specify volumes to

Refined copper market 150

issues, particularly during times of strong demand for commodities. D Labour

Key Performance Indicators

EBITDA US$1,680.7m Capital expenditure US$1,335.4m

Principal Risks and Uncertainties

LA PAZ National highway

Towns and cities

POTOSI Other railways

TUPIZA 5060 Pound Rail

LA SERENA ARGENTINA CHILE

Location: Chiles Coquimbo Region, 240km northeast of Santiago

40% Japanese Consortia

1 Securing and strengthening the Core Business

Los Pelambres port facility at Punta Chungo

1 Securing and strengthening the Core Business

Key data for 2009

Location: Chiles Antofagasta Region, 1,350 km north

1 Securing and strengthening the Core Business

Location: Chiles Antofagasta Region, 1,500 km north

1 Securing and strengthening the Core Business

Production and cost data for Michilla

asin New York by Project Finance Magazine who named it as Mining

2 Organic and sustainable growth of the Core Business

Drilling work in the Sierra Gorda District

3 Growth beyond the Core Business

Location: Chiles Antofagasta Region

Sustainable Development Principles

Group social and

The Choapa Valley near Los Pelambres

Corporate Sustainability continued

Corporate sustainability Ethics