QUELLAVECO: A SUSTAINABLE PROJECT Tom McCulley, CEO PDAC – Toronto, March 2019 1
CONTENTS 1. Generating trust for a long-term commitment 2. Peru: An attractive mining jurisdiction 3. Long-term relationship with Peru 4. Project location 5. Contribution to Peru 6. Our Global Sustainability Pillars 7. Committed to working with local communities 8. Dialogue Table commitment progress 9. Major permits in place 10. Local employment and local procurement 11. Social development aligned with Sustainable Development Goals 12. Delivering improved quality and volume of water 13. Quellaveco on track 2
GENERATING TRUST FOR A LONG-TERM COMMITMENT 1 Safety: Our first priority Innovative and sustainable water strategy for Quellaveco to 2 provide benefit to communities 3 A strategic partner for the development vision of Moquegua A collaborative and transparent relationship with regional 4 and national Government Established history of respectful and responsible behaviour 5 to communities Closely aligned to United Nations Sustainable Development 6 Goals and Global Compact and Voluntary Principles We Committed to an impactful and sustainable operation, contributing to a 7 better future for Moquegua and Peru 3
PERU – AN ATTRACTIVE MINING JURISDICTION The world’s second largest producer of copper, Peru has become increasingly stable over the with mining accounting for ~10% of GDP past two decades • Strong and sustained economic growth • Until 2015, gross domestic product increased on average by 5.3% • In 2018 gross domestic product is expected to grow ~4% • Robust fiscal policy and improved security • The mining industry in Peru is well- established, with a clear policy and regulatory framework • Peru ranked 14 th in Frasier Institute 2018 Investment Attractiveness Index (19 th in 2017) • Major global players have large-scale Quellaveco investments in Peru, many spanning decades 4
PERU – AN ATTRACTIVE MINING JURISDICTION Professionalism of Peru’s mining and promotion Quellaveco Project supported by Central, Regional institutions facilitate investment and Local government Global • Government institutions clearly mining understand how volatile the • Government supports project industry mining industry can be execution, acknowledging Central importance to national economy government • Government institutions • Legislation supports mining participate actively in dialogue Building processes with local communities trust • Follow-up on commitment fulfilment Regional / • Expectant with the project Local • Investment Tracking Group • Continuous engagement government reactivated at the Ministry of Investment Finance. promotion • Key to unlock bottlenecks The south of Peru is an established mining location • Early identification of potential obstacles to move forward with Ease of permits and authorisations • Fastest growing copper producing region in Peru doing • Better planning to improve business • Hosts many of the world’s foremost mining deadlines, with the same level of companies requirements • Established infrastructure and skilled workforce • New Mining Management and Information Committees track • Clear policy and regulatory framework Social commitment fulfilment and help issues prevent social unrest (due to non- compliance or unattended claims) 5
LONG-TERM RELATIONSHIP WITH PERU 2018 Quellaveco: working in Peru for >25 years FS updated. Investment 2015 Assurance review successful FS for 127.5ktpd completed. Mitsubishi acquires All major permits approved. additional 21.9% stake of Quellaveco from AA plc Independent Project Review completed AA plc approves execution of project 2012 Mitsubishi acquires 18.1% 2010 stake of project from IFC Pre-FS completed. 1 st & 2 nd Dialogue Table completed EIA amendments approved. following 18 month process Early-works initiated Main permits approved 2008 FS revised for 91ktpd. New plant location / water source 2000 1992 First Feasibility Study (FS) for 64ktpd, and Environmental Impact Anglo American Assessment (EIA) approved purchase of Quellaveco 6
PROJECT LOCATION Located at ~3,500m above sea level in south of Peru, 34km from the city of Moquegua Quellaveco – Key statistics 60% Ownership: 40% Peru Overview Copper Commodities: Lima (molybdenum by-product) Mine: Open-pit, 1.3Bt Reserves, 0.57% TCu 1 Quellaveco ~9,000 at peak construction Workforce: ~2,500 steady state operations Construction time: < 4 years from August 2018 Construction First production 2022 Commissioning: Ramp-up during 2023 Permitting: Key construction permits obtained Capex: US$5.0-5.3bn Throughput rate: 127.5ktpd Operation ~330ktpa average first five years Production: ~300ktpa average first 10 years Reserve life: ~30 years 7
CONTRIBUTION TO PERU At national and local level Investment US$5.0-5.3bn 25,000 people to US$0.3bn invested benefit from since project Development Fund approval (Aug-18) Will deliver average Canon & royalty ~300ktpa copper eq. income for Moquegua (first 10 years) will increase >50% Significant 0.4% GDP growth investment in water during 2018 – 2019 infrastructure >3,800 Moqueguan US$11m invested in employees currently education, health and working on the productive projects Quellaveco project (2017 – 2018) 8
OUR GLOBAL SUSTAINABILITY PILLARS SOCIAL ENVIRONMENTAL GOVERNANCE 9
COMMITTED TO WORKING WITH LOCAL COMMUNITIES Dialogue Table focussed on three key …with firm commitments areas… Water 26 Supply and optimal use of water resources Agreements directly from the Dialogue Table Environment 31 Compliance and monitoring of environmental Bodies from 3 different municipalities commitments Local ~$300m stakeholders Sustainable Community investment commitment over next development projects 30 years, besides taxes and royalties 10
GOOD PROGRESS BEING MADE AGAINST COMMITMENTS Commitments No. of Fulfilled On Track During Commitments Operation Water 11 4 4 3 Supply and optimal use of water resources Environment 4 1 11 6 Compliance and monitoring of environmental commitments Local 3 4 - 1 stakeholders Sustainable development projects 11
ALL MAJOR CONSTRUCTION PERMITS IN PLACE Major Permits Water Licences Permits Status Licences Status Environmental Impact Study Construction Water Authorisation Beneficiation Concession Operations Water Licence (grant on start of operations) Mining Plan Mining Closure Plan 12
LOCAL EMPLOYMENT Recruitment of Moqueguan candidates is prioritised, with all applications channelled through a dedicated regional labour office in Moquegua. Local employment Unskilled labour 3,864 5% 5,371 95% 3,864 5,371 95% Local Non-local 13
LOCAL PROCUREMENT 1,085 721 Local businesses have been identified Local businesses as potential future benefitted from 303 suppliers our training programmes Local businesses “ Progresa supplied goods Moquegua” and and services to “ Emerge Perú” the project in 2018 14
SOCIAL DEVELOPMENT ALIGNED WITH UN’S SUSTAINABLE DEVELOPMENT GOALS • Economic productive development projects • Projects to improve agricultural production • Projects and programmes to prevent and reduce anaemia and malnutrition / Food safety • Projects to improve education quality • Projects on technology and innovation • EMERGE Perú – Business Development Programme 15
DELIVERING IMPROVED QUALITY AND VOLUME OF WATER TO LOCAL COMMUNITIES Responsibly sourced water for operations Water for operational phase to come from two sources in High Mountain region: • 80% (18Mm 3 ) from Titire River : unfit for human, livestock or agricultural use • 20% (4Mm 3 ) from Vizcachas reservoir : • 60Mm 3 capacity dam and reservoir under construction • Operation will use only 4Mm 3 p.a. • Will provide better quality and volume of water to Moquegua and Tambo regions • Water for the operation to be transported to site via 95km water pipeline. 16
QUELLAVECO ON-TRACK 2018 achievements 2019 priorities • Asana and Vizcachas river diversions • Substantially complete engineering complete • Complete earthworks in concentrator • Asana dam and tunnel complete • First concrete at concentrator • Main access road complete • Progress HME contracts and awards • Contracts and procurement significantly • Vizcachas dam progressed • 95km water pipeline construction • Earthwork contracts awarded and progressing on-site Committed to working together to make Peru’s vision for mining a reality by 2030 17
PHOTO GALLERY 1. Anglo American - Safety Day 2. Asana Barrier 3. Asana River Tunnel 4. Aerial View - Quellaveco Site 5. Salveani Camp 6. Aerial View - Papajune Plant 7. Aerial View - Vizcachas Dam 8. Water Pond for Construction 18
ANGLO AMERICAN - SAFETY DAY 19
ASANA BARRIER 20
ASANA RIVER TUNNEL 21
AERIAL VIEW – QUELLAVECO SITE 22
SALVEANI CAMP 23
AREAL VIEW – PAPUJUNE PLANT 24
AERIAL VIEW – VIZCACHAS DAM 25
VIZCACHAS DAM SITE 26
WATER POND FOR CONSTRUCTION 27
THANK YOU 28
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