UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. - PDF document

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q � QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended: March 31, 2017 or � TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number: 1-14066 SOUTHERN COPPER CORPORATION (Exact name of registrant as specified in its charter) Delaware 13-3849074 (State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.) 1440 East Missouri Avenue Suite 160 Phoenix, AZ 85014 (Address of principal executive offices) (Zip Code) Registrant’s telephone number, including area code: (602) 264-1375 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes � No � Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes � No � Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. Large accelerated filer � Accelerated filer � Non-accelerated filer Smaller reporting company � � � Emerging growth company If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. � Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes � No � As of April 30, 2017 there were outstanding 773,016,469 shares of Southern Copper Corporation common stock, par value $0.01 per share.

Table of Contents Southern Copper Corporation (“SCC”) INDEX TO FORM 10-Q Page No. Part I. Financial Information: Item. 1 Condensed Consolidated Financial Statements (Unaudited) Condensed Consolidated Statements of Earnings for the three months ended March 31, 2017 and 2016 3 Condensed Consolidated Statements of Comprehensive Income for the three months ended March 31, 2017 and 2016 4 Condensed Consolidated Balance Sheets as of March 31, 2017 and December 31, 2016 5 Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2017 and 2016 6 Notes to Condensed Consolidated Financial Statements 7-28 Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 29-45 Item 3. Quantitative and Qualitative Disclosure about Market Risk 46-47 Item 4. Controls and procedures 48 Report of Independent Registered Public Accounting Firm 49 Part II. Other Information: Item 1. Legal Proceedings 50 Item 1A. Risk Factors 50 Item 2. Unregistered Sale of Equity Securities and Use of Proceeds 50 Item 4. Mine Safety Disclosures 50 Item 6. Exhibits 51-52 Signatures 53 List of Exhibits 54-56 Exhibit 10.4 Tax Agreement entered into by the Company and Americas Mining Corporation, effective as of February 20, 2017. 1-4 Exhibit 15 Independent Accountants’ Awareness Letter 1 Exhibit 31.1 Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 1 Exhibit 31.2 Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 1 Exhibit 32.1 Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 1 Exhibit 32.2 Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 1 2

Table of Contents PART I — FINANCIAL INFORMATION Item 1. Condensed Consolidated Financial Statements Southern Copper Corporation CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (Unaudited) Three Months Ended March 31, 2017 2016 (in millions, except per share amounts) Net sales (including sales to related parties, see Note 7) $ 1,583.9 $ 1,245.1 Operating costs and expenses: Cost of sales (exclusive of depreciation, amortization and depletion shown separately below) 843.8 726.8 Selling, general and administrative 21.4 26.3 Depreciation, amortization and depletion 153.4 135.3 Exploration 5.1 10.5 Environmental remediation (10.2) — Total operating costs and expenses 1,013.5 898.9 Operating income 570.4 346.2 Interest expense (105.7) (90.2) Capitalized interest 14.9 15.2 Other income (expense) 4.8 (0.5) Interest income 0.9 2.2 Income before income taxes 485.3 272.9 Income taxes (including royalty taxes, see Note 4) 176.2 92.3 Net income before equity earnings of affiliate 309.1 180.6 Equity earnings of affiliate, net of income tax 6.2 5.1 Net income 315.3 185.7 Less: Net income attributable to the non-controlling interest 0.9 0.6 Net income attributable to SCC $ 314.4 $ 185.1 Per common share amounts attributable to SCC: Net earnings - basic and diluted $ 0.41 $ 0.24 Dividends paid $ 0.08 $ 0.03 Weighted average shares outstanding - basic and diluted 773.0 773.9 The accompanying notes are an integral part of these condensed consolidated financial statements. 3

Table of Contents Southern Copper Corporation CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited) 3 Months Ended March 31, 2017 2016 (in millions) Net income and comprehensive income $ 315.3 $ 185.7 Comprehensive income attributable to the non-controlling interest 0.9 0.6 Comprehensive income attributable to SCC $ 314.4 $ 185.1 The accompanying notes are an integral part of these condensed consolidated financial statements. 4

Table of Contents Southern Copper Corporation CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) March 31, December 31, 2017 2016 (in millions) ASSETS Current assets: Cash and cash equivalents $ 698.7 $ 546.0 Restricted cash — 3.6 Short-term investments 52.7 51.3 Accounts receivable trade 669.6 591.9 Accounts receivable other (including related parties 2017 - $46.8 million and 2016 - $23.4 million) 100.2 76.6 Inventories 979.9 1,010.4 Prepaid taxes 226.7 249.4 Other current assets 46.0 36.9 Total current assets 2,773.8 2,566.1 Property and mine development, net 8,755.9 8,766.5 Ore stockpiles on leach pads 848.2 806.9 Intangible assets, net 155.5 154.2 Deferred income tax 771.8 727.3 Equity method investment 90.2 87.5 Other assets 127.6 125.8 Total assets $ 13,523.0 $ 13,234.3 LIABILITIES Current liabilities: Accounts payable (including related parties 2017 - $77.5 million and 2016 - $62.2 million) $ 505.7 $ 584.2 Accrued income taxes 163.0 185.1 Accrued workers’ participation 159.1 125.4 Accrued interest 132.5 85.6 Other accrued liabilities 29.2 18.7 Total current liabilities 989.5 999.0 Long-term debt 5,954.9 5,954.2 Deferred income taxes 195.0 162.6 Other liabilities and reserves 37.3 31.1 Asset retirement obligation 222.3 216.5 Total non-current liabilities 6,409.5 6,364.4 Commitments and contingencies (Note 9) STOCKHOLDERS’ EQUITY Common stock 8.8 8.8 Additional paid-in capital 3,360.5 3,358.2 Retained earnings 5,707.5 5,455.3 Accumulated other comprehensive income (2.4) (2.4) Treasury stock, at cost, common shares (2,989.7) (2,987.6) Total Southern Copper Corporation stockholders’ equity 6,084.7 5,832.3 Non-controlling interest 39.3 38.6 Total equity 6,124.0 5,870.9 Total liabilities and equity $ 13,523.0 $ 13.234.3 The accompanying notes are an integral part of these condensed consolidated financial statements. 5