Southern Copper Q2 2007 Earnings Call Transcript

TRANSCRIPT SPONSOR

Southern Copper Corp. (PCU)
Q2 2007 Earnings Call
July 30, 2007 11:00 am ET

Executives

Raul Jacob - Head of IR
Jose Chirinos - CFO
Oscar Gonzalez - CEO

Analysts

Jorge Beristain - Deutsche Bank
Rafael Urquia
Donald McLachlan
Victoria Santaella
Veband Budbey
Yuri Maslov
Philippe Hourai
Oscar Tabera

Presentation

Operator

Good morning. And welcome to Southern Copper Corporation Second Quarter 2007 Results Conference Call. With us this morning, we have Southern Copper Corporation, Mr. Jose Chirinos, Chief Financial Officer; Mr. Raul Jacob, Head of Investor Relations who will discuss the result of the company for the second quarter and 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 event or otherwise. Our results are expressed in "U.S. GAAP".

Now I'll pass the call to Mr. Raul Jacob.

Raul Jacob

Thank you very much Britney and thank you everyone again for joining us for the second quarter 2007 results for Southern Copper Corporation. Today we have Mr. Oscar Gonzalez Rocha, who is our Chief Executive Officer and Mr. Chirinos who is our Chief Financial Officer. I will leave you through with Mr. Chirinos who is going to do first statement of this conference call.

Jose Chirinos

Thank you very much Raul and thank you everyone again for joining us for the second quarter 2007 results for Southern Copper Corporation.

Copper prices, production and sales. The LME average copper price was $3.47 per pound in the second quarter of 2007. 6.1% higher than the $3.27 per pound average in the second quarter of 2006 and also higher than the copper price for the first quarter for 2007, only do us $2.69 per pound.

During the second quarter 2007, copper production was 351 million pound, 28.1% higher than the 273.9 million pounds of production in the second quarter of 2006 lower than the 378 million pounds of copper produced in the first quarter of 2007. When compared with a three first months of 2007, copper production decreased due to lower production from the Toquepala mine in Peru. As a result of lower ore grades and lower mineral milling from the Cananea mine due to a marginal repair in the tailings deposit system.

Smelted and refined copper production was lower by 16.3% and 2.4% respectively. When we compared to the second quarter of 2006, this variance results from the ramping up of the modernized Ilo smelter in Peru.

We are pleased to report that the nominal and design capacity for the Isasmelt furnace, the most important component of this facility was reached in less than 45 days, compared with other Isasmelt furnace using this technology, the start-up of the Ilo smelter has been achieved in the shortest time. Also, the sulfur capture during the second quarter was 97.6% higher than the 92% required by the Peruvian regulations. We expect this project to be at full capacity during the third quarter of 2007.

Copper sales were 356.2 million pounds, 8.2% higher than the 329.2 million pound sold in the second quarter of 2006. As you may have noticed, there is no direct correlation between the production increase of 28.1% and the sales increase of 8.2% when comparing 2007 figures with 2006 ones.

The difference is due to the replacement of third parties copper sold in 2006 by SCC copper. The third parties copper is much more expensive than our own production. This equates to a higher return on sale. We will revisit this in a few minutes when we'll discuss that.

Molybdenum prices, production and sales. Molybdenum prices were $30.41 per pound, 26% higher than the 2006 second quarter averaged price of $24.22 per pound and 18% higher than the first quarter of 2007 averaged of $25.81 per pound.

Molybdenum production increased from 5.1 million pounds in the second quarter of 2006 to 8.6 million in the first quarter, a positive variance of 69%. The higher production resulted from improvement in the recovering of La Caridad production, which added 3.5 million pounds of additional molybdenum production planned this increase.

When compared with the first quarter of 2007, second quarter 2007 had 6% higher production. Due to the better production, sales volume of molybdenum increased from 5.2 million pounds to 9.1 million pounds, a positive variance of 75% helping significantly to the profitability of our operations. With respect to same prices, production and sales, fixed prices during the second quarter of 2007 averaged $1.66 per pound, higher by 11% when we compare to the second quarter of 2006 price of $1.49 per pound. The average price for the first quarter of 2007 was $1.57 per pound.

Mine zinc production was 73.6 pounds in the second quarter of 2007, 5% higher than the 70.1 million pounds produced in the second quarter of 2006. Second quarter zinc production was also higher than the 71.3 million pounds produced in the first quarter of 2007.

The increase in production between the second quarters of 2007 and 2006 is started from higher production at the San Martin mine, where an illegal stoppage in the second quarter of 2006 reduced production, and from better all grades and recoveries in our other initial operations. It should be pointed out that our refined zinc production increased to 42.3 million pounds. These figures compares with 2006 second quarter production of 12.3 million pounds.

The 244% production increase of refined zinc results from the recovery of operations at SCCs zinc electrolitic refinery located in San Luis Potosí in Mexico as you know this facility resume operations in October of 2006 after then electrical file seriously attracted it at the beginning of the year. Zinc sales including concentrates and refined material were 70.1 million pounds in the second quarter of 2007 higher by 16% than the 60.5 million pounds sold in the same period of 2006 and 7% higher than 65.6 million pounds of zinc sold in the first quarter of 2007.

Net sales, due to the higher prices and volume increases our sales were 1.8 billion in the second quarter of 2007. This figure compares very favorably with the total sales for the second quarter of 2006 of 1.3 billion an increase of 43% for the first quarter of 2007 sales were 1.4 billion.

Cost of sales, cost of sales amounted to by $162 million in the second quarter an increase of 7.8% from that by $122 million in the second quarter of 2006. The increase in cost of sales in the second quarter of 2007 as compared to the second quarter of 2006 is principally due to $57.5 million of higher production cost as a result of the higher strike-free production in our Mexican operation, offset by a reduction of $113.2 million in purchases of copper concentrates on the open market made in 2006, due to the strike activities.

Other factors, increasing cost of sales include an increasing workers participation of $27.5 million, a loss in translation difference of $17.2 million due to the appreciation of the Mexican peso against the US dollar. The consumption of inventory of $32.1 million and $11.3 million of higher sales expenses, mainly due to the sales of excess copper concentrates in our Peruvian operation, due to the investment ramping up.

The company's cash cost known in our industry as C1 was negative $29.5 per pound in the second quarter of this year, this figure compared with a positive cash cost of $40.5 per pound for the same period of 2006. Excluding the effect of the by product revenue cash cost was $1.32 per pound lower than the $1.50 per pound of the third quarter of 2006. For the first quarter of 2007, cash cost averaged $4.7 per pound.

Operated income and EBITDA; as our sales increased by 43% and operating cost and expenses only by 8.5%, the company operating income amounted to $1.145 billion in the quarter, which compares the result with last year's second quarter operating income of $649 million and the $787 million obtained in the first quarter of 2007.

EBITDA for the second quarter was $1.2 billion per company record and 61% higher than last year's second quarter EBITDA of $735 million and also higher than the $61 million obtained in the first quarter. The EBITDA margin is 65% of sales, higher than 58% of sales registered in 2006.

With respect to net income, second quarter 2007 net income increased to $726 million from $439.3 million in the second quarter of 2006, an increase of 65% and amounted to $2.465 per fully diluted share, compared to $1.49 per fully diluted share for the second quarter of 2006.

Derivative activities, I would like to comment briefly on the scope of some of our derivative activities in the periods we are reviewing. We have recorded significant losses from copper derivative activities in 2006 periods. In the second quarter of 2006, we recorded a sales reduction of about 258 million due to losses on copper derivatives.

In the second quarter of 2007, we are pleased to know that a gain of 3.3 million was recorded in sales due to profit derivative activities. As of June 30, 2007 we have in place copper color contents running from July to December for 146.2 million pounds with minimum and maximum LME prices of $3.27 per pound and $4.07 per pound, founds to be clear $4.07 per pound. Additionally, we have in place copper swap contracts for 7.9 million pounds of third quarter copper sales at an average COMEX price of $3.71 per pound. We expect that these contracts will ensure a positive return for our shareholders.

Additionally, I would like to add to a certain investment we lease hold that contain embedded derivatives. We began making these investments in 2006 and they are recorded and the marketable securities on our balance sheet. At June 30, 2007 this investment have a face value of 820 million, and a net value of 276.2 million after deducting of valuation account recorded in recurring liabilities.

Investments were made to enhance the return on our cash balance. Unfortunately, we have settled some losses, both realized and unrealized on this investments. In the second quarter of 2007 and the first six months of 2007, we have recorded losses of $50.8 million and $81.6 million, respectively.

The respective capital expenditures, capital expenditures included in exploration expense amounted to $90.8 million during the second quarter of 2007, a slight decrease compared to the second quarter of 2006, due principally to the completion of the Ilo smelter modernization in January 2007. Additionally, the company's crushing and conveying project added for Toquepala unit is in full production.

A primary crusher and associated overrun conveying system are fully operational. Construction of the break-in ramp had placed 51.6 million tonnes of material and was completed in the second quarter of 2007. We plan to construct a new SX/EW plant at the Cananea mine with an annual copper production capacity of 33,000 metric tonnes.

Proportions for an engineering procurement and construction management contract had been received and are being analyzed. In conjunction with this project, we are developing a crushing and conveying system project with our 15 million metric tonnes per year capacity.

Regarding the expansion projects at the Cananea mine, the concentrator expansion is under a technical and economic evaluation. Expanded concentrator would add 33,000 pounds of copper content per year and would begin production in the year 2009. In parallel, due to improving molybdenum grades, the company also plans to build a molybdenum plant to produce concentrates with approximately 4,000 tonnes of molybdenum content per year. We have completed the basic engineering and we are analyzing alternatives of the detailed engineering.

The company's exploration activities, the pre-feasibility study at Los Chancas, a copper-molybdenum property in the Southern Peru is in process and we expect it to be completed in this quarter. Additionally, a feasibility study for Tia Maria, a copper oxide deposit in the region of Arequipa, Peru is in process. This study should also be completed this quarter. In addition to these Peruvian properties we are planning to develop our Mexican properties at El Arco in Baja California and Angangueo in Michoacan. We expect to go forward with the development of this Mexican properties as well as the expansion of the operating properties once we believe that the necessary financial and governmental requisites have been obtained.

With respect to the payment of dividend declared it is the company policy to review at each Board meeting the capital investment plan. Last resources and expected future cash flow generation from operations, in order to determine the appropriate early dividend. Accordingly, the company declared a quarterly dividend of $1.60 per common share to be paid on August 31, 2007 to common shareholders of record at the close of business on August 14, 2007.

With this in mind ladies and gentlemen, thank you very much for joining us. And we would like to open up the forum for questions.

Question-and-Answer Session

Operator

(Operator Instructions) Your first question comes from the line of Jorge Beristain.

Jorge Beristain - Deutsche Bank

Hi, Mr. Chirinos, Jorge Beristain with Deutsche Bank here. I just had a question about the cash costs of production which seemed to be rising. And I understand that a part of the quarter-on-quarter increase roughly $0.10 per pound was due to increase profit sharing with workers. I was wondering if you could share with us a kind of sensitivity at current copper prices that were seeing now in the third quarter, if you could expect that level of profit sharing to increase quarter-on-quarter going into the third quarter?

Jose Chirinos

Okay. Thank you very much. With respect to this, that was something extraordinary between the first and second quarter. This increase is something that happened in Cananea that Mr. Gonzalez looked and explained. And as you noted we are containing and controlling the costs that are something exceptional of course in this respect. But the current costs are well controlled.

With respect to the increase of the workers' participation, this is due to the higher economic result [increasing their basis], profit before tax and that is increasing due to the prices and production and so on. That's why it is increasing.

Jorge Beristain - Deutsche Bank

Yes, but sorry, could you give us a sense if this is going to increase again in the third quarter versus the second quarter?

Jose Chirinos

If this is going to increase, if the profit before taxes increases, the prices are in the same level and the costs are also controlled, or if we have better prices, that's going to increase consequently.

Jorge Beristain - Deutsche Bank

Okay, thank you.

Operator

Your next question comes from [Rafael Urquia].

Rafael Urquia

Hi, good morning everyone, I have two questions. The first one is regarding the derivatives that you are using. You mentioned that you booked a loss of $50 million on investments and looking at your income statement, it's a loss of $55 million in a booked on the line of losses on derivative instrument. Could you explain me again what happened there, because you also mentioned that you had a gain of $3.3 million in the derivatives? So, this would my first question.

And my second question is regarding your other expansion project. First, if have any, could you give us any guidance on the total costs of the expansion project in the Cananea, the one that you mentioned a 33,000 tonnes and also about the other Tia Maria or Los Chancas and El Arco as well? Thank you.

Jose Chirinos

Okay, thank you, [Rafael]. Because we have many, many questions, I would like to ask Raul to answer with respect to the last part of the question.

Raul Jacob

Okay. Regarding the CapEx for our Cananea, Los Chancas, and Tia Maria, the total package of expansions that we consider what we call the first generation, have currently at cost in the range of $400 million of total CapEx. I should point out that we are currently doing the feasibility study in Tia Maria and there is a reasonable chance for an upgrade of the project production which is right now 43,000 metric tonnes of copper per year and that number may increase. If the number increase, of course we will see an increase in CapEx related to the Tia Maria project. But so far the Cananea expansions in the SX/EW as well as the concentrator and the molybdenum plant, the Tia Maria project have a total CapEx of $400 million.

Rafael Urquia

Raul, do you have what's the CapEx only for Tia Maria and what's the CapEx for Cananea project?

Raul Jacob

At this point, I think that we will…

Oscar Gonzalez

Raul, if you want I can explain about him Tia Maria. Tia Maria as you mentioned is going to be mainly increased. We are with ducktail with the feasibility study, but very now we have a possible production of 90,000 tonnes of copper content from oxides and the cost will be around $700 million. But in this $700 million, we are preparing some of the costs for the sulfur exploitation that will be negative because we are finding more sales in these deposits, and we can go for exploitation after the leech-in operation. That is for Tia Maria. I don’t know if that answer your question and Raul you can continue with the rest.

Raul Jacob

Sure, thank you. In the case of Los Chancas, we have by this that is about to change because we are finishing the pre-feasibility study of Los Chancas in the third quarter. So, I think that we'd better wait for the news from our consultants on this matter. And in the case of derivatives, Jose Chirinos will explain what the company has recorded and what's the current position on that?

Jose Chirinos

Okay, with respect to the 3.12 million gain, it is recorded and shown in the net sales line, because it corresponds to the copper sale. And with respect, the other few you were asking that some detail, in our next 10-Q report we will show in detail of what's going on as we did in the previous quarter.

Rafael Urquia

Okay, thank you.

Jose Chirinos

Does that answer your question? Okay.

Operator

Your next question comes from the line of Donald McLachlan.

Donald McLachlan

Yeah. Good morning. I have a couple of questions. I am interested in your outlook for copper market for the coming quarters pricing, demand, what are you seeing out there? And then what's the risk of additional capacity disrupting whatever market dynamics? And then also I am curious about the situation of the Asarco litigation is there any risk overruling that can sort of reverse the corporate restructuring?

Oscar Gonzalez

Donald. On the market what do we see is basically a market that is extremely tie as you know copper inventories are less than a week right now and have been in that extremely low level for quite a while. At the first half of 2007 it is clear that the Chinese market has re-stock their inventories of copper. We have found evidence that that has stop already and we believe that for the second half of the year the market should be relatively balanced, but responding to a very strong economic growth in the world as you know the GDP growth for the world economy it's between 3% and 3.5% according to different estimates and that give you support for having Indian or basic materials with strong demand and in the case of copper I think supply is not responding as it was expected we are having certainly a very tine market. Again, I hope that this clarifies your concerns.

Donald McLachlan

Yes. Well it does. Thanks. And what about the Asarco?

Oscar Gonzalez

Not necessarily about the Asarco question, but we cannot answer that at least on matter of this conference.

Donald McLachlan

Okay. I understood.

Operator

Your next question comes from the line of Victoria Santaella.

Victoria Santaella

Hi Mr. Chirinos, good morning and congratulations on the great results. I have two brief questions. Number one if you can give us some idea on the grades of Toquepala mine going forward, are we going to continue seeing the trends there. And number two, if you can elaborate a little bit on the decline on the smelted copper during the second quarter and what should we be looking for in a next year on that line as well?

Jose Chirinos

Okay. Thank you very much, Victoria. I would like to ask Mr. Oscar Gonsalez to answer your questions.

Oscar Gonzalez

Yes, about the grades in the Toquepala mine within that, we are going to improve a little bit for next year, right now we are in the order of 0.7, 0.73. And I think as we are going to increase to 2.75 for next year. That is above grades. And I didn't recall the second part to your question.

Victoria Santaella

And my second part of the question is the perspective on the declining production of your smelted copper?

Oscar Gonzalez

Like it was mentioned in the discretion of Mr. Chirinos because of the ramping up of the smelter. But right now, we expected that in the third quarter it will be at normal capacity and that is as smelting in the order of 3,400 tonnes of concentrate. Right now we are in the last three weeks of July in 3000 that there is a little more than 85%. Then we expected that we will comply with that and we will not have any more problems in the future.

Victoria Santaella

Thank you. And one last question as you can comment in general. Are you experiencing any bottlenecks with the equipment that you might want to acquire in the market in order to continue with your CapEx plan? Is there any changes in your long-term growth a planning giving the hype markets, and as I mentioned before, [scarcity] in some cases of tooling machinery and so on in the mining industry?

Oscar Gonzalez

No, we don't expect any problem at all. And of course in the new productions for our expansions in Toquepala, Cuajone, and the projects in Tia Maria, Los Chancas, and Cananea, we will let assume have a result from our feasibility study and started doing the connection with fabricators in order to have every tender we will need, on time.

Victoria Santaella

Thank you very much.

Operator

Your next comes from the line of Veband Budbey.

Veband Budbey

Hi, basically I have got two questions. My first question is about the volumes of mine copper. As I see, there is a decline in the mine copper production compared to the first quarter of 2007. So I just wanted to know why is there a decline in the mine copper production, in the first quarter the production was around 378 million pounds and in the second quarter, it's approximately around 351 million pounds. I'm just interested to know why is there is a decline in production and in the light of the recent labor problems, is there any revised guidance on copper production?

And my second question is about the cost. As I said, there has been a decline in the mine copper production, but the cost of production has actually gone up. In the first quarter, the cost of production was approximately 466 million. In the second quarter, it's 562 million. So there though there has been a decline in production, the cost actually gone up. So I just wanted to know why is there a increase in cost, and do you have any guidance for this full year on cost? Thank you.

Raul Jacob

Oscar Gonzalez will comment on your question.

Oscar Gonzalez

Okay. The high cost that we have in the second quarter mainly was because of the expansions that we have in the Cananea mine because of rupture of a pipeline, where a pipeline to fill our concentrator and we need to replace it completely including something, there is a problems in the same concentrator and that cost and the cost of energy that is high in Peru and in Mexico is doing these extra costs and we hope that the energy cost is going to continue. But we hope that the extra costs that we need to spend for this changing of the pipeline will reduce the cost from the second quarter in the third quarter. And the other part of your question was what actually?

Veband Budbey

I wanted to know do you have any guidance for the cost for the full year?

And my first question was why there has been a decline in the copper production compared to first quarter?

Oscar Gonzalez

That is the same the reason that our concentrator in Cananea for the full month of June, we don’t have that production at full capacity, was 40% percent of the capacity and somewhere else in the milling of Toquepala, that is for delta gasless production in the second quarter. But we hope that for the third quarter because the pipeline in Cananea is already fixed in the middle of July will be better in the third quarter. And the same in Toquepala because we are going to increase our production because of the grade and because of the equipment that we are using closer to the mine, the crushing equipment.

Veband Budbey

Okay. So, do you have any guidance on the full year production numbers and the cost numbers?

Oscar Gonzalez

I think that our copper production will be very close to the 170,000 tonnes like we have in the first quarter of 2007. And the cost I hope that we will be able to come back to some of our last year of $0.65, that we have in the year 2006. But remember that either diesel because of the oil prices and the energy are getting higher and is difficult that are coming back now. But we hope that with the extra production we will reduce the cash costs or the operating cash costs.

Veband Budbey

Thank you very much.

Operator

Your next question comes from the line [Yuri Maslov].

Yuri Maslov

Yes, I actually have got two questions if I may. One is on the moly production because it seems that your moly production is quite strong. So, I was wondering if you had any guidance on moly production for full year '07, is it going to be like 12,000 tonnes like in '06, but it seems to me it's going to be higher than that?

And the related question to that is, if you start producing additional 4,000 tonnes of moly from 2009, what's going to be the combined output that is going to be 18,000 or 19,000 tonnes or if you could give some clarity on that? So, that was my first question.

And the second question is about your feasibility studies that you mentioned today on Los Chancas and El Arco, because if I remember correctly they are part of the third generation, so if you are doing feasibility studies now, does that imply that you are going to bring potentially the production earlier than initially expected? Thanks.

Oscar Gonzalez

Yes. About the moly production the reason where the Cananea the grades was 0.037 that these higher than last quarters and is going to continue decline in the mine of Michoacan recovery. And in Toquepala the grades was same 0.038, but in Cuajone was at the normal 0.24 within that our production for diesel is going to be very close to the last year production. Remember that we mention that in Peru operations we look at a shortage of 8% in the production of moly, because of the grades. And in Mexico is increased within as we are going to be very close to the field of Brazil and up till Cananea we will have these moly plant ready definitely we are going to go in the fields that you mentioned in the order of 16,000 tonnes of moly. About the El Arco I think that it was mentioned really we believe that the when we will get ready the financial and the governmental requisites have been obtained mainly because we don't have any investor in that area. And we are restoring that again and making a feasibility and reason of our feasibility study that we believe a long time ago with some engineering firms. We will decide we will continue with that, but is one of our intensions to have that Peruvian operation as soon as we can.

Yuri Maslov

Okay. Thanks.

Operator

Your next question comes from the line of [Philippe Hourai].

Philippe Hourai

Hi, good morning again. So, I have just one final question, its regarding your growth strategy, because indeed last quarter you mentioned the potential and newer positions that you could have. Has that changed in the past few months due to the current level of consolidation in the market or are you still pursuing new acquisitions?

Jose Chirinos

Okay, Philippe, thank you. Our strategy is to at present to develop the projects that were mentioned, and probably as it was explained before to increase the capacity of our present facilities.

Philippe Hourai

Okay, but, do you still consider new acquisitions or not?

Oscar Gonzalez

Not right now. We are not with this kind of embedment that we are thinking for our own operation. We don’t think that we are in the position right now, unless it's something that is very attracted, but we don’t think so.

Philippe Hourai

Okay, thank you.

Operator

Your next question comes from the line of [Oscar Tabera].

Oscar Tabera

Good morning gentlemen. I just have a couple of follow-ups on the questions that you already gone at, I apologize if you had this; I just joined the conference late. You have a common press release with some of your expansion projects.

Raul Jacob

The same copy you have, Oscar.

Oscar Tabera

Can you hear me?

Oscar Gonzalez

No, we are not reading you very well, being cut your transmission.

Oscar Tabera

Okay, now look, I'll call you back later, thank you very much.

Oscar Gonzalez

Thank you for joining.

Operator

Your next question comes from the line of Jose Bernstein.

Jorge Beristain - Deutsche Bank

Hi, just a follow-up on the CapEx. I just didn’t quite catch when you were saying of your generation of one project's which I understand is Cananea and Los Chancas. And then you also mentioned Tia Maria thrown in their and I think quoted the total being $400 million for the CapEx for those three projects. Could you just clarify what the growth CapEx is for your generation one project?

Raul Jacob

Yes, I'm sorry if I mislead you on that Jorge. But Tia the first generation of projects comprised of four projects. They are the following: the SX/EW plant at Cananea that will add 33,000 metric tonnes of copper production per year; the expansion of the Cananea concentrator that will add another 33,000 metric tonnes of additional copper production per year; molybdenum plant in Cananea that will produce 4,000 metric tonnes of molybdenum per year; and Tia Maria, that at this point has an official estimate of 43,000 metric tonnes per year. Those were four projects have an estimate cost of $400 million.

Now let's explain the Tia Maria; we are doing the feasibility study and there are several options that may increase the CapEx that we're currently having in our estimate. That's where we are. In the case of Los Chancas, Los Chancas is not a project of our first generation package. It's a project of a third generation. It’s a Greenfield project as you know. And we are doing the pre-feasibility study on that project. Even though we have a forecast for CapEx on Los Chancas, we are currently about to receive in the third quarter our pre-feasibility study on this matter and we'd like to maintain the CapEx number still unadjusted for Los Chancas.

Jorge Beristain - Deutsche Bank

Okay. I understand. Thank you.

Oscar Gonzalez

This is Oscar Gonzalez. The thing is that we are in the process of the feasibility study and we don't have the real feasible right now. But it was mentioned, Tia Maria is a possibility that will be a double of production of 90,000 tonnes instead of 43,000 and that of course is going to cost more. But we are not going to have the results until the end of the third quarter of this year, [backed there in] Santiago, Chile is doing these studies for us and is still developments from analysis and when we will be ready, we will let you know about this.

Jorge Beristain - Deutsche Bank

Okay. Thank you.

Operator

And there are no further questions at this time.

Oscar Gonzalez

Thank you very much ladies and gentleman for joining us this morning, and thank you very much. Good day. Bye-bye.

Operator

This concludes today's conference call. You may now disconnect.

Copyright policy: All transcripts on this site are copyright Seeking Alpha. However, we view them as an important resource for bloggers and journalists, and are excited to contribute to the democratization of financial information on the Internet. (Until now investors have had to pay thousands of dollars in subscription fees for transcripts.) So our reproduction policy is as follows: You may quote up to 400 words of any transcript on the condition that you attribute the transcript to Seeking Alpha and either link to the original transcript or to www.SeekingAlpha.com. All other use is prohibited.

THE INFORMATION CONTAINED HERE IS A TEXTUAL REPRESENTATION OF THE APPLICABLE COMPANY'S CONFERENCE CALL, CONFERENCE PRESENTATION OR OTHER AUDIO PRESENTATION, AND WHILE EFFORTS ARE MADE TO PROVIDE AN ACCURATE TRANSCRIPTION, THERE MAY BE MATERIAL ERRORS, OMISSIONS, OR INACCURACIES IN THE REPORTING OF THE SUBSTANCE OF THE AUDIO PRESENTATIONS. IN NO WAY DOES SEEKING ALPHA ASSUME ANY RESPONSIBILITY FOR ANY INVESTMENT OR OTHER DECISIONS MADE BASED UPON THE INFORMATION PROVIDED ON THIS WEB SITE OR IN ANY TRANSCRIPT. USERS ARE ADVISED TO REVIEW THE APPLICABLE COMPANY'S AUDIO PRESENTATION ITSELF AND THE APPLICABLE COMPANY'S SEC FILINGS BEFORE MAKING ANY INVESTMENT OR OTHER DECISIONS.