Q1 2020 Earnings Call
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Ladies and gentlemen, thank you for standing by your conference call will begin momentarily. Thank you for your patience and please continues to standby again your conference call will begin on entirely thank you.
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Sure.
Good morning, and welcome to Southern Copper Corporation first quarter 2020 results conference call with this morning, we have southern Copper Corporation. They said about with Jacob Vice President Finance stretch your friends to eat CFO.
I will discuss the results of the company for the first quarter Twentytwenty, that's why I listen to answer any questions. You may have the information discussed on today's call may include forward looking statements regarding the company's results and prospects, which are subject to risks and uncertainties actual results may differ.
Materially and the company cautioned not to place undue reliance on these forward looking statements.
Southern Copper Corporation undertakes no obligation to publicly update or revise any forward looking statements, whether I thought we sold off new information future events or otherwise always told I expect that stands for U.S. debt now I will pass the call to missing I would say go.
Thank you very much grooming are good morning, everyone welcome to sell them copper first Gordon.
<unk> results conference call.
Okay breathing would need to these corporate army, they're all Scotland public or true Southern Copper's C O on board member.
Got it have you got to figure out if you will also aboard me.
Before we go to the need to cross border. Let me first express my best wishes for you and your loved ones. One one indeed difficult time said were crazy pace.
Heap Leach school, we will begin with an update somebody buys the games Big Colby.
Team pending and its impact in our operations.
I would view the border markets on southern copper skew results related to production. So you.
Operating costs.
Sure we're supposed to kind of expansion projects after that we'll open the session for place.
It's hard for games, the coldest making freedom.
Taking proper care report personnel, that's always been Burlington Perkins well work company.
I come from thing to Cobi 19, pandemic the conference, where we operate sober copper containers in French operations in compliance with local emergency measures.
That's you know scalding 19.
I think there and then.
Copper implemented bigger Regal hygiene got some things from Probables, Oh, it's facilities to protect their health and welfare up its employees or find many of the neighborhood.
These statements from Barman Cold, Turkey has made it clear that essentially kind of bigger CVP must compete.
He called me in the team South American team.
Industrial mine, which is closely linked chemicals in construction industry.
Good training requirements are flexible hospital medical infrastructure.
For the manufacturing will help related supply and technologically.
These industries are indispensable.
To strengthen the infrastructure manufacturing logistics support global supply chains. They could do you still see shopping industrial mining assets supplier you materials, such as steel copper.
Coal coal Subaru think me, helping the nice for the years gone about Mexico.
These countries.
Cobiz 19 through social dispensing and stay at home research I recognize that the doctor mining indispensable Slobogin's world fuel supply chain for potential problems to fight dependent.
Corporate indispensible for Goodman, fucked, remote, especially like cables.
Our to produce high voltage electrical installation, but to play like took about where to look I mean.
Hi, Good goes that's blackson.
Indeed quite the same show for the money approximately electronic components required to generate turns me on these two good electrical power <unk> urban centers, electrical and electronic copper component.
Our old something to sorry, well, maybe kind of wouldn't them on a fine.
So computer hardware <unk> data transmission <unk> just on board.
Copper you told her required surfaces to remove bars is some bacteria, which make it essentially for the production ramping water I never conditioning says.
Chemical industries with Dermatological Prostacyclins proved to be.
Vital department to fight against the public Mike pandemic affecting the war.
Given the nature of 19 operations was on how you feel can man.
That's the thing for me remote locations and Weve mandatory you personally let's see if we can you be easier people names on compliance Cobiz multipurpose these measures such as the FICO isolation that access control.
I feel mine uses advanced unreliable machinery.
No required high speed pick a concentration among employees in many cases work personally feel there.
Opinion distance distances, so more than 100 meter from their core co workers.
The company develop Riegelwood Cobiz 19, emergency protocols, and only 40% called the Labor force mix equal or about 6300 employees are currently working on site under strict safety measures remain in workforce 8751 fleet.
Oh, working from home, including all hard which can be viewed was due to age.
Why are made it got conditions for the group <unk> operations.
3500 employees from 39% worked pools are working on site understood.
Sure.
Why is the remaining 5468 employees are working from home for we see ASCII.
It should be no got to be.
Well be happy not known cases, so called my confusion, among our where employees. If I were my new facility Nicky Cool I'm sorry.
It's always nice thing emerging cheaper cool half reports preventative measures such as you can fix.
Let me kind of monetary before work going on Sunday I cannot work area I respect for social this.
We have also restricted access to construct those buyers I know your friendship personnel.
Let's move people actually leaving workforce exposure.
Golden Monkey, such a troubled restrictions.
The face to face meeting or Bourgeon Brickell, I'm, Washington, that's where the execution older health safety and social distance measures you sure by governmental choice.
From the beginning of the Cobiz 19 pandemic self imposed for high speed limit its strong prevention measures to protect built up its workers their family and there can be.
For this purpose the company has improved a bunch of $11.2 million.
The nations and general it's important for regional they do on me.
That's a wait and comparing it we did funding capital needed, maybe got supply and builds and something that kind of company. Neither for reading supports the hospitals in their communities, where we offer.
So no. We haven't stopped you can find better you company called property sure temporary funded three facilities for people for since inception.
Burberry, Spiritthree BP, who require isolation sport, Missouri, most because I don't care.
Well also been they'd be over 200, something I principal personal protection equipment to me, because Oh, I'm, sorry, 30000 hygiene keep slower workers on the potential irrational.
Including General information, that's you know about different then.
Along with them to be up also when they cleaning or personal protection with me.
Members of the National and part of Mexico, Ondeck to police car.
Additionally, we're hoping vulnerable and de Vito photography.
Oh, disabling personal I'm pregnant woman by connecting more than 30000 key companion food packaging all right.
In addition, there both arrangement airports, we have installed more than [laughter] workable thing.
The peak areas of the community more just reinforce presented on wash.
Moreover, endorse the state of commercial we got offer for 350 sports schools run description or workshops on line.
I'm over 58000 Beardsley.
Maybe to start being watched by 3700 to squeeze from schools is phones for like I worked.
Additionally, well so our community care third we are for free Medicon psychological unemployment constitutes 24 hours city.
Oh, there's always focus on the copper market the core of our.
Hopefully.
During the first quarter. This year he loved them, it's an exchange copper price decrease from an average of going up from 82 cents per pounds in the first quarter 2019 doubled or something you see.
Since per pound studies that 9.2% reduction.
No they werent seeing prices seem to reach.
From 20 to 30 per pound today, it's about 33.
That's a reflection won't be impactful cobiz 19 prices on the demand on them copper supply.
The words don't see experiencing the public hill financial and economic impact Cobiz, Nike and Tim.
See piece affecting both supply and demand at this point piece, it's difficult to assist.
For the picked up this crisis in the copper market vitamin on them copper price.
Let me see nothing abnormal in here, we expect to have seasonal.
Upper inventories increased about 200 to 250000 pounds in the first quarter over the year.
Turning to your 15, D., so China and the winter impact demand at the northern things.
This year, we have to Cokemaking outbreak, that's an additional one factor affecting copper demand and supply I know, obviously copper price.
At the end of 2019 copper demand for refined copper, what's his committees up 23.6 million phones.
Oh I'm draw on inventory studies that each of the lump them with of exchange comics, and Shanghai warehouses, and they make them bonded warehouses.
Doug that number of inventories through some of those were 599000 phones.
Hi, Dimple February this year, they did you inventories warehouses.
Nine tons and tons and tons and tons or 3000, 300000 318000 from higher Sunday inventories have you have left here.
Last Friday April 24.
Well what had been for was working mate 975000 tones.
356000 tons over to closing off 2019, not a reliable they will mark the increase of yen forever.
We believe these reflects dimensional seasonal effect of about <unk>.
The effect of about 250000 tons due to Chinese new year under winter in fact, I mentioned, that's where the additional market the surplus created by the Cobiz Nike pending.
Almost year, we expect additional inventory, we partially gifts or through the rest of the you.
For 2020, if it's difficult to estimate Wendy's lead happen, where we are seeing that much weaker demand and next year.
That's helpful from southern Coppers production for the past quarter.
Oh, 739.4% support assays in the first quarter 2000.
Corporate production increased by 5.8% to 241967 pounds.
First quarter.
Personally I'm wondering can you just thousand six I'm thinking nine pounds, the first quarter last year.
It was principally due to higher production on our proven.
Okay Pablo mine production increased by 14.5%.
The result of additional copper production will 8574 phones from the new concentrator Hankla Horny mine production increased by 23.2% due to higher ore grades and recoveries.
Nick.
Copper production lighting, we like 1.4%.
When compared to last year's first quarter, mainly due to lower production of the were not least operations.
That's a result of lower ore grades. This effect was partially offset by higher production like I work Im sorry, do need that increase would prefer production by 35% her slipped up the restoration work to somewhere team mine the bridge.
Automotive to me it represented 7.3% off the company's faced by the first quarter 2020.
It's close to your were first like problem.
Molybdenum prices averaged nine going up from 50 seat.
Thanks for pound ending the quarter, which compares with $11.70 per pound in the first quarter of 2019, an 18.3% victories.
Well listen in wind production increased by 39.7% the first quarter 2020, compared with the first quarter of left here. She was principally due to significantly higher production that they'll work pocket been a mine. We haven't you almost have been line. My plan is starting in the second quarter.
For 2019, and I suffer so that the toquepala mine increased production by quite a bit an 80% or in the first quarter up this year.
Oh, well these blends produced 990 treat tones of a new molybdenum production.
And I see began operation if one of last year.
We also have to do the benefits of a much higher production will depend on what we're holding which increases the ER molybdenum production by 42.6% you also to higher grades.
Super represented 5.1% off or things like the first quarter of 2020 with an average price. So 16 go down from 87 cents per account in the quarter I'm, 8.7% entry from the first quarter last year Supernus compete our second type.
Mine silver production increased by 21.6% during the first quarter.
From you know this year from are you, saying from the first quarter of 2018 observers local fire production with all our operations, particularly as you have even though the underground conflicts a mindset, we have which increases its production by 35.7% due to.
Strong production at the time Murphy mine.
So my team approximately.
607000 ounces into first quarter.
See emphasis.
In addition, what's how does the book trying to put on mine, having kids its production by 16.3% in children.
That was 128000 tones, well Ah Onez Twozs also seubert somebody new concentrator.
That's what a higher product you want they would not be some mine.
That increases its production by 13.3% due to higher tweak some recalls.
We're seeing it represents a 3.8% the forward satisfied you. The Fourkscore. These you with an average price of 97 cents per pound in the quarter.
<unk> decreased 21.1 person from first quarter last year.
I think buying for Berkshire increased by 3.8%.
91263 phone the first quarter of 2020.
Huh.
Mainly due to 200.
2851 cents of new production coming from December 39, that's where left increased production to Spartacus mine have increased its production by 9.5%.
On top of hot or whatever that also increased production by 7.2 person you too.
Operations plus the summer team.
<unk> increased a.
What were partially offset by the come through longer mine production reduction but.
Did you use its production by 90, we're saying how do we not yet regarding these operations. The company has decided to shut down my facility due to several for all the event at the mine. We're currently evaluating different options to supply the concentrator.
On to learn.
Refined zinc production increased by 8.5% into first quarter of 2020, <unk> Berkley first quarter 2019.
[noise] financial results.
First quarter of 2020 sales were 1.7 billion dollar this is $33.7 million lower than things for the first quarter last year or 1.9% no.
Well first sales volume increased by 10.6% antibodies decrease like 3.5% and then it's an area of lower prices I say mentioned I'm doing my son exchange price decreased like 9.2 person quarter on.
Regarding our main but products, we have I would say itself molybdenum.
Oh, hi, 6.6% due to higher volume.
41.9% parts of the upside it's like lower priced.
Silver sales increased by 14.7% due to higher volume and better prices.
For the same thing, even though we had higher volume of 7.1 for saying its body was lower by 15.4% due to lower price.
Our total operating costs and expenses increased by 126.7 million or 12% when compared to his first quarter 2018, the main cool increment convenient purchase copper $77.4 million lower capitalized leachable material seven.
3.5 need in Florida, the term up to your 15, when we didn't even broader depreciation was 11.3 on older.
These cost improvements were partially compensated by the change great burden.
That's a decrease costs by 30 million 30 Museum door.
And lowering been lower inventory consumption by thinking when seats in Florida.
Fuel cost decreased by 8.7 doomed order from the first.
Regarding <unk>.
The first quarter of 2020 did was $718.8 million. This is a 41.8% margin compared with 889 million or 50.8, marking the first quarter 2000.
Operating cash cost per pound the copper before byproduct credits was a daughter and 42.
It's per pound the first quarter 2000 twin.
It is 17.1 cents lower than the value for the fourth quarter last year.
These 10.8% decrease in operating cash cost you said, we're sort of lower cost per town.
Production costs.
Creeping up refining charges and that needs to eat it makes sense.
Partially offset by lower pre.
Well when copper operating cash, including the benefits of like problem, then what 77.4 cents per pound the first quarter of 2001.
These cash calls was 20.4 cents lower tend to cast close to 97.8 cents per pound the fourth quarter of 2019 does he took 20.9% reduction in past.
Regarding by products, we have a total credits up 332.2 million dollar poor 64.1 cents per pound in their first quarter of 2020.
His fieger's represents a 5.6% increase when compared with the Crazy Oh 16.
2.7 cents per pound the fourth quarter of 2000.
Total credit increase for molybdenum Singh.
Before you got an decrease we'll see.
[noise] net income attributable to if you see shareholders in the first quarter 2020, West 214.8 million, Florida that is 12.5% don't see fourq diluted earnings per share of 28 cents for.
Perfect.
Capital expenditure program.
Southern copper as you know that's I'm definitely not Sophie.
Not basing it.
Its growth on the ultimate copper prices on spot on the one you'll see gases, he offering and do though.
Throughout the years old strong financial discipline, that's consistently alone we bet on a continuous basis no great assets.
The first quarter of 2000 brings people spend 101 million garnered some coptic though batsmen. This is a 41.7% lower than the same period until 2019 and represented 58.8% of our net income.
For the premium probably we have occurred we currently have a portfolio of 2.8 deem them door approved.
Well you can put all of which 1.6 billion uncomfortable really being best.
So you wouldn't be up I mean, <unk> 2.5 be doing Florida growing and go to try and 2.8 billion dollar probably.
Total investment program through which increased to 8.1 view.
40, M. idea when do you like April 2000, they seem to see sick on structured Bourbon well deep I don't think it doesn't sound I don't want in Texas that would you call it would be probably with a topic those buckets of 1.4.
The woman that worked and permits after completing an exhaustive review process of environmental and social matters first nice in compliance with all the stoppage regulatory requirements are having addressed all observational study.
The trial was just do it construction firms where defeated from October Thirtyth of last year, when the mining come to the proven need your mind Rocky private construction permit for the tier Muddy airport.
For the Mexican probably you.
Indicates that makes it costs you know we have three probably you to do.
Maybe the thing.
Concentrator, which you've seen some older.
It's a pretty good he said located between the wouldn't that be simplicity.
It includes developing a new concentrator to produce approximately 80000 pounds thing I'm 20000 tons of copper for you.
Currently we have completed the basic engineering and the detailed engineering you some problem.
The type preparation process started on the purchase orders for the me, we're putting me asking.
It's probably because 40 for me to the capital budget is 400 them certain needed and we expect to initiate operations in the third quarter 2000 and things.
When completed this facility we've doubled the companies think production capacity.
I would provide work on the night direct jumps 1470 indirect.
Well, it's not as probably also located in South Dakota used to support even six kilometers away from lack of either.
It's pretty it consists of a not compete mine operation with amendment production capacity 35000 tons of copper in concentrate.
I knew Ptwenty five neither white Oak Grove facility for mining Trotsky under construction and we'd be used to transport or from the peak food primary crusher something like how do you that copper concentrate.
He's support Liquent significantly improves the overall you know ore grade combining that 0.78 percentage, Texas from B. Riley your brain.
Okay would they sporting 34% ore grade from like how do you.
If I could not it's 159 million and we expected to start production during the first half of 2000.
[noise], there's work for you cannot Mexico. The we're undertaking it for you could do lab constant Sonora, He said low copied gum and offer Greenfield for you.
Which is approximately 45 kilometers from our would not be summary.
It's copper oxide mineralization contains estimated proved and probable reserves of 355 million so for within average koppers wasteful.
Morning.
Eight 7%.
Hi, Bill that we just don't break up the conventional open pit mine and corporate costs would be produced using the high cost efficient and environmentally friendly it's actually w. picking up.
If I could support dealer east $310 million needs fixing to start production during 2010 countries.
The construction of the pilot plan, let's finish on do productions are being developed with encouraging gysle.
[noise] regarding view them as you know it seems that company policy to review at each board meeting the company's cash position.
Expected cash flow generation from operations.
Got it doesn't isn't blend and all the financial needs in order to determine the prophy poor could be.
Accordingly, so now the markets on April 20, Threerd divorce directors ultra right, a cash dividend of 20 cents per share.
So maybe people on May 22 shareholders of record I think throws a fitness on May 13, if you [noise].
Despite the strong cash position of the company and they are reasonably good the sold for the quarter due to uncertainty of the metro markets I'm worth calling them and importantly expansions planned by or something.
Before they can dislocation that more cautious approach regarding these either.
Consequently, our board approved thieving, Dick willing to 50% or what the company has to be paid the last few quarters consumer in southern coppers, the strong financial strong financial condition and competitive cost structure. We have don't out that's how long will endure the current difficult times on overcome the crisis.
We didn't mind, ladies and gentlemen, thank you very much for joining us and we like now open up.
[noise]. Thank you, ladies and gentlemen, I sorry, nine there to ask the question you will need to fresh start one on your telephone to withdraw your question press the pound key please standby, while we compiled it given a roster.
And I first question is John I phone, so far that size with Scotiabank. Please go ahead I phone so.
Thank you on a good morning, everyone and thank you for their presentation called the question on hobbies forgotten and go for patients in Mexico in second place, but if you expect and that's all from the brochure simple like gross.
But or the government analysis to mining operations everybody's as fast as Dennis you can quantify what system. So for opens next equal on that if you can provide guidance on for books on for this would you.
That.
I think as well thank you.
Thank you very much for your question my phone so well Oh, we have mentioned you know well report where operating with the about 40% of our workforce, Mexico and 39% still fit in there.
[laughter].
Obviously borrowing on complaint we told relations that has established by the prototyping most countries.
[music].
When you operate we do too much lower.
So hard to tell for sure.
Useful and recommended workforce what happens. He said you are folding somehow a certain maintenance works on a I'm certain words at the mine operations.
Even who are our our funds are our what we call on fine at the constant I do have been mine.
ER defense that Ah, we have a basically.
I agreed with our workforce over there to shut down the facilities that in order to avoid do they possibly deal flow contention. So were following up I mentioned the restricted protocols for.
For for our operations that includes the.
Their suppliers the power and materials that we had little required wolfberry.
I didn't mind generally speaking we have closed for now postponed or several works related to leachable material and stripping.
That's a that's something that is to.
Put aside for for these final for emergency.
He paid who we are expecting the upper piece too.
Open up.
Oh, yeah certain activities that are concurrent with mine operations and the lower who operates at a much higher activity levels than what we're doing now.
In Mexico, where we're currently.
Operating if they stay with 40% of the workforce on Dymatize when they come inside this is Oh. This is consider park cameco.
He was three cents on death, or we have Oh significant.
Fixation, two or three cents older than having the material available on that so obviously were stupid there due to the due to the the mixture speaking by regulatory [noise].
At this point for the year, it's hard to provide a guy we will provide a much for 13 guidance a into light when we had to a better handle where we are in terms of production.
On Sunday and emergency plants that we can hoot lake one or we have more openness to cooperate.
Our facilities because of Oh, so that's slowing down we'll see.
The yeah crises for changing regulations.
Having said that Oh, we have made some some estimate that.
We we may have a smoker production about between 3% to 4%.
For 2020, when you compare that with our initial plan.
And that's basically or current view on copper Maine.
Okay. Thank you.
No.
Thank you. Our next question is from Carlos Alibabas Morgan Stanley. Please go I have Carla.
Thank you very much on.
[laughter].
Great suppressed maybe more on that point.
Typically aren't that I can.
If I can you would think that you are having some extra nice in your your Mike.
You did better than you hear me.
Yes, yes, I think your growth. So the question anything they maybe a recommended a bit off from the prior point <unk> can you go look at [laughter] quickly if they mine in Mexico I put you seen.
No. It's my understanding these are the mine in the rule are producing but you know given the comments in the in the press release I'd like you read or earlier it seems that youre, implying you know the company's implying that the mining sector in both countries was declared Seychelles, whereas bodies no whatever understandably. So you could please help us clarified.
Todd I'm, exactly whether or not or the southern copper mine.
Both countries are producing that that'll be a very useful and then if I understood correctly.
It seems like through at least there they some production going would delay or be fair creeping like could you talk maybe.
How do you see the impact or is it fair rollover stripping costs in the second quarter and then beyond.
As a company needs to catch up we that we Didnt later, thank you very much.
[noise]. Thank you for your question on sort of Carlos on their Mexico mine.
I mean, but let me first mentioned when they will be on mindset, where our minds I don't break meaning that there is every year in high capacity level.
Over 90% or most of the time, even close to capacity someday I mentioned, our where mines are our <unk> are complying or shut down or you can you can go well if you go out.
Not really until the Argentine that has been everybody to Turkey. It's finish on a adopt a err on the metallurgical facilities, where everything we do nocturnal concentrate or learn where smelting them and or what are we to the case, hoping Mexican oh.
Operations well there are certain facilities that that's just the can cannot be style Ah lisanti.
Put up an example, the epic CW operations are we we have to stop at the mine site. They could use the leachable material, but due to the areas where you collect the the material or poor operating defects that would you plans its producing the.
The new equipment liquid solution that you have to either store for cross the Sun's Boeing has a certain leamington capacity. So eventually do you have to keep producing mode. There to maintain a certain level Oh operation.
Mexico when carefully to diminish up the mine site the old it will be operations related to.
Related to a street being on Leachable material and that produce you've done a burden limited in fashion I'm you know for forward to Concentrators.
The deferred off the street being in the second quarter Joan its a.
This is what were seeing turnkey would happen where portfolio or certain maintenance and certainly jobs at the at the mine as well that's a them into those you've got facility because we're operating with much led to a workforce than than normal times.
I think consequence, or we have whereas postponing certain repair job to Pittsburgh.
Well, we have to undertake path to eventually you can obviously, we're not to we will have to consider at certain point in time, we cannot perform Easter is maintenance and I'm older or jaxa to ER to either.
We've used to do operational level for.
Shut down certain certain equipment that are required I never to that made require a making the in the next to a few weeks or so.
The cost of debt, we don't comment at this point to ER.
The SIFI police sitting in the fine, but we do know that we will have to make an especially for in the second part of the year or in the second quarter, a if a available.
Or two to do a catch up our current Brian He's done a certain point after the emergency Huh Huh Huh huh.
We will consider.
Funds concerns the rental awful multipoint, many more there too to do a at chop in there, but I mentioned the street being more reach a little material movement that the mine or are they concentrate or it's mainly a means to me that that's where we're.
Postponed in some cases and some other cases, we have Oh, we have bands that are these who who's making the first quarter because when we knew when we get realized that we were no. That's some difficulties the unit coming weeks after the initial.
Outbreak off the public 19 so.
At this point I can't provide you with and specific a bigger than that we do know that it would require next three or four and we will you provide information we need to home. That's when we are a weekend more clear situation, which we believe will be by by the end probably second quarter.
Issue.
Thanks.
Thank you. Our next question Consol's team Lantana Swiss Bank of America. Please go ahead.
Hey, good morning.
Thanks for the detail I I'm, sorry, if I missed it I know last conference call you provided updated thoughts on your long term Capex budget and I was wondering if you could we view any changes that near term and I know you went to the projects, but I am I don't think I caught if there any changes to the timing of completion of the pod.
Can you remind us please [noise].
[noise] are adjusting their thinking for forward. Your question no at this point, we haven't done many any changes in our goals for that you would it pointed out a 20 year made has significant adjustment.
I'd say a reduction.
In our capital, but it's the or when we reported he info for 2019 in February.
Or at this point you have made a further.
The reduction in our capital expenditures 40 fear to personally think piece is relatively small we are basically putting in place the purchase orders and I'm finding contracted for four works related to lower power you.
And we expect a respect that given the time span that we have respect to two a month, if we want to maintain the.
A completion date to four four now for troublesome thinking for instance, we have to reduce our but 38.6 billion border.
For 2021, it's a $132.8 billion reduction.
In total for the next five year it to about $367.5 million basically the cost reduction <unk>.
That's come from.
Minor projects that the.
The.
Okay fine operations, so we have to the trees.
Well there are some pretty good but we were considering for the next that in five years, we have some postpone them for a little bit longer.
And.
And also for.
For the for the.
Well, we were considering the construction if I use military who have requires certain investments a short time, we have.
Decided to postpone due to investments Oh for for Awhile.
Thank you and I was just wondering if you don't want invite any framework for how to think about that decision regarding the dividend so how much.
Just a board take into consideration the copper price or the sustained importance of sustaining its capex levels or is it a combination of both or you know is it a given free cash flow level that they consider or any other color would be great.
[noise] well if you look at their results for the first border and how well how we are doing there.
Yeah. The company had been there are proving their dividends and last to see through 2019. The company approved for the board approved for the then for 40 cents per for sure each of the quarters.
Oh, we have preferred and point in time.
Prices are well.
Lower than what we had at the end of 2019 I mentioned already that we were at about two or there will be to north to persuade P M and.
That would you still turnover price sensitive today.
Todays prices.
We we believe that the company could be a holding on to 40 cents or are you then, but the divorce or decided to leave more cautious in beautification due to.
The.
Not right now we have regarding the supply and demand balance in the next to fuel a few months for copper.
Or even though we feel very comfortable with that were cash costs as he mentioned that there will be to.
About 77 cents per pound and that's good that's had they probably had the.
Lowest cost a leveling up there.
The first part time.
Even though we believe that this is a very comfortable situation for us.
And that we don't have older than the predicts that you know are there were undertaking or the older may your cash out commitments to afford for diesel for towards the next two.
A few years or what decided to to slow down a little bits on on on dividends core and to see and few weeks here and we have so more clarity.
Each quarter second quarter, we have phase one of the debt that we had.
It was 400 medium notes on on their own that was paid on April 16.
Now with the scandal and MP.
Our cash position, even though it's it's totally so so far right now.
We believe that it's a it's a better to maintain a prudent view on these matters and too so.
Well, he shored up to where cash so falsities, India. So the people [laughter].
Okay. Thank you and that's how south.
Thanks.
Thank you. Our next question comes from John brands with H S. Before.
Hi, good morning ROE. Thanks for taking my questions first though I want to ask you about demand could.
What are your customers, saying or are they they continue to take their contracted volumes.
Are you seeing any any deferrals of volumes or are you still able to sell everything you do can produce and are you having any issues logistically getting it from Peru, and Mexico to clients or and then secondly, you touched a little bit on the supply chain issues for your current operations.
Hoping you can comment a little bit on on any issues, you're having on supply chain from from projects are you seeing.
Sort of play isn't getting equipments any contract of works I'm trying to understand.
I know you said.
There's no official a change in project timelines, but what does the likelihood that because of the covert outbreak.
Potentially push those those projects back and there is some delay thank you.
Sure. Thank you for your question drone, well basically where we're selling older materials that were producing.
Obviously, a their transportation has been a little bit more complicated to in particular, the first weeks Oh it through the and the end of March when we have to we have to some so you think the nishu sood not only on our ports, but also in the fourth so power of our trying.
We're we're operations were restricted or with list a workforce.
Happens to be the case in the imports so that we operate the into on the one that we use Nixon like sports [noise].
In terms of saying, we haven't happening any problems with our customers the were shipping or delivers to okay.
I'll, let me mention something when we have.
The financial crisis and back in 2008 2009.
We sold older copper that we produce even though we knew when the time demand.
Dropped by 7% demand for refined copper dropped like 7%.
Doing both years, so it seems that the quality of the material that we for the provide for customers. It's I. Appreciate your time Daddy to helping them to maintain our sales to a physical seem to with no significant issues about supply chain. So we have.
From some problems have the beginning because.
Certainly in certain important thing or suppliers Ah Ah decided to shut down their facility for instance on explosive for back to Peru with with that with key for US shutdowns facilities that there was a problem. The also getting line, which you said they seek to them.
Three or four hour concentrator and smelting operations was the somehow difficult you could do at certain point in time, but Ah Ah ones did these problems were where things we are currently being.
Being supply on a reasonable.
Level, obviously, we're working with a slightly less a base, hoping been pretty much a natural forward key.
Inputs, but that's a little that's the signing up the current times on the on the project.
It certainly certain certain TV pieces related probably cannot be they provided are these points because they're required traveling more or or side do you see that are not to a little with his point, that's really the downside of Oh the of the project activity.
On the upside I should say that Ah onez do all the when the widman are being by need to track toward trucks et cetera truly jewelers.
Well.
So some other companies are constantly there their purchases and that has to many that's set to move ahead. The waiting in line for for Easter moving Whitman. So.
In no way you you'd have to a different in a perfect. So we we that's why we want to went a little bit Paulson see specifically floods, where we're seeing or more player. They clear a tendency these doesn't matter.
Great. Thank you very much.
Oh, okay.
Thank you. Our next question is from Hernan Kisladag [laughter] life [laughter] Hello. Good morning. Thank you for the person vision two quick questions. The first one is if you could provide break it down on a variable versus fixed costs included in Europe I suppose on the second one if you have available any kind of.
Immediately facilities.
The second one piece.
If you have any kind of coming to the grade facilities.
No I'm, sorry, cool I couldn't good we're just going to cycle.
Oh, yes, if you have available with some good days the committed credit facilities.
<unk> okay.
Okay Church or no we don't last year would be ER.
Let me start in by your second question.
Last year, we issue or a $1 billion POSIMIR.
A 30 year or.
30 year lumpy the loans that are used to paying or a face to face.
Phase two.
First rate of 4.5%, we think that Oh, we have no problem, we're required to go to the financial markets, but even at these prices or older. We our cash flow positive. So we then we don't see the do there's some poor hobby now.
The.
Specific because it is good for four for through the facilities for the if I read into two or we won't be written since were these type of for because Oh.
On the film on variable versus fixed cost.
How about the burden for 30% or cost our fix.
The rest of it is the variable you look at the mines or is there to probably more like a 25% six wildly mentally purposes, it a little bit more than 30%.
So we have some extra room, we were to reduce our production, but please keep in mind.
And this is an important point for all the old our listeners keeping my Oh power facilities.
Our very competitive cost wise, we don't have a high cost facility, that's how the copper.
The most oh, good kind of equals reflects a that condition and theoretically.
Yeah.
Similar if you look at the core the operations that we know.
Okay. Thank you very much.
Good morning.
Thank you. Our next question is on under asphalt kind of house or will you be yet. Please go ahead.
Thank you very much just a quick question for me how do you think about the current oil price.
Not so much the outlook, but you know if anything we're missing. Although then you know presumably you would benefit your fuel cost you know in terms of lower fuel costs going into second quarter, maybe partially offsetting the lower copper price, we're sitting at the moment, but is there any other placing your operation.
What we should think about what the current low oil price how it's affecting your other your results are you overall operations.
That is the question. Thank you very much.
Sure well Oh, you represented a while ago last year for instance, about 14% support operating costs.
The last quarter was 12.7%.
Of our operating cost so obviously I'm.
I do and talk to second quarter. The first quarter, we didn't have flat to the significant the price the assumption that oil has had the last a few that's being weak are we gonna have to.
So main you would use or diesel for moving our truckload of course, we use some diesel for order as smoking operations.
That's basically so it's an important material it would reduce its a impact on overall cost that's for sure.
We believe that.
That's a somehow Ah I noticed that anytime that we have a a redemption copper price it's usually.
I'm joined by a reduction in oil prices as well as if it affects the effects the impact to.
And it takes up effects the I reported on the on on a we're reviewing cost that we are the first quarter. We had a reduction of about a $35 million an hour no corporate costs due to foreign exchange to.
Adjustments, that's supposed to be much more important Mexico. We're we're a Mexican peso devaluation will be precision has been and slightly lower than 75% that need to put all the proceeding channels that we haven't spoken to be in about 40%. So.
So you could either it's a different in terms of the impact on on the two countries by the way I like to mention now that Oh were net earnings were the impact.
Higher effective tax rate.
First quarter of the 2020 this year due to or the impact on our local financial tax payments the Mexican <unk>.
Related to a change gain bear interest at a carton into Mexican them through E. M. A tax roseland generates a certain certain tax profits and that's kind of being reflected in our first quarter effective tax rate that due to unusually.
Much higher than the average is 38% them capital not normal year basis, it's a little bit there almost totaled 12 point, but would that oh percentage points over there about how we are seeing that much her attire a tax rate in these two quarters on what we know we expected.
No no normal denom or personal corporations.
And you asked about the answer your question.
It does actually I'm actually maybe about one quick follow up just to clarify so we can assume that you're not hedging.
Or the expose show your fuel exposure in any material ways is that fair to assume.
We don't have any hate to say right now and they're looking to do matter.
No we haven't management, we haven't I couldn't you decision.
Okay. That's very clear. Thank you very much that's a that's all my questions I can't go up.
Thank you sound like and nine next question is on Seattle. She has already Bradescos Levy. Please go ahead.
Yeah, well your line is helping.
Hi, I'm, sorry, I wasn't me, it's going to hear me now.
Yeah.
Okay.
I know how are you.
Hi, how are you Carol.
Good good okay. So just two quick questions here one is on the average capacity utilization you're running right now you mentioned, you're running at around 90% embedded with them not mistaken.
Did you provide that number for Mexico as well a and the second question is.
Are there any specific rules for different operations or region within Mexico, when they do.
In regards to two to the you know the the shut down or reduce reduction in operations reduction reduction in utilization rates for for the mining operation and if you see risks of soft further reductions on production in many regions are mindset within those two countries and also.
When do you expect to be back 200% utilization in both countries.
Okay. Let me start I do that you did you through last but that's part of your question.
Well.
Once we are being able to operate the on on all the useful.
He said we have the mining at work there.
Total nickel operations, well, we'll certainly have who are looking to how we're going to or do the catch up in certain maintenance expenditures the or certain activities that are that have been postponed due to the operationally with us I mean, you've been a few days I cant simple spoken due to the.
The emergency.
Data will take a while we believe that we will be able to pass through these are these the situation during the second quarter.
Oh this year.
Possible or we will certainly there.
Try to do it to the quickest as possible. So we are operating them to who capacity.
Now [noise].
Yes, they will say state where operating over 90% of capacity.
In terms of production in Mexico, we are not the about high level, where operating the effects of w. facilities that are important I've been Mexican operations.
Are you seeing what we have.
Available in terms of Pls.
The mining operations or where we're going on so as much as we can on the mineral production side, but obviously do you have to have certain certain limits because of the way that we are operating and you've seen.
Well, it's working these were focusing what we call critical.
Critical PBT, we're probably knows these are very important for instance, a these activities are prevailing a that a certain the ways the or do well do teams are under control.
Where we're using water for for some of the facilities. So we don't kind of food and he and the mean Berman to issue. So no facility. So besides these are critical things that we're doing and we're doing that motive to maintain network operations town.
And we can't poor forwards appropriate time, who are increasing at full capacity now were our Mexican it's one of two instances.
So you would assume that you're gonna be back to 100% most likely in the third quarter is that fair to assume.
Dr Pepper.
And and regarding a at least a ballpark number of a where your whereas your utility capacity utilization in Mexico right now is it 60% 50% 70%.
Well I'm on the 60 W. pursuit is where operating or are you seeing all the capacity that we have for the mining operations is slightly lower than than what we have we're concentrating on producing minimal.
So we got determine teaming or production level. So I suspect it a into really no plan lists or five 2% to 6% from them.
Okay.
Great. Thank you.
No.
Thank you. Our next question comes as far as Stan.
Fevone up with.
Some management. Please go ahead.
Yes, and good morning her own. Thank you for during the call just true it wasn't clear on the Gentleman's crude discussion what their capacity utilization was in.
In Mexico, compared superior chicken clarified this and then.
My second question is on liquidity it seems like subsequent lead to the.
And then of the third quarter, you paid and the 400 million bonds use I'm curious what youre. Your cash position is pro forma the payment of a bad debt and you feel comfortable with your liquidity position after thing.
Does that thank you.
Yes, or where where we already paid to you've seen our our cash position that the into March was a little bit the it close to $2.1 billion in cash.
Well, we repaid 400 million dollar.
Oh, they have to be in April so just a simple arithmetic I'm not no we have not the affected our cash position significantly.
After that I mean ordered them due to this thing.
Oh, so it's just fair to assume that yet.
So just to clarify so it's fair to assume that you.
After doing this payments it's like.
You are running at 1.7 billion in cash and that kind of the.
Well, yes.
How about does it against them.
Mhm.
Okay.
And then no not really de I mean going forward you okay with this.
I'm, sorry couldn't get when do I have no just don't do liquidity and then do capacity utilization in Mcopco, just just something yep yep, Okay. Yep Yep. Its important you mentioned that are difficult quarter the year.
Usually we have to pay is a much much.
Much more cash out the expenses than than say on the second quarter and the rest of the year and the reason for that that we usually pay.
We do a final payment income taxes that tends to be indicates the first quarter for that it'll be an operation for Mexico. It's on the second quarter that if there is a any any catch up at the end of the year that you have to pay on taxes. It's it's coming from doing the first quarter for Mexican the second quarter. So beats in first quarter we.
You have to pay that also was a a 40 cents dividend what declare.
The fourth quarter, the fourth quarter 2000, my team that was based on the first quarter as well and some older taxes that says its special money.
And that her paid for who so all these are left the workers participation affected the cash position the company in the first quarter and do so this is the case Oh. This is no it's more like a seasonal seasonal depletion so ending it.
First quarter with the it'll be north of $2 billion.
Sure. They do the capacity built cashed in relation to the company had even though we paid a certain amounts for import taxes and ER and do work because of the.
Profit sharing now density test a bunch more cash velocity.
Well substance destructing the impact of lower prices, obviously on second quarters unknown unknown to pick on order and the second half the year or so at this point where were very comfortable with our cash position. We don't see a reason for for moving or or go.
Turning to ensure markets. This is something that we are obviously evaluating on an ongoing basis and that's that that's how we see right now.
Thank you Andy on the Mexico capacity utilization, sorry, I didn't catch up.
Oh, well, where we're breaking a or the idea sexy that would you plan to we've done much harder capacity that the conditional mining operations because of the characteristics of pieces to different technologies and so that's that's where we're.
Thank you.
No one thank you. Thank you so much and our next question is fun Lucas Young with JP Morgan. Please go ahead.
Hi, My question was actually were answered already thank you very much.
Thank you. Our next question the cost on Alex hacking with Citi. Please go ahead.
Yeah. Good morning, Raul Thanks for that thanks for calling a hope you're doing well.
Just a couple of follow especially on net debt.
The company has been holding that that around 5 billion for the last few years are you still overall comfortable with that level.
And then the second question just on the supply chain, just a follow up a little bit.
I guess when do you start to reach critical levels of key supplies and in Peru. If the pick the restrictions are lifted I mean, they are you at a point why you're down to a few days or weeks there or you could you could continue for longer. Thank you very much.
[noise] and you're working on takes a while net debt.
Well, we believe that were okay, where we are now.
Dick I'd say, it's something that we evaluate them and I am at an ongoing basis.
And Uh huh.
We see no leasing after I'd say, we issue won't begin go ramping in there the last year for the findings in the project that we have Mexico I think there that.
That's fine for now.
I'm now on the on their supply chains and supply issues.
Well, we I think that we are doing better now than paid three weeks ago.
Oh, three weeks ago, a certain certain suppliers of class I mention nine month bills. If that's an example had their their plans to shut down at that time, so well, it's very difficult for us to getting isn't a trip and we were basically.
Are running a running out of the inventory so and.
We.
I have to certain talks with the born in the company to a they both agreed that they were necessary for our supply chain and nothing that their operations and well being reasonably well the supply now both up you're right. That's the others I mean, what working.
Here in Peru is that the food emblem piece is now moving to the second sage needs emergency and the second stage. It means also that certain economic activities and we believe that mining would be among them.
We'll be considered for poor reported smart to open up so.
We will.
Our 16th they're good relations for we're off to improve our operational level at this point the but.
Well you have to wait for that.
The government has announced that Oh next week, which should have some regulations.
On that so we're expecting them and we believe that a that will be even a little what pooper isn't that much higher level TV.
Great Thanks, well take care.
Yeah, well come out of it with Dupont.
Two things.
Thank you so much. Our next question is kind of Johnson last I was with Johnson last Sunday Independent research this car hats.
Thank you very much.
In the first quarter than mine output average 80 to 81000 tonnes a month.
And the current Las April which is almost over.
Thanks, a mine output will be closer to 50000 tons or 60000 tons or 70000 tons.
[noise] well it depends on more how are we doing some so forth before oh.
The different plan or the point that we expected to be slightly higher than seven homes.
Significant contribution from the Peruvian operations.
Thank you.
Thank you. Our next question from Cardinal I bought with Morgan Stanley.
Yes, thank you very much going anywhere else.
Yes.
Oh go ahead.
I know these values, so sometimes but maybe I could you comment as to how you see production copper production and the topic.
In the next few years, if that's changed or based on where were going to regarding the virus. Thank you.
And you mean for huh.
Yeah for you for southern copper.
Oh no.
Okay.
Well basically where were maintaining our view on the on the on the production, where we are or the fact that the Peruvian operations are low to operate the I mean, where all of a almost like it won't get probably two thirds encouraging because we're missing production on that to make.
Become facilities or a certain point and but my belief that we won't be able to who to overcome. These soon it's a matters are as possible to the order.
In terms of Arbitron, it's basically what we have been saying a a refresher.
Are there the forecast.
Oh Lisa.
Well this year our our.
So what's the schedule on page.
[noise] or did here or not we're plan ethics as mentioned at the beginning of the year with 993000 phones or <unk> 0.84, I'm, sorry that was it doesn't make.
Well this years 995000 phones.
For 2021 986.3 thousand tones.
2020, 250000, 2003, one medium and 66000.
It doesn't come to for one reason I'm one.
Hundred thousand pounds.
For for copper.
We think that that's what is happening at least it's affecting both supply and demand for corporate.
And then net effect on price. This is not that hard, but you mean mining at the very beginning.
At the very beginning we have reports on on the companies that do marketing 10 against that demand, but the what's a falling down by about a 700000 tons per year when a market that has a pretty good three and a half a million pounds of copper producer and consumer refined copper though.
But what we're seeing now that it's not on the demand that supply that is also.
Greetings and let me mention this as an example.
We have right now we may your mine in Peru.
There are two of them are shut down.
They are their capacity it's about a.
400000 pounds.
For a year of copper in each of the cases, so that they hundred thousand gone so for work capacity supply.
Copper production days all.
And another one which is Uh huh.
Uh Huh capacity is about 450000 pounds.
Operating at 50% off of capacity. So when you have for gifting between significant that players about 1 million tons of I'm not capacity put aside and that is to have used to somehow leveling the.
The man or the demand dropped as where theme, which is significant as well as I mentioned before our client base, that's not the being affected so far we are hoping that this is going to be the case were seeing a very encouraging find the fact that China is moving forward with different.
Different the smoking facilities as well as the economic activities inside China, and we are expecting than Oh. The older aircraft were we sold our copper which is Europe on I mean, you with a to b or old school moving for a week or the up natural foods Nerd, Connecticut.
He was he took them more significant though that's the worst but station we believe that they should be.
And then that affects a this year, but not necessarily next month.
Right.
You don't expect the car in the fair I'll say stripping senior in the rule and perhaps you Mexico.
To effect and we see a production.
He really and so you expect to catch up or doing the and remain but I think lease.
Glad versus prior production guidance right.
We expect to do a catch up plan, where were considering doing a catch up Glenn.
That will mean for new centers renting a certain equipment for for a few a few months and doing. The addition, stripping that we required yeah. So at this point, we're not expecting who happened in part due to keeping our bridge.
Right. Okay. Thank you Raul keep healthy like that let me say, they say something else. So that's kind of OCA and to all of our audiences.
We will provide that we think that that we're currently in a very unstable environment, we need to have some more clarity and I. We believe that next to a few weeks wu kind of that and we'll report on on a more complete based on mail nowhere July a coal looking at our second quarters or.
Results.
When it goes through.
Hello.
[laughter] fell on sign any further question trying to kill it back to you for any final.
<unk>.
Thank you very much or academy or will we did say we completed our conference call for southern copper first quarter of 2000 thinking.
We certainly appreciate your participation hope you have.
You.
Hope to have you factored that when we report the second quarter same can bring much in happened might be.
And with that ladies and gentlemen, we thank you for participating in today's program and you may now disconnect.
How about went okay.
[music].