Southern Copper subsidiary prices $1B senior notes

PHOENIX - In a recent move to bolster its financial position, Minera Mexico, S.A. de C.V., an indirect subsidiary of Southern Copper Corporation (NYSE:SCCO), has successfully priced $1 billion in senior notes. The notes, bearing an interest rate of 5.625% and maturing in 2032, were priced on Tuesday and are expected to close on February 12, 2025, pending customary closing conditions. The company, currently valued at $76.71 billion, maintains strong financial health with a current ratio of 2.77, indicating robust liquidity to meet short-term obligations.

This financial maneuver, revealed in a Form 8-K filing with the Securities and Exchange Commission (SEC), is part of an unregistered offering under Rule 144A and Regulation S of the Securities Act of 1933. As such, these senior notes have not been registered under the Securities Act and, therefore, cannot be offered or sold within the United States absent registration or an exemption from registration requirements. According to InvestingPro analysis, Southern Copper operates with a moderate level of debt and maintains strong cash flows sufficient to cover interest payments, suggesting a prudent approach to financial management.

The company has stated its intention to allocate the net proceeds from this offering towards capital expenditures and general corporate purposes. This strategic decision reflects Southern Copper’s ongoing efforts to invest in its operational infrastructure while also maintaining flexibility for potential future opportunities. The company’s stock has shown recent momentum with a 7.55% return over the past week, though InvestingPro analysis suggests the stock is trading above its Fair Value. Subscribers can access 12 additional ProTips and comprehensive financial metrics to better evaluate this investment opportunity.

Investors should note that the information provided in the SEC filing does not constitute an offer to sell or a solicitation of an offer to buy any security. Moreover, no sales of these securities will take place in jurisdictions where such offers, solicitations, or sales would be unlawful.

The announcement is a significant development for Southern Copper and its stakeholders, as it provides the subsidiary with additional resources to pursue its growth and investment plans. The transaction is set against the backdrop of a metal mining industry that is constantly evolving, with companies like Southern Copper looking to secure their financial footing in a competitive market. The company maintains strong profitability metrics with a gross profit margin of 57.11% and has demonstrated consistent performance, maintaining dividend payments for 30 consecutive years.

The decision by Minera Mexico to issue senior notes is a common financial strategy used by corporations to raise capital. By opting for senior notes, the company is issuing debt with a promise to pay back the investment with interest, which is often seen as a less risky investment compared to stocks.

The filing was signed by Andres Carlos Ferrero, General Counsel of Southern Copper Corporation, and is based on a press release statement.

In other recent news, Southern Copper Corporation has witnessed significant adjustments in its stock ratings from renowned financial institutions. Morgan Stanley (NYSE:MS) upgraded Southern Copper from Underweight to Equalweight, citing a more balanced risk-reward scenario for the company. The firm also adjusted its price target for the company to $102.00. In relation to Southern Copper, Grupo Mexico SAB de CV saw an upgrade from JPMorgan from Neutral to Overweight due to a perceived significant undervaluation. The firm also increased the price target for the company’s shares to Peso137.00.

Simultaneously, JPMorgan revised its stance on Southern Copper, upgrading the stock from Underweight to Neutral, and increased the price target to $92.50. The adjustments reflect the firm’s recognition of Southern Copper’s significant exposure to copper, justifying its consistent premium over its peers. These recent developments highlight the shifting perspectives of financial institutions towards Southern Copper and Grupo Mexico, providing investors with a new lens through which to view these companies.

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