Southern Copper Corporation November, 2013
0 I. Introduction
1 Management Presenters
Presenter Title
Raul Jacob Vice President of Finance & CFO
2 Safe Harbor Statement
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 Mexican 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 Grupo Mexico’s 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. Grupo Mexico 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.
3 Corporate Structure
100.0% (*) AMERICAS MINING CORPORATION 81.8% (*) Public Float
18.2% (*)
99.29 % 99.95 %
SCC Peru Branch Minera Mexico
(*) As of October, 2013 4 Copper – The Best Fundamental Story in Commodities
Solid Fundamentals Copper Consumption by Region
► Copper has the best fundamentals in the basic materials space: ― Asia represents over 60% of world demand (China=41% and could reach 45% in 5 years) ― China and EM countries will continue growing, at a lesser pace, but still substantial. ― Additional production expected by 2014-15, will be partially offset by restocking in US and Europe and ore grade decay. ― Improving view on macroeconomic concerns regarding the US and Europe. Together, they represent over 50% of world’s economy and 27% of copper demand. CRU Jan 2013 LME Copper Cash Price vs. Inventories Copper Consumption by End-use
5.00 1,000,000 Consumer Products 4.50 900,000 Transport 9% 13% 4.00 800,000 Industrial 3.50 700,000 Machinery 13% 3.00 600,000
2.50 500,000
2.00 400,000
1.50 300,000
1.00 200,000 Electrical & Electronic 0.50 100,000 Products 34% 0.00 - Construction 2-Jan-09 9-Sep-09 8-May-09 22-Jan-13 19-Jan-12 14-Jan-11 12-Jan-10 31% 25-Sep-13 20-Sep-12 16-Sep-11 15-Sep-10 24-May-13 22-May-12 17-May-11 14-May-10 5 LME COMEX shanghai LME Cash Brook Hunt Dec. 2012 Southern Copper Strengths
►Highest copper reserves of the industry
►Excellent organic growth projects
►Low cost, fully integrated operations
►Experienced management team
►Strong financial performance / investment grade
►Outstanding dividend history
►Good long-term copper & molybdenum fundamentals
6 II. Overview of Operations
7 Company Overview
1 Copper Reserves : 67.1 mmt Mexico
Buenavista 2013 Estimates: Santa Eulalia La Caridad Copper Production: 630 kt Santa Barbara San Martin Sales: $ 5.8 B Charcas San Luis Potosi EBITDA: $ 2.9 B Taxco 50% of Sales Peru 9M - 2013 Cash Cost: $ 0.99/lb.
#1 copper company by reserves 2 Key Copper open pit mines #5 copper producer 3 Underground mines Smelters and Refineries #11 copper smelter and refinery 3
Cuajone
Source: Company Filings Ilo Toquepala Notes: 1 Copper contained in reserves based on US$2.00 per pound of copper as of December 31, 2012 2 Based on available companies reports 3 Wood Mackenzie Limited 2012 8 World’s Largest Copper Reserves
Copper Reserves as Reported SCC Highlights
80 ► #1 mine life among copper producers 70 67.1 63.6 ► #5 world’s largest producer of mined copper 60 ► Highly diversified geographical presence 50 41.3 ► Four large-scale open-pit mines 40 34.5 30 23.3 22.2 21.5
Copper Reserves (Mt) Reserves Copper 20 Mine Life 11.0 10.6 10 120 0 105 100 SCC VALE Xstrata
Anglo 80 Codelco Freeport Rio TintoRio American BHP Billiton Antofagasta 60
Source 10K Annual Rep. 10K 20F Annual Rep. Reserve20F Rep. Annual 20F Rep. 40 34 34 PeriodDec.31, 2012 Dec.31, 2012 Dec.31, 2012 Jun.30, 2012 Dec.31, 2012 Dec. 31, 2012 Dec. 31, 2012 Dec. 31, 2012 Dec. 31, 2012 25 21 21 18 Cu Price $2.00 N/A $2.00 $3.26N/A N/AN/A $3.67 $2.75 20
0 SCC Anglo Codelco Freeport BHP Rio Tinto Xstrata American Billiton
9 Geographic Footprint & Product Diversification
9M 2013 Revenue by Product 9M 2013 Revenue by Market
Mexico Acid Other 3% 28% Zinc 3% Other Molybdenum 3% 2% 6% Peru 5%
Silver Chile 7% 6%
Brasil United States 8% 20% Copper 78%
Asia 14% Europe 17%
10 Low Cost Operations
Cash Cost per Pound of Copper Produced Low Cost Drivers Net of ByNet By-By---ProductsProductsProductsProducts
2.0 Fully integrated low cost operations
1.5 World class assets 1.09 0.91 0.98 0.99 1.0 Significant SX-EW production 0.71 (US$/lb) 0.52 Strong by-product credits 0.5 0.28 Management focus on cost efficiency 0.0
2010 2011 2012 1Q13 2Q13 3Q13 9M13 Operating Cash Cost per Pound of Copper CostCostCostStructureStructureStructure (1)(1)(1) ProducedProducedProduced
Other Operating 2.50 15% Materials 18% 2.05 1.94 2.00 1.92 1.76 1.75 1.79 1.58 Maintenance Fuel 16% 1.50 15% (US$/lb)
1.00
Labor 0.50 16% Power 2010 2011 2012 1Q13 2Q13 3Q13 9M13 20% (1) 9M 2013 11 III. Financial Overview
12 SCC Financial Summary
(US$ MM) 2011 2012 LTM 2013 9M 2013
Copper Price (LME) US$ per pound 4.00 3.61 3.41 3.35 Income Statement: Net Revenues $6,819 $6,669 $6,069 $4,418 EBITDA 3,910 3,773 3,116 2,221 EBITDA Margin 57% 57% 51% 50% Net Income 2,336 1,935 1,744 1,212 Dividends paid per share 2.43 4.06 3.31 0.56 Balance Sheet Statement: Cash & Equivalents $848 $2,459 $1,795 $1,795 Total Assets 8,063 10,384 10,936 10,936 Total Debt 1 2,746 4,214 4,210 4,210 Total Liabilities 4,026 5,595 5,526 5,526 Total Shareholders' Equity 4,015 4,765 5,383 5,383 Cash Flow Statement: Capital Expenditures $613 $1,052 $1,576 $1,190 Free Cash Flow 2 1,467 952 7 177 Dividends paid to common shareholders 2,080 3,140 2,799 473
Total Debt / EBITDA 0.7x 1.1x 0.8x 1.4x
13 Solid Financial Performance
Top Tier Margins and Conservative Leverage for Increased Financial Flexibility
9M 2013 EBITDA Margin (%)Margin (%) 9M 2013 Total Debt / EBITDA (x(x)))) No Amortizations UntilUntilUntil 201520152015
1 1 2013 $5 SCC 50% Freeport 0.57
2 2 2015 $200 Antofagasta 46% Antofagasta 0.62
2 2 2020 $400 Vale 45% BHP 1.24
1 2 2022 $300 BHP 43% SCC 1.42
2 2 2028 $51 Rio Tinto 37% Vale 1.47
2 2035 $1,000 1 Rio Tinto Freeport 35% 1.65
2 2 2040 $1,100 Anglo 1.81 Anglo 29%
2 Glencore 2 7.26 2042 $1,200 GlencoreXstrata 20% Xstrata
Source: Company Reports Source: Company Reports 1 9M 2013 1 9M 2013 2 1H 2013 2 1H 2013 14 Investment Program to Significantly Increase Production Board approved Other projects
2013-14 2015-16 2016-17 2018 and on Buenavista Molybdenum Plant 3Q13 - Buenavista: Buenavista Zinc Conc. 2016 - Los Chancas. - $1.2B - 100K $38M - 2K Tons Mo - Concentrator Plant 1H15 - $1.4B - $332M 16K Tons Cu - 55K Tons Cu, 7.5K Tons Mo 188K Tons Cu, 2.6K Tons Mo Tons Zn Cuajone: Variable Cut-off Grade + HPGR - Mine equipment $505M Los Chalchihuites 2016 - Cuajone Concentrator 2H13 - $158M - 22K Tons Cu, $140M, 26K Tons Cu Expansion - $500M – 50K 0.7K Tons Mo Toquepala Concentrator Expansion 4Q15 - $1.05B - 100K Tons Cu , 3.1K El Arco Conc & SX/EW 2017 - Tons Cu, 0.7 Tons Mo $2.6B – 190K Tons Cu, 105K Buenavista SX/EW III 2Q14 - $444M Tons Mo Oz Au Ilo Smelter & Refinery 120K Tons Cu Angangueo Polymetallic Mine – 1H15 - Expansion $175M - 10.4K Tons Cu, 7K Tons Zn, 4K Empalme Cu Smelter 2017 - Tons Pb, 2.4M Oz Ag $812M – 350K Tons Cu Cont. Pilares Cu Mine 1H15 - $189M - 40K Copper Refinery 2017 - $318M Tons Cu (under review) 350K Tons Cu Cont. Tía María SX/EW 4Q16 – $1.2B - 120K Zinc Refinery - $600M – 120K Tons Cu Tons Zn
201320132013-2013---20172017 CapexCapexCapexProgram Overview (MM) 201320132013-2013---20172017 Copper Production Forecast (‘000 MT Cu)
2,500 2,300 1,200 1,145 2,250 Estimated Capex = $6.2B 1,060 2,000 1,000 859 1,750 1,600 800 1,500 1,400 670 630 1,250 600 1,000 400 750 600 500 250 200 250 - 0 15 Source: SCC 2013 2014 2015 2016 2017 2013 2014 2015 2016 2017 New Molybdenum Plant in Mexico
16 SX EW III Mexico – Solvent Extraction Area
17 Mine in Buenavista Mexico
18 New Copper Concentrator in Buenavista
19 HPGR Plant in Peru - Cuajone
20 Technological Improvement Project - Toquepala
21 Ilo 3 Sub Electrical Station
22 SCC’s Major Strengths
SCC is the Premier Copper Play • WorldWorld class assets in investment grade countries • ##11 in reserves of any company with various exploration prospects - Increasing copper production • Capacity to deliver projects through flexible capitalcapital structure and significant cash generation capability • FFullyully integrated low cost operations - Strategic investments focused on cost competitiveness • OOutstandingutstanding dividend history • EExperiencedxperienced management with proven track record SCC EBITDA and % Margin (in US$ millions) $3,910 $3,773
$2,865 $2,529 $1,814 52.1% 48.6% 56.0% 57.0% 57.0%
2008 2009 2010 2011 2012 Cu price $3.16 $2.34 $3.42 $4.00 $3.61 23 Southern Copper Corporation November, 2013
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