SOUTHERN COPPER CORP/ Q1 FY2024 earnings call

• Copper market: LME copper price down 5.4% QoQ. Global copper supply forecast revised to a 1% drop vs previous 3.2% growth. Demand expected to grow 2.5% YoY.
• Southern Copper production: Copper production up 7.6% QoQ to 240,270 tons. Molybdenum production up 9.5% YoY. Silver mined production up 8.4% YoY. Zinc mined production up 75% QoQ.
• Financial results: Sales down 7% YoY. Adjusted EBITDA down 9.6% YoY. Operating costs down 2.1% YoY.
• Capital investments: Over $15 billion planned for decade, including projects in Peru and Mexico. Buenavista zinc concentrator had $383 million invested by Mar 31, 2024.
• ESG: Included in S&P Global's Sustainability Yearbook, reduced ESG risk rating, renewable energy use increased, educational centers inaugurated in Mexico and Peru.
• Dividend: Board approved a quarterly stock dividend of 0.0104 shares per share payable May 23, 2024.

Copper represented 78.6% of sales in Q1 2024. Copper production increased 7.6% QoQ to 240,270 tons. Molybdenum was 10.5% of sales value, production up 9.5% YoY but price down 38%. Silver was 4.3% of sales value, mined production up 8.4% YoY but refined down 1.6% QoQ. Zinc was 2.7% of sales value, mined production up 75% QoQ, but refined down 15% YoY. Sales were $2.6 billion, $194 million lower than Q1 2023. Operating costs decreased by $30 million or 2.1% YoY. Adjusted EBITDA was $1,417.7 million, 9.6% lower than Q1 2023.

• Copper production forecast for 2024 increased to 948,800 tons, up 4.1% from 2023. Zinc production expected to increase 84% in 2024 driven by Buenavista zinc concentrator. Tia Maria project expected to start contributing by 2027 with a 2-year construction timeline.
• Copper demand expected to grow 2.5% in 2024 due to resilient US economy and decarbonization technologies.

• Buenavista operations had water supply issues last quarter, though sufficient water supplies are now ensured. Market uncertainties due to potential copper supply deficit and fluctuating prices.

Q: What drove the decision to change dividend to all shares?

A: Due to company's share treasury resources and conservative cash position, using shares from treasury to pay dividend.

Q: Appetite for M&A?

A: Currently focused on organic growth, following M&A opportunities but no specific interest yet.

Q: Trend in cost before by-products?

A: Operating cash cost per pound of copper before by-product credits was $2.11 in Q1 2024, expected to remain at current level.

Q: Update on Buenavista water supply and permit?

A: Using truck fleet for water supply, have permit for wells but not for pipeline; no news on pipeline permit.

Q: Copper production profile and Tia Maria?

A: 2024 copper production forecast 948,800 tons, Tia Maria included in 2027 forecast with 2-year construction timeline.

Q: Stock dividend and next quarter dividend?

A: Dividend decision made per Board meeting, next quarter dividend not pre-determined; Board evaluates cash position, project outlooks, etc.

Q: Investment in Ilo and Empalme?

A: Plans for new smelters in Ilo (Peru) and Empalme (Mexico) for later this decade, updating progress as projects mature.