RESULTS

THIRD QUARTER AND NINE MONTHS 2016

Investor Relations:

Raul Jacob (602) 264-1375

southerncopper@southernperu.com.pe www.southerncoppercorp.com

October 27, 2016 - Southern Copper Corporation (NYSE and BVL: SCCO)

  • Net Sales in the third quarter 2016 ("3Q16") were $1,400.7 million 23.6% higher than 3Q15 net sales of $1,133.6 million. This result was due to a 30.5% increase in copper sales volume, resulting from increased productive capacity at the Buenavista mine, which was partially affected by a 10% reduction in copper price.

  • EBITDA in 3Q16 was $546.5 million, 29.7% higher than the $421.2 million in 3Q15. The margin increased from 37.2% to 39.0%.
  • Net income in 3Q16 was $197.6 million (14.1% of net sales), 100.8% higher than the net income of $98.4 million (8.7% of net sales) in the 3Q15. The increase was mainly the result of the additional sales volume and lower unit production cost at the Buenavista mine.
  • Copper mine production increased 25% in 3Q16 to 224,869 tons from 179,892 tons in 3Q15, mainly as a result of a 72.8% increase in production at the Buenavista mine in Sonora, Mexico, which increased production by 47,987 tons. With this quarter's production, we reached a new nine-month production record of 672,372 tons, an increase of 25.3% compared with the same period of 2015.
  • By-product production: Mined silver production increased by 20% to 4.0 million ounces in 3Q16 compared to 3.3 million ounces in 3Q15 mainly due to higher production at the Buenavista mine. Mined zinc production was 18,851 tons in the 3Q16, 15.7% higher than 3Q15 production as the Charcas and Santa Eulalia mines have solved operational issues that affected production in the prior year. Mined molybdenum production decreased by 2.8% to 5,581 tons in 3Q16 from 5,739 tons in 3Q15 due to lower ore grades at our Peruvian operations. In the nine months period ("9M16"), mined silver production increased 24.3% and mined zinc production increased 25.1% compared with the nine months of 2015.
  • Operating cash cost per pound of copper, including by-product credits, was $0.95 in 3Q16, a decrease of 13.1% compared to 3Q15. Cash cost per pound of copper before by-products credits was $1.49 in 3Q16 compared to $1.58 in 3Q15. This cost decrease was the result of the completion of the first stage of our investment program and cost savings initiatives which resulted in 4.0% lower administrative costs.
  • Capital investments were $840.5 million for the 9M16, almost the same amount invested in 9M15, and represented 139% of net income. In 2016, we continue the development of our investment program to increase copper production capacity to 1.2 million tons or 90% higher from our 2013 production level of 617,000 tons. For 2016 we expect to produce 905,600 copper tons.
  • Dividends: On October 20, 2016, the Board of Directors authorized a dividend of $0.05 per share payable on November 29, 2016, to shareholders of record at the close of business on November 9, 2016.

Commenting on the Company's results and outlook, Mr. German Larrea, Chairman of the Board, said "In the third quarter of 2016 we continue receiving the benefit of our new Buenavista concentrator, which operates at full capacity, while our investment program at the Toquepala mine is moving forward on schedule. We produced 672,372 tons of copper in the nine months of 2016, a new Company record for a nine-month period.

Third Quarter

Nine Months

2016

2015

Variance

2016

2015

Variance

$

%

$

%

(in millions except per share amount and %s)

Our investment program to optimize Company production capacity has continued through the current down-cycle in the metals market with accumulated investments of $5.2 billion since 2013. These investments and other management actions are improving the Company performance through increased production and cost savings. Year to date, these improvements are reflected in a 25.3% increase in copper production, a 24.3% increase in silver production and a 12.3% reduction in our operating cash cost before by-product credit. We believe that as we approach the metals market upward cycle, our investment program will further enhance the return to stakeholders."

Sales

$1,400.7

$1,133.6

$ 267.1

23.6%

$3,980.8

$3,791.3

$ 189.5

5.0%

Cost of sales

831.4

670.8

160.6

23.9%

2,309.9

2,057.4

252.5

12.3%

Operating income

362.4

286.9

75.5

26.3%

1,093.7

1,227.0

(133.3)

(10.9)%

EBITDA

546.5

421.2

125.3

29.7%

1,582.9

1,614.7

(31.8)

(2.0)%

EBITDA margin

39.0%

37.2%

1.8pp

4.8%

39.8%

42.6%

(2.8)pp

(6.6)%

Net income

$ 197.6

$ 98.4

$ 99.2

100.8%

$ 604.6

$ 675.6

$ (71.0)

(10.5)%

Net income margin

14.1%

8.7%

5.4pp

62.5%

15.2%

17.8%

(2.6)pp

(14.8)%

Income per share

$ 0.26

$ 0.12

$ 0.14

116.7%

$ 0.78

$ 0.85

$ (0.07)

(8.2)%

Capital investments

$ 275.6

$ 316.2

$ (40.6)

(12.8)%

$ 840.5

$ 845.9

$ (5.4)

(0.6)%

El Pilar acquisition

$ -

$ 100.4

$(100.4)

(100)%

$ -

$ 100.4

$(100.4)

(100)%

Capital Investments

Mexican Projects

Buenavista Projects - Sonora: Of the $3.5 billion of this investment program, the Company has already invested $3.25 billion. The new concentrator started operations in September 2015 and it is now running at 105% of its design capacity. We are expecting to increase Buenavista production by 200,000 tons to produce 460,000 tons of copper in 2016 and 500,000 tons in 2017. We also expect to increase our Buenavista molybdenum production to a capacity of 4,600 tons per year. Crushing, Conveying and Spreading System for Leachable Ore (Quebalix IV): This project's main objective is to reduce processing time as well as mining and hauling costs. It will also increase production by improving SX-EW copper recovery. It has a crushing and conveying capacity of 80 million tons per year. The plant is already in its testing and commissioning phase expecting to reach full capacity by 4Q16. As of September 30, 2016, the project has a 99% progress with an investment of $296.9 million out of the approved capital budget of $340 million.

Excluding the almost completed Quebalix IV project and some minor infrastructure facilities, all the other facilities of this program are currently operating. The Buenavista program is being finished on time and below our budget.

Peruvian Projects

Toquepala Expansion Project - Tacna: This project includes a new-state-of-the-art concentrator which will increase annual production capacity by 100,000 tons of copper to 235,000 tons in 2018, and will also increase molybdenum production by 3,100 tons at an estimated capital cost of $1.2 billion. Through September 30, 2016, we have invested

$476.6 million in the project. The project is expected to be completed by the 2Q18.

Toquepala High Pressure Grinding Roll (HPGR) system: The main objective of this project is to ensure that our existing concentrator will operate at its maximum milling capacity of 60,000 tons per day, even with an increase of the ore material hardness index. Additionally, recoveries will be improved and production enhanced with a better ore crushing. The budget for this project is $40 million and we have invested $18.1 million as of September 30, 2016. It is expected to be completed by the 4Q17. Cuajone´s Heavy Mineral Management Optimizing Project - Moquegua: The project consists of installing a primary crusher at the Cuajone mine pit with a conveyor system for moving the ore to the concentrator. The project aims to optimize the hauling process by replacing rail haulage, thereby reducing operating and maintenance costs as well as the environmental impact of the Cuajone mine. The crusher will have a processing capacity of 43.8 million tons per year. The main components, including the crusher and the 7 kilometer overland conveyor belt, have been acquired and we have started excavations and civil work. As of September 30, 2016, we have invested $112.9 million in this project out of the approved capital budget of $215.5 million. The project is expected to be completed by the 2Q17. The Cuajone tailing thickeners project at the concentrator will replace two of the three existing thickeners with a new hi-rate thickener. The purpose is to streamline the concentrator flotation process and improve water recovery efficiency, increasing the tailings solids content from 54% to 61%, thereby reducing fresh water consumption and replacing it with recovered water. As of September 30, 2016, we are continuing with the engineering and procurement process. We have invested $7.7 million in this project out of the approved capital budget of $30 million, and we expect it to be completed by the 2Q17. Conference Call

The Company's third quarter and nine months earnings conference call will be held on Friday, October 28, 2016, beginning at 11:30 AM - EST (10:30 AM Lima and Mexico City time).

To participate:

Dial-in number: 888-771-4371 in the U.S.

847-585-4405 outside the U.S.

Raul Jacob, SCC Vice President of Finance & CFO

Conference ID: 43688519 and "Southern Copper Corporation Third Quarter 2016 Earnings Results"

Average Metal Prices

LME

Copper ($/lb.)

COMEX

Copper ($/lb.)

Molybdenum ($/lb.)

Zinc ($/lb.)

Silver ($/oz.)

Gold ($/oz.)

1Q 2016

2.12

2.11

5.27

0.76

14.87

1,181.21

2Q 2016

2.15

2.13

6.89

0.87

16.83

1,259.36

3Q 2016

2.17

2.16

6.94

1.02

19.59

1,334.82

9M 2016

2.14

2.13

6.37

0.88

17.10

1,258.46

1Q 2015

2.64

2.66

8.41

0.94

16.70

1,219.22

2Q 2015

2.75

2.77

7.45

1.00

16.38

1,192.82

3Q 2015

2.38

2.40

5.75

0.84

14.87

1,124.01

4Q 2015

2.22

2.20

4.75

0.73

14.75

1,104.40

9M 2015

2.59

2.61

7.20

0.93

15.99

1,178.69

Average 2015

2.50

2.51

6.59

0.88

15.68

1,160.11

Variance: 3Q16 vs. 3Q15

(8.8)%

(10.0)%

20.7%

21.4%

31.7%

18.8%

Variance: 3Q16 vs. 2Q16

0.9%

1.4%

0.7%

17.2%

16.4%

6.0%

Variance: 9M16 vs. 9M15

(17.4)%

(18.4)%

(11.5)%

(5.4)%

6.9%

6.8%

Source: Silver - COMEX; Gold and Zinc - LME; Molybdenum - Metals Week Dealer Oxide

Production and Sales

Three Months Ended September 30,

Nine Months Ended September 30,

2016

2015

%

2016

2015

%

Copper (tons)

Mined

224,869

179,892

25.0%

672,372

536,593

25.3%

3rd party concentrate

7,901

5,101

54.9%

17,685

10,566

67.4%

Total production

232,770

184,993

25.8%

690,057

547,159

26.1%

Smelted

159,933

145,887

9.6%

462,133

434,513

6.4%

Refined and Rod

216,163

197,559

9.4.%

636,845

596,237

6.8%

Sales

229,142

175,540

30.5%

662,228

528,990

25.2%

Molybdenum (tons)

Mined

5,581

5,739

(2.8)%

16,456

17,354

(5.2)%

Sales

5,561

5,621

(1.1)%

16,453

17,159

(4.1)%

Zinc (tons)

Mined

18,851

16,297

15.7%

56,874

45,471

25.1%

Refined

25,362

21,459

18.2%

78,656

71,487

10.0%

Sales

24,495

21,831

12.2%

77,817

72,875

6.8%

Silver (000s ounces)

Mined

3,975

3,314

20.0%

12,097

9,730

24.3%

Refined

3,578

3,490

2.5%

11,403

9,761

16.8%

Sales

4,413

3,633

21.5%

12,661

10,209

24.0%

Southern Copper Corporation published this content on 27 October 2016 and is solely responsible for the information contained herein.
Distributed by Public, unedited and unaltered, on 27 October 2016 23:51:02 UTC.

Original documenthttp://www.southernperu.com/ENG/invrel/INFDLPressRelease/pr161027.pdf

Public permalinkhttp://www.publicnow.com/view/AAF8C8F7DAF18738F82EA11545FF2FB0D718C552