Southern Copper Corporation

Transcription

1 Southern Copper Corporation June

2 I. Introduction 1

3 Safe Harbor Statement This presentation contains certain statements that are neither reported financial results nor other historical information. These estimates are forward-looking statements within the meaning of the safe-harbor provisions of the Mexican securities laws. These forward-looking estimates are subject to risk and uncertainties that could cause actual results to differ materially from the expressed in the forward-looking statements. Many of these risks and uncertainties relate to factors that are beyond Grupo Mexico s ability to control or estimate precisely, such as future market conditions, commodity prices, the behavior of other market participants and the actions of governmental regulators. Readers are cautioned not to place undue reliance on these forwardlooking statements, which speak only as of the date of this presentation. Grupo Mexico does not undertake any obligation to publicly release any revision to these forward-looking estimates to reflect events or circumstances after the date of this presentation. 2

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

5 Corporate Structure 80.0% (*) Public Float 20.0% (*) % % SCC Peru Branch Minera México (*) As of December 31,

6 Copper The Best Fundamental Story in Commodities Improving Fundamentals Copper Consumption by Region Continued strong demand from China which grew from 26% in 08 to 36% in 09. Asia is now 57% of world demand Evidence of gradual OECD demand recovery Asia Ex China 21% All Other 8% Japan 5% Europe 21% China s monetary tightening should not derail country's sustained growth and copper demand USA 9% Limited production upside and falling grades result in a tight market going forward CRU Feb 2010 China 36% LME Copper Cash Price vs. Inventories Copper Consumption by End-use ,600,000 1,400,000 1,200, Industrial Machinery 9% Consumer Products 9% Transport Equipment 12% ,000, , , , ,000 Building 28% Electrical 42% Jan Jan Feb-08 4-Mar Mar Apr-08 6-May May Jun-08 8-Jul Jul Aug-08 8-Sep Sep Oct-08 5-Nov Nov Dec-08 8-Jan Jan Feb Mar Mar Apr May-09 1-Jun Jun-09 9-Jul Jul Aug-09 7-Sep Sep Oct-09 4-Nov Nov Dec-09 5-Jan Jan Feb-10 4-Mar Mar Apr-10 4-May May-10 Registered inventories in tons 3 month price US$ per ton AME, Brook Hunt & Calyon Estimates 5

7 Southern Copper Strengths Highest copper reserves in the mining industry Excellent organic growth projects Low cost fully integrated 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 : 55.4 mmt Production capacity: 680 ktpy E2010 Copper Production: 500 kt Sales: $ 4,400 M EBITDA: $ 2,400 M 55% of Sales 1Q10 Cash Cost: $ / lb. Mexico Cananea La Caridad San Martin Peru Santa Eulalia Santa Barbara Taxco Charcas San Luis Potosi #1 copper company by reserves 2 #6 copper producer 3 #12 copper smelter 3 Key Copper open pit mines Underground mines Smelters and Refineries Source: Company Filings Notes: 1 Copper contained in reserves based on US$1.80 per pound of copper as of December 31, Based on available companies reports 3 CRU information for Cananea at full capacity Ilo Cuajone Toquepala 8

10 World s Largest Copper Reserves Support Substantial Organic Growth Potential Copper Reserves as Reported SCC Highlights #1 position in reported copper reserves #1 mine life among copper producers Copper Reserves s (Mt) #6 world s largest producer of mined copper Highly diversified geographical presence Four large-scale open-pit mines Mine Life 0 SCC Co odelco reeport Fr BHP Anglo Am merican Xstrata Rio Tinto VALE fagasta Antof Source 10K Annual Rep. 10K 20F Annual Rep. Reserve Rep. 20F 20F Annual Rep. Period 12/31/09 12/31/09 12/31/09 06/30/09 12/31/09 06/30/09 12/31/09 12/31/09 12/31/09 Cu Price $1.80 $1.98 $1.60 $3.14 (*) (*) (*) $2.91 $ SCC Anglo Codelco Freeport BHP American Billiton Rio Tinto Xstrata 9

11 Geographic Footprint & Product Diversification 1Q-2010 Revenue by Product 1Q-2010 Revenue by Market Silver 5% Zinc 5% OtherAcid 2% 2% Asia 13% Europe 17% United States 25% Molybdenum 16% Peru 3% Copper 70% Mexico 20% Other Latin American 22% 10

12 Low Cost Operations Cash Costs per Pound of Copper Produced Net of By-Products Low Cost Drivers (US$/lb) Fully integrated low cost operations Q09 2Q09 3Q09 4Q09 1Q World class assets Significant SX-EW production Strong by-product credits Management focus on cost efficiency (US$/lb) Operating Cash Cost per Pound of Copper Produced Cost Structure (1) Maintenance 22% Other 11% Operating Materials 13% Fuel 13% Q09 2Q09 3Q09 4Q09 1Q10 Labor 16% Power 25% (1) As of 1Q

13 III. Financial Overview 12

14 SCC Financial Summary (US$ MM) LTM Q 2010 Copper Price (LME) US$ per pound Income Statement: Net Revenues $4,851 $3,734 $4,332 $1,219 EBITDA 2,546 1,814 2, EBITDA Margin 52% 49% 53% 57% Net Income 1, , Dividends paid per share Balance Sheet Statement: Cash & Equivalents $717 $772 $652 $652 Total Assets 5,764 6,063 6,001 6,001 Total Debt , ,280 1,280 1,280 Total Liabilities 2,369 2,169 2,088 2,088 Total Shareholders' Equity 3,381 3,875 3,894 3,894 Cash Flow Statement: Capital Expenditures $517 $415 $426 $75 Free Cash Flow 2 1, , Dividends paid to common shareholders 1, Net Debt / EBITDA 0.2x 0.3x 0.3x 0.9x 1 Includes short-term and long-term debt 2 Free Cash Flow defined as net cash from operating activities less capital expenditures 13

15 Investment Program to Increase Production Copper = +50% ; Molybdenum = +35% Attractive Organic Growth Prospects Tía María Cuajone Ilo Refinery El Arco Buenavista Angangueo Tia María Concentrator Toquepala Expansion Mine Toquepala SX/EW Expansion Concentrator t Cananea Los Concentrator Expansion Ilo Smelter Moly Zinc Chancas Expansion La Caridad Expansion Circuit Refinery Concentrator Expansion Expansion Cananea New Cananea SX/EW III Concentrator &SX/EWIV Cananea Concentrator Expansion $2.8Bn Capex Program Overview $ MM 000 MT Additional Copper Production $1,400 $1,200 $1,000 $800 $802 $1,242 $ ,020 $600 $400 $ $0 2010E 2011E 2012E Existing Copper Production Estimate onwards includes production from Cananea Source: SCC. Production from new projects 14

16 Millions of USD as of May 2010 SCC Debt Amortization Schedule Strong liquidity & no significant amortizations due until 2020 Recent $1.5B Notes: 2020 Notes : 5.375% 2040 Notes : 6.750% $1,000 $1,100 $400 $200 $10 $10 $10 $10 $10 $ Mitsui Yankee Bonds 10 & 30 year Bonds April 2010 Bonds 15

17 SCC s Mayor Strengths SCC is the Premier Copper Play World class assets in investment grade countries #1 in reserves with various exploration prospects - Increasing copper production, reserves and continued exploration Capacity to deliver projects through flexible capital structure and significant cash generation capability Fully integrated low cost operations - Strategic investments focused on cost reduction - Securing long term energy supply at competitive prices Outstanding dividend history Experienced management with proven track record (in US$ millions) SCC EBITDA and % Margin $1,675 $3,329 $3,825 $2,348 $2,529 $1, % 61.0% 62.9% 52.1% 48.6% 54.1%

18 Operational Update - Cananea Minesite Cananea Minesite Largest copper mine worldwide in terms of reserves End of the labor struggle at Cananea could trigger an investment of $2.1 billion to expand Cananea s production from 180ktpy to 450ktpy of copper Expansion Concentrator facilities expansion to produce 188ktpy of additional copper New SX EW plant to produce 82ktpy of copper Molybdenum circuit, 2 ktpy Key Metal: Current Operating Capacity Copper Concentrator Production: 125 ktpd SX-EW Plant Capacity: 55 ktpy Reserve Information Reserves (1): 25.1 MT Average Copper Grade: Sulfide: 0.511% Leachable Materials: 0.201% Stripping Ratio: 2.44x Production (kt) Source: SCC Note: (1) Reserves based on US$1.80 per pound of copper