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Southern Copper CorporationMay, 2019
1
I. Introduction
2
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 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 Southern Copper’s (SCC) 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. SCC 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
3
Corporate Structure
100.0% (*)
99.29 % 99.96 %
11.1% (*)
Public Float
SCC Peru Branch Minera Mexico
(*) As of December 31, 2018
AMERICASMINING
CORPORATION
88.9% (*)
Transport11%
Electrical Network
24%
Construction30%
Industrial Machinery
10%
Consumer & General Products
25%
LME Copper Cash Price vs. Inventories
Copper Consumption by End-use
Solid Fundamentals Copper Consumption by Region
Wood Mackenzie 2018
Copper – The Best Fundamental Story in Commodities
4
Copper has the best fundamentals in the basic materials space:
― Our basic scenario does not consider an escalation of U.S. – China commercial protectionism or a recession.
― Expect 2.5% copper demand growth. 2019 demand driven by worldwide economic growth.
― Expect supply growth of 1.5% due to lack of projects.
― Possible 2019 market deficit due to 165K tonsproduction losses in Chile and Peru during 1Q19.
Wood Mackenzie 2018
► Refined copper inventories have decreased by 49%, since its peak in March, 2018.
-
100,000
200,000
300,000
400,000
500,000
600,000
700,000
800,000
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LME COMEX shanghai LME Cash
5
Southern Copper Strengths
►#2 copper reserves of the industry
►Excellent organic growth projects
►Low cost, fully integrated operations
►Experienced management team
►Strong financial performance / investment grade since 2005
►Outstanding dividend history
►Good long-term copper & by-product fundamentals
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II. Overview of Operations
7
Peru
Ilo
Mexico
Copper open pit mines
Underground mines
Smelters and Refineries
Key
Company Overview
Copper Reserves 1: 69.7 mmt
2018 Cash Cost $ 0.87/lb.
2019 Estimates (@ $2.96 x Lb of Cu):
Copper Production: 987 kt
Sales: $ 7.5 B
EBITDA: $ 4.1 B
54% of Sales
#2 copper company by reserves 2
#5 copper producer 3
#10 copper smelter 3
#7 refinery 3
Source: Company FilingsNotes: 1 Copper contained in reserves based on US$2.90 per pound of copper as of December 31, 20182 Based on available companies reports3 Wood Mackenzie Limited 2017
Santa Barbara
Charcas
Taxco
San Luis Potosi
Santa Eulalia
San Martin
Cuajone
La Caridad
Buenavista
ToquepalaTia Maria
Projects
El Arco
El Pilar
Los Chancas
Michiquillay
70
56
47 46
37 37 37 34 32
20
SCCO Anglo American KGHM Codelco Freeport BHP Rio Tinto First Quantum Antofagasta Glencore
78
69
47 45
28 26 24 22 22 16
Codelco SCCO BHP Freeport Glencore KGHM First Quantum Anglo American Rio Tinto Antofagasta
Large Scale Reserve Base Underpins Industry-Leading Mine Life
Second Largest Copper Reserve Base Globally(1)
Longest Mine Life in the Copper Space
Attributable Copper Reserves; Mt
Attributable Copper Reserves / 2019E Copper Production; Years
1,704 987 1,275 1,215 1,428 557 688 393 594 509
Attributable 2019E Production; kt
(2)
Source: SCCO filings, Wood Mackenzie.Notes: Based on Wood Mackenzie estimates except for SCCO’s reserves and 2019E production, which is based on SCCO’s management estimates.(1) Latest reserve figures from
Wood Mackenzie, as of 2017. (2) 2018 reserve figures from SCCO filings.
SCCO is set apart from its peers by its large scale copper reserve base and market leading mine life
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21 172 200 182 226 285
447 431 414 428
118
114 121 121 126
131
133 135 132 131
6
6 6 6
5 6
6 5 6 14
169
156 152 139 140
144
141 148 170 258
165
140 159 169
178 178
171 158 161
156
479
587 638 617
677 743
900 877 884
987
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Guidance
Buenavista La Caridad IMMSA Toquepala Cuajone
Proven Development Capabilities to Deliver Stable Organic Growth
SCCO Copper Production Track Record (2010 – 2019)Cu Production by Mine; kt
BuenavistaNew SX-EW III Plant
US$1.4 bn mm / +120kt Cu
CuajoneConcentrator Optimization
US$157 mm / +24kt Cu
BuenavistaNew Concentrator Plant
US$1.8 bn / +188kt Cu +2.6kt Mo
2nd Generation of Projects (Board Approved, 2019 – 2021) + Strong Pipeline of Organic Growth Projects (+2022)
BrownfieldBrownfield Greenfield
SCCO has a proven track record of operational efficiency and project development execution, having been able to double copper production in the last 10 years (from 479kt Cu in 2010 to 987kt Cu in 2019E)
ToquepalaConcentrator Expansion
US$1.3 bn – 100kt Cu +3.1kt Mo
Source: SCCO filings, company estimates.
Buenavista Zinc
+80kt Zn / +20kt Cu Zinc Concentrator – US$413 mm
Pilares
35ktNew Mine Development – US$159 mm
Tia Maria
+120kt CuSX-EW – US$1.4 bn
Mexico Operations Peru Operations
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Geographic Footprint & Product Diversification
2018 Revenue by Product 2018 Revenue by Market
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Copper80%
Molybdenum7%
Zinc5%
Silver4%
Other4%
Asia 25%
Mexico 23%
Europe 22%
United States18%
Other LatAm7%
Peru 5%
Operating Materials
19%
Fuel14%
Power15%Labor
14%
Maintenance20%
Other18%
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Low Cost Operations
Cash Cost per Pound of Copper Produced Net of By-Products
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 and growth
(1) Last 12 months
Cost Structure (1)
1.07 1.11
0.950.92
0.87
0.80
0.7
0.9
1.1
2014 2015 2016 2017 2018 2019 E
(US
$/lb
)
1.89
1.66
1.44 1.49 1.54 1.48
1.20
1.70
2.20
2014 2015 2016 2017 2018 2019 E
(US
$/lb
)
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Cost Leadership Among Largest Copper Producers
2019E C1 Cash Costs, Composite Costs, Grouped by Company (1), US$/Lb
(1.00)
(0.50)
0.00
0.50
1.00
1.50
2.00
2.50
3.00
0% 20% 40% 60% 80% 100%
1st Quartile
12Note: (1) Composite by company and based on Wood Mackenzie estimates except for SCCO’s 2019E C1 cost, which is based on SCCO’s management estimates
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III. Financial Overview
$1,199 $795 $1,094
$2,269 $2,435 $2,508
2014 2015 2016 2017 2018 1Q19 LTM
677 743 900 877 884 908
$5,788 $5,046 $5,380
$6,655 $7,097 $7,009
$3.11
$2.50 $2.21
$2.80 $2.96 $2.82
2014 2015 2016 2017 2018 1Q19 LTM
$1,530 $1,150 $1,119 $1,024 $1,121 $999
2014 2015 2016 2017 2018 1Q19 LTM
Solid Operational and Financial Track Record
$2,728 $1,945 $2,212
$3,292 $3,556 $3,507
47.1%
38.5% 41.1%
49.5% 50.1% 50.0%
2014 2015 2016 2017 2018 1Q19 LTM
Capital ExpendituresUS$ mm
Free Cash Flow (Adj. EBITDA – Capex)US$ mm
Net Revenue and Avg. Cu PriceUS$ mm; US$/lb(1)(2)
Adj. EBITDA and Adj. EBITDA MarginUS$ mm; %
Cash Flow Conversion(4)
Total Cu Production, kt
43.9% 40.9% 49.4% 68.9% 68.5% 71.5%
Source: SCCO filings.Notes: (1) Average LME price. (2) Average LME price for the three months ended March 31, 2019. (3) Cash cost incurred at each processing stage, from mining through to recoverable
metal delivered to market, net of by-product credits. (4) (Adj. EBITDA – Capex) / Adj. EBITDA.
C1 Cash Costs(3); US$/lb
$1.07 $1.11 $0.95 $0.92 $0.87 $0.90
SCCO has a strong track record of profitability through the copper business cycle. Conservative leverage levels and long-dated amortization profile support SCCO’s investment grade rating
Total Cu Production CAGR: 6.9%
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$2,728
$1,945
$2,212
$3,292
$3,556 $3,507
$1,199
$795
$1,094
$2,269 $2,435 $2,508
$3.11
$2.50
$2.21
$2.80 $2.96
$2.82
$3.28
$3.90 $3.85
$3.45
2014 2015 2016 2017 2018 1Q19 LTM 2019E 2020E 2021E 2022E
Adj. EBITDA FCF (Adj. EBITDA - Capex) Avg. Cu Price Cash Flow Conversion
43.9%
40.9%
49.4%
68.9% 68.5% 71.5%
Proven Economic Resilience to Volatility and Commodity Environment Downturns
Source: SCCO filings, Wood Mackenzie.Notes: (1) Average annual LME price in 2014-2018. (2) Average LME price for the three months ended March 31, 2019 for 1Q19. (3) Wood Mackenzie forecasts. (4) Calculated as (Adj.
EBITDA – Capex) / Adj. EBITDA.
SCCO has a solid track record of profitability through the copper business cycles. Conservative leverage levels support SCCO’s investment grade ratingTotal Copper Production; kt
Cash Balance; US$ mm
(4)(1)(2)(3)
Increased cash generation potential from production growth, consistent
cost efficiency and copper price consensus estimates above current
price levels
Investment Grade Since 2005
BBB+(Stable)
11/18/2018
BBB+(Stable)
10/18/2018
Baa2(Positive)
03/27/2019Debt; US$ mm
Net Debt / Adj. EBITDA; x
Dividends; US$ mm
$703 $878 $597 $1,055 $1,058 $951
$4,181 $5,952 $5,954 $5,957 $5,960 $5,961
1.3x 2.6x 2.4x 1.5x 1.4x 1.4x
$381 $271 $139 $456 $1,082 $1,160
677 743 900 877 884 908
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16Source: SCC
Toquepala Concentrator Expansion4Q18 - $1.2B - 100K Tons Cu, 3.1K
Tons Mo
2017-2019 2020-2022Buenavista:- $3.1B program to increase capacity
from 180K Tons Cu to 500K Tons Cu, 4.6K Tons Mo
Buenavista Zinc Conc. 3Q22 - $413M 20K Tons Cu, 100K Tons Zn
Los Chancas Conc. & SX/EW -$2.8B - 130K Tons Cu, 7.5K Tons Mo
Pilares 1Q21 - $159M 35K Tons Cu
Investment Program to SignificantlyIncrease Production
Board approved Other projects
2018-2026 Capex Program Overview (MM) 2018-2026 Copper Production Forecast (‘000 MT Cu)
Tia Maria SX/EW 2Q22 – $1.4B - 120K Tons Cu
El Arco Conc. & SX/EW - $2.8B 190K Tons Cu, 105K Oz Au
Ilo Smelter & Refinery Expansion
El Pilar 1Q23 - $256M – 35K Tons Cu
MEXICO PERU
Michiquillay $2.5B - 225K Tons Cu
884 987 990 983
1,067 1,170 1,198
1,369
1,808
0
300
600
900
1,200
1,500
1,800
2018 2019 2020 2021 2022 2023 2024 2025 2026
+105%
1,053
1,766
2,058
2,934
2,537 2,599
2,829
2,181
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2018 2019 2020 2021 2022 2023 2024 2025 2026
Average:$2.0 B
$5.1 $7.4 $8.0 $9.5 $10.4 $11.4 $11.4 $12.5 $15.3 $19.3
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Key Differentiators to Achieve Lower Capital Intensity
Growth profile based on pipeline of organic projects
Regional synergies, growth projects also located in Mexico and Peru
Significant infrastructure economies of scale with ~35% of targeted production growth coming from brownfield expansions
Highly experienced project development team focused on capital efficiency and discipline
SX-EW Technology: lower capital intensity; underpins production growth
High-Quality, Low-Capital Intensive Growth Profile
Low Capital Intensity Organic Growth Completed and Expansion Projects; US$ ‘000s/ton of Annual Cu-Eq Production
Low Capital Intensity Versus Greenfield Development Projects(1)
Capital Intensity; US$ ‘000s/ton of Annual Cu-Eq Production
Source: SCCO filings, Wood Mackenzie.Note: (1) Includes largest 15 greenfield copper development projects by average production expected to come online between 2019 and 2022 according to Wood Mackenzie. SCCO
figures based on SCCO’s management estimates.
Brownfield Greenfield
Avg. Brownfield: $10.0Avg. Greenfield: $13.4
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$2,728
$1,945 $2,212
$3,292$3,556
$4,074
47%
38% 41% 49%
50%54%
2014 2015 2016 2017 2018 2019E
SCC EBITDA and % Margin(in US$ millions)
SCC is the Premier Copper Play• World class assets in investment grade countries.
• #2 in reserves of any company with various organic growth prospects.
- Copper production heading towards 1.8M Tons by 2026.
• Capacity to deliver projects through flexible capital structure and significant cash generation capability. Investments focused on cost competitiveness.
• Fully integrated low cost operations. Expects cash cost of $0.80 per pound by 2019.
• Outstanding dividend history.
• Experienced management with proven track record.
SCC’s Major Strengths
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Cu price $3.11 $2.50 $2.21 $2.80 $2.96 $2.96
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Appendix
Active Social Responsibility Initiatives
More than 110 social responsibility initiatives designed to integrate SCCO’s operations with local communities were implemented in 2017 with over 12,800 community volunteers participating
– These initiatives fostered positive relationships with the communities to develop optimal social conditions and promote sustainable development of the area
– Over US$60 mm invested in 2017 community development projects in education, health, productive projects and development of infrastructure and services
SCCO looks to improve communities through their “Casa Grande” model:
– 15 Community Development Centers: Open Houses for communities, where courses and workshops are held to promote development
– Participatory Diagnostics: Communities and SCCO participate carrying out development projects
– Community Committees : Integrated by volunteer leaders from local communities and members of the Company who collaborate in evaluating sustainable projects
– Seed Capital: Investment in social projects, implementing strategies to improve quality of life in communities
– Productive Projects: Projects that transform community lives by productive skills
Key Environmental Certifications in Place
4 units certified under ISO 14001:2004
Strong commitment to clean industry practices
Internationally accepted standard for the handling of environmental management plans
Source: SCCO filings.
Management Team Committed to Highest HSE Standards
15 certifications in environmental quality
Certifications evidence strong commitment to achieving highest environmental quality standards
15 certifications in clean industry
Clean Industry
EnvironmentalQuality
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Financial Results
Source: SCCO filings.Notes: (1) Average annual LME price. (2) Average LME price for the three months ended March 31, 2019. (3) 1Q19 Total Debt / Adj. EBITDA and Net Debt / Adj. EBITDA calculated
using LTM Adj. EBITDA. (4) Net Capitalization considers the sum of book value of equity and net debt.
(2)
(US$ mm unless otherwise stated) 2014 2015 2016 2017 2018 1Q19
Avg. Cu Price; US$/lb(1) $3.11 $2.50 $2.21 $2.80 $2.96 $2.82Avg. Cash Cost (C1), Net of By-Products 1.07 1.11 0.95 0.92 0.87 0.90Avg. Cash Cost (C1), Before By-Products 1.89 1.65 1.44 1.49 1.54 1.53
Income Statement SummaryNet Sales $5,788 $5,046 $5,380 $6,655 $7,097 $1,753
Cost of Sales 2,841 2,928 3,034 3,253 3,409 844SG&A 103 99 94 93 103 29Depreciation, Amortization and Depletion 445 511 647 671 674 182Exploration and Other 166 94 40 18 30 6
EBIT $2,141 $1,369 $1,564 $2,630 $2,881 $694EBIT (%) 37.0% 27.1% 29.1% 39.5% 40.6% 39.6%
Adj. EBITDA $2,728 $1,945 $2,212 $3,292 $3,556 $890Adj. EBITDA Margin (%) 47.1% 38.5% 41.1% 49.5% 50.1% 50.8%
Net Income Attrib. to SCCO $1,333 $736 $777 $729 $1,543 $388Net Income Margin (%) 23.0% 14.6% 14.4% 10.9% 21.7% 22.1%
Balance Sheet SummaryCash & Equivalents $703 $878 $597 $1,055 $1,058 $951Total Debt 4,181 5,952 5,954 5,957 5,960 5,961Net Debt 3,478 5,074 5,357 4,902 4,902 5,010
Cash Flow Statement SummaryCapital Expenditures $1,530 $1,150 $1,119 $1,024 $1,121 $173SCCO Share Buybacks 683 1,004 72 -- -- --Dividends 381 271 139 456 1,082 309
Credit MetricsNet Debt / Adj. EBITDA(3) 1.3x 2.6x 2.4x 1.5x 1.4x 1.4x
Total Debt / Adj. EBITDA(3) 1.5 3.1 2.7 1.8 1.7 1.7
Net Debt / Net Capitalization(4) 37.3% 48.9% 47.7% 44.4% 42.6% 42.8%
Total Debt / Net Capitalization(4) 41.7 52.9 50.4 49.2 47.4 47.1EBIT / Interest Expense 8.1x 4.1x 4.3x 7.4x 8.0x 7.7x
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