RESULTS Second Quarter 2017

Transcription

1 RESULTS Second Quarter 2017 Relevant figures in US dollars 1 Mexico City, July 27, Grupo México, S.A.B. de C.V. ( Grupo México GMéxico BMV: GMEXICOB). Consolidated sales during 1H17 totaled US$4.51 billion, 13% higher than in 1H16, given 24% higher copper prices. In the Transportation Division, volumes decreased 2% compared to 1H16, causing a 3% drop in sales. In Infrastructure, sales decreased 2% to US$302 million due to lower rates from Pemex. During 1H17, copper sales volumes reached 512,807 tons, in line with the previous year s sales volumes. Silver and zinc sales volumes increased 5% and 3% respectively. During the first six months of the year, copper s cash cost per pound totaled US$1.12, increasing 4% from 1H16. EBITDA for 1H17 was US$1.97 billion, 22% higher than in 1H16. The Mining Division reached US$1.5 billion, implying 38% growth vs. 1H16. The Transportation Division reached US$382 million, 2% higher compared to 1H16. The Infrastructure Division's EBITDA totaled US$133 million. Cost of Sales in 1H17 reached US$2.4 billion, 7% higher than in 1H16. In the Mining Division, costs rose 9% due to inventory depletion and FX appreciation. In the Transportation Division, it rose 2%. In the Infrastructure Division it grew 3%. The operating cash flow in 1H17 reached US$1.18 billion, US$393 million greater than in 1H16. Consolidated net profit was US$801 million in 1H17, which means 6% growth compared to 1H16. Capital investments reached US$653 million in 1H17, 9% less than in 1H16, given the conclusion of our expansion at Buenavista. On June 30, Grupo Mexico announced that, through its Transportation Division, it completed the acquisition of Florida East Coast Railway Holdings Corp after receiving all the necessary authorizations. This acquisition positions our Transportation Division as a relevant player in North America, since it adds to the current operations in Mexico and the state of Texas. Contact: Marlene Finny (55) ir@mm.gmexico.com On July 21, 2017, the Management Board declared the payment of a cash dividend of P$0.30 per share outstanding, to be made in a single installment as of August 24, Second Quarter Variance January June Variance (Thousand US Dollars) US$000 % US$000 % Sales 2,089,262 2,250, , ,009,841 4,513, , Cost of Sales 1,152,999 1,195,622 42, ,235,307 2,400, , Operating Income 611, , , ,153,029 1,498, , EBITDA 883, , , ,611,711 1,970, , EBITDA Margin (%) 42.3% 44.2% 40.2% 43.7% Net Income 350, ,130 27, , ,467 44, Profit Margin (%) 16.8% 16.8% 18.9% 17.8% Investments / Capex 456, ,407 (103,409) (22.6) 717, ,603 (65,024) (9.1) Employees 29,933 29,452 (481) (1.6) 29,933 29,452 (481) (1.6) 1 All figures are in dollars ("US$"), United States currency, under US GAAP, unless otherwise stated. 2Q17 Page 1

2 Highlights by Division Mining Division Projects in Mexico Buenavista Crushing, Conveying and Spreading System for Leachable Ore (Quebalix IV), Sonora. The project is fully operational and was completed on time at a cost of US$327 million, which is US$117 million below our budget of US$444 million. This project will reduce processing time as well as mining and hauling costs, increasing production by improving SXEW copper recovery. Buenavista New Molybdenum Plant, Sonora. The new molybdenum plant in Buenavista started operations during April and it is now operating at full capacity to produce an additional 2,000 tons per year. Buenavista Projects, Sonora. The Buenavista program was 100% completed on time and US$101 million below our budget of $3,265 million. These projects are increasing copper production from 180k MT to 500k MT. Buenavista Zinc, Sonora. This project is located within the Buenavista facility and contemplates the development of a new concentrator to produce approximately 80,000 tons of zinc and 20,000 tons of copper per year that will allow us to double our current zinc production. As of today, we have concluded the basic engineering and we are working on the detailed engineering of the project. We estimate an investment of US$413 million. We expect Buenavista Zinc to start operations by Pilares, Sonora. This project is located 10 km away from La Caridad and will be developed as an openpit mine operation, the ore will be then transported by truck to the primary crushers of the La Caridad copper concentrator helping to significantly improve the overall mineral ore grade (0.78% expected from Pilares vs. 0.34% La Caridad). An investment of US$159 million is estimated and an expected startup in 2019, with annual production of 34,500 MT of copper. Projects in Peru We currently have five copper major investments in Peru, including the Tia Maria project, with a total capital budget for these projects of $2,900 million of which US$1,275 million have been already invested. Toquepala Expansion Project, Tacna. This US$1.2 billion project includes a newstateoftheart concentrator which will increase Toquepala s annual copper production by 100k tons to 217k tons in 2018 and 260k tons in Through June 30, 2017, we have invested US$650 million in this expansion. The project has reached 70% progress and is expected to be completed by the 2Q18. Toquepala High Pressure Grinding Roll (HPGR) system, Tacna. The main objective of this project is to ensure that our existing concentrator will operate at its maximum annual production capacity of 117,000 tons of copper while reducing operating costs through ore crushing efficiencies, even with an increase of the ore material hardness index. The budget for this project is US$50 million of which we have invested US$30 million as of June 30, We expect the Toquepala HPGR investment to be completed by the 1Q18. Cuajone s Heavy Mineral Management Optimizing Project, Moquegua. The project consists of installing a primary crusher at the Cuajone mine pit with a conveyor system for moving the ore to the concentrator. The project aims to optimize the hauling process by replacing rail haulage, thereby reducing operating and maintenance costs as well as the environmental impact of the Cuajone mine. The crusher will 2Q17 Page 2

3 have a processing capacity of 43.8 million tons per year. The main components, including the crusher and the 7 kilometer overland conveyor belt, have been already assembled. As of June 30, 2017, we have invested $184 million in this project out of the approved capital budget of US$215 million. The project has reached 99% progress and is expected to be completed in the 3Q17. The Cuajone tailing thickeners project, Moquegua. at the concentrator will replace two of the three existing thickeners with a new hirate thickener. The purpose is to streamline the concentrator flotation process and improve water recovery efficiency. While increasing the tailings solids content from 54% to 61% we will increase recovered water production and reduce fresh water consumption. Equipment assembly is almost finished and we are starting the commissioning process. As of June of 2017, we have invested US$21 million in this project out of the approved capital budget of US$30 million. The project has reached 99% progress and we expect to complete the commissioning by the end of the 3Q17. Tia Maria. We have completed all engineering and have successfully obtained the approval of the environmental impact assessment. We are currently working to obtain the construction license for this 120k MT of copper per year SXEW Greenfield project with a total capital budget of US$1.4 billion. Projects in Spain Aznalcollar, Andalucía. This project is located only 35 km. from the city of Seville, Spain. After the project was awarded to Grupo Mexico in a public international bidding process in 2015, in mid2016 the regional authorities granted us permission to begin exploration activities. From July 2016 to April 2017 we executed an ambitious exploration campaign. Results to date provide confirmation for initial information on the project and suggest promising potential to eventually increase the initial size of the ore bodies. We are working on an updated feasibility study to be finalized by year end. Permitting process will follow and construction could kickoff towards the end of 2018 and to start operations by 2021 the project s estimated investment totals US$290 million. The Aznalcollar mining project represents Grupo Mexico s first venture into Europe, and offers the potential of significantly enhancing the Company s current zinc production: Aznalcollar is expected to produce more than 70,000 tons of zinc and copper concentrates per year over an initial life of mine of 19 years (102,000 tons of zinc equivalent). 2Q17 Page 3

4 Transportation Division FEC Acquisition. Grupo Mexico announced that, through its Transportation Division, it completed the acquisition of Florida East Coast Railway Holdings Corp ( FEC ), owner of Florida East Coast Railway. Before completing the transaction, GMXT obtained the authorizations from all US regulatory agencies, including the Committee of Foreign Investment in the United States, the Surface Transportation Board, and the Federal Communications Commission. The acquisition was completed with a US$2.0 billion payment from GMXT, funded with a US$1.55 billion loan from BBVA and Credit Suisse, and a US$250 million one from Santander. The remainder was funded with GMXT s own resources and debt at FEC s level, totaling US$97 million. FEC s acquisition is an important strategic addition to GMXT for the provision of transportation services in North America. This transaction generates greater strength for GMXT in terms of geographic presence, and the service we will be able to offer our clients, and it will significantly improve the scope and scale of our services. Growth in the Intermodal Segment. This segment accrued 7 % growth in TonsKm. This growth is due to a greater number of containers hauled, mainly with an increase in crossborder traffic of auto parts and consumer products from Monterrey and Silao to Chicago. Infrastructure Division Good traffic on Salamanca León highway. During 2Q17, it reported $158 million pesos in revenues and a weighted average daily traffic of over 11,500 units; the equivalent traffic corresponds to over 17,500 units; this translates into a 7% increase in sales year over year. Traffic remains above the figure agreed with the SCT. New Energy Generation Record. During 2Q17, 899,175 MwH were generated, translating into a 5.7% increase from 1Q17. Higher revenues at México Compañía Constructora. During 2Q17, sales totaled US$38 million, which translates into a 20% increase vs. 1Q17, mainly due to greater works in the state of Sonora, the New Mexico City airport (AICM), and the direct access from the highway to the city of Leon. 2Q17 Page 4

5 Financing 2016 As of June 30, 2017 Gross Gross Cash & Net (US$000) Debt (1) Debt (1) Banks (2) Debt Grupo México 60,494 (60,494) Americas Mining Corporation 120,795 (120,795) Southern Copper Corporation 5,952,854 5,955, ,901 5,226,685 Asarco 78,701 54,485 14,367 40,118 GMéxico Transportes 1,813,658 82,305 1,731,353 GFM Ferromex 263, ,737 79, ,788 Ferrosur 31,177 22,325 16,684 5,641 México Proyectos y Desarrollos 1,108,531 1,025,438 66, ,275 Grupo Mexico (Consolidated) 7,434,955 9,150,230 1,169,658 7,980,571 (1) include Debt Fees (2) include Short Term Investment Grupo México maintains a solid balance sheet with low leverage, as its net debt to EBITDA stands at 2.2x. 92% of the debt is USDdenominated and 8% is in pesos. 74% of the debt has a fixed rate. In addition, Grupo Mexico has a comfortable debt payment schedule. Grupo Mexico is analyzing options to refinance a US$1.55 billion loan obtained for the FEC acquisition, following the Group s longterm debt strategy. This proves that the company s financial soundness enables it to be well positioned to continue with its aggressive expansion program and analyze possible opportunities that may arise on the market. 1,800.0 Grupo Mexico Maturities As of June 30th, , , , , Mining Division Transportation Division Infrastructure Division 2Q17 Page 5

6 Mining Division Americas Mining Corporation Key Figures Second Quarter Variance January June Variance (Thousand US Dollars) US$000 % US$000 % Sales 1,552,759 1,727, , ,989,992 3,535, , Cost of Sales 935, ,511 36, , , , Operating Income 384, , , ,385 1,111, , EBITDA 583, , , ,086,046 1,500, , EBITDA Margin (%) 37.6% 42.3% 36.3% 42.4% Net Income 207, , , ,341 (51,278) (9.1) Profit Margin (%) 13.4% 12.1% 18.7% 14.4% Investments / Capex 368, ,342 (71,793) (19.5) 604, ,552 (46,920) (7.8) Average Metal Prices 3Q 4Q 1Q Second Quarter Var. January June Var % % Copper ($cts/pound) Molybdenum ($dlls/pound) Zinc ($cts/pound) Silver ($dlls/ounce) Gold ($dlls/ounce) 1, , , , , (0.2) 1, , Lead ($cts/pound) Sulfuric Acid ($dlls/ton) (20.7) (19.8) Source: Copper & Silver COM EX; Zinc & Gold LM E; M olybdenum M etals Week Dealer Oxide, Sulfuric Acid AM C Copper. Copper production in 1H17 decreased 6% compared to 1H16 to 495,778 tons as a result of a lower production at Asarco (18%), mainly due to the partial shutdown of operations at Hayden and lower ore grades at Cuajone. Molybdenum. Molybdenum production in 1H17 decreased 2% to 10,679 tons compared to the same period a year earlier, given a lower production at Toquepala (26%) and Cuajone (4%), due to lower ore grades. Zinc. Zinc production in the first half of the year declined 4% to 36,412 tons, compared to 38,017 tons in 1H16. This decline is a result of a lower production at Santa Eulalia (18%), given lower ore grades. Silver. In 1H17, silver production decreased 2% to 8,156 thousand ounces compared to 1H16, mainly explained by the lower production in underground mines (10%). Gold. Gold production decreased (2%) to 32,703 ounces, given lower gold content in the production of Toquepala (13%) and Cuajone (12%). Gold sales fell from US$109 million to US$35 million because we stopped buying gold from third parties to improve profitability. 2Q17 Page 6

7 Mining Production Mining Division Second Quarter Variance January June Variance % % Copper Production (MT) 266, ,763 (17,309) (6.5) 528, ,778 (32,318) (6.1) Sales ($US MM) 1,241,917 1,447, , ,426,624 2,953, , Molybdenum Production (MT) 5,305 5, ,875 10,679 (196) (1.8) Sales ($US MM) 81,281 67,063 (14,217) (17.5) 136, ,916 23, Zinc Production (MT) 19,994 17,815 (2,180) (10.9) 38,017 36,412 (1,605) (4.2) Sales ($US MM) 57,159 76,719 19, , ,684 52, Silver Production ('000 Oz) 4,075 3,492 (583) (14.3) 7,825 7,284 (541) (6.9) Sales ($US MM) 69,643 75,552 5, , ,512 18, Gold Production (Oz) 47,179 12,215 (34,964) (74.1) 87,672 25,586 (62,086) (70.8) Sales ($US MM) 60,462 17,509 (42,953) (71.0) 108,515 34,539 (73,976) (68.2) Sulfuric Acid Production (MT) 682, ,096 (11,789) (1.7) 1,385,809 1,355,323 (30,486) (2.2) Sales ($US MM) 24,330 21,342 (2,988) (12.3) 47,218 39,302 (7,916) (16.8) Cash Cost In 1H17, operating cash costs per pound of copper reached US$1.12, vs. US$1.08 (+4%) in the same period last year. This was due to the increase in fuel and electricity costs, and the FX appreciation. Sales Distribution The contribution of each metal to AMC s accrued sales in 2017 is depicted below Sulfuric Acid 1.1% Molybdenum 4.5% Silver 4.2% Zinc 4.4% Gold 1.0% Others 0.4% Lead 0.8% Copper 83.6% 2Q17 Page 7

8 Transportation Division Key Figures Second Quarter Variance January June Variance (Thousand US Dollars) US$000 % US$000 % Load Volume (MillionTons/Km) 14,471 14,264 (207) (1.4) 27,847 27,218 (629) (2.3) Moved Cars 319, ,807 4, , ,451 3, Sales 479, ,992 (1,107) (0.2) 914, ,342 (26,211) (2.9) Cost of Sales 264, ,767 14, , ,633 12, Operating Income 160, ,388 (18,939) (11.8) 296, ,377 (40,847) (13.8) EBITDA 200, ,699 11, , ,397 7, EBITDA Margin (%) 41.8% 44.3% 41.0% 43.0% Net Income 97,663 86,380 (11,283) (11.6) 177, ,320 (19,997) (11.3) Profit Margin (%) 20.4% 18.1% 19.4% 17.7% Investments / Capex 86,214 54,611 (31,603) (36.7) 107,032 91,055 (15,977) (14.9) The Transportation Division s total revenues in 1H17 amounted to US$888 million, 3% lower than in the same period of This is due to the conversion effect resulting from an 8% devaluation of the peso vs. the USD. Revenues in peso terms showed an accumulated an increase of 4% up to 2Q17, compared to the same period a year earlier. Volumes transported during the first half of the year were 2% lower in tonskm than in the same period of Contribution per segment in revenues and tonskm, as well as revenue volume up to June 30, 2017: Revenues per Segment Tons Kms. Cement, 4% Others, 6% Siderurgical, 6% Intermodal, 8% Agricultural, 29% Cement, 1,615 Energy, 1,962 Industrial, 1,040 Automotive, 1,321 Agricultural, 10,129 Industrial, 8% Intermodal, 2,206 Chemical, 9% Automotive, 12% Chemical, 2,471 Energy, 9% Mineral, 9% Siderurgical, 2,602 Mineral, 3,872 EBITDA in the semester rose 2% compared to the same period of 2016, from US$375 to US$382 million, respectively. The margin in the quarter went from 41.0% to 43.0%. EBITDA growth in peso terms compared to the same period of 2016 totaled 10%. Capital Investments. During 1H17, capital investments reached US$91 million. 2Q17 Page 8

9 Infrastructure Division Key Figures Second Quarter Variance January June Variance (Thousand US Dollars) US$000 % US$000 % Sales 156, ,449 (3,741) (2.4) 307, ,510 (6,067) (2.0) Cost of Sales 70,851 77,493 6, , ,753 4, Operating Income 53,697 44,254 (9,443) (17.6) 96,169 85,718 (10,451) (10.9) EBITDA 81,526 68,539 (12,987) (15.9) 149, ,579 (16,717) (11.2) EBITDA Margin (%) 52.2% 45.0% 48.5% 44.0% Income before Taxes 34,700 24,816 (9,884) (28.5) 57,049 45,876 (11,173) (19.6) Current Income Taxes 1,453 4,477 3, ,154 6,728 3, Deferred Income Taxes (11,836) 11,333 23,169 (195.8) (7,864) 38,186 46,050 (585.6) Net Income 45,080 9,001 (36,079) (80.0) 61, (60,797) (98.4) During the first half of the year, consolidated sales in the Infrastructure Division reached US$302 million, 2% less than in the previous year. EBITDA in the division reached US$133 million during 1H17, translating into an 11% decrease from the same period of the previous year, mainly due to a lower utilization of PEMSA s equipment, and PEMEX s reduction in platform rates, as well as the 46% price hike in gas molecule, which affects the Energy Division. Profit before tax totaled US$46 million, 20% below the US$57 million obtained in 1H16. Net income was mainly affected by the appreciation of the peso and inflationary effects that increased the deferred tax, generating a negative impact of US$46 million in 1H17. However, net income in Mexican pesos was P$948 million, which represents an increase of 3% compared to 1H16. * * * * * 2Q17 Page 9

10 Company Profile Grupo Mexico GMéxico is a holding company whose main activities are: (i) mining, where it is one of the largest integrated copper producers worldwide; (ii) the vastest railway system in Mexico; and (iii) engineering, procuring, construction, and drilling services. These business lines are grouped under the following subsidiaries: GMexico s Mining Division is represented by its subsidiary Americas Mining Corporation ( AMC ), whose main subsidiaries are Southern Copper Corporation ( SCC ) in Mexico and Peru, and Asarco In the USA. Both companies together hold the largest copper reserves in the world. SCC trades on the New York and Lima stock exchanges. SCC s shareholders, directly or through subsidiaries, are: GMexico (88.9%) and other shareholders (11.1%). It has mines, metallurgical plants and exploration projects in Peru, Mexico, the USA, Spain, Chile, Argentina, and Ecuador. Asarco was reincorporated into GMexico on December 9, It has 3 mines and 1 smelting plant in Arizona, and 1 refinery in Texas. GMexico s Transportation Division is represented by its subsidiary Infraestructura y Transportes México, S.A. de C.V. ( ITM ) and Grupo México Transportes S.A. de C.V. Its main subsidiaries are Grupo Ferroviario Mexicano, S.A. de C.V. ( GFM ), Ferrocarril Mexicano, S.A. de C.V. ( Ferromex ), Ferrosur, S. A. de C. V. ( Ferrosur ), Intermodal México, S.A. de C.V., and Texas Pacifico, LP, Inc. Ferromex is the largest railway company and has the largest coverage in Mexico. Its network spans 8,111 km. of railways covering roughly 71% of the Mexican territory. Ferromex s lines connect at five border points with the USA, as well as at four ports on the Pacific Coast, and two on the Gulf of Mexico. GMexico holds 55.% of Ferromex, Union Pacific holds 26%, and Grupo CarsoSinca Inbursa, 18.5%. Ferrosur s railway network spans 1,549 km. covering the center and southeast of the country. It serves the states of Tlaxcala, Puebla, Veracruz, and Oaxaca, mainly, and has access to the Veracruz and Coatzacoalcos ports in the Gulf of Mexico. GMexico holds 74.99% of Ferrosur, and Grupo CarsoSinca Inbursa holds 25.01%. GMexico s Infrastructure Division is represented by its subsidiary México Proyectos y Desarrollos, S.A. de C.V. ( MPD ). Its main subsidiaries are México Compañía Constructora, S.A. de C.V. (MCC) y Grupo México Servicios de Ingeniería, S.A. de C.V. ( GMSI ), Controladora de Infraestructura Petrolera México, S.A. de C.V. ( PEMSA ), Controladora de Infraestructura Energética México, S.A. de C.V. ( CIEM ), and Concesionaria de Infraestructura del Bajío, S.A. de C.V. ( CIBSA ). MPD, PEMSA, MCC, GMSI, and CIEM are controlled 100% by GMéxico. MPD and MCC participate in engineering, procuring, and construction activities for infrastructure works. GMSI s business line is integrated project engineering. PEMSA offers drilling services for oil and water exploration, and related added value services, such as cementation engineering, and directional drilling. CIEM s business line is energy generation through two combined cycle plants and a wind farm. CIBSA operates and maintains a highway concession joining Salamanca and Leon. This report includes certain estimates and future projections that are subject to risks and uncertainty of their real results, which could differ significantly from the figures expressed. A lot of these risks and uncertainty are related to risk factors that GMexico cannot control or estimate precisely, such as future market conditions, metal prices, the performance of other market participants, and the actions of government regulators, all of which are described in detail in the Company s annual report. GMexico is under no obligation to publish a revision of these future projections to reflect events or circumstances that may take place following the release of this report. 2Q17 Page 10

11 Conference call to discuss the results of the second quarter of 2017 Mexico City, July 27, 2017 Grupo Mexico, S.A.B. de C.V. ( Grupo México BMV: GMEXICOB) will hold its conference call to comment on the results for the second quarter of 2017 with the financial community on July 27, 2017 at 1:00pm Mexico time (2:00 pm EST). A Q&A session for analysts and investors shall follow the call. To participate, please dial in 10 minutes before the start of the conference call: (888) (US participants) (847) (participants outside the US) Confirmation code: A repetition of the call shall be available 2 hours following the end of the call and until August 10, Afterwards, a transcription of the call shall be made available via Grupo Mexico s website. (888) (participants from the US) (630) (participants outside the US) Confirmation code: # 2Q17 Page 11

12 GRUPO MEXICO, S.A.B. DE C.V. (GM) CONSOLIDATED FINANCIAL STATEMENTS (US GAAP) (Thousands of US Dollars) Quarters Accumulated STATEMENT OF EARNINGS Q217 Q216 Variance Variance Net sales 2,250,448 2,089, ,186 4,513,847 4,009, ,006 Cost of sales 1,195,524 1,152,837 42,686 2,400,664 2,235, ,590 Exploration 5,792 10,446 (4,654) 11,046 21,035 (9,989) Gross profit 1,049, , ,153 2,102,137 1,753, ,405 Gross margin 47% 44% 47% 44% Administrative expenses 51,251 54,357 (3,105) 98, ,499 (13,202) Environmental remediation (10,229) (10,229) EBITDA 993, , ,545 1,970,693 1,611, ,982 Depreciation, amortization and depletion 268, ,043 8, , ,205 26,826 Operating income 729, , ,459 1,498,038 1,153, ,010 Operating margin 32% 29% 33% 29% Interest expense 96,578 96,980 (402) 209, ,558 14,028 Interest income (6,448) (4,295) (2,153) (12,198) (8,135) (4,063) (Gain) loss in investments (76,841) (117,945) 41,104 (224,639) (406,536) 181,897 Other (income) expense, net 36,018 (6,898) 42,917 90,157 35,530 54,627 Earnings before Tax 679, ,737 35,993 1,435,131 1,336,611 98,520 Taxes 207, ,378 (3,477) 460, ,876 20,934 Participation in subsidiary not consolidated and associated (4,985) (5,192) 207 (12,111) (11,110) (1,001) Net Earnings 476, ,551 39, , ,845 78,586 Net income attributable to the noncontrolling interest 98,684 87,264 11, , ,662 34,302 Net income attributable to GM 378, ,288 27, , ,183 44,284 BALANCE SHEET Cash and cash equivalents 1,169,658 1,326,169 (156,511) 1,169,658 1,326,169 (156,511) Restricted cash 116,613 94,168 22, ,613 94,168 22,445 Notes and accounts receivable 1,035, , ,781 1,035, , ,781 Inventories 1,010,157 1,028,396 (18,239) 1,010,157 1,028,396 (18,239) Prepaid and others current assets 884, ,945 12, , ,945 12,620 Total Current Assets 4,216,899 4,097, ,095 4,216,899 4,097, ,095 Property, plant and equipment, Net 15,465,243 13,547,006 1,918,237 15,465,243 13,547,006 1,918,237 Leachable material, net 923, , , , , ,197 Other long term assets 4,184,147 3,320, ,052 4,184,147 3,320, ,052 Total Assets 24,790,134 21,787,554 3,002,581 24,790,134 21,787,554 3,002,581 Liabilities and Stockholders' Equity Current term debt 1,669, ,881 1,541,447 1,669, ,881 1,541,447 Accumulated liabilities 1,189,759 1,127,558 62,201 1,189,759 1,127,558 62,201 Current Liabilities 2,859,086 1,255,439 1,603,647 2,859,086 1,255,439 1,603,647 Longterm debt 7,480,903 7,307, ,829 7,480,903 7,307, ,829 Other noncurrent liabilities 1,699,523 1,553, ,507 1,699,523 1,553, ,507 Total Liabilities 12,039,512 10,115,528 1,923,984 12,039,512 10,115,528 1,923,984 Stockholders equity 2,003,496 2,003,496 2,003,496 2,003,496 Other equity accounts (2,592,406) (2,648,479) 56,074 (2,592,406) (2,648,479) 56,074 Retaining earnings 11,587,064 10,762, ,688 11,587,064 10,762, ,688 Total Stockholders' equity 10,998,154 10,117, ,762 10,998,154 10,117, ,762 Noncontrolling interest. 1,752,468 1,554, ,835 1,752,468 1,554, ,835 Total Liabilities and Equity 24,790,134 21,787,554 3,002,581 24,790,134 21,787,554 3,002,581 CASH FLOW Net earnings 476, ,551 39, , ,845 78,587 Depreciation, amortization and depletion 268, ,043 8, , ,205 26,826 Deferred income taxes (14,996) 23,305 (38,301) 26,137 96,368 (70,231) Participation in subsidiary not consolidated and associated (4,985) (5,192) 207 (12,111) (11,110) (1,001) Other Net (38,268) (147,844) 109,576 (103,414) (404,674) 301,260 Changes in assets and liabilities (150,570) (34,613) (115,957) (230,977) (288,661) 57,684 Cash generated by operating activities 536, ,250 3,588 1,182, , ,125 Capital expenditures (353,407) (456,816) 103,410 (652,603) (717,626) 65,024 FEC s Acquisition (2,009,432) (2,009,432) (2,009,432) (2,009,432) Restricted cash 19,501 18,435 1,066 (71,164) (9,111) (62,054) Other Net 52,864 85,839 (32,975) 92,201 (29,371) 121,572 Cash used in investing activities (2,290,474) (352,543) (1,937,931) (2,640,998) (756,108) (1,884,890) Debt incurred 1,800,000 5,000 1,795,000 1,800,000 5,000 1,795,000 Debt repaid (38,123) (45,385) 7,262 (64,633) (80,823) 16,190 Dividends paid (187,459) (95,359) (92,100) (322,379) (138,578) (183,801) SCC common shares buyback (53,746) 53,746 Other Net (752) (752) (1,529) (711) (818) Cash used in financing activities 1,573,666 (135,744) 1,709,410 1,411,459 (268,858) 1,680,317 Effect of exchance rate changes on cash and cash equivalents (27,418) (47,112) 19,694 (31,502) (40,315) 8,813 Net increase (decrease) cash & cash equivalents (207,388) (2,149) (205,240) (78,943) (276,308) 197,365 Cash and cash equivalents Beginning of year 1,377,046 1,328,318 48,729 1,248,601 1,602,477 (353,876) Cash and cash equivalents End of year 1,169,658 1,326,169 (156,511) 1,169,658 1,326,169 (156,511) 2Q17 Page 12

13 AMERICAS MINNING CORPORATION (AMC) CONSOLIDATED FINANCIAL STATEMENTS (US GAAP) (Thousands of US Dollars) Quarters Accumulated STATEMENT OF EARNINGS Q217 Q216 Variance Variance Net sales 1,727,358 1,552, ,599 3,535,365 2,989, ,373 Cost of sales 971, ,324 36,089 1,984,918 1,827, ,668 Exploration 5,792 10,446 (4,654) 11,046 21,035 (9,989) Gross profit 750, , ,165 1,539,401 1,141, ,694 Gross margin 43% 39% 44% 38% Administrative expenses 28,961 29,223 (262) 57,879 61,997 (4,118) Environmental remediation (10,229) (10,229) EBITDA 731, , ,826 1,500,292 1,086, ,246 Depreciation, amortization and depletion 199, ,637 5, , ,326 21,534 Operating income 522, , ,007 1,111, , ,506 Operating margin 30% 25% 31% 24% Interest expense 75,908 75, , ,619 15,318 Interest income (1,642) (1,973) 331 (2,859) (4,204) 1,344 (Gain) loss in investments 76,461 (45,310) 121,771 66,832 (335,794) 402,626 Other (income) expense, net (2,859) (873) (1,986) (7,378) (1,328) (6,050) Earnings before Tax 374, ,476 17, , ,092 (22,732) Taxes 135, ,745 8, , ,426 6,670 Participation in subsidiary not consolidated and associated (3,555) (3,558) 3 (9,719) (8,670) (1,049) Net Earnings 242, ,289 9, , ,335 (28,353) Net income attributable to the noncontrolling interest 34,010 25,393 8,617 69,641 46,716 22,926 Net income attributable to AMC 208, , , ,619 (51,278) BALANCE SHEET Cash and cash equivalents 864, , , , , ,718 Restricted cash 3,700 8,369 (4,669) 3,700 8,369 (4,669) Notes and accounts receivable 710, , , , , ,632 Inventories 901, ,008 (37,623) 901, ,008 (37,623) Prepaid and others current assets 722, ,873 (33,805) 722, ,873 (33,805) Total Current Assets 3,202,158 3,011, ,254 3,202,158 3,011, ,254 Property, plant and equipment, Net 10,406,961 10,057, ,202 10,406,961 10,057, ,202 Leachable material, net 923, , , , , ,197 Other long term assets 1,861,052 1,979,332 (118,280) 1,861,052 1,979,332 (118,280) Total Assets 16,394,017 15,871, ,373 16,394,017 15,871, ,373 Liabilities and Stockholders' Equity Longterm debt 24,332 24, ,332 24, Other noncurrent liabilities 1,229,376 1,461,678 (232,302) 1,229,376 1,461,678 (232,302) Current Liabilities 1,253,708 1,485,928 (232,219) 1,253,708 1,485,928 (232,219) Long term debt 5,985,739 6,007,306 (21,566) 5,985,739 6,007,306 (21,566) Other long term liabilities 1,011,510 1,126,810 (115,301) 1,011,510 1,126,810 (115,301) Total Liabilities 8,250,957 8,620,043 (369,086) 8,250,957 8,620,043 (369,086) Stockholders equity 1,056,021 1,056,021 1,056,021 1,056,021 Other equity accounts (2,459,733) (2,465,961) 6,229 (2,459,733) (2,465,961) 6,229 Retained earnings 8,804,249 7,994, ,526 8,804,249 7,994, ,526 Total Stockholders' equity 7,400,538 6,584, ,755 7,400,538 6,584, ,755 Noncontrolling interest. 742, ,817 75, , ,817 75,705 Total Liabilities and Equity 16,394,017 15,871, ,373 16,394,017 15,871, ,373 CASH FLOW Net earnings 242, ,289 9, , ,335 (28,353) Depreciation, amortization and depletion 199, ,637 5, , ,326 21,534 Deferred income taxes (56,575) (2,914) (53,662) (69,500) 65,475 (134,976) Participation in subsidiary not consolidated and associated (3,555) (3,558) 3 (9,719) (8,670) (1,049) Others Net 98,520 (50,079) 148, ,932 (324,786) 461,718 Changes in assets and liabilities (111,012) (16,971) (94,041) (215,167) (178,773) (36,394) Cash generated by operating activities 368, ,405 15, , , ,481 Capital expenditures (296,342) (368,137) 71,795 (557,552) (604,472) 46,920 Restricted cash 1, ,061 5,320 29,720 (24,400) Other Net (21,601) (1,901) (19,700) (28,460) (161,703) 133,243 Cash used in investing activities (316,347) (369,503) 53,156 (580,692) (736,455) 155,764 Debt repaid (6,083) (6,083) (12,166) (12,166) Dividends paid (10,327) (4,321) (6,006) (17,186) (6,941) (10,245) SCC common shares buyback (53,746) 53,746 Others Net (752) (752) (1,529) (711) (818) Cash used in financing activities (17,162) (10,404) (6,758) (30,881) (73,564) 42,683 Effect of exchance rate changes on cash and cash equivalents (32,520) (29,410) (3,110) (61,463) (13,444) (48,019) Net increase (decrease) cash & cash equivalents 2,716 (55,913) 58, ,353 (304,556) 432,909 Cash and cash equivalents Beginning of year 861, ,257 54, ,711 1,055,901 (320,190) Cash and cash equivalents End of year 864, , , , , ,719 2Q17 Page 13

14 GMÉXICO TRANSPORTES, S. A. DE C.V. (GMXT) CONSOLIDATED FINANCIAL STATEMENTS (US GAAP) (Thousands of US Dollars) Quarters Accumulated STATEMENT OF EARNINGS Q217 Q216 Variance Variance Net sales 477, ,099 (1,107) 888, ,553 (26,211) Cost of sales 278, ,016 14, , ,163 12,470 Gross profit 199, ,083 (15,858) 364, ,390 (38,681) Gross margin 42% 45% 41% 44% Administrative expenses 15,971 16,243 (272) 29,492 31,340 (1,848) EBITDA 211, ,402 11, , ,550 7,847 Depreciation, amortization and depletion 41,866 38,513 3,353 79,840 75,826 4,014 Operating Income 141, ,327 (18,939) 255, ,224 (40,847) Operating margin 30% 33% 29% 32% Interest expense 5,909 6,069 (160) 11,219 11,598 (379) Interest income (2,625) (2,633) 8 (5,666) (4,703) (963) Other (income) expense Net 5,453 (7,123) 12,576 21,638 (4,677) 26,315 Earnings before Tax 132, ,014 (31,363) 228, ,006 (65,820) Taxes 21,905 41,146 (19,241) 28,768 70,382 (41,614) Participation in subsidiary not consolidated and associated (1,430) (1,634) 204 (2,392) (2,440) 48 Net Earnings 112, ,502 (12,326) 201, ,064 (24,254) Net income attributable to the noncontrolling interest 25,796 26,839 (1,043) 44,490 48,747 (4,257) Net income attributable to ITM 86,380 97,663 (11,283) 157, ,317 (19,997) BALANCE SHEET Cash and cash equivalents 178, ,361 (246,423) 178, ,361 (246,423) Notes and accounts receivable 252, ,631 79, , ,631 79,173 Inventories 52,372 34,046 18,326 52,372 34,046 18,326 Prepaid and others current assets 95,245 78,737 16,508 95,245 78,737 16,508 Total Current Assets 579, ,775 (132,416) 579, ,775 (132,416) Property, plant and equipment Net 3,326,317 1,666,714 1,659,603 3,326,317 1,666,714 1,659,603 Other long term assets 1,115, , ,467 1,115, , ,467 Total Assets 5,021,272 2,610,618 2,410,654 5,021,272 2,610,618 2,410,654 Liabilities and Stockholders' Equity Current portion of longterm debt 1,544,755 9,077 1,535,678 1,544,755 9,077 1,535,678 Accumulated liabilities 286, ,933 97, , ,933 97,080 Current Liabilities 1,830, ,010 1,632,758 1,830, ,010 1,632,758 Longterm debt 569, , , , , ,175 Other noncurrent liabilities 266, , , , , ,542 Other liabilities 38,263 7,412 30,851 38,263 7,412 30,851 Total Liabilities 2,705, ,018 2,107,326 2,705, ,018 2,107,326 Stockholders equity Other equity accounts (615,593) (723,090) 107,497 (615,593) (723,090) 107,497 Retaining earnings 2,536,450 2,374, ,023 2,536,450 2,374, ,023 Total Stockholders' equity 1,920,862 1,651, ,520 1,920,862 1,651, ,520 Noncontrolling interest. 395, ,258 33, , ,258 33,808 Total Liabilities and Equity 5,021,272 2,610,618 2,410,654 5,021,272 2,610,618 2,410,654 CASH FLOW Net earnings 112, ,502 (12,326) 201, ,064 (24,254) Depreciation, amortization and depletion 41,866 38,513 3,353 79,840 75,826 4,014 Deferred income taxes (3,930) 11,034 (14,964) (12,728) 12,596 (25,324) Participation in subsidiary not consolidated and associated (1,430) (1,634) 204 (2,392) (2,440) 48 Other Net 9,822 (5,076) 14,898 27,944 3,195 24,749 Changes in assets and liabilities (34,076) (39,181) 5,105 (48,860) (46,983) (1,877) Cash generated by operating activities 124, ,158 (3,730) 245, ,258 (22,644) Capital expenditures (54,611) (86,214) 31,603 (91,055) (107,032) 15,977 FEC s Acquisition (2,009,432) (2,009,432) (2,009,432) (2,009,432) Dividends received Cash used in investing activities (2,063,940) (86,154) (1,977,786) (2,100,384) (106,929) (1,993,455) Debt incurred 1,800,000 1,800,000 1,800,000 1,800,000 Debt repaid (2,349) (5,019) 2,670 (4,616) (10,056) 5,440 Dividends received (paid) Net (52,000) (26,000) (26,000) (153,000) (26,000) (127,000) Cash used in financing activities 1,745,651 (31,019) 1,776,670 1,642,384 (36,056) 1,678,440 Effect of exchance rate changes on cash and cash equivalents (11,452) (25,988) 14,536 9,667 (34,938) 44,605 Net increase (decrease) cash & cash equivalents (205,313) (15,003) (190,310) (202,719) 90,335 (293,054) Cash and cash equivalents Beginning of year 384, ,364 (56,113) 381, ,026 46,631 Cash and cash equivalents End of year 178, ,361 (246,423) 178, ,361 (246,423) 2Q17 Page 14

15 MÉXICO PROYECTOS Y DESARROLLOS, S.A. DE C.V. (MPD) CONSOLIDATED FINANCIAL STATEMENTS (US GAAP) (Thousands of US Dollars) Quarters Accumulated STATEMENT OF EARNINGS Q217 Q216 Variance Variance Net sales 152, ,190 (3,741) 301, ,577 (6,067) Cost of sales 77,493 70,851 6, , ,475 4,278 Gross profit 74,956 85,339 (10,384) 148, ,102 (10,345) Gross margin 49% 55% 49% 52% Administrative expenses 3,644 4,654 (1,010) 8,453 9,692 (1,239) EBITDA 68,539 81,526 (12,987) 132, ,296 (16,717) Depreciation, amortization and depletion 27,057 26, ,586 53,241 1,345 Operating income 44,254 53,697 (9,443) 85,718 96,169 (10,451) Operating margin 29% 34% 28% 31% Interest expense 18,010 20,665 (2,656) 34,570 40,548 (5,977) Interest income (1,344) (827) (517) (2,454) (1,542) (912) Other (income) expense, net 2,773 (841) 3,614 7, ,611 Earnings before Tax 24,816 34,700 (9,884) 45,876 57,049 (11,172) Taxes 15,810 (10,384) 26,193 44,914 (4,709) 49,623 Net Earnings 9,007 45,084 (36,077) ,758 (60,795) Net income attributable to the noncontrolling interest Net income attributable to MPD 9,001 45,080 (36,079) ,756 (60,797) BALANCE SHEET Cash and cash equivalents 66,163 94,454 (28,290) 66,163 94,454 (28,290) Restricted cash 112,913 85,799 27, ,913 85,799 27,113 Notes and accounts receivable 72,161 46,185 25,976 72,161 46,185 25,976 Inventories 56,398 55,339 1,059 56,398 55,339 1,059 Prepaid and others current assets 171, ,907 36, , ,907 36,462 Total Current Assets 479, ,684 62, , ,684 62,320 Property, plant and equipment, Net 1,690,188 1,777,500 (87,312) 1,690,188 1,777,500 (87,312) Other long term assets 340, ,839 (31,245) 340, ,839 (31,245) Total Assets 2,509,785 2,566,022 (56,237) 2,509,785 2,566,022 (56,237) Liabilities and Stockholders' Equity Current portion of longterm debt 100,240 94,554 5, ,240 94,554 5,685 Accumulated liabilities 193, ,662 18, , ,662 18,696 Current Liabilities 293, ,217 24, , ,217 24,382 Longterm debt 925,198 1,013,977 (88,779) 925,198 1,013,977 (88,779) Other noncurrent liabilities 89, ,747 (40,201) 89, ,747 (40,201) Total Liabilities 1,308,343 1,412,941 (104,598) 1,308,343 1,412,941 (104,598) Stockholders equity 952, ,552 51, , ,552 51,110 Other equity accounts (102,669) (66,608) (36,061) (102,669) (66,608) (36,061) Retaining earnings 350, ,493 33, , ,493 33,490 Total Stockholders' equity 1,200,977 1,152,438 48,539 1,200,977 1,152,438 48,539 Noncontrolling interest (178) (178) Total Liabilities and Equity 2,509,785 2,566,022 (56,237) 2,509,785 2,566,022 (56,237) CASH FLOW Net earnings 9,007 45,084 (36,077) ,758 (60,795) Depreciation, amortization and depletion 27,057 26, ,586 53,241 1,345 Deferred income taxes 11,333 (11,837) 23,170 38,186 (7,864) 46,050 Other Net 1,681 (7,264) 8,945 4,886 (6,848) 11,734 Changes in assets and liabilities (38,791) (53,964) 15,173 (33,540) (9,906) (23,634) Cash generated by operating activities 10,287 (993) 11,280 65,081 90,381 (25,300) Capital expenditures (2,454) (2,466) 12 (3,997) (6,123) 2,126 Restricted cash 19,405 17,900 1,505 (76,485) (38,831) (37,653) Other Net (554) 57,240 (57,794) 41,157 23,633 17,525 Cash used in investing activities 16,396 72,673 (56,277) (39,324) (21,322) (18,003) Debt incurred 5,000 (5,000) 5,000 (5,000) Debt repaid (29,691) (34,283) 4,592 (47,851) (58,601) 10,750 Cash used in financing activities (29,691) (29,283) (408) (47,851) (53,601) 5,750 Net increase (decrease) cash & cash equivalents (3,008) 42,397 (45,405) (22,095) 15,458 (37,553) Cash and cash equivalents Beginning of year 69,171 52,057 17,114 88,258 78,996 9,263 Cash and cash equivalents End of year 66,163 94,454 (28,290) 66,163 94,454 (28,290) 2Q17 Page 15