Good morning and welcome to Southern Copper Corporation’s First Quarter 2016 Results Conference Call. With us this morning, we have Southern Copper Corporation, Mr. Raul Jacob, Vice President, Finance and CFO, who will discuss the results of the Company for the first quarter 2016 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 Jacob. You may begin.

Thank you very much, Richard, and good morning to everyone and welcome to Southern Copper Corporation’s first quarter 2016 earnings conference call. Participating with me in today’s conference are Mr. Oscar Gonzalez Rocha, Southern Copper’s CEO; and Mr. Daniel Muñiz, Executive Vice President of Southern Copper. In today’s call, we will begin with an update on our view of the copper market. We will then review Southern Copper’s key results related to production, sales, operating cost, financial results and expansion projects. After that, we will open the session for questions. Now, let me focus on the copper market, which is the core of our business. During the past quarter, we have seen some easing in the macroeconomic headwinds that have affected our market over the last four years. In particular, we want to emphasize the slight recovery of commodity prices as a result of the U.S. dollar depreciation. Also the Chinese economy’s copper consumption has a more positive outlook now, improving the sentiment regarding the copper market balance. As you know, China is the world’s major copper consumer with about 46% of world consumption. We believe that China’s demand for copper is having reasonable support from the partial recovery of the housing markets and the national grid investment program. Looking at the supply side, production cut announcements are currently over 800,000 tons. As these cuts materialize, they will offset the additional production coming from new operations such as Las Bambas, Toromocho or expansions including Cerro Verde, [indiscernible], Buenavista project. In addition to these production cuts, we believe that supply will be affected in the coming quarters from delays in project startups, technical problems, labor unrest, excess government taxation and other difficulties that has [incumbent] [ph] to our industry in the last few years. Even though the current world’s economic outlook…

Thank you. We will now begin the question-and-answer session. [Operator Instructions] And our first question comes from Karel Luketic from Bank of America Merrill Lynch. Please go ahead.

I have two questions, the first one is on CapEx. We saw first quarter CapEx running below budget and we just wanted to confirm what the guidance for CapEx in 2016 and 2017 onwards is, please and if that includes or not Tia Maria? And my second question is on the production guidance, if you could provide the latest update for copper production 2016, ‘17 et cetera onwards that will be great. Those are my questions? Thank you.

Okay, thank you very much for your questions, Karel. First, at this point, we just finished the first quarter of the year, so we don’t think that our capital budget has to be adjusted at this point. If we see a reduction in the trend of expenditures or at what you mentioned holds for the second and quarter, we will make an adjustment. But, at this point, we will like to maintain the budget as it is. Regarding the production, our current view is that, -- well, we indicated in the first call of the year in January that our goal for the year is 903,000 tons of copper for 2016. As you have seen our first quarter numbers are slightly better than just what we mentioned, so we may at this point estimates a slightly increase in our production of -- to about 910,000 for 2016. For next year, 2017, 944,000 tons; for 2018, 1,057,000 tons; 2019, pretty much the same; and 2020, 1.2 million tons. This includes the effect of Tia Maria, particularly in 2019 and ‘20.

Thank you. Our next question on line comes from Carlos de Alba from Morgan Stanley. Please go ahead.

So, the cost in the quarter performed very well, and so just wanted to explore, what are your views going forward as you get to full capacity in the concentrator, in the new concentrator in Buenavista. And then as Toquepala project comes on line, where did you see the 141 trending? And also the new energy supply agreement in Peru, could you elaborate a little bit more on what can we expect from that new contract coming in? And then, if you can talk a little bit about why the Company continues to purchase copper in the quarter and a little bit of an increase year-on-year, so you can comment on that, that will be great. Thank you.

I couldn’t get your last concern, Carlos. Could you repeat it please?

Yes, it’s purchase copper, the purchase of copper concentrate? So…

Okay, on cash cost, we indicated at the beginning of the year that our guidance for 2016 before credits was $1.50 for the year; we’re doing a little bit better than that. This quarter we have this, you will point out 1.41. For the rest of the year, we expect the cash cost to be where it is or vary very little depending on the prices mainly. We’ll increase our production slightly through the second quarter and the third quarter to finally reach full capacity in our new concentrator. That certainly will bring in some much lower cost units to our pipeline of production. However, we always have some other contingencies that may affect this. So, for now, let’s say that we are about $1.41 or $1.40 before credits. After credits, we’ll have some good news in the second part of the year, when we initiate the ramping of our new molybdenum plant in Buenavista. That is something that we’re expecting for the third quarter of the year and that should increase our credits. Besides this, as you have seen, we’re looking at better prices for silver, for gold; today silver passed over $18 per ounce; that will certainly help us. As I mentioned, silver is now our main byproduct after -- or the second product after copper. And molybdenum is getting a little bit better from what we have seen in the last couple of quarters. Looking at your concern about the power contract, well, we have good opportunity to improving our target for power in Peru. And we’re taking advantage -- that should improve our cost position for the Toquepala project. That is something that we’re still working on, but we’re very close to a final agreement. And finally, on the purchase -- yes?

Yes, is it possible to quantify or give us a range of the potential impact of this new energy supply agreement in your cost?

Just for the plant will be a cost reduction in power for about 20%, but just for the plant, or the new plant.

The new plant in Toquepala?

The new plant in Toquepala. So, the effect of that is a slight improvement in our energy cost. Besides that on your point about purchase concentrate, this is something that we do more or on an operational basis sometimes you have some excess concentrates that you sell at certain part of the year. And if commercial conditions are appropriate, you acquire copper from third parties. So, this is not specifically driven by the business, by the operations. And as such, we have been acquiring copper concentrates for our Peruvian units as well as the Mexican units in the past. Now, I don’t think that we’ll be acquiring copper concentrates for the Mexican units. But, in the case of the Peruvian operations, sometimes it is better to acquire copper concentrates from a nearby copper producer such as Cerro Verde for instance than to go importing the copper concentrate that we own in Mexico.

Thank you. Our next question comes from Matthew Korn, Barclays Capital.

Let me ask a little bit on Tia Maria. Has anything changed there? I know you’ve been conducting your outreach program and the government has been recommending the round tables, but I guess can anything move forward really until after the election or not? And then, secondly, follow-up on that, should we think about any substantial differences that you can perceive in the two Peruvian candidates regarding their relationship with the mining industry because I believe that Mr. Kuczynski is a former mining minister himself. I just wonder it would seem that’d be beneficial but your views on that would be helpful. Thanks.

Okay. Let me address first your concern about Tia Maria. We didn’t have much to report, much new to report on this, and that’s why we didn’t mention it in our report. So, what’s it? It is basically the situation is pretty much the same; we’re still working with both the communities and the government in order to get the project moving forward. And there is not much to report on that. Regarding the two candidates on the runoff, well, at this point, we believe that we can work very well with whoever is elected. We have a policy of collaborating with the government authorities and to provide as much of our own view on how the industry could be improved. And I think that in that regard we can work very well with any one of the two candidates.

Thank you. Our next question on line comes from Marcos Assumpçao from Itaú BBA. Please go ahead. Marcos Assumpçao: First question, you mentioned about the strong demand in China recently. Do you have any views on why copper prices have not rebounded as much as other commodities that are related to the housing industry, like steel and iron ore? And second question would be with the recent recovery in copper prices to the level of 2.30 per pound, have we started to see any of the guy that were shutting down capacity when prices were lower thinking on getting back to the market?

Okay. First, let me say that we don’t see a strong copper demand in China. We just see more support for demand. We believe that the copper market is not -- I mean the physical copper market is not as bad as the prices may indicate. We last year sold 70,000 tons of refined copper, very quickly, no problems, very good turns. This year, we have 160,000 tons of copper concentrate that add to this 70,000 tons I mentioned. Again, very good turns. A significant portion of these concentrates are going to Chinese smelters. So, we believe that the physical market is not as bad as people think to believe. And the reason for that I believe that this is my personal view is that do you hear the news of the new projects and you don’t hear the bad news, I mean nobody wants to talk about them while cutting production, ore not getting the plans as you expected, or nor doing a ramping as you were thinking about. So, in that sense, we believe that the market will certainly show a much more support for this year and next year. Marcos Assumpçao: And regarding the capacity shutdowns or capacity restarts, did you see any news on that front?

No, not at this point. Marcos Assumpçao: Last question, Raul, on the scrap market, can you comment a little bit on how you see that; how you see prices on the scrap market as well?

Well, scrap market is pretty much quite reduced nowadays. At these copper prices, not much activity in scrap; most likely the producers of scrap are keeping it to themselves for a better time to sell them. That’s basically what we think. And that’s why you see much more refined copper demand coming from the major consumers of copper.

Thank you. Our next question on line comes from Alfonso Salazar from Scotiabank. Please go ahead.

I was checking that your working capital has been increasing and sales of copper remained below production, I think this is the third quarter in a row. So just wondering what can we expect for the second half of the year regarding working capital and sales?

Let me first mention that working capital usually increase for the Company in the first quarter of the year due to certain payments that we do at the Peruvian operations such as workers’ participation or income tax. Secondly, I think that that the increase in the working capital has an explanation that I will summarize now. Our invoicing increase by the new operation of Buenavista, new sales of concentrates, concentrates to longer terms that refine copper. So, our accounts receivable increased by about a $110 million, when you compare this past quarter with the first quarter of 2015. Inventories also increased due to the higher operation activity that the Company has. That includes also some increasing our leachable inventories for processing at the new SX-EW III plant in Buenavista. At the end or through 2015, we have had significant accounts payable due to the project final payments for the Buenavista projects. And we have decreased that quite a bit by about a $150 million in the last quarter of 2015 and the first quarter of the year. And that also increased the working capital of the Company and the reference is just other activities related to tax credits and some other prepayments that we have to do for our projects. So, mainly I would say that this is -- increasing in working capital that you’ve seen is related and the drainage of that in our cash generation from operations is resulting from the new project activities and the current construction of the other projects that are still in the construction part of their lifecycle.

And do, you think it’s going to normalize at this level in the second quarter or what can you expect?

I think that we should have a better trend in cash from operations in the second quarter and on. We will have a more stable Buenavista operation requiring less working capital because you already put it in the fourth and the first quarter of the year. And we will see the impact in accounts payable of the new Toquepala concentrator. So, we should be generating more cash from operations in this quarter and the rest of the year.

Thank you. Our next question on the line comes from Guillermo Estrada from GBM. Please go ahead.

Just two quick questions from me, and the first one is regarding the IMMSA mines Santa Eulalia and Charcas. Currently what is that situation that we should we expect in terms of production for the next couple of years? And just a follow-up question, are there any updates on the moly and silver production guidance for this year and 2017?

Let me focus first on Charcas and Santa Eulalia. In the case of Charcas, we had some operating problems in 2015 that has been already solved; and in the case of Santa Eulalia, we had a slot that we spend some resources in fixing this problem. We believe that it’s solved already; there’s some difficulties due to an underground river that goes very close to the Santa Eulalia mine. Looking at our zinc production for [audio gap] we indicated we’re expecting 84,600 tons of zinc, for 2017, 90,000 tons of zinc, for 2018, 107,000 tons of zinc.

Thank you. Our next question comes from Ricardo Miranda from LarrainVial. Please go ahead.

Thanks for taking the questions. The first one is regarding MSCI possible change in Southern Copper at money market index. I’d like to know what is your sense in that matter? Second is what about the El Pilar project, what are the advances there? And third, as price recovers toward the end of this year, I’m speaking about copper price and byproducts. Do you expect that you will continue with the stock buyback plan? Thank you very much.

Okay. Let me start by your first concern, MSCI. We hope that MSCI maintain the Peruvian, the Lima stock exchange as an emerging market. If they don’t do that, they have mentioned that they will pass Southern Copper as a U.S. company and since most of our operations are in Mexico and Peru, we believe that our companies proceed more than U.S. risk, Latin American mining risk. So, we will certainly lag this to be the case that we remain as we have been so far. But, if it happens, we don’t think that it will have a strong effect on the Company share price. I’m sorry, your second question was…

El Pilar.

On the El Pilar, okay. El Pilar, we have -- our Board has approved budget for doing in-depth study on the best way to go ahead with this project -- Mr. Gonzalez will make a comment.

Yes, we are going to lose only some drilling to find and check all the results of that. But right now, suspended until we can get more income to the level of that project. But right now, we are only going to drill for verify results and that’s all.

On the share buyback, we have stopped and we will maintain that for a while.

Thank you. Our next question on line comes from Tony Rizzuto from Cowen & Company. Please go ahead.

Thank you for taking my questions. The first one is a follow-up. You made some comments that were rather constructive on China and yet we see the physical premium being pretty sluggish over there, so just some further color on that, why the disconnect? And the secondly, you indicated that you believe supply will be affected in future quarters, and I was wondering if you could elaborate, be a little bit more specific about which mines or operations that you see in particular as having some of those issues? Thank you.

Let me start by the second question that you have. We’re seeing several announcements of the cuts in production; in our collection, these are over 800,000 tons already, [audio gap] cuts have to be materialized. And they are mainly in high cost operations worldwide. I think that, if you look at what happened in the U.S. you had announcements of either shutdowns or production reductions in several mines -- let me mention some of them we have Mineral Park, Wolverine [indiscernible], Miami et cetera. And same thing happens in some other operations worldwide. The most important impact has been at the African operations where this has been combined with some state higher taxation or some other actions from the African states. So, those are currently affecting the supply demand balance, reducing supplying and accommodating some space for the new projects production that we’re seeing worldwide. An important thing to mention here is that we don’t have new Greenfield projects being approved at this price levels and that is creating certainly a deficit in the future for our industry. And I think that that’s where good fundamentals for copper are holding. Regarding the Chinese terms, we -- I see your point but we believe that demand is improving in Tier 1 and Tier 2 cities with much more housing demand that will give some better support for acquisitions of or copper purchases from China. And also the national grid plan has been growing at a good pace in the last few quarters. So, those two reasons make us to believe that the market will have some support in China.

Thank you. And our final question comes from Ricardo Miranda from LarrainVial. Please go ahead.

Already you took my questions. Thanks.

At this time, I see we have no further questions. I’d like to turn the call back over to presenters for any closing remarks.

Richard, I think that we have one more call, one more questioner.

We do have a question that came in the queue from Carlos de Alba please go ahead.

Thank you very much, and just a couple of housekeeping items, Raul. So, we so that the depreciation charge in the quarter did not increase despite the fact that the CapEx has been going up. And also the tax rate, which has been quite volatile recently, remained -- the effective tax rate that is still remaining in the quarter around 34%. And so, just wanted to understand how do you see that effective tax rate going forward?

Tax rate, and the first one was?

Depreciation.

Depreciation, yes. Okay, depreciation, basically -- it takes a [audio gap], once you finish spending the money, it takes a little bit longer to start depreciating the assets. And the reason for that is that you have to do final payments to your vendors of equipment et cetera, et cetera. Usually when we do this, we catch up with whatever depreciation we have to do and we try to anticipate it. But this so far, this is what we’re charging now. We may have an increase on this as we move on with the end of the Buenavista projects, and we initiate the capitalization of other projects that we’re doing -- are currently doing. Regarding the tax rate, we’re expecting it to be at this level; it may be slightly adjusted upward as we go ahead with the Buenavista projects and when we start paying dividends from the Mexican operations. But at this point, it reflects our view on the year. This is an important thing to mention. At this point, the tax rate, effective tax rate of the Company represents what we are expecting for 2016. We see a difference; we will adjust the rate in the corresponding quarter.

And I see we have no further questions at this time.

Okay. Well, thank you very much. With this, we’re concluding our conference call for Southern Copper first quarter of 2016 results. We certainly appreciate your participation and hope to have you back with us when we report the second quarter of 2016. Thank you very much and have a nice day today.

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