What were the primary drivers for the significant increase in net sales and net income?

The primary drivers were higher average market prices for copper and other metals, coupled with the restoration of full production capacity at the Buenavista mine in Mexico. This combination led to higher sales volumes and improved profitability, more than doubling net income in both the three- and six-month periods compared to 2010.

How is the company managing its operating costs in the current environment?

Southern Copper continues to maintain its position as one of the lowest-cost producers in the industry. For the first six months of 2011, its operating cash cost was $0.310 per pound, reflecting efficient operations and effective cost management, even with increases in fuel, power, and repair costs. The company's strategy focuses on production enhancement and cost control to remain profitable.

What is the status of the Tia Maria project, and what are the potential implications?

The Tia Maria project in Peru experienced a suspension of its Environmental Impact Assessment (EIA) approval process in April 2011 due to protests and governmental decisions. While the company is appealing the decision and has legal title to the concessions, the project is currently suspended. Management has reviewed the asset's carrying value and believes any impairment loss will not be material, as equipment is being repurposed. The company remains confident in completing the project once approvals are received.

What are the company's main capital expenditure plans and outlook?

Southern Copper is investing heavily in capital expenditures, with an estimated $700 million for 2011, primarily focused on increasing production capacity and reducing operating costs. Key projects include expansions at the Toquepala and Cuajone concentrators in Peru, and significant growth projects at the Buenavista mine in Mexico, including new SXEW plants and concentrator expansions. The company is also actively exploring in Argentina and Ecuador.

SCCO 10-Q Quarterly Report Q2 FY2011 — Revenue, Net Income, EPS

Summary

Southern Copper Corporation (SCCO) reported a significant increase in financial performance for the three and six months ended June 30, 2011, compared to the same periods in 2010. Net sales surged by 53.6% and 42.3% respectively, driven by higher metal prices, particularly for copper, and the full restoration of production at the Buenavista mine. Net income attributable to SCC more than doubled in both periods, reflecting strong operational improvements and favorable market conditions. The company's operational highlights include a substantial increase in copper production, largely due to the ramp-up at the Buenavista mine, and a continuation of its low operating cash cost position, reinforcing its industry-leading cost competitiveness. Despite macroeconomic uncertainties such as the US debt ceiling debate and the European debt crisis, SCCO maintained a positive outlook for copper market fundamentals, anticipating improved demand from Asia. The company also continued its strategic capital expenditure program, focusing on production increases and cost reductions across its Peruvian and Mexican operations.

Financial Highlights

51 data points

Beta

Revenue

$1.80B

0.6% Gross Margin

Net Income

$658.00M

0.4% Net Margin

EPS (Diluted)

$0.78

Total Assets

$7.79B

Cash & Equivalents

$1.45B

Free Cash Flow

$92.06M

Financial Statements

Beta

Revenue	$1.80B
Cost of Revenue	$695.98M
Gross Profit	$1.03B
SG&A Expenses	$25.74M
Operating Expenses	$802.77M
Operating Income	$998.70M
Net Income	$658.00M
EPS (Basic)	$0.77
EPS (Diluted)	$0.78
Shares Outstanding (Basic)	857.49M
Shares Outstanding (Diluted)	857.49M

Key Highlights

1Net sales increased significantly by 53.6% to $1.80 billion for the quarter and 42.3% to $3.40 billion for the six months, driven by higher metal prices and increased sales volume.
2Net income attributable to SCC more than doubled, rising 110.0% to $658 million for the quarter and 63.1% to $1.14 billion for the six months, reflecting improved profitability.
3Copper production saw a substantial increase of 29% for the quarter due to the full restoration of Buenavista mine production, contributing to higher sales volumes.
4Operating cash cost remained low at $0.310 per pound for the six months (with by-product credits), underscoring the company's cost competitiveness.
5The company is progressing with its significant capital expenditure program, with an estimated $700 million for 2011, focused on expanding production and reducing costs.
6Despite global macroeconomic concerns, SCCO maintained a positive outlook on copper market fundamentals, expecting improved demand from Asia.
7The Tia Maria project in Peru faced a suspension of its Environmental Impact Assessment approval process, leading to a review of its carrying value, though impairment is not expected to be material.

SOUTHERN COPPER CORP/ Quarterly Report for Q2 Ended Jun 30, 2011

Summary

Financial Highlights

Key Highlights

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