Southern Copper Corporation · NYSE:SCCO
Southern Copper — Investor Presentation (January 2009)
35 slides from Southern Copper's investor presentation, January 2009
Slide 1: Southern Copper Corporation Highlights
Southern Copper Corporation Highlights Southern Copper Corporation Highlights January 2009 January 2009 0
Slide 2: Safe Harbor Statement
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 n
Slide 3: I. Introduction
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Slide 4: Management Presenters
Management Presenters Presenters Title Raúl Jacob f Manager of Financial Planning & IR 3
Slide 5: Corporate Structure
Corporate Structure 79.1% Public Float 20 9% 20.9% 99.29 % 99.95 % SCC Peru Branch Minera México 4
Slide 6: Metal Market
Metal Market Copper Molybdenum • Slowdown in demand due to concerns • 92% of world reserves and production about industrial production. capacity are concentrated in: Mexico, Peru, USA, China, and Chile. • Supply pp y constraints and cash cost increases. • Demand largely driven by special steel alloy
Slide 7: Southern Copper Strengths
Southern Copper Strengths `Long o g life e reserves ese es aand deexploration p o at o pprojects ojects `Excellent organic growth projects `Low cost fully integrated operations `Experienced management team `St `Strong financial fi i l performance f / investment i t t grade d `Outstanding dividend hi
Slide 8: II. Overview of Operations
Il. Overview of Operations ¥ 2 = . * * Cali ee as Wear er Bye
Slide 9: Company Overview
Company Overview Copper Reserves 1: 49.1 mmt Mexico Cananea La Caridad For December 2008 Santa Eulalia Copper Production: 489 kt Buenavista Santa Barbara El Arco Sales: $ 4,851 M San Martin Charcas San Luis Potosi EBITDA: $ 2,557 M Angangueo Taxco Cash Cost: $ 0.34 / lb. Peru e u #2 copper company b
Slide 10: Long Life Reserves
Long Life Reserves X First largest copper reserves of any publicly traded company X Long-life Long life reserves with strong capacity expansion plans Main Copper Reserves SCC Copper Reserves 60 50.3 49.1 50 69 9 69.9 Copper Contained in reserves (Mt) er Reserves (Mt) 40.0 70 40 42% 60 49.1 30 50 29%
Slide 11: Low Cost Operations
Low Cost Operations Cash Costs per pound of Copper Low Cost Drivers Produced Net of By-Products 06 0.6 f Management focus on cost efficiency 0.44 f Significant low cost SX-EW production 0.4 0.34 f High quality reserves f Strong by-product credits – 12M08: (US$//lb) 0.2 0 18 0.18 0.16 – molybdenum (1
Slide 12: Low Cost of Operations
Low Cost of Operations SCC’s cash cost as per Brook Hunt estimates is in the bottom quartile of global copper producers XHigh quality reserves, large scale open-pit mines, low cost SX-EW production, strong by-products credits, and management focus on cost efficiency are among SCC’s key low cost driv
Slide 13: Geographic and Product Diversification
Geographic and Product Diversification 2008 SCC Revenue by Product 2008 SCC Revenue by Market Other Acid 3% Silver 4% Peru 4% 3% Zinc 4% Asia Europe 5% 24% Molybdenum Molybdenum United States 19% 16% Copper C Mexico 27% 69% 23% Other Latin American 18% 12
Slide 14: Expansion Projects
Expansion Projects Tía María SX EW / Copper Ilo Metallurgical Operations Expansion f LBE for Operations: 4Q - 2010 f LBE for Operations: 2012 f Annual Copper Production: 120 ktpy f Additional Concentrates from f Estimated Capex: $934 M Cuajone & Toquepala, 445 ktpy Toquepala Concentrator Expansion f
Slide 15: Tia Maria Project
Tia Maria Project X Estimated Capex : US $934 M X 120,000 MT of copper SX EW Cathodes per year X LBE for Operations : 2010, for 18 years 14
Slide 16: Tia Maria: New Operating Unit Overview
Tia Maria: New Operating Unit Overview Highlights Key Operating Data f Located at 100 Km north of Ilo, Peru Key Metals: Copper f Annual production of 120 ktpy of copper SX EW Plant Capacity: SX-EW 120 ktpy f Cash cost estimated at ¢ 70-80 per Lb f Life of mine : 18 years Resource Information Expansi
Slide 17: III. Financial Overview
111. Financial Overview “AYA AG Y ff Lg j 4 j “j (j VY (4 ¢ (4 4 / G FT La 7 7 (4 44 ¢ 4, ar SF ¢ & A 4 Ad
Slide 18: SCC Financial Summary
SCC Financial Summary (US$ MM) 2005 2006 2007 2008 Copper Price (LME) US$ per pound 1.67 3.05 3.23 3.16 Income Statement: Net Revenues $4,089 $5,460 $6,086 $4,851 EBITDA 2,335 3,316 3,766 2,557 EBITDA Margin 57% 61% 62% 53% Interest Expense 109 113 123 116 Net Income 1,400 2,038 2,216 1,407 Balance
Slide 19: Solid Financial Performance
Solid Financial Performance Among the highest EBITDA margins and strongest leverage ratios in the metals & mining industry 2007 EBITDA Margin (%) Net Debt// 2007 EBITDA (x) ( ) Antof agasta 72% Antof agasta-0.7x Southern Copper 62% Southern Copper 0.01x BHP Billiton 0.4x Anglo American 46% Anglo Ame
Slide 20: Focus on Total Return to Investors
Focus on Total Return to Investors Disciplined approach to creating shareholder value Current Dividend Yield1 (%) 3-Year Share Price Performance1 (%) Southern Copper 12.1% 39% Southern Copper Antofagasta 8.9% 23% BHP Billiton Freeport 7.4% 14% Antofagasta Rio Tinto 6.8% 13% CVRD Anglo American 5.6%
Slide 21: Capital Expenditure Forecast (US$M)
Capital Expenditure Forecast (US$M) $107 $1,200 $199 $1,000 $800 $600 $1,200 $940 $400 $780 $517 $200 $393 $250 $0 2008 2009E 2010E 2011E 2012E 2013E Source: SCC 20
Slide 22: SCC Debt Amortization Schedule
SCC Debt Amortization Schedule Millions of USD as of December 31, 2008 SCC is evaluating the best financing option for its projects. $1,000 $200 $56 $ $0 $10 $10 $10 $10 $10 2008 2009 2010 2011 2012 2013 2015 2028 2035 Mitsui Yankee Bonds 10 & 30 year Bonds 21
Slide 23: IV. Appendix
IV. Appendix 22
Slide 24: Estimated Production Capacity Growth
Estimated Production Capacity Growth (Ktpy) 1,579 1,579 1,342 237 1,276 66 1,086 190 970 920 116 50 820 100 120 700 2008 Full Capacity 2010 - Tía María 2012 - Toquepala 2012 - Cuajone 2014 - Los 2014 - El Arco SX 2014 - Cananea SX 2016 - New 2016 - Total Production SX EW (120 ktpy Concentrator Conce
Slide 25: Other Expansion Projects
Other Expansion Projects El Arco (SX EW + Concentrator) Los Chancas (SX EW + Concentrator) f LBE for Operations: 2014 f LBE for Operations: 2014 f Annual Copper Production: f Annual Copper Production: SX-EW SX EW = 35 ktpy; Conc.= Conc. 155 ktpy SX-EW SX EW = 20 ktpy Conc. Conc = 80 ktpy f Annual Go
Slide 26: Operational Update - Cananea Minesite
Operational Update - Cananea Minesite Highlights Operating Statistics (2008) f Largest mine in Mexico Key Metals: Copper f Fourth largest copper mine worldwide in Concentrator Capacity: 77 ktpd terms of reserves (similar to Escondida) SX-EW Plant Capacity: 55 ktpy f Recent LOM study shows operations
Slide 27: Operational Update - Caridad Minesite
Operational Update - Caridad Minesite Operating Statistics (2008) Highlights Key Metals: Copper, Mo, Au, Ag Concentrator Capacity: p y 90 ktpd p fSecond largest mine in Mexico SX-EW Plant Capacity: 22 ktpy f Recent LOM study shows operations Copper Production: 119 kt through 2044 Molybdenum Producti
Slide 28: Operational Update - Cuajone Minesite
Operational Update - Cuajone Minesite Operating Statistics (2008) Highlights Key Metals: Copper, Mo Concentrator Capacity: 87 ktpd f Second largest copper mine in Peru Copper Production: 196kt f Leachable ore sent to Toquepala by Molybdenum Production: 4.4 kt pipeline Reserve Information (2007) f LO
Slide 29: Operational Update - Toquepala Minesite
Operational Update - Toquepala Minesite Highlights Operating Statistics (2008) Key Metals: Copper, Mo f Third Thi d largest l t copper mine i ini Peru P Concentrator Capacity: 60 ktpd f LOM study shows expanded operations SX-EW Plant Capacity: 56 ktpy through 2036 Copper Production: 153 kt f High mo
Slide 30: Operational Update - Caridad Metallurgical Complex
Operational Update - Caridad Metallurgical Complex Highlights Operating Statistics (2008) f Consists of a smelter, electrolytic copper Smelter capacity: 1,000 ktpy refinery, precious metal refinery and a Anode capacity: 300 ktpy copper rod plant Cathode production: 140 kt f 10th largest copper smelt
Slide 31: Operational Update - Ilo Metallurgical Complex
Operational Update - Ilo Metallurgical Complex Highlights Operating Statistics (2008) f Consists of a smelter, anode plant, Smelter Capacity: 1,200 ktpy electrolytic plant and precious metals Copper Anode Production(1): 307 kt plant Cathode Capacity: 280 ktpy f 6th largest g copper pp smelter worldw
Slide 32: SLP Metallurgical Complex: Overview
SLP Metallurgical Complex: Overview Highlights Operating Statistics (2008) f Assets consist of copper smelter and zinc Zinc refinery capacity: 105 ktpy refinery Zinc production: 107 kt f One of the most cost-efficient zinc refineries Copper concentrate in the world f d capacity: feed it 230 ktpy Exp
Slide 33: Comparable Company Analysis
Comparable Company Analysis Southern Copper Antofagasta Codelco Freeport Data as of: LTM 12/31/2008 LTM 06/30/2008 12/31/2007 LTM 12/31/2008 Current Rating Ba1 / BBB- / BB+ -- / -- / -- Aa3 / A / -- B1 / B+ / -- IIncome Statement St t t Net Revenues $4,851 $4,292 $16,988 $17,796 EBIT 2,202 2,902 8,5
Slide 34: Summary of Reserves Data
Summary of Reserves Data 1 The table below details SCC’s copper and molybdenum reserves as of December 31, 2007 Cuajone Toquepala Cananea La Caridad Total Immsa 2 Mineral Reserves (Peru) (Peru) (Mexico) (Mexico) Open-Pit Mines (Mexico) Mineral Reserves Metal Prices: Copper ($/lb.) $1.20 $1.20 $1.20
Slide 35: Debt Breakdown
Debt Breakdown US$ MM as of December 31, 2008 Type Maturity Amount Interest Rate Yankee Bonds 9.25% Senior Unsecured Bonds Unsecured 2028 / bullet $56 9.25% Sub-total $56 Unsecured Notes 6.375% Notes due 2015 1 Unsecured 2015 / bullet $200 6.375% 7.50% Notes due 2035 1 Unsecured 2035 / bullet $1,000
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