Q2 2026 Southern Copper Corp Earnings Call
Speaker #1: As well as answer any questions that 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 cautions not to place undue reliance on these forward-looking statements.
Speaker #1: SOUTHERN COPPER CORPORATION undertakes no obligation to publicly update or revise any forward-looking statements whether as a result of new information, future events, or otherwise.
Speaker #1: All results are expressed in full US GAAP. Now I'll pass the call on to Mr. Raul Jacob.
Operator: I'll pass the call on to Mr. Raul Jacob.
Speaker #2: Thank you very much, Carmen. Good morning, everyone, and welcome to Southern Copper's second quarter 2026 results conference call. At today's conference, I'm accompanied by Mr. Leonardo Contreras, CEO of Southern Copper and also a board member.
Raul Jacob Ruisanchez: Thank you very much, Carmen. Good morning, everyone, welcome to Southern Copper's Q2 2026 results conference call. At today's conference, I'm accompanied by Mr. Leonardo Contreras, CEO of Southern Copper and also a board member. Let me first begin by mentioning that Southern Copper delivered another exceptional quarter, registering record-breaking results in sales, adjusted EBITDA, and net income. These outstanding achievements are driven by operating excellence and reflect our commitment to creating long-term value for our stakeholders in a context marked by sustained demand for copper and the other minerals we produce. Today, we will begin with an update on our view of the copper market, then review Southern Copper's key results related to production, sales, operating costs, financial results, expansion projects, and ESG. After this, we will open the session for questions.
Speaker #2: Let me first begin by mentioning that SOUTHERN COPPER delivered another exceptional quarter, registering record-breaking results in sales, adjusted EBITDA, and net income. This outstanding achievement is driven by operating excellence and reflects our commitment to creating long-term value for our stakeholders in a context marked by sustained demand for copper, and the other minerals we produce.
Speaker #2: Today, we will begin with an update on our view of the copper market, and then review Southern Copper's key results related to production, sales, operating costs, financial results, expansion projects, and ESG.
Speaker #2: After this, we will open the session for questions. The London Metal Exchange copper price increased 40%, from an average of $4.32 per pound in the second quarter of 2025 to $6.04 this past quarter.
Raul Jacob Ruisanchez: The London Metal Exchange copper price increased 40% from an average of $4.32 per pound in Q2 2025 to $6.04 this past quarter. In the COMEX market, we saw a 31% increase with an average of $6.16 per pound this quarter. Based on current supply and demand dynamics, we estimate a slight copper market deficit for 2026. Copper inventories worldwide, the total combining stock in London Metal Exchange, COMEX, Shanghai, and London warehouses, that the sum of these inventories stood at 1,123,000 tons as of yesterday, 21 July. We estimate that this inventory can currently cover approximately 15 days of global demand. Let's look at Southern Copper's production for the past quarter. Copper represented 73% of our sales in Q2 2026.
Speaker #2: In the COMEX market, we saw a 31% increase, with an average of $6.16 per pound this quarter. Based on current supply and demand dynamics, we estimate a slight copper market deficit for 2026.
Speaker #2: Copper inventories worldwide: the total combined in-stock in London Metal Exchange, COMEX, Shanghai, and London warehouses that the sum of these inventories stood at $1,123,000 tons as of yesterday, July 21st.
Speaker #2: We estimate that this inventory can currently cover approximately 15 days of global demand. Now let's look at SOUTHERN COPPER'S production for the past quarter.
Speaker #2: Copper represented 73% of our sales in the second quarter of 2026. Copper production registered a decrease of 3.5% compared to the figure in the second quarter of last year, standing at 230,662 tons this past quarter.
Raul Jacob Ruisanchez: Copper production registered a decrease of 3.5% compared to the print in Q2 2025, standing at 230,662 tons this past quarter. Our quarterly result reflects a 12% drop in production in Peru, mainly attributable to lower ore grades and recoveries at both Toquepala and Cuajone. These results were partially offset by an increase in production at our Mexican operation of 3.2%, which was driven by higher production at our Buenavista, La Caridad, and IMMSA mines. For 2026, we expect to produce 917,000 tons of copper, an increase of about 1% over our initial plans. For molybdenum, it represented 11% of our sales in Q2 and is currently our first by-product. Molybdenum prices averaged $29.44 per pound this quarter, compared to $20.57 in Q2 2025. This represents an increase of 43%.
Speaker #2: Our quarterly results reflect a 12% drop in production in Peru, mainly attributable to lower ore grades and recoveries at both Toquepala and Cuajone. However, these results were partially offset by an increase in production at our Mexican operations of 3.2%, which was driven by higher production at our Buenavista, La Caridad, and IMMSA mines.
Speaker #2: For 2026, we expect to produce 917,000 tons of copper, an increase of about 1% over our initial plan. For molybdenum, it represented 11% of our sales in the second quarter and is currently our first by-product.
Speaker #2: Molybdenum prices average $29.44 per pound this quarter, compared to $20.57 in the second quarter of 2025. This represents an increase of 43%. Molybdenum production dropped 11% in the second quarter of this year, compared to the same period of last year.
Raul Jacob Ruisanchez: Molybdenum production dropped 11% in Q2 2026 compared to the same period of 2025. It was mainly driven by a decrease in production at all our mines due to lower ore grades. In 2026, we expect to produce 27,900 tons of molybdenum. This is 7% above our initial plan. For silver, it represented 9% of the company's sales value in Q2 2026. Silver prices averaged $33.49 per ounce this quarter, compared to $33.62 in Q2 2025. This represents an increase of 118% in price. Silver is currently our second by-product. Despite higher production at our La Caridad and IMMSA mines, silver production fell 4% in Q2 2026, driven by the lower production at the Toquepala, Cuajone, and Buenavista mines.
Speaker #2: This was mainly driven by a decrease in production at all our mines, due to lower ore grades. In 2026, we expect to produce 27,900 tons of molybdenum. This is 7% above our initial plan.
Speaker #2: For silver, it represented 9% of the company's sales value in the second quarter of this year. Silver prices average $73.49 per pound per ounce, excuse me, per ounce this quarter, compared to $33.62 in the second quarter of last year.
Speaker #2: This represents an increase of $119% in price. Silver is currently our second by-product. Despite higher production at our La Caridad and IMSA mines, silver production fell 4% in the second quarter of 2026, driven by the lower production at the Toquepala, Quajoni, and Buenavista mines.
Raul Jacob Ruisanchez: Refined silver production decreased 0.3% quarter-over-quarter, driven mainly by a drop in production at the Ilo refinery in Peru. In 2026, we expect to comply with our plan to produce 24 million ounces of silver. Zinc was 4% of our sales value in Q2 2026, with an average price of $1.57 per pound in the quarter, which represents a 31% increase compared to Q2 2025. Mine zinc production decreased 14% quarter-on-quarter to total 39,250 tons. This decrease was mainly driven by lower production at the Buenavista, San Martin, and Charcas mines. Refined zinc production decreased 6% in Q2 2026, vis-a-vis the same Q2 2025. This was principally due to lower ore grades. For 2026, we expect to produce 162,900 tons of zinc. Financial results.
Speaker #2: Refined silver production decreased 0.3%, quarter over quarter, driven mainly by a drop in production at the Elo refinery. In Peru. In 2026, with spec to comply with our plan to produce 24 million ounces of silver.
Speaker #2: Zinc was 4% of our sales value in the second quarter of 2026, with an average price of $1.57 per pound in the quarter, which represents a 31% increase compared to last year's second quarter.
Speaker #2: Mine zinc production decreased 14% quarter on quarter, to total 39,257 tons. This decrease was mainly driven by lower production at the Buenavista, San Martin, and Charcas mines.
Speaker #2: Refined zinc production decreased 6% in the second quarter of this year, vis-à-vis the same quarter of 2025. This was principally due to lower ore grades.
Speaker #2: For this year, 2026, with spec to produce 163,900 tons of zinc. Financial results: for the second quarter of 2026, sales were 4.3 billion dollars.
Raul Jacob Ruisanchez: For Q2 2026, sales were $4.3 billion. This is $1.2 billion higher the print in Q2 2025, a 41% increase. Copper sales increased 38%, while the volume fell 1.5% in a scenario of the mentioned better prices. Regarding our main by-products, we registered higher sales for molybdenum by 34%. Zinc sales in turn rose 24%. Silver were up 86% in the three cases of these by-products due to higher prices, and these sales were partially offset by a decrease in volume. Our total operating cost and expenses increased $202 million or 14% compared to Q2 2025. The main cost increments were in operating materials, purchased copper, diesel and fuel, workers' participation, and translation difference, as well as other factors. These cost increments were partially offset by a decrease in repair materials and inventory consumption.
Speaker #2: This is $1.2 billion higher than the print in the second quarter of 2025, a 41% increase. Copper sales increased 38%, while the volume fell 1.5%, in a scenario of the mentioned better prices.
Speaker #2: Regarding our main by-product, we registered higher sales for molybdenum by 34%. Zinc sales, in turn, rose 24%. Silver was up 86%. In all three cases, these by-products benefited from higher prices.
Speaker #2: And these sales were partially offset by a decrease in volume. Our total operating cost and expenses increased $202 million, or 14%, compared to the second quarter of 2025.
Speaker #2: The main cost increments were in operating materials, purchased copper, diesel and fuel, workers' participation, and translation difference. As well as other factors. These cost increments were partially offset by a decrease in repair materials, and inventory consumption.
Raul Jacob Ruisanchez: The Q2 2026 adjusted EBITDA hit a record high of $2,956 million, which represented an increase of 60% with regard to the $1,791 million registered in Q2 2025. The adjusted EBITDA margin in Q2 of this year stood at 67% versus 59% in Q2 of last year. Adjusted EBITDA year-to-date was $5,569 million. This is 58% higher than the print in H1 2025. The adjusted EBITDA margin in H1 of this year stood at 65% versus 57% for H1 2025. Operating cash cost per pound of copper before by-product credits was $2.29 per pound in Q2 2026. That is $0.02 lower than the value for Q1 of this year.
Speaker #2: The second quarter, 2026, adjusted EBITDA hit a record high of $2,856 million, which represented an increase of 60%, with regard to the $1,701.91 million registered in the second quarter of 2025.
Speaker #2: The adjusted EBITDA margin in the second quarter of this year stood at 67%, versus 59% in the second quarter of last year. Adjusted EBITDA year-to-date was $5.569 billion.
Speaker #2: This is 58% higher than the print in the six months of 2025. The adjusted EBITDA margin in the six months of this year stood at 65% versus 57% for the six months of 2025.
Speaker #2: Operating cash cost per pound of copper before by-product credits was $2.29 per pound in the second quarter of 2026. That is $0.02 lower than the value for the first quarter of this year, 1% decrease in operating cash cost is a result of lower cost per pound from production administrative expenses, a higher premiums.
Raul Jacob Ruisanchez: 1% decrease in operating cash cost is a result of lower cost per pound from production, administrative expenses, and higher premiums. This result was partially offset by a decrease in treatment and refining charges. Southern Copper operating cash cost, including the benefit of by-product credits, was $0.05 per pound in Q2 2026. Even though this cash cost was $0.15 higher than the cash cost of -$0.11 for Q1, we think that this is an excellent mark for the company. Regarding by-products, we had a total credit of $1,106 million or $2.24 per pound in Q2 2026. These figures represent a 7% decrease compared to a credit of $1,189 million or $2.41 per pound reported in Q1 2026. Total credits have increased for molybdenum and zinc and decreased for silver and sulfuric acid.
Speaker #2: This result was partially offset by a decrease in treatment and refining charges. Southern Copper operating cash cost, including the benefit of by-product credits, was $0.05 per pound in the second quarter of 2026.
Speaker #2: Even though this cash cost was $0.15 higher than the cash cost of minus $0.11 for the first quarter, we think that this is an excellent mark for the company.
Speaker #2: Regarding by-products, we had a total credit of $1,106 million, or $2.24 per pound, in the second quarter of 2026. These figures represent a 7% decrease compared to the credit of $1,189 million, or 241 cents per pound, reported in the first quarter of 2026.
Speaker #2: Total credits have increased for molybdenum and zinc, and decreased for silver and sulfuric acid. The second quarter of 2026 net income hit a record high of $1,670 million, up 72% versus the $973 million registered in the second quarter of last year.
Raul Jacob Ruisanchez: The Q2 2026 net income hit a record high of $1,670 million, up 72% versus the $973 million registered in Q2 of last year. This was mainly the result of higher net sales and the cost control measures that we impose in our operations. The net income margin in Q2 2026 stood at 39% versus 32% in Q2 2025. On a year-to-date basis, net income was 69% higher than in 2025 due to higher net sales. Cash flow from operating activities in H1 of this year was $3,683 million, which represents an increase of 117% compared to the $1,698 million posted in H1 of last year. This improvement was attributable to a strong cash generation at our operations, which was driven by higher sales and a decrease of $719 million in operating assets and liability requirements.
Speaker #2: This was the result of higher net sales, mainly the results of higher net sales, and the cost control measures that we imposed in our operations.
Speaker #2: The net income margin in the second quarter of 2026 stood at 39%, versus 32% in the second quarter of 2025. On a year-to-date basis, net income was 69% higher than in 2025, due to higher net sales.
Speaker #2: Cash flow from operating activities in the six months of this year was $3,683 million, which represents an increase of $117% compared to the $1,698 million post in the six months of last year.
Speaker #2: This improvement was attributable to strong cash generation at our operations, which was driven by higher sales and a decrease of $719 million in operating assets and liability requirements.
Speaker #2: This year, on June 24th, the company issued $1.25 billion in 10-year fixed-rate senior and secured notes. This debt is due in 2036, with an annual interest rate of 5.35%.
Raul Jacob Ruisanchez: This year, on 24 June, the company issued $1.25 billion in a 10-year fixed rate senior unsecured notes. This debt is due in 2036 with an annual interest rate of 5.35%. Demand for the notes was $4 billion, which was 3.2 times greater than the total issuance amount. Proceeds will be used exclusively by Southern Peru Copper Corporation, our Peruvian branch, to develop the Tia Maria project, finance its capital expenditure program, as well as general corporate purposes for Southern Peru Copper Corporation. Regarding capital investment, Southern Copper's current capital investment program for this decade exceeds $20.5 billion and includes investments in projects in Peru and Mexico. In Q2 of the year, we spent $423 million on capital investments, which reflected a 79% increase over the figure reported in Q2 2025 and represents 25% of this quarter's net income.
Speaker #2: Demand for the notes was $4 billion, which was 3.2 times greater than the total issuance amount. Proceeds will be used exclusively by Southern Peru Copper Corporation, our Peruvian branch, to develop the Tía María project.
Speaker #2: Finance its capital expenditure program, as well as general corporate purposes, for Southern Peru Copper Corporation. Regarding capital investment, Southern Copper's current capital investment program for this decade exceeds $20.5 billion and includes investments in projects in Peru and Mexico.
Speaker #2: In the second quarter of this year, we spent $423 million on capital investments, which reflected a 79% increase over the figure reported in the second quarter of 2025, and represents 25% of this quarter's net income.
Speaker #2: In the first half of the year, we spent $865 million on capital investments, which represents 27% of net income and reflects the impact of a 506% increase in capital expenses year-on-year.
Raul Jacob Ruisanchez: In H1, we spent $865 million on capital investments, which represent a 27% of net income and reflects the impact of a 56% increase in capital expenses year on year. Looking at our Peruvian projects, as Peru is poised to begin a new executive cycle, we are encouraged by the initial statements made by President-elect Mrs. Keiko Fujimori. Accordingly, SCC reiterates its commitment to work with the incoming administration to promote economic growth and social development in Peru through the advancement of our Peruvian projects, Tia Maria, Los Chancas, and Michiquillay, which represent a combined investment of approximately $10.3 billion. Given that there is a description of our main capital project in Southern Copper's press release, I am going to focus on updating new developments for each of them.
Speaker #2: Looking at our Peruvian projects, as Peru is poised to begin a new executive cycle, we are encouraged by the initial statements made by President-elect Mrs. Keiko Fujimori. Accordingly, SCC reiterates its commitment to work with the incoming administration to promote economic growth and social development in Peru through the advancement of our Peruvian projects Tía María, Los Chancas, and Michiquillay, which represent a combined investment of approximately $10.3 billion.
Speaker #2: Given that there is a description of our main capital project in Southern Copper's press release, I'm going to focus on updating new developments for each of them.
Speaker #2: In the case of the Tía María project, located in the Peruvian region of Arequipa, as of June 30th of this year, the company has committed $1.101 billion to various project activities, of which $693 million has already been invested.
Raul Jacob Ruisanchez: In the case of the Tia Maria project located in the Peruvian region of Arequipa, as of 30 June of this year, the company has committed $1,101 million to various project activities, of which $693 million has already been invested. Mass earthwork has moved 13.8 million metric tons of material from the Toay deposit. This is a 71% progress. Also, most purchase orders for the project's major equipment has been issued. Regarding the leaching process, purchase orders have been placed for key state-of-the-art equipment and procurement activities for the remaining major equipment continue. Regarding the power supply, electromechanical works are underway at the main electrical substations, and efforts continue to build the 220-kilowatt transmission line. Concurrently, the mass earthworks required to develop both the dry and wet areas are in their final stage.
Speaker #2: Mass Air Works has moved 13.8 million metric tons of material from the La Tapada deposit. This represents 71% progress. Also, most purchase orders for the project's major equipment have been issued. Regarding the leaching process, purchase orders have been placed for key state-of-the-art equipment, and procurement activities for the remaining major equipment continue.
Speaker #2: Regarding the power supply, electromechanical works are underway. The main electrical substations are being constructed, and efforts continue to build the 220-kilovolt transmission line. Concurrently, the mass air works required to develop both the dry and wet areas are in their final stage.
Raul Jacob Ruisanchez: Civil works and steel structure assembly have commenced in key facilities, including the primary, secondary, and tertiary crushing circuits, as well as the solvent extraction and electrowinning facilities, among others. At the close of June, the Tia Maria project had reached 42% completion and 5,817 new jobs have been created. Of these positions, 1,254 have been filled with local applicants. For the Los Chancas project in the region of Apurimac in Peru, as of 30 June, the presence of illegal miners within the project area continues despite the state's on-site enforcement efforts through the environmental prosecutor's office. This has hindered the project's progress. Meanwhile, community development and environmental management programs continue in the communities of Tiaparo and Tapayrihua, both located within our direct area of influence.
Speaker #2: Civil works and steel structural assembly have commenced in key facilities, including the primary, secondary, and tertiary crushing circuits, as well as the solvent extraction and electrowinning facilities, among others.
Speaker #2: At the close of June, the Tía María project had reached 42% completion, and 5,817 new jobs have been created. Of these positions, 1,254 has been filled with local applicants.
Speaker #2: For the Los Chancas project, in the Peruvian region of Apurímac, as of June 30, the presence of illegal miners within the project area continues despite the state's on-site enforcement efforts through the Environmental Prosecutor's Office.
Speaker #2: This has hindered the project's progress. Meanwhile, community development and environmental management programs continue in the communities of Tía Paro and Tapairigua, both located within our direct area of influence.
Speaker #2: In the case of the Michiquillay project in the Peruvian region of Cajamarca, studies to estimate mineral reserves and develop the mine plan, coupled with hydrological and hydrogeological assessments, are currently underway.
Raul Jacob Ruisanchez: In the case of the Michiquillay project in the Peruvian region of Cajamarca, studies to estimate mineral reserves and develop the mine plan, coupled with hydrological and hydrogeological assessments, are currently underway. In addition, geotechnical research is progressing and entering its final phase. Focusing on our Mexican projects, Southern Copper has several projects in its Mexican pipeline that may boost organic growth if they are found to be of value for both the stakeholders and the communities in which we operate. These projects are Angangueo and Chalchihuites, which are part of the Mexican copper circuit, and the Empalme smelter, which are expected to bolster our position as a fully integrated copper producer. We are engaged in talks with the current administration to continue rolling out SCC's Mexican investments for $10.2 billion.
Speaker #2: In addition, geotechnical research is progressing and entering its final phase. Focusing in our Mexican projects, Southern Copper has several projects in its Mexican pipeline that may boost organic growth if they are found to be of value for both stakeholders and the communities in which we operate.
Speaker #2: These projects are Angangueo and Chalchihuites, which are part of the Mexican copper circuit, and the Empalme smelter, which are expected to bolster our position as a fully integrated copper producer.
Speaker #2: We're engaged in talks with the current administration to continue rolling out SEC's Mexican investments for $10.2 billion. El Pilar, in Sonora state, is a greenfield project that has obtained the necessary environmental permits and will begin early site preparation work in September of this year—next September, in other words—to develop energy lines, water pipelines, roads, workers' accommodations, and some other facilities.
Raul Jacob Ruisanchez: El Pilar in the Sonora State, it's a greenfield project that has obtained the necessary environmental permits and will begin early site preparation work in September of this year, next September, in other words, to develop energy lines, water pipelines, roads, workers' accommodation, and some other facilities. Project construction will commence in Q1 2027, and production is expected to begin in H2 2029. This project is located in Sonora, in Mexico, approximately 45 km away from the Cananea and Buenavista mine. Its copper oxide mineralization contains estimated proven and probable reserves of 317 million tons of ore with an average copper grade of 0.249% and a life mine of 18 years. It will operate as an open pit mine with annual production capacity of 36,000 tons of copper cathode, utilizing cost-efficient and environmentally friendly SX-EW technology. SX-EW stands for solvent extraction and electrowinning.
Speaker #2: Products for project construction will commence in the first quarter of 2027, and production is expected to begin in the second half of 2029. This project is located in Sonora, Mexico, approximately 45 kilometers from the Cananea and Buenavista mines.
Speaker #2: Its copper oxide mineralization contains estimated proven and probable reserves of 317 million tons of ore, with an average copper grade of 0.249%. And a live mine of 18 years.
Speaker #2: It will operate as an open-pit mine with annual production capacity of 36,000 tons of copper cattle, utilizing cost-efficient and environmentally friendly effective W technology.
Speaker #2: Effective W stands for Solvents Traction and Electro-Wielding. With an investment of $551 million, this project will employ a direct workforce of 450 people during the construction phase, and 300 during the operational phase.
Raul Jacob Ruisanchez: With an investment of $551 million, this project will employ a direct workforce of 450 people during the construction phase and 300 during the operational phase. For environmental, social, and corporate governance or ESG practices, over the last five years, we have reported several times on the Cularjahuira Dam, located in the Candarave area in southern Peru. This is in the Tacna region in Peru. This dam has transformed the lives of 80% farmers of the area and their facilities by providing year-round access to water. According to the Ministry of Agricultural Development and Irrigation, crop yields in the area have risen around 20%. This infrastructure, with a capacity of 2.5 million cubic meters, was built by our company through an alliance with the Peruvian state and local farmers. We continue to work with authorities to build the Callajas and Calientes dams, also in the Candarave area.
Speaker #2: For environmental, social, and corporate governance, or ESG practices, over the last five years, we have reported several times on the Curahawita Dam, located in the Candarave area in southern Peru.
Speaker #2: This is in the Tacna region in Peru. This dam has transformed the late lives of 18% farmers of the area and their facilities, by providing year-round access to water.
Speaker #2: According to the Ministry of Agricultural Development, crop yields in the area have risen around 20%. This infrastructure, with a capacity of 2.5 million cubic meters, was built by our company through an alliance with the Peruvian state and local farmers.
Speaker #2: We continue to work with the authorities to build the Kayasas and Calientes dams, also in the Candarave area. With these additional dams, more than 90% of farmers' water needs will be covered.
Raul Jacob Ruisanchez: With these additional dams, more than 90% of farmers' water needs will be covered. Moving to Mexico, students from Nacozari and Esqueda schools, both in Sonora, Mexico, performed admirably in national and international competitions, including the Mexican Mathematics Olympiad and INFOMATRIX 2026. These achievements reflect the company's commitment to education and the development of STEAM skills. The company currently benefits 3,000 students through 11 education centers it operates in Mexico and Peru. Sports drive community integration and well-being. To promote integration and well-being through sports, our company joined the global social initiative of the Mexican government. Our efforts, which focus on communities neighboring our operations, have brought together 2,629 participants who are organized into 216 teams of employees and community members with categories for children and youth.
Speaker #2: Moving to Mexico, students from Nacosari and Esqueda schools, both in Sonora, Mexico, performed admirably in national and international competitions, including the Mexican Mathematics Olympics and Informatics 2026.
Speaker #2: This achievement reflects the company's commitment to education and the development of esteemed skills. The company currently benefits 3,000 students through 11 education centers it operates in Mexico and Peru.
Speaker #2: Sports rights community integration and well-being. To promote integration and well-being through sports, our company joined the Global Social Initiative of the Mexican government. Our efforts, which focus on communities neighboring our operations, have brought together 2,629 participants, who are organized into 216 teams of employees and community members, with categories for children and youth.
Speaker #2: Alongside these initiatives, 580 volunteers worked to create 14 community murals and recognition sports venues. Which strengthens harmonious relations, inclusion, and the social fabric. These sports and cultural programs cover approximately 41% of the general population close to our Mexican operations.
Raul Jacob Ruisanchez: Alongside this initiative, 580 volunteers work to create 14 community murals and recognition sports venue, which strengthens harmonious relations, inclusion, and the social fabric. These sport and cultural programs cover approximately 41% of the young population close to our Mexican operations. Dividend announcement. Regarding dividends, as you know, it is the company policy to review our cash position, expected cash flow generation from operations, capital investment plans, and other financial needs at each board meeting to determine the appropriate quarterly dividend. Accordingly, on 16 July 2026, Southern Copper Corporation announced a quarterly cash dividend of $1.10 per share of common stock and a stock dividend of 0.012 shares of common stock per share. This will be payable on 27 August 2026 to shareholders of record at the close of business on 11 August 2026.
Speaker #2: I made an announcement regarding dividends. As you know, it is the company policy to review our cash position, expected cash flow generation from operations, capital investment plans, and other financial needs at each Board meeting to determine the appropriate quarterly dividend.
Speaker #2: Accordingly, on July 16 of this year, Southern Copper Corporation announced a quarterly cash dividend of $1.10 per share of common stock and a stock dividend of 0.012 shares of common stock per share. This will be payable August 27 of this year, 2026, to shareholders of record at the close of business on August 11, 2026.
Speaker #2: Let me mention that, factoring in both the cash dividend and the equivalent value of the stock dividend, the total estimated dividend payment is $3.23 per share.
Raul Jacob Ruisanchez: Let me mention that factoring in both the cash dividend and the equivalent value of the stock dividend, the total estimated dividend payment is $3.23 per share. Ladies and gentlemen, with these comments, we end our presentation today. Now we would like to open the forum for questions.
Speaker #2: Ladies and gentlemen, with these comments, we end our presentation today. Thank you very much for joining us. And now we would like to open the forum for questions.
Speaker #1: Thank you so much. As a reminder, to ask a question, press *11 on your telephone and wait for your name to be announced.
Operator: Thank you so much. As a reminder, to ask a question, press star one one on your telephone and wait for your name to be announced. To remove yourself, press star one one again. One moment for our first question. It is from Richard Garcia Torrena with Barclays. Please proceed.
Speaker #1: To remove yourself, press star 11 again. One moment for our first question. It's from Richard Garcia Torena with Barclays. Please proceed.
Speaker #3: Great, thank you for taking my question. I just want to talk about copper production in the quarter, which was down 3.5% year over year. Can you discuss how the grades have progressed at Toquepala and Cuajone?
Richard Garcia: Great. Thank you for taking my question. Just want to talk about copper production in the quarter was down 3.5% year over year. Can you just talk about how the grades have progressed at Toquepala and Cuajone? What do you see that doing in H2 of this year? Is that impacting your full year production expectations at all?
Speaker #3: And what do you see that doing in the second half of this year? And is that impacting your full-year production expectations at all?
Speaker #2: Thank you very much for your question, Richard. Well, we have been reporting—and we mentioned this at the beginning of the year—that our expectation was, for the first part of the year, we were expecting to produce, in 2026, about 910,000 tons of copper.
Raul Jacob Ruisanchez: Thank you very much for your question, Richard. Well, we have been reporting, we mentioned this at the beginning of the year, that our expectation was at the first part of the year, we were expecting to produce in 2026 about 910,000 tons of copper. Now, we are expecting for this year 917,000 tons of copper, we are improving a little bit on our plan. The main reason for the change or for the lower production vis-a-vis last year, it is ore grades, particularly at the Cuajone mine, where we had a reduction that translating into about 35,000 tons of lower copper production. The difference comes from Toquepala.
Speaker #2: Now we're expecting, for this year, 917,000 tons of copper. So we're improving a little bit on our plan, but the main reason for the change, or for the lower production versus last year, is ore grades, particularly at the Cuajone mine.
Speaker #2: Where we had a reduction that translates into about 35,000 tons of lower copper production, and the difference comes from Toquepala. As I mentioned, we have been at the same time doing some important efforts to increase production for the Mexican operations, and that has been that has allowed us to maintain our production levels in Mexico, but having a lower volume in the range of 40,000 tons in total at the Peruvian sites.
Raul Jacob Ruisanchez: As I mentioned, we have been, at the same time, doing some important efforts to increase production for the Mexican operations, and that has allowed to maintain our production levels in Mexico, but having a lower volume in the range of 40,000 tons in total at the Peruvian sites.
Speaker #3: Great. And if I can just ask a bigger-picture question, you talked about approximately $10.3 billion in CapEx required for your Peruvian projects. And with the new administration, is it your expectation that there will be some additional funding incentives that could potentially be in place for local production growth?
Richard Garcia: Great. If I can just ask a bigger picture question. You talked about $10.3 billion in CapEx required for your Peruvian projects. With the new administration, is it expectations that there'll be some additional funding incentives that could be potentially in place for local production growth? Relative to that, you did issue $1.25 billion of debt for Tia Maria. Is funding going to be the main expectation for financing these new projects? How do you think about financing the remainder of the projects?
Speaker #3: And then, relative to that, you did issue $1.25 billion of debt. For Tía María, is funding going to be the main expectation for financing these new projects?
Speaker #3: Or, how do you think about financing the remainder of the projects?
Raul Jacob Ruisanchez: The latest bond issue, the one that we mentioned in our press release for $1.25 billion, was mainly for financing the Tia Maria project. As you know, we expect to spend in total $1.8 billion in Tia Maria. With this bond, we should cover a significant portion of it. If by any reason we finish Tia Maria before spending this money, we'll have some other projects that could absorb a portion of the funds. If that would be the case, that would be a very small amount. For the Peruvian projects, we are indicating the expected capital expenditures for each of them, for Los Chancas and Michiquillay.
Speaker #2: The latest bond issue, the one that we mentioned in our press release for $1.25 billion, was mainly for financing the Tía María project.
Speaker #2: As you know, we expect to spend, in total, $1.8 billion on Tía María. So, with this bond, we should cover a significant portion of it.
Speaker #2: If for any reason we finish Tía María before spending this money, we'll have some other projects that could absorb a portion of the funds. But if that were the case, it would be a very small amount.
Speaker #2: For the Peruvian projects, we are indicating the expected capital expenditures for each of them, for Los Chancas and Uchiquillay. Those numbers will be reviewed and updated when we have a goal for the project.
Raul Jacob Ruisanchez: Those numbers will be reviewed and updated when we have a go for the project, as we have done in this past quarter with El Pilar, where we have already a budget that is what we expect to spend in the construction of El Pilar. Generally speaking, the company considers use of some debt at certain point in the developing of the projects of the company. Well, as a good practice to have a balance or a better balance debt capital structure in our financial statements. That's basically it. Even though I cannot assure you that we will issue bonds or some other forms of financing at each time that we go on with the project, this is what we have been doing in the last few years. I believe that we could move on in that same direction for the future projects as well.
Speaker #2: As we have done in this past quarter with El Pilar, where we already have a budget that is what we expect to spend in the construction of El Pilar.
Speaker #2: Generally speaking, the company considers use of some debt at certain points in the development of the projects of the company. Well, as a good practice, to have a balance or a better balanced capital debt-capital structure in our financial statements.
Speaker #2: That's basically it. So, even though I cannot assure you that we will issue bonds or some other forms of financing each time that we move forward with the project, this is what we have been doing in the last few years.
Speaker #2: So, I believe that we could move on in that same direction for the future projects as well.
Speaker #3: Thank you.
Richard Garcia: Thank you.
Raul Jacob Ruisanchez: You're welcome.
Speaker #2: You're welcome.
Operator: Thank you. Our next question is from Emerson Vieira with Goldman Sachs. Please proceed.
Speaker #1: Thank you. Our next question is from Emerson Viera with Goldman Sachs. Please proceed.
Emerson Vieira: Hello, good morning, everyone. I have two questions. The first of them, I want to just explore a little bit more Tia Maria project. I understand that.
Speaker #4: Hello. Good morning, everyone. I have two questions. The first, I want to just explore a little bit more the Tía María project. I understand that.
Raul Jacob Ruisanchez: I'm sorry, Emerson.
Speaker #4: Can you hear me?
Emerson Vieira: Can you hear me?
Raul Jacob Ruisanchez: I can't copy you well.
Speaker #2: I can't copy you well.
Emerson Vieira: Is it now better now?
Speaker #4: Does it sound better now?
Speaker #2: Yes.
Raul Jacob Ruisanchez: Yes.
Speaker #4: Okay, thank you. So, yeah, I have two questions. The first of them is just regarding the Tía María project. I understand that the fiscal progress is advancing, right?
Emerson Vieira: Okay.
Raul Jacob Ruisanchez: Go on, please.
Emerson Vieira: Thank you. Yeah. I have two questions. The first of them is regarding Tia Maria project. I understand that the physical progress is advancing, right? There is a critical equipment component, which is the desalination plant. I just wanted to double-check if the.
Speaker #4: But there is a critical equipment component, which is the sublimation plant. So, I just wanted to double-check.
Raul Jacob Ruisanchez: Emerson. Emerson, please. Sorry for saying this, but could you separate a little bit your mouth from the microphone because it doesn't copy you well.
Speaker #2: Emerson.
Speaker #4: If the.
Speaker #2: Emerson, please I think that sorry for saying this, but could you separate a little bit your from the microphone? Because it doesn't copy you well.
Emerson Vieira: Okay. How about now? Better?
Speaker #4: Okay. How about now? Better?
Raul Jacob Ruisanchez: Excellent.
Speaker #2: Excellent. Excellent.
Emerson Vieira: Okay. Thank you. I got an issue here with the mic. Yeah. I have two questions. First of them on the project, on Tia Maria specifically. It's good to see that physical progress is advancing. I understand there's a critical component, which is the desalination plant. I wanted just to double-check if the order to purchase that equipment has already happened. If not, if this is a risk for delaying the project. If I recall well, last Q it was mentioned start up in Q3 2027, in this press release, the company mentioned start up in H2. Just try to understand if you guys see a risk of some delays in the project. That's for Tia Maria.
Speaker #4: Okay, thank you. Thank you. Yeah, I've got an issue here with the mic. So, yeah, I have two questions. First of them, on the projects—on Tía María specifically—it's good to see that physical progress is advancing.
Speaker #4: But I understand there's a critical component, which is the sublimation plant. So I wanted just to double-check if the order to purchase that equipment has already happened.
Speaker #4: And if not, is this a risk for delaying the project? If I recall well, last quarter, it was mentioned starting up in the third quarter of 2027, and in this press release, the company mentioned starting up in the second half. So, just trying to understand if you guys see a risk of some delays in the project.
Speaker #4: That's for Tía María. Also, on the Mexican project, Pilar, just trying to understand here—was the company able to obtain the water license that had expired?
Emerson Vieira: Also on the Mexican project, El Pilar, just trying to listen here if, the company was able to obtain the water license that was expired. You mentioned that all environmental license have been obtained, just double-checking if everything is indeed well-placed to start the early works. This is on the projects. I have quickly another question, I'll do later on.
Speaker #4: You mentioned that all environmental licenses have been obtained, but I'm just double-checking if everything is indeed well in place to start the early works. So, this is on the projects, and then I have just another question, but I'll ask that later on.
Speaker #2: Okay. Let me start by El Pilar, because that's the easiest way the easiest to answer. We already have the license, the water license renewed.
Raul Jacob Ruisanchez: Okay. Let me start by El Pilar, because that's the easiest to answer. We already have the water license renewed, we're ready to go, that's why we are reporting it. Begin initial works of construction in September a full construction process in Q1 of next year. For Tia Maria, we are putting purchase orders and doing the proper contracts to different suppliers of the major parts of equipment, among them the desalination plant. For now, we don't expect a delay in the project. That's what we're reporting. If there is a perception that the project will delay a little bit, we'll certainly report that to the market. For now, we don't have nothing to report on this.
Speaker #2: So we're ready to go, and that's why we are reporting that we will begin initial works of construction in September, and then a full construction process in the first quarter of next year.
Speaker #2: For Tía María, well, there are several we are putting purchase orders and doing the proper contacts to different suppliers of the major parts of equipment.
Speaker #2: Among them, the diesel plant, for now, we don't expect a delay in the project. That's what we're reporting. But if there is a perception that the project will delay a little bit, we'll certainly report that to the market.
Speaker #2: But for now, we don't have anything to report on this.
Speaker #4: All right, thank you. Just a second one, right now. On sales, right—there was a gap this quarter; sales were a little bit below production.
Emerson Vieira: All right. Thank you.
Raul Jacob Ruisanchez: No.
Emerson Vieira: Just a second one right now on sales. There was a gap this quarter. Sales was a little bit below production. Just trying to understand if you guys expect to see a reversal in H2. I don't know, maybe inventory is being consumed so that we see sales coming above production for H2 of this year. Thank you.
Speaker #4: So, just trying to understand if you guys expect to see a reversal in the second half. I don't know, maybe inventories being consumed so that we see sales coming above production for the second half of this year.
Speaker #4: Thank you.
Raul Jacob Ruisanchez: No, I think we should do a little bit better in terms of volume in H2. The reason for that is that we have been increasing a little bit our material in process at our operations in H1 of the year. I expect that metal to show up and being available for sales at certain point in H2 of this year. That's my personal view. For now, we are advising the market on 917,000 tons of total production for the year. That's basically what we're thinking now.
Speaker #2: No, I think we should do a little bit better in terms of volume in the second half. The reason for that is that we have been increasing a little bit our material process at our operations in the first half of the year.
Speaker #2: So I expect that metal to show up and be available for sale at some point in the second half of this year. So that's my personal view for now.
Speaker #2: We are advising the market on 917,000 tons of total production for the year. So that's basically what we're thinking now.
Speaker #4: Okay. Thank you. Very helpful.
Emerson Vieira: Okay. Thank you. Very helpful.
Raul Jacob Ruisanchez: You're welcome.
Speaker #2: You're welcome.
Speaker #1: Thank you. Our next question comes from Rafael Barcelos with Bradesco BBI. Please proceed.
Operator: Thank you. Our next question comes from Rafael Barcellos with Bradesco BBI. Please proceed.
Speaker #2: Good morning, and thanks for taking my questions. So, the first question: I just wanted to get your views on the overall political environment in Peru.
Rafael Barcellos: Good morning, and thanks for taking my questions. The first question, I just wanted to get your views on the overall political environment in Peru. We are about to start a new government, if you can give your broad view on what can change going forward on the regulatory backdrop. On top of that, if you can comment specifically about two projects. Of course, the first one, Tia Maria. What can it change for the project? I understood from the last question that you see Tia Maria on track. I just wanted to get more insights on where are the main risks for us to keep an eye on here on the execution of the project. Particularly because 2027 is a key year in terms of CapEx disbursement. I just wanted to understand where do you see the risks.
Speaker #2: I mean, we are about to start a new government, so if you can give your broad view on what could change going forward in the regulatory backdrop.
Speaker #2: And on top of that, if you can comment specifically about two projects, right? Of course, the first one, Tía María—what can it change for the project?
Speaker #2: And I understood from your last from the last question that you see Tía María on track, but I just wanted to get more insights on where are the main risks for us to keep an eye on here on the execution of the project.
Speaker #2: Particularly because 2027 is a key year in terms of CAPEX disbursement, right? So I just wanted to understand, where do you see the risks?
Speaker #2: And in the case of Los Chancas, also in this context on the political environment, I mean, you have been facing these illegal mining activities, right?
Rafael Barcellos: In the case of Los Chancas, also in this context on the political environment, you've been facing these illegal mining activities. I just wanted also to understand, how can those things change given the new government. As a second question, can you comment a bit more on the outlook that you see for copper and byproducts production for the H2 of the year and 2027? I'm understanding that you have a chance to beat the previous guidance for the year, which was 911,000 tons, right? I just wanted to understand, how does it change your view for 2027 as well? Thank you.
Speaker #2: So, I just wanted to also understand how those things can change given the new government. And as a second question, can you comment a bit more on the outlook that you see for copper and by-products production for the second half?
Speaker #2: And for the second half of the year and 2027, I mean, I'm understanding that you have a chance to beat the previous guidance for the year, which was 911,000 tons, right?
Speaker #2: But I just wanted to understand, how does it change your view for '27 as well? Thank you. Okay. Thank you for your questions, Rafael.
Raul Jacob Ruisanchez: Okay. Thank you for your questions, Rafael. On the political environment, well, we have to review the plan that was presented by the elected president for the elections, for Keiko Fujimori. They are considering several initiatives that we believe will be positive for the mining industry in Peru. In general for the economy, but particularly in the mining industry. I think that at the same time, the priorities that the incoming administration has mentioned are important because one of them is the fight to illegal mining, which is something that is affecting us on Los Chancas. We believe that some initiatives that are twofold, a new law for artisan mining, which is something that is widespread in Peru and has centuries of activities being Peru a strong mining country. For that, I think I will see some positive developments. Some of them will be favorable for Los Chancas.
Speaker #2: On the political environment, well, we see we have to review the plan that was presented by the elected president for the elections. For Keiko Fujimori, it was very clear they are considering several initiatives that we believe will be positive for the mining industry in Peru.
Speaker #2: In general, for the economy—particularly for the mining industry—I think that, at the same time, the priorities that the incoming administration has mentioned are important, because one of them is the fight against illegal mining.
Speaker #2: Which is something that is affecting us on Los Chancas. So we believe that some initiatives that are twofold. A new law for artisan mining which is something that is widespread in Peru and has centuries of activities being strong mining country.
Speaker #2: So, for that, I think I will see some positive developments—some of them will be favorable for Los Chancas, we believe so. For the Tía María project, the deployment—I think that the risks are the usual ones you may expect for a project under construction.
Raul Jacob Ruisanchez: We believe so. For the Tia Maria project deployment, I think that the risks are the usual ones that you may expect for a project under construction, even though we have reviewed with very strong detail all the matters that may impact the project. Well, sometimes things are not as expected, but for now, we don't see anything like that showing up. The social environment is positive for the project. We're working with the local population in several initiatives. They are, as we reported, a significant amount of people from the area that in many cases were former protesters of the project or family of those persons, and they are okay. We're fine in that regard. I already comment on what we're seeing, how we're seeing right now the project.
Speaker #2: Even though we have reviewed very detailed—it's very strong detail—on the matters that may impact the project, well, sometimes things are not as expected. But for now, we don't see anything like that showing up.
Speaker #2: The social environment is positive for the project. We are working with the local population in several initiatives. We have reported a significant number of people from the area, that in many cases were former protesters of the project or family of those persons.
Speaker #2: And they are okay in that regard. I already commented on what we're seeing and how we are seeing the project right now. On the outlook for copper and by-products for the second half, I already mentioned our goals for this year for the four materials: copper, moly, silver, and sulfuric acid.
Raul Jacob Ruisanchez: On the outlook for copper and byproducts for the H2, I mentioned already for this year our goals for the four materials that we Copper, moly, silver, zinc, and sulfuric acid. You already have this information. For next year, for copper, we're expecting to produce more or less the same that we have for this year. For now, that's what we have to report. We expect to have some help from Tia Maria's tonnage, hopefully in the later part of 2027. For 2028 and on, we expect Tia Maria to fill in and increase our production level to about 970,000 tons. In 2029, our copper production should be over a million tons, 1,060,000 tons. That's our current expectation.
Speaker #2: And zinc and sulfuric acid. So you already have this information. For next year, for copper, we are expecting to produce more or less the same as we have this year.
Speaker #2: For now, that's what we have to report. In 2028, we will, and with these, it will have for next year some help—we expect to have some help from Tía María's tonnage, hopefully, in the later part of 2027.
Speaker #2: For 2028 and on, we expect Tía María to come online and increase our production level to about 970,000 tons. In 2029, our copper production should be over a million tons—1,060,000 tons.
Speaker #2: That's our current expectation. A portion of that will come from Tía María and from recoveries in ore grades at Toquepala and Guajone. And basically, in 2029, we will have the positive benefit of El Pilar.
Raul Jacob Ruisanchez: A portion of that will come from Tia Maria and from recoveries in all grades at Toquepala and Cuajone. Basically, in 2029, we will have the positive benefit of El Pilar and some other better ore grades at the Mexican operation. We are very positive. As you know, our goal is to be over 1.6 million tons of copper by 2033, 2034, and that's what we're heading towards with organic growth in projects pretty much fully owned by the company.
Speaker #2: And some other better ore grades at the Mexican operation. So, we are very positive. As you know, our goal is to be over 1.6 million tons of copper by 2033–2034.
Speaker #2: And that's what we're heading toward, with organic growth in projects pretty much fully owned by the company.
Rafael Barcellos: Thank you. Just as a follow-up, can you be more specific when you say about the expectations for a new or revision on the mining law in Peru, which sort of aspects you believe could improve in the medium term?
Speaker #1: Great, thank you. Just as a follow-up, can you be more specific when you talk about expectations for a new or a revision of the mining law in Peru?
Speaker #1: Which aspects do you believe could improve in the medium term?
Speaker #2: No, it's more than reviewing the mining law. It's improving the safety of the securities, given the security environment in the country. That by itself will be very useful for mining projects in Peru.
Raul Jacob Ruisanchez: No, it's more than reviewing the mining law. It's improving the safety, the security, excuse me, the security environment in the country. That by itself will be very useful for mining projects in Peru. Besides that, we expect the government to maintain the fiscal accounts in order. On top of that, there have been some changes in the institutional arrangement of the country. We will have a senate in Peru that we haven't had for over 30 years. Some other changes that will make the political environment much more stable. That's our expectations. We have to see what the elected President Fujimori proposes in her speech on 28 July, when she will take over the position of president. That's when we will see specifically what their goals are and have more clarity on this. The general view is a positive one, as I mentioned.
Speaker #2: Besides that, we expect the government to maintain the fiscal accounts in order. And, on top of that, there have been some changes in the institutional arrangement of the country. We will have a Senate in Peru, which we haven't had for over 30 years.
Speaker #2: And some other changes that will make the political environment much more stable. That's our expectation. We have to see what the elected president Fujimori proposes in her speech on July 28, when she will take over the position of president.
Speaker #2: That's when we will see specifically what their goals are and have more clarity on this. But the general view is a positive one, as I mentioned.
Speaker #1: Okay. Very clear. Thank you.
Rafael Barcellos: Okay. Very clear. Thank you.
Speaker #2: Thank you very much.
Raul Jacob Ruisanchez: Thank you very much.
Speaker #3: Thank you. Our next question is from David Feng with CICC. Please proceed.
Operator: Thank you. Our next question is from David Feng with CICC. Please proceed.
David Feng: Hi. Good morning, Raúl and team. Thanks for taking my question. My first question is a follow-up question on the new administration. We saw that the incoming administration has proposed distributing up to 40% of the mining canon directly to the residents in producing areas. Based on your experience in local communities in Peru, do you believe this would materially improve community acceptance, or could it make the existing community agreements more complicated?
Speaker #4: Oh, hi. Good morning, Hugo and team. Thanks for taking my question. My first question is a follow-up on the new administration. We saw that the incoming administration has proposed distributing up to 40% of the mining canon directly to the residents in producing areas.
Speaker #4: So, based on your experience in local communities in Peru, do you believe this would materially improve community acceptance, or could it make the existing community agreements more complicated?
Raul Jacob Ruisanchez: In this case, David, we will not comment on this until we see specifically what's the proposal. If it holds, that's the very first thing, if it will hold or they have to review it, and we will know that as the policies of the new administration are deployed. For now, we don't have anything to comment on this.
Speaker #2: In this case, David, we will not comment on this until we see specifically what the proposal is. If it holds, that's the very first thing.
Speaker #2: If it will hold, or if they have to review it—and that, we will not know until the policies of the new administration are deployed.
Speaker #2: So for now, we don't have anything to comment on this.
Speaker #4: Okay, understood. And I have another question on Tía María. So, we saw that you have provided a cash cost estimate of $1.16 per pound.
David Feng: Okay, understood. I have another question on the Tia Maria. We saw that you have provided a cash cost estimate of $1.16 per pound. Just would like to double confirm if it's after by-product credits, and if so, what by-product price assumptions underpinning this estimate? Should we expect it to be a life of mine average cost or cost can be reached at the initial years of the projects, let's say, 2008 or 2009?
Speaker #4: I’d just like to double confirm if that’s after by-product credits, and if so, what by-product price assumptions underpin this estimate? Also, should we expect it to be a life-of-mine average cost, or could that cost be reached in the initial years of the project, say, 2028 or 2029?
Speaker #2: Okay. Well, Tía María has no by-products, so it's just copper that we will be producing. And as you mentioned, the cash cost estimate that we have is $1.16.
Raul Jacob Ruisanchez: Okay. Well, Tia Maria has no by-products. It's just copper, what we will be producing. As you mentioned, the cash cost estimate that we have, it's $1.16. That's the cash cost that we have as an estimate right now. Hopefully, well, we have seen some changes in the fuel prices and some other materials, but this is the estimate that we're looking at right now.
Speaker #2: So, it's $1.16. That's the cash cost that we have as an estimate right now. Hopefully—well, we have seen some changes in fuel prices and some other materials, but so far, this is the estimate that we're looking at right now.
Speaker #4: Thank you so much. I'll pass it on.
David Feng: Thank you so much. I'll pass it on.
Raul Jacob Ruisanchez: You're welcome.
Speaker #2: You're welcome.
Speaker #3: Thank you. And our next question is from John Tomasos with John Tomasos Very Independent Research. Please proceed.
Operator: Thank you. Our next question is from John Tumazos with John Tumazos Very Independent Research. Please proceed.
Speaker #1: Thank you very much. I want to try to understand a little better some of the project delays. And maybe El Pilar is a simple one—just 36,000 tons copper production, smaller open-pit.
John Tumazos: Thank you very much. I want to try to understand a little better some of the project delays, and maybe El Pilar is a simple one, just 36,000 tons copper production, smaller open pit. The predecessor, Mercator, bought it in 2009 for $40 million from Stingray. You bought it out for $100 million in 2015 from the Mercator bankruptcy. It's now 11 years that you've had it. Please explain the delays in engineering and permitting and why it takes so long. This seems to be much easier than Tia Maria or Michiquillay or El Arco or some of the other projects.
Speaker #1: The predecessor, Mercator, bought it in 2009 for $40 million from Stingray. You bought it out for $100 million in 2015 from the Mercator bankruptcy.
Speaker #1: It's now 11 years that you've had it. Please explain the delays in engineering and permitting and why it takes so long. This seems to be much easier than Tía María, Michiquillay, or Los Arcos, or some of the other projects.
Raul Jacob Ruisanchez: Mm-hmm. Thank you for your question, John. Well, each project has its own challenges. In the case of El Pilar, we had an in-depth technical review in order to be absolutely sure that we will get the recoveries on copper that we were expecting for the project. That was something that took us a little bit longer than what we believed when we acquired the project, and you mentioned already the year. Besides this, in the meantime, we had to renew some of the permits that we have for the project, and we have finishing this process recently, and that's why our last board meeting, the project was presented for approval, and it got it. That's why we're moving forward with it. Usually, projects have different challenges.
Speaker #2: Thank you for your question, John. Well, each project has its own challenges. And in the case of El Pilar, we had technical, and indeed technical, review in order to be absolutely sure that we will get, in the recovery zone, the copper that we were expecting for the project.
Speaker #2: That was something that took us a little bit longer than what we believed when we acquired the project, and you mentioned already the year.
Speaker #2: Besides this, in the meantime, we had to renew some of the permits that we have for the project, and we have finished this process recently.
Speaker #2: And that's why, at our last board meeting, the project was presented for approval, and it got it. So that's why we are moving forward with it.
Speaker #2: So usually, projects have different challenges. In this case, it was at the very beginning, as I say—some technical issues that had to be quite clear before we went into the investment.
Raul Jacob Ruisanchez: In this case, it was the very beginning, as I say, some technical issues that have to be quite clear before we go into the investment. The second one is, well, some permitting that given the time that we spent in solving all the technical issues, took a little bit longer as well.
Speaker #2: And the second one is, well, some permitting—that, given the time that we spent in solving all technical issues, took a little bit longer as well.
Speaker #1: How much was the impact when Obrador wanted to halt the open pits in Mexico? Did that delay it?
John Tumazos: How much was the impact when Obrador wanted to halt the open pits in Mexico? Did that delay it?
Speaker #2: For us, it has no impact, since we already have our concessions, including the open-pit ones. And so, there's no point to this. For instance, El Pilar is open pit, and we are fine moving forward with it with all the permitting for the project.
Raul Jacob Ruisanchez: For us, it has no impact since we already have our concessions including the open-pit ones. There's no point on this. For instance, El Pilar is open pit, and we're fine moving forward with it, with all the permitting for the project.
Speaker #1: Thank you. I just—I wait many years, and I hope God gives me enough years to see everything get built.
John Tumazos: Thank you. I wait many years, and I hope God gives me enough years to see everything get built.
Speaker #2: We hope so.
Raul Jacob Ruisanchez: We hope so.
Speaker #1: Thank ank you.
John Tumazos: Thank you.
Speaker #3: Thank you. This concludes our Q&A session. I will pass it back to Raul Jacob for closing comments.
Operator: Thank you. This concludes our Q&A session. I will pass it back to Raul Jacob for closing comments.
Speaker #2: Thank you, Carmen. Well, with this, we conclude our conference call for Southern Copper's second quarter 2026 results. We certainly appreciate your participation and hope to have you back with us when we report the third quarter results for this year.
Raul Jacob Ruisanchez: Thank you, Carmen. Well, with this, we conclude our conference call for Southern Copper's Q2 2026 results. We certainly appreciate your participation and hope to have you back with us when we report the Q3 of this year results. Thank you very much for being with us today, and have a nice day.
Speaker #2: Thank you very much for being with us today, and have a nice day.
Operator: This concludes today's conference. Thank you for participating, and you may now disconnect.
