Copper Production - Southern Copper Corporation
Transcripción
Copper Production - Southern Copper Corporation
SOUTHERN COPPER Overview and Highlights May, 2008 Safe Harbor Statement This presentation contains ‘‘forward-looking statements,’’ as defined by federal securities laws, with respect to our financial condition, results of operations and business, and our expectations or beliefs concerning future events. These statements include words such as, but not limited to, ‘‘expect,’’ ‘‘anticipate,’’ ‘‘believe,’’ ‘‘intend,’’ ‘‘plan,’’ ‘‘seek,’’ ‘‘forecast,’’ ‘‘estimate,’’ ‘‘continue,’’ ‘‘may,’’ ‘‘will,’’ ‘‘would,’’ ‘‘could,’’ ‘‘likely,’’ and similar expressions. These forward-looking statements reflect management’ss current expectations and assumptions regarding future events and operating and management financial performance and are based on currently available information. However, actual results are subject to risks and uncertainties, which could cause actual results to differ materially from those contained in the forward-looking statements. Many risks and uncertainties are inherent in the copper industry. Others are more specific to our operations. Additional information about risks and uncertainties that could affect our future results are contained in our SEC filings, including our reports on Forms 8-K, 10-Q, and 10-K and a registration statement on Form S-3 relating to our proposed public offering of common stock. stock 1 I. Introduction Management Presenters Presenters Title Genaro Guerrero f Executive VP and CFO Raúl Jacob f Manager of Financial Planning & IR 3 Corporate Structure 75.1% Public Float 24.9% 99.29 % SCC Peru Branch 99.95 % Minera México 4 Southern Copper Highlights Long Life Reserves and Exploration Prospects Excellent Organic Growth Projects Low Cost Fully Integrated Operations Experienced Management Team Strong Financial Performance / Investment Grade Outstanding Dividend History Strong Copper & Molybdenum Fundamentals 5 Southern Copper Business Strategy f Leverage L our world-class ld l reserves and d exploration l ti prospects – Develop portfolio of value enhancing projects f Low cost, pure copper play – Strategic investments focused on cost reduction – Increase copper production, reserves and continue exploration f Investment grade capital structure with focus on cash flow generation – Return excess capital to investors – St k repurchase Stock h program and d stock t k appreciation i ti 6 Copper Price Trends Strong g underlying y g fundamentals with p potential to change g the long-term g average of copper prices Real Copper Price Trends (US producer) (in US$1998) 1900—1933 1934—1973 1974—2002 Today1 Average: US$2.13/lb $ Average: US$1.61/lb $ Average: US$1.36/lb $ Current Price: US$3.54 $ fTechnological advances fConstruction programs fSubstitution/conservation fIncreased demand after WWII reduce Cu consumption driven by China and fEconomies of scale emerging nations reduce unit costs and fUS consumer boom fShift from manufacturing real prices to service economies fLow inventories fIndustrialization of Japan $4.50 led to rising real prices fProcessing efficiency fSupply disruptions $4.00 lowers costs fNew projects: Low ore $3.50 grades and delays US$/lb $3 00 $3.00 $2.50 $2.00 $1.50 $1.00 $0.50 $0.00 1900 33 years 1907 1914 1921 29 years 40 years 1928 1935 1942 1949 1956 1963 1970 1977 1984 1991 1998 2005 2006 2007 2008 Source: USGS, Thomson Financial Datastream Note: 1 Average as of March 31st, 2008 7 II. Overview of Operations Company Overview Mexico i Copper Reserves 1: 49.1 mmt For the LTM 2008 (as of March 31, 2008): Copper Production: 549 kt Sales: $ 6,227 M EBITDA: $ 3,850 M Cash Cost: $ -0.23 / lb. Cananea La Caridad Santa Eulalia Buenavista S Santa Barbara b El Arco San Martin Charcas San Luis Potosi Angangueo Taxco Peru #2 copper company by b reserves 2 #7 copper producer 3 Tantahuatay Key #8 copper smelter 3 Mines Smelters and Refineries Source: Company Filings Notes: 1 Copper contained in reserves based on US$1.20 per pound of copper as of December 31, 2007 2 Ranking based on companies reports where available 3 CRU Los Chancas Tia Maria Cuajone Ilo Projects T Toquepala l 9 SCC Mines Total copper production in 2007 amounted to 592 kt Cananea — Mexico La Caridad — Mexico f Copper production 1: 99 kt f Copper production 1: 125 kt – 17% of total – 21% of total – 35% SX-EW 2, 65% mill 3 – 18% SX-EW 2, 82% mill 3 f Reserves 4: 19 Mt – 39% of total f Reserves 4: 5.2 Mt – 10% of total f Silver p production: 0.8 M Oz f Molybdenum y production: p 6.2 kt f Gold production: 6.9 k Oz f Silver production: 1.9 M Oz f Gold production: 4.2 k Oz Cuajone — Peru f Copper production 1: 182 kt Toquepala — Peru f Copper production 1: 178 kt – 31% of total – 30% of total – 100% mill 3 – 21% SX-EW 2, 79% mill f Reserves 4: 9.1 Mt – 18% of total 3 f Reserves 4: 15.7 Mt – 32% of total f Molybdenum production: 3.8 kt f Molybdenum production: 6.2 kt f Silver production: 2.2 2 2 M Oz f Silver production: 2.0 2 0 M Oz f Gold production: 4.9 k Oz f Gold production: 2.4 k Oz Source: SCC 1 Production includes copper in concentrate and SX-EW cathodes 2 Solvent Extraction / Electrowinning process 3 Mill: A plant in which ore is treated and metals are recovered or prepared for smelting 4 Copper price of $1.20 / lb used to calculate reserves 10 SCC Metallurgical Complexes Three main metallurgical complexes Caridad – Mexico Ilo – Peru f Copper Smelter f Copper Smelter f Electrolytic y Copper pp Refinery y f Copper pp Refinery y f Precious Metal Refinery f Precious Metals Refinery f Rod Plant f Sulfuric Acid Plant f Sulfuric Acid Plant f Total copper smelting capacity: San Luis Potosi – Mexico f Electrolytic Zinc Refinery f Copper Smelter f Sulfuric Acid Plant – 2,200 kt per year in concentrate feed, standard equivalent of 640 thousand tons of contained copper f Total copper refinery capacity: – 580 kt per year in refined cathode f Totall precious i metals l refinery fi capacity: i – Silver: 19.4 M oz – Gold : 117 K oz f Total zinc refinery capacity: – 105 kt per year in refined zinc f Total sulfuric acid capacity: – 2,796 kt per year 11 Long Life Reserves First largest g copper pp reserves of any yp publicly y traded company p y Copper Reserves SCC Copper Reserves Sensitivity 60 42.1 40 25.6 22.9 17.3 20 16.5 10.2 N/A Annual Rep Rep. 20F $1.20 07/12/31 07/12/31 07/06/30 07/12/31 06/12/31 N/A $2.31 N/A N/A N/A $2.00 Antofagasta 20F 07/12/31 07/12/31 07/06/30 $1.20 Xstrata Rio Tinto 06/12/31 10K Anglo American Period Cu Price 10K 8.7 BHP Billiton Sourc Annual Rep Rep. SCC 0 FCX 10 CVRD-Inco 30 Codelco Copper Reserrves (Mt) 49.1 Coppe er Contained in reserrves (Mt) 50.3 50 69.9 70 42% 60 50 40 29% SEC 38.2 2007 30 20 49.1 2006 10 0 0.90 1.20 2.664 Copper prices ($/lb) Reserve Rep Rep. Annual Rep Rep. Annual Rep Rep. Source: SCC 12 Low Cost of Operations SCC’s cash cost is in the bottom q quartile of g global copper pp p producers Net Operating Cash Costs Low Cost Drivers (1) 0.6 0.44 (US$/lb) 0.4 0.18 0.2 0.16 0.03 0 -0.17 -0.23 -0.2 2003 2004 2005 2006 2007 LTM 2008 -0.4 Cash Cost per Pound Produced, excluding By-Product Credits f High quality reserves f Strong by-product by product credits (1) – molybdenum (18% of revenues) – zinc (6% of revenues) – silver (4% of revenues) – g gold & others (3% ( of revenues)) f Significant low cost SX-EW production (2) – 94 kt or 12% of copper production in 2007 f Large scale mines f Management focus on cost efficiency Cost by Elements (1) 1.80 (US$/lb) 1.50 1.28 1.40 1 01 1.01 1.20 Operating Materials 16% Maintenance 17% 0.85 0.90 Other 11% 1.48 0.74 Fuel 13% 0.60 0.30 0.00 2003 2004 Source: Southern Copper Notes: (1) Includes by-product credits. 2005 2006 2007 LTM 2008 Labor 16% Notes: (1) LTM as of March 31, 2008 (2) Solvent Extraction / Electrowinning process. Energy 27% 13 Geographic and Product Diversification SCC has broad g geographic g p and p product diversification 2007 SCC Revenue by Product 2007 SCC Revenue by Market Asia 9% Silver Other Zinc 3% 4% 6% Peru 2% Latin America 19% Europe 24% Molybdenum 18% United States 26% Copper 69% Mexico 20% 14 Experienced Management Team SCC’s team has an average g of 30 y years experience p with the Company p y f As a result of the SCC–MM merger, the management teams of both companies have been seamlessly integrated Germán Larrea Chairman of the Board Oscar González Rocha CEO SCC & President - Peru Xavier García de Q Quevedo COO SCC & President - Mexico Vidal Muhech Genaro Guerrero Armando Ortega Mario Vinageras Gabino Paez VP - Environmental VP-Finance ((CFO)) General Counsel VP - Commercial VP - Human Resources f SCC is fully compliant with the Sarbanes-Oxley Act f Strong corporate governance provisions – one class of shares – pro-rata number of independent directors (4 of 13) – Special Nominating Committee for independent directors – Audit Committee for independent accountants, and to review internal audit procedures, accounting and financial controls – independent director oversight of any potential related party transactions – Compensation and stock incentive plan committees 15 Expansion Projects Description 1st Generation Projects Tía María SX EW / Copper f LBE for Operations: 4Q - 2010 f Annual Copper Production: 120 ktpy f Estimated Capex: $934 M Toquepala Concentrator Expansion f LBE ffor O Operations: i 2011 f Annual Production: Copper = 100 ktpy; Moly = 3.1 ktpy f Estimated Capex: p $600 $ M Cuajone Concentrator Expansion f LBE for Operations: 2011 f Annual Production: Ilo Smelter Expansion f Additional Concentrates from Cuajone & Toquepala, 445 ktpy f LBE for Operations: 2011 f From 1.2 MTPY of Conc to 1.8 MTPY f Copper Prod: 325 ktpy to 490 ktpy f Estimated Capex: $150 M Ilo Copper Refinery Expansion f LBE for Operations: 2011 f Copper Production: From 280 ktpy to 360 ktpy f Estimated Capex: p $50 $ M Copper concentrate = 50 ktpy Moly = 700 tpy f Estimated Capex: $374 M Additional Production of Cu: 270 ktpy; Capex: $ 2,108 M Source: SCC LBE : Last Best Estimate 16 III. Financial Overview Financial Summary (US$ MM) Copper Price (LME) US$ per pound Income Statement: Net Revenues COGS Gross Margin G g SG&A EBITDA EBITDA Margin EBIT Interest Expense Net Income 2003 2004 2005 2006 LTM 20084 3.44 0.81 1.30 1.67 3.05 2007 3.23 $1,577 992 584 58 64 493 31% 326 117 84 $3,097 1,334 1,762 ,76 72 1,702 55% 1,482 106 982 $4,089 1,635 2,454 , 5 81 2,335 57% 2,071 109 1,400 $5,460 2,020 3,440 3, 0 88 3,316 61% 3,054 113 2,038 $6,086 2,122 3,964 3,96 98 3,766 62% 3,497 123 2,216 $6,227 2,176 4,050 ,050 99 3,850 62% 3,575 122 2,230 Balance Sheet Statement: Cash & Equivalents Total Assets $352 4,491 $710 5,319 $876 5,688 $1,023 6,376 $1,409 6,581 $1,473 6,778 Total Debt 1 Total Liabilities Total Shareholders' Equity 1,671 2,386 2,023 1,330 2,494 2,814 1,172 2,349 3,326 1,528 2,696 3,667 1,450 2,716 3,848 1,450 2,760 4,001 $65 $228 $471 $456 $316 $281 ((0.1)) 944 1,193 1,604 2,388 2,376 2.7x 4.2 0.4x 16.0 0.1x 21.4 0.2x 29.3 0.01x 30.6 -0.01X 31.6 Cash Flow Statement: Capital Expenditures 2 Free Cash Flow 3 Key Credit Ratios Net Debt / EBITDA EBITDA / Interest Expense 1 Includes short-term and long-term debt including current portion 2 Includes capitalized stripping costs until 2005 3 Free Cash Flow defined as net cash from operating activities less capital expenditures 4 LTM as of March 31, 2008 18 Solid Financial Performance Among g the highest g EBITDA margins g and strongest g leverage g ratios in the metals & mining industry Net Debt/ 2007 EBITDA (x) 2007 EBITDA Margin (%) Antofagasta 72% SCC 62% BHP Billiton FCX Anglo American 51% 46% 44% Antofagasta -0.7x SCC BHP Billiton Anglo American e ca FCX Rio Tinto 42% Xstrata CVRD - Inco 41% CVRD - Inco Xstrata 39% Rio Tinto -0.02x 0.4x 0.5x 0.7x 1.0x 2.7x 3.2x Source: SCC; Company Reports 19 Focus on Total Return to Investors Disciplined p approach pp to creating g shareholder value Current Dividend Yield1 (%) Anglo American 7.6% SCC 1.3% Rio Tinto 1.3% 0.0% In 2007, SCC paid US$2 Billi Billion 1.4% Xstrata 328% 333% Antofagasta US$6.80 per share 291% Freeport 242% BHP Billiton 218% Anglo American 0.5% 1.0% 439% Rio Tinto 1.7% Freeport 448% Xstrata 3 5% 3.5% BHP Billiton CVRD SCC 6.3% Antofagasta CVRD 3-Year Share Price Performance1 (%) 2.0% 3.0% 4.0% 5.0% 6.0% 7.0% 8.0% Source: Bloomberg; Company Filings Note: 1 Regular and special dividends declared over last twelve months by record date divided by current share price as of March 31, 2008 (SCC = US$103.83) 190% 0% 100% 200% 300% 400% 500% 1 As of March 31, 2008 20 Capital Expenditure Forecast (US$M) $1,200 $1,070 $1,085 $107 $1,000 $199 $800 $600 $471 $400 $137 $328 $500 $60 $456 $$226 $121 $316 $45 $40 $135 $200 $380 $56 $950 $116 $965 $213 $333 $112 $247 $127 $143 $230 $181 $120 $120 $120 $120 2010E 2011E $0 2005A 2006A 2007A 2008E 2009E All Other Projects f 2008- 2011 = US$ $ 2,108 , M in First Generation Development p f Source: SCC US$ 480 M in Other Equipment Replacement Investments 21 SCC Debt Amortization Schedule Millions of USD as of March 31, 2008 $1 000 $1,000 SCC is evaluating the best financing option for its projects. j t $200 $150 $56 $10 $10 $10 $10 $10 $10 2008 2009 2010 2011 2012 2013 Mitsui Yankee Bonds 2015 2028 2035 10 & 30 year Bonds 22 SOUTHERN COPPER Overview and Highlights May, 2008