Southern Copper : SCC reports 2Q21 results

RESULTS

SECOND QUARTER AND SIX

MONTHS 2021

Investor Relations:

Raul Jacob Victor Pedraglio +[phone]

July 26, 2021

Southern Copper Corporation (NYSE and BVL: SCCO)

• 2Q21 net sales were $2,897.0 million, 62.3% higher than 2Q20 mainly due to higher market metal prices for all our products. Metal prices increased for copper (+81.8%, LME), molybdenum (+68.6%) zinc (+48.3%), silver (+61.9%) and gold (+6.2%). On a year- to- date basis, net sales were 54.9% higher than in 2020.

• 2Q21 net income was $932.7 million, which represented a 259.4% increase with regard to the $259.5 million registered in 2Q20. The net income margin in 2Q21 was 32.2%, versus 14.5% in 2Q20. Our aggressive capital investment program─ which has spent US$ 10.6 billion in the last 10 years─ worked alongside an improvement in market prices to drive growth in net income this quarter. Through these investments, our Company has significantly increased its production in the last decade for copper (+109%), molybdenum (+49%) and silver (+70%) while improving cost efficiency and productivity. On a YoY basis, net income was 257.7% higher than in 2020.
• 2Q21 adjusted EBITDA was $1,862.4 million, which represented an increase of 141.9% with regard to the $770.0 million registered in 2Q20. The adjusted EBITDA margin in 2Q21 was 64.3% versus 43.1% in 2Q20. Adjusted EBITDA in 6M21 was $3,416.9 million, 129.5% higher than in 6M20. The adjusted EBITDA margin in 6M21 was 62.9% vs 42.5% in 6M20.
• Copper production decreased 6.3% in 2Q21 in quarter-on-quarter terms to 237,110 tons. This result was driven by a drop in ore grades due to stripping and maintenance works that were rescheduled to this year after having been postponed in 2020 due the COVID 19 pandemic. Copper production fell 3.9% YoY to 475,512 tons. We expect copper production in 2021 to total 960,000 tons.
• By-productproduction: Mined zinc production increased 8.9% this quarter due to an uptick in production at both the Charcas mine and the San Martin mine; these results were partially offset by lower production at the Santa Barbara mine. Molybdenum production decreased (-10.8%) in 2Q21 compared to 2Q20 due to a decrease in production at both the Toquepala and Buenavista mines; these results were partially offset by higher production at Cuajone and La Caridad. Mined silver production decreased by 16.1% in 2Q21 after production fell at our IMMSA, Buenavista and Toquepala operations.
• Operating cash cost per pound of copper, including by-product revenue credits, was $0.59 in 2Q21, which represented an improvement of 11.5% compared to the $0.66 reported in 2Q20. In 6M21, the operating cash cost per pound of copper, including by-product revenue credits, was $0.66. This represented an improvement of 7.5% compared to the $0.72 reported in 6M20. These results were mainly due to an increase in by-product revenue credits, which was partially offset by an uptick in production costs.
• Cash flow from operating activities in 6M21 was $1,844.2 million, which represented an increase of 106.2% over the $894.5 million posted in 6M20. This improvement was attributable to strong cash generation at our operations, which was driven by an increase in metal prices and in cost-control efficiencies.

		SECOND QUARTER AND SIX MONTHS 2021 RESULTS		SOUTHERN COPPER

• In 2Q21, we spent $219.8 million on capital investments, which reflected a 94.0% increase with regard to 2020 and represented 23.6% of net income this quarter. In the first half of the year, we spent $452.4 million on capital investments, which represented 26.7% of net income.
• Dividends: On July 22, 2021, the Board of Directors authorized a dividend of $0.90 per share payable on August 26, 2021 for shareholders of record at the close of business on August 12, 2021.

Mr. German Larrea, Chairman of the Board, commenting on the Company´s progress and current circumstances, said: "Continuing with our pledge to support the fight against the COVID-19 pandemic, we have partnered with the Ministry of Health in Peru to provide logistics to distribute and apply COVID-19 vaccines in the regions of Arequipa, Tacna, Moquegua, Cajamarca and Apurimac. This cooperative effort, which is the Company's latest large-scale effort to combat the pandemic in both Mexico and Peru, will facilitate the process to vaccinate 424,000 people. All of these initiatives reflect the Company's steadfast commitment to protecting the health, safety and well-being of our employees, their families and the communities in our operating areas.

On July 28th, Mr. Pedro Castillo will be sworn into office as the new President of Peru. We commend the Republic of Peru's support of democracy, which has been unwavering over the last 20-plus years. At this time, the Company would like to reiterate its commitment to continue working with the government to underpin and bolster the country's economic recovery.

In 2020, Southern Peru Copper Corporation, our Peruvian Branch, was at the top of the Lima Stock Exchange's list of corporate tax contributors. We anticipate that in 2021, SPCC will also be a major tax contributor, based on projections for productivity and an upward trend in international metal prices. The Company's significant fiscal contributions have been possible under the current tax structure, which applies progressive rates for the special mining tax and royalties."

Key Financial Data

					Second Quarter							First Six Months
		2021			2020			Variance				2021			2020			Variance
						$			%							$			%
								(in millions except per share amount and %s)
Sales	$2,897.0	$1,785.4		$1,111.6			62.3%	$5,429.5	$3,505.1		$1,924.4		54.9%
Cost of sales	985.5		976.7		8.8			0.9%	1,929.3	1,932.4		-3.1		(0.2)%
Operating income	1,675.2	577.2		1098			190.2%		3,026.8	1,110.4		1,916.4		172.6%
Net income	$932.7		$259.5		$673.2			259.4%		$1,696.6	$474.3		$1,222.3		257.7%
Net income margin	32.2%	14.5%		17.7pp	122.1%	31.2%	13.5%		17.7pp	131.1%
Adjusted EBITDA	1,862.4	770.0		1,092.4			141.9%		3,416.9	1,488.8		1,928.1		129.5%
Adjusted EBITDA margin	64.3%	43.1%		21.2pp	49.2%	62.9%	42.5%		20.4pp	48.0%
Income per share	$1.21		$0.34		$0.87			255.9%	$2.19	$0.61		$1.58		259.0%
Capital investments	219.8		113.3		106.5			94.0%	452.4	214.3		238.1		111.1%

2Q21

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		SECOND QUARTER AND SIX MONTHS 2021 RESULTS		SOUTHERN COPPER

Capital Investments

Peruvian Projects

Our current portfolio for approved projects in Peru totals $2.8 billion, $1.6 billion of which has already been invested. If we include the up-and-coming Michiquillay ($2.5 billion) and Los Chancas ($2.6 billion) projects, our total investment program in Peru reflects a commitment of $7.9 billion.

Tia Maria - Arequipa: Southern Copper has been consistently working to promote the welfare of the population of the Islay province. As part of these efforts, we have implemented successful social programs in education, healthcare and productive development to improve the quality of life in the region. We have also promoted agricultural and livestock activities in the Tambo Valley and supported growth in manufacturing, fishing and tourism in Islay.

On January 7th 2021, the mayor of the Islay province (Arequipa, Peru) awarded a City Diploma to SPCC in recognition of the Company's efforts to assist the population of Islay during the COVID-19 pandemic. SPCC provided medical assistance, tests, oxygen, personal protection equipment and food stuffs to the population in the area of influence of the Tia Maria project.

We reiterate our view that the initiation of construction activities at Tia Maria will generate significant economic opportunities for the Islay province and the Arequipa region. Given the current Peruvian economic situation, it is crucial to move ahead on projects that will stimulate a sustainable growth cycle. We will make it a priority to hire local labor to fill the 9,000 jobs (3,600 direct and 5,400 indirect) that we expect to generate during Tia Maria's construction. When operating, we expect Tia Maria to directly employ 600 workers and indirectly provide jobs for another 4,200. Additionally, from day one of our operations, we will generate significant contributions to revenues in the Arequipa region via royalties and taxes.

We expect the Peruvian government to acknowledge the significant progress the project has made on the social front and the important contributions that Tia Maria will generate for Peru´s economy and, consequently, take the necessary steps to provide SCC with adequate support to initiate construction.

Mexican Projects

Buenavista Zinc - Sonora: This project is located within the Buenavista facility and includes the development of a new concentrator to produce approximately 100,000 tons of zinc and 20,000 tons of copper per year. We have completed the basic engineering study and the detailed engineering study is 94% complete. In order to continue with the project, stronger preventive measures to combat COVID-19 have been put in place. Procurement has progressed 84%. Additionally, Construction Site Works are in progress. The project has all the necessary permits and the capital budget is $413 million. As of June 30, 2021, we have invested $178.2 million in this project. We expect to initiate operations in 2023. When completed, this new facility will double the Company's zinc production capacity and provide 490 direct jobs and 1,470 indirect 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 concentrate. A new 25-meter wide off-road facility for mining trucks has been built and will be used to transport the ore from the pit to the primary crushers at the La Caridad copper concentrator. This project will significantly improve the overall 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 the project to begin production in the 1Q22. As of June 30, 2021, we have invested $75.3 million in this project.

El Pilar - Sonora: This low-capital intensity copper greenfield project is strategically located in Sonora, Mexico, approximately 45 kilometers from our Buenavista mine. Its copper oxide mineralization contains estimated proven and probable reserves of 281 million tons of ore with an average copper grade of 0.301%. We anticipate that El Pilar will operate as a conventional open-pit mine with an annual production capacity of 36,000 tons of copper cathodes. This operation will use highly cost efficient and environmentally friendly SX-EW technology. The budget for El Pilar is $310 million. . As of June 30, 2021, we have invested $2.0 million in this project. We expect production to begin in 2023 and the mine life is estimated at 13 years. The results from experimental pads in the leaching process have confirmed

2Q21

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		SECOND QUARTER AND SIX MONTHS 2021 RESULTS		SOUTHERN COPPER

adequate levels of copper recovery. The Company continues developing the project basic engineering and site environmental activities.

El Arco - Baja California: This is a world-class copper deposit located in the central part of the Baja California peninsula with ore reserves of over 2.4 billion tons with an ore grade of 0.422%; 0.3 billion tons of leach material with an ore grade of 0.288%; and 0.11 grams of gold per ton. The project includes an open-pit mine combining concentrator and SX-EW operations. Annual production is expected to total 190,000 tons of copper and 105,000 ounces of gold with an estimated capital budget of $2.9 billion. As of June 30, 2021, we have invested $63.6 million in this project. The Company has started the baseline study and is reviewing the basic engineering analysis to request the environmental impact permit. Several years back, we began to acquire the rights to all relevant mining concessions in the area; this process was completed in 2020.

Environmental, Social & Governance (ESG) Investment

Southern Peru signed an inter-institutionalcooperation agreement with the Ministry of Health of Peru that allows the Company to support the government in efforts to organize and implement 26 vaccination sites in the regions of Arequipa, Moquegua, Tacna, Cajamarca and Apurimac. The Company will donate more than USD $2.45 million to vaccinate 424 thousand-plus people over the next 2 months, which is equivalent to 40% of the population of these regions.

The aforementioned agreement was the third of three agreements signed with the government of President Sagasti to aggressively fight the pandemic. The first entailed a donation of 2,181.4 tons of medical oxygen, which was produced by the oxygen plants at our Ilo smelter to provide liquid oxygen to the southern regions of Peru. The second donated 4 oxygen plants (two of them mobile), which are currently operating in the regions of Tacna, Puno, Arequipa, Piura and Cajamarca.

Our company is committed with sourcing our operations with renewable energy. In 2020, 22% of Southern Copper Corporation's electricity came from renewable sources. We are currently evaluating options to contract an additional portion of our power demand from renewable electricity. In 2022, we expect at least 25% of our energy supply will come from renewable electricity.

The percentage of recycled water from mining operations has increased 5% over the last three years and reached 74% in 2020. This represented savings of approximately 3.5 million cubic meters of fresh water a year. The Company has made major efforts to increase the amount of water available to the nearby communities in Mexico and Peru and has rehabilitated more than 200 kilometers of irrigation canals and 400 water reservoirs. These initiatives have benefitted 20 thousand farmers and in just 5 years, the Company has invested USD $79 million in water projects for communities.

Grupo Mexico published its Sustainable Development Report 2020, which contains information on Southern Copper Corporation's progress in areas relative to sustainability and is aligned with the reporting standards of the Global Reporting Initiative (GRI) and, for the first time, also adheres to the frameworks of the Sustainability Accounting Standards Board (SASB) and the Task Force on Climate-RelatedFinancial Disclosure. The 2020 version includes a section on the SCC's response to the COVID-19pandemic and provides greater detail on issues relative to economic, governance and climate change performance.

2Q21

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		SECOND QUARTER AND SIX MONTHS 2021 RESULTS		SOUTHERN COPPER

Conference Call

The Company's second quarter earnings conference call will be held on Tuesday, July 27, 2021, beginning at 12:00 PM

• EST (11:00 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: 3395415 and "Southern Copper Corporation Second Quarter 2021 Earnings Results"

2Q21

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