Mining Industry Fair Value Sociedad Minera ... - KALLPA SAB

Alberto Arispe Edder Castro

Head of Research Analyst

(511) 630 7500 (511) 630 7529

[email protected] [email protected]

Cerro Verde

Equity's Fair Value (USD million)

Share's Fair Value (USD)

Previous Fair Value (Aug-11)

Recommendation

Market Capitalization (USD million)

Share's Market Value (USD)

Shares Outstanding (million)

Potential Upside

Range 52 weeks

YTD change Investment thesis: NeutralADTV - L12M (USD 000)

Trading LSE i. Exposure to copper

Source: Bloomberg, Kallpa SAB

ADTV: Average daily traded volume

L12M: Last Twelve Months

Financial Ratios

P / E

P / BV

P / EBITDA

(CA - Inventory) / CL

EPS

ROE

ROA ii.

Source: SMV, Kallpa SAB

Table N° 1: Financial margins' evolution

Chart N° 1: CVERDEC1 vs. Copper Spot

Cerro Verde

Xstrata PLC

Anglo American PLC

Southern Copper Corp

Antofagasta PLC

Source: Bloomberg

EBITDA Margin

62% 43% 65%

25% 17% 34%

43% 20% 39%

55% 34% 57%

51% 20% 58%

Source: Bloomberg, Cerro Verde

9.57 6.93 5.03

Operating Margin Net Margin

Note: CA and CL are Current Assets and Current Liabilities, respectively.

3.08 2.43 3.09

39.3%

45.90

Neutral

29.2%28.6%50.4%

35 - 43

350.06

2011 2012e

12.89

13,897

39.70

37.00

Kallpa SAB updates Sociedad Minera Cerro Verde S.A.A.’s (Cerro

Verde) valuation recommending to maintain its shares within a

benchmark portfolio for the Peruvian market. Our USD 37.00 fair

value per CVERDEC1 share is 6.8% below its USD 39.70 market

price as of closing of November 20th 2012.

EQUITY RESEARCH | Update November 21th, 2012

Mining Industry Fair Value

Sociedad Minera Cerro

Verde S.A.A.

USD 37.00Neutral

(LSE: CVERDEC1)

12,951

16.35 12.84

5.19 4.25 3.36

8.24 10.34 8.46

25.6%

We value Cerro Verde using a Discounted Cash Flow to the Firm

methodology. For the valuation, we consider its single mining unit and

its expansion project, which is meant to increase the processing

capacity from 120,000 to 360,000 metric tons per day (TPD).

Cerro Verde is basically a copper producer. In 2011, 92% of its

sales corresponded to copper concentrates and copper cathodes.

In the same year, the company ranked second in the Peruvian

Ranking of Copper Producers with a 25% stake.

During 2012, the red metal’s price suffered a fall due to lower

global demand. However, in accordance with estimations by

International Copper Study Group (ICSG), there will be a deficit of

400,000 MT in the global supply of refined copper that will not be

covered until 2014. Therefore, we expect copper price to remain

above USD/Lb 3.40 along 2012 – 2017.

High profitability compared to its peers

Cerro Verde is one of most profitable mining in the world. Below is

a comparison of its financial margins:

Despite the fact that these margins have had a decreasing

tendency during the last 4 years, this hasn’t affected the

company’s competiveness. Cerro Verde’s ROE and ROA for the

last 12 months were 28.4% and 24.0%, respectively. With these

indicators, it exceeded the industry’s average ROE and ROA that

were 19.9% and 13.1%, respectively.

-6.8%

2013e

11.1%

661.9

24.3%

4,000

5,000

6,000

7,000

8,000

9,000

10,000

11,000

20

30

40

50

60

Jan

-11

Mar

-11

May

-11

Jul-

11

Sep

-11

No

v-1

1

Jan

-12

Mar

-12

May

-12

Jul-

12

Sep

-12

No

v-1

2

USD/TMUSD CVERDEC1 Copper Spot

mailto:[email protected]


Mining industry | Sociedad Minera Cerro Verde S.A.A.

Chart N° 2: Cerro Verde's Cash Cost performance iii. Increasing cash cost

iv. Social risk

Chart N° 3: Copper companies - L12M ROE


v. Support from Freeport – McMoran

Chart N° 4: Cerro Verde's shareholders

Source: Cerro Verde

www.kallpasab.com 2Update

(*) Cash Cost = (Operating costs - credits for other metals' sales) / Lbs - copper

production

Source: Cerro Verde, Kallpa SAB

Cerro Verde’s main shareholder is Freeport McMoran, which is the

world’s main molybdenum producer and one of the world’s main

copper producers. It also produces gold in a lower extent.

It has presence in South America, North America, Africa and

Indonesia, which demonstrates that it has achieved an important

geographically diversification that supports the continuity of its

operations.

As of closing of 2011, the company had calculated proved and

probable copper reserves equivalent to 136,700 million copper

pounds and 3,420 million molybdenum pounds. Of the total

reserves of Freeport, Cerro Verde represents 22% and 20% of

copper and molybdenum reserves, respectively.

A water treatment plant in Alto Cayma, concluded in July

2012.

The company’s cash cost has increased in the last 3 years. This

as a consequence of the reduction of produced copper pounds

from 695 million in 2008 to 647 million in 2011. However, this

happened in a scenario where silver and molybdenum sales

(credit to determine the operation’s cash cost) have been

increasing since 2009, mitigating the cash cost increase (See

Chart 2).

The company does not have a conflict record with communities in

Arequipa. This is due to a mutual development policy with the

communities of the zone. Up to date, the company has built for the

communities:

a)

b)

Bamputañe Dam, concluded in December 2009.

The company’s commitment in order to achieve the community’s

development reduces the probability of emerging social conflicts

that may affect current operations and/or the expansion project.

However, it is important to remark that the company has been

penalized by Ministerio de Ambiente (Ministry of Environment),

through Organismo de Evaluacion y Fiscalizacion Ambiental –

OEFA (Organization for Environmental Evaluation and Inspection),

twice. The fines’ amount reached PEN 248,000 due to

carelessness in its productive process that contaminated the

ground and air of surrounding communities.

0%

10%

20%

30%

40%

Sou

ther

n

Co

pp

er

Cer

ro V

erd

e

An

tofa

gast

a

Free

po

rt-

McM

oR

an

Xst

rata

An

glo

Am

eric

an

Teck

0

50

100

150

200

250

0.50

0.65

0.80

0.95

1.10

1.25

1.40

2008 2009 2010 2011

Credit (silver y molybdenum)

Cash Cost*

Cash Cost without credit

USD/Lb

Cyprus Climax Metals Company

(Freeport - McMoRan's subsidiary)

SMM Cerro Verde Netherlands B.V.

(Sumitomo Metal Mining's subsidiary)

Compañía de Minas Buenaventura S.A.A.

Minority Shareholders

53.6%

21.0%

19.6%

5.8%

MM USD

http://www.kallpasab.com/


Picture N° 1: Cerro Verde open pit mine

Source: Cerro Verde

Chart N° 5: Cerro Verde within the structure of Freeport McMoRan Copper & Gold

Source: Freeport McMoRan


Company’s description

Sociedad Minera Cerro Verde S.A.A. is based in Peru and its shares list in the Lima Stock Exchange (LSE:

CVERDEC1) since November 2000.

Cerro Verde's mining unit is basically a copper and molybdenum open pit mine. The productive process starts with the

exploration & exploitation of its mining deposits, up to the flotation, leaching, concentration, smelting and refining of

the mineral for its subsequent sale. The company is one of the country’s main copper producers.

The shareholding is composed by the following: Freeport – McMoran Copper & Gold (53.6%), SMM Cerro Verde

Netherlands B.V. (Compañia Minera Sumitomo Metal’s subsidiary) with 21%, Compañia de Minas Buenaventura

S.A.A. (19.6%) and the remaining 5.8% is distributed among minority shareholders.

Given the size of the operations of its main shareholder, we consider that it is important to locate Cerro Verde within

Freeport – McMoran’s structure:

Henderson -(100%) Colorado

Chino -(100%) N. Mexico

Tyrone -(100%) N. Mexico

Miami -(100%) Arizona

Sierrita -(100%) Arizona

Safford -(100%) Arizona

Bagdad -(100%) Arizona

Morenci(85%) - Arizona

Freeport Mc-MoRan

Mining Units

North America South America Africa

Ojos del Salado (80%) - Chile

Candelaria(80%) - Chile

El Albra(51%) - Chile

Cerro Verde (53.56%) - Peru

Fungurume -(100%) Congo

Tenke -(100%) Congo



Operating Unit

i) Cerro Cero Mining Unit – 76.7% of the fair value

Chart N° 6: Cerro Verde's location in Peru

Source: Kallpa SAB

ii) Cerro Verde’s expansion project – 23.3% of the fair value

Favorable points to the company

a) Construction of Bamputañe Dam

b) Drinking water and wastewater treatment plants

c) Tax stability

d) Sales stability

www.kallpasab.com 4

Cerro Verde is neither subject to the special mining tax nor subject to royalty payments because the comapny

signed a stability contract (active until December 2013). However, the current government created a special

mining tax directed to the companies that hold a tax stability contract. Given this, it is subject to the payment of

this special tax which fluctuates between 4% and 13% of the period’s operating income.

The company is committed to sell to Sumitomo Metal Mining Co. Ltd. 50% of its copper concentrate production

and 20% to Freeport McMoran Corp. Having assured 70% of its sales, the company focuses its efforts to

increase its production and to improve its operating efficiency.

Cerro Verde's mine is located 30 km from the city of

Arequipa at 2,770 meters above sea level. Its proved and

probable reserves are 30,200 million copper pounds and

710 million molybdenum pounds, in accordance to

information as of 2011. In addition, given its current installed

capacity, it is estimated a 90 years life of mine (LOM).

Sociedad Minera Cerro Verde operates the mining units

Cerro Verde 1, 2 and 3. These three units constitute the

copper production unit, named Cerro Cero. Currently, it

processes 120,000 TPD and the copper annual production

reaches 600 million pounds.

Update

Cerro Verde signed an agreement with a committee formed by civilians and by Arequipa’s authorities so that the

company totally finances the construction of a drinking water treatment plant and the partially construction of a

wastewater treatment plant. The first of these commitments has been fulfilled. In this way, the company aims to

ensure water resources that are needed for its operations even after its expansion project’s development.

In accordance with the agreement that Cerro Verde signed with Empresa de Generacion Electrica de Arequipa

S.A. (EGASA), Cerro Verde built Bamputañe Dam in the district of Santa Lucia (Puno). In return, the company

will have power at a fixed tariff until 2015. From an economic point of view, this gives Cerro Verde cost stability

and decreases its sensitivity to inflation costs . In addition, it strengthens its relationships with the community

and decreases the probability of social conflicts.

The expansion project aims to increase the annual production in 600 million copper pounds and 15 million

molybdenum pounds. With it, copper production will double in 2016. The investment related to this project totals

USD 4,400 million, an amount that had been reviewed twice due to higher infrastructure costs and wage

expenses. These resources will be used to build a concentrating plant and a leaching platform, additional to the

existing ones.

In December 2011, the company submitted the EIA (Environmental Impact Assessment) to the Peruvian

government for its review and approval. To date, the Peruvian government has not yet declared in regard of this

matter.

Leyenda MinasProyecto/Explor.

Cerro Verde San José

Minas de Cobre ChapiTía María

Zafranal



a)

b)c)

d)

The valuation’s main assumptions are the following:

Production

Chart N° 7: Copper production's components

Production in Cerro Verde operating mining unit

(Million Lb.)

Copper concentrates

Copper cathodes

Sub - Total

Processing plant's expansion - Cerro Verde

(Million Lb.)

Copper concentrates

Copper cathodes

Sub - Total

TOTAL

Source: Cerro Verde, Kallpa SAB Source: Cerro Verde, Kallpa SAB

Copper price


145

460

145

2017e

431431

2018e

431

169 169 169

600 600 600

1,205 1,205 1,205

2016e

605 605

460

Valuation

605

2016e 2017e 2018e

460

145

ii)

i)

We value Cerro Verde using a Discounted Cash Flow to the Firm methodology @ 10.1%. Since we maintained the

company’s current equity structure (no debt), the cost of capital becomes the proper discount rate for the valuation. It

should be noted that the valuation’s analysis period covers 2012 to 2017 and that model incorporates results as of

closing of Q3 2012. From 2018, we assume a perpetual cash flow to the firm, without growth.

Cerro Verde, like every mining company, has a limited amount of reserves (90 years LOM at current production levels

and 30 years LOM post expansion project, considering proved & probable reserves). However, we assume a

perpetual flow since we believe that Cerro Verde will aim to expand its reserves inside and outside its current mining

unit.

The assumptions’ main changes regarding the previous update published in August 2011 are the following:

Decrease in copper prices.

Higher CAPEX for Cerro Verde’s expansion project.

The expansion project will operate at 100% in 2016.

Increase in cash cost and addition of a 2% annual inflation

-

Cerro Verde’s main target is copper production. It should be noted that the company produces silver and

molybdenun concentrates in a lower extent. Its production is basically divided into copper concentrates and

copper cathodes, which represented 92% of 2011’s sales. Our copper production estimations for 2012 – 2015

and after the expansion project reaches 100% of its production capacity, are the following:

Table N° 2: Copper production's estimated composition after

……………………the expansion project.

As it was previously mentioned, one of the main adjustments within our model is copper price’s performance. In

accordance with International Copper Study Group (ICSG), in 2012 the deficit for refined copper worldwide will

reach 426 thousand MT (2.1% of this year’s global demand). However, global production of refined copper is

expected to grow 6.0% in 2013 generating a 458 thousand TM surplus; in this way, pressures over copper price

are expected to decrease. In addition, the base metal price is currently responding to the uncertainty over the

debt crisis in Europe, to fears in USA in regard with the elimination of tax exemptions and the reduction of public

expenditure (Fiscal Cliff), and to China’s economic slowdown.

69% 73% 74% 74% 76% 76% 76% 76%

28% 31% 27% 26% 24% 24% 24% 24%

0%

20%

40%

60%

80%

100%

120%

2008 2009 2010 2011 2012e 2013e 2014e 2015e

Copper concentrades Copper cathodes

667 647 605 605 605 605

Million Lb

694 662




Operating costs

iv) Operating expenses

www.kallpasab.com 6

2012 2013e

Operating expenses have remained stable in regard with Cerro Verde’s sales, fluctuating between 3.3% and

3.4% of total sales. We have maintained the same performance for forecasted operating expenses along the

analysis period.

Price for copper concentrate

Table N° 3: Copper estimated price - USD/Lb.

3.7 3.7 3.5 3.4

Given this, and in line with Bloomberg’s consensus, we expect copper price variation for 2013 to be zero or

negative. As long as new mining units and expansions in processing plants worldwide progressively cover the

supply’s deficit, copper price will decrease and this is reflected in our model.Below is our estimated price vector:

On the other hand, copper future price’s performance is essential to calculate the company’s revenue. We

estimate that towards 2015, Cerro Verde’s copper revenue will represent approximately 93% of total sales. This

information is presented below:

(*) Others correspond to silver and molybdenum concentrates which are produced in a lower

extent.


(*) We assume the same variation for copper concentrates and copper cathodes.


2014e 2015e

iii)

Cerro Verde is characterized for maintaining a stable cost structure. In the last 4 years, its operating costs as a

percentage of sales have been maintained between 30% and 33%, reflecting that the mining industry’s inflation

has been controlled by the company. However, as of closing of 9M 2012, the operating costs represented 36.5%

of total sales due to the increase in services rendered by third parties. In other words, inflation cost has affected

the company’s result for this year.

On the other hand, due to the decrease in produced copper pounds, Cerro Verde’s cash cost , after credit for

silver and molybdenum concentrate sales, has increased from USD/Lb 0.77 in 2010 to USD/Lb 0.95 in 2011. In

addition, due to the increase in operating costs during this year and to maintain the annual copper production in

approximately 600,000 pounds, we anticipate that the cash cost will fluctuate around USD/Lb 1.05 – 1.15. In

addition, we have considered a 2% inflation cost in the operating costs for the next years, since we expect that

this effect will continue in the future.

Update

68% 65%71% 67% 67%

26%27%

22% 26% 26%

6% 8% 7% 7% 7%

0%

25%

50%

75%

100%

2011 2012e 2013e 2014e 2015e

Chart N° 8: Sales Breakdown by product

Copper concentrades Copper cathodes Others*

-8%

-6%

-4%

-2%

0%

2%

4%

6%

8%

10%

12%

2012e 2013e 2014e 2015e

Chart N° 9: Estimated annual variation in copper price*



v) CAPEX

a)

b)

The total forecasted CAPEX totals USD 4,792 million towards 2015, as it is shown below:

Source: Kallpa SAB

Expansion project’s financing

Source: Kallpa SAB

www.kallpasab.com 7

We have considered two kinds of CAPEX in our valuation: a) Maintenance CAPEX and b) Expansion CAPEX.

vi)

Update

Maintenance CAPEX.- Considering that the company grows in an organic way, we have considered in

our model a maintenance CAPEX equivalent to 16.2% of copper production over the base of historic

information of the last 3 years (the ratio is defined as CAPEX in USD million / million of produced copper

pounds). In this way, the annual maintenance CAPEX will reach USD 98 million during the analysis

period.

Expansion CAPEX.- We consider the expansion project’s implementation in Cerro Verde’s mining unit.

This project includes a USD 4,400 million total investment (our previous estimation considered a USD

3,600 million investment) up to 2015. In this way, the company aims to double its copper production

(approximately 1,200 million copper pounds per year) and to increase its molybdenum production towards

2016.

We believe that Cerro Verde will finance its processing plant’s expansion with available cash and with the cash

flows that will be generated along the analysis period. However, given that the company’s resources will be

redirected to finance the project, we expect a decrease in the dividend payout ratio. Although we have not

considered in our model that the company will finance its expansion project with debt, it is possible that this

happens in a non – significant way in order to maintain its equity’s structure in the long – term (no debt).

122 195 98 98 98 98

400

1,500 1,500

1,000

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2010 2011 2012e 2013e 2014e 2015e

USD MM

Chart N° 10: CAPEX's composition

Maintenance CAPEX Expansion CAPEX

45%

30%

20% 20% 20%

0%

10%

20%

30%

40%

50%

2011 2012e 2013e 2014e 2015e

Chart N° 11: Dividend Payout Ratio



Discount rate

Chart N° 12: Discount rate's calculation

Source: Kallpa SAB


vii)

COK

10.12%

Rf

3.30%

Beta

0.74

Risk premium

6.50%Country risk

2.00%



i)

ii)

iii) Optimistic scenario – FV: USD 50.50

Chart N° 13: Scenario Analysis

Source: Kallpa SAB

iv) Scenario without the expansion project – FV: USD 28.37

www.kallpasab.com 9

Under the optimist scenario we assume a 20% increase in the copper price vector during 2013 – 2018, which

affects positively the long – term price. This assumption emerges at a possible recovery in the global economy

and in the demand of the base metal. Therefore, we obtain a USD 50.50 fair value per share.

On the other hand, it is important to calculate the fair value in the event that the expansion project is cancelled.

This is an unlikely scenario given the good relationships that Cerro Verde holds with the inhabitants and the

authorities in the department of Arequipa. However, in the mining industry, the social risk is always a fact to

consider. Therefore, our fair value without the expansion project is USD 28.37 per share.

Base scenario - FV: US$ 37.00

In the base scenario we consider the implementation of the expansion of Cerro Verde’s processing plant,

starting up operations at 100% in 2016, which will double copper production. The model considers that the

mining unit’s expansion will be financed with its own resources (cash and cash equivalents plus generated cash

flows). In addition, long – term copper price is USD/Lb 3.02. Therefore, we obtain a USD 37.00 fair value per

share.

In the following analysis, we sensitize our fair value to changes in the assumptions, in accordance to the following

scenarios:

Scenario analysis

Pessimistic scenario – FV: USD 23.50

Update

Under this pessimist scenario, we assume a 20% fall in the copper price vector during 2013 – 2018, which

negatively affects long – term price. This happens under a weakening scenario in the American economy (non –

favorable decision in regard with the Fiscal Cliff), and in China (GDP decrease due to the European debt crisis),

which are the main consumers of the red metal. Therefore, our fair value per share decreases to USD 23.50.

23.5

- 13.5

37.0

+ 13.5

50.5

-

10

20

30

40

50

60

Pessimistic Scenario Discount of 20% - Copper Price

Base Scenario Premium of 20% -Copper Price

Optimistic Scenario



(*) The earnings distributed to employees has been included in the cost of sales in order to standardize the financial statement's presentation.

(**) In 2013 and 2014, USD 1,500 million will be invested per year for the expansion project, generating an increase in depreacition expenses.

Cerro Verde

Freeport-McMoRan

Xstrata PLC

Southern Copper Corp

Anglo American PLC

Teck Resources Ltd

Antofagasta PLC

First Quantum Minerals

Inmet Mining Corp

Average

Source: Bloomberg

EV: Market capitalization + preferred equity + total debt - cash and cash equivalents

Chart N° 14: EV/EBITDA vs P/E - Peer Companies Chart N° 15: ROE vs ROA - Peer Companies


UK

Canada

19,807

10,393 11.70 20.32 10.07 10.34 2.03

8.7%

1,229,463 1,723,029

-10,219 0 -101

Net interest income

-155

1,361,289

62.8%

-108,819

-72,905

10.63 10.11 4.89

23,561 9.69 12.29 5.21 4.36 0.93

Canada

2014e**

Sales 1,835,911

-167,195

EBITDA 1,093,925 1,196,242 1,643,520

Taxes

-130,179

-78,312

-51,867

67.3%

-136,070

1,757,510 2,368,988

Cost of sales -685,090 -528,047 -645,959

2,369,332

-1,034,907

3,718

1,150,821

Earnings before taxes 1,023,238

65.7%

-35,914

1,650,236

65.4%

-133,402

-83,444

-49,958

62.7% 70.0% 72.7%

Operating expenses

PERU

Switzerland

Gross margin

-137,642 -108,999

2,109

-4,527

1,250,053

-400,017

61.9%

2,837

3,002

-165

1,562,117

-483,718

Net Income 718,433 1,078,399

Sales expenses -78,190

Operating Income 1,013,179 1,120,464 1,555,834

-90,557Other operating expenses

-304,805 -413,601 -483,270

10,059 1,665 1,829

Interest income 20,278 1,665 1,930

Interest expenses

1,122,129 1,557,663

Canada

29,535 13.81 13.72 7.92

EBITDA Margin 59.6% 68.1% 69.4%

9.95 13.42 5.15

5.17

13,897 16.73 16.35 9.24

UK

29,625 9.61 12.75

Net margin 39.1% 40.3% 45.4%

Depreciation & Amortization 80,746 75,778 87,686

6.3%

24.0%

1,521,319

64.2%

8.83 4.21

1,685,8671,344,6561,643,341

66.8%

Analysis of multiples

Company

65.2%

CountryMarket Cap.

(USD million)

EV/EBIDTA

Trailing 12M

EV/EBITDA

2012P/BV ROE ROA

62.0%

2010 2011 2012e 2013e**

Income Statement

INCOME STATEMENT (USD 000) 2008* 2009

-59,452

-67,877 -76,638

1,334,4251,695,350Gross Income

-41,122

56.3%

1,207,498

-450,662

756,836

31.9%

P/E Trailing

12MP/E 2012

1,516,8341,252,470

57.8%

-2,418

1,204,247

50.8%

3,251

-165

1,519,128

-509,143

1,009,985850,036708,528 1,074,393

317,07292,18584,061

39.2%42.8%

60.1%

5.88 3.04

6.20 1.03 10.7%

28.8%

5.59

8.05 4.49 36.3%

1.05 7.4%18,851

USA

2,524,609

-874,374

2,168,037

-806,748

2,520,050

-824,700

5.66 1.02 10.1% 7.3%

-83,612

-52,458

1,559,280

Operating margin 55.2% 63.8%

2,294

20.6%

12,363 16.59 14.70 5.04 19.4% 10.2%

3.8%

4.7%

2,459 3,406

40.0%

169,034

12.6%

USA 36,321 12.11 11.88 5.96 5.78 2.12 18.1% 8.9%

12.31 13.95 6.52 6.74 2.21 19.7%

38.0% 28.0%

Cerro Verde

Freeport McMoRan

Southern Copper

Xstrata

Anglo American

Teck

2

4

6

8

10

11 12 13 14 15 16 17 18

EV/EBITDA

P/E

Cerro Verde

Freeport McMoRan

Southern Copper

Xstrata

Anglo American

Teck0%

10%

20%

30%

40%

50%

0% 5% 10% 15% 20% 25% 30%

P/BV

P/E

Mkt. Cap. Mkt. Cap.




Share prices in this report are based on market prices as of closing of the day prior to the publication of this report, unless it is strictly

stated.

General statement

This document is for informative purposes only. Under no circumstances it should be used / be considered as an offer of sale or an

application of purchase of shares or any other securities mentioned in this document. The information herein has been obtained from

sources which are believed to be reliable, but Kallpa Securities SAB does not guarantee the trustfulness or accuracy of the content

of this report, or the future market values of shares or other securities mentioned in this document. The views and opinions

expressed in this document constitute our opinion at the time of this report and are subject to change without any notice. Kallpa

Securities SAB does not guarantee analysis updates before any change in the circumstances of the market. The products referred in

this document may not be available for purchase in some countries.

Kallpa Securities SAB has reasonably designed policies to prevent or to control the exchange of non-public information used by

areas such Research and Investment, Capital Markets, among others.

Definition of qualification ranges

Kallpa Securities SAB has 5 qualification ranges: Overweight +, Overweight, Neutral, Underweight and Underweight - . The analyst

will assign the coverage one of these ranges.

Appendix – Disclaimer

Analyst certification

The analyst that prepared this report hereby certifies that: i) the opinions and views expressed in this valuation report, in regard with

the issuer and with the company’s overview, reflected his/her personal opinion and ii) No part of his/her salary compensation was, is

or will be related directly or indirectly to the recommendations expressed in this report.

The economic compensation of the analyst that prepared this report is based in several factors, including but not limited to Kallpa

Securities SAB’s profitability and the profits generated by its different areas, including investment banking. In addition, the analyst

does not receive any kind of economic compensation from the companies he/she covers.

This valuation report was prepared by Kallpa Securities SAB’s employees that maintain the position of Analyst. Persons involved in

the elaboration of this report are authorized to maintain shares.

Neutral -15% to 0% +15% to 0% Neutral

The range assigned to each company covered by the analyst in these reports is based on the analysis/monitoring Kallpa Securities

SAB has been developing for the company. In some cases, the analyst can express his/her short-term points of view to traders,

vendors and some Kallpa Securities SAB’s clients but this point of view may differ in time by market volatility and other factors.

The fair value calculated by Kallpa SAB is based in one or more valuation methodologies commonly used by financial analysts,

including but not limited to discounted cash flows, In Situ valuations or any other applicable methodology. It should be noted that the

publication of a fair value does not imply any guarantee that the value will be achieved.

Underweight- < - 30% > + 30% Overweight+

Underweight -15% to -30% +15% to +30% Overweight



KALLPA SECURITIES SOCIEDAD AGENTE DE BOLSA

MANAGEMENT

Alberto ArispeCEO(511) 630 [email protected]

TRADING

Enrique Hernández Eduardo Fernandini Javier Frisancho Jorge RodríguezManager Head Trader Trader Trader(51 1) 630 7515 (51 1) 630 7516 (51 1) 630 7517 (51 1) 630 [email protected] [email protected] [email protected] [email protected]

CORPORATE FINANCE

Ricardo CarriónManager(51 1) 630 7500

[email protected]

EQUITY RESEARCH

Marco Contreras Edder Castro Humberto León Fátima RamírezAnalyst Analyst Analyst Assistant(51 1) 630 7528 (51 1) 630 7529 (51 1) 630 7527 (51 1) 630 7500

[email protected] [email protected] [email protected] [email protected]

OPERATIONS

Elizabeth Cueva Alan Noa Mariano Bazán Armando TrujilloManager Analyst - Securities Analyst - Treasury IT(51 1) 630 7521 (51 1) 630 7523 (51 1) 630 7522 (51 1) 630 7500

[email protected] [email protected] [email protected] [email protected]

MIRAFLORES OFFICE

Jose Antonio Avendaño Daniel Berger Victor Hugo RosselRepresentative Representative Representative(51 1) 652 6452 (51 1) 652 6453 (51 1) 652 6400

[email protected] [email protected] [email protected]

CHACARILLA OFFICE

Hernando Pastor Gerardo del Águila Jonathan del ÁguilaRepresentative Representative Representative(51 1) 626 8700 (51 1) 626 8700 (51 1) 626 8700

[email protected] [email protected] [email protected]

EL POLO OFFICE

Ana María Castro Gissella GárateRepresentative Investment Advisor(51 1) 630 7532 (51 1) 630 7533

[email protected] [email protected]

AREQUIPA OFFICE

Jesús MolinaRepresentative(51 54) 272 937

[email protected]























Mining Industry Fair Value Sociedad Minera ... - KALLPA SAB

Documents

Transcript of Mining Industry Fair Value Sociedad Minera ... - KALLPA SAB