Exhibit 99.1
FOR IMMEDIATE RELEASE
SPCC REPORTS FIRST QUARTER 2005 ECONOMIC RESULTS
LIMA, PERU, April 21, 2005 - Southern Peru Copper Corporation (SPCC) (NYSE and LSE PCU) today reported net earnings of $187.6 million, or diluted earnings per share of $2.34, for the first quarter of 2005 compared with net earnings of $86.8 million, or diluted earnings per share of $1.09, for the first quarter of 2004, an increase of 116.1% over the 2004 period.
Sales of products were $486.2 million in the first quarter of 2005, compared with $274.1 million in the first quarter of 2004, an increase of 77.4% over the 2004 period.
The average price for copper on the London Metal Exchange in the first quarter of 2005 was $1.48 per pound, compared with $1.24 per pound in the 2004 first quarter. The average price for copper on the New York Commodity Exchange (COMEX) in the first quarter of 2005 was $1.47 per pound, compared with $1.23 per pound in the first quarter of 2004. The average price for molybdenum, one of SPCC’s principal by-products, was $31.31 per pound in the first quarter of 2005, compared to $ 8.27 per pound in the first quarter of 2004. The price of silver, on the COMEX was higher at $6.99 per ounce in the first quarter of 2005, compared to $6.71 per ounce during the first quarter of 2004.
Mine copper production decreased 14.6% to 178.5 million pounds in the first quarter of 2005 compared with the first quarter of last year. This decrease of 30.5 million pounds included 7.4 million pounds from the Toquepala mine, 20.0 million pounds from the Cuajone mine and 3.1 million pounds in solvent extraction/electrowinning (SX/EW) production. The decrease in Toquepala production was a result of a lower volume of material milled and lower ore grade and the decrease in Cuajone production was a result of lower ore grade in the 2005 period. The main reason for the 3.1 million pound decrease in SX/EW production was lower grade of PLS (pregnant leaching solution). All the above noted production quantities are in line with amounts forecasted in our 2005 budget.
Commenting on the Company’s economic results, for the first quarter of 2005, Mr. German Larrea, Chairman of SPCC said, “The improvement in Company earnings for the first quarter of 2005 is principally due to increase in sales volume of copper and molybdenum and significant increase in sales price for copper and molybdenum. SPCC’s sale of copper was reduced in the first quarter of 2004 due to the build-up of inventory needed to establish the copper rod program.”
Reporting on the Company’s modernization program, Mr. Oscar Gonzalez Rocha, President and CEO of SPCC, said “The Ilo smelter modernization project is moving ahead on schedule with detailed engineering and preliminary construction work in process in order to finish by the end of 2006. Additionally the Company’s leaching dump, crushing and conveying project at the Toquepala mine is also progressing on schedule. The leaching dumps project investment through March 2005 is $56.1 million. This project is scheduled for completion in mid-2005 with projected annual operating cost saving of $25 million.”
On April 1, 2005, SPCC completed its acquisition of Minera Mexico, S.A. de C.V. (MM) pursuant to the Agreement and Plan of Merger (Agreement), dated as of October 21, 2004. SPCC acquired a 99.1463% interest in MM in exchange for the issuance of 67,207,640 shares of common stock. Grupo Mexico’s interest in SPCC, through subsidiaries, increased from 54.2% to 75.1%. In addition, in compliance with the Agreement, SPCC paid in the first quarter of 2005 a $100 million transaction dividend and MM reduced its outstanding net debt to less than $1.0 billion. The first quarter 2005 financial statements included in this report reflect the results of SPCC at March 31, 2005, prior to the acquisition of MM on April 1, 2005. Summary pro-forma information of the combined company is as follows:
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| | First Quarter 2005 | |
| | SPCC alone | | SPCC & MM | |
| | (dollars in millions) | |
| | | | | |
Sales | | $ | 486.2 | | $ | 945.0 | |
Net earnings | | $ | 187.6 | | $ | 324.2 | |
Total assets | | $ | 2,696.6 | | $ | 5,373.9 | |
Production: | | | | | |
Copper (000s lbs.) | | 178,500 | | 356,595 | |
Molybdenum (000s lbs.) | | 6,550 | | 8,864 | |
Silver (000s ozs.) | | 1,038 | | 2,770 | |
Zinc (000s lbs.) | | — | | 76,494 | |
On April 4, 2005, SPCC entered into a Registration Rights Agreement with its Class A shareholders, which contemplates that SPCC will file as promptly as practicable a shelf registration statement on Form S-3 with the Securities and Exchange Commission, as per the disclosure made on April 8, 2005.
The 2005 shareholders meeting called for April 28, 2005 has been postponed to May 16, 2005 in order to ensure a major participation of shareholders.
Southern Peru, together with Grupo Mexico, will hold a conference call with the financial community on Friday, April 22, at 10:00 AM Mexico City time (11:00 AM New York) to discuss 1st Quarter 2005 results. The call will be hosted by J. Eduardo Gonzalez, Vice President & Chief Financial Officer of the company. The conference call can be accessed at: 866-332-8507 in the US and 816-650-2807 outside the US.
Southern Peru Copper Corporation is one of Peru’s largest companies and one of the ten largest copper producers worldwide. The ownership of SPCC’s shares, either directly or through subsidiaries as of April 1st, 2005, is as follows: Grupo Mexico (75.1%), Cerro Trading Company (7.7%), Phelps Dodge (7.6%) and other shareholders (9.6%).
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Forward-Looking Statements:
This press release may contain statements regarding SPCC’s assumptions, projections, expectations, intentions or beliefs about future events. These statements are intended as “Forward-Looking Statements” within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. All statements with respect to SPCC or Minera Mexico, their corporate plans, future financial condition, future results of operations, future business plans, strategies, objectives and beliefs and all other statements that are not historical facts are forward looking. Statements containing the words: “expects”, “anticipates”, “intends”, “plans”, “may”, “will”, “believes”, “seeks”, “estimates”, or other similar words are also forward looking. These statements are based on management’s assumptions and beliefs in light of the information available to it. These assumptions involve risks and uncertainties which may cause the actual results, performance or achievements expressed or implied by such forward looking statements. Forward-looking statements are not guarantees of future performance and actual results may differ materially from estimates in the forward-looking statements. No obligation to revise these forward-looking statements to reflect events or circumstances after the date of this release is undertaken.
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Southern Peru Copper Corporation
and Subsidiaries
SUMMARY OF EARNINGS
(Unaudited)
| | Three Months Ended
March 31, | | | |
| | 2005 | | 2004 | | Variance | |
| | (in millions, except for per share data) | |
| | | | | | | |
Sales | | $ | 486.2 | | $ | 274.1 | | 77.4 | % |
| | | | | | | |
Earnings before taxes on income and minority interest | | 281.3 | | 134.8 | | 108.7 | |
| | | | | | | |
Taxes on income | | 92.3 | | 47.2 | | 95.6 | |
| | | | | | | |
Minority interest of investment shares | | 1.4 | | 0.8 | | 80.4 | |
| | | | | | | |
Net earnings | | $ | 187.6 | | $ | 86.8 | | 116.1 | % |
| | | | | | | |
Weighted average common shares outstanding (Basic) | | 80.0 | | 80.0 | | | |
Weighted average common shares outstanding (Diluted) | | 80.0 | | 80.0 | | | |
| | | | | | | |
Per common share amounts: | | | | | | | |
Net earnings - basic and diluted | | $ | 2.34 | | $ | 1.09 | | | |
Dividends paid | | $ | 1.25 | | $ | 0.27 | | | |
Southern Peru Copper Corporation
and Subsidiaries
Average Metal Prices
| | Three Months Ended
March 31, | | | |
| | 2005 | | 2004 | | Variance | |
| | | | | | | |
Copper (per pound - LME) | | $ | 1.48 | | $ | 1.24 | | 19.4 | % |
| | | | | | | |
Copper (per pound - COMEX) | | $ | 1.47 | | $ | 1.23 | | 19.5 | % |
| | | | | | | |
Silver (per ounce - COMEX) | | $ | 6.99 | | $ | 6.71 | | 4.2 | % |
| | | | | | | |
Molybdenum (per pound - Metals Week Mean) | | $ | 31.31 | | $ | 8.27 | | 278.6 | % |
Metal Production and Sales
| | Three Months Ended
March 31, | | | |
| | 2005 | | 2004 | | Variance | |
| | | | | | | |
Copper (000s pounds) | | | | | | | |
Mined | | 178,500 | | 209,000 | | (14.6 | )% |
Refined | | 175,700 | | 178,400 | | (1.5 | )% |
Sales | | 176,600 | | 155,300 | | 13.7 | % |
| | | | | | | |
Silver (000s ounces) | | | | | | | |
Mined | | 1,038 | | 1,099 | | (5.6 | )% |
Refined | | 916 | | 896 | | 2.2 | % |
Sales | | 944 | | 940 | | 0.4 | % |
| | | | | | | |
Molybdenum (000s pounds) | | | | | | | |
Mined | | 6,550 | | 4,852 | | 35.0 | % |
Sales | | 6,554 | | 4,862 | | 34.8 | % |
Southern Peru Copper Corporation
and Subsidiaries
CONDENSED CONSOLIDATED STATEMENT OF EARNINGS
(Unaudited)
| | Three Months Ended
March 31, | | | |
| | 2005 | | 2004 | | Variance | |
| | (in thousands, except for per share data) | |
| | | | | | | |
Net sales | | $ | 486,224 | | $ | 274,066 | | 77 | % |
| | | | | | | |
Operating costs and expenses: | | | | | | | |
Cost of sales (exclusive of depreciation, amortization and depletion, shown separately below) | | 172,740 | | 108,796 | | 59 | |
Selling, general and administrative expenses | | 8,508 | | 7,080 | | 20 | |
Depreciation, amortization and depletion | | 18,583 | | 18,994 | | (2 | ) |
Exploration | | 3,012 | | 2,175 | | 38 | |
Total operating costs and expenses | | 202,843 | | 137,045 | | 48 | |
| | | | | | | |
Operating income | | 283,381 | | 137,021 | | 107 | |
| | | | | | | |
Interest income | | 4,050 | | 1,079 | | 275 | |
Interest expense | | (6,142 | ) | (4,491 | ) | 37 | |
Capitalized interest | | 2,269 | | 1,337 | | 70 | |
Other income (expense) | | (2,247 | ) | (178 | ) | 1,162 | |
| | | | | | | |
Earnings before taxes on income and minority interest | | 281,311 | | 134,768 | | 109 | |
| | | | | | | |
Taxes on income | | 92,272 | | 47,168 | | 96 | |
| | | | | | | |
Minority interest of investment shares | | 1,425 | | 790 | | 80 | |
| | | | | | | |
Net earnings | | $ | 187,614 | | $ | 86,810 | | 116 | % |
| | | | | | | |
Per common share amounts: | | | | | | | |
Net earnings - basic and diluted | | $ | 2.34 | | $ | 1.09 | % | 114.1 | % |
| | | | | | | |
Dividends paid | | $ | 1.25 | | $ | 0.27 | | 363.0 | |
| | | | | | | |
Weighted average common shares outstanding (basic) | | 80,018 | | 80,014 | | | |
Weighted average common shares outstanding (diluted) | | 80,018 | | 80,023 | | | |
Southern Peru Copper Corporation
and Subsidiaries
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
| | Three Months Ended
March 31, | |
| | 2005 | | 2004 | |
| | (in thousands) | |
| | | | | |
OPERATING ACTIVITIES: | | | | | |
Net earnings | | $ | 187,614 | | $ | 86,810 | |
Depreciation, amortization and depletion | | 18,583 | | 18,994 | |
Capitalized mine stripping | | (10,782 | ) | (6,583 | ) |
Minority interest of investment shares | | 1,425 | | 790 | |
Cash provided from (used for) operating assets and liabilities | | 82,247 | | (61,589 | ) |
Other, net | | (9,871 | ) | 2,209 | |
Net cash provided from operating activities | | 269,216 | | 40,631 | |
| | | | | |
INVESTING ACTIVITIES: | | | | | |
Capital expenditures | | (50,424 | ) | (33,628 | ) |
Proceeds from (purchase of) held-to-maturity investment | | 45,267 | | — | |
Other, net | | — | | — | |
Net cash used for investing activities | | (5,157 | ) | (33,628 | ) |
| | | | | |
FINANCING ACTIVITIES: | | | | | |
Debt incurred (repaid) | | 957 | | — | |
Escrow (deposits) withdrawals on long-term loans | | — | | (5,000 | ) |
Dividends paid | | (100,000 | ) | (21,605 | ) |
Distributions to minority interests | | (780 | ) | (168 | ) |
Treasury stock and investment share purchases, net | | — | | (5 | ) |
Net cash provided from (used for) financing activities | | (99,823 | ) | (26,778 | ) |
| | | | | |
Effect of exchange rate changes on cash | | 11,972 | | 337 | |
Net increase in cash and cash equivalents | | $ | 176,208 | | $ | (19,438 | ) |
Southern Peru Copper Corporation
and Subsidiaries
CONDENSED CONSOLIDATED BALANCE SHEET
(Unaudited)
| | March 31,
2005 | | December 31,
2004 | |
| | (in thousands) | |
| | | | | |
ASSETS | | | | | |
Current assets: | | | | | |
Cash and cash equivalents | | $ | 722,237 | | $ | 546,029 | |
Marketable securities | | — | | 45,267 | |
Accounts receivable, net | | 226,314 | | 308,031 | |
Inventories | | 108,962 | | 96,940 | |
Other current assets | | 14,062 | | 17,286 | |
Total current assets | | 1,071,575 | | 1,013,553 | |
| | | | | |
Net property | | 1,249,374 | | 1,217,479 | |
Capitalized mine stripping, net | | 253,710 | | 244,013 | |
Intangible assets | | 105,743 | | 106,454 | |
Other assets | | 16,213 | | 15,631 | |
Total Assets | | $ | 2,696,615 | | $ | 2,597,130 | |
| | | | | |
LIABILITIES | | | | | |
Current liabilities: | | | | | |
Current portion of long-term debt | | $ | 40,000 | | $ | 32,314 | |
Accounts payable | | 109,860 | | 100,708 | |
Accrued liabilities | | 348,464 | | 328,425 | |
Total current liabilities | | 498,324 | | 461,447 | |
| | | | | |
Long-term debt | | 250,000 | | 256,729 | |
Deferred income taxes | | 106,406 | | 116,277 | |
Other liabilities and reserves | | 20,638 | | 24,851 | |
Asset retirement obligation | | 5,736 | | 5,643 | |
Total non-current liabilities | | 382,780 | | 403,500 | |
| | | | | |
MINORITY INTEREST | | 11,929 | | 11,284 | |
| | | | | |
STOCKHOLDERS’ EQUITY | | | | | |
Common stock (a) | | 261,958 | | 261,958 | |
Accumulated other comprehensive loss | | (4,931 | ) | — | |
Retained earnings | | 1,546,555 | | 1,458,941 | |
Total stockholders’ equity | | 1,803,582 | | 1,720,899 | |
Total Liabilities, Minority Interest and Stockholders’ Equity | | $ | 2,696,615 | | $ | 2,597,130 | |
| | | | | |
(a) Common Shares: Authorized | | 34,099 | | 34,099 | |
Outstanding | | 14,117 | | 14,117 | |
| | | | | |
Class A Common Shares: Authorized and Outstanding | | 65,901 | | 65,901 | |
Southern Peru Copper Corporation
and Subsidiaries
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDER’S EQUITY
(unaudited)
| | Three Months Ended
March 31, | |
| | 2005 | | 2004 | |
| | (in thousands) | |
| | | | | |
CAPITAL STOCK: | | | | | |
Common Stock, balance at beginning and end of period | | $ | 143 | | $ | 143 | |
| | | | | |
Class A Common Stock, balance at beginning and end of period | | $ | 659 | | $ | 659 | |
| | | | | |
ADDITIONAL PAID-IN CAPITAL, balance at beginning and end of period | | $ | 265,745 | | $ | 265,745 | |
| | | | | |
TREASURY STOCK: | | | | | |
Balance at beginning of period | | $ | (4,589 | ) | $ | (4,672 | ) |
Used for corporate purposes | | — | | 14 | |
Balance at end of period | | $ | (4,589 | ) | $ | (4,658 | ) |
| | | | | |
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS): | | | | | |
Balance at beginning of period | | $ | — | | $ | — | |
Net loss on derivative instruments | | — | | — | |
Balance at end of period | | (4,931 | ) | — | |
| | $ | (4,931 | ) | $ | — | |
| | | | | |
RETAINED EARNINGS: | | | | | |
Balance at beginning of period | | $ | 1,458,941 | | $ | 1,053,528 | |
Net earnings | | 187,614 | | 86,810 | |
Dividends paid | | (100,000 | ) | (21,605 | ) |
Stock awards | | — | | — | |
| | $ | 1,546,555 | | $ | 1,118,733 | |
| | | | | |
TOTAL STOCKHOLDER’S EQUITY | | $ | 1,803,582 | | $ | 1,380,622 | |
