Southern Copper Corporation Highlights

Transcription

1 Southern Copper Corporation Highlights ht Southern Copper Corporation Highlights March 2009 January

2 Safe Harbor Statement This presentation contains forward-looking statements, as defined by federal securities laws, with respect to our financial condition, results of operations and business, and our expectations or beliefs concerning future events. These statements include words such as, but not limited to, expect, anticipate, believe, intend, plan, seek, forecast, estimate, continue, may, will, would, could, likely, and similar expressions. These forward-looking statements reflect management s current expectations and assumptions regarding future events and operating and financial performance and are based on currently available information. However, actual results are subject to risks and uncertainties, which could cause actual results to differ materially from those contained in the forward-looking statements. Many risks and uncertainties are inherent in the copper industry. Others are more specific to our operations. Additional information about risks and uncertainties that could affect our future results are contained in our SEC filings, including our reports on Forms 8-K, 10-Q, and 10-K and a registration statement on Form S-3 relating to our proposed public offering of common stock. 1

3 I. Introduction 2

4 Management Presenters Presenters Raúl Jacob Title Manager of Financial Planning & IR 3

5 Corporate Structure 79.5% (*) Public Float 20.5% (*) % % SCC Peru Branch Minera México (*) As of February 23, 2009 (10K, page 6) 4

6 Metal Market Copper Molybdenum Slowdown in demand due to decrease in 92% of world reserves and production industrial production. capacity are concentrated in: Mexico, Peru, Cash cost increases resulting from lower USA, China, and Chile. by product credits Demand largely driven by special steel Strong alloys consumption. long-term fundamentals: Supply constraints and emerging economies LME Copper Cash Price vs. Inventories es Molybdenum Prices 1,400,000 $ ,200,000 $40.00 $ ,000,000 $ ,000 $25.00 $ ,000 $ ,000 $ ,000 $5.00 $ Jan-00 4-Apr Jul Oct Jan Apr Jul Oct Jan-02 3-May-02 8-Aug-02 7-Nov Feb May Aug Nov Feb May Aug Nov-04 8-Mar-05 9-Jun-05 9-Sep-05 9-Dec Mar Jun Sep Dec Mar Jun Sep Dec-07 1-Apr-08 1-Jul-08 2-Oct-08 5-Jan-09 5-Apr Jul Oct Jan Apr-01 1-Aug-01 2-Nov-01 8-Feb May Aug Nov Feb-03 4-Jun Sep Dec Mar-04 9-Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct-07 1-Feb-08 7-May-08 1-Aug Oct Feb-09 FOB North America price US$ per lb Registered inventories in tons 3 month price US$ per ton

7 Southern Copper Strengths Long life reserves and exploration projects Excellent organic growth projects Low cost fully integrated t operations Experienced management team Strong financial performance / investment grade Outstanding dividend history Good long-term copper & molybdenum fundamentals 6

8 II. Overview of Operations 7

9 Company Overview Copper Reserves 1 : 50.7 mmt 2008 Key Data Copper Production: 489 kt Sales: $ 4,851 M EBITDA: $ 2,546 M Cash Cost: $ 0.34 / lb. #1 copper company by reserves 2 #7 copper producer 3 #9 copper smelter 3 Mexico Cananea La Caridad San Martin Peru Santa Eulalia Santa Barbara Taxco Charcas San Luis Potosi Key Copper open pit mines Underground mines Smelters and Refineries Source: Company Filings Notes: 1 Copper contained in reserves based on US$1.20 per pound of copper as of December 31, Based on available companies reports 3 CRU Ilo Cuajone Toquepala 8

10 Long Life Reserves First largest copper reserves of any publicly traded company Long-life reserves with strong capacity expansion plans Main Copper Reserves SCC Copper Reserves Copper Reserve es (Mt) SCC Codelco 37.5 FCX 25.2 BHP Billiton 22.9 Anglo American Rio Tinto Xstrata 12.1 CVRD-Inco 10.3 ntofagasta A Contained in reserve es (Mt) Copper % % SEC Copper prices ($/lb) Source 10K Annual Rep. 10K 20F Annual Rep. 20F Reserve Rep. Annual Rep. Annual Rep. Period 08/12/31 07/12/31 08/12/31 08/06/30 07/12/31 07/12/31 08/06/30 07/12/31 08/12/31 Cu Price $1.20 N/A $1.60 $2.00 N/A $2.31 N/A N/A N/A 9

11 Low Cost Operations (US$/lb) Cash Costs per pound of Copper Produced Net of By-Products Operating Cash Cost per Pound of Copper Produced Low Cost Drivers Management focus on cost efficiency Significant low cost SX-EW production High quality reserves Strong by-product credits 2008 (per Lb of Cu): molybdenum ( 0.71) zinc ( 0.17) silver ( 0.18) other ( 0.16) sulphuric acid ( 0.15) Cost Structure (US$/lb) Operating Other Materials % 16% Maintenance 15% Labor 14% Power 31% Fuel 12% As of December 31, 2008 As of December 31,

12 Geographic and Product Diversification 2008 SCC Revenue by Product 2008 SCC Revenue by Market Zinc 4% Silver 4% Other Acid 3% 4% Peru 3% Asia 5% Europe 24% Molybdenum 16% 19% Copper 69% Mexico 23% United Statest 27% Other Latin American 18% 11

13 Expansion Projects Tía María SX EW / Copper LBE for Operations: 2H Annual Copper Production: 120 ktpy Estimated Capex: $934 M Toquepala Concentrator Expansion LBE for Operations: 1H Annual Production: Copper = 100 ktpy; Moly = 3.1 ktpy Estimated Capex: $600 M Cuajone Concentrator Expansion Annual Production: Copper = 50 ktpy Moly = 0.7 ktpy Estimated Capex: $374 M Ilo Metallurgical Operations Expansion Additional Concentrates from Cuajone & Toquepala, 445 ktpy Smelter expansion from 1.2 MTPY to 1.8 MTPY Copper Anode production: 325 ktpy to 490 ktpy Copper Cathode production: From 280 ktpy to 360 ktpy Estimated Capex: $200 M Additional Copper Production : 270 ktpy; Capex : $2.1B LBE : Last Best Estimate 12

14 III. Financial Overview 13

15 SCC Financial Summary (US$ MM) Copper Price (LME) US$ per pound Income Statement: Net Revenues $4,089 $5,460 $6,086 $4,851 EBITDA 2,335 3,316 3,766 2,546 EBITDA Margin 57% 61% 62% 52% Interest Expense Net Income 1,400 2,038 2,216 1,407 Dividends paid per share Balance Sheet Statement: Cash & Equivalents $876 $1,023 $1,409 $717 Total Assets 5,688 6,376 6,581 5,764 Total Debt 1 1,172 1,528 1,450 1,290 Total Liabilities 2,349 2,696 2,716 2,369 Total Shareholders' Equity 3,326 3,667 3,848 3,381 Cash Flow Statement: Capital Expenditures 2 $471 $456 $316 $517 Free Cash Flow , , , ,204 Dividends paid to common shareholders 854 1,509 2,002 1,711 Key Ratios Net Debt / EBITDA 0.1x 0.2x 0.01x 0.2x EBITDA / Interest Expense Includes short-term and long-term debt including current portion 2 Includes capitalized stripping costs until Free Cash Flow defined as net cash from operating activities less capital expenditures 14

16 Solid Financial Performance Among the highest EBITDA margins and strongest leverage ratios in the metals & mining industry 2008 EBITDA Margin (%) Net Debt/ 2008 EBITDA (x) Antofagasta 56% Antofagasta -1.5x Southern Copper 52% Southern Copper 0.2x BHP Billiton 39% BHP Billiton 0.4x Xstrata 39% 1 Xstrata 1.0x Anglo American 1.1x Anglo American 37% FCX 1.1x Freeport 32% 1 CVRD - Inco 2.7x Rio Tinto 17% Rio Tinto 3.9x 1 Year 2007 Source: SCC; Company Reports 15

17 Focus on Total Return to Investors Disciplined approach to creating shareholder value Current Dividend Yield 1 (%) 3-Year Share Price Performance 1 (%) Southern Copper 12.1% 39% Southern Copper Antofagasta Freeport 7.4% 8.9% : US$500 M. Share Repurchase Program 14% 23% BHP Billiton Antofagasta Rio Tinto 6.8% 13% CVRD Anglo American 5.6% -36% Anglo American CVRD 4.6% In 2008, SCC paid US$1.7 Billion US$ 1.94 per share -53% Rio Tinto BHP Billiton 3.3% -53% Xstrata Xstrata 0.0% -57% Freeport 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% 14.0% -60% -40% -20% 0% 20% 40% 60% Source: Bloomberg; Company Filings Note: 1 Regular and special dividends declared over last twelve months by record date divided by current share price as of December 31, 2008 (SCC = US$16.06) 1 As of December 31,

18 Capital Expenditure Forecast (US$M) $1,200 $1,000 $107 $199 $800 $600 $400 $200 $0 $1,200 $940 $780 $517 $393 $ E 2010E 2011E 2012E 2013E Source: SCC 17

19 SCC Debt Amortization Schedule Millions of USD as of December 31, 2008 $1,000 $200 $10 $10 $10 $10 $10 $ Mitsui Yankee Bonds 10 & 30 year Bonds 18