David Feng

David Feng asked about Southern Copper's capital management strategy, specifically whether stronger cash flow from current copper prices would be used to boost growth plans or increase the cash portion of dividends. He also inquired about the impact of higher copper prices on the Los Chancas project, considering both the potential to leverage more resources and the increased incentive for illegal miners.

Answer

Raul Jacob, Vice President, Finance, Treasurer, and CFO, stated that dividend decisions are at the discretion of the board, which has historically increased the cash portion with improved results. Regarding Los Chancas, Mr. Jacob noted that while higher prices are generally beneficial for projects, all projects are evaluated at significantly lower long-term average prices. He mentioned some government initiatives against illegal mining but had no specific progress to report on the project's advancement at this time.

David Feng asked about Southern Copper's capital management strategy, specifically whether stronger cash flow from current copper prices would be used to boost growth plans or increase the cash portion of dividends. He also questioned how higher copper prices impact projects like Los Chancas, potentially making development easier by leveraging more resources or more challenging by incentivizing illegal miners.

Answer

Raul Jacob, VP of Finance, Treasurer, and CFO, stated that dividend decisions are made by the board, which has been increasing the cash portion of dividends in line with improved results. He indicated that this trend might continue if results further improve. Regarding Los Chancas, Mr. Jacob noted that while better prices are generally favorable, projects are evaluated at significantly lower, long-term average prices. He acknowledged that higher prices could incentivize illegal mining but mentioned some government initiatives to help combat it, though there's nothing significant to report yet. He expressed belief that the Peruvian government would take action to allow the project to advance.

David Feng from CICC asked about copper pricing, specifically whether the COMEX price is a better benchmark than LME for Southern Copper's sales, given the premium and the company's customer base in the Americas.

Answer

Executive Raul Jacob explained that sales from Mexican operations are largely priced using COMEX, while Peruvian operations and some concentrate sales use LME. He acknowledged the current arbitrage favors COMEX but stated the company maintains exposure to both benchmarks as the market can shift quickly.