Southern Copper : SCC reports 1Q19 results

RESULTS

FIRST QUARTER 2019

Investor Relations:

Raul Jacob +[phone]

[e-mail]

www.southerncoppercorp.com

April 29, 2019

Southern Copper Corporation (NYSE and BVL: SCCO)

∙Copper production increased 11.6% in 1Q19 when compared with 1Q18, due to higher production at all of our operations. In Mexico, copper production increased 5.2% when compared to 1Q18, due to operating improvements at our new Buenavista's plants, SX/EW and concentrator. In Peru, production increased by 24.3% due to the successful initial ramping up of the new Toquepala concentrator.

∙1Q19 net sales were $1,753.4 million. Copper sales volume increased (+6.9%) as well as silver (+19.9%) and zinc (+2.2%). However, due to lower metal prices, net sales were 4.8% lower than 1Q18.

∙1Q19 adjusted EBITDA was $889.9 million 12.2% higher than 4Q18 adjusted EBITDA of $793.1 million. The adjusted EBITDA margin in 1Q19 was 50.8% compared with 46.8% in 4Q18.

∙1Q19 net income was $388.2 million, 17.5% lower than 1Q18 net income of $470.7 million. Net income margin in 1Q19 was 22.1% compared with 25.6% in 1Q18. These decreases were mainly due to lower sales.

∙By-productproduction: Mined silver production increased by 4.8% in 1Q19 compared with 1Q18 due to higher production at our Toquepala mine, which was partially offset by lower production at the Cuajone and La Caridad operations. Mined zinc production increased 4.6% in 1Q19, compared with 1Q18 production mainly due to higher production at the Santa Eulalia mine. Molybdenum production decreased slightly (-0.6%) due to lower production at the Toquepala mine as a result of lower grades and recoveries that was partially offset by higher production at the Buenavista and Cuajone mines.

∙Cash cost before by-productcredits decreased from $1.57 to $1.53, a 2.9% reduction. However, lower by-product revenues surpassed this cost improvement. In the 1Q19, the Company had total by-product credits of $0.62 per pound, which compares to $0.78 per pound credits in the 1Q18. Because of these variances, operating cash cost per pound of copper net of by-product revenues was $0.90 in 1Q19, compared to $0.79 in 1Q18.

∙Cash flow from operating activities was $371.3 million, a 42.9% decrease when compared with $649.8 million in

1Q18. SCC's cash flow was affected in 1Q19 by higher annual payments of profit sharing to our Peruvian work force as well as taxes in Mexico and Peru. In addition, SCC's working capital increased due to higher copper concentrate sales from the new Toquepala concentrator.

∙Capital investments in 1Q19 were $173.1 million. These investments are in line with our growth program aiming to produce 1.5 million tons of copper by 2025. Due to our aggressive investment program, in 2019, we expect to achieve maximum capacity at our new Toquepala concentrator by mid-May and to recover the production of the San Martin mine. Thereby, this year, we expect production increases of +12.5% in copper, 36% in zinc, 24% in silver, and

		FIRST QUARTER 2019 RESULTS		SOUTHERN COPPER

15% in molybdenum. At 2018 average prices, these production improvements would represent a sales increase of over $800 million.

∙The San Martin mine recovery program. We have continued working on the San Martin mine to initiate operations shortly. An investment budget of $87 million has been assigned for this purpose. Currently, the mine has 200,000 tons of ore and the concentrator has initiated production. For 2019, we expect an annual production of 14,600 tons of zinc, 2.4 million ounces of silver and 5,000 tons of copper. At current market prices, the 2019 production forecast for this unit has an estimated value of $108 million. As of March 31, 2019 the program had a total expense of $34.9 million.

∙Dividends: On April 11, 2019, the Board of Directors authorized a dividend of $0.40 per share payable on May 17, 2019, to shareholders of record at the close of business on May 03, 2019.

Mr. German Larrea, Chairman of the Board, commenting on the quarter´s results and the Company´s outlook said: "We are pleased with the initial results of the new Toquepala concentrator ramping up, which has reached 86% of capacity usage at the end of 1Q19. During this year, we will get the full benefit of our Toquepala expansion and other cost reduction programs in our financial results".

"Additionally, we appreciate the efforts of the Peruvian government in its review and assessment of the Tia Maria project. We believe that their efforts in conjunction with those of the local communities and the work of the Company team has been extremely helpful in moving this project forward, by helping develop a fair and honest assessment of the project. We expect that the construction license for its development will soon be issued, which will generate employment opportunities and contribute to the social development in Islay and the Arequipa region."

Key Financial Data

		1Q19			1Q18			Variance			4Q18			Variance
						$			%					$			%
Sales	$1,753.4		$1,841.1		$(87.7)		(4.8)%	$1,694.6		$58.8		3.5%
Cost of sales	844.1		876.5		(32.4)		(3.7)%	856.8		(12.7)		(1.5)%
Operating income	693.7		773.3		(79.6)		(10.3)%	623.5		70.2		11.3%
Net income	$388.2		$470.7		$(82.5)		(17.5)%	$293.2		$95.0		32.4%
Net income margin	22.1%		25.6%			(3.5)pp	(13.7)%	17.3%			4.8pp	27.7%
Adjusted EBITDA	889.9		939.4		(49.5)		(5.3)%	793.0		96.9		12.2%
Adjusted EBITDA margin	50.8%		51.0%			(0.2)pp	(0.4)%	46.8%			4.0pp	8.5%
Income per share	$ 0.50		$ 0.61		$ (0.11)		(18.0)%	$ 0.38		$ 0.12		31.6%
Capital investments	$173.1		$295.7		$(122.6)		(41.5)%	$289.6		$(116.5)		(40.2)%

Note: Figures in millions except per share amounts and %'s.

1Q19

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		FIRST QUARTER 2019 RESULTS		SOUTHERN COPPER

Capital Investments

Southern Copper's investment philosophy is not based on the outlook of copper prices but on the quality of the assets that we operate and develop. Throughout the years, our strong financial discipline has consistently allowed us to invest on a continuous basis in our great asset portfolio.

Peruvian Projects

Currently we have a portfolio of approved projects in Peru of $2.8 billion of which $1.6 billion have already been invested. Considering the Michiquillay ($2.5 billion) and Los Chancas ($2.8 billion) projects, our total investment program in Peru increases to $8.1 billion.

Toquepala Expansion Project - Tacna: This $1.3 billion project includes a new-state-of-the-art concentrator that will increase Toquepala´s annual copper production to 258,000 tons in 2019, a 52% production increase for this operation when compared to 2018. Through March 31, 2019, we have invested $1,240.9 million in this expansion. The construction of the project was completed and production initiated in the 4Q18. Full production is expected to be reach in the 2Q19.

Tia Maria - Arequipa: We completed all engineering and environmental requirements, including responding to the 14 observations received from the Ministry of Energy and Mines in 4Q18. We expect to receive the construction license for this 120,000 ton annual SX-EW copper greenfield project with a total capital budget of $1,400 million in the first half of 2019.

In addition to our on-going social work with the communities of the Tambo valley, the Company is currently deploying its successful labor program "Forge Your Future" (Forjando Futuro) to train 700 people from the Islay Province in 2019. After training, the participants will be eligible to apply for one of the estimated 9,000 jobs (3,600 direct and 5,400 indirect) required during the Tia Maria construction phase. We believe that the initiation of construction activities for Tia Maria will generate significant economic opportunities for the Islay province and the Arequipa region.

When in operation, we expect Tia Maria will generate a significant contribution through mining royalties and taxes from day one and will directly employ 600 workers and indirectly provide jobs to another 4,200.

Mexican Projects

Buenavista Zinc - Sonora: This project is located within the Buenavista facility and includes the development of a new concentrator to produce approximately 80,000 tons of zinc and 20,000 tons of copper per year. Currently, we have completed the basic engineering. Water concessions have been requested. The project´s budget is $413 million, and we expect to initiate operations in 2021. When completed, this new zinc concentrator will double the Company's zinc production capacity. This project will generate 3,760 jobs.

Pilares - Sonora: Located 6 kilometers from La Caridad, this project consists of an open-pit mine operation with an annual production capacity of 35,000 tons of copper in concentrates. The ore will be transported from the pit to the primary crushers of the La Caridad copper concentrator through a new 25-meter wide off-road facility for mining trucks. Environmental permit studies were presented to the government´s environmental authorities and additional land is being acquired. This project will significantly improve the over-all mineral ore grade (combining the 0.78% expected from Pilares with the 0.34% from La Caridad). The budget for Pilares is $159 million and we expect it to start producing in early 2020.

1Q19

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		FIRST QUARTER 2019 RESULTS		SOUTHERN COPPER

Conference Call

The Company's first quarter earnings conference call will be held on Monday, April 29, 2019, beginning at 10:00 AM - EST (9:00 AM Lima and Mexico City time).

To participate:

Dial-in number: 877-455-8486 in the U.S. 629-228-0768 outside the U.S.

Raul Jacob, SCC Vice President of Finance, Treasurer & CFO

Conference ID: 9647566 and "Southern Copper Corporation First Quarter 2019 Earnings Results"

1Q19

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						FIRST QUARTER 2019 RESULTS				SOUTHERN COPPER
									Average Metal Prices
					LME		COMEX
				Copper			Copper	Molybdenum			Zinc		Silver	Gold
					($/lb.)			($/lb.)	($/lb.)			($/lb.)		($/oz.)	($/oz.)
	1Q 2019	2.82			2.81		11.70		1.23	15.52	1,304.24
	1Q 2018	3.16			3.14		12.14	1.55	16.68	1,329.28
	2Q 2018	3.12			3.09		11.55	1.41	16.50	1,306.44
	3Q 2018	2.77			2.73		11.74	1.15	14.92	1,212.75
	4Q 2018	2.80			2.74		11.99	1.19	14.51	1,228.09
	Average 2018	2.96			2.93		11.86	1.33	15.65	1,269.14
	Variance: 1Q19 vs. 1Q18	(10.8)%			(10.5)%		(3.6)%	(20.6)%	(7.0)%	(1.9)%
	Variance: 1Q19 vs. 4Q18	0.7%			2.6%		(2.4)%	3.4%	7.0%	6.2%
	Source: Silver - COMEX; Gold and Zinc - LME; Molybdenum - Metals Week Dealer Oxide
									Production and Sales
											Three Months Ended
												March 31,
										2019	2018			%
			Copper (tons)
			Mined						228,629	204,815		11.6%
			3rd party concentrates			731		16,200		(95.5)%
			Total production		229,360	221,015		3.8%
			Smelted						118,516	163,668		(27.6)%
			Refined and rod	177,739	205,296		(13.4)%
			Sales						227,424	212,767		6.9%
			Molybdenum (tons)
			Mined								5,145		5,175		(0.6)%
			Sales								5,103		5,243		(2.7)%
			Zinc (tons)
			Mined								18,550		17,736		4.6%
			Refined								26,332		26,877		(2.0)%
			Sales								26,962		26,391		2.2%
			Silver (000s ounces)
			Mined								4,342		4,143		4.8%
			Refined								3,134		3,150		(0.5)%
			Sales								5,104		4,258		19.9%

1Q19

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