Southern Copper Corporation

Transcription

1 Southern Copper Corporation March

2 I. Introduction 1

3 Management Presenters Presenters Raúl Jacob Title Manager of Financial Planning & IR 2

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

5 Metal Market Copper Short Term World copper demand drops by 6.6% in 2009 (CRU). Chinese restocking and SBR purchases (235K) avoided a 17% decrease. 2010: China copper demand: +15%. Expect recovery of OECD countries. Long Term Strong long-term fundamentals from BRIC s and N-11. Supply constraints and higher cash cost at normalized prices. Molybdenum 92% of world reserves and production capacity are concentrated in: USA, China, Mexico, Peru and Chile. Demand largely driven by special steel alloys consumption. 38% of production with a cash cost over $ LME Copper Cash Price vs. Inventories es Molybdenum Prices ,600, ,400, ,200, ,000, , , , , Aug Oct-07 4-Jan Mar Jun Aug Nov Jan Apr-09 2-Jul Sep Nov Feb-10 4-Jul-07 5-Sep-07 7-Nov Jan Mar May Jul Sep Nov Feb Apr Jun Aug-09 9-Sep-09 5-Oct Oct Nov Dec Jan Feb-10 Registered inventories in tons 3 month price US$ per ton FOB North America price US$ per Lb.

6 Copper Plays Strong Role in Infrastructure 2009 World Copper Consumption by Region 2008 World Refined Copper Consumption by End-use Asia Ex China 21% All Other 8% Japan 5% Europe 21% Industrial Machinery 9% Consumer Products 9% Transport Equipment 12% USA 9% Building 28% Electrical 42% China 36% Source: CRU Feb 2009 Source: AME, Brook Hunt & Calyon Estimates 5

7 World Copper Consumption by Region All Other 8% Japan 7% All Other 8% Japan 5% Ai Asia Ex China 21% Europe 26% Asia Ex China 21% Europe 21% USA 9% China 27% USA 11% China 36% Source: CRU Feb 2009 Source: CRU Jan

8 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 7

9 II. Overview of Operations 8

10 Company Overview Copper Reserves 1 : 55.8 mmt Production capacity: 650 ktpy For 2009 Copper Production: 485 kt Sales: $ 3,734 M EBITDA: $ 1,814 M Cash Cost: $ 0.36 / lb. Mexico Cananea La Caridad San Martin Peru Santa Eulalia Santa Barbara Taxco Charcas San Luis Potosi #1 copper company by reserves 2 #7 copper producer 3 #9 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 Ilo Cuajone Toquepala 9

11 Long Life Reserves World s largest copper reserves Strong capacity expansion plans - Lower capital needs for reserve replenishment will translate into additional capital to fund growth Reported Copper Reserves SCC Copper Reserves Copper Re eserves (Mt) Southern Copper Codelco 37.5 Freeport 27.1 BHP Billiton 22.4 Anglo American Xstrata Rio Tinto VALE Antofagasta Co opper Contained in re eserves (Mt) % 2008 SEC Copper prices ($/lb) Source 10K Annual Rep. 10K 20F Annual Rep. Reserve Rep. 20F Annual Rep. Annual Rep. Period 12/31/09 12/31/08 12/31/08 06/30/09 12/31/08 06/30/09 12/31/08 12/31/08 12/31/08 Cu Price $1.80 $1.68 $1.60 $3.14 $1.15 (*) $3.01 (*) $1.90 (*) Not reported 10

12 Geographic Footprint & Product Diversification 2009 Revenue by Product 2009 Revenue by Product & Market Silver 7% Zinc 5% Other Acid 3% 2% Asia 8% Europe 24% Peru 3% Molybdenum 12% United States 28% Copper 71% Mexico 23% Other Latin American 14% 11

13 Low Cost Operations Cash Costs per pound of Copper Produced Net of By-Products Low Cost Drivers Q09 2Q09 3Q09 4Q09 (US$/lb) Fully integrated low cost operations World class assets Significant SX-EW production Strong by-product credits Management focus on cost efficiency Operating Cash Cost per Pound of Copper Produced Cost Structure 1 Other 12% Operating Materials 18% (US$/lb) 1.00 Maintenance 17% Fuel 12% Q09 2Q09 3Q09 4Q09 As of December 31, 2009 Labor 17% Power 24% 12

14 Operational Update - Cananea Minesite Highlights Operating Capacity Largest mine in Mexico Key Metals: Copper Fourth largest copper mine worldwide in Concentrator o Capacity: 125 ktpd terms of reserves (similar il to Escondida) Recent LOM study shows operations through 2070 Unique deposit: no evidence of decline in ore grades at SX-EW Plant Capacity: Reserve Information 55 ktpy deeper stratas Reserves (1) : 25.1 MT Expansion Several projects planned to increase Average Copper Grade: Sulfide: 0.511% production to an estimated 66kt per Leachable Materials: 0.201% year: Stripping Ratio: 2.44x - SX-EW III 33 ktpy Production (kt) - Concentrator expansion 33 ktpy Molybdenum circuit, 4 ktpy Possible second expansion to increase capacity by an additional 215 ktpy 99 Source: SCC Note: (1) Reserves based on US$1.80 per pound of copper

15 Expansion Projects Tia María SX/EW Toquepala Concentrator Expansion La Caridad Expansion Cuajone Concentrator Expansion Ilo (Smel + Ref) Expansion Cananea SX/EW III Cananea El Arco Concentrator Expansion Cananea Moly Circuit New Cananea Concentrator & SX/EW IV Buenavista Mine Zinc Refinery Expansion Developing Pipeline Angangueo Los Chancas Projects Under Development Capex Investment Production Target Projects (US$MM) Date Production Capacity Tía María SX EW $934 4Q-2011 Copper: 120 ktpy Toquepala Concentrator $600 2Q 2012 Copper: 100 ktpy + Expansion Moly: 3.1 ktpy Cuajone Concentrator Expansion La Caridad Concentrator Expansion Power Plant for Mexican Operations Approved Projects $ Copper: 72 ktpy + Moly: 0.7 ktpy $ Copper: 50 ktpy + Moly: 30ktpy 3.0 $ MW Additional Copper Production: 342 ktpy; Capex : $2.8B 14

16 III. Financial Overview 15

17 SCC Financial Summary 2009 (US$ MM) Q 2Q 3Q 4Q Copper Price (LME) US$ per pound Income Statement: Net Revenues $6,086 $4,851 $3,734 $622 $825 $1,152 $1,136 EBITDA 3,766 2,546 1, EBITDA Margin 62% 52% 49% 36% 46% 51% 54% Net Income 2,216 1, Dividends paid per share Balance Sheet Statement: Cash & Equivalents $1,409 $717 $772 $291 $236 $413 $772 Total Assets 6,581 5,764 6,063 5,364 5,442 5,677 6,063 Total Debt 1 1,450 1,290 1,280 1,290 1,285 1,285 1,280 Total Liabilities 2,716 2,369 2,169 2,059 1,999 2,005 2,169 Total lshareholders' h 'Equity 3,848 3, , , , , ,875 Cash Flow Statement: Capital Expenditures $316 $517 $415 $63 $140 $111 $98 Free Cash Flow 2 2,388 1, (257) (33) Dividends paid to common shareholders 2,002 1, Net Debt / EBITDA 0.01x 0.2x 0.3x 4.4x 2.8x 1.5x 0.8x 1 Includes short-term and long-term debt 2 Free Cash Flow defined as net cash from operating activities less capital expenditures 16

18 Solid Financial Performance Among the highest EBITDA margins and strongest leverage ratios in the metals & mining industry 2009 EBITDA Margin (%) 2009 Net Debt/ EBITDA (x) 1 Antofagasta 60% 1 Antofagasta 0.3x Freeport Southern Copper 50% 49% SCC 4Q09 EBITDA Margin = 54% Southern Copper BHP Billiton 0.3x 0.3x VALE 48% Freeport 0.5x BHP Billiton 41% Rio Tinto 1.4x Xstrata 31% Xstrata 1.8x Rio Tinto 30% VALE 2.9x Anglo American 21% Anglo American 2.9x Source: SCC; Company Reports 1 9m as at September 30,

19 Capital Expenditure Forecast (US$M) $1,400 $1,200 $1,000 $800 $107 $199 $600 $400 $200 $0 $1,242 $802 $752 $524 $414 $180 $ E 2011E 2012E 2013E 2014E Source: SCC 18

20 SCC Debt Amortization Schedule Millions of USD as of December, 2009 Strong liquidity & no significant amortizations due until 2015 $1,000 $200 $10 $10 $10 $10 $10 $ Mitsui Yankee Bonds 10 & 30 year Bonds 19

21 SCC s Mayor Strengths World-class reserves and exploration prospects Increase copper production, reserves and continue exploration Growth financed with internal cash generation after optimizing the debt structure Fully integrated low cost operations Strategic investments focused on cost reduction Secure long term energy contracts at competitive prices Flexible capital structure to undertake expansion projects Exposure to strong copper fundamentals and strong byproducts credits Outstanding dividend history 20

22 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. 21