Southern Copper boosts copper output by 23% in Q2; zinc, silver also jump

Lima, Peru (Platts)--25 Jul 2016 455 pm EDT/2055 GMT

Southern Copper increased production of copper in the second quarter on gains at its Buenavista mine in Mexico.

Southern boosted copper output by 23.3% to 227,504 mt in the quarter from 184,535 mt a year ago, the Phoenix-based company said Monday in a statement. Zinc production jumped 43% to 19,994 mt, while silver rose 27.5% to 4.1 million oz. Molybdenum fell 8% to 5,305 mt.

Southern said it sold copper at $2.13/lb on the Comex, down 23% from a year earlier, while zinc fell 13% to 87 cents/lb and molybdenum declined 7.5% to $6.89/lb. Silver prices rebounded 2.7% to $16.83/oz.

The company trimmed cash costs net of byproducts to 91 cents/lb in the quarter from $1.12/lb a year earlier. Capital expenditures increased by 21.6% in Q2 to $341.6 million, with the bulk of spending on the $3.5 billion Buenavista expansion.

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Buenavista, where the company has invested $3.2 billion to date, is expected to produce 4,600 mt of molybdenum and 460,000 mt of copper this year. The mine's 188,000 mt/year concentrator, which will also produce 2.3 million oz/year of silver and 21,000 oz/year of gold, is now fully operational.

The company added work is 98% completed at the $340 million, 80,000 mt/year Quebalix heap leaching project, where $248.4 million has been spent to date. The project is slated for completion in Q3.

In Peru, the $1.2 billion, 100,000 mt/d Toquepala concentrator plant, where the company has invested $431.1 million to date on an expansion to 235,000 mt/d, is due for completion by Q2 2018. A $40 million HPGR system at the mine will be completed by end-2017, Southern said.

The company has invested $102.2 million to date on a $165.5 million, 43.8 million mt/year conveyor belt and a 43.8 million mt/year crusher at its Cuajone mine, to be completed by Q2 2017.

Southern posted a $222 million Q2 profit, down 24.7% due to a 3.5% decline in sales to $1.34 billion and higher sales costs. The company is counting on its $1.4 billion Tia Maria copper project in Peru and expansions at three of its mines to boost annual copper production to 1.2 million mt by 2018.

--Alex Emery,

--Edited by Jason Lindquist,

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