Release Date: April 25, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Southern Copper Corp (NYSE:SCCO) reported a 20% increase in net sales for the first quarter of 2025, reaching $3 billion.
• Copper production remained stable at 240,226 tons, with positive results from Buena Vista SXCW cattle production and Toquepala concentrate production.
• Molybdenum production rose 9% in the first quarter, driven by higher ore rates at Toquepala, Caridad, and Buena Vista mines.
• The company expects to produce 968,200 tons of copper in 2025, a slight increase from the previous plan.
• Southern Copper Corp (NYSE:SCCO) maintained a competitive cash cost of $0.77 per pound of copper, a 21% reduction from the previous quarter.

Negative Points

• Copper production at La Caridad decreased due to a drop in ore grades and recovery rates.
• Total operating costs and expenses increased by 12% compared to the first quarter of 2024, driven by higher inventory consumption and other material costs.
• Refined zinc production dropped 11% in the first quarter compared to the same period in 2024.
• The company faces challenges with illegal miners at the Los Chankcas project, impacting project development.
• Concerns about a potential trade war between the US and China could negatively impact global copper demand.

Q & A Highlights

• Warning! GuruFocus has detected 3 Warning Sign with OSTO:CCC.

Q: How should we think about cash costs evolving for the rest of the year, and what was the reasoning behind the increase in the proportion of the share dividend? A: Raul Jacob, CFO: We are prudent in managing cash flow, balancing operational funding and shareholder returns. The first quarter saw higher tax payments, impacting cash flow, but this is not expected to recur in the rest of the year. We anticipate cash costs to remain in the range of $0.75 to $0.80 per pound of copper for 2025, assuming stable byproduct prices.

Q: Can you provide details on the capital expenditure for Tia Maria and other projects? A: Raul Jacob, CFO: For Tia Maria, we expect to spend under $200 million in 2025, $980 million in 2026, and $460 million in 2027. Other projects like Michiquillay and Los Chancas will see increased spending as they progress from exploration to construction. Our forecasted capital expenditure is $1.5 billion for 2025, increasing to $2.3 billion in 2026 and $2.7 billion in 2027.

Q: How flexible are you in selling more copper concentrate instead of refined copper given current market conditions? A: Raul Jacob, CFO: We must comply with contracts, which are over 70% based on refined copper. While TCRCs are favorable for concentrate producers, our smelters are competitive, and we see minimal difference between selling concentrates and refined copper. Our focus remains on fulfilling contracts and delivering to our industrial customer base.

Q: What is the status of the Tia Maria project in terms of community acceptance and potential protests? A: Raul Jacob, CFO: The Tia Maria project has strong local support, with only a small group of protesters. The community is largely in favor, recognizing the project's benefits. We are working closely with local stakeholders to ensure smooth progress.

Q: How does Southern Copper plan to respond to potential tariffs on copper imports to the US? A: Raul Jacob, CFO: If tariffs are imposed, we would reassign production to other markets to mitigate impact. We are hopeful that the US will continue to recognize copper's importance and maintain zero duties on imports.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.