ANGLO AMERICAN PLC - Anglo American approves Quellaveco copper project for development

Anglo American approves Quellaveco copper project for development

Anglo American plc (the “Company”)
Registered office: 20 Carlton House Terrace, London SW1Y 5AN
Registered number: 3564138 (incorporated in England and Wales)
Legal Entity Identifier: 549300S9XF92D1X8ME43
ISIN: GBOOB1XZS820
JSE Share Code: AGL
NSX Share Code: ANM

NEWS RELEASE

26 July 2018

Anglo American approves Quellaveco copper project for development

Anglo American plc (“Anglo American”) announces that its Board has approved the development
of the world-class Quellaveco copper project in Peru.

Mark Cutifani, Chief Executive of Anglo American, commented: “Quellaveco is one of the
world’s largest and most attractive undeveloped copper orebodies. We expect Quellaveco to
generate a real, post tax IRR of greater than 15%, with a four-year payback(1) and an EBITDA
margin of more than 50% due to its highly competitive first quartile cash cost position. We see
significant potential to expand Quellaveco beyond its current 30-year reserve life as well as to
increase throughput above the initial capacity of 127,500 tonnes per day.

“After several years of extensive preparatory work, we are very pleased to develop the project
together with our partners Mitsubishi. We are grateful for the strong support we have gained from
our host communities and at the national level. Quellaveco should bring very significant
opportunities and sustainable benefits to the lives of those we employ, our business partners, the
surrounding region and Peru as a whole, for decades to come.”

The development phase of the project will commence following completion of the transaction,
announced in June 2018, whereby Mitsubishi Corporation (“Mitsubishi”) will increase its interest
in Anglo American Quellaveco S.A., (“AAQSA”), which owns the Quellaveco project, to 40%. The
development has an expected capital cost of $5.0 to 5.3 billion and will be funded on an
attributable basis: 60% by Anglo American and 40% by Mitsubishi, with Mitsubishi pre-funding
the first $500 million of Anglo American’s share of the capital expenditure.

First production of copper is expected in 2022, ramping up to full production in 2023. During the
first ten years of full production Quellaveco is expected to produce approximately 300,000 tonnes
per year at a cash cost of $1.05 per pound of copper.

The support of local communities is the result of an innovative 18-month consultation with local
authorities and community representatives from the Moquegua region. Through this ‘dialogue
table’, Anglo American agreed 26 detailed and specific long-term commitments relating to water
management, environmental protection and social investment. For example, by ensuring that the
water required by the operation is drawn mainly from a river whose water is naturally unfit for
human or agricultural use and additionally by collecting excess rainfall and sharing it with the
communities, Anglo American is delivering on its promise of a positive water impact for local
people and their livelihoods.

Mark Cutifani added: “This is an exciting moment for Anglo American. The approval of Quellaveco
is an important step in delivering the full potential of our world class asset portfolio, with an
expected project ROCE in excess of 20%, and we look forward to working responsibly with all
our stakeholders to make it a reality.”


(1) Four-year payback is from first production in 2022


For further information, please contact:

  Media                                                    Investors
  UK                                                       UK
  James Wyatt-Tilby                                        Paul Galloway
  james.wyatt-tilby@angloamerican.com                      paul.galloway@angloamerican.com
  Tel: +44 (0)20 7968 8759                                 Tel: +44 (0)20 7968 8718

  Marcelo Esquivel                                         Robert Greenberg
  marcelo.esquivel@angloamerican.com                       robert.greenberg@angloamerican.com
  Tel: +44 (0)20 7968 8891                                 Tel: +44 (0)20 7968 2124

  South Africa                                             Sheena Jethwa
  Pranill Ramchander                                       sheena.jethwa@angloamerican.com
  pranill.ramchander@angloamerican.com                     Tel: +44 (0)20 7968 8680
  Tel: +27 (0)11 638 2592

  Ann Farndell
  ann.farndell@angloamerican.com
  Tel: +27 (0)11 638 2786


Notes to editors:

On 14 June 2018, Anglo American announced that it had entered into a Heads of Agreement
with Mitsubishi Corporation in relation to Mitsubishi’s proposed acquisition of an additional 21.9%
equity interest in AAQSA, which owns the Quellaveco project, for a total consideration of
$600 million. Following closing of the transaction, Mitsubishi’s interest will increase to 40%, while
Anglo American will retain 60%. The total subscription by Mitsubishi for new shares in AAQSA
will be $833 million, which will reduce Anglo American’s share of capital contributions to AAQSA
for the development of the Quellaveco project by $500 million. Following approval of the project
by the Anglo American Board, all material conditions to the closing of the transaction have now
been met and therefore completion of the transaction is expected during August 2018.

Quellaveco is one of the world’s largest undeveloped copper deposits and is located in the
Moquegua region in the south of Peru. With Ore Reserves estimated at 1.3 billion tonnes,
containing approximately 7.5 million tonnes of copper (at 0.57% TCu), Quellaveco has a Reserve
Life of 30 years, with potential for further extension given its estimated additional Mineral
Resources of 1.6 billion tonnes, containing 6.0 million tonnes of copper (at 0.37% TCu)3. The
Quellaveco project will use open pit mining and processing by flotation to produce copper
concentrate, as well as molybdenum and silver by-products. At its initial nameplate throughput
rate of 127,500 tonnes per day, Quellaveco is expected to produce an average of approximately
300,000 tonnes per year over its first ten years of operation, at a C1 cash cost of $1.05 per pound
of copper.

The project has been granted all its major permits required for construction, and benefits from a
high level of acceptance from the local communities and the local, regional and national
governments. Quellaveco will be operated by Anglo American and will create more than 9,000
jobs during the construction phase and approximately 2,500 jobs in normal operation.
For additional information and materials relating to Quellaveco, please visit
www.angloamerican.com/quellaveco.

1.    Estimates as at 31 December 2017. For a breakdown of the classification categories, refer to the Anglo American
      Ore Reserves and Mineral Resources Report 2017. TCu = Total Copper.

Anglo American is a global diversified mining business and our products are the essential
ingredients in almost every aspect of modern life. Our portfolio of world-class competitive mining
operations and undeveloped resources provides the metals and minerals to meet the growing
consumer-driven demands of the world’s developed and maturing economies. With our people
at the heart of our business, we use innovative practices and the latest technologies to discover
new resources and mine, process, move and market our products to our customers around the
world.

As a responsible miner – of diamonds (through De Beers), copper, platinum and other precious
metals, iron ore, coal and nickel – we are the custodians of what are precious natural resources.
We work together with our key partners and stakeholders to unlock the sustainable value that
those resources represent for our shareholders, the communities and countries in which we
operate and for society at large. Anglo American is re-imagining mining to improve people’s lives.
www.angloamerican.com


The Company has a primary listing on the Main Market of the London Stock Exchange and
secondary listings on the Johannesburg Stock Exchange, the Botswana Stock Exchange, the
Namibia Stock Exchange and the SIX Swiss Exchange.

Sponsor
RAND MERCHANT BANK (A division of FirstRand Bank Limited)

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