Southern Copper Corporation

Good morning, and welcome to Southern Copper Corporation's fourth quarter and year 2025. With us this morning, we have Southern Copper Corporation Mr. Raul Jacob, Vice President Finance, Treasurer, and CFO, who will discuss the results of the company for the fourth quarter and year 2025, 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. 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. Raul Jacobs.

Thank you very much, Gigi. Good morning, everyone, and welcome to Southern Copper's fourth quarter and full year 2025 results conference call. At today's conference, I'm accompanied by Mr. Oscar González Rocha, CEO of Southern Copper and board member, as well as Mr. Leonardo Contreras, who is also board member. 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 costs, financial results, expansion projects, and ESG. After this, we will open the session for questions. Our performance in year 2025 delivered new company records for net sales, adjusted EBITDA, and net income. These milestones are a testament to the strength of our strategy, execution, and commitment to sustainable growth. This strong performance was primarily driven by a rise in by-product production and improved metal prices for all our products. Mine sink production rose 36% year-on-year, bolstered by an additional 52,500 tons from the Buena Vista sink concentrator. Mine silver production increased 15% last year, are primarily driven by higher production at all our mines. Molybdenum production was 31,200 tons in 2025, which was 7% above the figure in 2024. The combination of higher production volumes and better copper and by-product prices enabled us to achieve record sales of $13.4 billion. This is 17% more than in 2024, a record high for EBITDA of $7.8 billion, that's 22% on top of 2024, and net income of $4.3 billion, which is 28% higher than 2024. We remain firmly committed to enhancing productivity and cost efficiency, driven by a strategy anchoring discipline and focus on achieving a long-term goal to produce 1.6 million tons of copper at the lowest possible, most competitive cost per pound. Looking into the metal market and prices for copper, the London metal copper price increased 21% from an average of $4.16 per pound in the fourth quarter of 2024 to $5.03 per pound this past quarter. For the COMEX market, we saw a 22% increase averaging during the past quarter $5.15 per pound. Based on current supply and demand dynamics, we're currently estimating a copper market deficit of about 320,000 tons for 2026. Copper inventories worldwide the sum of the London Metal Exchange, Commer, Comex, and Shanghai and Bondell warehouses, where as of January 26, this past Monday, approximately 14 days of global demand. Let's look at Southern Copper's production for the past quarter. Copper represented 75% of our sales in the fourth quarter of 2025. Copper production registered an increase of 1.4% in the fourth quarter of last year on a quarter-to-quarter terms to stand at 242,172 tons. Our quarterly results reflect higher production as our La Caridad, Toquetala, Coajone, and Insa mine, which was attributable to better ore grades and recoveries. These positive results were partially upset by a decrease in production at our Buena Vista operation. For 2025, copper production decreased 1.8% to 956,270 tons. This figure is 1% lower than our 2025 plan of 965,000 tons. Our year-on-year results reflects lower production at our Buena Vista and the Peruvian mines, partially offset by a rise in production at our IMSA and La Caridad mines. For 2026, we expect to produce 911,400 tons of copper, which represents a decrease of 4.7% compared to 2025's final print. This slight drop was primarily attributable to lower oil rates at our Peruvian operations. For molybdenum, it represented 8% of the company's sales value in the fourth quarter of 2025, and is currently our first byproduct. Molybdenum prices averaged $22.75 per pound in the quarter, compared to $21.00 and 61 cents in the fourth quarter of 2024. This represents an increase of 5%. Molybdenum production increased 10% in the fourth quarter of last year compared to the fourth quarter of 2024. This was mainly driven by an increase in production at Choquetal and Cojone mines due to higher ore rates at both operations. These results were partially offset by a decrease in production at the Buena Vista and La Caridad mines. Molybdenum production increased 7.4% year-on-year in 2025 after production grew at Toquepala and Caridad and was partially offset by lower production at Buena Vista and Oaxaca. In 2026, we expect to produce 26,000 tons of molybdenum. For silver, it represented 9% of our sales in the fourth quarter of last year, with an average price of $54.48 per ounce in the quarter, which is reflected in an increase of 74%. Silver is currently our second by-product. Mine-silver production increased 15% in the fourth quarter of 2025 versus the same period of the prior year. It was boosted by production growth at all our mines. Refined silver production increased 10% quarter over quarter, driven mainly by increased production at all our refineries. In 2025, we produced 24 million ounces of silver which represents an increase of 15% over the 2024 production level. This was due to higher production at all our mines. In 2026, we expect to produce 24 million ounces of silver, a slight decrease of 2% compared to 2025. For zinc, it represented 4% of our sales in the fourth quarter of 2025 with an average price of $1.44 per pound in the quarter. This represents a 4.3% increase compared to the fourth quarter of 2024. Zinc is currently our third byproduct. Zinc, my introduction, increased 7% quarter-on-quarter and totaled 46,223 tons. Growth was mainly driven by higher production at the Buena Vista sink concentrator and by an increasing production at San Martin mine. Refined sink production increased 2% in the fourth quarter vis-a-vis the fourth quarter of 2024. Sink production for the full year 2025 increased 36% due to additional production of 52,500 tons from Buena Vista sink and an upswing in production at our Santa Barbara mine. This was partially offset by lower production at our Charcas and San Martin operations. For 2025, we expected to use 165,500 tons of zinc. Financial results. For the fourth quarter of 2025, sales were $3.9 billion. This is $1.1 billion higher than sales in the fourth quarter of 2024. Copper sales increased 39%, and volume was up 3%, supported by better prices. In the case of LMEs, was 21% higher and in the case of COMEX, 22% higher. Regarding our main byproducts, we reported higher sales for molybdenum of 6% due to an increase of volume of 10% and better prices. Zinc increased its value in the value of sales in 23% due to higher volume for 21% and better prices. increase its value in 106%, you can increase in volume of 11% and better price. 2025 net sales hit a record high of $13.4 billion, topping the 2024 net sales by 17%. This expansion was mainly driven by higher sales volumes for molybdenum, zinc, and silver. Growth in sales volumes remain stable for copper, growth in sales volume remain stable in 2020. Operating costs. Our total operating costs and expenses increased $282 million, that is 19%, when compared to the fourth quarter of 2024. The main cost increments were in workers' participation, purchase copper, and inventory consumption and operations contractors and services. We have also, in the quarter, a one-time adjustment of $60 million for asset retirement obligations at the Mexican operations, mainly at the Buena Vista one. These cost increments were partially compensated by lower labor costs at the Peruvian operations. The fourth quarter 2025 adjusted EBITDA was $2.3 billion, which represented an increase of 53% with regard to the 1.5 billion registered in the fourth quarter of 2024. The adjusted EBITDA margin in the fourth quarter was 60% versus 54% in the fourth quarter of 2024. For the year 2025, The adjusted EBITDA hit a record high of 7.8 billion, reflecting a robust 22% increase over the figure in 2024. The adjusted EBITDA margin in 2025 was 58% versus 56% in 2024. Cash cost. Operating cash cost per pound of copper before by product trade was $2.29 per pound in the fourth quarter of 2025. This is six cents higher than the value for the third quarter of $2.23 per pound. This 3% increase in the operating cash cost was driven by higher cost per pound from the production cost, administrative expenses, and lower premiums, which were partially offset by lower treatment and refining costs. Thousand copper operating cash costs, including the benefit of by-product credits, was 52 cents per pound in the fourth quarter of last year. This cash cost was 10 cents higher than the cash cost of 42 cents for the third quarter of 2025. Regarding by-products, we have a total credit of $920 million or $1.77 per pound in the fourth quarter of 2025. These figures represent a 3% increase when compared to a credit of $895 million or $1.81 per pound in the third quarter of 2025. Total credits have increased for zinc, silver, and sulfuric acid and decrease for . 2025 operating cash cost per pound of copper before was $2.17 per pound, and this was higher than the $2.13 cents per pound that we reported in 2024. This is a fourth-cent increase. NEPA by-product credit 2025 cash cost was 58 cents per pound. This 31-cent reduction in the cash cost compared to the 89 cents per pound reported in the fourth quarter for the full year, excuse me, for the full year 2024, and this was mainly attributable to a 34-cent increase in by-product revenue credit. Net income in the fourth quarter was $1,308 million, which represents a 65% increase with regard to the $794 million registered in the fourth quarter of 2024. The net income margin in the past quarter was 34% versus 29% in the fourth quarter of 2024. 2025 net income hit a record high of $4.3 billion, which is 28% above the figure in 2024. These improvements were driven by an increasing net sales and by our strict cost control measures. The net income margin in 2025 was 32% versus 30% in 2024. Cash flow from operating activities in 2025 was $4.8 billion, which represented an increase of 8% over the $4.4 billion posted in 2024. This result, which was mainly fueled by higher net income, was partially offset by an increase in net operating assets, particularly accounts receivables. For capital investment, Our current capital investment program for this decade exceeds $20.5 billion and includes investments in projects in Peru and Mexico. In 2025, we spent $1.3 billion on capital investments, which reflected a 29% increase year-on-year and represented 30% of net income in 2025. Given that there is a description of our main capital project in thousand coppers per release, I'm going to focus on updating new developments for each of them. Regarding the Peruvian projects, I'm focusing on the Tia Maria project currently under construction at the Arequipa region in Peru. This project represents a landmark investment for Peru and the Arequipa region. The current estimated capital budget is $1.8 billion. As of the end of 2025, the project was 24% complete. At current copper prices, Tia Maria will generate $20.2 billion in exports and $4.6 billion in taxes and royalties over its first 20 years of operation. The project has already created 3,589 jobs, a strong focus on local hiring. When operations begin in In 2027, Tia Maria will provide 764 direct jobs and nearly 6,000 indirect jobs, demonstrating our commitment to sustainable growth and long-term regional development. As of December 31st of last year, the company has committed about $800 million to different project activities. Large-scale earth-moving works have mobilized 1.7 million tons of material, from the La Tapada deposit. Purchase orders to acquire metallic structures for secondary and tertiary trashing has been issued for the dry area. At the SXEW process level, state-of-the-art technology has been selected for our main equipment. Access roads and platforms, as well as temporary contractor camps, has been completed. Regarding energy supply, all earthworks for the electrical main substation has been completed. Foundation works are currently underway and the transmission line is being built. Next efforts will focus on developing the main and secondary components of the project's dry and wet areas and setting up a temporary camp. For Los Chancas in Apurima, as of December of last year, we continue to implement environmental and social programs communities of Tapairiwa and Chiapas, which are located within the direct area of influence of the Los Chancas mining deposit. Despite these efforts, the presence of illegal miners within the project area has prevented the project from advancing. In this context, the company continues to take actions with the relevant authorities to regain control of the project area. For the Michiquillai project in Cajamarca, also in Peru, this is a world-class greenfield mining project that we expect to produce 225,000 tons of copper per year with an estimated investment of about $2.5 billion. The comprehensive review of the geological information to estimate the project's mineral resources has been duly audited in accordance with the SEC mining disclosure standards under Regulation SK-1300. Subsequently, the company intends to use this information to estimate mineral reserves and develop the corresponding mine plan. Regarding environmental, social, and corporate governance or ESG practices, The company, in recognition of our efforts in the ambits of prevention and minimizing risk, our Buenavista mine in Sonora, in Mexico, as well as our Toquepal and Coajone mines in Peru, received the authorization from the Copper Mark for compliance with the Global Industry Standard on Pailings Management set forth by the International Council on Mining and Metals. This accreditation guarantees that best international practices are followed to provide authorities, the community neighboring our operations, and other stakeholders with assurances that operations are safe. For the SXEW plant at the La Caridad unit in Sonora, Mexico, this unit has been awarded with the casco de plata, the silver helmet, the category of metallurgical plant with up to 500 workers this is in recognition of his status as one of the country's safest operations this recognition which was best told by the mexican mining chamber known as coming next it was hand during the opening ceremony of the 36th international mining convention in mexico and this attests to the company's commitment to risk prevention and employee safety. In the case of the Peruvian branch, Southern Peru was recognized by the Peruvian government as the main company with the largest number of projects awarded under public works for taxes in 2025. The company is currently rolling out four investments for a total of $28 million that would benefit more than 5,000 people. Over time, Southern Copper has worked on 40 projects through this mechanism and has invested more than $400 million in infrastructure to bridge social gaps. In 2025, also about 5,000 residents benefited from the health campaigns conducted in the communities near our mining operations and projects in the Peruvian regions of Moquegua, Arequipa, Apurímac, and Cajamarca. Teams of specialists in internal medicine, ophthalmology, pediatrics, gastroenterology, among other disciplines visit communities to provide comprehensive medical care. This is on the nearby communities of our operations. 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 January 22, 2026, Southern Copper Corporation announced a quarterly cash dividend of $1 per share of common stock and a stock dividend of 0.0085 shares of common stock per share. This is payable on February 27th of this year to shareholders of record at the close of business on February 10th. 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.

Thank you. As a reminder, to ask a question, please press star 1-1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1-1 again. Please stand by while we compile the Q&A roster. Our first question comes from the line of Timna Tanners from Wells Fargo.