southern copper corporation november, 2014€¦ · 13 . scc financial summary (us$ mm) 2012 2013...
TRANSCRIPT
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Southern Copper Corporation November, 2014
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I. Introduction
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Management Presenter
Presenter Raul Jacob
Title
Vice President, Finance & CFO
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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 forward-
looking 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.
Safe Harbor Statement
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Corporate Structure
100.0% (*)
99.29 % 99.95 %
15.9% (*)
Public Float
SCC Peru Branch Minera Mexico
(*) As of October 31, 2014
AMERICAS MINING
CORPORATION
84.1% (*)
China43%
Asia Ex China19%
Europe18%
USA8%
Japan5%
Other7%
Transport13%
Electrical & Electronic Products
34%
Construction31%
Industrial Machinery
13%
Consumer Products
9%
LME Copper Cash Price vs. Inventories Copper Consumption by End-use
Solid Fundamentals Copper Consumption by Region
Brook Hunt Dec. 2012
CRU Jan 2014
Copper – The Best Fundamental Story in Commodities
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► Copper has the best fundamentals in the basic materials space:
― Asia represents over 60% of world demand (China=43% and could reach 45% in 5 years)
― China and EM countries will continue growing, at a lesser pace, but still substantial.
― Additional refined production expected for 2015, will be partially offset by restocking in Europe, ore grade decay and scrap scarcity.
― Positive recovery of the world economy will support copper prices.
-
100,000
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LME COMEX shanghai LME Cash
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Southern Copper Strengths
►Highest copper reserves of the 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
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II. Overview of Operations
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Peru
Ilo
Mexico
Copper open pit mines
Underground mines
Smelters and Refineries
Key
Company Overview
Copper Reserves 1: 67.6 mmt 2013 Cash Cost: $ 1.00/lb.
2014 Estimates: Copper Production: 658 kt Sales: $ 5.9 B EBITDA: $ 2.9 B 49% of Sales 9M 2014 Cash Cost $ 1.03/Lb. #1 copper company by reserves 2
#6 copper producer 3 #12 copper smelter 3
#9 refinery 3
Source: Company Filings Notes: 1 Copper contained in reserves based on US$2.00 per pound of copper as of December 31, 2013 2 Based on available companies reports 3 Wood Mackenzie Limited 2013
Santa Barbara
Charcas
Taxco
San Luis Potosi
Santa Eulalia
San Martin
Cuajone
La Caridad
Buenavista
Toquepala Tia Maria
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Copper Reserves as Reported SCC Highlights
►#1 mine life among copper producers
►#6 world’s largest producer of mined copper
►Highly diversified geographical presence
►Four large-scale open-pit mines
Mine Life
World’s Largest Copper Reserves
67.661.2
39.334.2 34.1
29.6
21.6
13.2 10.9
0
10
20
30
40
50
60
70
80
SC
C
Cod
elco
Free
port
BH
P B
illito
n
Gle
ncor
eX
stra
ta
Ang
loA
mer
ican
Rio
Tin
to
Ant
ofag
asta
VA
LE
Cop
per R
eser
ves
(Mt)
Source 10K Annual Rep. 10K 20F Reserve Rep. Annual Rep. Annual Rep. 20F Annual Rep.
Period Dec.31, 2013 Dec.31, 2013 Dec.31, 2013 Jun.30, 2013 Dec. 31, 2013 Dec.31, 2013 Dec. 31, 2013 Dec. 31, 2013 Dec. 31, 2013
Cu Price $2.00 N/A $2.00 $3.68 N/A N/A N/A $3.00 $3.64
105
59
34 3425 21 21 18
0
20
40
60
80
100
120
SCC SCC afterexpansion
AngloAmerican
Codelco Freeport BHPBilliton
Rio Tinto Xstrata
Geographic Footprint & Product Diversification
9M 2014 Revenue by Product 9M 2014 Revenue by Market
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Copper77%
Silver5%
Molybdenum10%
Zinc3%
Acid2%
Other3%
(75 pp refined or further processed)
Mexico28%
Europe14%
United States18%Asia
17%
Brasil7%
Chile8%
Peru5%
Other3%
Operating Materials
19%
Fuel16%
Power19%
Labor14%
Maintenance15%
Other17%
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Low Cost Operations
Cash Cost per Pound of Copper Produced Net of By-Products
Cost Structure (1) Operating Cash Cost per Pound of Copper Produced
Low Cost Drivers
Fully integrated low cost operations
World class assets
Significant SX-EW production
Strong by-product credits
Management focus on cost efficiency
(1) 9M 2014
0.520.71
1.00 1.020.94
1.14
0.0
0.5
1.0
1.5
2011 2012 2013 1Q14 2Q14 3Q14
(US
$/lb
)
1.76 1.751.92 1.85 1.97 1.96
0.50
1.00
1.50
2.00
2.50
2011 2012 2013 1Q14 2Q14 3Q14
(US
$/lb
)
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III. Financial Overview
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SCC Financial Summary
(US$ MM) 2012 2013 LTM 2014 9M 2014
Copper Price (LME) US$ per pound 3.61 3.32 3.17 3.15Income Statement:Net Revenues $6,669 $5,953 $5,852 $4,316EBITDA 3,456 2,954 2,768 2,052EBITDA Margin 52% 50% 47% 47%Net Income 1,935 1,624 1,404 985Dividends paid per share 4.06 0.68 0.46 0.34Balance Sheet Statement:Cash & Equivalents $2,459 $1,673 $1,034 $1,034Total Assets 10,384 10,996 11,537 11,537Total Debt 1 4,214 4,205 4,206 4,206Total Liabilities 5,595 5,434 5,657 5,657Total Shareholders' Equity 4,765 5,534 5,848 5,848Cash Flow Statement:Capital Expenditures $1,052 $1,703 $1,624 $1,111Free Cash Flow 2 952 154 (10) 8 Dividends paid to common shareholders 3,140 574 384 283
Total Debt / EBITDA 1.1x 1.4x 1.5x 1.5x
1 Includes short-term and long-term debt2 Free Cash Flow defined as net cash from operating activities less capital expenditures.
Top Tier Margins and Conservative Leverage for Increased Financial Flexibility
9M 2014 Total Debt / EBITDA (x)
9M 2014 EBITDA Margin (%)
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Source: Company Reports 1 9M 2014 2 1H 2014
No Amortizations Until 2015
Source: Company Reports 1 9M 2014 2 1H 2014
Solid Financial Performance
$1,200
$1,100
$1,000
$51
$300
$400
$200
2042
2040
2035
2028
2022
2020
2015
30%
34%
38%
40%
42%
47%
48%
Anglo
Freeport
Vale
Rio Tinto
Antofagasta
SCC
BHP
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1
2
2
2
2
1
2.30
1.97
1.54
1.33
1.07
0.94
0.31
Anglo
Vale
SCC
Rio Tinto
BHP
Antofagasta
Freeport
2
1
1
2
2
1
2
1,703 1,711 1,850
1,100 1,100
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200
400
600
800
1,000
1,200
1,400
1,600
1,800
2,000
2013 2014 2015 2016 2017 15 Source: SCC
Toquepala Concentrator Expansion 1Q17 - $1.2B - 100K Tons Cu , 3.1K Tons Mo
2013-14 2015-17 Buenavista Molybdenum Plant 3Q13 - $38M - 2K Tons Mo
Buenavista: - Concentrator Plant 3Q15 - $1.4B -
188K Tons Cu, 2.6K Tons Mo - Mine equipment $505M
Los Chancas. - $1.2B - 100K Tons Cu, 7.5K Tons Mo
Los Chalchihuites 2016 - $140M, 26K Tons Cu
Buenavista Zinc Conc. 2016 - $332M 16K Tons Cu - 55K Tons Zn
Investment Program to Significantly Increase Production
Board approved Other projects
Buenavista SX/EW III 4Q14 - $444M 120K Tons Cu
Cuajone: Variable Cut-off Grade + HPGR 2H13 - $158M - 22K Tons Cu, 0.7K Tons Mo
2013-2017 Capex Program Overview (MM) 2013-2017 Copper Production Forecast (‘000 MT Cu)
Angangueo Polymetallic Mine – 1H16 - $175M - 10.4K Tons Cu, 7K Tons Zn, 4K Tons Pb, 2.4M Oz Ag Tia Maria SX/EW 1Q17 – $1.4B - 120K Tons Cu
El Arco Conc & SX/EW 2017 - $2.6B – 190K Tons Cu, 105K Oz Au
Empalme Cu Smelter 2017 - $812M – 350K Tons Cu Cont. Copper Refinery 2017 - $318M 350K Tons Cu Cont. Zinc Refinery - $600M – 120K Tons Zn
Cuajone Concentrator Expansion - $500M – 50K Tons Cu, 0.7 Tons Mo
Ilo Smelter & Refinery Expansion
617 658 758
912
1,151
0
200
400
600
800
1,000
1,200
2013 2014 2015 2016 2017
Pilares Mine 1Q17 – $189.5M - 40K Tons Cu
$2,529
$1,814
$2,865
$3,910 $3,773
$2,945
$2,052
52.1% 48.6% 56.0% 57.0% 57.0% 49.0% 47.0%
2008 2009 2010 2011 2012 2013 9M 2014
SCC is the Premier Copper Play • World class assets in investment grade countries • #1 in reserves of any company with various exploration prospects
- Increasing copper production • Capacity to deliver projects through flexible capital structure and significant cash
generation capability
• Fully integrated low cost operations - Strategic investments focused on cost competitiveness
• Outstanding dividend history
• Experienced management with proven track record
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(in US$ millions)
SCC EBITDA and % Margin
SCC’s Major Strengths
Cu price $3.16 $4.00 $3.61 $3.15$2.34 $3.42 $3.32