SOUTHERN COPPER CORPORATION (SCCO): what the price assumes

In the published model solve dated 2026-Q2, anchored at $197.24, SOUTHERN COPPER CORPORATION (SCCO) is priced for +22.6% growth. boothcheck publishes no house fair value, target price, or buy/sell rating; individual model outputs and user-controlled scenarios are analytical inputs, not Boothcheck targets. Narrative composed 2026-07-26.

Generated: 2026-08-10 · Exported: 2026-08-12 · Source: https://boothcheck.com/report/SCCO

Headline

What The Price Assumes (Inversion)

The assumption today's price embeds, recovered by inverting the valuation.

The operating-margin figure is value-band context at year 12: derived from the framework's value band, a separate calculation — not part of the priced-in solve.

Solve inputs: computed at a 11.2% cost of capital with 4% terminal growth over a 5-year stage; each 1pp of cost of capital moves the implied operating-profit growth ~5pp.

Reconcile: at the x-ray's 9.3% required return this reads ~12.6%/yr; the models below use their own rates.

How unusual the bet is: within-range

Valuation X-Ray

The price is justified by relative-multiple and growth-DCF; asset-based/earnings-power land below the price.

How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.

Families that justify the price: Relative, Growth Families that call it expensive: Asset, Earnings

The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 9.0%); the inversion above states its own rate.

Per-Model Detail (n=14)

Economic-Unit Decomposition (Sum Of The Parts)

One or more material disclosed units has unresolved economics. Unknown/general is not evidence of homogeneity: segment SOTP is primary but incomplete, consolidated cash flow may remain only a secondary cross-check when every unit shares an enterprise basis, and one sector multiple or target margin is withheld.

No total common-equity value is stated. One or more material units lack a supported unit value. The displayed values are an indicative subtotal; consolidated debt and cash cannot be applied to a fraction of the company.

Solvency

Interest expense is not separately reported in the latest filings, so interest coverage cannot be computed.

Bullet Takeaways

• The molybdenum, silver and zinc that come up alongside the copper now sell for more than it costs to run the mines: operating cash cost per pound of copper, net of by-product credits, was negative 3 cents across the first half of 2026 against 70 cents a year earlier.
• Peruvian output fell 12.0% in the June quarter on lower ore grades, and the roughly 10.3 billion dollars of projects meant to replace it sit in a country where an interim president was impeached four months into his term in February 2026.
• Next dated events are the August 27, 2026 payment of a $1.10 cash dividend plus a stock dividend, together valued near $3.23 a share, and first production at the Tía María project in the second half of 2027.

Bull Case

Watch what management does with the money, because in mining that is usually the whole tell. On July 16, 2026 the board authorised a quarterly cash dividend of $1.10 a share alongside a stock dividend of 0.0120 shares per share, together worth roughly $3.23 a share at the price used to value them, payable August 27 to holders of record August 11. Against that, the entire first-half capital programme consumed 864.7 million dollars, or 26.7% of net income, even after rising 56.2% year on year. A miner that can fund an accelerating build out of a quarter of its earnings and still pay out most of the rest is describing a cost position, not a dividend policy.

That cost position is genuinely unusual. Operating cash cost per pound of copper, net of by-product revenue credits, came to 5 cents in the June quarter against 63 cents a year earlier, and across the first half it was negative 3 cents against 70 cents. Read plainly: the molybdenum, silver and zinc that come out of the same rock sold for more than the entire cash cost of the operation, so on that measure the copper arrived free. This is not purely a 2026 phenomenon either. The same measure ran 58 cents a pound in 2025, 89 cents in 2024 and 1.03 dollars in 2023, which is a decade-long position at the low end of the global cost curve rather than a windfall.

The margin that follows is visible in any comparison you care to run. Trailing operating margin sits at 53.4%. FCX, the largest listed copper producer filing on U.S. forms, ran an operating margin near 28% on revenue of roughly 26.4 billion dollars. In the June quarter the gap widened further: operating income of 2,623.2 million dollars on sales of 4,289.0 million works out near 61%, on volumes that actually fell 3.5%. Nothing about that came from selling more. It came from selling the same material into a market paying 39.8% more for copper on the London exchange and 118.6% more for silver.

The growth pipeline is funded rather than promised, which in this sector is the rarer condition. The capital programme for the decade exceeds 20.5 billion dollars. Tía María in Arequipa will produce 120,000 tonnes a year of copper cathode from the second half of 2027; as of June 30, 2026 the company had committed 1,101 million dollars to it and already invested 693 million, with mass earthworks 71% complete and most major equipment orders issued. Michiquillay in Cajamarca is designed for roughly 225,000 tonnes a year over a mine life beyond 25 years for about 2.5 billion dollars, with production expected in 2032. On June 24, 2026 the company raised 1.25 billion dollars of 10-year senior unsecured notes at 5.350%, with proceeds ring-fenced to the Peruvian branch for exactly this programme.

The balance sheet is barely stretched by any of it. Gross borrowings run about 7.3 billion dollars against liquid assets near 5.3 billion, leaving net borrowings on a funded basis of roughly 1.9 billion, which is around 0.26 times operating profit. First-half cash from operations reached 3,683.0 million dollars, up 116.9%. A company can build two greenfield mines, service a new bond and pay one of the larger dividends in the sector at the same time only when the underlying operation is throwing off far more than it needs, which is the whole argument in one line.

Bear Case

The variable with the most leverage on this investment is not the copper price. It is Peru. Roughly 10.3 billion dollars of the project pipeline sits there, and the political backdrop is unstable enough that the annual report has to narrate it: after the president of the Peruvian congress assumed the presidency in the absence of a vice president, the filing records that "on February 17, 2026, the interim president was impeached four months into his term", with a further interim president installed the next day. Permits for Tía María, Los Chancas and Michiquillay have to survive whichever administration is in office when each one comes up. The chairman's second-quarter commentary treats the coming transition as an opportunity, which is the only thing a chairman can say.

The state's claim on the upside is written into the tax code rather than left to chance. Peru levies a special mining tax on operating income at graduated rates running from 2% to 8.4%, and the charge rose to 111.8 million dollars in 2025 from 86.9 million in 2024 and 71.7 million in 2023. That is a levy engineered to take a larger share precisely as profitability improves, which is the same profitability the current price is paying for. And when relations break down the cost is measured in years, not quarters: the annual report records eleven years of an illegal stoppage at the San Martin mine, from July 2007 to August 2018, before the company resumed control.

The mines themselves are getting harder in the place that matters most. Copper production at the Peruvian operations fell 12.0% in the June quarter and the group was down 3.8% year to date, attributed to lower ore grades. Grade decline is not weather and it does not reverse on its own. It is the deposit telling you what is left, and it is the reason the 10.3 billion dollar Peruvian programme exists in the first place. Meanwhile Tía María, the nearest of those projects, carries an estimated cash cost of 1.16 dollars per pound, which is an order of magnitude above what the existing mines currently report on a by-product-adjusted basis.

That comparison exposes what the celebrated cost position actually is. The negative cash cost of the first half is by-product arithmetic, and by-product credits rose 68.2% year to date for a reason visible in the price table: silver up 137.9%, molybdenum up 33.7%, zinc up 22.6%. Silver is not a copper variable. Should it retrace, the same mines with the same crews and the same grades revert toward the 70 cents a pound of the first half of 2025 or the 1.03 dollars of 2023, and nothing operational will have changed. Capitalising a cost structure that is largely a silver price is among the older mistakes available in this sector.

Which is where the price becomes the problem. At roughly 20 times trailing operating income the market is asking for about 26.5% annual growth in operating profit sustained for five years, and only about 32% of comparably fast growers have held that pace for even that long. The recent record makes the near-term rate look easy, since first-half operating income of 5,103.6 million dollars was 63.4% above the year before, but that is precisely the trap in a cyclical: the rate is not the stretch, the duration is. Only the cash-flow methods reach today's quote at all. The price sits about 2.9 times above where the earnings-power methods land, about 2.7 times above the asset-value approaches and about 1.45 times above peer multiples. One last detail sits underneath: part of the dividend is paid in shares, and the count has grown about 1.5% a year over the four years to March 2026. A pro-rata stock dividend leaves a holder owning exactly the same fraction of the company as before, which is worth remembering when the total payout is quoted per share.

Valuation

Twenty times operating profit is an ordinary-sounding number for a miner, and it is doing more work here than it looks. Inverted, today's quote of $179.31 asks the business to grow operating profit around 26.5% a year for five years, on top of a trailing base already earned at exceptional prices. That solve carries a single set of assumptions rather than a measurement, and it is sensitive to the discount rate used: each percentage point on the cost of capital shifts the implied growth by more than five points. One caveat belongs immediately alongside it. The trailing denominator lags the business, since first-half 2026 operating income of 5,103.6 million dollars was 63.4% ahead of the 3,122.5 million earned a year earlier, so the multiple struck on trailing profit overstates what the price pays for current earning power.

The methods split cleanly, and the split is about which earnings a method chooses to believe. Only the cash-flow approaches, which project forward from recent free cash flow, reach today's price. The price sits about 2.9 times above where the earnings-power methods land, about 2.7 times above the asset-value approaches and about 1.45 times above peer multiples. That is not a disagreement about the mines. It is a disagreement about the copper cycle: the earnings-power lens averages operating profit across five years including the softer 2023, and the asset lens starts from book equity of about $14.35 a share, a figure that reflects mines depreciated over decades rather than the metal still in them.

Cohort comparison sharpens the same point without settling it. FCX, the closest large listed copper producer reporting on U.S. forms, earned an operating margin near 28% on revenue around 26.4 billion dollars with 6.4% revenue growth. Among smaller precious-metals producers, HL ran a 44% operating margin on 1.6 billion dollars of revenue and CDE about 39% on 2.6 billion. Southern Copper's trailing operating margin of 53.4% is the highest of that group and the June quarter came in near 61%, which is the reward for sitting at the bottom of the cost curve with a by-product suite that is currently repricing faster than copper itself.

What that margin is built on deserves stating rather than assuming. Operating cash cost per pound net of by-product credits was 5 cents in the June quarter and negative 3 cents across the first half, against 63 and 70 cents in the comparable 2025 periods. The company's own longer series shows 58 cents in 2025, 89 cents in 2024 and 1.03 dollars in 2023. The low-cost position is real and durable across those years; the current reading is that position amplified by silver, which has risen 137.9% year to date. A reader deciding what multiple is appropriate has to decide first which of those two numbers is the run rate.

Solvency puts almost no constraint on any of it. Gross borrowings near 7.3 billion dollars sit against liquid assets around 5.3 billion, leaving net borrowings of roughly 1.9 billion on the funded basis, about 0.26 times operating profit, or close to 3.0 billion once lease obligations are included. The 1.25 billion dollar note issued June 24, 2026 at 5.350% and maturing in 2036 is earmarked entirely for the Peruvian branch and the Tía María build. First-half capital spending of 864.7 million dollars represented 26.7% of net income. Whatever happens to the multiple, the balance sheet is not the thing that decides it.

Catalysts

Second-quarter results published July 21, 2026 set records across the income statement. Sales of 4,289.0 million dollars were 40.6% higher than a year earlier, operating income reached 2,623.2 million and net income 1,670.0 million, up 65.3% and 71.6% respectively, with adjusted earnings before interest, tax, depreciation and amortisation of 2,856.0 million. The gains came from the market rather than the mines: copper rose 39.8% on the London exchange and 30.5% on COMEX, molybdenum 43.1%, zinc 30.8% and silver 118.6%, while copper sales volumes fell 1.5% and production dropped 3.5% to 230,662 tonnes on a 12.0% decline at the Peruvian mines.

Capital returns and financing both moved in the same week. On July 16, 2026 the board authorised a quarterly cash dividend of $1.10 a share plus a stock dividend of 0.0120 shares per share, payable August 27, 2026 to holders of record on August 11, together valued near $3.23 a share. Three weeks earlier, on June 24, 2026, the company issued 1.25 billion dollars of 10-year senior unsecured notes at a 5.350% coupon maturing in 2036, with proceeds reserved for the Peruvian branch to develop Tía María and fund its capital programme.

The project timetable is the longer-dated part of the story. Tía María is targeting first production in the second half of 2027 at 120,000 tonnes a year of copper cathode, with 1,101 million dollars committed and 693 million invested as of June 30, 2026 and mass earthworks 71% complete. Michiquillay in Cajamarca is scheduled for 2032 at roughly 225,000 tonnes a year over a mine life beyond 25 years, at an estimated cost near 2.5 billion dollars. Both depend on permitting in Peru, where the chairman noted the country is approaching another executive transition and said the company intends to work with the incoming administration on advancing the Peruvian pipeline.

Peer Cohorts (Per Segment, With Filing Citations)

Mexican open-pit operations (reported)

• FCX (Freeport-McMoRan Inc.)
• FY2025 10-K: …electrical power through long-term contracts with the Salt River Project and natural gas through long-term contracts with El Paso Natural Gas as the transporter. We believe the Miami operation has sufficient water sources to support current operations. Refer to "Governmental Regulations" above and Item 1A. "Risk…
• FY2025 10-K: …pounds in 2024 and 141 million pounds in 2023. Chino is located in a desert environment with rainfall averaging 16 inches per year. The highest bench elevation is 2,250 meters above sea level and the ultimate pit bottom is expected to be 1,508 meters above sea level. The Chino operation encompasses approximately…
• BHP (BHP GROUP LIMITED)
• FY2025 20-F: Surface area (ha) Folio Number Year Register Regional office Pits, waste dumps, leach pads, plants 619 V 964 1984 Hipotecas y Gravámenes Bienes Raíces Antofagasta 22,084 Energy transmission lines, aqueducts, mineral pipelines, roads 1121 V 1117 2018 Hipotecas y Gravámenes Bienes Raíces Antofagasta 26,988 1. As defined…
• FY2025 20-F: …by biological leaching. Oxide and transitional ores are processed using heap leaching. Leached products are converted to copper cathode then railed to Antofagasta port. 6.2.6 Physical condition Construction commenced on the Escondida property in 1988 with first production in 1990. A number of expansion phases…
• RIO (RIO TINTO PLC)
• FY2025 20-F: …stage property. In addition to mining activities, MEL conducts both exploration and development activities across the property. History Utah International Inc. (Utah) and Getty Oil Co. (Getty) commenced geochemical exploration in the region in 1978 which led to the discovery of the Escondida deposit in 1981. In 1984,…
• FY2025 20-F: …ore in order to meet demand for the minerals required to transition to a low-carbon economic environment, consistent with the climate change commitments of the Paris Agreement. We expect this to exceed new supply to the market and therefore increase prices. Under the Aspirational Leadership scenario, the economic…
• NEXA (NEXA RESOURCES S.A.)
• FY2025 20-F: …and Mineral Resources (Atacocha Open Pit) The Atacocha Open Pit Mineral Reserves and Mineral Resources estimates are based on the definitions for Mineral Reserves and Mineral Resources in SK-1300 and the tables below are based on costs and modifying factors from the Atacocha Open Pit mine. Atacocha Open Pit - Year…
• FY2025 20-F: …Operations Atacocha Open Pit - Year End Mineral Resources as of December 31, 2025 (on an 83.01% Attributable ownership basis) (1)(2)(3)(4) Grade (5) Contained Metal (5) Class Tonnage (5) Zinc Copper Silver Lead Gold Zinc Copper Silver Lead Gold (Mt) (%) (%) (g/t) (%) (g/t) (kt) (kt) (koz) (kt) (koz) Measured 1.66…
• BVN (BUENAVENTURA MINING CO INC)
• FY2025 20-F: …mainly related to epithermal gold deposits in high sulfidation environments, in addition to some bonanza gold vein epithermal systems, Cu-Au transitional epithermal-porphyry, and breccias pipe Cu-Au-Mo. We have two-ore deposits in production in oxide material: San Pedro Sur and Pampa Verde. 55 Table of Contents…
• FY2025 20-F: …in oxide material. Below the oxides level of the Cerro Tantahuatay area, there is a significant copper, gold and silver mineralization associated to pyrite-enargite-chalcopyrite (sulfides), which are present as disseminations and fracture fillings associated with an epithermal-porphyry transitional zone, breccias…

Mexican IMMSA unit (underground) (reported)

• NEXA (NEXA RESOURCES S.A.)
• FY2025 20-F: …Underground) The Atacocha Underground Mineral Reserves and Mineral Resources estimates are based on the definitions for Mineral Reserves and Mineral Resources in SK-1300 and the tables below are based on costs and modifying factors from the Atacocha Underground mine. Atacocha Underground - Year End Mineral Reserves…
• FY2025 20-F: …levels based on exploratory data analysis and then composited to 2.0 m lengths. Wireframes were filled with blocks and sub-celling at wireframe boundaries. Blocks were interpolated with grade using the OK and ID 3 interpolation algorithms. Block estimates were validated using industry standard validation techniques.…
• FCX (Freeport-McMoRan Inc.)
• FY2025 10-K: 31, 2025, the DMLZ underground mine had 174 open drawbells. 24 Table of Contents Ore milled from the DMLZ underground mine averaged 54,300 metric tons per day in 2025, 64,900 metric tons per day in 2024 and 75,900 metric tons per day in 2023. The DMLZ fleet consists of approximately 327 pieces of mobile equipment,…
• FY2025 10-K: …difficulties and develop extensive infrastructure facilities. The area also receives extreme rainfall, which has led to periodic floods and mudslides. We cannot predict whether weather-related or seismic events will occur in the future or the extent to which any such event would affect our operations. Underground…
• HL (HECLA MINING COMPANY)
• FY2025 10-K: …BLM administered land, Plan of Operations and other required State permits in place Exploration Underground Au, Ag Vein Midas United States Nevada 100.0 % 1,456 unpatented lode claims, 33 leased unpatented lode claims, (total 27,583 acres unpatented claims); 44 patented lode claims, private land (2,417 acres) BLM…
• FY2025 10-K: …Francine, 6.5ft (1.98m) for El Toro, El Bronco, and El Tigre, and 4.9 feet (1.5 m) for Hugh Zone and Andrea. (18) Mineral resources for Fire Creek, Hollister and Midas are reported using a minimum mining width of four feet or the vein true thickness plus two feet, whichever is greater. (19) Fire Creek underground…
• CDE (COEUR MINING, INC.)
• FY2025 10-K: …mine; (3) the Independencia underground mine; (4) the La Nación underground mine; and (5) other nearby deposits and exploration targets. The Palmarejo complex is located approximately 260 miles (418 kilometers) southwest of Chihuahua, in the state of Chihuahua in Northern Mexico. The coordinates for the centroid of…
• FY2025 10-K: …landscape has become increasingly sophisticated and aggressive. While we have not experienced any material cybersecurity threats or incidents to date, there can be no assurance that a future cybersecurity incident would not have a material adverse effect on our cash flows, financial condition or results of…
• PAAS (Pan American Silver Corp.)
• FY2025 40-F: …domiciled in Canada, and its office is at Suite 2100 - 733 Seymour Street, Vancouver, British Columbia, V6B 0S6. The Company is listed on the Toronto Stock Exchange (TSX: PAAS) (the "TSX"), and the New York Stock Exchange (NYSE: PAAS) (the "NYSE"). Pan American engages in silver and gold mining and related…
• FY2025 40-F: …Development Projects Brazil Jacobina Mineração e Comércio Ltda. 100 % Jacobina mine Canada Lake Shore Gold Corp. 100 % Bell Creek and Timmins West mines (together "Timmins mine") Gatling Exploration Inc. 100 % Larder project (1) Chile Minera Meridian Ltda. 100 % El Peñon mine Minera Florida Ltda. 100 % Minera Florida…

Peruvian operations (reported)

• FCX (Freeport-McMoRan Inc.)
• FY2025 10-K: …affect our operations and business, including our ability to conduct business, demand for the commodities we produce and our profit margins. Actions taken by governmental authorities and third parties to contain and mitigate the risk of spread of any major public health crisis may negatively impact our business,…
• FY2025 10-K: …of operations and financial condition. South America. South America countries have historically experienced periods of economic growth, as well as recession, periods of high inflation and general socio-economic and political instability. In Peru, political uncertainty has created instability in the regulatory…
• BHP (BHP GROUP LIMITED)
• FY2025 20-F: …is renewable for an additional period of up to 3 years Mine type & mineralisation style Open-cut Enriched and oxidised porphyry copper deposit containing in situ copper oxide mineralisation that overlies a near-horizontal sequence of supergene sulphides, transitional sulphides and finally primary (hypogene) sulphide…
• FY2025 20-F: …Lundin Mining formed Vicuña Corp., a 50/50 independently operated joint venture, to hold Josemaria and Filo del Sol. Josemaria was previously 100 per cent owned by Lundin Mining. Lundin Mining contributed its interest in the Josemaria deposit to the joint venture for a cash payment from BHP Key permit conditions…
• RIO (RIO TINTO PLC)
• FY2025 20-F: …Type of mineralisation Consists of a series of porphyry deposits containing copper, gold, silver and molybdenum. Processing plants and other available facilities One copper concentrator with a nominal feed capacity of 100 ktpd currently comprising 2 SAG mills, 5 ball mills, rougher and cleaner flotation circuits and…
• FY2025 20-F: …stage property. In addition to mining activities, MEL conducts both exploration and development activities across the property. History Utah International Inc. (Utah) and Getty Oil Co. (Getty) commenced geochemical exploration in the region in 1978 which led to the discovery of the Escondida deposit in 1981. In 1984,…
• BVN (BUENAVENTURA MINING CO INC)
• FY2025 20-F: …with Banco de Crédito del Perú, Banco Santander S.A., and Banco BBVA, in a principal amount of US$100,000,000, US$60,000,000, and US$40,000,000, respectively. In 2025, the Company amended these facilities to extend their tenor and modified certain applicable interest rates and fees. As part of its ongoing liquidity…
• FY2025 20-F: …flight directly from Lima. History The first mining operations date back to colonial times. The district was abandoned from 1842 until 1910, when the Orcopampa Mining Union was formed to continue mining. In 1960, we became interested in the area, and in 1962, exploration began in Orcopampa, with work resuming in the…
• NEXA (NEXA RESOURCES S.A.)
• FY2025 20-F: …José Jeri and the election of José María Balcázar as the interim President. Such political conditions have adversely affected, and may continue to adversely affect, investor confidence and the overall economic outlook in the country. Inflationary pressures reduced economic growth and fluctuations in the Sol exchange…
• FY2025 20-F: …operating income derived exclusively from the sale of metallic resources, with marginal rates between 4.00% and 13.12%. Municipal permits Under the General Mining Law, all Peruvian mines located in rural areas such as Cerro Lindo, Atacocha, El Porvenir and Chapi (which was sold on December 23, 2024) are exempted from…

Methodology Note

• Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
• Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
• Economic-unit decomposition (SOTP): each disclosed business unit is assigned its native valuation basis before any multiple is applied. Operating units are valued on enterprise value; funded financial units are valued on their own common equity, because their borrowings fund earning assets rather than levering the parent. A company total is stated only once every material unit carries a supported value and the parent capital bridge reconciles.
• Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
• Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.

Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.