Southern Copper Corporation Q2 FY2025 earnings call

Management Statement and Operational Highlights

• Production: Copper production had a slight decrease, with Mexico and Peru operations affected by mine issues (e.g., Buenavista, La Caridad in Mexico; Cuajone in Peru) partially offset by other mines (Toquepala, IMMSA). Molybdenum production increased, silver and zinc production had varying changes.
• Financials: Sales were $3.1 billion, down 2% from Q2 2024. Adjusted EBITDA was $1,791 million, slightly down from Q2 2024. Operating cash cost per pound of copper before by-product credits was $2.11, with by-product credits increasing.
• Capital Investments: Peruvian projects could surpass $10.3 billion in a decade. Tia Maria project has created jobs, Los Chancas project has framework agreement, Michiquillay project has exploration progress. Mexican projects await permits; Minera Mexico to invest in modernization, etc.
• ESG: Sustainable development report verified, 24% reduction in lost time injury frequency rate, 39% electricity from renewables, Copper Mark Certification, inclusion in FTSE indices, recognition for Mexican Gray Wolf conservation.
• Dividends: Quarterly cash dividend of $0.80 per share and stock dividend of 0.0101 shares per share declared.

Segment Performance

• Copper: Represented 74% of sales in Q2 2025. Production was 238,980 tons, a slight decrease of 1.4% from Q2 2022. Expected to produce 965,300 tons in 2025, a 0.9% decrease from 2024's final print.
• Molybdenum: Represented 12% of sales. Average price was $20.57 per pound, down 5% from Q2 2024. Production increased 3.5% year-over-year. Expected to produce 28,700 tons in 2025, a 1% decrease from 2024.
• Silver: Represented 7% of sales. Average price was $33.62 per ounce, up 17%. Mine production increased 15% year-over-year. Expected to produce 22.8 million ounces in 2025, a 9% increase from 2024.
• Zinc: Represented 4% of sales. Average price was $1.20 per pound, down 7% from Q2 2024. Mine production increased 56% quarter-over-quarter. Expected to produce 173,400 tons in 2025, a 33% increase from 2024.

Guidance

• 2025 copper production expected at 965,300 tons, in line with plan but down 0.9% from 2024.
• 2025 molybdenum production expected at 28,700 tons, down 1% from 2024.
• 2025 silver production expected at 22.8 million ounces, up 9% from 2024.
• 2025 zinc production expected at 173,400 tons, up 33% from 2024.

Risks

• Intense commercial war between U.S. and China could affect economic growth and copper demand.
• Uncertainty around potential copper tariffs on U.S. imports and their impact on contracts.
• Low treatment and refining charges (TC/RCs) may affect economics of new smelter investments.

Question and Answer

• **Q: Dive into realized copper prices, COMEX premium, contracts, and cash costs.

A: Some contracts under COMEX, honoring them, no tariff yet, cash costs affected by by-product credits, low TC/RCs impact smelter investment consideration.

• **Q: Chile exemption on copper tariffs, Tia Maria startup date.

A: Confidential on dialogues, Tia Maria expects tests and production in first half of 2027.

• **Q: CapEx spend, Tia Maria production profile.

A: Higher CapEx in second half for Tia Maria, production estimates to be updated.

• **Q: Peruvian and Mexican maintenance, impact on shipments, production, cost.

A: Maintenance in Peruvian mines and Ilo smelter, Mexican focus on Buenavista concentrator, cash cost expected to be competitive.

• **Q: Buenavista zinc prioritization, production guidance.

A: Prioritizing zinc for higher value, zinc production guidance for 2025 and 2026, copper production from Buenavista expected to be lower.

• **Q: Cuajone expansion, copper sales decline.

A: Copper sales decline due to inventory sold in Q1, Cuajone expansion water supply concerns being addressed.