Good morning and welcome to Southern Copper Corporation's third quarter and nine months 2015 results conference call. With us this morning, we have Southern Copper Corporation, Mr. Raul Jacob, Vice President of Finance and CFO, who will discuss the results of the company for the third quarter and nine months 2015 as well as answer any questions that you may 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 statements, whether as a result of new information, future events or otherwise. All results are expressed in a full U.S. GAAP. Now, I will pass the call onto to your host, Mr. Raul Jacob. Mr. Jacob, you may begin.

Thank you very much, Bianca and good morning to everyone and welcome to Southern Copper’s third quarter 2015 earnings conference call. Participating with me in today’s conference call is Mr. Daniel Muniz, Southern Copper’s board member. In today's call, we will begin with an update on our view of the copper market. We will then talk about Southern Copper's key results related to production, sales, operating cost, financial results, expansion projects and capital expenditure program. After that, we will open the session for questions. Before we go ahead with our review of the markets, let me emphasize that Southern Copper is very well positioned to take advantage of the current market conditions. As I will report, the company has increased its copper sales by 11% year-to-date, adding very low-cost copper pounds to its total cash cost. On top of this, we have a strong balance sheet and a relaxed debt payment schedule with no principal payments due until 2020. So during this low price environment, we’re making our company much more cost competitive, while maintaining a very solid financial condition. Having said this, let me focus on the copper market, the core of our business. We maintain our long-term confidence in the positive fundamentals of the copper market. During this year, demand has been affected by macroeconomic headwinds and concerns about the Chinese economy’s copper consumption. As you know, China is the world major copper consumer with about 46% of world consumption estimated for 2015. We believe China's demand for copper will increase 3% this year. For 2016, we think it will increase its gold mark to about 4%, driven by the recovery of the Chinese housing market and the national grid investment program. Let me mention that 4% of additional copper demand from China is approximately 400,000 tons of…

Thank you Mr. Jacob. [Operator Instructions] And our first question comes from Thiago Lofiego from Bank of America. Thiago your line is open, please go ahead.

I have two question. First one on the Tia Maria project, you already commented a little bit on it. If you could give us a little bit more color on how the dialogue with the communities is progressing and if it's reasonable to expect the construction permits this year already? And the second question would be on your production volumes. We were looking for a better - a higher increase quarter on quarter due to the Buenavista facilities run perhaps, so if you could give us some color on where production levels are at both Buenavista’s SX/EW and Concentrator facilities that would be very helpful? Thank you.

Okay, Thiago. On the Tia Maria, well we have as I mentioned we are - we have been conducting these door-to-door campaign and we have launched thorough initiatives that are designed for the whole Tambo Valley. And the reception that we have received has been very positive. About 90% of all the houses or all the doors to say that we knocked opened, were open and received the company personnel and we had conversation on the merits of the project and I think that this has been very helpful. Our goal is to obtain the construction permit for Tia Maria between the rest of the year or in the first quarter of next year that's what we want to do. In the case of - of the production for Buenavista as it was mentioned, we adjust a little bit our estimate for productions in the case of the new facilities basically. For the new concentrator, we're expecting a production of about 29,500,000 tons for this year. A little of that was obtained on the fourth quarter - on the third quarter, the rest about 25,000 tons should be obtained in the fourth quarter. We’re very optimistic about the initial development of the plant ramping up. And we think that this is going to be an excellent project for the company. In the case of SX/EW III, the SX/EW III has been operating at full speed at full capacity but with a lower POS or Pregnant Liquid Solution grade in this year, due to the shutdown of the areas where we have the reaches the areas. Now we receive an authorization to initiate activities on Tinajas in July and it's one of the area where the reach is the material for this plant to operate. So we’ve forward preparing these areas to production and we’re expecting that that will allow us to increase the total production of the SX/EW III to its expected copper capacity.

I guess just to compliment, I mean was there any specific negative factors during the quarter that prevented you from producing more than what you produced. My question is because of the fact that you are ramping up a couple of facilities and again your volumes were flattish quarter on quarter in terms of production. So I'm just trying to figure out if there was any specific negative factor preventing production to increase further in the quarter.

No, not in that sense Thiago, we have a good production profile, actually we look at our plan facilities, the whole operations to say, so - are all - this year in very good shape, Toquepala the Buenavista facilities, the first, concentrator number one of Buenavista, the Caridad operations all of them are doing very well. What has been said that was financial lower PLS that we have been introducing into the new SX/EW III in Buenavista, lower grade in other words of copper. In the case of the new concentrator, a slight delay in ramping up process that did not make us to produce as much as expected in our initial plans.

Okay, perfect thank you Raul.

Thank you. And our next question comes from Carlos de Alba from Morgan Stanley. Carlos your line is open, please go ahead.

Thank you very much good afternoon Raul. I have several questions. The first two are related to growth projects. So the first one is, we saw a very little increase in the CapEx disbursed at Toquepala quarter on quarter only around [indiscernible]. So if you could comment as to why that is the case, why it is taking a little longer than I expected to pick up a basin in Toquepala. And also in Tia Maria, will the company consider given the current prices of copper and the market expectations for deficits in 2017 and 2018 to perhaps cancel Tia Maria and just - or sell it and just focus on the other good projects that the company has. And then a couple of other questions, one is regarding tax expenses; they were significantly higher this year than we have seen in recent quarters. So if you can comment on that that would be great. And finally, the company has continued to buy back some shares and at some point, the benefit of as you have said creating value to shareholders by buying back in shares. We will not outpace the potential negatives of very reduced flow. So what is the Company's view on this balance I guess and what are the company plans going forward? Thank you.

Okay, thank you very much for your questions Carlos. Focusing on the Toquepala project capital expenditures, the first part of the project is focused on discussions with different vendors of equipment, issuing the initial purchase orders for equipment, some down payments go with that but most of them have been done in October, so you're not seeing much action in the third quarter because we were more in the design step of the final acquisition of equipment or selecting the company that will the engineering for certain parts of the project et cetera. So that explains why we haven't spent as much as you may expect in order to go ahead with the Toquepala project that's basically it. In the case of Tia Maria, you mentioned that we are considering either cancelling the project or selling it, no we are not, we think that this is an excellent project and we want to go ahead with it. We think that our work with the local community and the authorities has given some positive results and we are as a said we’re expecting to get the construction permit for Tia Maria either before the year-end or in the first quarter of 2016. On the tax expense of the tax charge actually to our results, we had adjustment related to the final tax return that the company procures of $50 million U.S. GAAP requires us to register these in the quarter that you do have that information. In our case, we had a reduction in foreign tax credits related to the different price environment in which we’re operating now and that was basically it. We had a difference between the provision of last year and tax return we have to do a catch up non-cash adjustment. And finally on the buyback, basically we are following a program that we established at the beginning of this year. We don't think that current liquidity [Technical Difficulty] and the existing stock in the market is reasonable for the stock to reflect the company value.

To give you an idea Carlos, the ADTV is about $40 million a day.

Okay, thank you. Our next question comes from Wilfredo Ortiz from Deutsche Bank. Wilfredo, your line is open.

Yes, good afternoon, gentlemen. I just wanted to see if you could give us an update on the production profile expected between now and 2018 as you’ve previously provided and also on the CapEx. And also if you could caveat that as far as Tia Maria getting up early by April or so of next year and if that doesn’t happen, and it gets the start later, how could that profile potentially on CapEx be changed.

Okay, Wilfredo, let me focus first on the production profile where I mentioned that for this year we are expecting 756,000 tons of copper. For next year with the full - the SX/EW III plus the new concentrator in Buenavista at full speed, we are expecting to produce a little bit more than 900,000 of copper, actually it’s 909,000 tons; for 2017, 1.020 million tons of copper; for 2018, 1.160 million of copper. On the CapEx, for the year, we are expecting $1.4 billion at this point. For 2016 we are still looking into the numbers. Actually what we have is not to expand this year will be spread through the next two to three years. So I think that on that one let me report on that in generally.

Got it. And as far as the projects that are - obviously the Peruvian projects that are still in the works or in the beginning phases if you will, is there the potential that the overall CapEx could end up being a lot lower considering current market conditions and perhaps your bargaining power?

We do see in the market, as you well pointed, situation where we have some advantage as buyers of equipment. We are expecting that to eventually materialize in lower expenses, but at this points it is a little bit thoroughly to do an adjustment in our budgets for the projects, basically it’s the Toquepala project, because as you know Buenavista projects are pretty much at the end of them. We are pretty much at the end of the Buenavista project, but in the case of Toquepala, it may happen, however we don’t want to report anything on that at this point, because we have - we are still - we are in the initial stage of the project development.

Okay, and one more if I may on the 1.4 billion CapEx for 2015, that’s excluding El Pilar or including El Pilar?

That includes El Pilar.

Okay, thank you.

You are welcome.

Thank you. The next question comes from Matthew Korn from Barclays Capital. Matthew, please go ahead.

Well, good day, everyone. Thanks for taking my questions. So a couple if I could. First, what kind of operating cost level would you expect to achieve next quarter and really into next year assuming that production schedule progresses as you intend and then energy prices followed roughly according to the futures? And then second, with the copper price remaining weak, as you pointed out, we’ve seen some major producers making cuts in their expected output. I am wondering what your view is as you are a low-cost producer. If there is some clients at a price that’s still above your current cash cost level, you yourself would review your current operating level, reviewing your project schedule in order to offer some kind of support to the market balance. Thanks very much.

Thank you very much for your questions, Matthew. Let me start by the last question. I don’t think that we will consider either stopping our operations or stopping our CapEx program. The company has been developing this strategy of being - of looking for low-cost operations, funding projects that will reinforce the characteristics and we prepare for the best times as well. In this case, as you know, we issued $2 billion in bonds at the beginning of this year. This cash available plus the cash from our operations will allow us to keep moving forward to our projects. Generally speaking, I don’t think that the company is considering either stopping operations or shutting down projects due to current market prices. That is out of the question for us. It will have to be a very really very bad price environment for us to consider that. Most likely shutdowns of operations will precede that and correct the price environment. On the operating cost, well, for the fourth quarter we have - we certainly have the benefit of additional low-cost units coming from our new concentrator. That should improve our cash cost before by product rates. As I mentioned, in the third quarter it was $1.58 per pound. We are expecting that to decrease in the fourth quarter. At this time, I think it will be premature to mention a specific figure. For next year, we are expecting to be operating before credits at about $1.54 per pound. The bad news is that the lower prices for our white products particularly molybdenum will affect us, so we are expecting a reduction in cash cost, but not as aggressive as it would be if we had normalized by product rates.

Thanks very much.

You are welcome.

Our next question comes from Marcos Assumpcao from Itau BBA. Marcos, your line is open.

Good morning, everyone. Good afternoon. First question here on the buyback again just to explore a little bit better that, is there a level in which the company needs to make a tender offer if the free float gets reduced even further? And second question is, is there also a level in which minorities are forced to squeeze out of the company or to sell - forced to sell if the company reach certain amount of stake in - if the controlling shareholder reaches a certain stake in the company? And my - just one follow-up question here. You mentioned about byproduct credits, could you please tell us your view regarding the moly prices going forward? We’ve seen very deep contraction in the moly prices recently. Do you think that this is sustainable going forward?

Let me go ahead with your last question. On the moly price, I think that it’s difficult if price holds for long period of time and having said that, the reason for this is that about half of the industry in the case of molybdenum it’s with cash cost in the range of $10 per pound and the price is about half of that. We don’t know how long this price scenario will remain. We do know that additional supply is coming to the molybdenum market from new operations. So that is a reason, that plus the weakness of the molybdenum demand, a portion, and significant portion of the molybdenum demand is related to the oil drilling industry and as you may imagine, not much activity on that industry nowadays. On the first question, basically we don’t think that at this point we have to worry about any concerns about the float of the company. We do know that there are certain - at certain point you have to - the company have some options open, but we are not considering those at this point.

Okay, and just a follow-up here, Raul. Just to stress the scenario here, you mentioned that in the moly industry a big part of the industry is losing money at current prices levels. Why do you think it could be different in the copper industry like seeing not only in the moly industry, but if you take look on the coal industry, also in the nickel industry nearly 40%, 50% of the industry is losing money when compared to the current prices and cash cost of the producers, why do you think in the copper industry it’s a little bit different?

Well, at this point, I think in the case of molybdenum, there are certain characteristics on the market. First is that, I would say, 50% of the market has the cash cost of about $10 or higher than that. Those are molybdenum producers. In the case of copper companies such as Southern that produce molybdenum as a byproduct, we are still making profit selling molybdenum at $4.50. So we don’t have an incentive to shut down production. In the case of the copper industry focusing specifically in our market, I think that we have seen some reaction to low prices. The discipline of the companies in our industry is responding to the low price scenario we are in today.

Okay, thank you very much.

You are welcome.

Thank you. And our next question come from Ivano Westin from Credit Suisse. Ivano, your line is open. Please go ahead.

Hi, thanks for the questions. First point on your production guidance that you mentioned. I just want to confirm that El Pilar volume is already included there and what is the estimated ramping up of El Pilar, specifically. On the second point, Toquepala high pressure grinding rolls, if you have the board approval you want to guarantee that you are going to have 60K per day production and I understand that this is given the increase in the ore material hardness index that you need additional CapEx. So I just wondered whether you foresee any risk of facing a similar issue in other operations where you could end up being forced to move ahead with additional CapEx which is not planned at this stage. And last question if I may, on your reserves, I just wondered what sort of copper price you’d expect to use when you update it by year end or next time and whether you can forecast any sort of positive outcome based on your drilling campaign.

Just hold on a sec please. Thank you for your questions. Okay. On El Pilar, the El Pilar production is included in our forecast. We are being very conservative on these prospects at this point. We have made - the rationale for acquiring the deposit was that we were going to construct a plant where the deposit is on the SX/EW plant and operated at a cash cost of about $1.60 per pound. We are looking and currently moving forward with the plan to optimize these investment design that we have at this point. That may vary different things I mean. It may vary the scale of the project, it may vary the investment, reducing it we believe. And so we are currently about to start the study on opportunities that could be addressed in order to optimize El Pilar project. In the case of Toquepala high pressure grinding rolls, this is a technology that has been used in the cement industry for many years and was observed by some hard rock index operations worldwide. We have one of these facilities operating in the Cuajone mine with excellent results and after we saw the results and see the opportunity that this will bring to our facilities of having the plants being used at the optimal level, we decided to acquire a similar equipment for the Toquepala operation. I don’t think that if we talk about the four operations, the four open pit operations that Southern Copper has, I think that that’s basically hard - the rock hardness index in the Mexican operations of Buenavista or Caridad are not a problem, so with these I think we will be finishing for the current operations. And finally on the reserves, you were asking on the price that we should or we’ll consider for when we do the reserve computation for the 10-K. We basically present two reserves estimate. One is using the three-year average that number will certainly be lower than what we have been using in the last year. But those reserves are presented as a request from the authorities. In the case of Southern Copper, we are using 290 as our current reserve base for the corporation. I don’t think that number will change. We believe that the copper market should recover in a couple of more years and we’ll see some of the recover in 2017 and we will be ready to go ahead with new production coming from the investments that we are doing nowadays in our operations.

Okay, clear. Thank you very much. Just one point, is there any possible positive outcome from a drilling company in terms of increasing your reserves?

For El Pilar or general?

In general.

Well, in some of our operations, we haven’t reached the final or the end of the deposit and that could provide some more reserves. But at this point, we’re not foreseeing something like that.

That’s very clear. Thank you very much.

Thank you. Our next question comes from Alfonso Salazar from Scotiabank. Alfonso, your line is open.

Thank you. A couple of questions. The first is regarding the situation at the IMMSA mines, Santa Eulalia, and Charcas, and if you can help us to quantify the impact on zinc and silver production for the rest of the year and in 2016, if any? And the second one is regarding - well, I'm trying to understand if we should expect more share buybacks going forward. You also mentioned that you are interested in some - doing some M&A activity, so just trying to see what to think - what is your strategy here? And how you will balance these two things? Thank you.

You’re welcome. Well, we are expecting to initiate production in San Martin and Taxco eventually. At this point, we have the Santa Eulalia mine not operating due to a fault. We are pretty much finishing the repair works for avoiding these kind of events in the future. So we’re expecting to have a better zinc production next year. This year, our goal is about 60 - 64,000 tons of zinc produced from our facilities. That number should increase next year since we will add the Santa Eulalia mine to our operations. On the M&A activity, well, we basically acquired El Pilar in July of this year and I mentioned in the last call, we are looking for some other opportunities, but there is nothing significant to report on that at this point, Alfonso.

Okay, thank you. And regarding the share buybacks, shall we expect you to continue if the price stays where it is?

Well, that’s always an option to the committee that reviews the share buyback. It’s something that I don’t like to - I don’t want to comment on this.

Okay, fair enough. Thank you.

Thank you. And our next question comes from Sasha Bukacheva from BMO. Sasha, your line is open.

Thank you. My first question relates to the buybacks. Do you know if there are float restrictions for continued listing requirements? In other words, if you continue with the buyback side, could that be potentially an issue?

We don’t think that we are there yet Sasha, and if there is a matter on that, we’ll put that on the consideration of the company Board.

Okay. But so do you know if there - is there a service threshold digit like 10%, 15%, do you know if there is that sort of like formal threshold?

Threshold for what?

Minimum free float.

There is no minimum threshold, and at the moment, the average daily trading volume is more than $40 million. We don’t see a big issue there given the size of the company.

Okay. That’s good to know, thank you. And then apologize if I missed it, but it looks like you’re $270 million under budget that Buenavista considering the project is 99% completed. So is that just a matter of - is that just a function of cash versus accruals or has there been capital reductions?

No, it’s the first point that you mentioned. We have some final payments that are due once the equipment is performing as indicated by the vendor, so that’s why you don’t have all the money out at the same time as the project has progressed.

Okay. Fair enough. So, nothing to get excited about, then. And then my last question is, have you actually launched the moly plant at the new concentrator and what do you expect in terms of moly production for next year for Buenavista?

Okay. The moly plant in - we have one moly plant operating in Buenavista currently, has a capacity of 2,000 tons per year. This year it hasn’t produced as much as expected, because of water - lack of water at certain part of the year, that was a problem that was already solved and the plant is operating normally now. For the new concentrator, we also have a molybdenum plant design. We haven’t finished the construction of this plant at this point. It will be finished through the first quarter of next year. The capacity of that plant is 2,600 tons per year.

All right. So, if you expect to finish construction in Q1, then I guess most of the next year will be a ramp-up. So what would be a reasonable then to include, 50% capacity, so, like 1,300 tons, or what do you --?

I will say that about 50% make sense, because we will be finishing it by the end of the first quarter, then ramping up through the second quarter and moving at full speed on the second half of the year, that will make sense.

Okay. Fair enough. Thank you very much. That’s it from me.

Thank you. Our next question comes from Guillermo Estrada from GBM. Guillermo, please go ahead.

Hi, good evening everyone. Most of the questions I have, have already been answered, but can you provide the molybdenum volumes evolution from here on until 2018? And my second question comes from the environmental remediation costs. Have they continued during this quarter? What should we expect from these costs? And could you give us any guidance about this - environmental remediation costs? Thank you very much.

Yes, on the molybdenum production forecast, for next year, we are expecting to be at about the same product level that we have for this year. We mentioned, 23,000 tons for 2015, it’s going to be same next year. We are having changing some ore grades for molybdenum next year, lower ore grades, so the estimated production will be around the same. It will be maintained by - for 2017 and then picking up in 2018 to 28,600. I am sorry, could you repeat your second questions please?

Sure. My second question is from the environmental remediation costs from the Buenavista spill. So, what should we expect in the coming quarters? Could you give any guidance?

Well, we are basically finishing this remediation process and such charges to our results will be very reduced. If you see what we have this quarter was $7 million. I don’t expect that much to be spent on the next - on this fourth quarter.

Okay, thank you very much.

Thank you. And our next question comes from Andreas Bokkenheuser from UBS. Andreas, please go ahead.

Thank you very much. Good afternoon, everyone. Just two quick questions from me, one a clarification. The long-term or medium-term production guidance you gave, 1.16 million tons by 2018, did that include Tia Maria or not? And the second question -

It does.

It does. Okay. So, I should look at - the jump we're seeing in production from 2017 to 2018 would be largely Tia Maria, then, and to some extent Toquepala, is that right?

I will say that the lapping in 2018 will be mainly Toquepala, because Toquepala will be finished by end of 2017 of fourth quarter, then ramping up will start in the fourth quarter of 2017 and we will move forward to 2018 with the project we believe at certain point in the first quarter of 2018 at full speed. In case of Tia Maria, we will initiate operations in 2018, so a portion of the increase will be related to Tia Maria.

Okay, understood. That's very clear. And just secondly, I know you said you didn't want to give CapEx guidance yet beyond 2016. But just in terms of direction, in regards to the US dollar strengthening, the peso weakening, are you seeing a bit of downward pressure? Any savings there on the CapEx from a weaker currency? Thank you.

Oh, yes. Thank you very much for the question, Andreas. Certainly, all civil works, labor cost are lower and that is benefiting our capital budget as well. As I mentioned, we believe that it is premature at this point to mention any savings in our budget, but we do know that we are in a buyer’s market in terms of equipment and construction works in both Mexico and Peru.

That's very clear. Thank you very much.

Thank you. And our next question comes from John Tumazos from John Tumazos Very Independent Research. John, your line is open.

Thank you. There are some small copper companies that do not operate their molybdenum circuits this year, as copper prices fell below 6 or 7, or further - molybdenum prices fell, excuse me. Is there a molybdenum price where you would not operate your molybdenum circuits?

I think - thank you for your question, John. I think that it will be very difficult for us to stop operating because our gain, cash cost, also molybdenum is very low. So even - as I say, even these very low prices of $4.50 for molybdenum - per molybdenum pound, we are making profit - an operating profit on our molybdenum production, and that’s why we are considering building a new molybdenum plant for new Buenavista Concentrator.

Thank you.

We have no further questions at this time.

Thank you very much Bianca. Well, with this, we conclude our conference call for Southern Copper third quarter of 2015 and the nine months results. We certainly appreciate your participation and hope to have you back with us when we report the fourth quarter of this year and full year results. Thank you very much and have a nice day.

Thank you, ladies and gentlemen. This concludes today’s conference. Thank you for participating. You may now disconnect.