Southern Copper to Complete Buenavista Expansion in 2015; Announces Unaudited Consolidated Earnings and Operating Results for the Fourth Quarter and Full Year Ended December 31, 2014; Provides Production and Capital Expenditures Guidance for the Year 2015, 2016, 2017 and 2018
Feb 4 15
Southern Copper announced that it will conclude the $3.40 billion expansion of its Buenavista del Cobre mine in Mexico in 2015, despite disruption caused by a major spill. The expansion will increase copper production by 175% to 488,000t/y while boosting molybdenum output by 42%. Progress was slower than planned during 2014 due to delays caused by a spill in August when 40,000m3 of acidified copper sulfate entered two rivers at the Sonora state project, contaminating local water supplies and impacting agriculture. The expansion of the Buenavista mine is advancing, with 61,400t capacity trucks, seven shovels and eight drills delivered at a cost of $511 million and already in operation. In addition, the company reported progress on other projects included within the overall expansion, with the $1.38 billion copper-molybdenum concentrator currently 92.2% complete and $978 million already invested. The concentrator, which has a capacity of 188,000t/y copper and 2,600t/y molybdenum, is expected to be completed in third quarter. The $444 million SX-EW III plant has reached full technical capacity, with estimated production of 120,000t/y copper cathode.
The company announced unaudited consolidated earnings and operating results for the fourth quarter and full year ended December 31, 2014. For the fourth quarter of 2014, the company’s net sales were $64 million lower than net sales of the fourth quarter of 2013. Net sales were $1,471.3 million compared to $1,535.2 million a year ago. EBITDA for the fourth quarter was $664 million. That is 45.1% margin and that compares with $726.9 million, 47.3% margin for the fourth quarter of 2013. Net income attributable to SCC shareholders was $348 million, that is 23.7% of sales or diluted earnings per share of $0.43. Operating income was $525.5 million compared to $616.8 million a year ago. Interest income was $3.3 million compared to $4.2 million a year ago. Income before income tax was $492.5 million compared to $577.2 million a year ago. Net cash provided from operating activities was $240.7 million compared to $495.1 million a year ago. Capital expenditures was $423.8 million compared to $512.8 million a year ago.
Net income for the full year 2014 was $1,333 million or $1.61 per basic and diluted share compared to $1,618.5 million or $1.92 per basic and diluted share a year ago. Capex in 2014 was $1.54 billion, compared to a budget of $2.30 billion, as a result of the delays at Buenavista and at the Toquepala mine expansion in Peru. Net sales were $5,787.7 million compared to $5,952.9 million a year ago. Operating income was $2,232.7 million compared to $2,540.7 million a year ago. Interest income was $15.3 million compared to $20.0 million a year ago. Income before income tax was $2,068.6 million compared to $2,383.3 million a year ago. Net cash provided from operating activities was $1,359.8 million compared to $1,857.2 million a year ago. EBITDA was $2,728.3 million compared to $2,955.9 million a year ago.
For the quarter, the company reported copper mined was 183,612 tons, compared to 165,062 tons for the last year. That was mainly due to higher production at Buenavista operations which increased production by 16,900 tons. Total production was 183,616 tons, compared to 166,908 tons for the last year. Molybdenum mined was 5,710 tons, compared to 5,848 tons for the last year, that was as a result of lower production at the La Caridad operation due to lower ore grades. Zinc mined was 15,980 tons, compared to 23,854 tons for the last year. That was mainly the result of the lower production at the Charcas and Santa Eulalia mines already discussed. Silver mined was 3,400 tons, compared to 3,643 tons for the last year.
For the full year, the company reported copper mined was 676,599 tons, compared to 617,019 tons for the last year. Total production was 682,592 tons, compared to 637,068 tons for the last year. Molybdenum mined was 23,120 tons, compared to 19,897 tons for the last year. Zinc mined was 66,614 tons, compared to 99,372 tons for the last year. Silver mined was 12,992 tons, compared to 13,513 tons for the last year.
The company provided production and capital expenditures guidance for the year 2015, 2016, 2017 and 2018. For the year 2015, improvements in operational practices and capital investments will reduce costs and increase the company copper and molybdenum production. The company plan to produce 782,300 tons of copper which will set a new record of production for Southern Copper. For this guidance, the company is considering that Buenavista operation will produce 344,700 tons. Of those, about 163,000 will come from new projects. The SX/EW Plant III will configured with 102,000 tons and the new concentrator at the same operation will have 61,000 tons of that total. For 2015, the company expects to produce 21,500 tons of molybdenum, given the variance result of lower ore grades and recoveries at operations. For 2015, the company is expects to produce 2.7 million ounces of silver, in line with 2014 production.
Production for 2016 is expected to be 910,000 tons.
Production for 2017 is expected to be 1,100,000 tons.
Production for 2018 is expected to be 1,170,000 tons.
For the year 2015, the board of directors approved a capital expenditure program of $2,687 million which will mainly be spent in the following projects: The company will conclude the expansion of the Buenavista mine which will reach a production capacity of 488,000 tons of copper per year; the company will initiate the expansion of Toquepala which will increase on production capacity by 100,000 tons of copper and 3,100 tons of molybdenum; the company will initiate the construction of the new greenfield project in Peru, Tia Maria which will produce 120,000 tons of copper per year. Production for 2015 is expected to be 782,000 tons. The company expects $2.7 billion CapEx budget for 2015. In 2015, the company will continue investment program to increase copper production capacity by approximately 89% from 2013 production level of 617,000 tons to 1,165,000 tons by the year 2018.
For the year 2016, the company is expecting to spend $1,180 million of CapEx.
For the year 2017, the company is expecting to spend $450 million of CapEx.
For the year 2018, the company is expecting to spend $328 million of CapEx.