Southern Copper Q1 2024 Earnings Call Transcript

Quartr
Provided by Quartr
April 26, 2024

There are 9 speakers on the call.

Operator

Good morning, and welcome to Southern Copper Corporation's First Quarter 2024 Results Conference Call. With us this morning, we have Southern Copper Corporation, Mr. Raul Jacob, Vice President of Finance, Treasurer and CFO, who will discuss the results of the company for the Q1 2024 as well as answer any questions that you might 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 to not place undue reliance on these forward looking statements.

Operator

Southern Copper Corporation undertakes no obligation to publicly update or revise any forward looking statement, whether as a result of new information, future events or otherwise. All results are expressed in full U. S. GAAP. Now I will pass the call on to Mr.

Operator

Raul Jacob.

Speaker 1

Thank you very much, Yiyi. Good morning, everyone, and welcome to Southern Copper's Q1 2024 results conference call. At today's conference, I'm joined by Mr. Oscar Gonzalez Rocha, CEO of Southern Copper and Board Member as well as Mr. Leonardo Contreras, who is also Board Member.

Speaker 1

In today's call, 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 cost, financial results, expansion projects and ESG. After this, we will open the session for questions. Now let us focus on the copper market. The London Metal Exchange copper price decreased 5.4% from an average of $4.05 per pound in the Q1 of 2023 to $3.83 in the past quarter. At the end of last year, we were expecting a slight market surplus for 2024.

Speaker 1

However, after several producers announced reductions in copper production, concerns about the potential deficit displays market optimism. At this time, we estimate that the copper supply will drop by about 1%. Previously, we were expecting a growth of 3.2% in supply, which has been reversed by these new forecasts of a drop of 1% as I said. In addition to a significant downward revisions to global copper production projections for this year, we're currently seeing a strong market demand on the back of our resilient U. S.

Speaker 1

Economy and new demand from decarbonization technologies and artificial intelligence. Demand is expected to grow by about 2.5% this year. We believe these new factors, as I say, decarbonization technologies, the resilience of the U. S. Economy will play a significant role in supporting long term copper demand, sustaining attractive copper price.

Speaker 1

Now let's look at Southern Copper's production for the past quarter. Copper represented 78.6% of our sales in the Q1 of 2024. Copper production registered an increase of 7.6% in the Q1 in quarter on quarter terms to stand at 240,270 tons. Our quarterly production result reflects a 19% increase in production in Peru due to higher ore grades, mineral processing and recoveries and a 0.5 increase in production in Mexico mines. This includes 2,158 tons of copper from the new zinc concentrator at Buenavista Mine.

Speaker 1

These positive results were partially offset by a decrease in SXEW cattle production at Buenavista and Toquepala. In the Q4 of 2023, we reported that our Buena Vista operation had experienced difficulties with its water supply. After taking action this past quarter to cover water requirements for this facility, we believe we have ensured sufficient water supplies to operate our Buenavista mine as forecasted in our annual plan. For 2024, we're increasing our forecast of copper production to 948,800 tons of copper, an increase of 4.1% over the 2023 final print. Last year, we drove our Pilares project to full capacity and initiated ramp up of the Buenavista zinc concentrator.

Speaker 1

For 2024, we expect these two projects to contribute with 43,800 tons of copper. For molybdenum, it represented 10.5% of the company's sales value in the Q1 of this year and is currently our first byproduct. Molybdenum prices averaged $19.84 per pound in the quarter compared to $32.04 in the Q1 of last year, which represents a decrease of 38%. Molybdenum production increased by 9.5% in the Q1 of 2024 compared to the same period of last year. This was mainly driven by higher production at the Peruvian operations and the Buenavista mine due to higher ore grades.

Speaker 1

These results were partially offset by lower production at La Caridad mine. In 2024, we expect to produce 26,100 tons of molybdenum, higher 2.4% than our plan. For silver, it represented 4.3% of our sales value in the Q1 of 2024 with an average price of $23.35 per ounce in the quarter, which reflected an increase of 3.6%. Silver is currently our 2nd byproduct. Mine silver production increased 8.4% in the Q1 of 2024 versus the Q1 of 2023 after production rose at all our mines with the section of Buenavista.

Speaker 1

Refined silver production fell by 1.6% quarter over quarter, which was mainly driven by a drop at the Inza and La Caridad Refinery. In 2024, we expect to produce 20,500,000 ounces of silver, an increase of 11.4% compared to 2023. Zinc represented 2.7% of our sales value in the Q1 of 2024, with an average price of $1.11 per pound in the quarter. This is 22% lower than last year's Q1's price for zinc. Zinc mine production increased 75% quarter on quarter and totaled 26,366 tons.

Speaker 1

This was mainly driven by the new Buenavista zinc concentrator production of 9,695 tonnes over the period and by an increase in production at the Santa Barbara, Charkas and San Martin mines of our IMSA subsidiary. Refined zinc production decreased by 15% in the Q1 of 2024 compared to the Q1 of 2020. For this year, we expect to produce 120,300 tons of zinc, which represents an increase of 84% over the 2023 production levels. This growth will be driven by the Buenavista Zinc Concentrator. We expect this facility to produce 54,500 tons of zinc in 2024 and an average of 90,200 tonnes of zinc and 20,000 tonnes of copper per year over the next 5 years.

Speaker 1

Financial results. For the Q1 of 2024, sales were $2,600,000,000 that is $194,000,000 lower than sales for the Q1 of 2023 or 7% less. The corporate sales volume increased by 2.8%, but value decreased 4.8% driven by lower prices. Regarding our main byproducts, despite an increase in our molybdenum sales volume of 8.4%, sales for molybdenum decreased by 9.3% due to lower prices. As I mentioned, prices dropped by 38% quarter on quarter.

Speaker 1

In the case of silver, sales dropped by 3.1% due to a decrease in volume. This drop was partially offset by better prices. Zinc sales dropped by 24% over the period due to lower prices and slightly lower volume. Operating costs. Our total operating costs and expenses decreased by $30,000,000 or 2.1 percent when compared to the Q1 of 2023.

Speaker 1

The main cost reductions have been inventory, purchased copper, workers' participation, explosives and grounding media and other These cost reductions were partially offset by higher repair material, diesel and fuel costs, labor and other costs. The Q1 of 2024 adjusted EBITDA was $1417,700,000 which is $9,600,000 lower when compared to the $1568,000,000 registered in the Q1 of 2023. This was due to lower prices for copper and molybdenum. The adjusted EBITDA margin in the Q1 of this year was 54.5% versus 56.1% in the Q1 of 2023. Operating cash cost per pound of copper before byproduct credits was $2.11 per pound in the Q1 of 2024.

Speaker 1

This is $0.12 below the $2.23 registered for the Q4 of 2023. This 5.3% decrease in operating cash cost was attributable to lower cost per pound from production, a decrease in treatment and refining cost and a drop in administrative expenses, all of these net of an uptick in the premiums. Southern Copper operating cash cost, including the benefit of byproduct credits, was $1.07 per pound in the Q1 of this year. This cash cost was $0.18 lower than the cash cost of $1.25 for the Q4 of 2023. Regarding by products, we had a total credit of $532,000,000 or $1.04 per pound in the Q1 of 2024.

Speaker 1

These figures represent a 5.9% increase when compared with the credit of $491,500,000 which was an equivalent of $0.984 in the per pound in the Q4. So we have better credits that increased our increased by 6% in absolute dollars and on a $0.04 versus 0.98 $0.04 in the Q4 of last year. Total credits have increased for molybdenum and silver, but decreased for zinc and sulfuric acid. Copper production volumes increased by 2.6% between the Q1 of this year and the 4th quarter of 2023. Regarding by products, production volumes increased for zinc, as I said, 56% and decreased for molybdenum and zinc.

Speaker 1

Net income was $736,000,000 or 9.5 percent lower when compared to the 813 $200,000 registered in the Q1 of 2023. The net income margin was for in the Q1 of this year was 28.3% versus 29.1% in the Q1 of 2023. Cash flow from operating activities in the Q1 of 2024 was $659,900,000 which represented an increase of 22% over the $540,000,000 $1,000,000 posted in the Q4 of 2023. This improvement was attributable to strong cash generation at our operations, which was driven by higher sales and cost control efficiency. In the Q1 of this year, cash flow from operating activities was 44% lower than the $1185,000,000 reported in the Q1 of 2023.

Speaker 1

This decrease was attributable to $311,000,000 increase in working capital, which was driven primarily with our Mexican operations. Capital investments. Our current capital investment program for this decade exceeds $15,000,000,000 and includes investments in the Tia Maria, Cochancas and Michiquillay projects in Peru and the Buenavista, Zinc, Pilar, El Pilar and El Arco projects in Mexico. This capital forecast includes several infrastructure investments, including key investments to bolster the competitiveness of the El Arco project. In the Q1 of this year, we spent $214,000,000 on capital investments, down 10% compared to the Q1 of last year and 16% versus the figure in the Q4 of 2023.

Speaker 1

Capital expenditure represented 29% of net income this quarter. Since there is a description of our main capital project in SEC's press release, I'm going to focus on updating new developments for each of them. For the Buenavista zinc concentrator, the capital budget for the project is $439,000,000 of which $383,000,000 had been invested as of March 31 this year. Concentrator operation began in the Q1 of 2024. We expect, as we mentioned already, to produce 54,500 tons of zinc and 11,900 tons of copper this year.

Speaker 1

And for the next 5 years, we expect to have an average production of 90,200 tons of zinc and 20,000 tons of copper per year coming from this new Buenavista zinc concentrator. For the Peruvian projects, in the case of Los Chancas in Aporimas, the company continues to engage in coordinated efforts with the Peruvian authorities to eradicate illegal mining activity. Once this process is completed, we will resume the environmental impact assessment and initiate hydro geological as well as geotechnical studies. We will also conduct a diamond drilling campaign for 40,000 meters to gather additional information on the characteristics of the Los Chancas deposit. For the Michiquillay project located in the Cajamarca region in Peru, as of March 31 this year, we have drilled 80,000 meters of on a total program of 110,000 meters and obtained 27,802 core samples for chemical analysis.

Speaker 1

Diamond drilling is underway, which will provide data for cross section interpretation, geological modeling and resource evaluation. We expect to begin hydrogeological and geotechnical studies soon and we'll also assess the results of meteorological testing at the deposit. The company continues to work with the Michiquillay and L'Encanara communities based on the guidelines of corresponding social agreements. For environmental, social and corporate governance or ESG, well, we're always we're very consistently reporting on ESG assessment conducting by rating agencies on our operations. For the 3rd consecutive year, we were included in the S and P Global Sustainability Yearbook.

Speaker 1

This means that thanks to our performance in this agency's corporate sustainability assessment evaluation, we're ranked among the top 15% of the best rated companies in sustainability in mining and metals. Regarding DSG Risk ratings report evaluation by Sustainalytics, SEC reduced its risk level by improving its score within the medium risk category from 27.5 in 2023 to 23.4 in 2024. For climate action, in the Q1 of 2024, we received clean energy certificates from one of our electricity suppliers in Peru. With these, all the electrical energy we consume in Peru in 2023 came from renewable sources. Measurements 23, which means that in 2023, which means that we have already hit our 20 27 target to ensure that 25% of our electrical supply is derived from renewable sources.

Speaker 1

Over the same period, greenhouse gas emissions dropped by 7.5% in 2023 compared to 2022. For climate governance, recently a briefing from Chapter 0, home of the Climate Governance Initiative was held for the directors and management of Southern Copper Corporation to inform them about the risks and opportunities associated with climate change. This initiative developed in collaboration with the World Economic Forum aims to support non executive director and chairs in integrating climate action into their business strategy. For the 2nd consecutive year, we received the Exceptional Company Award in Mexico, presented by the Business Coordinated Council, the Communication Council and the Institute For the Promotion of Quality. On this occasion, the success of our educational center model was recognized after outstanding results were reported for mathematics and Spanish and English languages, which are above the national and regional average for the cohort of 2,000 students from the 4 basic levels schools sponsored by the company in Mexico under a voluntary initiative to benefit our employees.

Speaker 1

In Peru, we inaugurated the high performance school or COR in Tagna. COR is the acronym in Spanish. The Peruvian this was in Tagna, the Peruvian Rio where our Toquepala mine operates. This campus houses 300 outstanding students for the state educational system. Many of these students come from the most vulnerable areas of the region.

Speaker 1

The core facilities will allow them to continue their studies in state of the art classrooms, laboratories, libraries, residences and sport areas. Thanks to an investment of $26,000,000 through the word for taxes modality. Dividend announcements. 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, Southern Copper Corporation announced last Friday that its Board of Director has approved a quarterly stock dividend of 0 point 0104 shares of common stock per share, payable on May 23, 2024 to shareholders of record at the close of business on May 8 this year.

Speaker 1

In lieu of fractional shares, cash will be distributed to each shareholder who will otherwise have been entitled to receive a fractional share based on a share price of $115.13 which is the average of the high and low share price on April 18, 2024. Shareholders will not be required to take any action to receive the stock dividends. After the payment date, shareholders' book entry accounts will be credited with additional shares that represent the stock dividend. When shares are held in a brokerage account in the name of a broker, The additional shares will be distributed to the broker on the shareholders behalf. The stock dividend is administered by Computershare, the company's transfer engine.

Speaker 1

Ladies and gentlemen, with these comments, we end our presentation today. Thank you very much for joining us, and we would like now to open the

Operator

Our first question comes from the line of Carlos De Alba from MS.

Speaker 2

Good morning, Raul. Thank you very much. So if I may ask, I have 3 questions. One is what drove the decision, the Board's decision to change the dividend from cash to all shares. In the all the time I've been covering the stock, the company, I think only one time that I can remember the company paid dividends in shares.

Speaker 2

And at that time, it was partial cash and partial shares. And so yes, any color would be very interesting to understand this deviation from the norm. My second question has to do with the appetite for Southern Copper to potentially pursue M and A and by a company in the sector as opposed to develop the projects, which while certainly the portfolio is attractive, they're probably many years away, potentially with the exception of Tia Maria to be developed. And lastly, the cost performance was really good in the quarter. Congratulations on that.

Speaker 2

I wanted to understand do you see the trend in costs before byproducts before the benefit of byproducts in the coming quarters? And if you can share the new guidance or how you see the average cost for the year before byproducts again? Thank you very much, Raul.

Speaker 1

Thank you. Thank you very much for your questions, Carlos. I'm going to address them now. Well, the change in the dividend, it's because we do have a resource, which are the shares that the company has been buying as part of the buyback program. And given the cash position of the company and the view on the price and how to respond to a sensible, say, GBN deal, given the cash, the price of the shares, it was considered to pay this dividend that if you do the arithmetic using as a reference the price that we indicated of $115 dollars and $34 I believe for the price that we use as a reference is about 1 point $2.0 per share.

Speaker 1

The cash generation of the company at the point of the Board meeting was not able without putting in compromise some expenditures for the future. And that's why the board decided to use this resource and let the shareholders decide if they want to keep the shares or monetize them by selling them in the market. Regarding your second concern on the appetite for potential M and A, basically, well, we do see we do follow what is happening worldwide within M and A opportunities. As you know, we are significantly focused in our organic growth. We're following our projects.

Speaker 1

We're happy to report on the Pilares well-being in the last year. This year is part of our operations and we're doing also some good work for the zinc concentrator ramping up. So those are the projects that has been finished lately and well, the zinc concentrator is in its way up to being a new operation as well. But generally speaking, what we're doing is we're following what's happening in the market. If we see a good opportunity for AFAS management, we'll be appropriate to do some recommendation to our Board and we're seeing different circumstances, but so far nothing has been taken our interest specifically.

Speaker 1

And regarding the cost before byproducts, keep in mind that producing the byproducts has a cost. So the new thin concentrator divided cost divided by the pounds of copper that all the pounds of copper that we produce, it's charging us a little bit our cash costs before credits. Obviously, the credits are much, much higher than the cost of this facility on a per pound basis as well. Where I believe that we are seeing prices, the cash cost in the range of what it is now. I think that we are not seeing inflation, for instance, affecting our cash cost now.

Speaker 1

A little bit may come from higher fuel prices if they keep where they are now, but that's basically it. So my view will be that we should maintain our cash cost before credit at this level. After credits, if you add the new production from the Buenavista concentrator, obviously, we will have much higher credits and we reported something of that even though we had not as good prices as we have in the other quarters. So that's basically it.

Speaker 2

Thank you, Raul. If I may just on the first question on the dividend. Maybe I just wanted to understand a little bit more because the company has very strong balance sheet. It finished the year 2023 with $1,800,000,000 in cash and marketable securities. It generated cash in the Q1, another $100,000,000 and so what changed?

Speaker 2

Are you planning on maybe do you see Tia Maria being approved soon or any other project starting relatively in the near future or maybe an opportunity to acquire an asset that will require cash and before you decided to use the shares? Because you could have also potentially canceled the shares and increase the EBITDA per share and before make the stock look cheaper.

Speaker 1

Well, if you see our cash from operating activities in the Q1 was $660,000,000 in round numbers. That is a reference that we look at in order to see how much is the capacity of paying a cash dividend coming from our operations. As I mentioned, we had a change in operating assets and liability for about $311,000,000 This, we believe, is going to be a one time issue. And but generally speaking, it was a mix of maintaining a conservative position regarding cash. If we see some positive developments in Tia Maria, as we're seeing that we're moving forward now, will certainly require more cash.

Speaker 1

So this is one of the reasons. The other ones are all related to having a conservative position regarding our cash position. It's more like being prudent at this point instead of paying a dividend that will create may create some problems for the future. Thank you, Rahul. You're welcome.

Operator

Thank you. One moment for our next question. Our next question comes from the line of Alejandro De Michelis from Jefferies.

Speaker 3

Yes, good morning, gentlemen. Thank you very much for taking my question. Actually, just to follow-up on the dividend question, Raul. So if I understood correctly, you said that you're using the shares you have in treasury. So should we think that the dividend in stock will only be limited to those shares that you have in treasury?

Speaker 3

Or can we assume that you could actually expand the share count that you have? That's the first question. And then the second question is, you mentioned some progress in Tia Maria. Can you give us a little bit more of a flavor of how you're seeing that process going?

Speaker 1

Yes. Let me start by the last question. We are seeing first thing is that the recent change in executive branch authorities related to mining and energy as well as finance as well as environmental affairs has been very positive for the project. The new ministers are working with the company to improve the conditions for the project to start. And that is a very positive result in our view.

Speaker 1

We also acknowledge that well, we have been doing social work in the Tambo Valley and Islay Province. And I think that we're seeing a better social environment generally speaking for the project. And this is basically the result of many years of consistent work. When we had the last stop at the Tia Maria project a few years ago, we didn't stop making progress on the social front. And that is something that we're seeing it's making a project advance a positive news for now.

Speaker 1

Regarding the dividends, well, we have these shares in treasury. This dividend will consume about 8,000,000 shares of the treasury that we the ones that we have in treasury. And that's basically it for now. We are not considering nor what you are saying, neither what you're saying on using all the shares in treasury or something like that, we're not considering that. And we're not also considering any shares issuance for the future.

Speaker 1

So for now, it's what it is. As was mentioned before in the first questions that we had from Carlos De Alba, we pay a few years ago in the Q4 of 2011, dividend was paid using the shares that we had at that time. And we by doing this, we transfer to the shareholders the decision of monetizing those shares or keeping them considering the very good outlook that the company has for the future.

Speaker 3

That's clear. And just to follow-up on Tia Maria, can you give us some timeline? Do you have any timeline on how the process is going

Speaker 4

to be?

Speaker 1

No timeline, no timeline. It's we're doing progress. We'll report to the market, to investors community as we move on, on a quarterly basis, but we don't want to set a timeline at this point. That's great. Thank you, Raul.

Speaker 1

You're welcome.

Operator

Thank you. One moment for our next question. Our next question comes from the line of Jon Brandt from HSBC.

Speaker 4

Hey, good morning, Raul. Thanks for taking my questions. Just wondering, would you I mean, we've seen Codelco talk about maybe taking on some partners to increase production.

Speaker 1

Could you John, please, could you get a little bit closer? I can't help you well.

Speaker 4

Yes. Is that better?

Speaker 1

Much better.

Speaker 4

Okay. We've seen Codelco talk about maybe partnering with some other miners to help increase their production. I'm wondering, do you have a really great pipeline of greenfield projects? Is that something that you would consider? Would you partner with another miner?

Speaker 4

I mean, would that help you pull forward some of the production? Or is there something else you could do to increase the speed of your greenfield projects? I guess that's the first question. And then just on Tia Maria, I mean, I think I noticed in your slide you were talking about a 2027 startup. When does that assume that you start construction activities?

Speaker 4

I mean, is it a 2 year construction activity before you would see first production? If you could sort of talk about that, that would be great. Thank you.

Speaker 1

Yes. Well, yes, it will be a 2 year construction process at this point. This is our estimated time line for construction. We don't know when this is going to be the case to report, but whenever it happens, we'll certainly let you all know. And to your first question, considering a partnering or a partnership with another miner, no, for now, we are not considering that the company is developing these projects as full own operations as it is the case with our current operations in general.

Speaker 4

Okay. So one follow-up, just to clarify your answers on the stock dividend. Should we expect next quarter you to go back to a cash dividend? Is that how we should interpret your answers?

Speaker 1

As I say, when I report on the dividend announcement, each board meeting, the board discuss the company cash position, the outlook on the market, any payments that we have to do for projects or debt, etcetera. And on that basis, a dividend is declared. How the Board is going to evaluate this in the next Board meeting, I can't advance anything on that.

Speaker 4

Okay, great. Thank you.

Speaker 1

You're welcome.

Operator

Thank you. One moment for our next question. Our next question comes from the line of Timna Tanners from Wolfe Research.

Speaker 5

Yes, happy Friday. Thanks. So wanted to probe a little bit more the Buena Vista situation. Last quarter, you told us you did not get you've not yet been granted the permit, and we're still moving water via truck. I know you said you've covered your needs, but can you give us an update on the supply situation there and any progress towards the permit?

Speaker 1

Certainly, Timna. Glad to hear from you. Well, yes, we are as you mentioned, we're covering a portion of the water that is required by Buenavista with track fleet. We're operating that so far this year and we're as we are indicating in the press release, we're covering our water needs for now and with some excess capacity. So we are comfortable with what we have as water supply.

Speaker 1

That's basically it. On the permit status, we do have the permit to operate the wells. We are using the wells to get the water, but we don't have a permit for building a pipeline that will bring the water from the wells to the facilities. That's why we're using the water trucks at this point. And no news on when are we going to get the permit.

Speaker 5

Got it. That you anticipated in my next question. Okay. And then as we go through with your new guidance for copper, silver, moly and zinc, Just looking at the copper side, your guidance implies kind of a little drop off from 1st quarter run levels run rate in Q and the copper, it implies a big step up in run rate for silver. Just trying to understand a little bit more of the nuances of what drives the the little slowdown in moly, slowdown in copper and an uptick in silver.

Speaker 5

I think we understand zinc pretty well, but just trying to understand the other items.

Speaker 1

Well, actually on the copper side, we are much more optimistic than let me put it differently. We're relatively conservative in our production goal for the year. Hopefully, we'll be better than what we're at this point estimated, but that's where we are now. That's our current plans. And so hopefully, we will improve a little bit our final mark for copper.

Speaker 1

In the case of molybdenum, we have been producing more molybdenum than this past quarter and more than the Q1 of last year. The problem here is are the prices for molybdenum that which are much lower than what we had last year. As I mentioned, we had a 40% to 38% drop in price for this quarter, visavis the first one of last year.

Speaker 5

Okay. And then on silver, did you have a comment on why that was trending much better than the Q1 run rate?

Speaker 1

Sure. It's we're getting silver from our current operating facilities. The new concentrator has also some silver content in the production that we're getting. So that's that plus better production at our operations is the driver for higher silver production.

Speaker 5

Okay. Thank you very much.

Speaker 1

You're welcome, Tina.

Operator

Thank you. One moment for our next question. Our next question comes from the line of Alfonso Salazar from Scotiabank.

Speaker 6

Hi, Raul. Let me please rephrase a couple of questions from my colleagues. The first one is, because this stock dividend is a one off, for the next quarter, the Board of Directors will not be considering the possibility of paying a stock dividend again. So is this correct?

Speaker 1

It's up to them. It's up to them. I can't comment on what they are going to decide on the next Board meeting.

Speaker 6

Okay. But in principle, it will be a one off.

Speaker 1

In principle, it will be a what?

Speaker 6

A one off, depending on our stock dividend.

Speaker 1

They approved a stock dividend this quarter. We don't have at this point any idea of what they are going to propose on the next one.

Speaker 6

Fair enough. Fair enough. Thank you. Can you remind us how many stocks do you have at the treasury after this payment?

Speaker 1

Well, before the payments, we had 111,000,000 shares.

Speaker 6

Sorry, I didn't understand.

Speaker 1

111,000,000. 111,000,000.

Speaker 6

Okay.

Speaker 1

And the share payout is okay, the share payout is about $8,000,000 So after this, we will have 103 the exact number will be 103,442,000 shares of treasury shares after this dividend payment.

Speaker 6

Yes, that's good. Excellent. The other question that I have is, can you remind us your copper production profile for the coming years? And let us know what is your projection for Tia Maria or other projects?

Speaker 1

Yes. How long is that too? Okay. We're expecting for this year, as I say, it's going to be 948,800 tons. Next year, 2025,920,000 dollars 2026,940,000 dollars 2027,

Speaker 6

Got it. And from that, I assume that there is some production coming from Tia Maria by 2027?

Speaker 1

Yes. Tia Maria is included in the forecast for 2027.

Speaker 6

Excellent. Thank you very much, Sal. You're welcome.

Operator

Thank you. One moment for our next question. Our next question comes from the line of John Tumazos from John Tumazos Very Independent Research LLC.

Speaker 7

Thank you. Raul, is it possible that maybe we're a little spoiled with these long delays in the very big projects moving forward, which permitted large dividends bigger than 50% payout. And now that Tia Maria may advance and the other projects in Peru are advancing, the dividend payout needs to be less than 50% rather than over 50% in cash. It's better not to gain weight and it's better not to accumulate debt because both of them are hard to reduce once you accumulate?

Speaker 1

Well, I agree on the weight comment on that, John. But I think

Speaker 4

that the

Speaker 1

company what we have seen and we have shown is that we're conservative and prudent in the use of our cash. We don't want to, for instance, take debt to pay a dividend. I think that is not in our DNA. But in certain circumstances, for instance, when we anticipate that our future EBITDA will be higher, because we're moving forward with a new project or getting some operations on a better shape, then it is reasonable to have some additional debt. As we have been paying all the maturities in our bonds in the last 5 years, I think as we're doing this, we may consider going to the bond market or to the capital market at certain point in time.

Speaker 1

Right now, we're not having any concrete plans for that. This is something that we evaluate on a consistent basis. As you may imagine, interest rates are not what they used to be and the company took advantage of that. If you look at our debt profile, the average interest rate that we're paying is significantly lower than what a company of such as ours may get in the next few years or if we go out to the market now. So being prudent is one of the reasons why the company has been considering this dividend in this quarter.

Speaker 1

And we believe that this prudent view will hold for the next few years. And that's what we as management are thinking about the use of debt and dividend payments.

Speaker 7

Thank you.

Operator

Thank you. One moment for our next question. Our next question comes from the line of Regina Carrillo from GBM.

Speaker 8

Hi, good morning. Thanks for taking my questions. I saw in the presentation that you mentioned investments in the Ino

Speaker 1

Regina, Regina, please get a little bit closer to your microphone.

Speaker 8

Is this better?

Speaker 1

Much better. Thank you.

Speaker 8

Perfect. I saw in the presentation that you mentioned investments in the Ilo and the Empame smelters. And I just wanted to get an update on what you're seeing there?

Speaker 1

Yes. We do have some plans for growing in the refining business as well as the mining business. And for that, we have plans for building a new smelter in Mexico, which at this point is considered to be in the Empain in Mexico, this is another state. And for the Peruvian facilities, we do have also plans for new smelter and refinery in the Ilo area, nearby our current facilities for smelting and refining. We're seeing that sales direct sales to the industrial complexes in both Mexico and Peru we'll absorb these new material whenever we move on with these projects.

Speaker 1

At this point, as you know, we are considering them for later on this decade, and we will be updating on any progress on these investments as we move on over time and the projects mature later on in time as well.

Speaker 8

Perfect. Thank you.

Speaker 1

You're welcome.

Operator

Thank you. At this time, I would now like to turn the conference back over to Mr. Raul Jacob for closing remarks.

Speaker 1

Thank you very much, Gigi. And well, with these, we conclude our conference call for Southern Copper's Q1 of 2024 results. We certainly appreciate your participation and hope to have you back with us when we report the 2nd quarter results. Thank you very much for being with us today and have a nice day.

Operator

This concludes today's conference call. Thank you for participating. You may now disconnect.

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Earnings Conference Call
Southern Copper Q1 2024
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