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Southern Copper Corporation

04/30/2026 | Press release | Distributed by Public on 04/30/2026 12:06

Quarterly Report for Quarter Ending March 31, 2026 (Form 10-Q)

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion provides information that management believes is relevant to an assessment and understanding of the condensed consolidated financial condition and results of operations of Southern Copper Corporation and its subsidiaries (collectively, "SCC", "the Company", "our", and "we"). This item should be read in conjunction with our interim unaudited Condensed Consolidated Financial Statements and the notes thereto included in this quarterly report. Additionally, the following discussion and analysis should be read in conjunction with the Management Discussion and Analysis of Financial Condition and Results of Operations and the Consolidated Financial Statements included in Part II of our annual report on Form 10-K for the year ended December 31, 2025.

EXECUTIVE OVERVIEW

Business: Our business is primarily the production and sale of copper. In the process of producing copper, a number of valuable metallurgical by-products are recovered, which we also produce and sell. Market forces outside of our control largely determine the sale prices for our products. Our management, therefore, focuses on value creation through copper production, cost control, production enhancement and maintaining a prudent capital structure to remain profitable. We endeavor to achieve these goals through capital spending programs, exploration efforts and cost reduction programs. Our aim is to remain profitable during periods of low copper prices and to maximize financial performance in periods of high copper prices.

We are one of the world's largest copper mining companies in terms of production and sales and our principal operations are in Peru and Mexico. We also have exploration programs in Chile and Argentina. In addition to copper, we produce significant amounts of other metals, either as a by-product of the copper process or through a number of dedicated mining facilities in Mexico.

Outlook: Various key factors will affect our outcome. These include, but are not limited to, the following:

●	Sales structure: In the first quarter of 2026, 70.2% of our revenue came from the sale of copper; 12.5% from silver; 10.5% from molybdenum; 3.4% from zinc; and 3.4% from other products, including gold, sulfuric acid, and other materials.

●

Copper: In the first quarter of 2026, copper prices per pound reported stronger performance, with the LME price increasing from $4.24 to $5.83 (+37.5%) and the COMEX price rising from $4.57 to $5.80 (+26.9%). Based on current supply and demand dynamics, we estimate a copper market deficit of 315,000 tonnes for 2026. Copper inventories worldwide stood at 1,234,000 tonnes as of April 21, 2026. We estimate that this inventory currently covers approximately 16 days of global demand.

●

Silver: Represented 12.5% of our sales in the first quarter of 2026, and became our most significant by-product during the period. Prices averaged $83.33 per ounce in the first quarter of 2026, compared to $32.31 in the same period of 2025 (+157.9%). This strong increase in prices, together with higher sales volumes of silver (+11.6%), led silver to top the list of significant by-products this quarter. We believe that silver prices will be supported by demand for industrial use and precious metals.

●	Molybdenum: Accounted for 10.5% of our sales in the first quarter of 2026. Prices for molybdenum averaged $25.37 per pound in the first quarter of 2026, compared to $20.43 in the same period of 2025, representing a 24.2% increase.

Molybdenum is mainly used in the production of special alloys for stainless steel that require significant hardness, corrosion and heat resistance. New uses for this metal are associated with lubricants, sulfur filtering of heavy oils and shale gas production.

For 2026, we believe that prices will hold at the current level of about $22.00 per pound due to high demand for stainless steel in China and given its diverse applications in critical industries.

●	Zinc: Average zinc prices increased 14.0% in the first quarter of 2026 versus the same period of 2025. Zinc represented 3.4% of our sales in the first quarter of 2026.

●	Production: In 2026, we expect our copper production to reach 915,400 tonnes, which is 4,000 tonnes above our planned target of 911,400 tonnes.

Regarding by-products, we expect to produce 166,800 tonnes of zinc in 2026, which is 1% above our initial plan. We also expect to produce 27,400 tonnes of molybdenum in 2026, which represents an increase of 5% compared to our initial plan. For silver, we expect to produce 24 million ounces in 2026, an increase of 1.3% compared our initial goal.

●	Capital Investments: In the first quarter of 2026, we spent $441.9 million on capital investments; this represented 28.3% of net income and an increase of 39.0% compared to the amount registered in the same period of 2025.

KEY MATTERS

Below, we discuss several matters that we believe are important to understand the results of our operations and financial condition. These matters include, (i) our earnings, (ii) our production, (iii) our "operating cash costs" as a measure of our performance, (iv) metal prices, (v) business segments, (vi) the effect of inflation and other local currency issues, and (vii) our capital investment and exploration program.

Earnings: The table below highlights key financial and operational data of our Company for the three-month period ended March 31, 2026 and 2025 (in millions, except copper price, percentages and per share amounts):


			Three months ended March 31,
		2026			2025			Variance		% Change
Copper price LME			5.83			4.24			1.59	37.5	%
Copper price COMEX			5.80			4.57			1.23	26.9	%
Pounds of copper sold			511.0			537.0			(26.1)	(4.9)	%
Net sales		$	4,251.4		$	3,121.9		$	1,129.5	36.2	%
Operating income		$	2,480.4		$	1,535.5		$	944.9	61.5	%
Net income attributable to SCC		$	1,576.9		$	945.9		$	631.0	66.7	%
Earnings per share		$	1.92		$	1.15		$	0.77	66.8	%
Cash dividends paid		$	1.00		$	0.70		$	0.30	42.9	%
Stock dividends paid		$	1.53		$	0.70		$	0.83	118.6	%

Net sales in the first quarter of 2026 totaled $4,251.4 million, representing a 36.2% increase compared to the same period in 2025. This performance was mainly supported by growth in the sales volumes of silver (+11.6%) and zinc (+16.4%), together with higher prices for copper (+37.5% LME; +26.9% COMEX), silver (+157.9%), molybdenum (+24.2%), and zinc (+14.0%). These positive effects were partially offset by a decrease in the sales volumes of copper (-4.9%) and molybdenum (-2.8%).

Net income attributable to SCC for the first quarter of 2026 reached $1,576.9 million, representing an increase of 66.7% compared to the same period in 2025. This performance was mainly supported by higher net sales (+36.2%), driven mainly by stronger metal prices. These positive effects were partially offset by higher operating costs (+11.6%) and an increase in income taxes (+67.2%).

Production: The table below highlights our mine production data for the three-month period ended March 31, 2026 and 2025:


	Three months ended March 31,
	2026	2025	Variance	% Change
Copper (in million pounds)	508.3	529.6	(21.3)	(4.0)	%
Molybdenum (in million pounds)	16.6	16.9	(0.4)	(2.2)	%
Silver (in million ounces)	6.0	5.4	0.6	11.1	%
Zinc (in million pounds)	88.5	86.8	1.7	2.0	%

The table below highlights our copper mine production data for the three-month period ended March 31, 2026 and 2025:


	Three Months Ended March 31,
Copper (in million pounds):	2026		2025		Variance		% Change
Toquepala	128.7		140.5		(11.8)		(8.4)	%
Cuajone	80.3		91.2		(10.9)		(11.9)	%
La Caridad	64.4		61.0		3.4		5.5	%
Buenavista	229.4		231.2		(1.8)		(0.8)	%
IMMSA	5.4		5.7		(0.3)		(4.6)	%
Total mined copper	508.3		529.6		(21.3)		(4.0)	%

First quarter: Copper mine production in the first quarter of 2026 stood at 508.3 million pounds, reflecting a 4.0% decrease compared to the same period of 2025. This decline was mainly attributed to lower production at Cuajone (-11.9%, which was attributable to a decrease in ore grades and mineral milled); Toquepala (-8.4%; due to lower ore grades); IMMSA (-4.6%; due to lower ore grades) and Buenavista (-0.8%; due to lower ore grades and recoveries). These effects were slightly offset by higher production at La Caridad (+5.5%; driven by improved recoveries, ore grades and increased SX-EW production).

Silver mine production increased 11.1% in the first quarter of 2026 compared to the same period of 2025. This growth was mainly driven by higher production at our La Caridad (+22.1%), Buenavista (+20.7%) and IMMSA (+10.8%) operations. However, this positive performance was slightly offset by lower production at our Cuajone (-7.5%) and Toquepala (-1.6%) mines.

Molybdenum production decreased 2.2% in the first quarter of 2026 compared to the same period in 2025. This decline was mainly driven by lower production at our Buenavista (-19.2%) and IMMSA (-0.9%) operations, primarily due to lower ore grades. These decreases were partially offset by higher production at Toquepala (+5.6%) and Cuajone (+1.0%), reflecting improved ore grades and recoveries.

Zinc production increased 2.0% in the first quarter of 2026 compared to the same period in 2025. This growth was mainly driven by higher production at our IMMSA operations (+9.1%). These increases were partially offset by lower production at our Buenavista Zinc concentrator (-1.9%).

Operating Cash Costs: An overall benchmark that we use, which is a common industry metric to measure performance is operating cash costs per pound of copper produced. Operating cash cost is a non-GAAP measure that does not have a standardized meaning and may not be comparable to similarly titled measures provided by other companies. This non-GAAP information should not be considered in isolation or as substitute for measures of performance determined in accordance with GAAP. A reconciliation of our operating cash cost per pound of copper produced to the cost of sales (exclusive of depreciation, amortization and depletion) as presented in the consolidated statement of earnings is presented under the subheading, "Non-GAAP Information Reconciliation" on page 55. We disclose operating cash cost per pound of copper produced, both before and net of by-product revenues.

We define operating cash cost per pound of copper produced before by-product revenues as cost of sales (exclusive of depreciation, amortization and depletion), plus selling, general and administrative charges, treatment and refining charges net of sales premiums; less the cost of purchased concentrates, workers' participation and other miscellaneous

charges, including royalty charges, and the change in inventory levels; divided by total pounds of copper produced by our own mines.

In our calculation of operating cash cost per pound of copper produced, we exclude depreciation, amortization and depletion, which are considered non-cash expenses. Exploration is considered a discretionary expenditure and is also excluded. Workers' participation provisions are determined on the basis of pre-tax earnings and are also excluded. Additional exclusions from operating cash costs are items of a non-recurring nature and the mining royalty charge as it is based on various calculations of taxable income, depending on which jurisdiction, Peru or Mexico, is imposing the charge. We believe these adjustments allow our management and stakeholders to more fully visualize our controllable cash cost, which we believe is one of the lowest of all copper-producing companies of similar size.

We define operating cash cost per pound of copper produced net of by-product revenues as operating cash cost per pound of copper produced, as defined in the previous paragraph, less by-product revenues and net revenue (loss) on sale of metal purchased from third parties.

In our calculation of operating cash cost per pound of copper produced, net of by-product revenues, we credit against our costs the revenues from the sale of all our by-products, including, molybdenum, zinc, silver, gold, etc. and the net revenue (loss) on sale of metals purchased from third parties. We disclose this measure including the by-product revenues in this way because we consider our principal business to be the production and sale of copper. As part of our copper production process, much of our by-products are recovered. These by-products, as well as the processing of copper purchased from third parties, are a supplemental part of our production process and their sales value contribute to covering part of our incurred fixed costs. We believe that our Company is viewed by the investment community as a copper company, and is valued, in large part, by the investment community's view of the copper market and our ability to produce copper at a reasonable cost.

We believe that both of these measures are useful tools for our management and our stakeholders. Our cash costs before by-product revenues allow us to monitor our cost structure and address areas of concern within operating management. The measure operating cash cost per pound of copper produced net of by-product revenues is a common measure used in the copper industry and is a useful management tool that allows us to track our performance and better allocate our resources. This measure is also used in our investment project evaluation process to determine a project's potential contribution to our operations, its competitiveness and its relative strength in different price scenarios. The expected contribution of by-products is generally a significant factor used by the copper industry to determine whether to move forward or not in the development of a new mining project. As the price of our by-product commodities can have significant fluctuations from period to period, the value of its contribution to our costs can be volatile.

Our operating cash cost per pound of copper produced, before and net of by-product revenues, is presented in the table below for the three-month period ended March 31, 2026 and 2025:

Operating cash cost per pound of copper produced (1)

(In millions, except cost per pound and percentages)


		Three Months Ended March 31,
	2026		2025		Variance		% Change
Total operating cash cost before by-product revenues	$	1,136.0	$	1,050.2	$	85.8	8.2	%
Total by-product revenues	$	(1,188.6)	$	(658.5)	$	(530.1)	80.5	%
Total operating cash cost net of by-product revenues	$	(52.6)	$	391.7	$	(444.3)	(113.4)	%
Total pounds of copper produced(2)		492.8		511.6		(18.9)	(3.7)	%
Operating cash cost per pound before by-product revenues	$	2.31	$	2.05	$	0.25	12.3	%
By-product revenues per pound	$	(2.41)	$	(1.29)	$	(1.13)	87.4	%
Operating cash cost per pound net of by-product revenues	$	(0.11)	$	0.77	$	(0.87)	(113.9)	%

(1)	These are non-GAAP measures. Please see page 55 for reconciliation to GAAP measure.

(2)	Net of metallurgical losses.

In the first quarter of 2026, the operating cash cost per pound before by-product revenues increased from $2.05 in 1Q25 to $2.31 (+12.3%). This increase was mainly driven by the unit cost effect of a decline in copper production (-3.7%) and by higher production costs (+11.6%). By-product revenues per pound rose 87.4%, from $1.29 to $2.41. As a result, the operating cash cost per pound net of by-product revenues improved significantly, shifting from a cost of $0.77 per pound to a credit of ($0.11) per pound, boosted primarily by growth in by-product revenues from silver, molybdenum, and zinc.

Metal Prices: The profitability of our operations is dependent on, and our financial performance is significantly affected by, the international market prices for the products we produce, and for copper, molybdenum, zinc and silver in particular.

We are subject to market risks arising from the volatility of copper and other metal prices. For the remaining nine months of 2026, assuming that expected metal production and sales are achieved; tax rates remain unchanged and giving no effects relative to potential cost changes, metal price sensitivity factors would indicate the following change in estimated net income attributable to SCC resulting from metal price changes:


		Copper			Molybdenum			Zinc			Silver
Change in metal prices (per pound except silver-per ounce)		$	0.10		$	1.00		$	0.10		$	1.00
Change in net earnings (in millions)		$	89.2		$	26.5		$	19.4		$	10.6

Business Segments: We view our Company as having three reportable segments and manage it on the basis of these segments. These segments are (1) our Peruvian operations, (2) our Mexican open-pit operations and (3) our Mexican underground operations, known as our IMMSA unit. Our Peruvian operations include the Toquepala and Cuajone mine complexes and the smelting and refining plants, industrial railroad and port facilities that service both mines. The Peruvian operations produce copper, with significant by-product production of molybdenum, silver and other material. Our Mexican open-pit operations include the La Caridad-Pilares and Buenavista mine complexes, the smelting and refining plants and support facilities, which service these mines. The Mexican open-pit operations produce copper, with significant by-product production of molybdenum, silver and other material. Our IMMSA unit includes three operating underground mines and several industrial processing facilities.

Segment information is included in our review of "Results of Operations" in this item and also in Note 14 "Segment and Related Information" of our condensed consolidated financial statements.

Inflation and Exchange Rate Effect of the Peruvian Sol and the Mexican Peso: Our functional currency is the U.S. dollar and our revenues are primarily denominated in U.S. dollars. Significant portions of our operating costs are denominated in Peruvian sol and Mexican pesos. Accordingly, when inflation and currency devaluation/appreciation of the Peruvian currency and Mexican currency occur, our operating results can be affected. In recent years, exchange rate volatility has been high but has had a limited effect on our results. Please see Item 3 "Quantitative and Qualitative Disclosures about Market Risk" for more detailed information.

Capital Investment Programs: We made capital investments of $441.9 million in the first quarter of 2026, compared to $317.8 million in the same period of 2025. In general, the capital investments and investment projects described below are intended to increase production, decrease costs or address social and environmental commitments.

Set forth below are descriptions of some of our current expected capital investment programs. We expect to meet the cash requirements for these projects by utilizing cash on hand; internally generated funds and additional external financing. All capital spending plans will continue to be reviewed and adjusted to respond to changes in the economy and market conditions.

Projects in Peru:

Our investments in Peruvian projects that are being built or for which basic or detail engineering is being conducted could surpass $10.3 billion in the next decade.

The openness of the Peruvian government and institutions to private investment; the strong support of local communities; and respect for the rule of law underpin our aggressive investment program. With the support and assistance of Peruvian authorities, the Company is moving forward to secure the administrative permits and licenses that are required prior to investment. The projects' construction and subsequent operating phases will generate new poles of development; create significant job opportunities; and drive growth in tax revenues at both, national and regional levels.

Tia Maria - Arequipa: This greenfield project, located in Arequipa, Peru, will use state of the art SX-EW technology that meets the highest international environmental standards and has the capacity to produce 120,000 tonnes of SX- EW copper cathodes per year. Operations are expected to begin in the third quarter of 2027.

Project update: As of March 31, 2026, the Company has committed $948 million across various project activities. Large-scale earthmoving works have moved 7.5 million tons of material from La Tapada deposit. The majority of purchase orders for major equipment have been issued. Regarding the SX-EW process, purchase orders have been placed for key equipment with state-of-the-art technology.

Regarding energy supply, foundation works at the main electrical substation, as well as work to build the 220kV transmission line, are underway. In parallel, large-scale earthworks for the grading of the main dry and wet area components are in their final stage, setting the groundwork for civil construction in key areas for secondary and tertiary crushing (dry area), solvent extraction (SX), and electrowinning (EW) (wet area) among others.

At the end of the first quarter of 2026, progress at Tia Maria stood at 32.5%, and 4,207 new jobs have been generated; 815 of these positions were filled with local applicants. To the fullest extent possible, we intend to fill the 5,000 jobs estimated to be required during Tia Maria´s construction phase prioritizing workers from the Islay province.

Projects in Mexico:

SCC has several projects in its Mexican pipeline that may boost organic growth if they are found to be of value for both stakeholders and the communities in which we operate. These projects are Angangueo, Chalchihuites and the Empalme Smelter, which are expected to bolster our position as a fully integrated copper producer. We are engaged in talks with the current administration to continue rolling out SCC's Mexican investments for $10.2 billion.

El Pilar - Sonora: This low-capital intensity copper greenfield project is strategically located in Sonora, Mexico, approximately 45 kilometers from our Buenavista mine. Its copper oxide mineralization contains estimated proven and probable reserves of 317 million tonnes of ore with an average copper grade of 0.249%. We anticipate that El Pilar will operate as a conventional open-pit mine with an annual production capacity of 36,000 tonnes of copper cathodes. This operation will use highly cost efficient and environmentally friendly SX-EW technology.

Potential projects:

We have a number of other projects that we may develop in the future. We continuously evaluate new projects on the basis of our long-term corporate objectives, expected return on investment, environmental concerns, required investment and estimated production, among other considerations. All capital spending plans will continue to be reviewed and adjusted to respond to changes in the economy and market conditions.

Los Chancas - Apurimac: This greenfield project, located in Apurimac, Peru, is a copper and molybdenum porphyry deposit. Current estimates of indicated copper mineral resources are 98 million tonnes of oxides with a copper content of 0.45% and 52 million tonnes of sulfides with a copper content of 0.59%. The Los Chancas project envisions an open-pit mine with a combined operation of concentrator and SX-EW processes that are expected to produce 130,000 tonnes of

copper and 7,500 tonnes of molybdenum annually. The estimated capital investment is $2,600 million and the project is expected to begin operating in 2031.

Project update: As of March 31, 2026, we continue to implement environmental and social programs in the communities of Tapayrihua and Tiaparo, which are located within the direct area of influence of the Los Chancas Mining Project. Despite these efforts, the presence of illegal miners within the project area has prevented the project from further progress. In this context, the Company continues to work with the relevant authorities to regain control of the project area.

Michiquillay Project - Cajamarca: In June 2018, Southern Copper signed a contract for the acquisition of the Michiquillay project in Cajamarca, Peru. Michiquillay is a world-class mining project with inferred mineral resources of 2,288 million tonnes and an estimated copper grade of 0.43%. When developed, we expect Michiquillay to produce 225,000 tonnes of copper per year (along with by-products of molybdenum, gold and silver) for an initial mine life of more than 25 years. We estimate an investment of approximately $2.5 billion will be required and expect production start-up by 2032.

Project update: Development of the geotechnical, hydrological, and hydrogeological studies is ongoing. In addition, studies related to the project's reserve estimation and mine plan have commenced.

El Arco - Baja California: This is a world-class copper deposit located in the central part of the Baja California peninsula with ore reserves of over 1,230 million tonnes of sulfides with an average ore grade of 0.40% and 141 million tonnes of leach material with an average ore grade of 0.27%. The project includes an open-pit mine with a combined 120 ktpd concentrator and 28 ktpy SX-EW operations.

Under the Mexican constitution, the government is solely responsible for electric energy transmission. The Comisión Federal de Electricidad (CFE), as the competent government entity, must interconnect the Baja California peninsula with the rest of the country. In this context, our project's initiation is dependent on action at the Mexican government level.

Detailed engineering is still underway for the concentrator, SX-EW plant, water desalination facilities, logistics infrastructure and power delivery.

The aforementioned information is based solely on estimates. We cannot make any assurances that we will undertake any of these projects or that the information noted is accurate.

ENVIRONMENTAL, SOCIAL AND GOVERNANCE ("ESG") PRACTICES

For the fifth consecutive year, S&P Global included SCC in its Sustainability Yearbook, which recognizes companies that rank within the top 15% for corporate sustainability performance. In 2025, Southern Copper ranked 4th among 256 companies in the Mining and Metals sector and stood in the top 2% of best performers. Notably, SCC also led the ranking for copper mining companies.

Southern Copper Corporation was recognized by Morningstar Sustainalytics as an ESG Industry Leader. SCC ranked 7th among 215 companies in the metals sector with diversified operations for its performance in environmental, social and governance risk management.

The National Water Authority recognizes our water management efforts in Peru. Southern Peru was awarded the "Certificado Azul" and the distinction of "Water-Responsible and Community-Supportive Company" within the framework of the Water Footprint Reduction and Shared Value program, for the efficient management of water at our

Toquepala operations and for our contributions to strengthening agriculture in Ilabaya and Candarave (Tacna region), including the restoration of 61 hectares of terraces and traditional crops, benefiting 720 farmers.

Certificate for Conservation. Tandem Global, an international organization specialized in conservation and habitat management certification, recognized our Buenavista del Cobre Mine (BVC) for its biodiversity conservation efforts in the Sierra La Elenita ecosystem in Cananea, Sonora.

We drive talent development through our Scholarship program. Each year, more than 9,000 individuals benefit from our educational, sports, and cultural programs in the communities where we operate. In 2026, we awarded scholarships to seven gifted students to continue their professional education at universities in Mexico and the United States, in recognition of their achievements in disciplines such as music, cinema, and sports.

ACCOUNTING ESTIMATES

Our discussion and analysis of financial condition and results of operations, as well as quantitative and qualitative disclosures about market risks, are based upon our consolidated financial statements, which have been prepared in accordance with U.S. GAAP. Preparation of these consolidated financial statements requires our management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. We make our best estimate of the ultimate outcome for these items based on historical trends and other information available when the financial statements are prepared. Changes in estimates are recognized in accordance with the accounting rules for the estimate, which is typically in the period when new information becomes available to management. Areas where the nature of the estimate makes it reasonably possible that actual results could materially differ from amounts estimated include: ore reserves, revenue recognition, ore stockpiles on leach pads and related amortization, estimated impairment of assets, asset retirement obligations, determination of discount rates related to the financial lease liabilities, classification of operating leases versus finance leases, valuation allowances for deferred tax assets, unrecognized tax benefits and fair value of financial instruments. We base our estimates on historical experience and on various other assumptions that we believe reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions.

BENEFIT PLANS

At the Company's July 2025 Board of Directors meeting, approval was granted by the Board to terminate the Retirement Benefit Plan for Salaried Employees of Southern Copper Corporation (the "Plan") effective December 1, 2025. The Termination will proceed as a standard termination. Since November of 2000, the Plan has been frozen and closed to new participants and accruals of benefits. Retirees currently receiving their monthly benefits from The Metropolitan Life Insurance Company ("MetLife") will continue to receive their monthly benefit from MetLife. Plan participants that will begin drawing their benefits for the first time after October 1, 2025, will receive their benefit from Midland Insurance Company.

Settlement charges related to the Plan termination, which will include the recognition of accumulated gains and losses recorded within other comprehensive income on the Company's balance sheet, are currently expected to occur in the fourth quarter of 2025. The Plan termination is subject to certain conditions, including regulatory review, and the Company has the right to change the effective date of the termination or revoke the termination. It is not expected that the Plan termination will have a material impact on the Company's financial statements, and the termination process is expected to be completed by April 30, 2026.

RESULTS OF OPERATIONS

The following highlights key financial results for the three-month period ended March 31, 2026 and 2025:


		Three Months Ended
		March 31,
Statement of Earnings Data		2026		2025		Variance		% Change
Net sales		$	4,251.4	$	3,121.9	$	1,129.5	$	36.2	%
Operating costs and expenses			(1,771.0)		(1,586.4)		(184.7)		11.6	%
Operating income			2,480.4		1,535.5		944.9		61.5	%
Non-operating income (expense)			(36.3)		(57.0)		20.7		(36.4)	%
Income before income taxes			2,444.1		1,478.5		965.6		65.3	%
Income taxes			(891.0)		(532.8)		(358.2)		67.2	%
Equity earnings of affiliate			28.7		3.3		25.4		760.8	%
Net income attributable to non-controlling interest			(5.0)		(3.2)		(1.8)		55.5	%
Net income attributable to SCC		$	1,576.9	$	945.9	$	631.0	$	66.7	%

Net sales in the first quarter of 2026 totaled $4,251.4 million, representing a 36.2% increase compared to the same period in 2025. This performance was mainly supported by an increase in the sales volumes of silver (+11.6%) and zinc (+16.4%) and by higher prices for copper (+37.5% LME; +26.9% COMEX), silver (+157.9%), molybdenum (+24.2%), and zinc (+14.0%). These positive effects were partially offset by lower sales volumes of copper (-4.9%) and molybdenum (-2.8%).

Net income attributable to SCC for the first quarter of 2026 reached $1,576.9 million, representing an increase of 66.7% compared to the same period in 2025. This performance was mainly supported by higher net sales (+36.2%), which rose mainly on the back of stronger metal prices and by-product volumes (silver/zinc) in the first quarter of 2026. These positive effects were partially offset by increases in operating costs (+11.6%) and income taxes (+67.2%).

The table below outlines the average published market metal prices for our metals for the three-month period ended March 31, 2026 and 2025:


		Three Months Ended March 31,
		2026			2025			% Change
Copper price ($per pound-LME)		$	5.83		$	4.24		37.5	%
Copper price ($per pound-COMEX)		$	5.80		$	4.57		26.9	%
Molybdenum price ($per pound)(1)		$	25.37		$	20.43		24.2	%
Zinc price ($per pound-LME)		$	1.47		$	1.29		14.0	%
Silver price ($per ounce-COMEX)		$	83.33		$	32.31		157.9	%

(1)	Platts Metals Week Dealer Oxide

The table below provides our metal sales as a percentage of our total net sales for the three-month period ended March 31, 2026 and 2025:


		Three Months Ended
		March 31,
Sales as a percentage of total net sales		2026		2025
Copper		70.2	%	77.9	%
Molybdenum		10.5	%	9.6	%
Silver		12.5	%	5.7	%
Zinc		3.4	%	3.6	%
Other by-products		3.4	%	3.2	%
Total		100.0	%	100.0	%

The table below provides our copper sales by type of product for the three-month period ended March 31, 2026 and 2025. The difference in value between products is the level of processing. At the market price, concentrates take a discount since they require smelting and refining processes, while refined and rod copper receive premiums due to their purity and presentation.


	Three Months Ended March 31,
Copper Sales (million pounds)	2026	2025	Variance	% Change
Refined (including SX-EW)	287.2	250.3	36.8	14.7	%
Rod	81.5	91.5	(10.0)	(11.0)	%
Concentrates and other	142.3	195.2	(52.9)	(27.1)	%
Total	511.0	537.0	(26.1)	(4.9)	%

The table below provides our copper sales volume by type of product as a percentage of our total copper sales volume for the three-month periods ended March 31, 2026 and 2025:


		Three months ended March 31,
Copper Sales by product type		2026		2025
Refined (including SX-EW)		56.2	%	46.6	%
Rod		15.9	%	17.0	%
Concentrates and other		27.9	%	36.3	%
Total		100.0	%	100.0	%

OPERATING COSTS AND EXPENSES

The table below summarizes the production cost structure by major components as a percentage of total production cost:


		Three months ended March 31,
		2026		2025
Power		13.3	%	12.9	%
Labor		13.4	%	11.9	%
Fuel		15.1	%	15.2	%
Maintenance		24.0	%	24.8	%
Operating material		17.5	%	18.9	%
Other		16.7	%	16.3	%
Total		100.0	%	100.0	%

First quarter: Operating costs and expenses were $1,771.0 million for the first quarter of 2026, compared to $1,586.4 million for the same period of 2025. The increase of $184.7 million was primarily due to:


Operating cost and expenses for the first quarter of 2025			$	1,586.4
Plus:
•	Increase in volume and cost of metals purchased from third parties.			77.4
•	Increase in other cost of sales (exclusive of depreciation, amortization and depletion), which is mainly attributable to:			102.2
	- Solidarity contribution for social and development programs in Sonora, Mexico	28.7
	- Labor expenses	20.7
	- Workers participation	18.0
	- Leachable material	17.0
	- Sales expenses	13.7
	- Energy costs	9.4
	- Fuel	6.8
	- Mining royalties	4.5
	- Other net, partially offset by	39.7
	- Exchange rate variance	(31.6)
	- Inventory variance	(24.8)
•	Increase in selling, general and administrative expenses.			4.1
•	Increase in depreciation, amortization and depletion expense.			1.9
Less:
•	Decrease in exploration expense.			(0.9)
Operating cost and expenses for the first quarter of 2026			$	1,771.0

NON-OPERATING INCOME (EXPENSE)

Non-operating income (expense) represented a net expense of $36.3 million for the three-month period ended on March 31, 2026, compared to a net expense of $57.0 million for the same period of 2025.

First quarter: The $20.7 million decrease in the expense level was due to:

●	$20.5 million decrease in net miscellaneous expenses, as the 2025 figure included a $9.9 million asset impairment at the Tia Maria project.

●	$2.1 million decrease in interest expense, net of capitalized interest; and partially offset by

●	$1.8 million decrease in interest income due to lower interest rates.

INCOME TAXES


		Three Months Ended
		March 31,
		2026			2025
Provision for income taxes ($ in millions)		$	891.0		$	532.8
Effective income tax rate			36.5	%		36.0	%

In addition to the income taxes of Peru, Mexico and the United States, the provision for income taxes also includes the mining royalties from Peru and Mexico and the Peruvian special mining tax.

SEGMENT RESULT ANALYSIS

We have three segments: the Peruvian operations, the Mexican open-pit operations and the Mexican underground mining operations.

The table below presents information regarding the volume of our copper sales by segment for the three-month period ended March 31, 2026 and 2025:


		Three Months Ended March 31,
Copper Sales (million pounds)		2026	2025	Variance	% Change
Peruvian operations		207.8	246.3	(38.5)	(15.6)	%
Mexican open-pit		300.6	290.2	10.4	3.6	%
Mexican IMMSA unit		7.5	5.3	2.2	42.7	%
Other and intersegment elimination		(4.9)	(4.7)	(0.2)	3.8	%
Total copper sales		511.0	537.0	(26.1)	(4.9)	%

The table below presents information regarding the volume of sales by segment of our significant by-products for the three-month period ended March 31, 2026 and 2025:


		Three Months Ended March 31,
By-product Sales (million pounds, except silver-million ounces)		2026	2025	Variance		% Change
Peruvian operations:
Molybdenum contained in concentrate		8.1	7.7	0.4		4.5	%
Silver		1.3	1.7	(0.4)		(24.3)	%
Mexican open-pit operations:
Molybdenum contained in concentrate		8.5	9.3	(0.8)		(8.9)	%
Zinc		42.0	33.0	9.0		27.4	%
Silver		3.9	3.1	0.8		24.6	%
IMMSA unit
Zinc-refined and in concentrate		51.7	47.5	4.2		8.7	%
Silver		1.8	1.6	0.2		13.5	%
Other and intersegment elimination
Silver		(0.6)	(0.7)	0.1		(11.5)	%
Zinc		-	-	-		-	%
Total by-product sales
Molybdenum contained in concentrate		16.6	17.0	(0.5)		(2.8)	%
Zinc-refined and in concentrate		93.7	80.5	13.2		16.4	%
Silver		6.3	5.7	0.7		11.6	%

Peruvian Open-pit Operations:


		Three Months Ended March 31,
		2026		2025		Variance		% Change
Net sales		$	1,581.3	$	1,266.0	$	315.4		24.9	%
Operating costs and expenses			(657.6)		(704.5)		46.9		(6.7)	%
Operating income		$	923.7	$	561.5	$	362.3		64.5	%

Net sales in the first quarter of 2026 increased by $315.4 million compared to the same period in 2025. This improvement was mainly supported by an increase in sales volumes of molybdenum (+4.5%) and by higher prices for copper (+37.5%, LME), silver (+157.9%), and molybdenum (+24.2%). These positive effects were partially offset by a decrease in the sales volumes of copper (-15.6%) and silver (-24.3%).

Operating costs and expenses were $657.6 million for the first quarter of 2026 compared to $704.5 million for the same period of 2025. The decrease of $46.9 million was primarily due to:


Operating costs and expenses for the first quarter of 2025			$	704.5
Less:
•	Decrease in other cost of sales (exclusive of depreciation, amortization and depletion), mainly attributable to:			(38.6)
	- Exchange rate variance	(16.8)
	- Inventory variance, partially offset by	(68.4)
	- Workers participation	31.7
	- Labor expenses	6.2
	- Energy costs	4.5
	- Other, net	4.2
•	Decrease in depreciation, amortization and depletion expense.			(8.6)
•	Decrease in cost of metals purchased from third parties.			(0.7)
•	Decrease in exploration expenses.			(0.3)
Plus:
•	Increase in selling, general and administrative expenses.			1.4
Operating costs and expenses for the first quarter of 2026			$	657.6

Mexican Open-pit Operations:


	Three Months Ended March 31,
	2026		2025		Variance		% Change
Net sales	$	2,443.5	$	1,749.4	$	694.1		39.7	%
Operating costs and expenses		(1,016.0)		(783.9)		(232.1)		29.6	%
Operating income	$	1,427.5	$	965.5	$	462.0		47.9	%

Net sales in the first quarter of 2026 increased by $694.1 million compared to the same period in 2025. This growth was mainly supported by an increase in the sales volumes of copper (+3.6%), silver (+24.6%) and zinc (+27.4%) and by higher prices for copper (+26.9%, COMEX), silver (+157.9%), zinc (+14.0%), and molybdenum (+24.2%). These positive effects were slightly offset by lower sales volumes of molybdenum (-8.9%).

Operating costs and expenses were $1,016.0 million for the first quarter of 2026 compared to $783.9 million for the same period of 2025. The increase of $232.1 million was primarily due to:


Operating costs and expenses for the first quarter of 2025			$	783.9
Plus:
•	Increase in other cost of sales (exclusive of depreciation, amortization and depletion), which is mainly attributable to:			125.2
	- Solidarity contribution for social and development programs in Sonora, Mexico	28.7
	- Inventory variance	44.8
	- Leachable material	22.1
	- Sales expenses	10.3
	- Labor expenses	8.3
	- Repairing materials, principally heavy equipment spare parts	7.9
	- Fuel	3.5
	- Other net, partially offset by	23.7
	- Exchange rate variance	(15.1)
	- Workers participation	(8.9)
•	Increase in volume and cost of metals purchased from third parties.			94.9
•	Increase in depreciation, amortization and depletion expense.			11.9
	Increase in exploration expense.			0.1
•	Increase in selling, general and administrative expenses.			(*)
Operating costs and expenses for the first quarter of 2026			$	1,016.0

(*) Less than $0.1 million.

Mexican Underground Operations (IMMSA):


	Three Months Ended March 31,
	2026		2025		Variance		% Change
Net sales	$	318.5	$	155.5	$	163.1		104.9	%
Operating costs and expenses		(177.8)		(137.0)		(40.7)		29.7	%
Operating income	$	140.8	$	18.4	$	122.4		663.4	%

Net sales in the first quarter of 2026 increased by $163.1 million compared to the same period in 2025. This growth was mainly supported by an increase in the sales volumes of copper (+42.7%), silver (+13.5%) and zinc (+8.7%) and by higher prices for copper (+26.9%, COMEX), silver (+157.9%) and zinc (+14.0%).

Operating costs and expenses were $177.8 million for the first quarter of 2026 compared to $137.0 million for the same period of 2025. The increase of $40.7 million was primarily due to:


Operating costs and expenses for the first quarter of 2025			$	137.0
Plus:
•	Increase in volume and cost of metals purchased from third parties.			21.6
•	Increase in other cost of sales (exclusive of depreciation, amortization and depletion), which is mainly attributable to:			16.1
	- Operations contractors	7.7
	- Labor expenses	6.2
	- Repairing materials, principally heavy equipment spare parts	3.5
	- Energy costs	3.5
	- Exchange rate variance	1.8
	- Other net, partially offset by	6.7
	- Workers participation	(13.2)
•	Increase in selling, general and administrative expenses.			2.8
•	Increase in depreciation, amortization and depletion expense.			0.7
Less:
•	Decrease in exploration expense.			(0.5)
Operating costs and expenses for the first quarter of 2026			$	177.8

Intersegment Eliminations and Adjustments:

The net sales, operating costs and expenses and operating income discussed above will not be directly equal to amounts in our condensed consolidated statement of earnings because the adjustments of intersegment operating revenues and expenses must be taken into account. Please see Note 13 "Segment and Related Information" of the condensed consolidated financial statements.

LIQUIDITY AND CAPITAL RESOURCES

Cash flow:

The following table shows the cash flow for the three-month period ended March 31, 2026 and 2025 (in millions):


	2026		2025		Variance
Net cash provided by operating activities	$	1,694.5	$	721.4	$	973.1
Net cash used in investing activities	$	(271.3)	$	(290.7)	$	19.3
Net cash (used in) provided by financing activities	$	(819.1)	$	432.9	$	(1,252.0)

Net cash provided by operating activities:

The change in net cash from operating activities for the three-month period ended March 31, 2026 and 2025 include, in millions, the following significant items:


	2026		2025		Variance		% Change
Net income	$	1,581.9	$	949.1	$	632.7		66.7	%
Depreciation, amortization and depletion		225.7		223.8		1.9		0.9	%
(Benefit) provision for deferred income taxes		(34.8)		28.2		(63.0)		(223.6)	%
(Gain) loss on foreign currency transaction effect		(17.6)		14.0		(31.6)		(225.8)	%
Other adjustments to net income		(4.5)		11.3		(15.8)		(140.0)	%
Change in operating assets and liabilities		(56.1)		(504.9)		448.8		(88.9)	%
Net cash provided by operating activities	$	1,694.5	$	721.4	$	973.1		134.9	%

Three-month period ended March 31, 2026: Net income was $1,581.9 million, which represented approximately 93.3% of the net operating cash flow. The cash flow from operating assets and liabilities dropped $56.1 million due to the following:

●	$(65.1) million increase in trade accounts receivable, which was mainly attributable to an increase in metal prices in the first quarter of 2026.

●	$(109.9) million decrease in accounts payable and accrued liabilities, principally due to income tax payments made at our Peruvian and Mexican operations.

●	$97.4 million net decrease in inventory, which was primarily driven by a reduction in the work in process inventory.

●	$21.5 million decrease in other operating assets and liabilities, net.

Three-month period ended March 31, 2025: Net income was $949.1 million, which represented approximately 131.6% of the net operating cash flow. The cash flow from operating assets and liabilities decreased $504.9 million due to the following:

●	$(358.1) million increase in trade accounts receivable, which was mainly attributable to an increase in metal prices and reported sales volumes in the first quarter of 2025.

●	$(273.7) million decrease in accounts payable and accrued liabilities, which was primarily driven by income tax payments at our operations and by workers' participation payments at our Peruvian operations.

●	$85.3 million net decrease in inventory, which was primarily driven by a $92.2 million drop in the work in process inventory at our Peruvian operations.

●	$42.0 million decrease in other operating assets and liabilities, net.

Net cash used in investing activities:

Three-month period ended March 31, 2026: Net cash used in investing activities included $441.9 million for capital investments. The capital investments included:

●	$206.2 million of investments at our Mexican operations:

●

$40.3 million for land for new projects,

●

$33.5 million for the IMMSA unit,

●

$23.0 million for the tailings deposits of the new concentrator at Buenavista,

●

$10.0 million for wells and recovered water conduction,

●

$103.3 million for replacement, maintenance expenditures and other projects, and

●

$(3.9) million increase in capital expenditures incurred but not yet paid.

●	$235.7 million of investments at our Peruvian operations:

●

$90.2 million for the Tia Maria project,

●

$6.0 million for the relocation of the electrical room and conveyor belt at the Cuajone concentrator,

●

$4.9 million for the relocation of the leaching crusher at Toquepala,

●

$3.0 million for the relocation of fuel storage tanks at the Cuajone mine,

●

$2.3 million for the cathode stripping machine at the Ilo refinery,

●

$55.2 million for replacement, maintenance expenditures and other projects,

●

$25.7 million for other minor projects with a budget below $1 million, and

●

$48.4 million decrease in capital expenditures incurred but not yet paid.

Investment activities in the first three months of 2026 included $170.5 million of net proceeds from short-term investments.

Three months ended March 31, 2025: Net cash used in investing activities included $317.8 million for capital investments. The capital investments included:

●	$157.7 million of investments at our Mexican operations:

●

$32.8 million for the new tailings disposal deposit at Buenavista mine,

●

$21.4 million for the IMMSA unit,

●

$12.1 million for land for new projects,

●

$9.3 million for the water supply system at La Churea,

●

$96.6 million for replacement and maintenance expenditures, and

●

$(14.5) million increase in capital expenditures incurred but not yet paid.

●	$160.1 million of investments at our Peruvian operations:

●

$43.7 million for the purchase of land at the Los Chancas project,

●

$7.4 million for the relocation of the leaching crusher at Toquepala,

●

$4.8 million for the Tia Maria project,

●

$4.2 million for the cathode stripping machine at Ilo refinery,

●

$3.0 million for the modernization of the delamination machine at Toquepala,

●

$2.2 million for the electric cogeneration at Ilo smelter,

●

$78.3 million for replacement and maintenance expenditures, and

●

$16.5 million decrease in capital expenditures incurred but not yet paid.

Investment activities in the first three months of 2025 included $27.2 million of net purchase of short-term investments.

Dividends:

On April 23, 2026, the Board of Directors authorized a quarterly cash dividend of $1.00 per share of common stock and a stock dividend of 0.0100 shares of common stock per share of common stock, payable on May 29, 2026 to shareholders of record at the close of business on May 13, 2026.

In lieu of fractional shares, cash will be distributed to each shareholder who would otherwise have been entitled to receive a fractional share, based on a share price of $187.45, which is the average of the high and low share price on April 23, 2026.

Capital Investment and Exploration Programs:

A discussion of our capital investment programs is an important part of understanding our liquidity and capital resources. We expect to meet the cash requirements for these capital investments from cash on hand, internally generated funds and from additional external financing if required. For information regarding our capital investment programs, please see the discussion under the caption "Capital Investment Programs" under this Item 2.

Contractual Obligations:

There have been no material changes in our contractual obligations in the first quarter of 2026. Please see item 7 in Part II of our 2025 annual report on Form 10-K.

NON-GAAP INFORMATION RECONCILIATION

Operating cash cost: Following is a reconciliation of "Operating Cash Cost" (see page 40) to cost of sales (exclusive of depreciation, amortization and depletion) as reported in our condensed consolidated statement of earnings, in millions of dollars and dollars per pound of copper in the table below:


	Three Months Ended				Three Months Ended
	March 31, 2026				March 31, 2025
			$ per				$ per
	$ millions		pound		$ millions		pound
Cost of sales (exclusive of depreciation, amortization and depletion)	$	1,498.8	$	3.04	$	1,319.2	$	2.58
Add:
Selling, general and administrative		35.8		0.07		31.7		0.06
Sales premiums, net of treatment and refining charges		(47.4)		(0.10)		(35.0)		(0.07)
Less:
Workers' participation		(125.0)		(0.25)		(107.0)		(0.21)
Cost of metals purchased from third parties		(120.9)		(0.25)		(50.6)		(0.10)
Royalty charge and other, net		(27.6)		(0.06)		(22.3)		(0.04)
Inventory change		(77.6)		(0.16)		(85.7)		(0.17)
Operating Cash Cost before by-product revenues	$	1,136.0	$	2.31	$	1,050.2	$	2.05
Add:
By-product revenues(1)		(1,179.4)		(2.39)		(652.5)		(1.28)
Net revenue on sale of metal purchased from third parties		(9.2)		(0.02)		(6.0)		(0.01)
Add:
Total by-product revenues		(1,188.6)		(2.41)		(658.5)		(1.29)
Operating Cash Cost net of by-product revenues	$	(52.6)	$	(0.11)	$	391.7	$	0.77
Total pounds of copper produced (in millions)		492.8				511.6

(1)	By-product revenues included in our presentation of operating cash cost contain the following:


	Three Months Ended				Three Months Ended
		March 31, 2026				March 31, 2025
			$ per				$ per
	$ millions		pound		$ millions		pound
Molybdenum	$	(445.5)	$	(0.90)	$	(300.5)	$	(0.59)
Silver		(478.2)		(0.97)		(156.6)		(0.31)
Zinc		(121.5)		(0.25)		(100.9)		(0.20)
Sulfuric Acid		(86.6)		(0.18)		(58.4)		(0.11)
Gold and others		(47.5)		(0.10)		(36.1)		(0.07)
Total	$	(1,179.4)	$	(2.39)	$	(652.5)	$	(1.28)

Southern Copper Corporation published this content on April 30, 2026, and is solely responsible for the information contained herein. Distributed via EDGAR on April 30, 2026 at 18:06 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]

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