~~Investment properties are measured at cost, net of accumulated depreciation and impairment loss, if any.~~F-34

~~Depreciation of the investment properties is determined using the straight-line method with useful life of 20 years.~~

~~F-27~~

Notes to the consolidated financial statements(continued)

Investment properties are derecognized either when they have been disposed of or when they are permanently withdrawn from use and no future economic benefit is expected from their disposal. The difference between the net disposal proceeds and the carrying amount of the asset is recognized in profit or loss in the period of derecognition.

~~Transfers are made to (or from) investment property only when there is a change in use.~~

For a transfer from investment property to an item of property, plant and equipment, the deemed cost for subsequent accounting is the fair value at the date of change in use. If an item of property, plant and equipment becomes an investment property, the Group accounts for such property in accordance with the policy stated under property, plant and equipment up to the date of change in use.


	~~(n)~~	Transfers are made to (or from) investment property only when there is a change in use. For a transfer from investment property to an item of property, plant and equipment, the deemed cost for subsequent accounting is the fair value at the date of change in use. If an item of property, plant and equipment becomes an investment property, the Group accounts for such property in accordance with the policy stated under property, plant and equipment up to the date of change in use.

	(n)	Impairment of non-financial assets -
		The Group assesses, at each reporting date, whether there is an indication that an asset may be impaired. If any indication exists, or when annual impairment testing for an asset is required, the Group estimates the asset’s recoverable amount. An asset’s recoverable amount is the higher of (i) an asset’s or cash-generating unit’ (CGU) fair value less costs of disposal and (ii) its value in use. The recoverable amount is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets. When the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount.

		In assessing value in use, the estimated future cash flows are discounted to their present value using a post-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining fair value less cost of disposal, recent market transactions are taken into account. If no such transactions can be identified, an appropriate valuation model is used.

		The Group bases its impairment calculation on detailed budgets and forecast calculations, which are prepared separately for each of the Group’s CGUs to which the individual assets are allocated. These budgets and forecast calculations generally cover a period of five years. A long-term growth rate is calculated and applied to project future cash flows limited to the live of the mine.

		Impairment losses of continuing operations, including impairment of inventories, are recognized in the consolidated statements of profit or loss in expense categories consistent with the function of the impaired asset.

		For non-financial assets in general, an assessment is made at each reporting date to determine whether there is an indication that previously recognized impairment losses may no longer exist or have decreased. If such indication exists, the Group estimates the asset’s or CGU’s recoverable amount. A previously recognized impairment loss is reversed only if there has been a change in the assumptions used to determine the asset or CGU’s recoverable amount since the last impairment loss was recognized. The reversal is limited so that the carrying amount of the asset does not exceed its recoverable amount, nor exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognized for the asset in prior years. Such reversal is recognized in the consolidated statements of profit or loss.

The Group assesses, at each reporting date, whether there is an indication that an asset may be impaired. If any indication exists, or when annual impairment testing for an asset is required, the Group estimates the asset’s recoverable amount. An asset’s recoverable amount is the higher of an asset’s or cash-generating unit' (CGU) fair value less costs of disposal and its value in use. Recoverable amount is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets. When the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount.F-35

In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining fair value less cost of disposal, recent market transactions are taken into account. If no such transactions can be identified, an appropriate valuation model is used.

Impairment losses of continuing operations, including impairment of inventories, are recognized in the consolidated statements of profit or loss in expense categories consistent with the function of the impaired asset.

For assets in general, an assessment is made at each reporting date to determine whether there is an indication that previously recognized impairment losses may no longer exist or have decreased. If such indication exists, the Group estimates the asset’s or CGU’s recoverable amount. A previously recognized impairment loss is reversed only if there has been a change in the assumptions used to determine the asset or CGU’s recoverable amount since the last impairment loss was recognized. The reversal is limited so that the carrying amount of the asset does not exceed its recoverable amount, nor exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognized for the asset in prior years. Such reversal is recognized in the consolidated statements of profit or loss.

~~F-28~~

Notes to the consolidated financial statements(continued)


	(o)	Provisions -
		General-
		Provisions are recognized when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects, when appropriate, the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognized as a finance cost.

		Provision for closure of mining units-
		The Group records a provision for closure of mining units when a legally enforceable obligation arises, which is independent of the full depletion of the mine reserves.

		The Group recognizes a provision for closure of mining units once the obligation has been properly measured. The liability is initially recognized at the present value of the estimated costs and is capitalized as part of the carrying amount of the related mining assets (property, plant and equipment). The discounted liability is increased for the change in present value based on discounted rates that reflects current market assessments and the risks specify to the liability. In addition, the capitalized cost is depreciated and/or amortized based on the useful life of the asset. Any gain or loss resulting from the settlement of the obligation is recorded in the current results.

		Changes in the estimated timing of closure or changes to the estimated future costs are dealt with prospectively by recognizing an adjustment to the provision for closure and a corresponding adjustment to the related mining asset. Any reduction in the provision for closure and, therefore, any deduction from the mining asset to which it relates, may not exceed the carrying amount of the mining asset. If it does, any excess over the carrying amount is taken immediately to the consolidated statements of profit or loss.

		If the change in estimate results in an increase in the provision for closure and, therefore, an addition to the carrying value of the mining asset, the Group considers whether this is an indication of impairment of the asset as a whole, and if so, the Group performs an impairment test.

		For closed mines, changes to estimated costs are immediately recognized in the consolidated statements of profit or loss.

~~General~~-F-36

Provisions are recognized when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects, when appropriate, the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognized as a finance cost.

~~Provision for closure of mining units -~~

When the liability is initially recognized, the present value of the estimated costs is capitalized by increasing the carrying amount of the related mining assets (property, plant and equipment). Over time, the discounted liability is increased for the change in present value based on discounted rates that reflects current market assessments and the risks specify to the liability, in addition, the capitalized cost is depreciated and/or amortized based on the useful life of the asset. Any gain or loss resulting from the settlement of the obligation is recorded in the current results.

Changes in the estimated timing of rehabilitation or changes to the estimated future costs are dealt with prospectively by recognizing an adjustment to the rehabilitation liability and a corresponding adjustment to the related asset. Any reduction in the rehabilitation liability and, therefore, any deduction from the asset to which it relates, may not exceed the carrying amount of the asset. If it does, any excess over the carrying amount is taken immediately to the consolidated statements of profit or loss.

If the change in estimate results in an increase in the rehabilitation liability and, therefore, an addition to the carrying value of the asset, the Group considers whether this is an indication of impairment of the asset as a whole, and if so, tests for impairment, in accordance with IAS 36 "Impairment of Assets".

~~For closed mines, changes to estimated costs are recognized immediately in the consolidated statements of profit or loss.~~

~~(p)~~

~~Treasury shares -~~

Own equity instruments that are reacquired (treasury shares) are recognized at cost and deducted from equity. No gain or loss is recognized in profit or loss on the purchase, sale, issue or cancellation of the Group’s own equity instruments. Any difference between the carrying amount and the consideration, if reissued, is recognized as additional capital in equity. The voting rights related to treasury shares are cancelled for the Group and no dividends on such shares are allocated.

~~F-29~~

Notes to the consolidated financial statements(continued)


	~~(q)~~ (p)	Treasury shares -
		The Group´s own equity instruments that are reacquired (treasury shares) are recognized at cost and deducted from equity. No gain or loss is recognized in profit or loss on the purchase, sale, issue or cancellation of the Group’s own equity instruments. Any difference between the carrying amount and the consideration, if reissued, is recognized as additional capital in equity. The voting rights related to treasury shares are cancelled for the Group and no dividends on such shares are allocated.

	(q)	Revenue recognition -
		Revenue from contracts with customers is recognized when control of goods or services are transferred to the customer at an amount that reflects the consideration to which the Group expects to be entitled in exchange for those goods and services.

		The Group has concluded that it is the principal in its revenue contracts because it typically controls the goods before transferring them to the customer.

		The disclosures of significant accounting judgements, estimates and assumptions relating to revenue from contracts with customers are provided in Note 3.

		Net sales of goods (concentrates and metals) -
		Revenue from sale of concentrates and metals is recognized at the point in time when control of the asset is transferred to the customer, on delivery of the goods, including transportation. The normal credit term is 30 to 90 days upon delivery.

		The Group considers whether there are other promises in the contract that are separate performance obligations, to which a portion of the transaction price needs to be allocated. The Group considers that the only performance obligation is the delivery of the goods. In determining the transaction price for the sale of concentrates and metals, the Group considers the effect of variable consideration and the existence of significant financing components.

		Variable consideration -
		If the consideration in the contract includes a variable amount, the Group estimates the amount of consideration to which it will be entitled in exchange for transferring the goods to the customer. The variable consideration is estimated at contract inception and constrained until it is highly probable that a significant revenue reversal for revenue recognized will not occur when the associated uncertainty with the variable consideration is subsequently resolved.

Revenue is recognized to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured, regardless of when the payment is being made. Revenue is measured at the fair value of the consideration received or receivable, taking into account contractually defined terms of payment and excluding taxes or duty. The specific recognition criteria described below must also be met before revenue is recognized:F-37

~~Sales of concentrates and metals -~~

~~Revenue from sale of concentrates and metals is recognized when the significant risks and rewards of ownership of the goods have passed to the buyer, usually on delivery of the goods.~~

Contract terms for the Company’s sale of metal in concentrate to customers allow for a price adjustment based on final assay results of the metal in concentrate by the customer to determine the final content. These are referred to as provisional pricing arrangements and are such that the selling price for metal in concentrate is based on prevailing spot prices on a specified future date after shipment to the customer (the quotation period). Adjustments to the sales price occurs based on movements in quoted market prices up to the date of final settlement. The period between provisional invoicing and final settlement can be between one and six months.

Sales contracts for metal in concentrate that have provisional pricing features are considered to contain an embedded derivative, which is required to be separated from the host contract for accounting purposes. The host contract is the sale of metals in concentrate, and the embedded derivative is the forward contract for which the provisional sale is subsequently adjusted with final liquidations. The embedded derivative is originated by the metals prices since the date of issuance of issuance of the provisional liquidation until the date of issuance of the final liquidation.

The embedded derivative, which does not qualify for hedge accounting, is initially recognized at fair value with subsequent changes in the fair value recognized in the consolidated statements of profit or loss until final settlement, and presented as part of net sales. Changes in fair value over the quotation period and up until final settlement are estimated by reference to forward market prices.

~~Interest income~~-

For all financial instruments measured at amortized cost, interest income is recorded using the effective interest rate (EIR). EIR is the rate that exactly discounts the estimated future cash payments or receipts over the expected life of the financial instrument or a shorter period, where appropriate, to the net carrying amount of the financial asset or liability. Interest income is included in finance income in the consolidated statements of profit or loss.

~~F-30~~

Notes to the consolidated financial statements(continued)

~~Royalty income~~-

~~The royalty income is recognized in accordance with the accrual method considering the substance of the relevant agreements.~~

~~Dividends~~-

~~Revenue is recognized when the Group's right to receive the payment is established, which is generally when shareholders approve the dividend.~~

~~Revenue from engineering and construction services -~~

Revenue is recognized based on the stage of completion of contracts for existing services. The stage of completion is measured by reference to services performed to date as a percentage of total services to be performed by each contract.

~~Rental income -~~

Rental income arising from operating leases on investment properties is accounted for on a straight-line basis over the lease term and is included in revenue in the consolidated statement of profit or loss due to its operating nature.


	~~(r)~~	~~Benefits~~ The Group´s sales of concentrates and metal allow for price adjustments based on the market price at the end of the relevant quotation period (QP) stipulated in the contract. These are referred as to ~~employees~~provisional pricing arrangements and are such that the selling price for metal in concentrate is based on prevailing spot prices on a specified future date after shipment to the customer. Adjustments to the sales price occur based on movements in quoted market prices up to the end of the QP.

		Sales of concentrates and metals at provisionally prices include a gain (loss) to be received at the end of QP; this is considered a variable consideration. Changes in the price during the quotation period are recognized in the “Net sales of goods” caption as fair value of accounts receivables.

		For provisional pricing arrangements, any future change that occur over the QP are embedded within the provisionally price trade receivables and are, therefore, within the scope of IFRS 9 and not within the scope of IFRS 15. Given the exposure to the commodity price, these provisionally priced trade receivables will fail the cashflow characteristics test within IFRS 9 and will be required to be measured at fair value through profit or loss from initial recognition and until the date of settlement. The subsequent changes in fair value are recognized in the consolidated statements of profit or loss each period and presented separately from revenue from contracts with customer as part of “fair value gain/losses on provisionally priced trade receivables”. Changes in fair value over, and until the end of, the QP, are estimated by reference to updated forward market prices for gold and copper as well as taking into account relevant other fair value considerations set out in IFRS 13, including interest rate and credit risk adjustments.

		Revenue is recognized at the amount the Group expects to be entitled. The estimate of the price expected to be received at the end of the QP is generally the month of, the month before, or the month following the scheduled month of shipment or delivery according to the terms of the contracts, using the most recently determined estimate of metal in concentrate (based on initial assay results) and the estimated forward price. The requirements in IFRS 15 on constraint estimates of variable consideration are also applied to determine the amount of variable consideration that can be included in the transaction price.

		Sales of services -
		Services are recognized over time because the customer simultaneously receives and consumes the benefits provided by the Group. For measuring progress of the services, the Group used the output method in measuring progress of the services due to the Group has the right to invoice an amount that corresponds directly to the performance completed to date.

Salaries and wages, bonuses, post-employment benefits and vacations are calculated in accordance with IAS 19, "Employee Benefits" and are calculated in accordance with current Peruvian legislation based on the accrual basis.F-38

~~Workers’ profit sharing~~

The Group recognizes workers’ profit sharing in accordance with IAS 19, “Employees Benefits". Workers' profit sharing is calculated in accordance with the Peruvian law (Legislative Decree No. 892), and the applicable rate is 8% over the taxable net base of current year. According to Peruvian law, the limit in the workers' profit sharing that an employee can receive is equivalent to 18 months of wages, and any excess above such limit has be transferred to the Regional Government and “National Fund for Employment’s Promotion and Training” (“FONDOEMPLEO”).

~~(s)~~

~~Borrowing costs -~~

Costs directly attributable to the acquisition, construction or production of a qualifying asset are capitalized as finance part of the cost of an asset. A qualifying asset is one whose value is greater than US$5 million and requires a longer period to 12 months to get ready for its intended use. All other borrowing costs are expensed in the period in which they occur. Borrowing costs consist of interest and other costs that the Group incurs in connection with the borrowing of funds.

~~F-31~~

Notes to the consolidated financial statements(continued)


	~~(t)~~	~~Taxes~~ Significant financing components
		The Group receives short-term advances from its customers. Using the practical expedient in IFRS 15, the Group does not adjust the promised amount of consideration for the effects of a significant financing component if it expects, at contract inception, that the period between the transfer of the promised good to the customer and when customer pays for that good will be one year or less.

		Contract Balances -
		Contract assets
		A contract asset is the right to consideration in exchange for goods or services transferred to the customer. If the Group performs by transferring goods or services to a customer before the customer pays consideration or before payment is due, a contract asset is recognized for the earned consideration that is conditional.

		Trade receivables
		A receivable represents the Group´s right to an amount of consideration that is unconditional.

		Contract liabilities
		A contract liability is the obligation to transfer goods or services to a customer for which the Group has received consideration (or an amount of consideration is due) from the customer. If customer pays consideration before the Group transfer goods or services to the customer, a contract liability is recognized when the payment is made or the payment is due (whichever is earlier). Contract liabilities are recognized as revenue when the Group performs under the contract.

		Cost to obtain a contract
		The Group pays sales commissions as part of the sales of services in the insurance brokerage segment. The Group has elected to apply the optional practical expedient for cost to obtain a contract which allows the Group to immediately expense sales commissions because the amortization period of the assets that the Group otherwise would have used is one year or less.

		Interest income -
		For all financial instruments measured at amortized cost, interest income is recorded using the effective interest rate (EIR). EIR is the rate that exactly discounts the estimated future cash payments or receipts over the expected life of the financial instrument or a shorter period, where appropriate, to the net carrying amount of the financial asset or liability. Interest income is included in finance income in the consolidated statements of profit or loss.

~~Current income tax -~~F-39

Current income tax assets and liabilities are measured at the amount expected to be recovered from or paid or the tax authority. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at the reporting period.

Current income tax relating to items recognized directly in equity is recognized in equity and not in the consolidated statements of profit or loss. Management periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate.

~~Deferred income tax -~~

Deferred income tax is provided using the liability method on temporary differences between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes at the reporting date.

Deferred income tax liabilities are recognized for all taxable temporary differences, except for taxable temporary differences associated with investments in associates, when the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future.

Deferred income tax assets are recognized for all deductible temporary differences, the carry forward of unused tax credits and any unused tax losses. Deferred tax assets are recognized to the extent that is probable that taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilized.

The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilized. Unrecognized deferred tax assets are re-assessed at each reporting date and are recognized to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realized or the liability is settled, based on tax rates and tax laws that have been enacted or substantively enacted at the reporting date.

~~Deferred tax items are recognized in correlation to the underlying transaction either in profit or loss, other comprehensive income or directly in equity.~~

Deferred tax assets and deferred tax liabilities are offset if a legally enforceable right to compensate current tax assets against current income tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority.

~~F-32~~

Notes to the consolidated financial statements(continued)


		Royalty income-
		The royalty income is recognized when the later of the following events occurs: the subsequent sales occur or the performance obligation is satisfied (or partially satisfied).

		Dividends-
		Revenue is recognized when the Group’s right to receive the payment is established, which is generally, when shareholders approve the dividend.

		Rental income -
		Rental income arising from operating leases on investment properties is accounted for on a straight-line basis over the lease term and is included in “Other, net” in the consolidated statement of profit or loss due to its operating nature.

	(r)	Benefits to employees -
		Salaries and wages, bonuses and vacations are calculated in accordance with IAS 19 “Employee Benefits” and are calculated in accordance with current Peruvian legislation based on the accrual basis.

		Workers’ profit sharing -
		The Group recognizes workers’ profit sharing in accordance with IAS 19 “Employees Benefits”. Workers’ profit sharing is calculated in accordance with the Peruvian law (Legislative Decree No. 892), and the applicable rate is 8% over the taxable net base of current year. According to Peruvian law, the limit in the workers’ profit sharing that an employee can receive is equivalent to 18 months of wages, and any excess above such limit has be transferred to the Regional Government and “National Fund for Employment’s Promotion and Training” (“FONDOEMPLEO”).

	(s)	Borrowing costs -
		Costs directly attributable to the acquisition, construction or production of a qualifying asset are capitalized as finance part of the cost of an asset. The Group defines a qualifying asset as one which value is greater than US$5 million and requires a longer period to 12 months to get ready for its intended use. All other borrowing costs are expensed in the period in which they occur. Borrowing costs consist of interest and other costs that the Group incurs in connection with the borrowing of funds.

	(t)	Taxes-
		Current income tax -
		Current income tax assets and liabilities are measured at the amount expected to be recovered from or paid or the tax authority. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at the reporting period.

		Current income tax relating to items recognized directly in equity is recognized in equity and not in the consolidated statements of profit or loss. Management periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate.

F-40

Notes to the consolidated financial statements(continued)


		Deferred income tax -
		Deferred income tax is provided using the liability method on temporary differences between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes at the reporting date.

		Deferred income tax liabilities are recognized for all taxable temporary differences, except for taxable temporary differences associated with investments in associates, when the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the near future.

		Deferred income tax assets are recognized for all deductible temporary differences, the carry forward of unused tax credits and any unused tax losses. Deferred tax assets are recognized to the extent that is probable that taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilized.

		The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilized. Unrecognized deferred tax assets are re-assessed at each reporting date and are recognized to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered.

		Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realized or the liability is settled, based on tax rates and tax laws that have been enacted or substantively enacted at the reporting date.

		Deferred tax items are recognized in correlation to the underlying transaction either in profit and loss, OCI or directly in equity.

		Deferred tax assets and deferred tax liabilities are offset if a legally enforceable right to compensate current tax assets against current income tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority.

		Peruvian mining royalties and special mining tax –
		In accordance with Law No.28258, as amended by Law No. 29788, mining royalties are either payable as the higher of as a specified percentage of operating profit or 1% of revenues. If the mining royalty is calculated as a percentage of operating profit, marginal rates ranging from 1% to 12% that increase progressively for companies with higher operating margins will apply.

Notes to the consolidated financial statements(continued)

~~Peruvian mining royalties and special mining tax -~~

Mining royalties and special mining tax are accounted for in accordance with IAS 12 “Income Tax” because they have the characteristics of an income tax. This is considered to be the case when they are imposed under government authority and the amount payable is based on taxable income-rather than physical quantities produced or as a percentage of revenue-after adjustment for temporary differences. Legal rules and rates used to calculate the amounts payable are those in effect on the date of the consolidated statements of financial position.

Therefore, obligations arising from Mining Royalties and Special Mining Tax are recognized as income tax under the scope of IAS 12. Both, Mining Royalties and Special Mining Tax generated deferred tax assets and liabilities, which must be measured using the average rates expected to apply to operating profit in the quarter in which the Group expects to reverse temporary differences.

Sales tax -

Expenses and assets are recognized net of the amount of sales tax, except:

(i)

When the sales tax incurred on a purchase of assets or services is not recoverable from the taxation authority, in which case, the sales tax is recognized as part of the cost of acquisition of the asset or as part of the expense item, as applicable;

(ii)

When receivables and payables are stated with the amount of sales tax included.

The net amount of sales tax recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the consolidated statements of financial position.

(u)

Fair value measurement

The Group measures its financial instruments ~~such as, derivatives and embedded derivatives,~~ at fair value at the date of the consolidated statements of financial position.

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either:

In the principal market for the asset or liability, or

In the absence of a principal market, in the most advantageous market for the asset or liability.

The Group uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximizing the use of relevant observable inputs and minimizing the use of unobservable inputs.

~~F-33~~

Notes to the consolidated financial statements(continued)

All assets and liabilities for which fair value is measured or disclosed in the consolidated financial statements are categorized within the fair value hierarchy, described, as follows, based on the lowest level input that is significant to the fair value measurement as a whole:

Level 1 - Quoted (unadjusted) market prices in active markets for identical assets or liabilities.

Level 2 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable.

Level 3 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable.

For assets and liabilities that are recognized in the consolidated financial statements on a recurring basis, the Group determines whether transfers have occurred between levels in the hierarchy by reassessing categorization (based on the lowest-level input that is significant to the fair value measurement as a whole) at the end of each reporting period.

The Group's Management determines the policies and procedures for both recurring fair value measurement and non-recurring measurement. At each reporting date, the Group's Management analyzes the movements in the values of assets and liabilities, which are required to be re-measured or re-assessed as per the Group’s accounting policies.

For the purpose of fair value disclosures, the Group has determined classes of assets and liabilities based on the nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy as explained above.

(v)

Derivative financial instruments and hedge accounting -

Initial recognition and subsequent measurement-

The Group uses derivative instruments to hedge its commodity price risk (forward commodity ~~contracts) and its foreign exchange risk (forward exchange rate~~ contracts). Such derivative financial instruments are initially recognized at fair value on the date on which a derivative contract is entered into and are subsequently re-measured at fair value. Derivatives are carried as financial assets when the fair value is positive and as financial liabilities when the fair value is negative.

At the inception of the hedge relationship, the Group formally designates and documents the hedge relationship to which it wishes to apply hedge accounting and the risk management objective and strategy for undertaking the hedge.

The documentation includes identification of the hedging instrument, the ~~hedge~~hedged item, ~~or transaction,~~ the nature of the risk being hedged and how the ~~entity~~Group will assess ~~the effectiveness of changes in~~whether the hedging ~~instrument’s fair value in offsetting~~relationship meets the ~~exposure to changes in cash flows attributable to~~hedge effectiveness requirements (including the ~~hedged risk. Such hedges are expected to be highly effective in achieving offsetting changes in cash flows~~analysis of sources of hedge ineffectiveness and ~~are assessed on an ongoing basis to determine that they actually have been highly effective throughout~~how the ~~financial reporting periods~~hedge ratio is determined). A hedging relationship qualifies for ~~which they were designated.~~hedge accounting if it meets all of the following effectiveness requirements:

~~F-34~~

F-43

Notes to the consolidated financial statements(continued)

There is ‘an economic relationship’ between the hedged item and the hedging instrument.

The effect of credit risk does not ‘dominate the value changes’ that result from that economic relationship.

The hedge ratio of the hedging relationship is the same as that resulting from the quantity of the hedged item that the Group actually hedges and the quantity of the hedging instrument that the Group actually uses to hedge that quantity of hedged item.

The Group’s hedge is classified as cash flow hedge. The effective portion of gain or loss on the hedging instrument is initially recognized in the consolidated statements of ~~Other Comprehensive Income,~~changes in equity, under the “Other equity reserves” caption, while the ineffective portion is recognized immediately in the consolidated statements of profit or loss in the ~~finance costs~~“Finance costs” caption.

(w)

Discontinued operations -

The Group classifies disposal groups as held for sale if their carrying amounts will be recovered principally through sale rather than through continuing use. Such disposal groups classified as held for sale are measured at the lower of their carrying amount and fair value less costs to sell.

The criteria for held for sale classification is regarded as met only when the sale is highly probable and the disposal group is available for immediate sale in its present condition. Actions required to complete the sale should indicate that it is unlikely that significant changes to the plan will be made or that the sale will be withdrawn. Management must be committed to the sale expected within one year from the date of the classification.

An extension of the period required to complete a sale does not preclude an asset (or disposal group) from being classified as held for sale if the delay is caused by events or circumstances beyond the entity’s control and there is sufficient evidence that the entity remains committed to its plan to sell the asset.

~~Property, plant and equipment are not depreciated or amortized once classified as held for sale.~~

~~Assets and liabilities classified as held for sale are presented separately as current items in the consolidated statement of financial position.~~

~~A disposal group qualifies as discontinued operation if it is a component of an entity that either has been disposed of, or is classified as held for sale, and:~~

~~Represents a separate major line of business or geographical area of operations~~

~~It is part of a single coordinated plan to dispose of a separate major line of business or geographical area of operations, or~~

~~It is a subsidiary acquired exclusively with a view to re sale.~~

Discontinued operations are excluded from the results of continuing operations and are presented as a single amount as profit or loss after tax from discontinued operations in the consolidated statement of profit or loss.

Additional disclosures are provided in note 1(e). All other notes to the consolidated financial statements include amounts for continuing operations, unless otherwise mentioned.

~~F-35~~(x)

Other assets -

Other assets represent patents and industrial property, right-of-use related to rights of way, and software licenses. Patents and industrial property and right-of-use are amortized over their useful economic lives. Software licenses are amortized over the straight-line method, using useful lives from 1 to 10 years.

The useful lives of intangible assets are assessed as either finite or indefinite. Intangible assets with finite live are amortized over their useful economic lives and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortization period and the amortization method for an intangible asset with a finite useful life are reviewed at least at the end of each reporting period. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset are considered to modify the amortization period or method, as appropriate, and are treated as changes in accounting estimates. The amortization expense on intangible assets with finite lives is recognized in the statement of profit or loss in the expense category that is consistent with the function of the intangible assets.

Internally generated intangibles, excluding capitalized development costs, are not capitalized. Instead, the related expenditure is recognized in the consolidated statement of profit or loss in the period in which the expenditure is incurred.

Notes to the consolidated financial statements(continued)

Gains or losses arising from derecognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognized in the consolidated statement of profit or loss when the asset is derecognized.

Significant judgments, estimates and assumptions

The preparation of the Group’s consolidated financial statements requires Management to make judgments, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the accompanying disclosures, and the disclosure of contingent liabilities. The estimates and assumptions are continuously evaluated and based on Management´s experience and other facts, including the expectations about future events, which are reasonable under current situation. Uncertainty about these estimates and assumptions could result in outcomes that require material adjustment to the carrying amount of assets and liabilities affected in future periods. Further information on each of these areas and how they ~~impact~~affect the various accounting policies are described below and also in the relevant notes to the consolidated financial statements.

3.1.

Judgments

In the process of applying the Group’s accounting policies, Management has made the following judgments, which have the most significant effect on the amounts recognized in the consolidated financial statements:

(a)

Contingencies -

By their nature, contingencies will be resolved only when one or more uncertain future events occur or fail to occur. The assessment of the existence and potential quantum of contingencies inherently involves the exercise of significant judgment and the use of estimates regarding the outcome of future events.

(b)

Development start date -

The Group assesses the status of each exploration project of its mining units to determine when the development phase begins. One of the criteria used to evaluate the development start date is when the Group determines that the property can be economically developed.

(c)

Production start date -

The Group assesses the stage of each mine under development to determine when a mine moves into the production phase. The criteria used to assess the start date are determined based on the unique nature of each mining project, such as the complexity of the project and its location. The Group considers various relevant criteria to assess when the production phase is considered to have commenced. Some of the criteria used to identify the production start date include, but are not limited to:

Level of capital expenditure incurred compared to the original construction cost estimates.

Completion of a reasonable period of testing of the mine plant and equipment.

Ability to produce metal in saleable form (within specifications).

Ability to sustain ongoing production of metal.

Notes to the consolidated financial statements(continued)

When a mine development /construction project moves into the production phase, the capitalization of certain mine development costs ~~ceases~~cease and costs are either regarded as forming part of the cost of inventory or expensed, except for costs that qualify for capitalization relating to mining asset additions or improvements. It is also at this point that depreciation or amortization commences.

~~F-36~~(d)

Useful life of property, plant and equipment

Depreciation is calculated under the straight-line method of accounting considering the lower of estimated useful lives of the assets or estimated reserves of the mining unit. See Note 2.4(h) for useful lives.

(e)

Revenue from contracts with customers -

The Group applied the judgement for determining the timing of satisfaction of services of revenue from contracts with customers. The Group concluded that revenue related to services such as energy generation and transmission, industrial services, and other services is to be recognized over time because the customer simultaneously receives and consumes the benefits provided by the Group.

~~Notes~~The Group determined that the output method is the best method in measuring progress of the services mentioned above due to the ~~consolidated financial statements(continued)~~Group has the right to invoice an amount that corresponds directly to the performance completed to date.

3.2.

Estimates and assumptions

The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are described below. The Group based its assumptions and estimates on parameters available when the consolidated financial statements were prepared. Existing circumstances and assumptions about future developments, however, may change due to market change or circumstances arising beyond the control of the Group. Such changes are reflected in the assumptions when they occur.

(a)

Determination of mineral reserves ~~and resources~~ -

Recoverable proven and probable reserves are the part of a mineral deposit than can be economically and legally extracted or produced at the time of the reserve determination. The determination of reserves involves numerous uncertainties with respect to the ultimate geology of the ore bodies, including quantities, grades and recovery rates. Estimating the quantity and grade of reserves requires the Group ~~calculates~~to determine the size, shape and depth of its ore bodies by analyzing geological data, such as sampling of drill holes, tunnes and other underground workings. In addition to the geology of the Group’s mines, assumptions are required to determine the economic feasibility of mining these reserves, ~~using~~including estimates of future commodity prices and demand, the mining methods ~~generally applied~~used and the related cost incurred to develop and mine its reserves. The process to estimate proven and probable ore reserves is audited by ~~mining and industry according~~an independent consultant each year.

F-46

Notes to ~~international guidelines.~~ the consolidated financial statements(continued)

All estimated reserves and resources represent estimated quantities of mineral proven and probable that under current conditions can be economically and legally processed.

The process of estimating quantities of reserves is complex and requires making subjective decisions when evaluating all geological, geophysical, engineering and economic information available choices. Reviews could occur on reserve and resources estimates due to, among others, revisions to the data or geological assumptions, changes in prices, production costs and results of exploration activities. Changes in estimated reserves and resources could affect mainly ~~affect~~ the ~~carrying value~~depreciation of fixed assets related directly to mining ~~concessions, development costs and property, plant and equipment; the charges in result for depreciation and amortization; and the carrying amount of~~activity, the provision for mine closure, the assessment of ~~mining units.~~the deferred asset’s recoverability and the amortization period for development costs.

(b)

Units of production depreciation -

~~Estimated economically recoverable reserves~~

Reserves and resources are used in determining the depreciation ~~and/or~~and amortization of mine-specific assets.

This results in a ~~depreciation/~~depreciation or amortization charge proportional to the depletion of the anticipated remaining ~~life-of-mine production. The~~ life of ~~each item, which~~mine production. Each mine’s life is assessed ~~at least~~ annually ~~has regard~~ to ~~both its~~evaluate: (i) physical life limitations and (ii) present assessments of economically recoverable reserves of the mine ~~property at which the asset is located.~~property. These calculations require the use of estimates and assumptions, including the amount of recoverable reserves. Changes ~~in estimates~~ are ~~accounted for~~recorded prospectively.

(c)

~~Mine rehabilitation provision~~Provision for closure of mining units -

The Group assesses its ~~mine rehabilitation~~ provision for closure of mining units at each reporting ~~date. The ultimate rehabilitation costs are uncertain,~~date using a discounted future cash flow method. In determining the amount of the provision, it is necessary to make significant assumptions and ~~cost~~ estimates, ~~can vary in response to~~because exist many factors ~~including~~that can affect the final amount of this provision. These factors include estimates of the extent and costs of ~~rehabilitation~~closure activities, technological changes, regulatory changes, cost increases as compared to the inflation rates, and changes in discount ~~rates.~~rates and periods where are expected that such costs will be incurred. These uncertainties may result in future actual expenditure differing from the amounts currently provided. The provision at the reporting date represents Management’s best estimate of the present value of the future ~~rehabilitation~~closure costs required.

~~F-37~~

~~Notes to the consolidated financial statements(continued)~~

(d)

Inventories ~~net~~ -

Inventories are classified ~~in short and long term in accordance with~~as current or non-current depending on the length of time that Management estimates will ~~start~~be needed to reach the production state of ~~the~~ concentrate ~~extracted from the~~extraction for each mining unit.

Net realizable value tests are performed at each reporting date and represent the estimated future sales price of the product the entity expects to realize when the product is processed and sold, less estimated costs to complete production and bring the product to sale. Additionally, Management considers the time value of money in calculating the net realizable value of its non-current inventories.

Notes to the consolidated financial statements(continued)

Classified minerals, which are materials with metal content that were removed from the pit of the Colquijirca mining unit for treatment at the expansion operation plant, contain lower grade ore than the average of treated minerals and are available to continue in the process of recovery of mineral and concentrates. Because it is generally impracticable to determine the mineral contained in the classified mineral located in the deposit field near Tajo Norte by physical count, reasonable estimation methods are employed. The quantity of minerals delivered to classified mineral is based on surveyed volumes of mined material and daily production records. Sampling and assaying of blasthole cuttings determine the estimated copper, lead and zinc grades of material delivered to classified minerals.

For minerals outside leach platform inventories, finished and in-progress goods are measured by estimating the number of tons added and removed. The number of contained gold ounces is based on assay data, and the estimated recovery percentage is based on the expected processing method. Tonnages and ounces of mineral are verified by periodic surveys.

For minerals inside leach platform inventories, reasonable estimation methods are employed because it is generally impracticable to determine the mineral contained in leach platforms by physical count. The quantity of material delivered to leach platforms are based on surveyed volumes of mined material and daily production records. Sampling and assaying of blasthole cuttings determine the estimated ore grades of material delivered to leach platforms.

(e)

Impairment of non-financial assets -

The Group assesses each asset or cash generating unit in each reporting period to determine whether any indication of impairment exists. Where an indicator of impairment exists, a formal estimate of the recoverable amount is made, which is considered ~~to be~~ the higher of (i) the fair value less costs of disposal and (ii) value in use. The assessments require the use of estimates and assumptions such as long-term commodity prices, discount rates, operating costs, among others. These estimates and assumptions are subject to risk and uncertainty.

The fair value of mining assets is generally calculated by the present value of future cash flows arising from the continued use of the asset, which include some estimates, such as the cost of future expansion plans, using assumptions that a third party might consider. The future cash flows are discounted to their present value using a discount rate that reflects current market assessment of the value of money over time, as well as specific risks of the asset or cash-generating unit under evaluation. The Group has determined the operations of each mining unit as a single cash generating unit.

F-48

Notes to the consolidated financial statements(continued)

(f)

~~Taxes~~Deferred income tax asset and recoverability -

Deferred tax assets are recognized for unused tax losses to the extent that it is probable that taxable profit will be available against which the losses can be utilized. Significant Management judgment is required to determine the amount of deferred tax assets that can be recognized, based upon the likely timing and the level of future taxable profits together with future tax planning strategies.

(g)

Fair value of contingent consideration -

The contingent consideration arising from a business combination is measured at fair value at the date of acquisition, as part of the business combination. If the contingent consideration is eligible to be recognized as a financial liability, the fair value is subsequently re-measured at each date of the consolidated financial statements. Determining the fair value of the contingent consideration is based on a model of discounted future cash flows. The key assumptions take into account the likelihood of achieving each goal of financial performance as well as the discount factor.

~~F-38~~

~~Notes to the consolidated financial statements(continued)~~

Standards issued but not effective

~~The relevant~~

Certain new accounting standards and interpretations have been published that are not mandatory for December 31, 2019 reporting periods and have not been early adopted by the Group. These standards are not expected to have a material impact on the Group in the current or future reporting periods and on foreseeable future transactions.

Amendments to IFRS 3: Definition of a Business -

In October 2018, the IASB issued ~~but not yet effective, up~~amendments to the definition of a business in IFRS 3 Business Combinations to help entities determine whether an acquired set of activities and assets is a business or not. They clarify the minimum requirements for a business, remove the assessment of whether market participants are capable of replacing any missing elements, and add guidance to help entities assess whether an acquired process is substantive, narrow the definitions of a business and of outputs, and introduce an optional fair value concentration test. New illustrative examples were provided along with the amendments. Since the amendments apply prospectively to transactions or other events that occur on or after the date of ~~issuance~~first application, the Group will not be affected by these amendments on the date of ~~the Group’s financial statements are disclosed below. The Group intends~~transition.

Amendments to ~~adopt these standards, if applicable, when they become effective.~~

IAS 1 and IAS 8: Definition of Material -

~~IFRS 9 Financial Instruments~~

In ~~July 2014,~~October 2018, the IASB issued amendments to IAS 1 Presentation of Financial Statements and IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors to align the ~~final version~~definition of ~~IFRS 9 Financial Instruments which reflects all phases of~~‘material’ across the ~~financial instruments project~~standards and ~~replaces IAS 39 and all previous versions of IFRS 9. IFRS 9 brings together all three~~to clarify certain aspects of the ~~accounting for~~definition. The new definition states that, “Information is material if omitting, misstating or obscuring it could reasonably be expected to influence decisions that the primary users of general purpose financial ~~instruments project: classification and measurement, impairment and hedge accounting. IFRS 9 is effective for annual periods beginning~~statements make on ~~or after January 1, 2018, with early application permitted. Except for hedge accounting, retrospective application is required, but~~ the ~~provision~~basis of ~~comparative~~those financial statements, which provide financial information about a specific reporting entity”. The amendments to the definition of material is not ~~compulsory. For hedge accounting,~~expected to have a significant impact on the ~~requirements are generally applied prospectively, with some limited exceptions.~~Group’s consolidated financial statements.

~~The Group is evaluating the impact of the adoption of this standard.~~

~~IFRS 15 Revenue from Contracts with Customers~~

IFRS 15 was issued in May 2014 and establishes a new five-step model that will apply to revenue arising from contracts with customers. Under IFRS 15, revenue is recognized at an amount that reflects the consideration to which an entity expects to be entitled in exchange for transferring goods or services to a customer. The new revenue standard is applicable to all entities and will supersede all current revenue recognition requirements under IFRS. Either a full retrospective application or a modified retrospective application is required for annual periods beginning on or after January 1, 2018. Early adoption is permitted.

The Company expects to adopt this new standard on the required date of its entry into force. For this purpose, the Management has prepared a detailed plan of adoption that contemplates diverse tasks (systems review, internal control and policies and procedures), deadlines and responsible, which will begin in May 2017 and will end during the fourth quarter of 2017.

More than 90 percent of the Company's revenues came from the sales of metals and polymetallic concentrates, all of which are formalized through contracts. Based on a preliminary analysis, the Company's Management does not expect to identify significant situations that may require a different accounting treatment under IFRS 15. To date, it is not possible to effect a quantitative disclosure as a result of the subsequent adoption of this standard.

If any material effect arise, the Company plans to use the modified retrospective method in the process of adopting IFRS 15, according to which the cumulative effect resulting from applying this new standard will be presented by adjusting the initial balance of retained earnings (January 1, 2018).

In addition, IFRS 15 establishes presentation and disclosure requirements that represent a significant change in current practice and significantly increases the volume of disclosures required in the Group's financial statements, many of which will be completely new.

~~F-39~~

F-49

Notes to the consolidated financial statements(continued)

~~IFRS 16 “Leases”~~

IFRS 16 sets out the principles for the recognition, measurement, presentation and disclosure of leases and requires lessees to account for all leases under a single on-balance sheet model similar to the accounting for finance leases under IAS 17. The standard includes two recognition exemptions for lessees: leases of ’low-value’ assets and short-term leases.It is effective for annual periods beginning on or after January 1, 2019, with early application permitted. The Group is currently evaluating the impact of the IFRS 16 in its consolidated financial statements and expects to adopt this new standard at the date required by the effective date.

~~IAS 7 Disclosure Initiative – Amendments to IAS 7~~

The amendments to IAS 7, Statement of Cash Flows, are part of the IASB’s Disclosure Initiative and require an entity to provide disclosures that enable users of financial statements to evaluate changes in liabilities arising from financing activities, including both changes arising from cash flows and non-cash changes. On initial application of the amendment, entities are not required to provide comparative information for preceding periods. These amendments are effective for annual periods beginning on or after 1 January 2017, with early application permitted. Application of the amendments will result in additional disclosures provided by the Group.

~~IAS 12 Recognition of Deferred Tax Assets for Unrealized Losses - Amendments to IAS 12~~

The amendments clarify that an entity needs to consider whether tax law restricts the sources of taxable profits against which it may make deductions on the reversal of that deductible temporary difference. Furthermore, the amendments provide guidance on how an entity should determine future taxable profits and explain the circumstances in which taxable profit may include the recovery of some assets for more than their carrying amount.

Entities are required to apply the amendments retrospectively. However, on initial application of the amendments, the change in the opening equity of the earliest comparative period may be recognized in the opening retained earnings (or in another component of equity, as appropriate), without allocating the change between opening retained earnings and other components of equity. Entities applying this relief must disclose that fact.

These amendments are effective for annual periods beginning on or after 1 January 2017 with early application permitted. If an entity applies the amendments for an earlier period, it must disclose that fact. These amendments are not expected to have any impact on the Group.

~~Business combination~~

~~Acquisition of controlling interest in Canteras del Hallazgo S.A.C. -~~

On August 18, 2014, Buenaventura acquired from Minera Gold Fields Peru S.A. (“Gold Fields”) 51 percent of the voting shares of Canteras del Hallazgo S.A.C., which represent the whole interest of Gold Fields in the equity of such entity.

Canteras del Hallazgo is a privately-held entity incorporated in 2009 and owner of the Chucapaca project, which is located in the Ichuña district, in the General Sanchez Cerro province, in the Moquegua department, Peru. According to previously performed studies, there is evidence of the existence of gold, silver, copper and antimony in the area, specifically in the Canahuire deposit.

~~F-40~~

~~Notes to the consolidated financial statements(continued)~~

~~The purchase consideration amounted to:~~

	~~US$(000)~~

~~Cash paid~~		~~81,000~~
~~Contingent consideration liability~~		~~23,026~~

~~As of December 31, 2014~~		~~104,026~~	Transactions in soles

Moreover, the Group recognized a gain of US$59,852,000 in the 2014 consolidated statement of profit or loss as a result of re-measuring the previously held equity interest (US$40,094,000) at its acquisition date fair value (US$99,946,000) in accordance with IFRS 3.

~~Assets acquired and liabilities assumed -~~

~~The fair values of the identifiable assets and liabilities assumed of Canteras del Hallazgo S.A.C. as at the date of acquisition were:~~

	~~US$(000)~~
~~Assets~~
~~Cash and cash equivalents~~		~~684~~
~~Income tax credit~~		29
~~Value added tax credit~~		~~10,599~~
~~Mining concessions, property, plant and equipment, net~~		~~202,658~~
		~~213,970~~
~~Liabilities~~
~~Deferred income tax liabilities, net~~		~~9,235~~
~~Trade and other payables and provisions~~		~~724~~
		~~9,959~~

~~Total identifiable net assets at fair value~~		~~204,011~~

~~Contingent consideration -~~

The purchase and sale agreement considered a contingent consideration of US$23,026,000, which corresponds to the present value of the future royalty payments equivalent to 1.5 percent over the future sales of the minerals arising from the mining properties acquired. The fair value has been determined using the income approach.

Significant increase (decrease) in the future sales of mineral would result in higher (lower) fair value of the contingent consideration liability, while significant increase (decrease) in the discount rate would result in lower (higher) fair value of the liability. Changes in the fair value of this contingent consideration have been recognized through profit or loss in the consolidated statement of profit or loss.

As of December 31, 2016, it is highly probable that the Group reaches the projected future sales. The fair value of the contingent consideration determined as of December 31, 2016 reflects this assumption and changes in metal prices.

~~F-41~~

~~Notes to the consolidated financial statements(continued)~~

~~A reconciliation of fair value measurement of the contingent consideration liability is provided below:~~

	~~US$(000)~~
~~As of January 1, 2015~~		~~23,026~~

~~Unrealized fair value changes recognized in profit or loss, note 27~~		~~(6,032~~	)

~~As of December 31, 2015~~		~~16,994~~

~~Unrealized fair value changes recognized in profit or loss, note 27~~		~~2,349~~

~~As of December 31, 2016~~		~~19,343~~

~~Significant unobservable valuation inputs are provided below:~~

2016 2015

Annual average of future sales of mineral (US$000) 233,278 208,574
Useful life of mining properties 13 12
Discount rate (%) 10 10
~~The Group has the preferential right of acquisition of the royalty in case Gold Fields decides to sell it.~~
~~Merger -~~
On September 22, 2014, the General Shareholders’ meeting of the Group approved the merger of the Company (absorbing entity) and its subsidiary Canteras del Hallazgo S.A.C. (absorbed entity) effective December 3, 2014.
~~The statement of profit or loss of Canteras del Hallazgo S.A.C. for the eleven-month period ended December 3, 2014 was as follows:~~
~~US$(000)~~
~~Administrative expenses~~ ~~(2,344~~ )
~~Net loss from currency exchange difference~~ ~~(2,319~~ )
~~Net loss~~ ~~(4,663~~ )
6. ~~Transactions in Soles~~
Transactions in ~~Soles~~soles are completed using exchange rates published by the Superintendent of Banks, Insurance and ~~AFP.~~A.F.P. As of December 31, ~~2016,~~2019, the exchange rates for U.S. dollars published by this Institution were US$~~0.2983~~0.3020 for buying and US$~~0.2976~~0.3015 for selling (US$~~0.2934~~0.2968 for buying and US$~~0.2930~~0.2959 for selling as of December 31, ~~2015)~~2018), and have been applied by the Group for the assets and liabilities accounts, respectively.

~~F-42~~
~~Notes to the consolidated financial statements(continued)~~
As of December 31, ~~2016~~2019 and ~~2015,~~2018, the Group ~~had~~presents the following assets and liabilities originally denominated in ~~Soles:~~soles by its equivalent in U.S. dollars:

2016 2015 2019 2018
S/(000) S/(000) US$(000) US$(000)

Asset
Assets
Cash and cash equivalents 21,212 53,218 6,796 11,526
Trade and other receivables 498,839 474,442 139,624 88,513
Income tax credit 83,623 155,014 31,960 24,277
Prepaid expenses 309 36,984
178,380 124,316
603,983 719,658
Liabilities
Trade and other payables (438,087 ) (414,385 ) (60,311 ) (53,962 )
Income tax payable (24,329 ) - (5,692 ) (2,080 )
Provisions (37,528 ) (71,264 )
Bank loans - (769,360 )
Provisions, contingent liabilities and other liabilities (41,515 ) (31,282 )
(499,944 ) (1,255,009 ) (107,518 ) (87,324 )

Net asset (liability) position 104,039 (535,351 )
Net asset position 70,862 36,992

7.6. Cash and cash equivalents
(a) This caption is made up as follows:

2016 2015 2019 2018
US$(000) US$(000) US$(000) US$(000)

Cash 290 417 304 347
Bank accounts (b) 48,754 38,102 37,836 57,078
Time deposits (c) 31,500 40,000 171,906 311,775
210,046 369,200
80,544 78,519

(b) Bank accounts earn interest at floating rates based on market rates.

(c) As of December 31, ~~2016~~2019 and ~~2015,~~2018, time deposits were kept in prime financial institutions, which generated interest at annual market rates and ~~had original~~have current maturities, ~~of less than 90 days,~~ according to the immediate cash needs of the Group.

~~F-43~~
F-50

Notes to the consolidated financial statements(continued)

8.7. Trade and other receivables, net
(a) This caption is made up as follows:

2016 2015
US$(000) US$(000) 2019 2018
US$(000) US$(000)
Trade receivables, net (b)
Domestic clients 89,811 76,078 141,005 105,225
Foreign clients 77,254 45,162 78,860 56,312
Related entities, note 30(b) 7,760 9,426 6,247 7,177
174,825 130,666 226,112 168,714
Allowance for doubtful accounts (f) (22,644 ) (21,741 )

Allowance for expected credit losses (f) (22,016 ) (22,013 )
152,181 108,925 204,096 146,701
Other receivables
Value added tax credit 53,754 49,332
Tax claims (g) 42,602 2,573
Accounts receivables to third parties 31,478 24,625
Due from for sales of assets (h) 21,648 2,715
Advances to suppliers 9,275 7,542
Tax deposits (d) 6,644 4,769
Refund applications of value added tax (c) 3,643 6,574
Interest receivable 3,244 3,000
Related entities, note 30(b) 126,669 125,487 2,967 3,705
Value added tax credit 96,204 73,145
Claims to third parties 26,705 15,649
Refund application of value added tax (c) 17,037 40,421
Tax deposits (d) 13,479 12,055
Restricted bank accounts (e) 2,087 - 2,510 2,782
Other minors 9,738 11,526

291,919 278,283
Allowance for doubtful accounts (f) (8,963 ) (4,779 )
Dividends receivable 2,501 -
Loans to personnel 1,128 1,392
Account receivables from hedges derivatives - 3,949
Other minor 743 2,738
Allowance for expected credit losses (f) (10,006 ) (10,089 )
172,131 105,607
Total trade and other receivables, net 435,137 382,429 376,227 252,308

Classification by maturity:
Current portion 269,089 219,862 287,712 211,715
Non-current portion 166,048 162,567 88,515 40,593

Total trade and other receivables, net 435,137 382,429 376,227 252,308

Classification by nature:
Financial receivables 319,454 268,863 318,830 196,402
Non-financial receivables 115,683 113,566 57,397 55,906
Total trade and other receivables, net 376,227 252,308

Classification by measurement :
Trade receivables (without provisional prices) 38,550 39,152
Trade receivables (with provisional prices) 165,546 107,549
Other accounts receivables 172,131 105,607
Total trade and other receivables, net 435,137 382,429 376,227 252,308

(b) Trade accounts receivable are denominated in U.S. dollars, are neither due nor impaired, do not yield interest and have no specific guarantees.

Notes to the consolidated financial statements(continued)

(c) ~~This item~~Corresponds mainly ~~corresponds~~ to ~~value added tax~~current year applications that are pending ~~to be refunded~~ as of December 31, 2016. In November 2013, Buenaventura filed claims procedures by S/19,500,000 (equivalent to US$5,817,000), in connection with undue offsets made by the Tax Authorities against tax debts of prior years. As of December 31, 2016, the resolution of the appeal process related to the S/19,500,000 claim is pending for Buenaventura.
~~F-44~~
~~Notes to the consolidated financial statements(continued)~~
In the opinion of the Management and Group’s legal advisors, the tax offset made by the Tax Authorities have no legal support, so there are enough arguments to obtain a favorable outcome in the claim process initiated by Buenaventura.2019.

(d) Corresponds to deposits held in the Peruvian State bank, which only can be used to offset tax obligations that ~~companies~~the Group have with the Tax Authorities.

(e) These balances correspond mainly to collections that are charged into restricted bank accounts that only can be used for the payment of financial obligations held by the subsidiary Empresa de Generación Huanza S.A. (hereafter “Huanza”), according to the finance lease signed with Banco de Crédito del Perú in 2009. Below is presented the movement:
2019 2018 2017
US$(000) US$(000) US$(000)
Beginning balance 2,782 2,372 2,087
Increase 166 410 285
Decrease (438 ) - -

Final balance 2,510 2,782 2,372
(f) Below is presented the movement in the allowance for expected credit losses:
2019 2018 2017
US$(000) US$(000) US$(000)
Beginning balance 32,102 32,184 31,607

Provision for other receivable, note 26 25 1,334 -
Provision for trade receivables, note 24 - 18 676
Provision of the period 25 1,352 676

Write off of the period (162 ) (410 ) -
Exchange difference 57 (173 ) -
Reversals of the period, note 26 - (45 ) (99 )
Other minor - (806 ) -
-
Final balance 32,022 32,102 32,184

Trade receivables 22,016 22,013 22,823
Other receivables 10,006 10,089 9,361

32,022 32,102 32,184
The allowance for expected credit losses of other receivables is related to provisions of accounts receivables to third parties.
In the opinion of the Group’s Management, the balance of the allowance for expected credit losses is sufficient to cover adequately the risks of failure to date of the consolidated statement of financial position.

Notes to the consolidated financial statements(continued)
(g) Corresponds mainly to claims to the Tax Administration mainly with Buenaventura, El Brocal and Rio Seco for US$36.3 million, US$2.5 million and US$3.4 million, respectively. In the opinion of the Group and its legal advisors, a favorable result should be obtained in the judicial process that has been initiated, see note 29(e).

~~(f)~~(h) ~~During~~On September 5, 2019, Consorcio Energético de Huancavelica S.A. entered into a contract for the ~~year 2016,~~sale of energy transmission systems in the ~~Group recorded~~areas of Huancavelica, Trujillo, Cajamarca, Callalli – Ares and Lorema with Conelsur LT S.A.C. for US$4.9 million for provision of the doubtful accounts. In the opinion of the Group’s Management, the balance of the provision for doubtful accounts is sufficient to cover adequately the risks of failure to date of the consolidated statement of financial position.21,023,000.

9.8. ~~Inventory,~~Inventories, net
(a) This caption is made up as follows:

2016 2015
US$(000) US$(000) 2019 2018
US$(000) US$(000)
Finished goods 12,763 12,787 2,084 7,715
Products in process 66,651 87,275
Products in process (b) 47,652 73,796
Spare parts and supplies 63,946 47,912 74,033 81,383
143,360 147,974 123,769 162,894
Provision for impairment of value of inventory (b) (8,386 ) (20,472 )

Provision for impairment of value of inventory (c) (25,402 ) (23,163 )
134,974 127,502 98,367 139,731

Classification by use:
Current portion 120,947 101,473 97,973 135,919
Non-current portion 14,027 26,029 394 3,812
98,367 139,731
134,974 127,502

~~F-45~~(b) Products in process include mainly to mineral in process of El Brocal for 1,592,905 Dried Metric Ton (DMT) amounting to US$31.2 million (2,254,874 DMT amounting to US$39.9 million as of December 31, 2018).
F-53

Notes to the consolidated financial statements~~(continued)~~(continued)
~~Products in process include mineral deposits located in the Tajo Norte mining unit (El Brocal). The detail of this mineral as of December 31, 2016 and 2015 is presented below:~~
2016 2015
US$(000) DMT US$(000) DMT

Type III (lead/zinc) 18,041 1,159,956 31,004 1,848,414
Mining Minerals 203 24,629 - -
Type I and II (copper) - - 73 6,923
18,244 1,184,585 31,077 1,855,337
Provision for impairment of value in mineral classified in process (123 ) - (2,563 ) -

18,121 1,184,585 28,514 1,855,337

Classification by use:
Current portion 5,586 2,485
Non-current portion 12,535 26,029

18,121 28,514
As part of the preparation of the mining unit to extract and process ore at a volume of 18,000 DMT/ day, Management of El Brocal decided to accumulate mineral with metal content in the proximity of the Tajo Norte mine, which has been treated since the first quarter of 2015.

~~(b)~~(c) The provision for impairment of value of inventory had the following movement during the years ~~2016, 2015~~2019, 2018 and ~~2014:~~2017:

2016 2015 2014
US$(000) US$(000) US$(000)

Beginning balance 20,472 7,735 6,647

Transfer from available for sale units 1,448 - -
Changes in provision for impairment of finished goods,
note 22(a) (7,581 ) 13,096 3,262
Changes in provision for impairment of finished goods (discontinued operations), note 1(e) (706 ) (1,474 ) 1,522
Changes in provision for impairment of spare parts and supplies (110 ) 1,115 (3,696 )
Reversal in provision for impairment of inventories (5,137 ) - -

Final balance 8,386 20,472 7,735
2019 2018 2017
US$(000) US$(000) US$(000)
Beginning balance 23,163 11,603 8,386

Continuing operations:
Provision for impairment of finished and in progress goods, note 21(a) 7,329 4,640 2,118
Reversal for impairment of finished and in progress goods, note 21(a) (9,472 ) (119 ) -
Provision for impairment of spare parts and supplies, note 26(a) 15,703 11,704 4,814
Reversal for impairment of spare parts and supplies, note 26(a) (11,641 ) (4,665 ) (2,370 )

Discontinued operations, note 1(e):
Provision for impairment of spare parts and supplies 843 - -
Reversal for impairment of spare parts and supplies (523 ) - (1,345 )

Final balance 25,402 23,163 11,603

In the opinion of Group’s Management, the provision for impairment of value of inventory adequately covers this risk as of the date of the consolidated statements of financial position.

~~F-46~~
~~Notes to the consolidated financial statements(continued)~~
~~10.~~9. Prepaid expenses
(a) This caption is made up as follows:

2016 2015 2019 2018
US$(000) US$(000) US$(000) US$(000)

Prepaid rentals (b) 29,879 29,235
Prepaid energy services(b) 26,582 27,464
Prepaid insurances 6,055 3,471 13,568 12,486
Deferred royalties and rentals of mining concessions 2,377 463
Deferred costs of works for taxes 1,801 1,801 4,138 2,407
Other prepaid expenses 1,711 2,496 2,373 1,366

41,823 37,466 46,661 43,723

Classification by maturity:
Current portion 11,392 8,231 20,969 17,145
Non-current portion 30,431 29,235 25,692 26,578
46,661 43,723
41,823 37,466

(b) This item corresponds mainly to paid in advance to EDEGEL for an original amount of US$31,007,190 corresponding to the ~~balance~~right to use the capacity of ~~an original prepayment~~the hydraulic system of ~~US$31 million for the lease of hydraulic installations~~EDEGEL by the subsidiary Empresa de ~~Generacion~~Generación Huanza S.A. This prepayment is being charged to results during the life of the underlying assets (35 years). since January 2015.

~~11.~~ ~~Investments in associates~~

Notes to the consolidated financial statements(continued)
10.       Investments in associates and joint ventures
(a) This caption is made up as follows:

Share in equity Share in equity
2016 - 2015 2016 2015 2019 2018 2019 2018
% US$(000) US$(000) % % US$(000) US$(000)

Associates
Sociedad Minera Cerro Verde S.A.A. 19.584 1,055,488 988,725 19.58 19.58 1,155,359 1,108,284
Minera Yanacocha S.R.L. 43.65 402,866 989,130 43.65 43.65 230,000 271,036
Compañía Minera Coimolache S.A. 40.095 74,734 62,609 40.10 40.10 98,426 89,554
1,483,785 1,468,874
Joint venture (c) 2,627 2,673
Other minor investments 3,519 3,519 1,835 1,835

1,536,607 2,043,983 1,488,247 1,473,382

(b) The table below presents the net share in profit (loss) of ~~associates:~~investments:

2016 2015 2014
US$(000) US$(000) US$(000)

Sociedad Minera Cerro Verde S.A.A. 66,763 6,518 77,891
Compañía Minera Coimolache S.A. 23,514 16,617 22,256
Minera Yanacocha S.R.L. (455,598 ) (196,510 ) (174,747 )

(365,321 ) (173,375 ) (74,600 )
~~F-47~~
~~Notes to the consolidated financial statements(continued)~~
2019 2018 2017
US$(000) US$(000) US$(000)
Minera Yanacocha S.R.L. (41,580 ) (35,582 ) (76,585 )
Sociedad Minera Cerro Verde S.A.A. 76,451 23,444 68,521
Compañía Minera Coimolache S.A. 12,883 10,994 21,271
Other minor (44 ) - -
47,710 (1,144 ) 13,207

Investments held by the Group in its associates Minera Yanacocha S.R.L. (through its subsidiary Compañía Minera Condesa S.A.) and Sociedad Minera Cerro Verde S.A.A., represent the most significant investments of the Group. Its operations are strategic to the Group's activities and participation in their results has been ~~important~~significant in relation to profits (losses) of the Group in the years ~~2016, 2015~~2019, 2018 and ~~2014.~~2017. The following relevant information on these investments is as follows:

Investment in Minera Yanacocha S.R.L.-
The ~~Company,~~Group, through its subsidiary Compañía Minera Condesa S.A., has an interest of 43.65 percent of Minera Yanacocha S.R.L. (hereinafter “Yanacocha”). Yanacocha is engaged in gold production and exploration and development of gold and copper in their own concessions or owned by S.R.M.L. Chaupiloma Dos de Cajamarca (subsidiary of the Group), with which signed a contract of use of mineral rights.

~~During~~The Quecher Main project of Yanacocha, an oxide deposit, is currently in its Execution Phase. This project extends the ~~last several years,~~life of the Yanacocha ~~has been developing~~operation until 2027, with average annual gold production of 200,000 ounces per year expected between 2020 and 2025. The Yanacocha Sulfides project is currently in its Definitive Feasibility Stage. In March of 2019, the Environmental Impact Assessment study was approved.

Notes to the consolidated financial statements(continued)
In addition, Yanacocha owns the Conga project which consists in two deposits of gold and porphyry of copper located at northeast of ~~the~~ Yanacocha operating area in the provinces of Celendín, Cajamarca and Hualgayoc (Peru).

Because of local communities and political protests for potential water impacts of the project development activities and construction, the projects are suspended since November 2011. To date, Yanacocha’s management has been making only water support activities recommended by independent experts, mainly the construction of water reservoirs, before carrying out any development project.

In December 2017, Yanacocha acquired 63.92 million of shares (share of 5%) held by International Finance Corporation (IFC) in Yanacocha, for an amount of US$47.9 million. In June 2018, Sumitomo Corporation (Sumitomo) paid US$48 million for the five percent stake in the ownership interest in Yanacocha for the proportion held prior to the repurchase of the IFC’s ownership stake in December. As a result of that acquisition, the Company recognized a lower value with respect to Yanacocha's equity participation.
On February 6, 2020, the Supreme Court resolution was published, whereby Yanacocha received notification of an unfavorable result in the Tax Dispute related to the amortization of contractual rights (see note 29(e)) for which Yanacocha recorded a liability in term of tax payable for US$8.1 million and recorded interests and penalties for US$21.0 million in its financial statements as of December 31, 2019.
The table below presents key financial data from the financial statements of Yanacocha under IFRS:

2016 2015
US$(000) US$(000) 2019 2018
US$(000) US$(000)
Statements of financial position as of December 31:
Current assets 1,107,893 1,345,682 1,060,455 960,758
Non-current assets 937,992 1,619,748 1,251,617 1,086,714
Current liabilities (135,136 ) (132,557 ) (190,577 ) (128,170 )
Non-current liabilities (1,025,025 ) (604,048 ) (1,631,783 ) (1,335,579 )
Shareholders’ equity, reported 885,724 2,228,825

Groups’ interest (43.65%) 386,618 972,882
Equity 489,712 583,723

Groups’ interest 213,759 254,795
Goodwill 16,248 16,248 16,241 16,241

402,866 989,130 230,000 271,036

~~F-48~~

Notes to the consolidated financial statements~~(continued)~~(continued)

2016 2015 2014
US$(000) US$(000) US$(000)

Statements of profit or loss as of December 31,
Net sales 761,193 1,031,174 1,165,299
Other operating income 17,713 10,625 30,300
Costs of sales (776,394 ) (751,736 ) (920,300 )
Cost of other operating income (2,951 ) (2,524 ) (22,422 )
Operating expenses (71,496 ) (82,846 ) (77,781 )
Administrative expenses (8,780 ) (26,325 ) (38,262 )
Selling expenses (3,695 ) (3,534 ) (4,458 )
Impairment loss of long-lived assets (889,499 ) - (541,141 )
Finance income (costs) (12,975 ) (22,061 ) (23,206 )
Gain (loss) from currency exchange difference (13,741 ) (251 ) 1,142
Income (loss) before income tax (1,000,625 ) 152,522 (430,829 )
Income tax (43,127 ) (602,717 ) 30,491
Net loss reported (1,043,752 ) (450,195 ) (400,338 )
Group’s interest (43.65%) (455,598 ) (196,510 ) (174,748 )
2019 2018 2017
US$(000) US$(000) US$(000)
Statements of profit or loss for the years ended December 31:
Revenue 739,302 657,358 667,046

Loss for the year (95,257 ) (81,517 ) (175,454 )

Share in results (41,580 ) (35,582 ) (76,585 )

During the ~~year 2016, Yanacocha~~Yanacocha’s Management identified as an impairment ~~indicators~~indicator the significant increase of the asset retirement and mine closure, as a result ofYanacocha determined the ~~increase in the asset retirement obligations of US$352 million as~~recoverable amount for its CGU Yanacocha. Regarding to CGU Conga, Yanacocha did not identify any important indicator. As a result of this analysis Yanacocha concluded that no additional impairment loss on CGU Yanacocha was required to be recorded as the ~~update~~recoverable amount exceeded the carrying amount of the CGU’s assets.
During 2018, the Yanacocha´s Management evaluated and concluded that there are no indicators of impairment of its ~~related obligation. Due to this, Yanacocha evaluated~~long-lived assets.
In addition, the recoverability of long lived assets and determine an impairment loss, net of taxes, of US$889.5 million, which reduced Yanacocha´s net equity and therefore, the equity participation of the Group in this associate in 2016. During 2015,Group’s management determined that there was no ~~impairment losses, but~~objective evidence that its investment in ~~2014~~ Yanacocha ~~recorded impairment charges of its long-lived assets, net of tax, of US$378.8 million.~~
~~In December 2015, Yanacocha recorded charges for deferred income tax recoverability by US$510 million since Management considers that~~ is ~~not probable that taxable profit will be available to compensate against the deductible temporary differences.~~
~~During 2016, Yanacocha agreed unanimously the distribution to the partners, in proportion to its social share, of US$300 million, which correspond to the portion of the retained earnings~~impaired as of December 31, ~~2014, originated in 2011.~~2019 and 2018.

Investment in Sociedad Minera Cerro Verde S.A.A. (Cerro Verde) -
Cerro Verde is engaged in the extraction, production and marketing of cathodes and copper concentrate from its mining unit that is located in Uchumayo, Arequipa, Peru.

~~F-49~~
~~Notes to the consolidated financial statements(continued)~~
The table below presents the key financial data from the financial statements of Cerro Verde under IFRS:

2016 2015
US$(000) US$(000) 2019 2018
US$(000) US$(000)
Statements of financial position as of December 31:
Current assets 1,218,508 1,056,525 1,614,928 1,455,080
Non-current assets 6,417,115 6,796,167 6,194,496 6,099,632
Current liabilities (293,631 ) (548,517 ) (420,786 ) (408,754 )
Non-current liabilities (2,502,711 ) (2,805,801 ) (2,039,389 ) (2,037,086 )

Shareholders’ equity, reported 4,839,281 4,498,374
Equity 5,349,249 5,108,872

Group’s interest (19.584%) 947,725 880,962
Group’s interest 1,047,596 1,000,521
Goodwill 107,763 107,763 107,763 107,763

1,055,488 988,725 1,155,359 1,108,284

Notes to the consolidated financial statements(continued)
2019 2018 2017
US$(000) US$(000) US$(000)
Statements of comprehensive income December 31:

Sales 2,890,066 3,054,026 3,202,931

Net profit for the year 390,377 119,710 349,881

Share in results 76,451 23,444 68,521

2016 2015 2014
US$(000) US$(000) US$(000)

Statements of profit or loss for the years ended December 31:
Revenue 2,384,154 1,115,617 1,467,097
Cost of sales (1,553,040 ) (862,004 ) (797,481 )
Sales expenses (131,391 ) (56,215 ) (54,210 )
Other operating income (expenses) (24,107 ) (26,600 ) (3,629 )
Finance costs (80,438 ) (16,010 ) (369 )
Finance income 954 512 2,443
Net gain (loss) of exchange difference 7,857 (75,770 ) 2,284

Profit before income taxes 603,989 79,530 616,135
Income tax (263,082 ) (46,246 ) (238,529 )

Net profit, reported 340,907 33,284 377,606
Adjustments to conform to the accounting policies of the Group - - 20,124

Net profit, adjusted 340,907 33,284 397,730

Group’s interest (19.584%) 66,763 6,518 77,891
Market capitalization:
As of December 31, ~~2016~~2019 and ~~2015,~~2018, total market capitalization of shares maintained by the Group in Cerro Verde was US$~~1,311.3~~1,323 million and US$~~994.0~~1,426 million, respectively (market capitalization value by each share of US$~~19.11~~19.30 and US$~~14.50,~~20.80, respectively).

~~F-50~~
~~Notes to the consolidated financial statements(continued)~~
Investment in Compañía Minera Coimolache S.A. (Coimolache) -
Coimolache is involved in the production and the sales of gold and silver from its open-pit mining unit located in Cajamarca, Peru.

The table below presents the key financial data from the financial statements of Coimolache under IFRS:

2016 2015 2019 2018
US$(000) US$(000) US$(000) US$(000)
Statements of financial position as of December 31:
Current assets 73,480 62,727 145,692 99,887
Non-current assets 261,075 185,665 234,223 261,782
Current liabilities (28,532 ) (26,775 ) (34,028 ) (39,204 )
Non-current liabilities (102,519 ) (46,562 ) (91,069 ) (86,103 )

Shareholders’ equity, reported 203,504 175,055
Equity 254,818 236,362

Adjustments to conform to the accounting policies of the Group (17,111 ) (18,900 ) (9,330 ) (13,003 )

Shareholders’ equity, adjusted 186,393 156,155
Equity, adjusted 245,488 223,359

Group’s interest (40.095%) 74,734 62,610
Group’s interest 98,426 89,554

2016 2015 2014
US$(000) US$(000) US$(000)
Statements of profit or loss for the years ended December 31:
Revenue 198,873 177,347 192,369
Cost of sales (107,913 ) (104,549 ) (100,649 )
Administrative expenses (4,144 ) (2,185 ) (2,073 )
Sales expenses (1,128 ) (1,111 ) (1,077 )
Other operating income (expenses) 755 765 929
Finance income 38 23 47
Finance costs (1,614 ) (723 ) (583 )
Exchange difference (117 ) (1,300 ) (1,465 )

Profit before income taxes 84,750 68,267 87,498
Income tax (27,894 ) (29,861 ) (36,090 )

Net profit, reported 56,856 38,406 51,408

Adjustments to conform to the accounting policies of the Group 1,790 3,039 4,099

Net profit, adjusted 58,646 41,445 55,507

Group’s interest (40.095%) 23,514 16,617 22,256
2019 2018 2017
US$(000) US$(000) US$(000)
Statements of profit or loss for the years ended December 31:
Net sales 241,173 225,447 203,790

Net income from continued operations 28,459 25,584 50,787

Adjustments to conform to the accounting policies 3,674 1,837 2,265

Net income, adjusted 32,133 27,421 53,052

Share in results 12,883 10,994 21,271

~~F-51~~

Notes to the consolidated financial statements(continued)
(c) The Group, through its subsidiary El Brocal, has an interest of 8 percent in Transportadora Callao S.A., a joint venture whose objective was the construction of a fixed conveyor belt of minerals and deposits in the Port of Callao. On May 2014, Transportadora Callao started operations and currently its main activity is the operation of that terminal.
The table below presents the key financial data from the joint venture under IFRS:
2019 2018
US$(000) US$(000)
Current assets 11,090 17,653
Non-current assets 100,106 107,175
Liabilities 88,608 101,575
Shareholders’ equity, reported 22,588 23,253

Net loss from continued operations (665 ) (1,814 )

Notes to the consolidated financial statements(continued)

11. ~~12.~~ Mining concessions, development costs, right-of-use asset, property, plant and equipment, net
(a) Below is presented the ~~movement in cost:~~movement:

Balance as of
January 1, 2015 Additions Disposals Sales Transfers Balance as of
December 31,
2015 Additions Disposals Sales Reclassifications
of assets
available for sale Reclassifications
and transfers Balance as of
December 31,
2016
Balance as of
January 1,
2018
Additions Disposals Sales Reclassifications and transfers
Balance as of
December 31, 2018
Additions Disposals Sales Reclassifications and transfers Implementation IFRS 16
Balance as of
December 31, 2019

US$(000) US$(000) US$(000) US$(000) US$(000) US$(000) US$(000) US$(000) US$(000) US$(000) US$(000) US$(000) US$(000) US$(000) US$(000) US$(000) US$(000) US$(000) US$(000) US$(000) US$(000) US$(000) US$(000) US$(000)

Cost
Cost:
Lands 22,001 2,293 (1,892 ) - 52 22,454 162 - (6 ) 78 270 22,958 22,690 783 (462 ) - (1,250 ) 21,761 630 - (135 ) (4,739 ) - 17,517
Mining concessions 198,009 - - - - 198,009 - - - - - 198,009
Mining concessions (f) 151,873 - - - - 151,873 - - - - - 151,873
Development costs 531,457 62,765 - - (52,459 ) 541,763 82,865 - - 31,192 (3,428 ) 652,392 712,051 32,059 (2,656 ) - 1,805 743,259 46,047 (443 ) - (819 ) - 788,044
Buildings, constructions and other 998,191 1,715 (1,690 ) (168 ) 20,908 1,018,956 581 - (20 ) 10,458 79,192 1,109,167 1,279,251 - (2,837 ) - 66,207 1,342,621 39 (3,559 ) (5,380 ) 26,120 - 1,359,841
Machinery and equipment 750,083 29,550 (887 ) (3,799 ) 52,278 827,225 46,152 (6,569 ) (2,844 ) 9,425 112,643 986,032 929,023 - (182 ) (9,205 ) 38,830 958,466 12 (30,235 ) (38,322 ) 22,783 - 912,704
Transportation units 10,950 491 (245 ) (990 ) 443 10,649 174 (341 ) (396 ) 357 (27 ) 10,416 9,946 42 (138 ) (510 ) 1,545 10,885 33 (540 ) (1,856 ) 370 - 8,892
Furniture and fixtures 13,025 137 (25 ) (84 ) 376 13,429 89 (61 ) (88 ) 359 319 14,047 13,902 - - (193 ) (403 ) 13,306 2 (1,310 ) (1 ) 13 - 12,010
Units in transit 11,836 15,212 (113 ) - (644 ) 26,291 15,797 - - - (12,037 ) 30,051 4,749 11 - - (2,078 ) 2,682 - (1 ) - 1,073 - 3,754
Work in progress 57,920 81,333 - - (71,130 ) 68,123 210,915 (352 ) - 1,037 (173,935 ) 105,788 101,122 67,096 (3,450 ) - (108,106 ) 56,662 44,319 (1,168 ) (78 ) (49,370 ) - 50,365
Stripping activity asset 85,721 17,790 - - 3,327 106,838 17,631 - - - (2 ) 124,467 130,447 11,279 - - - 141,726 11,545 - - 819 - 154,090
Right-of-use asset (e) - - - - - - 3,721 (10,897 ) - - 18,528 11,352
Mine closure costs 64,086 76,799 (2,414 ) - 49,132 187,603 34,532 - - 25,754 - 247,889 241,288 61,239 - - (18,365 ) 284,162 26,722 - - - - 310,884
2,743,279 288,085 (7,266 ) (5,041 ) 2,283 3,021,340 408,898 (7,323 ) (3,354 ) 78,660 2,995 3,501,216 3,596,342 172,509 (9,725 ) (9,908 ) (21,815 ) 3,727,403 133,070 (48,153 ) (45,772 ) (3,750 ) 18,528 3,781,326

Accumulated depreciation and amortization:
Mining lands - - - - - - - - - - - -
Mining concessions 77,396 54 - - - 77,450 16 - - - - 77,466
Lands 1,249 - - - (1,249 ) - - - - - - -
Mining concessions (f) 40,239 10 - - - 40,249 10 - - - - 40,259
Development costs 184,278 49,771 - - (34,838 ) 199,211 18,225 - - 25,596 (1,396 ) 241,636 263,122 35,433 - - (2 ) 298,553 29,964 - - - - 328,517
Buildings, construction and other 314,045 69,353 (1,915 ) (81 ) 39 381,441 65,050 - (9 ) 8,598 598 455,678 506,837 84,244 - - 562 591,643 83,274 (3,391 ) (3,569 ) (638 ) - 667,319
Machinery and equipment 399,761 77,546 (277 ) (1,941 ) 852 475,941 81,753 (5,378 ) (827 ) 6,640 (68 ) 558,061 582,449 93,722 (177 ) (8,659 ) (1,978 ) 665,357 66,020 (28,619 ) (35,459 ) 638 - 667,937
Transportation units 7,276 1,385 (221 ) (916 ) 408 7,932 1,103 (250 ) (365 ) 358 14 8,792 8,390 745 (85 ) (436 ) (15 ) 8,599 744 (538 ) (1,779 ) - - 7,026
Furniture and fixtures 6,321 1,252 (87 ) (66 ) 157 7,577 1,156 (60 ) (22 ) 319 202 9,172 9,880 644 - (187 ) (214 ) 10,123 653 (1,172 ) - - - 9,604
Stripping activity asset 6,482 6,434 - - - 12,916 5,813 - - - - 18,729 41,695 28,820 - - 3 70,518 18,405 - - - - 88,923
Right-of-use asset (e) - - - - - - 7,778 (2,611 ) - - - 5,167
Mine closure costs 32,268 33,381 (491 ) - 34,835 99,993 22,417 - - 19,335 (470 ) 141,275 158,121 10,350 - - - 168,471 15,373 - - - - 183,844
1,027,827 239,176 (2,991 ) (3,004 ) 1,453 1,262,461 195,533 (5,688 ) (1,223 ) 60,846 (1,120 ) 1,510,809 1,611,982 253,968 (262 ) (9,282 ) (2,893 ) 1,853,513 222,221 (36,331 ) (40,807 ) - - 1,998,596

Provision for impairment of long-lived assets
Mining concessions - 3,345 - - - 3,345 - - - - - 3,345
Property, plant and equipment - 27 - - - 27 - - - 6,533 - 6,560
Provision for impairment of long-lived assets:
Mine closure costs 20,121 - (5,693 ) - (1,221 ) 13,207 2,083 - - - - 15,290
Development costs - 3,803 - - - 3,803 - - - 5,684 - 9,487 10,153 - - - - 10,153 - - - - - 10,153
Mine closure costs - 4,080 - - - 4,080 - - - 6,910 - 10,990
Property, plant and other 4,531 - (2,837 ) - 1,221 2,915 - - - - - 2,915
- 11,255 - - - 11,255 - - - 19,127 - 30,382 34,805 - (8,530 ) - - 26,275 2,083 - - - - 28,358

Net cost 1,715,452 1,747,624 1,960,025 1,949,555 1,847,615 1,754,372

~~F-52~~

Notes to the consolidated financial statements(continued)

(b) Impairment of long-lived assets
In
In accordance with its accounting policies and processes, each asset or CGU is evaluated annually at ~~year end,~~year-end, to determine whether there are any indications of impairment. If any such indications of impairment exist, a formal estimate of the recoverable amount is performed.

In assessing whether impairment is required, the carrying value of the asset or CGU is compared with its recoverable amount. The recoverable amount is the higher of the CGU’s fair value less costs of disposal (FVLCD) and value in use (VIU). Given the nature of the Group’s activities, information on the fair value of an asset is usually difficult to obtain unless negotiations with potential purchasers or similar transactions are taking place. Consequently, the recoverable amount for each CGU is estimated based on discounted future estimated cash flows expected to be generated from the continued use of the CGUs using market based commodity price and exchange assumptions, estimated quantities of recoverable minerals, production levels, operating costs and capital requirements, and its eventual disposal, based on the latest life of mine (LOM) plans. These cash flows were discounted using a real ~~pre-tax~~post-tax discount rate that reflected current market assessments of the time value of money and the risks specific to the CGU.

The estimates of quantities of recoverable minerals, production levels, operating costs and capital requirements are obtained from the planning process, including the LOM plans, one-year budgets and CGU-specific studies.

During 2019, Buenaventura recorded a provision for US$2.1 million as a result of the analysis of the recoverable amount of its Julcani mining unit. The main factors considered in the impairment analysis were reserves and mining useful lives. As a result of the analysis of the recoverable amount ~~analysis performed~~ as of December 31, ~~2015,~~2019, La Zanja has not recognized a provision or recovery for impairment of long-lived assets.
During 2018, as a result of derecognition of assets in Shila mining unit, Buenaventura recorded a reversal in the ~~Group recognized~~provision for impairment ~~losses related to mine properties~~for US$2.8 million previously recorded in 2016. In addition, La Zanja recorded a reversal for the ~~mining operating unit of~~impairment provision for US$5.7 million (during 2017, La Zanja recorded a provision for US$~~3,803,000~~21.6 million) as a result of the analysis of the recoverable amount. The main factors considered in the impairment analysis were reserves and mining useful lives. The recoverable amounts of La Zanja are based in Managements estimations of the value in use.
During 2017, as a result of the sale of the mining units of Breapampa ~~for US$7,452,000 (US$794,000~~and Recuperada, as well as the sale of ~~December 31, 2014). During 2016,~~the assets of the Shila Paula mining unit, the Group recorded ana reversal of impairment ~~loss related to Shila-Paula mining unit for~~losses by US$~~2,043,000.~~7.4 million, US$7.1 million and US$2.7 million, respectively, see note 1(e).

Key assumptions
The determination of value in use is most sensitive to the following key assumptions:

-– Production volumes
-– Commodity prices
-– Discount rate
– Costs

Notes to the consolidated financial statements(continued)

Production volumes: Estimated production volumes are based on detailed life-of-mine plans and take into account development plans for the mines agreed by management as part of planning process. Production volumes are dependent on a number of variables, such as: the recoverable quantities; the production profile; the cost of the development of the infrastructure necessary to extract the reserves; the production costs; the contractual duration of mining rights; and the selling price of the commodities extracted.
~~F-53~~
~~Notes to the consolidated financial statements(continued)~~

As each producing mining unit has specific reserve characteristics and economic circumstances, the cash flows of the mines are computed using appropriate individual economic models and key assumptions established by management. The production profiles used were consistent with the reserves and resource volumes approved as part of the Group’s process for the estimation of proved and probable reserves and resource estimates.

Commodity prices: Forecast commodity prices are based on management’s estimates and are derived from forward price curves and long-term views of global supply and demand, building on ~~past~~ experience of the industry and consistent with external sources. These prices were adjusted to arrive at appropriate consistent price assumptions for the different qualities and type of commodities, or, where appropriate, contracted prices were applied. These prices are reviewed at least annually.

Estimates prices for the current and long-term periods that have been used to estimate future ~~revenues~~cash flows are as follows:

2017 2018 2019 2020
US$ US$ US$ US$

Gold 1,288.00 /Oz 1,313.00 /Oz 1,291.00 /Oz 1,291.00 /Oz
Silver 18.50 /Oz 19.50 /Oz 19.40 /Oz 19.40 /Oz
Copper 5,200.00 /MT 5,633.00 /MT 6,000.00 /MT 6,000.00 /MT
Lead 2,000.00 /MT 2,134.00 /MT 2,150.00 /MT 2,150.00 /MT
Zinc 2,360.00 /MT 2,500.00 /MT 2,444.00 /MT 2,444.00 /MT
2020 2021-2025
US$ US$
Gold 1,500/Oz 1,500/Oz
Silver 17.00/Oz 18.40/Oz
Copper 6,000/MT 6,600/MT
Lead 1,950/MT 2,100/MT
Zinc 2,250/MT 2,300/MT

Discount rate: In calculating the value in use, a ~~pre-tax~~ discount rate after tax of ~~8.3% was~~4.88%,7.02% and5.15% (equivalent topre-taxrate of 6.92%, 9.95% and 7.31%)were applied to the ~~pre-tax~~post-tax cash ~~flows. This~~flows of Buenaventura, El Brocal and La Zanja, respectively.These discount ~~rate is~~rates are derived from the Group’s post-tax weighted average cost of capital (WACC), with appropriate adjustments made to reflect the risks specific to the CGU. The WACC takes into account both debt and equity. The cost of equity is derived from the expected return on investment by the Group’s investors. The cost of debt is based on its interest bearing borrowings the Group is obliged to service. The ~~beta~~Beta factors are evaluated annually based on publicly available market data.

Notes to the consolidated financial statements(continued)

(c) The book value of assets held under finance leases, and assets under trustworthy equity, amounted to US$~~218,558,000~~313.3 million as of December 31, ~~2016~~2019 (US$~~226,429,000~~337.3 million as of December 31, ~~2015)~~2018) and is presented in various items of property, plant and equipment.~~No additions occurred during 2016 (US$262,000 during 2015).~~ During 2019 and 2018, no acquisitions of assets under lease agreements were made. Leased assets are pledged as security for the related finance lease liabilities.

(d) ~~The amount of capitalized~~During 2019 and 2018, no finance costs ~~during the year~~ ~~2016wasUS$7,531,000 (US$1,307,000during the year2015)and is presented under investing activities in the consolidated statements of cash flows~~.~~The average rate used to determine the financial cost to be capitalized was~~ ~~3.52percent during the year2016.~~were capitalized.

(e) Right-of-use assets
The net assets for right in use maintained by the Group correspond:
~~F-54~~ 2019
US$(000)
Right in use assets
Buildings 4,602
Transportation units 1,112
Machinery and equipment 471
6,185

During 2019, the additions to the right-of-use assets were US$3.7 million and the disposals were US$10.9 million.
(f) Mining concessions includes the goodwill of El Brocal amounted to US$34.0 million.
(g) In mid-2016, a landslide occurred in the west wall of the Tajo Norte; consequently, it was decided not to mine this area due to stability and operational design issues. According to the distribution of reserves, this area (Phase 10) contained 5.5 MT of ore and 9.2 MT of waste valued at US$13,573,000, which were withdrawn from the reserves in the year 2017.

Notes to the consolidated financial statements(continued)
12.          Other assets, net

~~13.~~(a) ~~Investment properties, net~~Below is presented the movement:
Balance as of
January 1,
2018 Additions Transfers Balance as of
December 31,
2018 Additions Disposals Balance as of
December 31,
2019
US$(000) US$(000) US$(000) US$(000) US$(000) US$(000) US$(000)
Cost:
Patents and industrial property (b) 13,680 2,642 (4,599 ) 11,723 2,139 - 13,862
Rights-of-use of lands right of way 7,853 4,439 - 12,292 1,319 - 13,611
Software licenses
8,816 1,448 (96 ) 10,168 242 (92 ) 10,318

30,349 8,529 (4,695 ) 34,183 3,700 (92 ) 37,791
Accumulated amortization:
Rights-of-use 5,210 738 - 5,948 1,486 - 7,434
Software licenses 2,378 596 - 2,974 820 (112 ) 3,682

7,588 1,334 - 8,922 2,306 (112 ) 11,116

Cost net 22,761 25,261 26,675
(b) The copper plant project is a technological initiative of the Company to develop a viable technical and economic solution for the treatment of complex copper concentrates. This project comprises several stages of development from a laboratory level, pilot to a demonstration stage.
13. Bank loans
The movement ~~of cost and accumulated depreciation for the years 2016 and 2015~~ is presented below:

Balance as of
January 1,
2015 Addition
(reversal) Balance as of
December 31,
2015 Addition
(reversal) Balance as of
December 31,
2016
US$(000) US$(000) US$(000) US$(000) US$(000)

Cost:
Administrative offices 12,103 - 12,103 (92 ) 12,011
Accumulated depreciation:

Administrative offices (903 ) (481 ) (1,384 ) (538 ) (1,922 )

Net cost 11,200 10,719 10,089
2019 2018 2017
US$(000) US$(000) US$(000)
Beginning balance 95,000 96,215 55,000

New loans 55,000 95,000 341,215
Disbursements (95,000 ) (95,000 ) (300,000 )
Sale of subsidiary - (1,215 ) -

Final balance 55,000 95,000 96,215

~~The Group does not have restrictions in the realization of its investment properties.~~
~~During 2016 and 2015, the fair value of the investment property amounted to S/76,495,466 and S/102,330,233, respectively (approximately US$22.8 million and US$30.4 million, respectively).~~
~~14.~~ ~~Bank loans~~
As of December 31, ~~2016, the Group maintains~~2019 and 2018, bank loans ~~amounting to US$55 million which~~ were obtained for working capital purposes, have current maturity and accrue interest at market annual rates ranging from ~~1.92%~~2% to ~~4.14%.~~
~~As of December 31, 2015, the Group maintains bank loans amounting to US$285.3 million, which accrue interest at market annual rates ranging from 1.32% to 5.61%. A portion of the loans held~~2.95% as of December 31, ~~2015 were repaid with the financial obligations detailed in note 17(b)~~2019 (2.00% to 3.13% as of December 31, 2018).

~~F-55~~

Notes to the consolidated financial statements(continued)

~~15.~~14. Trade and other payables
(a) This caption is made up as follows:

2016 2015
US$(000) US$(000) 2019 2018
US$(000) US$(000)
Trade payables (b)
Domestic suppliers 232,745 209,107 131,278 154,998
Related entities, note 30(b) 1,372 1,175 29 36
131,307 155,034
234,117 210,282

Other payables
Taxes payable 16,708 9,320 12,043 9,102
Accounts payable to non-controlling interests 15,661 15,403
Remuneration and similar benefits payable 9,796 10,409 11,522 10,531
Interest payable 5,318 7,464
Royalties payable to the Peruvian State 3,670 2,103 2,132 2,171
Dividends payable 1,018 1,044
Dividends payable (c) 604 663
Related entities, note 30(b) 3 - 51 20
Other liabilities 8,449 13,610 3,883 3,738
55,305 51,889 35,553 33,689

289,422 262,171
Total trade and other payables 166,860 188,723

Classification by maturity:
Current portion 273,440 247,114 166,244 188,084
Non-current portion 15,982 15,057 616 639

Total trade and other payables 289,422 262,171 166,860 188,723

Classification by nature:
Financial payables 269,044 250,748 152,686 177,450
Non-financial payables 20,378 11,423 14,174 11,273

Total trade and other payables 289,422 262,171 166,860 188,723

~~(a)~~(b) Trade payables arise mainly from the acquisition of material, supplies and spare parts and services provided by third parties. These obligations have current maturities, accrue no interest and are not ~~secured.~~secure.

~~F-56~~

Notes to the consolidated financial statements(continued)
(c) The movement of dividends payable is presented below:
2019 2018 2017
US$(000) US$(000) US$(000)
Beginning balance 663 730 1,018
Declared dividends to controlling shareholders, note 17(d) 22,098 22,860 22,099
Dividends paid to controlling shareholders (22,098 ) (22,860 ) (22,099 )
Declared dividends to non-controlling shareholders 6,500 5,560 6,036
Dividends paid to non-controlling shareholders (6,500 ) (5,560 ) (6,036 )
Expired dividends (53 ) (44 ) (327 )
Other minor (6 ) (23 ) 39

Final balance 604 663 730

~~16.~~15. Provisions, contingent liabilities and other liabilities
(a) This caption is made up as follows:

2016 2015
US$(000) US$(000)

Provision for closure of mining units and exploration projects (b) 206,462 166,403
Workers’ profit sharing payable 8,398 894
Provision for environmental liabilities 7,324 8,373
Provision for obligations with communities 4,710 2,883
Provision for labor contingencies 3,395 3,611
Provision for safety contingencies 2,807 6,346
Board of Directors’ participation 1,140 993
Provision for environmental contingencies 753 1,259
Stock appreciation rights 588 330
Other provisions 1,115 622

236,692 191,714
Classification by maturity:
Current portion 62,502 49,829
Non-current portion 174,190 141,885

236,692 191,714
As of January 1, 2019 Changes (additions and deductions) Accretion expense Disbursements As of December 31, 2019
US$(000) US$(000) US$(000) US$(000) US$(000)
Closure of mining units and exploration projects (b) 225,877 32,654 10,656 (16,882 ) 252,305
Bonus to employees and officers 18,620 15,855 - (15,249 ) 19,226
Environmental liabilities 3,768 3,944 - (1,407 ) 6,305
Safety contingencies 4,877 1,270 - (942 ) 5,205
Labor contingencies 4,042 (258 ) - (7 ) 3,777
Obligations with communities 5,878 1,306 - (3,675 ) 3,509
Board of Directors’ participation 2,108 1,736 - (2,250 ) 1,594
Environmental contingencies 234 1,343 - (77 ) 1,500
Workers’ profit sharing payable 1,772 (7 ) - (1,696 ) 69
Other provisions 758 259 - - 1,017
267,934 58,102 10,656 (42,185 ) 294,507

Classification by maturity:
Current portion 68,172 72,771
Non-current portion 199,762 221,736
267,934 294,507

Notes to the consolidated financial statements(continued)

(b) Provision for closure of mining units and exploration projects -
The table below presents the movement of the provision for closure of mining units and exploration projects:

2016 2015
US$(000) US$(000)

Beginning balance 166,403 103,010
Transfer from available for sale units 15,851 -
Changes and additions in estimates (discontinued operations), note 1(e) 3,365 -
Accretion expense (discontinued operations), note 1(e) 970 45
Changes and additions in estimates (continued operations), note 12(a) 34,532 74,907
Accretion expense (continued operations), note 27 4,116 3,298
Disbursements (18,775 ) (14,857 )

Final balance 206,462 166,403

Classification by maturity:
Current portion 37,405 31,196
Non-current portion 169,057 135,207

206,462 166,403
~~F-57~~
~~Notes to the consolidated financial statements(continued)~~
2019 2018
US$(000) US$(000)
Beginning balance 225,877 200,183

Changes (additions and deductions) in estimates
Continuing mining units, note 11(a) 26,722 42,874
Discontinued mining units, note 1(e) 1,912 6,013
Exploration projects, note 26(a) 4,020 (2,433 )

Accretion expense
Continuing mining units, note 27(a) 10,266 4,911
Discontinued mining units, note 1(e) 266 88
Exploration projects, note 26(a) 124 71

Disbursements (16,882 ) (25,830 )

Final balance 252,305 225,877

Classification by maturity:
Current portion 35,280 30,524
Non-current portion 217,025 195,353

252,305 225,877

The provision for closure of mining units and exploration projects represents the present value of the closure costs that are expected to be incurred between the years ~~2017~~2020 and ~~2039. These estimates are~~2041. The Group recognizes the provision of closure of mining units and explorations projects based on estimates of studies ~~prepared by independent advisers~~and activities that meet the environmental regulations in ~~effect.~~effect and that will be approved by the Ministry of Energy and Mines. The provision of continued operations are prepared by independent advisors and provisions related to discontinue operations are prepared by internal advisors.

The provision for closure of mining units and exploration projects corresponds mostly to activities that must be carried out for restoring the mining units and areas affected by operation and production activities. The principal works to be performed correspond to earthworks, re-vegetation efforts and dismantling of the plants. Closure budgets are reviewed regularly to take into account any significant change in the studies conducted. Nevertheless, the closure costs of mining units will depend on the market prices for the closure works required, which would reflect future economic conditions. Also, the time when the disbursements will be made depends on the useful life of the mine, which will be based on future metals prices.

Notes to the consolidated financial statements(continued)
As of December 31,~~2016,~~ 2019, the future value of the provision for closure of mining units and exploration projects wasUS$~~220.0~~296.2 million,which has been discounted using annual risk-free rates ~~ranging~~ from ~~0.40~~ minimums of 1.79 to ~~4.83~~ 3.12 percent, in periods of 1 to23 22 years,~~resulting in an updated liability ofUS$185,163,000 (US$166,403,000~~as (as of December 31,~~2015)~~ 2018, the provision was US$280.3 million, which has been discounted using annual risk-free rates from minimums of 1.98 and 4.74 to a maximum percent in periods of 1 to 23 years).The Group believes that this liability is sufficient to meet the current environmental protection laws approved by the Ministry of Energy and Mines.

As of December 31, ~~2016,~~2019, the Group has constituted letters of credit in favor of the Ministry of Energy and Mines for US$~~117,664,000~~121.4 million (US$~~110,403,000~~119.7 million as of December 31,~~2015)~~ 2018) to secure current mine closure plans of its mining units and exploration projects up to date.
~~F-58~~
~~Notes to the consolidated financial statements(continued)~~

~~17.~~16. Financial obligations
(a) This caption is made up as follow:

2016 2015 2019 2018
US$(000) US$(000) US$(000) US$(000)

Compañía de Minas Buenaventura S.A.A. (b)
BBVA Banco Continental S.A. 61,667 -
Compañía de Minas Buenaventura S.A.A.(b)
BBVA Banco Continental 61,667 61,667
Banco de Crédito del Perú 61,667 - 61,667 61,667
CorpBanca New York Branch 61,666 - 61,666 61,666
Banco Internacional del Perú 30,000 - 30,000 30,000
ICBC Perú Bank 25,000 - 25,000 25,000
Banco Latinoamericano de Comercio Exterior S.A. 20,000 - 20,000 20,000
Banco de Sabadell, Miami Branch 15,000 - 15,000 15,000
275,000 - 275,000 275,000
Debt issuance costs (3,119 ) - (2,504 ) (3,618 )
271,881 - 272,496 271,382
Sociedad Minera El Brocal S.A.A.
Banco de Crédito del Perú – New financial obligation (c) 161,894 -
Debt issuance costs (709 ) -
161,185 -
Banco de Crédito del Perú – Finance leaseback - 94,490
Debt issuance costs (c) - (976 )
- 93,514
Banco de Crédito del Perú - Mid-term financial obligation (c) - 75,000
161,185 168,514
Empresa de Generación Huanza S.A.
Banco de Crédito del Perú – Finance lease (c) 176,062 188,138
Banco de Crédito del Perú – Finance lease (d) 130,504 147,166

Sociedad Minera El Brocal S.A.A.
Banco de Crédito del Perú – Finance leaseback (d) 136,812 156,328
Other obligations 173 -

Buenaventura Ingenieros S.A.
Banco de Crédito del Perú – Finance lease (e) 7,361 9,082
Other obligations - 69

Contacto Corredores de Seguros S.A.
BBVA Banco Continental S.A. – Finance lease 53 93

Obligations for leases, note 2.3 and (g) 7,503 -
Total financial obligations 592,342 353,710 571,688 587,062

Classification by maturity:
Current portion 40,110 33,394 265,692 46,166
Non-current portion (f) 552,232 320,316
Non-current portion (e) 305,996 540,896

Total financial obligations 592,342 353,710 571,688 587,062

~~F-59~~

Notes to the consolidated financial statements(continued)

(b) On June 27, 2016, Buenaventura entered into a long-term finance contract with seven Peruvian and foreign banks, with the following terms and conditions:

- Principal: US$275,000,000.
- Annual interest rate: Three-month ~~Libor~~LIBOR plus 3%.
- Term: 5 years since June 30, 2016, with final maturity in June 30, 2021.
- Grace Period: Two years.
- Amortization: 6six semiannual installments of US$39,285,714 ~~since~~starting July 2018 and a final payment of US$39,285,716 in June 2021.
- Guarantee: None. The subsidiaries Compañía Minera Condesa S.A., Inversiones Colquijirca S.A. and Consorcio Energético de Huancavelica S.A. are the guarantors.

As part of the commitments, the Group must meet certain consolidated financial ratios. The main ratios are the following:

(i) Debt service coverage ratio: Higher than 4.
(ii) Leverage ratio: Less than 43 times since June 30, ~~2016 until June 30, 2017 and less than 3 times since that date.~~2017.
(iii) Net consolidated equity value: Higher than US$2,711,388,800.

For the calculation of (i) and (ii), the financial obligations and ~~EBITDA~~Earnings Before - Interest Depreciation and Amortization (EBITDA) of ~~Empresa de Generación~~ Huanza ~~S.A.~~ are excluded.

Additionally, there is a requirement related to the distribution of dividends (until December 31, 2018: up to 20% of the available net income for the previous period; since January 1, 2019: up to the total of net income for the previous period), according to the execution of the dividend policy of the ~~Company.~~Buenaventura.

On March 28, 2018, Buenaventura restructured its financial obligation by modifying some of the clauses as follows:
- Annual interest rate: LIBOR of three months plus 2.15%.
- Term: 4 years from April 2018, due in April 2022.
- Amortization of credit: five semi-annual installments of US$55 million each since as of April 2020.
The Buenaventura´s Management oversees the compliance of the terms described ~~above is overseen by the Company´s Management.~~above. As of December 31, ~~2016, the Company~~2019 and 2018, Buenaventura complies with the above financial ratios.

Notes to the consolidated financial statements(continued)
(c) On October 29, 2019, El Brocal entered into a new financial obligation of US$161,893,850 with Banco de Crédito del Perú in order to cancel the two previous obligations: i) Finance leaseback; and ii) Mid-term financial obligation. The new financial obligation has the following terms and conditions:
- Principal (Part A): US$113,325,695.
- Principal (Part B): US$48,568,155.
- Annual interest rate (Part A): 3.76 percent.
- Annual interest rate (Part B): Three-month LIBOR plus 2.39 percent.
- Term (Part A): 5 years since October 2019 until October 2024.
- Term (Part B): 7 years since October 2019 until October 2026.
According to the lease contract mentioned above, El Brocal is required to maintain the following financial ratios:
(i) Debt service coverage ratio: Higher than 1.3.
(ii) Leverage Ratio: Less than1.0 times.
(iii) Indebtedness ratio:Less than2.25 times.
This new financial obligation is guaranteed by a security guarantee contract on assets; guarantee contract on credit rights, flows and account balances; land mortgage contract; and mortgage contract on mining concessions.
The El Brocal´s Management oversees the compliance of the terms described above. As of December 31, 2019 and 2018, Buenaventura complies with the above financial ratios.
The compliance with the financial ratios is monitored by El Brocal’s management, which it managed and obtained from Banco de Crédito del Perú a waiver for any possible breach of the financial ratios that occured for the last quarter of 2019 and for the year 2020.
(d) On December 2, 2009, ~~Empresa de Generación~~ Huanza ~~S.A.~~ entered into a finance lease contract with Banco de Crédito del Perú~~, with~~. In the year 2017, Huanza negotiated a reduction of the fixed rate of interest and agreed a modification of the following terms and conditions:

- Principal: US$119,000,000.
- Annual interest rate: Three-month ~~Libor~~LIBOR plus ~~4.60 percent (three-month Libor plus 4.00 percent as of December 31, 2015).~~2.75 percent.
- Term: 6 years since August 2014, with final maturity in November 2020.
- Guarantee: Leased equipment.
- Amortization: ~~Through~~ 26 quarterly variable installments and a final payment of US$44,191,000.

~~F-60~~
F-70

Notes to the consolidated financial statements(continued)

On June 30, 2014, Banco de Credito del Perú extended the finance lease contract above mentioned, through the addition of a new ~~tranche with~~tranche. In 2017, Huanza negotiate a reduction of the fixed rate of interest and agreed a modification of the following terms and conditions:

- Principal: US$103,373,000.
- Annual interest rate: Three-month ~~Libor~~LIBOR plus ~~4.70 percent (Three-month Libor plus 4.20 percent as of December 31, 2015)~~2.75 percent.
- Term: 6 years since August 2014, with final maturity in November 2020.
- Guarantee: Leased equipment.
- Amortization: Through an initial installment of US$~~23,780,000,~~18,373,000, with 26 quarterly variable installments and a final installment of US$68,905,000.

~~(d)~~ On June 9, 2015, the Board of Directors of El Brocal approved the modification of the debt and new payment schedule of the leaseback through sale contracts through the sale of assets with the same value including~~equipment, machinery and processing plant located in the Colquijirca mining unit. The contracts have the following terms and conditions:~~
In addition, Huanza have granted a security interest for 100 percent of shares.
According to the lease contract mentioned above, Huanza is required to maintain the following financial ratios:
- Debt service coverage ratio: Higher than 1.1.
- Minimum Net equity of US$30,000,000.
On December 2, 2009, Huanza signed a “Guarantee Trust Agreement” (hereinafter “the contract”), related to the financial lease agreement described above. In said contract, Huanza and Buenaventura are the trustors, the Bank is the trustee and La Fiduciaria S.A. is the fiduciary. The objective of the contract is the constitution of a trust equity with irrevocable character, which serves entirely as a guarantee of the total payment of the guaranteed obligations, which are based on the agreements, renewals, extensions or modifications established in the financial lease documents.
Under this contract, Huanza promised to grant the following:

- ~~Principal: US$166,500,000.~~Trust of flows with respect to all the income of the hydroelectric power station of Huanza, including the income from sales of power and energy, through which Huanza is obliged to receive all the cash flows of commercial income through a collection account, as well as carry out certain mandatory actions that guarantee the channeling of flows mentioned above.
- ~~Annual interest rate: Nine-month Libor plus 4.75 percent.~~Trust of assets of the station, the lands, the assets of Huanza necessary for the operation of the station that are not under the Financial Lease Agreement and the actions of Huanza, as well as the right of collection on future flows that would correspond receive Huanza before the eventual public auction of the rights and assets of the concession because of the expiration of the concession.
- ~~Term: 5.5 years since September 23, 2015, with final maturity in year 2020.~~
- ~~Amortization: Through 22 quarterly variable installments.~~The conditional transfer, by which Huanza assigns to the Bank the rights and obligations derived from the agreements and contracts signed by Huanza for the construction of the Plant.

~~In connection with the above financing, El Brocal complied with the following financial ratios:~~
~~(i)~~ ~~Debt service coverage ratio: Higher than~~ ~~1.3~~
~~(ii)~~ ~~Leverage ratio: Less than~~ ~~1.0 times.~~
~~(iii)~~ ~~Debt ratio:~~
a. ~~Less than2.50times as of December 31,2016;~~
b. ~~Less than2.50times from January 1,2017to September 30,2017;~~
c. ~~Less than2.25times as of December 31,2017;~~
d. ~~Less than2.0times from January 1,2018.~~
These sales agreements with a subsequent financial lease are guaranteed by a trust agreement related to collection rights, sales contracts, cash flows for sales contracts and one related to the assets indicated in the contract.
The compliance with the financial ratios described above is monitored by El Brocal’s Management. El Brocal’s Management obtained a waiver from the bank for any possible breach of the financial ratios for one year.
~~F-61~~

Notes to the consolidated financial statements~~(continued)~~(continued)
~~(e)~~ ~~On March 28, 2014, Buenaventura Ingenieros S.A. (hereinafter “BISA”), entered into a finance lease contract with~~ ~~Banco de Credito del Perú, for the construction of administrative offices, with the following terms and conditions:~~

- ~~Principal: US$14,944,000.~~
- ~~Annual interest rate: 4.60 percent.~~
- ~~Term: 5 years and 4 months since April 2014, with final maturity~~Letters of Guarantee, by means of which, Buenaventura is constituted as Huanza's solidarity guarantor, guaranteeing in ~~July 2019.~~
- ~~Guarantee: Leased property.~~
- ~~Amortization: Through 64 monthly installments~~favor of ~~US$208,000 each.~~the Bank the fulfillment of the obligations breached by Huanza.

The loan is subject to compliance with certain financial ratios. During the years 2016 and 2015, the BISA´s Management obtained from Banco de Crédito a waiver for the compliance of the financial ratios stipulated in the contract, which covers the period of one year. As ~~a consequence, as~~ of December 31, ~~2016~~2019 and ~~2015, the classification of the debt has been made according~~2018, Huanza complied with these assumed commitments, including that related to the ~~payment schedule originally agreed with~~channeling of all the ~~bank.~~cash flows received for commercial income through a collection account.

~~(f)~~(e) The long-term portion of the financial obligations held by the Group ~~mature~~matures as follows:

Year 2016 2015
US$(000) US$(000) 2019 2018
US$(000) US$(000)
Less than 1 year - 40,104

Between 1 and 2 years 81,057 41,708 133,091 278,397
Between 2 and 5 years 474,294 238,504 127,463 266,625
More than 5 years 48,566 -

555,351 320,316 309,120 545,022
Debt issuance costs (3,119 ) - (3,124 ) (4,126 )
552,232 320,316
305,996 540,896

~~18.~~(f) Below is presented the movement:
2019 2018 2017
US$(000) US$(000) US$(000)

Beginning balance 587,062 633,083 592,342
New obligations 161,894 - 80,000
New lease obligations, note 2.3 19,885 - -
Payments of financial obligations (186,152 ) (45,222 ) (32,599 )
Payments of obligations for leases (7,596 ) - -
Increase of debt issuance costs (728 ) - (480 )
Movement of lease obligations (4,786 ) - -
Accrual of debt issuance costs in results, note 27(a) 2,109 1,024 909
Exchange difference - 384 (165 )
Increase in interest for debt restructuring - (2,207 ) -
Accrual of debt issuance costs capitalized - - 272
Sale of asset under lease agreement - - (7,196 )

Final balance 571,688 587,062 633,083

Notes to the consolidated financial statements(continued)
(g) Lease liabilities related to the right in use are:
2019
US$(000)
Buildings 5,296
Transportation units 1,429
Machinery and equipment 778
7,503
Classification by maturity:
Current portion 3,692
Non-current portion 3,811
7,503
Buildings -
Lease liabilities related to buildings mainly correspond to a lease contract entered by Buenaventura on its administrative offices in Lima located in Las Begonias Street N°415, San Isidro, Lima, Peru, with a lease term of 10 years since the year 2013 and fixed payments. The Group has the option to lease the assets for two additional term of 5 years each.
Future minimum rentals payable as of December 31 are the following:
2019 2018
US$(000) US$(000)

Within one year 1,470 1,543
After one year but not more than five years 3,697 5,787
5,167 7,330
Transportation units -
The Group has lease contracts for various items of mining vehicles used in its operations. Leases of mining vehicles generally have lease terms between one and three years. The Group’s obligations under its leases are secured by the lessor’s title to the leased assets. Generally, the Group is restricted from assigning and subleasing the leased assets. No contracts require the Group to maintain certain financial ratios nor includes variable lease payments.
The Group also has certain leases of assets with lease terms of 12 months or less and leases of office equipment with low value. The Group applies the short-term lease and lease of low-value assets recognition exemptions for these leases.

Notes to the consolidated financial statements(continued)
17. Shareholders’ equity, net
(a) Capital stock -
The Group’s share capital is stated in ~~Soles~~soles and ~~consists~~consisted of common shares with voting rights, with a nominal amount of S/10.00 per share. The table below presents the composition of the capital stock as of December 31, ~~2016~~2019 and ~~2015:~~2018:

Number of
shares Capital
stock Capital
stock
S/(000) US$(000)

Common shares 274,889,924 2,748,899 813,162
Treasury shares (21,174,734 ) (211,747 ) (62,665 )

253,715,190 2,537,152 750,497
~~F-62~~
~~Notes to the consolidated financial statements(continued)~~
Number of shares
Capital
stock

Capital
stock

S/(000) US$(000)

Common shares 274,889,924 2,748,899 813,162
Treasury shares (21,174,734 ) (211,747 ) (62,665 )
253,715,190 2,537,152 750,497

The market value of the common shares amounted to S/~~34.37~~47.77 per share as of December 31, ~~2016~~2019 (S/~~14.35~~53.60 per share as of December 31, ~~2015)~~2018). These shares present trading frequencies of 1025 and 1535 percent in the years ~~2016~~2019 and ~~2015,~~2018, respectively.

(b) Investment shares -
Investment shares have a nominal value of S/10.00 per share. Holders of investment shares are neither entitled neither to exercise voting rights nor to participate in shareholders’ meetings; however, they confer upon the holders thereof the right to participate in the dividends ~~distribution in the same manner as common shares.~~distribution. The table below presents the composition of the investment shares as of December 31, ~~2016~~2019 and ~~2015:~~2018:

As of December 31, 2016
Number of
shares Investment
shares Investment
shares
S/(000) US$(000)

Investment shares 744,640 7,447 2,161
Treasury investment shares (472,963 ) (4,730 ) (1,370 )

271,677 2,717 791
As of December 31, 2015
Number of
shares Investment
shares Investment
shares Number of shares Investment shares Investment shares
S/(000) US$(000) S/(000) US$(000)

Investment shares 744,640 7,447 2,161 744,640 7,447 2,161
Treasury investment shares (272,963 ) (2,730 ) (765 ) (472,963 ) (4,730 ) (1,370 )
271,677 2,717 791
471,677 4,717 1,396

The market value of the investment shares amounted to S/~~25.00~~16.00 per share as of December 31, ~~2015~~2019 (S/~~14.14~~19.60 per share as of December 31, ~~2015)~~2018). These shares did not present a trading frequency in ~~2016~~2019 and ~~2015.~~
~~During 2016, the Group purchased 200,000 treasury shares at a market value of US$1,210,000, recording a purchase loss of US$605,000, presented as part of the additional capital.~~2018.

(c) Legal reserve -
The Peruvian Corporations Law requires that a minimum of 10 percent of the distributable earnings for each period, after deducting the income tax, be transferred to a legal reserve until the latter is equal to 20 percent of the capital stock. This legal reserve can be used to offset losses or may be capitalized, with the obligation, in both cases, to replenish it.

Notes to the consolidated financial statements(continued)
Although, the balance of the legal reserve exceeded the limit mentioned above, the Group increased its legal reserve by US$~~30,000~~53,000 in ~~2016~~the year 2019 (US$~~4,000~~44,000 and US$327,000 in ~~2015).~~
~~F-63~~
~~Notes~~the years 2018 and 2017 respectively) as a result of the expired dividends. According to the ~~consolidated financial statements(continued)~~General Corporate Law, dividends expire ten years after the payment due.

(d) Dividends declared and paid -
~~During 2015, no dividends have been declared or paid.~~
The table below presents the dividends declared and paid in ~~2016~~2019, 2018 and ~~2014:~~2017:

Meetings Date Dividends
paid Dividend
per share Date
Dividends declared and
paid

Dividend
per share

US$(000) US$ US$(000) US$

2016 Dividends
2019 Dividends
Mandatory Annual Shareholders’ Meeting March 25 16,538 0.06
Less - Dividends of treasury shares (1,298 )

15,240

Board of Directors’ Meeting October 27 8,269 0.03 October 29 7,442 0.03
Less - Dividends of treasury shares (648 ) (584 )
6,858
7,621 22,098
2014 Dividends

2018 Dividends
Mandatory Annual Shareholders’ Meeting March 27 3,032 0.01 March 27 8,269 0.03
Less - Dividends of treasury shares (648 )
7,621

Board of Directors’ Meeting October 30 6,339 0.02 October 25 16,538 0.06
Less - Dividends of treasury shares (729 ) (1,299 )
15,239
8,642 22,860

2017 Dividends
Mandatory Annual Shareholders’ Meeting March 28 15,711 0.06
Less - Dividends of treasury shares (1,232 )

14,479

Board of Directors’ Meeting October 27 8,269 0.03
Less - Dividends of treasury shares (649 )
7,620
22,099

According to the current Law, there are no restrictions for the remittance of dividends or repatriation of capital by foreign investors.

Dividends declared by S.M.R.L. Chaupiloma Dos de Cajamarca corresponding to non-controlling interest were US$~~7,400,000,~~6,500,000, US$~~10,488,000~~5,560,000 and US$~~8,880,000~~6,036,000 for the years ~~2016, 2015~~2019, 2018 and ~~2014,~~2017, respectively.

Notes to the consolidated financial statements(continued)

(e) Basic and diluted ~~loss~~profit (loss) per share -
~~Loss~~
Profit (loss) per share is calculated by dividing net profit (loss) for the period by the weighted average number of shares outstanding during the year.
The calculation of ~~loss~~profit (loss) per share attributable to the equity holders of the parent is presented below:

2016 2015 2014

Loss net (numerator) - US$ (323,492,000 ) (317,210,000 ) (76,065,000 )
Total common and investment shares (denominator) 254,111,250 254,186,867 254,186,867

Loss net per basic share and diluted - US$ (1.27 ) (1.25 ) (0.30 )
2019 2018 2017

Profit (loss) net (numerator) - US$ (12,208,000 ) (13,445,000 ) 60,823,000
Total common and investment shares (denominator) 253,986,867 253,986,867 253,986,867
Profit (loss) net per basic share and diluted - US$ (0.05 ) (0.05 ) 0.24

The calculation of ~~loss~~profit (loss) per share from continuing operations attributable to the equity holders of the Parent is presented below:

2016 2015 2014

Loss net (numerator) - US$ (304,419,000 ) (296,977,000 ) (70,235,000 )
Total common and investment shares (denominator) 254,111,250 254,186,867 254,186,867

Loss net per basic share and diluted - US$ (1.20 ) (1.17 ) (0.28 )
~~F-64~~
~~Notes to the consolidated financial statements(continued)~~
2019 2018 2017

Profit (loss) net (numerator) - US$ (1,694,000 ) (1,637,000 ) 71,167,000
Total common and investment shares (denominator) 253,986,867 253,986,867 253,986,867
Profit (loss) net per basic share and diluted - US$ (0.01 ) (0.02 ) 0.28

The common and investment shares outstanding at the close of ~~2016, 2015~~2019, 2018 and ~~2014~~2017 were ~~253,986,867, 254,186,867 and 254,186,867, respectively.~~253,986,867.
A tax of 5 percent of the income tax is established to the dividends or any other form of distribution of profits.

Notes to the consolidated financial statements(continued)

~~19.~~18. Subsidiaries with material non-controlling interest
(a) Financial information of main subsidiaries that have material non-controlling interest are provided below:

Country of
incorporation
and operation 2016 2015 2014
% % %

Equity interest held by non-controlling interests:
Sociedad Minera El Brocal S.A.A. Peru 40.95 45.93 45.93
S.M.R.L. Chaupiloma Dos de Cajamarca Peru 40.00 40.00 40.00
Minera La Zanja S.R.L. Peru 46.94 46.94 46.94
Country of
incorporation and operation
2019, 2018 and 2017
%
Equity interest held by non-controlling interests:
Sociedad Minera El Brocal S.A.A. Peru 38.57
S.M.R.L. Chaupiloma Dos de Cajamarca Peru 40.00
Minera La Zanja S.R.L. Peru 46.94
Apu Coropuna S.R.L. Peru 30.00

2016 2015 2014 2019 2018 2017
US$(000) US$(000) US$(000) US$(000) US$(000) US$(000)
Accumulated balances of material non-controlling interest:
Sociedad Minera El Brocal S.A.A. Peru 167,986 172,542 208,664 161,917 176,978 165,032
Minera La Zanja S.R.L. Peru 55,613 53,271 85,756 33,026 42,295 48,642
S.M.R.L. Chaupiloma Dos de Cajamarca Peru 1,906 2,357 3,600 1,587 1,800 1,693
Apu Coropuna S.R.L. Peru 678 - - 148 164 223
Other minor Chile (61 ) - -

226,122 228,170 298,020
196,678 221,237 215,590
Profit (loss) allocated to material non-controlling interest:
Sociedad Minera El Brocal S.A.A. Peru (13,426 ) (34,991 ) 3,450 (13,432 ) 2,880 4,246
Minera La Zanja S.R.L. (9,090 ) (6,346 ) (6,006 )
S.M.R.L. Chaupiloma Dos de Cajamarca 6,286 5,667 5,827
Apu Coropuna S.R.L. Peru (157 ) (102 ) - (14 ) (410 ) (454 )
S.M.R.L. Chaupiloma Dos de Cajamarca Peru 6,950 9,244 10,250
Minera La Zanja S.R.L. Peru 2,342 (32,486 ) 725
Other minor Chile (31 ) - - (1 ) - (1 )
(16,251 ) 1,791 3,612
(4,322 ) (58,335 ) 14,425

During ~~2016,~~2017, purchases of shares in the ~~Group, through the Lima Stock Exchange, made capital contributions to its~~ subsidiary Sociedad Minera El Brocal S.A.A., were made for ~~S/63.9 million (equivalent to~~ US$~~18.6 million) and US$45.2 million~~621,000, which resulted in an increase in its shares and a dilution of non-controlling shareholders of ~~7.26%~~0.09%.

~~F-65~~

Notes to the consolidated financial statements~~(continued)~~(continued)

(b) The summarized financial information of these subsidiaries, before inter-company eliminations, is presented below:

Statements of financial position as of December 31, ~~2016:~~2019:

Sociedad
Minera El
Brocal
S.A.A. S.M.R.L.
Chaupiloma
Dos de
Cajamarca Minera
La Zanja
S.R.L. Apu
Coropuna
S.R.L. Other
minor Total Sociedad Minera El Brocal S.A.A. Minera La Zanja S.R.L. S.M.R.L. Chaupiloma Dos de Cajamarca Apu Coropuna S.R.L.
US$(000) US$(000) US$(000) US$(000) US$(000) US$(000) US$(000) US$(000) US$(000) US$(000)

Current assets 120,291 7,439 155,659 2,301 81 285,771 149,945 112,420 6,252 2,141
Non-current assets 642,790 - 90,447 88 500 733,825 576,028 26,038 - 185
Current liabilities (184,324 ) (2,684 ) (40,411 ) (129 ) - (227,548 ) (118,965 ) (20,170 ) (2,286 ) (1,094 )
Non-current liabilities (168,589 ) - (89,278 ) - (2 ) (257,869 ) (210,904 ) (47,930 ) - (740 )

Total shareholders’ equity, net 410,168 4,755 116,417 2,260 579 534,179
Shareholders’ equity, net 396,104 70,358 3,966 492

Attributable to:
Shareholders of the parent 242,182 2,849 60,804 1,582 640 308,057
Shareholders of the Group 234,187 37,332 2,379 344
Non-controlling interests 167,986 1,906 55,613 678 (61 ) 226,122 161,917 33,026 1,587 148

410,168 4,755 116,417 2,260 579 534,179 396,104 70,358 3,966 492

Statements of financial position as of December 31, ~~2015:~~2018:

Sociedad
Minera El
Brocal S.A.A. S.M.R.L.
Chaupiloma
Dos de
Cajamarca Minera La Zanja S.R.L. Total Sociedad Minera El Brocal S.A.A. Minera La Zanja S.R.L. S.M.R.L. Chaupiloma Dos de Cajamarca Apu Coropuna S.R.L.
US$(000) US$(000) US$(000) US$(000) US$(000) US$(000) US$(000) US$(000)

Current assets 87,676 9,381 103,540 200,597 170,274 126,878 7,154 2,263
Non-current assets 652,197 16 116,792 769,005 603,280 31,841 - 182
Current liabilities (166,424 ) (3,508 ) (37,030 ) (206,962 ) (123,052 ) (25,834 ) (2,653 ) (1,165 )
Non-current liabilities (197,763 ) - (69,816 ) (267,579 ) (217,683 ) (42,781 ) - (739 )

Total shareholders’ equity, net 375,686 5,889 113,486 495,061
Shareholders’ equity, net 432,819 90,104 4,501 541

Attributable to:
Shareholders of the parent 203,144 3,532 60,215 266,891
Shareholders of the Group 255,841 47,809 2,701 377
Non-controlling interests 172,542 2,357 53,271 228,170 176,978 42,295 1,800 164

375,686 5,889 113,486 495,061 432,819 90,104 4,501 541

~~F-66~~

Notes to the consolidated financial statements~~(continued)~~(continued)

Statements of profit or loss for the ~~year ended December 31, 2016:~~years 2019, 2018 and 2017:

Sociedad
Minera El
Brocal S.A.A. S.M.R.L.
Chaupiloma Dos
de Cajamarca Minera
La Zanja
S.R.L. Apu
Coropuna
S.R.L. Other
minor Total
US$(000) US$(000) US$(000) US$(000) US$(000) US$(000)

Revenues 230,611 24,339 178,922 - - 433,872
Cost of sales (234,594 ) (16 ) (150,039 ) - - (384,649 )
Administrative expenses (11,802 ) (112 ) (1,980 ) (4 ) - (13,898 )
Sales expenses (10,650 ) - (938 ) - - (11,588 )
Exploration in non-operating areas (1,939 ) - (4,619 ) (524 ) - (7,082 )
Impairment loss of long-lived assets 309 11 4,237 - (410 ) 4,147
Finance income 256 - 87 - - 343
Finance costs (12,554 ) (2 ) (2,614 ) - - (15,170 )
Net gain (loss) for exchange difference (270 ) (93 ) 65 5 - (293 )
Profit (loss) before income tax (40,633 ) 24,127 23,121 (523 ) (410 ) 5,682
Income tax 7,851 (6,761 ) (18,256 ) - - (17,166 )

Net profit (loss) (32,782 ) 17,366 4,865 (523 ) (410 ) (11,484 )

Attributable to non-controlling interests (13,426 ) 6,950 2,342 (157 ) (31 ) (4,322 )

Dividends paid to non-controlling interests - 7,400 - - - 7,400
~~F-67~~
~~Notes to the consolidated financial statements(continued)~~
~~Statements of profit or loss for the year ended December 31, 2015:~~
Sociedad
Minera El
Brocal S.A.A. S.M.R.L.
Chaupiloma
Dos de
Cajamarca Minera
La Zanja
S.R.L. Total
US$(000) US$(000) US$(000) US$(000)

Revenues 171,294 32,414 161,007 364,715
Cost of sales (204,556 ) (54 ) (213,372 ) (417,982 )
Administrative expenses (19,168 ) (106 ) (2,251 ) (21,525 )
Sales expenses (9,056 ) - (1,207 ) (10,263 )
Exploration in non-operating areas (2,366 ) - (8,954 ) (11,320 )
Impairment loss of long-lived assets - - (3,803 ) (3,803 )
Other operating expense, net (2,657 ) - (687 ) (3,344 )
Finance income 154 - 16 170
Finance costs (10,096 ) (4 ) (3,684 ) (13,784 )
Net gain (loss) for exchange difference (3,847 ) 45 (1,973 ) (5,775 )
Profit (loss) before income tax (80,298 ) 32,295 (74,908 ) (122,911 )
Income tax 4,109 (9,186 ) 5,702 625
Net profit (loss) (76,189 ) 23,109 (69,206 ) (122,286 )

Attributable to non-controlling interests (34,991 ) 9,244 (32,486 ) (58,335 )
Dividends paid to non-controlling interests - 10,488 - 10,488
~~Statements of profit or loss for the year ended December 31, 2014:~~
Sociedad
Minera El
Brocal S.A.A. S.M.R.L.
Chaupiloma
Dos de
Cajamarca Minera La
Zanja S.R.L. Total
US$(000) US$(000) US$(000) US$(000)

Revenues 210,002 36,867 185,286 432,155
Cost of sales (149,969 ) (74 ) (137,659 ) (287,702 )
Administrative expenses (17,617 ) (113 ) (5,920 ) (23,650 )
Sales expenses (7,103 ) - (1,441 ) (8,544 )
Exploration in non-operating areas (5,085 ) - (19,689 ) (24,774 )
Other operating income (expense), net (50 ) (1 ) (3,389 ) (3,440 )
Finance income - - 1 1
Finance costs (4 ) (3 ) (1,728 ) (1,735 )
Net loss for exchange difference (1,039 ) (50 ) (1,525 ) (2,614 )
Profit before income tax 29,135 36,626 13,936 79,697
Income tax (21,621 ) (10,996 ) (12,388 ) (45,005 )
Net profit 7,514 25,630 1,548 34,692
Attributable to non-controlling interests 3,450 10,250 725 14,425
Dividends paid to non-controlling interests - 8,880 - 8,880
~~F-68~~
~~Notes to the consolidated financial statements(continued)~~
Sociedad Minera El Brocal S.A.A. Minera La Zanja S.R.L. S.M.R.L. Chaupiloma Dos de Cajamarca Apu Coropuna S.R.L.
Other
minor

US$(000) US$(000) US$(000) US$(000) US$(000)

Year 2019 -

Revenues 299,252 43,520 22,297 - -
Net profit (loss) (32,855 ) (19,364 ) 15,715 (48 ) (17 )
Attributable to non-controlling interests (13,432 ) (9,090 ) 6,286 (14 ) (1 )

Year 2018 -

Revenues 332,298 96,611 20,385 - -
Net profit (loss) 6,305 (13,519 ) 14,168 (1,369 ) -
Attributable to non-controlling interests 2,880 (6,346 ) 5,667 (410 ) -

Year 2017 -

Revenues 322,653 165,319 20,739 - -
Net profit (loss) 10,386 (12,795 ) 14,568 (1,515 ) 386
Attributable to non-controlling interests 4,246 (6,006 ) 5,827 (454 ) (1 )

Statements of cash flow for the ~~year ended December 31, 2016:~~years 2019, 2018 and 2017:

Sociedad
Minera El
Brocal S.A.A. S.M.R.L.
Chaupiloma
Dos de
Cajamarca Minera La
Zanja S.R.L. Apu
Coropuna
S.R.L. Total
US$(000) US$(000) US$(000) US$(000) US$(000)

Operating activities (9,151 ) 18,178 11,839 (1,895 ) 18,971
Investing activities (37,935 ) - (14,994 ) - (52,929 )
Financing activities 48,021 (18,500 ) - 2,717 32,238
Increase (decrease) in cash and cash equivalents in the year 935 (322 ) (3,155 ) 822 (1,720 )
~~Statements of cash flow for the year ended December 31, 2015:~~
Sociedad
Minera
El Brocal
S.A.A. S.M.R.L.
Chaupiloma
Dos de
Cajamarca Minera La
Zanja S.R.L. Total
US$(000) US$(000) US$(000) US$(000)

Operating activities (1,523 ) 26,474 30,743 55,694
Investing activities (28,375 ) - (26,761 ) (55,136 )
Financing activities 31,867 (26,220 ) - 5,647
Increase (decrease) in cash and cash equivalents in the year 1,969 254 3,982 6,205
~~Statements of cash flow for the year ended December 31, 2014:~~
Sociedad
Minera El
Brocal S.A.A. S.M.R.L.
Chaupiloma
Dos de
Cajamarca Minera La
Zanja S.R.L. Total Sociedad Minera El Brocal S.A.A. Minera La Zanja S.R.L. S.M.R.L. Chaupiloma Dos de Cajamarca Apu Coropuna S.R.L.
US$(000) US$(000) US$(000) US$(000) US$(000) US$(000) US$(000) US$(000)

Year 2019 -
Operating activities 71,682 22,375 17,075 111,132 1,545 (908 ) 16,040 -
Investing activities (131,045 ) - (20,452 ) (151,497 ) (28,259 ) (1,629 ) - -
Financing activities 54,642 (22,200 ) 7,000 39,442 (405 ) (763 ) (16,250 ) 1,032
Increase (decrease) in cash and cash equivalents in the year (4,721 ) 175 3,623 (923 )
(27,119 ) (3,300 ) (210 ) 1,032
Year 2018 -
Operating activities 74,985 10,323 14,066 (572 )
Investing activities (29,546 ) (13,160 ) - -
Financing activities (29,974 ) - (13,900 ) -
15,465 (2,837 ) 166 (572 )

~~F-69~~

Notes to the consolidated financial statements~~(continued)~~(continued)
Sociedad Minera El Brocal S.A.A. Minera La Zanja S.R.L. S.M.R.L. Chaupiloma Dos de Cajamarca Apu Coropuna S.R.L.
US$(000) US$(000) US$(000) US$(000)
Year 2017 -
Operating activities 60,525 139,155 15,093 (185 )
Investing activities (64,343 ) (17,326 ) - -
Financing activities 18,096 (32,077 ) (15,090 ) 1,477
14,278 89,752 3 1,292
~~20.~~19. Tax situation
(a) Current tax regime -
The Company and its Peruvian subsidiaries are subject to the Peruvian tax regime.
~~By means of Law N° 30296 enacted on December 31, 2014, the Peruvian government introduced certain amendments to the Income Tax Law, effective January 1, 2015. The most relevant are listed below:~~
- ~~There will be a gradual reduction of the corporate income tax from 30% to 28% in 2015 and 2016; to 27% in 2017 and 2018; and to 26% in 2019 and thereafter.~~
- There will be a gradual increase of the withholding income tax to dividends from 4.1% to 6.8% in 2015 and 2016; to 8.0% in 2017 and 2018; and to 9.3% in 2019 and thereafter. These rates will be applicable to the distributed or approved dividends, whichever first occurs, effective January 1, 2015.
- ~~The retained earnings or other items that can generate taxable dividends, obtained until December 31, 2014, will be subject to a rate of 4.1 percent.~~
By means of Law N° 1261 enacted on December 10, 2016, the Peruvian government introduced certain amendments to the Income Tax Law, effective January 1, 2017. The most relevant are listed below:

- A corporate income tax rate of 29.5% is set.
- A tax of 5% of the income tax is established to the dividends or any other form of distribution of profits.
- The rate applicable to dividends will be considered taking into account the year in which the results or profits that form part of the distribution ~~have~~has been ~~obtained,~~obtained. The rate will be consider according to the following: 4.1% with respect to the results obtained until December 31, 2014; 6.8% with respect to the results obtained during the years 2015 and 2016; ~~And~~and 5% with respect to the results obtained from January 1, 2017.
- It has been established that the distribution of dividends to be made corresponds to the oldest retained earnings.
In July 2018, Law No. 30823 was published. Under this Law, the Congress delegated to the Executive Power the power to legislate on various issues, including tax and financial matters. In this sense, the main tax regulations issued are the following:
(i) Since January 1, 2019, the applicable treatment of royalties and remuneration for services rendered by non-domiciled was modified (Legislative Decree No. 1369).
(ii) The rules that regulate the obligation of legal persons and / or legal entities to inform the identification of their final beneficiaries (Legislative Decree No. 1372) were established.
(iii) The Tax Code was modified in order to provide greater guarantees to taxpayers in the application of the general anti-avoidance rule (Rule XVI of the Preliminary Title of the Tax Code); as well as to provide the Tax Administration with tools for its effective implementation.
(iv) Rules have been established for the accrual of income and expenses for tax purposes since January 1, 2019. Until 2018, there was no normative definition of this concept, so in many cases, accounting rules were used for its interpretation.

Notes to the consolidated financial statements(continued)

(b) Years open to tax review -
During the four years following the year of filing the tax return, the tax authorities have the power to review and, as applicable, correct the income tax computed by the Group. The Income Tax and Value Added Tax (VAT) returns for the following years are open to review by the Tax Authorities:
~~F-70~~
~~Notes to the consolidated financial statements(continued)~~

Entity Years open to review by the Tax Authorities

Compañía de Minas Buenaventura S.A.A. ~~2012-2016~~
~~Bisa Construcción S.A. (absorbed by Buenaventura Ingenieros S.A. in December 2015)~~ ~~2012, 2014-2015~~
~~Buenaventura Ingenieros S.A.~~ ~~2013-2016~~
~~Compañía de Exploraciones, Desarrollo e Inversiones Mineras S.A.C. –  CEDIMIN (absorbed by Buenaventura in May 2013)~~ ~~2012-2013~~2015-2019
Compañía Minera Condesa S.A. ~~2012-2016~~2015-2019
Compañía Minera Colquirrumi S.A. ~~2012-2016~~2015-2019
Consorcio Energético de Huancavelica S.A. ~~2012-2016~~2016-2019
Contacto Corredores de Seguros S.A. ~~2012, 2014-2016~~2014-2019
El Molle Verde S.A.C. ~~2012-2016~~2015-2019
Empresa de Generación Huanza S.A. ~~2012, 2013, 2015, 2016~~2015-2019
Inversiones Colquijirca S.A. ~~2012-2016~~2015-2019
Minera La Zanja S.R.L. ~~2013-2016~~2016-2019
Sociedad Minera El Brocal S.A.A. ~~(*)~~ ~~2013-2016~~2014, 2016-2019
S.M.R.L. Chaupiloma Dos de Cajamarca ~~2012-2016~~2015-2019
Procesadora Industrial Río Seco S. A. ~~2012, 2014, 2015, 2016~~2015-2019
Apu Coropuna S.R.L. ~~2013-2016~~2015-2019
Cerro Hablador S. A. C. ~~2013-2016~~2015-2019
Minera Azola S. R. L. ~~2014-2016~~2015-2019
~~(*) The value added tax is subject to review for the period from 2012 to 2016.~~
~~As of the date of issuance of this report, Compañía de Minas Buenaventura S.A.A. has been notified by the Tax Administration for the start of the audit of the 2014 income tax return.~~

Due to the possible interpretations that the Tax Authorities may give to legislation in effect, it is not possible to determine whether ~~or not~~ any of the tax audits will result in increased liabilities for the Group. For that reason, any tax or surcharge that could arise from future tax audits would be applied to the income of the period in which it is determined. In management's opinion and its legal advisors, any possible additional payment of taxes in the entities mentioned before would not have a material effect on the consolidated financial statements as of December 31, ~~2016~~2019 and ~~2015.~~2018.

The open tax process of the Group and its associates are presented in note ~~29 (g)~~29(e).

~~(c)~~ ~~Tax-loss carryforwards -~~
The tax-loss carryforward determined by the Group amounts to approximately S/1,345,802,000 and S/1,271,245,000, respectively (equivalent to US$400,536,000 and US$201,634,000 respectively). As permitted by the Income Tax Law, the Group has chosen a system that permits to offset these losses with an annual cap equivalent to 50 percent of net future taxable income.
~~The Group has decided to recognizea deferred income tax assetrelated to the tax-loss carryforward,due to there it is more likely than not that the tax-loss carryforward can be used to compensate future taxable net income.~~
~~F-71~~

Notes to the consolidated financial statements(continued)

~~(d)~~
(c)
Tax-loss carryforwards -
As of December 2019 and 2018, the tax-loss carryforward determined by the Group amounts to approximately S/1,950,896,000 and S/1,550,156,000, respectively (equivalent to US$588,151,000 and US$458,762,000 respectively). As permitted by the Income Tax Law, the Group has chosen a system that permits to offset these losses with an annual cap equivalent to 50 percent of net future taxable income.
The Group recognized a deferred income tax asset related to the tax-loss carryforward of those companies where is probable that a carryforward can be used to compensate future taxable profits.
(d)
Transfer pricing -–
For purposes of determining the Income Tax, the transfer prices for transactions with related companies and companies domiciled in territories with little or no taxation must be supported with documentation and information on the valuation methods used and the criteria considered for their determination. Tax Administration can request this information based on analysis of the Group's operations. The Group’s Management and its legal advisers believe that, as a result of the application of these standards, no material contingencies will arise for the Group as of December 31, 2016 and 2015.

	For purposes of determining the Income Tax, the transfer prices for transactions with related companies and companies domiciled in territories with little or no taxation must be supported with documentation and information on the valuation methods used and the criteria considered for their determination. Tax Administration can request this information based on analysis of the Group’s operations. The Group’s Management and its legal advisers believe that, as a result of the application of these standards, no material contingencies will arise for the Group as of December 31, 2019 and 2018.
	~~21.~~
20.	Net sales

	~~(a)~~
	(a)	The Group’s revenues are mostly from sales of gold and precious metals in the form of concentrates, including silver-lead, silver-gold, zinc and lead-gold-copper concentrates and ounces of gold. ~~The table~~Set out below ~~presents~~is the ~~net sales to customers by geographic region and product type:~~disaggregation of the Group’s revenue from contracts with customers:

2016 2015 2014
US$(000) US$(000) US$(000)

Sales and services by geographic region:
Metal and concentrates sales
America 410,154 419,359 430,869
Peru 401,372 345,146 427,564
Europe 109,788 60,549 46,585
Asia 94,356 21,215 54,268

1,015,670 846,269 959,286
Services rendered
Peru 28,782 50,839 71,159
1,044,452 897,108 1,030,445

Sale by metal:
Gold 440,603 419,541 449,404
Silver 385,989 313,418 348,171
Copper 224,649 131,356 271,282
Zinc 142,425 102,110 46,903
Lead 58,690 55,445 39,185
Manganese sulfate 5,982 3,649 483
1,258,338 1,025,519 1,155,428

Commercial deductions (244,414 ) (196,145 ) (184,385 )
Adjustments to prior period liquidations 4,611 7,467 (6,073 )
Embedded derivatives from sale of concentrate 880 (388 ) (9,570 )
Hedge operations (3,745 ) 9,816 3,886
1,015,670 846,269 959,286
Services rendered 28,782 50,839 71,159

1,044,452 897,108 1,030,445

	2019		2018		2017
	US$(000)		US$(000)		US$(000)
Revenues by geographic region:
Metal and concentrates sales -
Peru		476,978		521,017		516,054
America - other than Peru		171,769		370,624		471,863
Asia		105,645		120,519		120,719
Europe		60,475		100,792		79,837
		814,867		1,112,952		1,188,473
Services -
Peru		23,501		23,712		14,903
America - other than Peru		130		289		14,794
Europe		30		-		-
		23,661		24,001		29,697
Royalties -
Peru		22,297		20,385		20,739

		860,825		1,157,338		1,238,909

~~F-72~~

Notes to the consolidated financial statements (continued)

	2019			2018			2017
	US$(000)			US$(000)			US$(000)
Revenues by type of good or services:
Sales by metal -
Silver		298,171			362,122			393,257
Gold		254,194			411,877			510,982
Copper		238,304			274,761			268,527
Zinc		149,317			164,666			170,518
Lead		89,141			85,555			85,957
Manganese sulfate		6,046			6,655			6,317
Indium		-			-			66
		1,035,173			1,305,636			1,435,624
Commercial deductions		(220,306	)		(192,684	)		(247,151	)
		814,867			1,112,952			1,188,473
Sales by services -		23,661			24,001			29,697
Royalties income -		22,297			20,385			20,739
Total revenue from contracts with customers		860,825			1,157,338			1,238,909

Revenues by type of recognition:
Goods transferred at a point in time		814,867			1,112,952			1,188,473
Services transferred over time		23,661			24,001			29,697
Royalties at a point of time		22,297			20,385			20,739
		860,825			1,157,338			1,238,909

(b)

Set out below, is the reconciliation of the revenue from contracts with customers with the amounts disclosed in the consolidated statement of profit or loss:

	2019		2018			2017
	US$(000)		US$(000)			US$(000)
Contracts with customers for sale of goods		814,867		1,112,952			1,188,473
Hedge operations		4,322		(1,398	)		(10,921	)
Fair value of accounts receivables		2,347		(6,013	)		8,417
Adjustments to prior period liquidations		394		788			1,237
Net sale of goods		821,930		1,106,329			1,187,206

Net sale of services		23,661		24,001			29,697

Royalty income		22,297		20,385			20,739

		867,888		1,150,715			1,237,642

	(c)	Performance obligations -
		The performance obligation of the sale of goods is satisfied upon delivery of the goods and payment is generally due within 30 to 90 days from delivery. Performance obligation of services is satisfied over-time and payment is generally due upon completion and acceptance of service.

Notes to the consolidated financial statements(continued)

~~(b)~~

(d)

Concentration of sales -

In 2016, the three customers with sales of more than 10 percent of total net sales represented 28, 22 and 22 percent from the total net sales of the Group (two customers in 66 and 22 percent during the year 2015 and; two customers in 62 percent and 17 percent during 2014). As of December 31, 2016, 46 percent of the accounts receivable correspond to these customers (85 percent as of December 31, 2015). These customers are related to the mining business.

The Group's sales of gold and concentrates are delivered to investment banks and national and international well-known companies. Some of these clients have sales contracts that guarantee supplying them the production from the Group’s mines at prices that are based on market quotations.

	In 2019, the three customers with sales of more than 10 percent of total net sales represented 25, 16 and 11 percent from the total net sales of the Group (three customers by 32, 13 and 11 percent during 2018 and three customers by 28, 15 and 10 percent during 2017). As of December 31, 2019, 84 percent of the accounts receivable correspond to these customers (43 percent as of December 31, 2018). These customers are related to the mining business.
	~~22.~~
		The Group’s sales of gold and concentrates are delivered to investment banks and national and international well-known companies. Some of these clients have long-term sales contracts with the Group that guarantee supplying them the production from the Group’s mines.

	(e)	Sales expenses -
		Sales expenses represent 3%, 2% and 2% of the total operating income for the years 2019, 2018 and 2017, respectively. Sales expenses corresponds mainly to transportation services and services and shipping costs. Transportation services represent 58% of the caption for the years 2019, 2018 and 2017. Shipping services and expenses represent 22%, 21% and 8% of the caption for the years 2019, 2018 and 2017.

21.	Cost of sales, without considering depreciation and amortization

	~~(a)~~
	(a)	The cost of sales of goods is made up as follows:

	2016			2015			2014			2019			2018			2017
	US$(000)			US$(000)			US$(000)			US$(000)			US$(000)			US$(000)

Beginning balance of finished goods and products in process, net of depreciation and amortization		69,932			105,944			105,640			49,206			37,640			58,633

Cost of production
Services provided by third parties		211,325			230,148			252,967			196,895			243,410			254,821
Consumption of materials and supplies		100,401			100,241			95,503			96,351			133,961			129,294
Direct labor		72,344			66,745			75,007			79,076			93,122			82,930
Electricity and water		41,989			34,972			32,802			44,583			50,215			42,877
Transport											20,784			23,539			25,406
Maintenance and repair		17,792			7,401			6,195			19,729			24,415			22,062
Transport		10,880			9,502			12,148
Rentals		10,852			5,783			3,948
Short-term and low-value lease											16,341			30,819			15,498
Insurances		4,347			5,247			6,400			12,235			11,311			5,870
Cost of concentrate purchased to associates		2,958			-			-
Provision for impairment of finished goods and product in progress, note 9(b)		(7,581	)		13,096			3,262
Other production expenses		9,789			7,078			10,786
Provision (reversal) for impairment of finished goods and product in progress, note 8(c)											(2,143	)		4,521			2,118
Other minor											11,755			9,634			10,179
Total cost of production of the period		475,096			480,213			499,018			495,606			624,947			591,055
Final balance of products in process and finished goods, net of depreciation and amortization		(47,216	)		(72,667	)		(105,944	)		(31,938	)		(49,206	)		(45,038	)

Cost of sales of goods, without considering depreciation and amortization		497,812			513,490			498,714			512,874			613,381			604,650

~~F-73~~

Notes to the consolidated financial statements(continued)

(b)

The cost of services is made up as follows:

	2016		2015		2014		2019		2018		2017
	US$(000)		US$(000)		US$(000)		US$(000)		US$(000)		US$(000)

Direct labor		5,983		18,314		33,461		1,231		2,128		7,398
Electricity and water								589		249		586
Consumption of materials and supplies								497		675		1,026
Services provided by third parties		1,689		16,247		13,881		331		382		1,782
Consumption of materials and supplies		868		7,865		8,017
Electricity and water		633		7,134		5,853
Maintenance and repair		217		637		406		186		543		946
Rentals		480		2,544		6,285
Insurances		212		1,233		1,058		163		86		246
Transport		213		3,868		6,196		148		50		98
Other		459		1,770		2,770
Cost of sales of services, without considering depreciation and amortization		10,754		59,612		77,927
Short-term and low-value lease								89		92		423
Other minor								144		113		449

								3,378		4,318		12,954

22.	~~23.~~	Exploration in operating units

	This caption is made up as follows:

~~This caption is made up as follows~~

	2016		2015		2014		2019			2018			2017
	US$(000)		US$(000)		US$(000)		US$(000)			US$(000)			US$(000)

Beginning balance of finished goods and products in process, net of depreciation and amortization								2,837			5,157			5,309

Exploration in operating units
Services provided by third parties		78,996		72,613		79,952		33,591			71,513			75,743
Consumption of materials and supplies		12,779		10,298		10,074		3,712			8,594			7,673
Direct labor		1,989		2,287		2,720		1,747			2,349			2,142
Rentals		1,603		859		797
Short-term and low-value lease								1,186			2,065			1,405
Electricity and water								905			1,337			820
Transport		321		238		1,194		71			192			543
Insurance		116		135		157
Other minor expenses		345		3,269		2,463
Maintenance and repair								10			450			98
Other minor								548			910			56
Total exploration in operating units								41,770			87,410			88,480
Final balance of products in process and finished goods, net of depreciation and amortization								(444	)		(2,837	)		(4,478	)
		96,149		89,699		97,357
Exploration in operating units								44,163			89,730			89,311

~~24.~~

~~Mining royalties~~

As of December 31, 2019, 2018 and 2017, disbursements of exploration in operating amount to US$44.2 million, US$89.7 million and US$89.3 million, respectively, which are presented in the “Payments to suppliers and third parties” caption of the consolidated statements of cash flows.

~~This caption is made up as follows:~~Notes to the consolidated financial statements (continued)

2016 2015 2014
US$(000) US$(000) US$(000)

Sindicato Minero de Orcopampa S.A., note 29(b) 19,824 21,942 21,688
Royalties paid to the Peruvian State 7,787 5,246 5,725
Others - - 15

27,611 27,188 27,428

23.	Mining royalties
	~~F-74~~
	This caption is made up as follows:

	2019		2018		2017
	US$(000)		US$(000)		US$(000)

Royalties paid to the Peruvian State		8,091		9,266		10,719
Sindicato minero de Orcopampa S.A., note 29(b)		4,741		12,122		20,165

		12,832		21,388		30,884

24.	Administrative expenses

	This caption is made up as follows:

	2019		2018			2017
	US$(000)		US$(000)			US$(000)

Personnel expenses		38,566		34,656			36,265
Professional fees		13,924		15,324			12,663
Sundry charges		7,489		3,965			4,921
Depreciation and amortization		3,825		1,295			1,146
Board of Directors’ compensation		2,202		3,252			1,422
Software licenses		1,706		1,824			2,523
Subscriptions and quotes		1,492		1,938			1,428
Communications		1,296		1,512			1,376
Donations		1,030		1,617	��		3,006
Short-term and low-value lease		1,011		5,818			5,412
Maintenance and repairs		953		2,732			2,657
Transport		878		1,212			989
Insurance		720		645			3,911
Consumption of materials and supplies		422		436			616
Canons and tributes		410		388			602
Travel and mobility		373		467			1,053
Allowance for expected credit losses, note 7(f)		-		18			676
		76,297		77,099			80,666

25.	Exploration in non-operating areas

	This caption is made up as follows:

	2019		2018		2017
	US$(000)		US$(000)		US$(000)

Personnel expenses		3,632		4,830		4,064
Services provided by third parties		3,611		22,764		5,401
Lands		1,528		1,867		1,781
Short-term and low-value lease		415		1,524		1,171
Consumption of materials and supplies		328		1,420		582
Other minor		2,365		3,902		5,263

		11,879		36,307		18,262

During 2019, disbursements of exploration in non-operating areas amount to US$11.9 million mainly focused in Yumpag and Marcapunta (US$36.3 million during 2018 mainly focused in Yumpag, Marcapunta and Emperatriz and US$18.3 million during 2017 mainly focused in Tambomayo, Yumpag, Marcapunta and Emperatriz exploration projects), which are presented in the “Payments to suppliers and third parties” caption of the consolidated statements of cash flows.

Notes to the consolidated financial statements(continued)


26.	Other, net

	(a)	This caption is made up as follows:

	2019		2018			2017
	US$(000)		US$(000)			US$(000)

Other income
Sale of supplies and merchandise to third parties		32,228		46,128			54,496
Sale of assets to third parties		19,405		3,863			369
Reversal for impairment of spare parts and supplies, note 8(c)		11,641		4,665			2,370
Sale of services to third parties		6,415		3,512			2,552
Revenue from commercial claims		2,098		-			-
Income from previous years		1,311		1,504			2,680
Sale of supplies to related parties, note 30(a)		1,259		27			4
Sale of assets to related parties, note 30(a)		11		30			336
Insurance claim recovery (c)		-		33,735			1,190
Sale of investment in subsidiary		-		7,097			-
Changes in provisions for exploration projects, note 15(b)		-		2,433			-
Recovery of expenses from previous years		-		81			68
Income from rental of investment properties		-		45			235
Expiration of allowance for expected credit losses, note 7(f)		-		45			99
Sale of investment properties (b)		-		-			11,250
Other minor		2,632		(566	)		11,881

		77,000		102,599			87,530

Notes to the consolidated financial statements (continued)

	2019			2018			2017
	US$(000)			US$(000)			US$(000)
Other expenses
Disposal cost of sale of supplies and merchandise to third parties		(33,664	)		(57,897	)		(60,239	)
Direct expenses		(15,992	)		(9,867	)		(5,721	)
Provision for impairment of spare parts and supplies, note 8(c)		(15,703	)		(11,704	)		(4,814	)
Net cost of property, machinery and equipment to third parties, note 11(a)		(4,965	)		(626	)		-
Changes in provisions for exploration projects, note 15(b)		(4,020	)		-			(891	)
Disposal cost of sale of supplies and merchandise to related parties		(2,944	)		(257	)		(40	)
Expenses from previous years		(2,240	)		(1,831	)		(603	)
Withdrawals and disposals of property, machinery and equipment, note 11(a)		(2,926	)		(6,626	)		(15,013	)
Allowance for expected credit losses, note 7(f)		(25	)		(1,334	)		-
Net cost of transfer of investments, note 1(d)		-			(11,178	)		(1,706	)
Net cost of investment properties (b)		-			-			(9,575	)
Other minor		(9,236	)		(2,587	)		(2,158	)

		(91,715	)		(103,907	)		(100,760	)

		(14,715	)		(1,308	)		(13,230	)

	(b)	During 2017 the Group sold to a third party its investment properties located in the El Derby Capital Building, district of Surco.

	(c)	Corresponds to the indemnity for the insurance claim of the rotor 2 of the 20X30 mill motor occurred in May 2017 of the subsidiary El Brocal. The total compensation for lost profits and consequential damages is US$38,793,000, while the associated costs for mitigation, repair and cost overruns are US$5,058,000, having a net effect on results of US$33,735,000, see note 26. As of December 31 of 2018, El Brocal has received the full amount of compensation from the insurance. As of December 31, 2017 corresponds to the recovery income of the sinister that occurred in the rotor 1 of the 20x30 mill and in the conveyor belt corresponding to the incident that occurred in 2016, for approximately US$4,175,000, and the incurred cost associated amounts to US$2,985,000, resulting in a net effect of US$1,190,000.

Notes to the consolidated financial statements (continued)

27.	Finance costs and finance income

	(a)	This caption is made up as follows:

	2019		2018		2017
	US$(000)		US$(000)		US$(000)

Finance income:
Interest on time deposits		4,971		5,176		1,050
Dividends income		3,625		-		-
Interests on third parties loans		460		561		813
Interests on loans to related parties, note 30(a)		86		92		1,685
Interests on tax claims		16		1,701		153
Other minor		517		340		43
		9,675		7,870		3,744

Unrealized variation of the fair value related to contingent consideration liability (b)		-		1,815		1,773

Total finance revenues		9,675		9,685		5,517
Finance costs:
Interest on borrowings		28,418		31,538		28,019
Tax on financial transactions		166		173		180
Interest on loans		1		2		1,053
Other minor		55		703		72
		28,640		32,416		29,324

Accretion expense for mine closure, note 15(b)		10,390		4,982		4,318
Accrual of debt issuance costs, note 16(f)		2,109		1,024		909
Unrealized variation of the fair value related to contingent consideration liability (b)		655		-		-
Accretion expense of leases liability		379		-		-
Total finance costs		42,173		38,422		34,551

	(b)	Contingent consideration -
		On August 18, 2014, Buenaventura acquired from Minera Gold Fields Peru S.A. (“Gold Fields”) 51 percent of the voting shares of Canteras del Hallazgo S.A.C., which represent the whole interest of Gold Fields in the equity of such entity.

		Through the fusion with Canteras del Hallazgo S.A.C, the Group is the owner of the Chucapaca project, which is located in the Ichuña district, in the General Sanchez Cerro province, in the Moquegua department, Peru. According to previously performed studies, there is evidence of the existence of gold, silver, copper and antimony in the area, specifically in the Canahuire deposit.

		The purchase and sale agreement considered a contingent consideration of US$23,026,000, which corresponds to the present value of the future royalty payments equivalent to 1.5 percent over the future sales of the minerals arising from the mining properties acquired. The fair value of the future royalty payments was determined using the income approach.

		Significant increase (decrease) in the future sales of mineral would result in higher (lower) fair value of the contingent consideration liability, while significant increase (decrease) in the discount rate would result in lower (higher) fair value of the liability. Changes in the fair value of this contingent consideration have been recognized through profit or loss in the consolidated statement of profit or loss.

Notes to the consolidated financial statements(continued)


		As of December 31, 2019, it is highly probable that the Group reaches the projected future sales. The fair value of the contingent consideration determined as of December 31, 2019 reflects this assumption and changes in metal prices.

		A reconciliation of fair value measurement of the contingent consideration liability is provided below:

	2019		2018			2017
	US$(000)		US$(000)			US$(000)

Beginning balance		15,755		17,570			19,343

Variation of the fair value in results		655		(1,815	)		(1,773	)

Final balance		16,410		15,755			17,570

Significant unobservable valuation inputs are provided below:

	2019		2018

Annual average of future sales of mineral (US$000)		190,815		193,906
Useful life of mining properties		14		13
Pre-tax discount rate (%)		10		10

The Group has the preferential right of acquisition of the royalty in case Gold Fields decides to sell it.

F-90

Notes to the consolidated financial statements(continued)

28.

~~25.~~

~~Administrative expenses~~

Deferred income tax

~~This caption is made up as follows:~~

2016 2015 2014
US$(000) US$(000) US$(000)

Personnel expenses 29,617 33,036 32,647
Sundry charges 17,454 21,248 23,375
Professional fees 11,696 10,364 13,956
Rentals 4,870 4,009 5,185
Donations 4,280 3,336 5,034
Insurance 3,023 5,105 3,726
Allowance for doubtful accounts 3,164 903 -
Communications 1,557 1,281 1,276
Canons and tributes. 1,460 824 1,207
Maintenance and repairs 1,076 973 2,720
Board of Directors’ participation 1,140 1,055 1,163
Travel and mobility 914 787 908
Subscriptions and quotes 697 540 779
Consumption of materials and supplies 416 1,032 1,688
Valuation (reversal) of stock appreciation’s rights 328 (121 ) 89

81,692 84,372 93,753

~~26.~~

~~Exploration in non-operating areas~~

~~This caption is made up as follows~~

2016 2015 2014
US$(000) US$(000) US$(000)

Services provided by third parties 13,629 18,852 34,582
Personnel expenses 3,908 4,713 6,053
Rights 3,457 - -
Lands 1,691 - -
Consumption of materials and supplies 768 1,436 3,213
Rentals 578 376 1,142
Maintenance and repairs 72 87 139
Insurance 49 84 75
Transport 26 20 168
Other expenses 2,411 5,042 4,635

26,589 30,610 50,007

~~F-75~~

~~Notes to the consolidated financial statements(continued)~~

~~27.~~

(a)

~~Finance costs and finance revenues~~

~~These captions are made up as follows:~~

2016 2015 2014
US$(000) US$(000) US$(000)

Finance revenues:
Interests on loans to associates, note 30(a) 4,164 2,286 2,887
Income from financial instruments 743 - -
Dividends income 589 500 2
Interests on third parties loans 489 492 5,380
Interests on tax claims 487 1,297 -
Interest on time deposits 358 419 139

6,830 4,994 8,408
Unrealized variation of the fair value related to contingent consideration liability, note 5 - 6,032 -

Total finance revenues 6,830 11,026 8,408

Finance costs:
Interest on borrowings 18,668 17,875 7,979
Interest on loans 4,643 5,565 729
Interest on commercial obligations 496 120 -
Banking expenses 319 366 673
Tax on financial transaction 159 312 148
Other finance costs 830 41 94
25,115 24,279 9,623
Unrealized variation of the fair value related to contingent consideration liability, note 5 2,349 - -
Accrual of the present value for mine and exploration project closure, note 16(b) 4,116 3,293 1,653

Total finance costs 31,580 27,572 11,276

~~F-76~~

~~Notes to the consolidated financial statements(continued)~~

~~28.~~

~~Deferred income tax~~

~~(a)~~

The Group recognizes the effects of timing differences between the accounting and tax basis. This caption is made up as follows:

As of January 1,
2015 Credit (debit) to the
Consolidated
statement of
profit or loss Credit (debit) to
consolidated
statements of other
comprehensive
income As of
December 31,
2015 Credit (debit)
to the
Consolidated
statement of
profit or loss Credit (debit) to
consolidated
statements of
other
comprehensive
income As of
December 31,
2016
US$(000) US$(000) US$(000) US$(000) US$(000) US$(000) US$(000)

Deferred asset for income tax included in results
Tax - loss carryforward 32,486 45,923 - 78,409 14,641 - 93,050
Difference in depreciation and amortization rates 58,461 (6,084 ) - 52,377 8,506 - 60,883
Provision for closure of mining units, net 19,796 12,848 - 32,644 6,894 - 39,538
Environmental liability for Santa Barbara mine 1,239 317 - 1,556 13 - 1,569
Other minor 17,744 2,307 - 20,051 622 - 20,673
129,726 55,311 - 185,037 30,676 - 215,713

Less - Allowance for deferred asset (4,237 ) (13,929 ) - (18,166 ) (18,846 ) - (37,012 )
125,489 41,382 - 166,871 11,830 - 178,701

Deferred asset included in retained earnings
Derivative financial instruments 2,540 (2,664 ) 2,565 2,441 - (1,301 ) 1,140
128,029 38,718 2,565 169,312 11,830 (1,301 ) 179,841

Deferred assets for mining royalties and special mining tax included in results
Exploration expenses 448 (774 ) - (326 ) 364 - 38
Other minors 366 (181 ) - 185 (180 ) - 5
814 (955 ) - (141 ) 184 - 43
Total deferred asset 128,843 37,763 2,565 169,171 12,014 (1,301 ) 179,884

Deferred liability for income tax included in results
Effect of translation into U.S. dollars (31,493 ) (42,044 ) - (73,537 ) 3,012 - (70,525 )
Differences in amortization rates for development costs (37,849 ) 5,545 (32,304 ) (19,484 ) - (51,788 )
Other minors (33,431 ) (1,958 ) 807 (34,582 ) (9,403 ) - (43,985 )
(102,773 ) (38,457 ) 807 (140,423 ) (25,875 ) - (166,298 )

Deferred liability for mining royalties and special mining tax
Deemed cost of property, plant and equipment (165 ) 153 - (12 ) 12 - -
Other minors 176 - - 176 (211 ) - (35 )
11 153 - 164 (199 ) - (35 )
Total deferred liability (102,762 ) (38,304 ) 807 (140,259 ) (26,074 ) - (166,333 )

Deferred income tax asset, net 26,081 (541 ) 3,372 28,912 (14,060 ) (1,301 ) 13,551

	As of January 1, 2018			Credit (debit) to consolidated statement of profit or loss			Credit (debit) to consolidated statements of other comprehensive income			Others movements			As of December 31, 2018			Credit (debit) to consolidated statement of profit or loss			Credit (debit) to consolidated statements of other comprehensive income		Others movements		As of December 31, 2019
	US$(000)			US$(000)			US$(000)			US$(000)			US$(000)			US$(000)			US$(000)		US$(000)		US$(000)
Deferred asset for income tax
Tax - loss carryforward		94,939			10,919			-			(396	)		105,462			25,866			-		-		131,328
Difference in depreciation and amortization rates		47,482			1,088			-			-			48,570			37			-		-		48,607
Provision for closure of mining units, net		19,793			7,423			-			-			27,216			3,684			-		-		30,900
Impairment loss of long-lived assets		9,920			(2,448	)		-			-			7,472			576			-		-		8,048
Other minor		15,459			5,369			-			(147	)		20,681			422			-		400		21,503
		187,593			22,351			-			(543	)		209,401			30,585			-		400		240,386
Derivative financial instruments		9,103			-			(9,103	)					-			-			-		-		-
		196,696			22,351			(9,103	)		(543	)		209,401			30,585			-		400		240,386
Deferred assets for mining royalties and special mining tax		123			(87	)		-			-			36			(6	)		-		-		30

Total deferred asset		196,819			22,264			(9,103	)		(543	)		209,437			30,579			-		400		240,416


Deferred liability for income tax
Differences in amortization rates for development costs		(45,693	)		(20,295	)		-						(65,988	)		(3,357	)		-		-		(69,345	)
Effect of translation into U.S. dollars		(46,023	)		(15,248	)		-						(61,271	)		14,995			-		-		(46,276	)
Other minors		(77,603	)		3,123			-						(74,480	)		(4,550	)		-		-		(79,030	)
		(169,319	)		(32,420	)		-						(201,739	)		7,088			-		-		(194,651	)

Derivative financial instruments		-			-			(813	)					(813	)		-			813		-		-
		-			-			(813	)					(813	)		-			813		-		-

Deferred liability for mining royalties and special mining tax		(161	)		159			-			-			(2	)		(166	)		-		-		(168	)

Total deferred liability		(169,480	)		(32,261	)		(813	)					(202,554	)		6,922			813		-		(194,819	)

Deferred income tax asset, net		27,339			(9,997	)		(9,916	)		(543	)		6,883			37,501			813		400		45,597

~~F-77~~

Notes to the consolidated financial statements(continued)

(b)

The deferred tax asset is presented in the consolidated statement of financial position:

	2016			2015				2019			2018
	US$(000)			US$(000)				US$(000)			US$(000)

Deferred income tax asset, net		25,881			41,574				74,556			38,305
Deferred income tax liability, net		(12,330	)		(12,662	)	Deferred income tax liability, net		(28,959	)		(31,422	)
									45,597			6,883
		13,551			28,912

(c)

The following is the composition of the provision for income taxes shown in the consolidated statement of income for the years ~~2016, 2015~~2019, 2018 and ~~2014:~~2017:

	2016			2015			2014			2019			2018			2017
	US$(000)			US$(000)			US$(000)			US$(000)			US$(000)			US$(000)
Income tax

Income tax expense
Current											(11,851	)		(12,433	)		(18,780	)
Deferred											37,617			(10,029	)		5,984
											25,766			(22,462	)		(12,796	)
Mining Royalties and Special Mining Tax
Current		(39,444	)		(14,222	)		(18,815	)		(60	)		(4,449	)		(4,933	)
Deferred		(14,060	)		(541	)		(47,006	)		(116	)		32			(159	)
											(176	)		(4,417	)		(5,092	)
		(53,504	)		(14,763	)		(65,821	)
Total income tax											25,590			(26,879	)		(17,888	)

(d)

Below is a reconciliation of tax expense and the accounting profit (loss) multiplied by the statutory tax rate for the years ~~2016, 2015~~2019, 2018 and ~~2014:~~2017:

	2016			2015			2014			2019			2018			2017
	US$(000)			US$(000)			US$(000)			US$(000)			US$(000)			US$(000)

Loss before income tax		(255,237	)		(340,549	)		10,011
Loss before income tax for discontinued operations		(19,073	)		(20,230	)		(5,618	)
Loss before income tax		(274,310	)		(360,779	)		4,393
Theoretical gain for income tax		(76,807	)		(101,018	)		1,318
Profit (loss) before income tax											(43,535	)		27,033			92,667
Loss for discontinued operations											(10,514	)		(11,808	)		(10,344	)

Profit (loss) before income tax											(54,049	)		15,225			82,323

Theoretical loss (gain) for income tax											15,944			(4,491	)		(24,285	)

Permanent items and others:
Share in the results of associates		102,290			48,545			22,380
Effect of translation into U.S. dollars		(3,012	)		42,044			30,520			14,995			(15,248	)		24,502
Impairment of deferred tax asset		18,846			13,929			-
Effect of change in income tax rate net		(1,431	)		2,347			327
Share in the results of associates and joint ventures											14,074			(337	)		3,896
Permanent items											(9,958	)		(3,466	)		(16,549	)
Unrecognized deferred tax asset											(9,265	)		(2,038	)		(1,898	)
Mining royalties and special mining tax		247			663			418			(24	)		3,118			1,538
Permanent items		6,577			4,447			3,824
Income tax expense		46,710			10,957			58,787			25,766			(22,462	)		(12,796	)
Mining Royalties and Special Mining Tax		6,794			3,806			7,034			(176	)		(4,417	)		(5,092	)
Total income tax		53,504			14,763			65,821			25,590			(26,879	)		(17,888	)

~~F-78~~

Notes to the consolidated financial statements(continued)

	(e)	Related to the investment in associates, the Group has not recognized a deferred income tax asset by US$~~257.5~~271.8 million as of December 31, ~~2016~~2019, originated by the difference between the financial and taxable basis of these investments (US$~~94.5~~277.0 million as of December 31, ~~2015)~~2018). Management believes that the timing differences will be reversed in the future without taxable effects. There is no legal or contractual obligation that would require the Company’s Management to sell its investment in its associates (which event would result in a taxable capital gain based on current tax law).

	(f)	Deferred income tax asset is presented net of the portion unrecognized that the Group estimates will not be probable that taxable profits will be available against which the deferred tax asset can be utilized:

~~29.~~

~~Commitments and contingencies~~

~~Commitments~~

~~(a)~~

~~Environmental -~~

~~The Group’s exploration and exploitation activities are subject to environmental protection standards.~~

Law No. 28090 regulates the obligations and procedures that must be met by the holders of mining activities for the preparation, filing and implementation of Mine Closure Plans, as well as the establishment of the corresponding environmental guarantees to secure fulfillment of the investments, subject to the principles of protection, preservation and recovery of the environment.

Law No. 28271 regulates environmental liabilities in mining activities. This Law has the objective of ruling the identification of mining activity’s environmental liabilities and financing the remediation of the affected areas. According to this law, environmental liabilities refer to the impact caused to the environment by abandoned or inactive mining operations.

~~The Group considers that the recorded liability is sufficient to meet the current regulatory environment in Peru.~~

~~(b)~~

~~Leased concessions -~~

~~The Group pays 10 percent on the valued production of mineral obtained from the concessions leased by Sindicato Minero Orcopampa S.A. This concession is in force until the year 2043. See note 24.~~

~~(c)~~

~~Letter of guarantee granted by Buenaventura -~~

~~Letter of guarantee - Huanza~~

On December 2, 2009, Banco de Credito del Perú signed a finance lease contract for US$119 million with Consorcio Energético de Huancavelica S.A., Empresa de Generación Huanza S.A. and Buenaventura. This financing is in favor of Empresa de Generación Huanza S.A., and is guaranteed by Buenaventura. On February 8, 2016, the bank released the guarantee granted by Buenaventura.

	Total deferred tax asset		Unrecognized deferred tax			Net deferred tax asset
	US$(000)		US$(000)			US$(000)

As of December 31, 2019 -
Tax - loss carryforward		139,614		(8,152	)		131,462
Difference in depreciation and amortization rates		68,151		(19,544	)		48,607
Provision for closure of mining units, net		53,418		(22,518	)		30,900
Impairment loss of long-lived assets		8,048		-			8,048
Other minor		21,369		-			21,369

Total income tax		290,600		(50,214	)		240,386

As of December 31, 2018 -
Tax - loss carryforward		106,223		(761	)		105,462
Difference in depreciation and amortization rates		68,114		(19,544	)		48,570
Provision for closure of mining units, net		47,859		(20,643	)		27,216
Impairment loss of long-lived assets		7,472		-			7,472
Other minor		20,681		-			20,681

Total income tax		250,349		(40,948	)		209,401

~~F-79~~

~~Notes to the consolidated financial statements(continued)~~

~~(d)~~

~~Operating lease commitments (the Group as a lessee) -~~

The Group has entered into operating leases on its administrative offices in Lima located in Las Begonias Street N°415, San Isidro, Lima, Peru, with a lease term of 10 years. The Group has the option to lease the assets for two additional term of 5 years each.

~~Future minimum rentals payable as of December 31, 2016 and 2015 are the following:~~

2016 2015
US$(000) US$(000)

Within one year 1,543 1,543
After one year but not more than five years 6,173 6,173
More than five years 2,701 4,244

10,417 11,960

~~(e)~~

~~Operating lease commitments (the Group as a lessor) -~~

~~The Group leases for several of its assets. These leases have purchase options. Below is a table showing future minimum lease payments and the present value of these payments:~~

2016 2015
Minimum
payments Present
value of
payments Minimum
payments Present
value of
payments
US$(000) US$(000) US$(000) US$(000)

Within a year 57,592 40,428 47,957 31,956
After one year but not more than five years 318,643 281,192 366,637 321,685

Total minimum lease payments 376,235 321,620 414,594 353,641

Less - amounts representing finance charges (54,615 ) - (60,953 ) -

Present value of minimum lease payments 321,620 321,620 353,641 353,641

~~Contingencies~~

~~(f)~~

~~Legal procedures~~-

~~Buenaventura -~~

Buenaventura is a party in legal procedures that have arisen in the normal course of its activities. Nevertheless, in the opinion of Buenaventura’s Management, none of these procedures, individually or as a whole, could result in material contingencies for the consolidated financial statements.

~~The possible contingencies amount toUS$9.9 million and US$2.0 million as of December 31, 2016 and 2015,respectively~~.

~~F-80~~

Notes to the consolidated financial statements(continued)

~~Yanacocha -~~

~~Mercury spill in Choropampa~~

In August 2000, Yanacocha paid under protest a fine of S/1,740,000 (approximately US$0.5 million) to the Peruvian government. Yanacocha has entered into settlement agreements with a number of individuals impacted by the incident. As compensation for the disruption and inconvenience caused by the incident, Yanacocha entered into agreements with and provided a variety of public works in the three communities impacted by this incident. Yanacocha cannot predict the likelihood of additional expenditures related to this matter.

In 2011, Yanacocha was served with 23 complaints alleging grounds to nullify the settlements entered into between Yanacocha and the plaintiffs. Yanacocha has answered the complaints and the court has dismissed several of the matters and the plaintiffs have filed appeals. All appeals were referred to the Civil Court of Cajamarca, which affirmed the decisions of the lower court judge. The plaintiffs have filed appeals of such orders before the Supreme Court. Some of these appeals were dismissed by the Supreme Court in favor of Yanacocha and others are pending resolution. Yanacocha will continue to vigorously defend its position. Yanacocha cannot reasonably estimate the ultimate loss relating to such claims.

~~Conga Project Constitutional Claim~~

On October 18, 2012, Marco Antonio Arana Zegarra (“Marco Arana”) filed a constitutional claim against the Ministry of Energy and Mines and Yanacocha requesting the Court to order the suspension of the Conga project as well as to declare not applicable the October 27, 2010 Directorial Resolution No.351-2010-MEM/AM approving the Conga project Environmental Impact Assessment (“EIA”).
29.
Commitments and contingencies
Commitments
(a)
Environmental -
The Group’s exploration and exploitation activities are subject to environmental protection standards.
Law No. 28090 regulates the obligations and procedures that must be met by the holders of mining activities for the preparation, filing and implementation of Mine Closure Plans, as well as the establishment of the corresponding environmental guarantees to secure fulfillment of the investments, subject to the principles of protection, preservation and recovery of the environment.
Law No. 28271 regulates environmental liabilities in mining activities. This Law has the objective of ruling the identification of mining activity’s environmental liabilities and financing the remediation of the affected areas. According to this law, environmental liabilities refer to the impact caused to the environment by abandoned or inactive mining operations.
The Group considers that the recorded liability is sufficient to meet the current regulatory environment in Peru.
(b)
Leased concessions -
The Group pays 10 percent on the valued production of mineral obtained from the concessions leased by Sindicato Minero Orcopampa S.A. This concession is in force until the year 2043. The payments are included as royalties, see note 23.
(c)
Leases
Group as a lessee -
The Group has lease contracts for several of assets used in its operations. Leases of plant and machinery generally have lease terms between 1 and 3 years. The Group also has certain leases of machinery with lease terms of 12 months or less and leases of office equipment with low value. The Group applies the ‘short-term lease’ and ‘lease of low-value assets’ recognition exemptions for these leases.
The carrying amounts of the right-of-use assets and liabilities recognized and the movements during the period are presented in note 11 and note 16, respectively.
Contingencies
(d)
Legal procedures -
Buenaventura -
The Group is a party in legal procedures that have arisen in the normal course of its activities. Nevertheless, in the opinion of Buenaventura’s Management, none of these procedures, individually or as a whole, could result in material contingencies for the consolidated financial statements.

~~F-81~~

Notes to the consolidated financial statements(continued)

~~On October 23, 2012, a Cajamarca judge dismissed the claims based on formal grounds finding that: (i) plaintiffs had not exhausted previous administrative proceedings; (ii) the Directorial Resolution~~
The possible contingencies amount to US$3.0 million and US$2.9 million as of December 31, 2019 and 2018, respectively.
Yanacocha -
Conga project Constitutional claim -
On October 18, 2012, Marco Antonio Arana Zegarra filed a constitutional claim against the Ministry of Energy and Mines and Yanacocha requesting the Court to order the suspension of the Conga project as well as to declare not applicable the October 27, 2010 directorial resolution approving the Conga Project Environmental Impact Assessment (“EIA”).
On October 23, 2012, a Cajamarca judge dismissed the claims based on formal grounds finding that: (i) plaintiffs had not exhausted previous administrative proceedings; (ii) the directorial resolution approving the Conga EIA is valid, and was not challenged when issued in the administrative proceedings; (iii) there was inadequate evidence to conclude that the Conga project is a threat to the constitutional right of living in an adequate environment and; (iv) the directorial resolution approving the Conga project EIA does not guarantee that the Conga project will proceed, so there was no imminent threat to be addressed by the Court. The plaintiffs appealed the dismissal of the case. The Civil Court of the Superior Court of Cajamarca confirmed the above mentioned resolution and the plaintiff presented an appeal.
On March 13, 2015, the Constitutional Court published its ruling stating that the case should be sent back to the first court with an order to formally admit the case and start the judicial process in order to review the claim and the proofs presented by the plaintiff. Yanacocha has answered the claim. Yanacocha cannot reasonably predict the outcome of this litigation. The Group has not established a provision in the accompanying financial statements for a loss arising from this contingency, which it does not consider probable.
Environmental contingences -
The Peruvian government agency responsible for environmental evaluation and inspection, “Organismo Evaluacion y Fiscalizacion Ambiental” (“OEFA”), conducts periodic reviews of the Yanacocha site. From 2011 to 2019, OEFA issued notices of alleged violations of OEFA standards to the Company relating to past inspections. OEFA has resolved with minimal or no findings.
In 2015 and 2016, the Autoridad Nacional del Agua of Cajamarca issued notices of alleged regulatory violations, and resolved some allegations in 2017 with no findings. The experience with OEFA and the Autoridad Nacional del Agua is that in the case of a finding of violation, remedial action is often the outcome rather than a significant fine.
The alleged OEFA violations currently range from zero to 17,642 tax units and the Autoridad Nacional del Agua alleged violations range from zero to 10 tax units, being each tax unit equivalent to approximately US$1,260 based on current exchange rates. Yanacocha is responding to all notices of alleged violations, but cannot reasonably predict the outcome of the agency allegations with potential fine for pending matters of US$0 to US$22.2, which it does not consider probable.

Notes to the constitutional right of living in an adequate environment and; (iv) the Directorial resolution approving the Conga project EIA does not guarantee that the Conga project will proceed, so there was no imminent threat to be addressed by the Court. The plaintiffs appealed the dismissal of the case. The Civil Court of the Superior Court of Cajamarca confirmed the above mentioned Resolution and the plaintiff presented an appeal.

On March 13, 2015, the Constitutional Court published its ruling stating that the case should be sent back to the first court with an order to formally admit the case and start the judicial process in order to review the claim and the proofs presented by the plaintiff. Yanacocha has answered the claim. Yanacocha cannot reasonably predict the outcome of this litigation.

~~Environmental contingencies~~

The Peruvian government agency responsible for environmental evaluation and inspection, Organismo Evaluacion y Fiscalizacion Ambiental (“OEFA”), conducts periodic reviews of the Yanacocha site. In 2011, 2012, 2013, the first quarter of 2015, second, third and fourth quarters of 2016 and January 2017, OEFA issued notices of alleged violations of OEFA standards to Yanacocha and Conga relating to past inspections. OEFA has resolved some alleged violations with minimal or no findings. In the first quarter of 2015 and the fourth quarter of 2016, the water authority of Cajamarca issued notices of alleged regulatory violations, and resolved some allegations in early 2017 with no findings. The experience with OEFA and the water authority is that in the case of a finding of violation, remedial action is often the outcome rather than a significant fine.

The alleged OEFA violations currently range from zero to 101,730 units and the water authority alleged violations range from zero to 40,000 units, with each unit having a potential fine equivalent to approximately US$1,200 based on current exchange rates. Yanacocha and Conga are responding to all notices of alleged violations, but cannot reasonably predict the outcome of the agency allegations.consolidated financial statements(continued)

	~~(g)~~ (e)	Open tax procedures –
		Buenaventura –-

~~Buenaventura -~~

During 2012 and 2014, the ~~tax authority~~“Superintendencia Nacional de Aduanas y de Administración Tributaria” (SUNAT) reviewed the income tax for 2007 and 2008. As a result, SUNAT dodoes not recognize tax declared deductions by S/1,056,310,000 (equivalent to US$~~314,375,000~~)318,453,000) in the year 2007 and S/1,530,985,000 (equivalent to US$~~455,650,000) in~~461,557,000) for the year 2008. The main unrecognized deduction is the payment made for the removal of the price component of its commercial contracts of gold. In the opinion of management and its legal counsel, the objections are unfounded so Buenaventura should get a favorable result in the initiated claim process.

~~F-82~~

~~Notes to the consolidated financial statements(continued)~~


-		In November 2018, the Tax Court resolved the appeal proceedings not recognizing the contracts of physical deliveries and the contractual obligation and considers that the payments correspond to an advance financial settlement of Contracts of Derivative Financial Instruments and that the Company would not have accredited the purpose of hedge and the risks covered. TheCompany’s Managementwith the support of its legal advisers initiated various administrative and judicial actions to present their arguments and defend their rights.
		These disputes would be resolved in judicial instances in the Judicial Power. As of December 31,2019,the total possible contingencies related to these audits amount toS/1,514million (equivalent toUS$456million).

	-	During 2015, SUNAT reviewed the income tax of 2009 and 2010. As a result, they did not recognize Buenaventura declared tax deductions by S/76,023,000 (equivalent to US$~~22,626,000~~)22,919,000) and the compensation of tax losses for S/561,758,000 (equivalent to US$169,357,000). The main unrecognized deductions by Buenaventura are: the non-deductibility of bonuses paid to contractors, a provision of doubtful accounts not accepted as an expense and income unduly deducted. ~~The possible contingencies~~In the opinion of Management and its legal counsel, Buenaventura should get a favorable result in the initiated claim process.

		In December 2018, the Tax Court resolved the appeal files confirming reparations for S/70,277,000 (equivalent to US$21,187,000) basically related to the ~~years 2009~~provision for collection of doubtful debts as an expense and ~~2010 amount~~unfounded income unduly deducted. To date, the Company’s Management, with the support of its legal advisors, has initiated administrative and judicial actions to~~S/567,794,000(equivalent toUS$168,986,000) as~~ present its arguments and make its rights prevail. These disputes would be resolved in judicial instances in the Judicial Power. As of December 31, ~~2016.~~ 2019, the total possible contingencies related to these audits amount to S/515 million (equivalent to US$155 million).

Notes to the consolidated financial statements(continued)

			In December 2019, Tax Administration initiated actions of forced collection of interest and fines for the reliquidation that it has made of prepayments from January to December 2009 and January to February 2010. These are based on the 2007 and 2008 annual tax fiscal years, which were recalculated by SUNAT with the objections mentioned in the first and second paragraphs and which are questioned in the judicial process. On December 20, 2019, SUNAT executed the forced collection of debt amounting to S/120,262,000 (equivalent to US$36,322,000). In opinion of the legal advisors of the Company, favorable results should be obtained in the judicial process that has been initiated, therefore an account receivable have been registered in the heading “Trade and other accounts receivable, net”, see note 7(g).

		-	During the year 2018, the Tax Administration has audited the income tax declaration for 2014. As a result of this audit, SUNAT does not recognize the Company deductions declared for S/94,898,000 (equivalent to US$28,610,000). The main disagreements are related to the non-deductibility of bonus paid to contractors, which also affects the compensation of tax losses that can be withheld and the use of balances in favor that are not recognized by SUNAT. In the opinion of the Management and its legal advisors, these repairs are not supported, so that a favorable result in the claim process that they have initiated will be obtained.

		-	During the year 2019, the Tax Administration reviewed the income tax of the year 2013. As a result, SUNAT did not recognize Buenaventura declared tax deductions by S/148,730,000 (equivalent to US$44,839,000). The main unrecognized deductions by Buenaventura are the non-deductibility of bonuses paid to contractors, the compensation of tax losses that can be withheld and the use of balances in favor that are not recognized by SUNAT. In the opinion of Management and its legal counsel, Buenaventura should get a favorable result in the initiated claim process.

		-	During the year 2019,the Tax Administration reviewed the income tax of the year2014.As a result, SUNAT did not recognize Buenaventura declared tax deductions related to the non-deductibility of bonus paid to contractorsfor S/2,067,000 (equivalent toUS$623,000).In the opinion of Management and its legal counsel, Buenaventura should get a favorable result in the initiated claim process.

		TheCompany’s Managementand its legal advisors are of the opinion that the results of the procedures in the various instances will be favorable to the Company, which is why they consider that it is not necessary to recognize any provision for these contingencies.

~~Subsidiaries -~~

~~During 2015, the tax authorities reviewed the income tax of the subsidiary Buenaventura Ingenieros S.A (BISA) for the fiscal years 2011 and 2012. The main unrecognized deductions are related~~Notes to the deduction of bonuses paid to staff for S/12,611,000 (equivalent to US$3,753,000) as well as the omission of income from transfer of fuel to suppliers, amounting to S/8,323,000 (equivalent to US$2,477,000). In addition, SUNAT requires the payment of the value added tax related to allegedly omitted revenues in the transfer of fuel to suppliers for S/8,323,000 (equivalent to US$2,477,000). BISA initiated claim process for the above assessments.

~~During 2016 Tax Authorities have resolved the claim process, maintaining the assessment related to the omission of income from transfer of fuel to suppliers.~~

~~The possible contingencies for income tax for~~ the years 2011 and 2012 amount to S/5,230,000 (equivalent to US$1,556,000) and for the value added tax amount to S/3,455,000 (US$1,028,000) as of December 31, 2016. In the opinion of Management of this subsidiary and its legal advisors, BISA should get a favorable result in the initiated claim process initiated in 2016.

On May 30, 2014, the Tax Authority issued tax and fines assessments for the 2011 income tax of the subsidiary Sociedad Minera El Brocal S.A.A. (El Brocal). Within the terms of law, El Brocal filed an appeal that is pending resolution to date. It should be noted that on June 18, 2014, El Brocal decided to pay under protest the income tax assessment by S/8,333,000 (equivalent to US$2,480,000) so it can have access to a discount benefit of the fine. This payment is recorded as an account receivable.consolidated financial statements(continued)

-	Subsidiaries –
	Sociedad Minera El Brocal S.A.A. –

	-	On May 30, 2014, SUNAT issued tax and fines assessments for the 2011 income tax of El Brocal. Within the terms of law, El Brocal filed an appeal that is pending resolution to date. It should be noted that on June 18, 2014, El Brocal decided to pay under protest the income tax assessment by S/8,333,000 (equivalent to US$2,512,000) so it can have access to a discount benefit of the fine. This payment is recorded as part of account receivables as “Trade and other accounts receivable, net”, see note 7(g).

	-	On January 8, 2015, ~~the Tax Administration~~SUNAT notified to the subsidiary El Brocal a ~~resolution of determination as a result of the inspection~~tax assessment for the 2012 income ~~tax. SUNAT~~tax, which was claimed by the subsidiary and ~~resolved the nullity of it;~~rejected by SUNAT. In addition, SUNAT notified ~~the resolution and fines~~a tax assessment for ~~payments on account~~income tax pre-payments from January to December 2012, which ~~amount~~amounts to S/~~3,996,000~~4,030,000 (equivalent to US$~~1,189,000)~~1,215,000). El Brocal has filed an appeal to the Tax Court, which is pending resolution.

	-	On June 14, 2017, the Tax Administration notified El Brocal determinations and fine resolutions as a result of the inspection procedure initiated by the 2013 income tax where the balances in favor and the taxable tax loss are repaired. These resolutions were claimed without favorable results. On January 24, 2018, El Brocal filed the appeal before the Tax Court.

	-	On May 13, 2019, the Tax Court notified El Brocal through Resolution No. 3062-3-2019 that accumulated the appeal files of the taxable years 2011, 2012 and 2013; and resolves to nullify the repair of the expense for food and confirms the observations related to the loss by derivative financial instruments and the expense of the payment in mining royalties of the 2011 fiscal year and its incidence in the 2012 and 2013 fiscal years.

		As a result of the resolution, the Tax Administration has notified compliance resolutions by relieving income tax and the effects on payments on account for the years 2011, 2012 and 2013. The Brocal has filed an appeal to the Tax Court.

		On August 9, 2019, El Brocal filed an administrative contentious lawsuit against the decision of the Tax Court since El Brocal had credited with reliable documentation the basis for the observations on the loss in derivative financial instruments and mining royalties.

	As of December 31, 2019, the possible contingencies held by El Brocal amount to S/7,014,000 (equivalent to US$2,114,000).

	El Brocal’s legal advisors believe that the outcome of these proceedings will be favorable and therefore, it is not necessary to recognize a provision for these contingencies.

~~El Brocal's legal advisors believe that the outcome of these proceedings will be favorable and, therefore, it is not necessary to recognize a provision for these contingencies.~~

~~F-83~~

Notes to the consolidated financial statements(continued)

	-	During the year 2019, the Tax Administration has reviewed the income tax stament for the year 2015. As a result of this review, SUNAT has verified on December 31, 2019 the determination and fine resolutions where it questions the depreciation rate of two tailings and the deduction of the development costs of Smelter Project for a total S/13,930,000 (equivalent to US$4,200,000) determining a debt of S /3,412,000 (equivalent to US$1,029,000). The Management of El Brocal and its legal advisors considered that the reparations are not supported by what they have started the claim process.

		On January 27, 2020, El Brocal has canceled the fine resolution with the resolution to benefit from the reduction of the fine. The amount disbursed of S/1,456,000 (equivalent to US$439,000) has been recorded as an account receivable in the financial statements of El Brocal.

		Minera La Zanja S.R.L. -
		During the years 2016, 2017 and 2018, SUNAT audited the income tax for the years 2013 and 2015; as a result, SUNAT does not recognize deductions declared for La Zanja. The main challenge is related to the deduction of development costs incurred for S/2,952,000 (equivalent to US$890,000) as of December 31, 2019 (S/2,692,000 equivalent to US$797,000 as of December 31, 2018). In Management´s opinion and its legal advisors, this interpretation is not supported and the subsidiary would obtain a favorable result in the claim process that has started.

		Empresa de Generación Huanza S.A. -
		During 2015, ~~the tax authority~~SUNAT audited the 2014 income tax of the subsidiary ~~Empresa de Generación Huanza S.A.~~Huanza. As a ~~consequence,~~result, a portion of the depreciation of its fixed assets is not recognized for S/27,532,000 (equivalent to US$~~8,194,000)~~8,300,000). The possible contingency amounts to S/6,999,000 (equivalent to US$2,110,000) as of December 31, 2019 (S/6,396,000 equivalent to US$1,893,000 as of December 31, 2018). In the opinion of ~~the~~Huanza´ Management and its legal advisors, this interpretation has no basis and therefore, Huanza would obtain a favorable result in the appeal process that has begun.

		Río Seco S.A.-
		The Customs Division of the SUNAT has determined an alleged omission in the payment of the General Sales Tax of S/1,815,000 (equivalent to US$547,000) in an import made in 2012 of certain equipment for the construction of The Industrial Plant. SUNAT supported its position that Rio Seco should have included the amount of the consideration paid by Río Seco for the engineering services provided by its suppliers abroad in the customs value. In the opinion of Management and its legal advisors, this observation is not substantiated and a favorable ruling should be obtained in the complaint and appeal process.

		On March 13, 2019, the Tax Court notified Resolution No. 0844-A-2019 that confirmed the observation of the Tax Administration.

Notes to the consolidated financial statements(continued)

	-	On May 17, 2019, the Tax Administration initiated the coercive collection actions of the tax debt. Río Seco initiated several administrative and judicial actions to suspend the collection, without favorable results. During July to September 2019, Tax Administration has executed the forced collection of the tax debt amounting to S/11,153,000 (equivalent to US$3,368,000), see note 7(g). In the opinion of the legal advisors of Río Seco, a favorable result should be obtained in the judicial process that has been initiated, so that said collection has been recorded in the heading “Trade and other receivables, net”.

		On June 13, 2019, Rio Seco has filed an administrative contentious lawsuit against the Tax Court’s Resolution so that the Judicial Power declares its nullity and ignore the Tax Administration’s objection.

		Other subsidiaries -
		In addition, ~~the Tax Authority~~SUNAT has issued tax assessments as a result of the audit of income taxes of other subsidiaries ~~of the Company~~ for S/~~8,922,000~~4,654,000 (equivalent to US$~~2,655,000)~~1,403,000). In the opinion of the Management and its legal advisors, the assessments are of possible occurrence; however, the subsidiaries expect to obtain a favorable outcome in the appeal processes initiated.

		Associates-
		Cerro Verde -
		Mining Royalties
		On June 23, 2004, Law 28528 was approved, which requires the holder of a mineral concession to pay a royalty in return for the exploitation of metallic and non-metallic minerals. The royalty is calculated using rates ranging from 1% to 3% of the value of concentrate or its equivalent according to the international price of the commodity published by the Ministry of Energy and Mines. Prior to January 1, 2014, Cerro Verde determined that these royalties were not applicable because it operated under the 1998 Stability Agreement with the Peruvian government. However, beginning January 1, 2014, Cerro Verde began paying royalties calculated on operating income with rates between 1% to 12% and a new special mining tax for its entire production basis under its current 15-year stability agreement, which became effective January 1, 2014.

		SUNAT assessed mining royalties on materials processed by the Cerro Verde´s concentrator, which commenced operations in late 2006. These assessments cover the period December 2006 to December 2013. Cerro Verde contested each of these assessments because it believes that its 1998 stability agreement exempts from royalties all minerals extracted from its mining concession, irrespective of the method used for processing such minerals. No assessments can be issued for years after 2013, as Cerro Verde began paying royalties on all of its production in January 2014 under its new 15-year stability agreement.

~~Associates -~~

~~Cerro Verde -~~

~~Mining Royalties~~

SUNAT, the Peruvian tax authority, has assessed mining royalties on materials processed by Cerro Verde´s concentrator, which commenced operations in late 2006. These assessments cover the period December 2006 to December 2007, and the years 2008 and September 2011.~~SUNAT issued resolutions declaring the claims of Cerro Verde unfounded for the periods 2006 to 2009~~.~~Cerro Verde appealed those decisions~~Notes to the ~~Tax Court~~consolidated financial statements. In July 23, 2013, the Peruvian Tax Tribunal issued two decisions affirming assessments for the period December 2006 through December 2008. Decisions by the Tax Tribunal ended the administrative stage of the appeal procedures for these assessments.

In September 18, 2013, Cerro Verde filed two administrative contentious claims before the Judiciary against the decisions of the Tax Court that dismiss the appeals presented. In relation to the periods 2006 and 2007, the 20th Administrative Court Specialized in Tax matters dismissed the claim filed. On May 2, 2016, Cerro Verde filed an appeal with the 7th Administrative Court.

~~In September 2013, Cerro Verde filed judiciary appeals to the~~Judicial Branch (Civil Court of the Superior Court of Justice of Arequipa), suing SUNAT, the Ministry of Energy and Mines and the Tax Court for requiring Cerro Verde to pay mining royalties during the period of Stability Contract in effect until December 31, 2013. Cerro Verde believes that said Stability Contract entered into with the Peruvian State in 1998 (which was effective as of January 1, 1999 and expires on December 31, 2013), guarantees that all the minerals extracted from its production unit are included in the stabilized tax and administrative regime, which does not include the payment obligation of the mining royalties~~. On September 15, 2016, Judiciary court dismissed the constitutional claim and on October 25, 2016, Cerro Verde appealed this decision.~~

With respect to the judiciary appeal related to the assessment for the year 2008, on December 17, 2014, the Eighteenth Contentious Administrative Court rendered its decision upholding the Company’s position and nullifying SUNAT’s assessment and the Tax Tribunal´s resolution (S/106.4 million). In December 2014, SUNAT and the Tax Court appealed this decision. The Court’s position also invalidates all penalties and interest assessed by SUNAT for that period, amounting to S/139.7 million. On January 29, 2016, the Sixth Superior Justice Court nullified the decision of the Eighteenth Contentious Administrative Court. On February 23, 2016, Cerro Verde appealed the decision to the Supreme Court.(continued)

	~~F-84~~	On October 29, 2019, Cerro Verde completed the payments of disputed assessments related to mining royalties for the period December 2006 to December 2008 that were under an installment program since 2014. Under that installment program, Cerro Verde made payments totaling S/711.1 million (US$221.9 million based on the date of payment exchange rate and US$214.4 million based on the December 31, 2019, exchange rate).

		With respect to the judiciary appeal related to disputed royalty assessments for the year 2006-2007, on August 9, 2017, the Cerro Verde filed a cassation appeal before the Supreme Court against the resolution issued by the Seventh Contentious Administrative Court, which was admitted in December 2017. The oral hearing before the Supreme Court took place on November 20, 2018 and their decision is pending.

		In September 2018, the Peruvian Tax Tribunal confirmed SUNAT’s resolution that ordered the payment of royalties and denied the Cerro Verde’s request to waive penalties and interest for the period January 2009 through September 2011. Cerro Verde elected not to appeal the Tax Tribunal’s decision to the Peruvian Judiciary and in early 2020, Cerro Verde initiated international arbitration.

		On October 2018, SUNAT notified Cerro Verde demands for payments based on the Tax Tribunal’s decisions for the period January 2009 to September 2011. Cerro Verde requested, and was granted two installment payment programs, including a six-month deferral and 66 equal monthly payments for each one, for the period January 2009 through September 2011. Total debt as of December 31, 2019 is S/1.0 billion (approximately US$314.1 million based on the December 31, 2019, exchange rate, including deferred interest, interest and penalties of US$202.8 million). As of December 31, 2019 Cerro Verde has made payments totaling S/315.1 million (US$94.7 million based on the date of payment exchange rate and US$95.0 million based on the December 31, 2019, exchange rate).

		On January 18, 2018, Cerro Verde received assessments from SUNAT related to mining royalties for the fourth quarter of 2011, on February 15, 2018, Cerro Verde appealed these assessments and SUNAT issued resolutions denying this appeal. On November 21, 2018, Cerro Verde appealed SUNAT’s resolution to the Tax Court. On December 4, 2019, Cerro Verde received a resolution denying the appeal of assessments for the fourth quarter of 2011. On December 18, 2019, SUNAT notified Cerro Verde of its demands for payment and on December 26, 2019, Cerro Verde paid the total debt of S/57.6 million (US$17.3 million based on the date of payment exchange rate and US$17.4 million based on the December 31, 2019, exchange rate). Also, on January 18, 2018, Cerro Verde received assessments from SUNAT related to special mining tax from the fourth quarter of 2011 to the fourth quarter of 2012. Cerro Verde appealed these assessments and SUNAT issued resolutions denying this appeal. Consequently, Cerro Verde appealed these assessments to the Tax Court which was also denied the appeal in July 2019. Cerro Verde then requested, and was granted an installment payment program, including a six-month deferral and 66 equal monthly payments, for the fourth quarter of 2011 through the fourth quarter of 2012. Total debt as of December 31, 2019, is S/255.8 million (approximately US$77.1 million based on the December 31, 2019, exchange rate, including deferred interest, interest and penalties of US$40.5 million). Payments for this installment program will start in the first quarter of 2020.

Notes to the consolidated financial statements(continued)

On ~~October 1, 2013, SUNAT served~~April 18, 2018, Cerro Verde a demand for payment totaling S/492 million (approximately US$146 million based on the December 31, 2016 exchange rate, including interest and penalties of US$86 million) based on the Tax Tribunal’s decisionsreceived assessments from SUNAT related to mining royalties for the ~~period December 2006~~year 2012. On May 17, 2018, Cerro Verde appealed these assessments. On January 23, 2019, Cerro Verde received a resolution issued by SUNAT denying the appeal of assessments for the year 2012. Cerro Verde decided not to ~~December 2008. As permitted by law,~~appeal these resolutions. Cerro Verde requested, and was granted an installment payment program, ~~that deferred payment for six months~~including a six-month deferral and ~~thereafter satisfies the amount via~~ 66 equal monthly ~~payments. As~~payments, for the year 2012. Total debt as of December 31, ~~2016,~~2019, is S/266.1 million (approximately US$80.2 million based on the December 31, 2019, exchange rate, including deferred interest, interest and penalties of US$45.7 million). Cerro Verde has made payments totaling S/~~323~~65.7 million (US$~~104~~19.5 million based on the date of payment exchange rate and US$9619.8 million based on December 31, 2016 exchange rates) under the installment program, which are presented in the non-current portion of other non-financial assets in the statements of financial position. Based on the results rendered on December 17, 2014 by the Eighteenth Contentious Administrative Court as is described in the previous paragraph, Cerro Verde requested an injunction that was accepted by the Judiciary and implied a modification of the installment program excluding the 2008 portion through SUNAT´s resolution notified to Cerro Verde on October 29, 2015. On August 18, 2016, the Sixth~~Superior Justice Court nullified the injunction described above and on September 28, 2016, SUNAT modified the Installment payment program to include the 2008 portion.~~

In July 2013, a hearing on SUNAT's assessment for 2009 was held, but no decision has been issued by the Tax Tribunal for that year. As of December 31, 2016, the amount of the assessment, including interest and penalties, for the year 2009 was S/268 million (approximately US$80 million based on the December 31, 2016 exchange rate).

On April 13, 2016, Cerro Verde received assessments from SUNAT for the year 2010 and for January to September 2011. On May 11, 2016, Cerro Verde appealed these assessments. At December 31, 2016, the amount of assessments from SUNAT including interest and penalties for the years 2010 and January to September 2011 is S/543 million (approximately US$162 million based on the December 31, 2016 exchange rate).

As of December 31, 2016, Cerro Verde estimates that the total exposure associated with mining royalties for the period from December 2006 to December 2013, including interest and penalties, totals US$544 million (based on the December 31, ~~2016~~2019, exchange rate).

On October 10, 2018, Cerro Verde received assessments from SUNAT related to mining royalties and special mining tax for the year 2013. On November 7, 2018, Cerro Verde appealed these assessments. On May 28, 2019, Cerro Verde received resolutions issued by SUNAT denying the appeal of these assessments for the year 2013. Cerro Verde decided not to appeal these resolutions. Cerro Verde requested, and was granted two installment payment programs, including a six-month deferral and 66 equal monthly payments for each one, for the year 2013. As of December 31, ~~2016, no provisions were recorded~~2019, the amount of these assessments, including interest and penalties for mining royalties for the year 2013 is S/183.9 million (approximately US$55.4 million based on the December 31, 2019, exchange rate including interest and penalties of US$29.5 million) and for the special mining tax for the year 2013 is S/151.0 million (approximately US$45.5 million based on the December 31, 2019, exchange rate including interest and penalties of US$22.1 million). Payments for these ~~assessments or for~~installment programs will start in the first quarter of 2020.

In December 2017, as a result of the unfavorable Supreme Court decision on the 2008 royalty matter, Cerro Verde requested the return of the amounts ~~paid under~~that would have been in excess for FONAVI (National Housing Fund) (December 2012 to December 2013), GEM (fourth quarter 2011 until the ~~installment payment program because management~~fourth quarter 2012) and its external legal advisors believe Cerro Verde’s Stability Agreement exempted it from these royalties and believes that the resolution will be favorable to Cerro Verde and any payments should be recoverable.customs duties (2013).

~~F-85~~

Notes to the consolidated financial statements(continued)

Other ~~taxes~~assessments received from SUNAT

Cerro Verde has also received assessments from SUNAT for additional taxes (other than the mining ~~royalty)~~royalty and special mining tax), including penalties and interest. Cerro Verde has filed ~~or will file~~ objections to the assessments because it believes it has properly determined and paid its taxes. A summary of these assessments follows:

							Taxes		Penalty and interest		Total
Year	Taxes		Penalty and interest		Total		US$(000)		US$(000)		US$(000)
	US$(000)		US$(000)		US$(000)

2002 – 2005		15,909		51,495		67,404
2003 - 2005								8,857		39,196	48,053
2006		6,545		49,491		56,036		10,990		51,943	62,933
2007		12,376		17,809		30,185		12,376		17,845	30,221
2008		20,797		12,968		33,765		20,797		12,968	33,765
2009		56,198		47,719		103,917		56,388		51,219	107,607
2010		65,997		98,284		164,281		62,581		107,324	169,905
2011		6,332		2,648		8,980		49,055		65,189	114,244
2014 - 2016		15,909		-		15,909
2012								51,981		11,257	63,238
2014 - 2019								38,975		-	38,975

		200,063		280,414		480,477		312,000		356,941	668,941

As of December 31, ~~2016,~~2019, Cerro Verde has paid US$~~180.7~~396.5 million ~~for these disputed tax assessments,~~from which ~~it believes is collectible. No amounts have been accrued for these assessments.~~US$186.6 million Cerro Verde considers will be recovered.

Yanacocha -

SUNAT challenged the withholding tax rate applied on the technical assistance services provided by non-resident supplier. The services were executed in Peru and also abroad; however, Yanacocha was not able to prove it during the tax audit. Based on that, SUNAT considers that the services were wholly executed in Peru; hence, the withholding tax rate must be 30% instead of 12%. The amount of the contingency involved is S/12.7 million (US$ 3.8 million).

The Tax Administration challenged the withholding tax rate applied on the technical assistance services provided by a non-resident supplier in the years 2002 and 2003. The services were executed in Peru and also abroad; however, Yanacocha was not able to prove that during the tax audit. Based on that, the Tax Administration considers that the services were wholly executed in Peru; therefore, the withholding tax rate should be 30% instead of 12%. Currently there is no contingency in this regard. The tax liability has been paid by Yanacocha.

Notes to the consolidated financial statements(continued)

In 2000, Yanacocha paid a total of US$29 million to assume their respective contractual positions in mining concession agreements with Chaupiloma Dos de Cajamarca S.M.R.L. The contractual rights allowed Yanacocha the opportunity to conduct exploration on the concessions, but not a purchase of the concessions. The tax authority alleges that the payments were acquisitions of mining concessions requiring the amortization of the amounts under the Peru Mining Law over the life of the mine. Yanacocha expensed the amounts at issue in the initial year since the payments were not for the acquisition of a concession but rather these expenses represent the payment of an intangible and therefore, amortizable in a single year or proportionally for up to ten years according to Income Tax Law. In 2010, the Tax Court in Peru ruled in favor of Yanacocha and the tax authority appealed the issue to the judiciary. The first appellate court confirmed the ruling of the Tax Court in favor of Yanacocha. However, in November, 2015, a Superior Court in Peru made an appellate decision overturning the two prior findings in favor of Yanacocha. Yanacocha has appealed the Superior Court ruling to the Peru Supreme Court. On January 18, 2019, the Peru Supreme Court issued notice that three judges support the position of the tax authority and two judges support the position of Yanacocha. Because four votes are required for a final decision, an additional judge was selected to issue a decision and the parties conducted oral arguments in April 2019. In early February 2020, the additional judge ruled in favor of the tax authority, finalizing a decision of the Peru Supreme Court against Yanacocha. Yanacocha will file an action objecting to the fines and interest associated with the underlying decision of the Peru Supreme Court. The potential liability in this matter is in the form of fines and interest in an amount up to US$61 million. It is not possible to fully predict the outcome of this litigation.

-(f)

SUNAT considers that the bonus for closing the collective agreement and the collateral benefits granted to the unionized and non-unionized employees qualify as remunerative concepts; hence, taxed with the contribution to ESSALUD. The contingency amounts to S/10.6 million (US$3.2 million).Uncertain tax treatment –

~~In Management's~~The Group determines whether to consider each uncertain tax treatment separately or together with one or more other uncertain tax treatments and uses the approach that better predicts the resolution of the uncertainty. The Group determined, based on its tax compliance and transfer pricing study that it is probable that its tax treatments (including those for the subsidiaries) will be accepted by the taxation authorities.

Letters of credit

(g)

Letters of credit –

The Group maintains letters of credit with regional governmets and others for US$361,000.

(h)

Letters of credit solidarity –

As of December 31, 2019, the Group maintains letters of credit solidarity in favor of the Ministry of Energy and Mines for amount of US$557,000 and US$23,696,000, a favor from its subsidiary Compañía Minera Colquirrumi S.A. and its ~~legal counsel’s opinion, that interpretation has no support so Yanacocha should get~~ associate Compañía ~~favorable outcome in the appeal initiated.~~

Minera Coimolache S.A., respectively.

~~F-86~~

Notes to the consolidated financial statements(continued)

30.

Transactions with ~~associates~~related companies

(a)

The Group has carried out the following transactions with its ~~associates~~related companies in the years ~~2016, 2015~~2019, 2018 and ~~2014:~~2017:

2016 2015 2014
US$(000) US$(000) US$(000)

Royalties collected to Minera Yanacocha S.R.L.:
S.M.R.L. Chaupiloma Dos de Cajamarca (c) 24,339 32,414 36,867

Services provided to Minera Yanacocha S.R.L. by:
Consorcio Energético de Huancavelica S.A. (electric power transmission) 915 1,694 915
Buenaventura Ingenieros S.A (execution of specific work orders) 177 845 699

Dividends received by:
Minera Yanacocha S.R.L. 130,950 - -
Compañía Minera Coimolache S.A. 11,390 6,691 12,938

Loans granted to:
Sociedad Minera Cerro Verde S.A.A. - 124,800 -

Sales of supplies to Compañía Minera Coimolache S.A. by:
Compañía de Minas Buenaventura S.A.A. 1 56 913
Minera La Zanja S.R.L. - 74 10

Sales of mineral to Minera Yanacocha S.R.L. by:
Compañía de Minas Buenaventura S.A.A. 1,271 2,114 3,258

Interest income over loans granted by Compañía Minera Coimolache S.A. to:
Consorcio Energético de Huancavelica S.A.A. 3 19 35

Supplies purchase to Compañía Minera Coimolache S.A. by:
Minera La Zanja S.R.L. 12 6 24
Compañía de Minas Buenaventura S.A.A. 1 29 6
Consorcio Energético de Huancavelica S.A.A. 10 1 -

Contributions and investments made to:
Canteras del Hallazgo S.A.C. - - 2,012

	2019		2018		2017
	US$(000)		US$(000)		US$(000)

Associates -
Revenues from:
Royalties		22,297		20,385		20,739
Energy		3,181		3,002		2,137
Supplies		1,259		27		4
Mineral		683		1,321		1,414
Mining concessions, property, plant and equipment		11		30		336

Purchase of:
Supplies		9		44		27

Services rendered to:
Services of energy transmission		287		393		559
Operation and maintenance services related to energy transmission		287	��	290		593
Administrative and Management services		359		214		149
Engineering services		-		348		1,119
Constructions services		4		-		1,332


Dividends received and collected from:
Sociedad Minera Cerro Verde S.A.A.		29,377		39,169		-
Compañía Minera Coimolache S.A.		4,011		7,623		9,823

Loans collected from:
Sociedad Minera Cerro Verde S.A.A.		-		-		124,800

Interest income:
Sociedad Minera Cerro Verde S.A.A.		-		-		1,685

Joint Venture -
Interest income:
Transportadora Callao S.A.		86		92		-

Non-controlling shareholders -
Dividends paid to:
Newmont Peru Limited - Sucursal del Perú		6,500		5,560		6,036

Terms and conditions of transactions with related parties

Purchase transactions and services with related parties are made at market prices. Outstanding balances at year-end are unsecured and interest free and settlement occurs in cash. There have been no guarantees provided or received for any related party receivables or payables.

~~F-87~~

Notes to the consolidated financial statements(continued)

2016 2015 2014
US$(000) US$(000) US$(000)

Interest income over loans granted by associates 4,164 2,286 2,887

Services provided to Compañía Minera Coimolache S.A. by:
Empresa de Generación Huanza S.A. (sale of energy) 1,679 1,676 233
Consorcio Energético de Huancavelica S.A. (construction services) 1,152 346 -
Buenaventura Ingenieros S.A (execution of specific work orders) 824 471 589
Consorcio Energético de Huancavelica S.A. (electric power transmission) 332 559 542

(b)

As a result of the transactions indicated in the paragraph (a), the Group had the following accounts receivable and payable from/to associates:

2016 2015
US$(000) US$(000)

Trade and other receivables, note 8(a) -
Trade receivables
Minera Yanacocha S.R.L. (c) 7,079 8,760
Compañía Minera Coimolache S.A. 681 666
7,760 9,426
Other receivables
Sociedad Minera Cerro Verde S.A.A. (d) 126,050 124,988
Minera Yanacocha S.R.L. 379 -
Compañía Minera Coimolache S.A. 240 499
126,669 125,487

Total trade and other receivables 134,429 134,913

Classification by maturity:
Current portion 8,379 9,925
Non-current portion 126,050 124,988

Total trade and other receivables 134,429 134,913

~~F-88~~

	2019		2018
	US$(000)		US$(000)
Trade and other receivables, note 7(a)

Minera Yanacocha S.R.L.		5,920		6,791
Compañía Minera Coimolache S.A.		327		386
		6,247		7,177
Other receivables, note 7(a)
Transportadora Callao S.A.		1,951		2,471
Compañía Minera Coimolache S.A.		1,016		1,234
		2,967		3,705
		9,214		10,882
Trade and other payables, note 14(a)
Compañía Minera Coimolache S.A.		27		36
Sociedad Minera Cerro Verde S.A.A.		2		-
		29		36
Other payables, note 14(a)
Other minor		51		20
		80		56

~~Notes~~As of December 31, 2019 and 2018, there is no allowance for expected credit losses related to ~~the consolidated financial statements(continued)~~related parties accounts.

2016 2015
US$(000) US$(000)

Trade and other payables, note 15(a) -
Trade payables
Compañía Minera Coimolache S.A. 25 892
Minera Yanacocha S.R.L. 1,347 283

1,372 1,175
Other payables
Compañía Minera Coimolache S.A. 3 -
Total trade and other payables 1,375 1,175

(c)

S.M.R.L. Chaupiloma Dos de Cajamarca -

In accordance with mining lease, amended and effective on January 1, 1994, Minera Yanacocha S.R.L. pays the Group a 3% royalty based on quarterly production sold at current market prices, after deducting refinery and transportation costs. The royalty agreement expires in 2032.

(d)

~~Sociedad Minera Cerro Verde S.A. -~~

In December 2014, Cerro Verde entered into shareholder loan agreements with, or affiliates of, Freeport Minerals Corporation, Compañía de Minas Buenaventura S.A.A. and SMM Cerro Verde Netherlands B.V., for up to US$800 million. As of December 31, 2016, Cerro Verde had borrowed US$606 million under these loan agreements (US$800 million under these loan agreements as of December 31,2015), US$125 million with Buenaventura as of December 31, 2016. Interest rate is variable (currently 3.08%). The loans mature on December 22, 2019, unless at that time there is senior financing associated with the expansion project that is senior to the loans, in which case the loans mature two years following the maturity of the senior financing.

~~(e)~~

Key officers -

As of December 31, ~~2016~~2019 and ~~2015, directors, officers and employees of the Group have been involved, directly and indirectly, in financial transactions with certain subsidiaries. As of December 2016 and 2015,~~2018, loans to employees, directors and key personnel amounts to US$~~91,000~~31,000 and US$~~61,000,~~19,000, respectively, are paid monthly and earn interest at market rates.

There are no loans to the Group’s directors and key personnel guaranteed with Buenaventura or any of its Subsidiaries’ shares.

~~F-89~~

Notes to the consolidated financial statements(continued)

The Group’s key executives’ compensation (including the related income taxes assumed by the Group) ~~as of December 31, 2016,~~for the years 2019 and ~~2015~~2018 are presented below:

						2019		2018
	2016		2015			US$(000)		US$(000)
	US$(000)		US$(000)
Accounts payable:
Directors’ remuneration					Directors’ remuneration		1,746		2,628
Salaries		1,034		3,381	Salaries		1,020		1,057
Directors’ compensations		1,016		1,047
Share-based compensation plans		598		330
Provision for bonus to officers					Provision for bonus to officers		6,205		6,345

Total		2,648		4,758	Total		8,971		10,030
Disbursements:					Disbursements:
Salaries		9,922		7,864	Salaries		12,690		12,908
Directors’ compensations					Directors’ compensations		1,746		2,628

Total		9,922		7,864	Total		14,436		15,536

(e)

The account receivable from Consorcio Transportadora Callao corresponds to the disbursements made between 2011 and 2013 by the subsidiary El Brocal in order to participate in the joint venture (see note 10(c)). This account receivable generates interest at an annual rate of 6.25 percent plus LIBOR at 3 months and it is estimated that it will be collected from the year 2023.

31.

Disclosure of information on segments

Management has determined its operating segments based on reports that the Group’s Chief Operating Decision Maker (CODM) uses for making decisions. The Group is organized into business units based on its products and services, activities and geographic locations. The broad categories of the Group’s business units are:

Production and sale of minerals (mining units in operation).

Exploration and development ~~activities~~projects.

~~Construction and engineering services~~

Energy generation and transmission ~~services~~services.

Insurance ~~brokerage~~brokerage.

Rental of mining ~~concessions~~concessions.

Holding of investment in shares (mainly in the associate company Minera Yanacocha S.R.L. ~~and the Group’s subsidiary S.M.R.L. Chaupiloma Dos de Cajamarca)~~).

Industrial activities.

The accounting policies used by the Group in reporting segments internally are the same as those contained in the notes of the consolidated financial statements.

The CODM monitors the operating results of the business units separately for the purpose of making decisions about resource allocation and performance assessment. Segment performance is evaluated based on operating profit or loss and is measured consistently with operating profit or loss in the Group’s consolidated financial statements. ~~Also,~~In addition, the Group’s financing and income taxes are managed at the corporate level and are not allocated to the operating segments, except for those entities, which are managed independently.

F-107

Notes to the consolidated financial statements(continued)

Corporate information mainly includes the following:

In segment information of profit ~~and~~or loss -

Sales to third parties of gold purchased by the Parent company from La Zanja mining unit and the corresponding cost of sale as well as other intercompany sales.

Administrative expenses, other income (expenses), exchange gain (loss), finance costs and income and income tax that cannot be directly allocated to the operational mining units owned by the Parent company (Uchucchacua, Orcopampa, Julcani and ~~Mallay)~~Tambomayo).

~~F-90~~

~~Notes to the consolidated financial statements(continued)~~

Exploration activities in non-operating areas, carried out directly by the Parent company and not by the consolidated separate legal entities.

Participation in subsidiaries and associate companies of the Parent company, which are accounted for using the equity method.

~~Gain on business combination occurred in 2014, see note 5 to the consolidated financial statements.~~

In the segment information of assets and liabilities –-

Investments in Sociedad Minera Cerro Verde S.A.A. and Compañía Minera Coimolache S.A., associate companies ~~which~~that are directly owned by the Parent company and are accounted for using the equity method; see note 1110 to the consolidated financial statements.

Assets and liabilities of the operational mining units owned directly by the Parent company since this is the way the CODM analyzes the business. Assets and liabilities of other operating segments are allocated based on the assets and liabilities of the legal entities included in those segments.

Adjustments and eliminations mainly include the following:

In segment information of consolidated statements of profit ~~and~~or loss –

The elimination of any profit or loss of investments accounted for under the equity method and not consolidated by the Group corresponding to the associate companies: Minera Yanacocha S.R.L., Sociedad Minera Cerro Verde S.A.A. and Compañía Minera Coimolache S.A.

The elimination of intercompany sales and cost of sales.

The elimination of any equity pickup profit or loss of the subsidiaries of the Parent company.

In the segment information of assets and liabilities –

The elimination of the assets and liabilities of the investments accounted for under the equity method and not consolidated, corresponding to the associate companies: Minera Yanacocha S.R.L., Sociedad Minera Cerro Verde S.A.A. and Compañía Minera Coimolache S.A.

The elimination of any equity pickup investments of the subsidiaries of the Parent company.

The elimination of intercompany receivables and payables.

Refer to Note ~~21(a)~~20(a) to the consolidated financial statements where the Group reports revenues from external customers for each product and service, and revenues from external customers attributed to Peru and foreign countries. The revenue information is based on the locations of customers.

Refer to Note ~~21(b)~~20(d) to the consolidated financial statements for information about major customers (clients representing more than 7210 percent of the Group’s revenues).

All non-current assets are located in Peru.

~~F-91~~

F-108

Notes to the consolidated financial statements(continued)

																																											Equity accounted investees																																			Equity accounted investees
	Ucchuchacua (Operation)			Orcopampa (Operation)			Julcani (Operation)			Mallay (Operation)			Colquijirca (Operation)			La Zanja (Operation)			Exploration and development mining projects			Construction and engineering			Energy generation and transmission			Insurance brokerage			Rental of mining concessions			Holding of investment in shares			Industrial activities			Corporate			Minera Yanacocha S.R.L.			Sociedad Minera Cerro Verde S.A.A				Compañía Minera Coimolache S.A.				Total operating segments				Adjustments and eliminations				Total			Uchucchacua (Operation)	Orcopampa (Operation)	Julcani (Operation)	Tambomayo (Operation)	Colquijirca (Operation)	La Zanja (Operation)	Exploration and development mining projects	Energy generation and transmission	Insurance brokerage	Rental of mining concessions	Holding of investment in shares	Industrial activities	Corporate	Minera Yanacocha S.R.L.	Sociedad Minera Cerro Verde S.A.A	Compañía Minera Coimolache S.A.	Total operating segments	Adjustments and eliminations	Total
	US$(000)			US$(000)			US$(000)			US$(000)			US$(000)			US$(000)			US$(000)			US$(000)			US$(000)			US$(000)			US$(000)			US$(000)			US$(000)			US$(000)			US$(000)			US$(000)				US$(000)				US$(000)				US$(000)				US$(000)			US$(000)	US$(000)	US$(000)	US$(000)	US$(000)	US$(000)	US$(000)	US$(000)	US$(000)	US$(000)	US$(000)	US$(000)	US$(000)	US$(000)	US$(000)	US$(000)	US$(000)	US$(000)	US$(000)

Year 2016
Year 2019
Results:
Continuing operations
Operating income
Operating income:
Net sale of goods		240,470			244,745			54,666			46,741			230,611			178,922			-			-			-			-			-			-			5,982			191,075			761,193			2,384,154				198,873				4,537,432				(3,521,762	)			1,015,670		186,016	58,902	40,082	188,175	299,252	43,520	−	−	−	−	−	6,046	−	734,526	2,890,066	241,173	4,687,758	(3,865,828)	821,930
Net sale of services		-			-			-			-			-			-			-			12,633			57,312			12,675			-			615			19,507			-			17,713			-				-				120,455				(91,673	)			28,782		−	−	−	−	−	−	−	59,690	15,687	−	615	19,557	−	4,776	−	−	100,325	(76,664)	23,661
Royalty income		-			-			-			-			-			-			-			-			-			-			24,339			-			-			-			-			-				-				24,339				-				24,339		−	−	−	−	−	−	−	−	−	22,297	−	−	−	−	−	−	22,297	−	22,297
Total operating income		240,470			244,745			54,666			46,741			230,611			178,922						12,633			57,312			12,675			24,339			615			25,489			191,075			778,906			2,384,154				198,873				4,682,226				(3,613,435	)			1,068,791		186,016	58,902	40,082	188,175	299,252	43,520	−	59,690	15,687	22,297	615	25,603	−	739,302	2,890,066	241,173	4,810,380	(3,942,492)	867,888

Operating costs
Cost of sales of goods		(118,561	)		(97,325	)		(23,633	)		(23,392	)		(178,231	)		(80,873	)		-			-			-			-			-			-			(2,962	)		(190,041	)		(725,740	)		(1,553,040	)			(107,913	)			(3,101,711	)			2,603,899				(497,812	)
Cost of services		-			-			-			-			-			-			-			(9,732	)		(25,250	)		-			-			-			(8,723	)		-			(2,951	)		-				-				(46,656	)			35,902				(10,754	)
Cost of sales of goods, excluding depreciation and amortization																																																	(128,523)		(54,739)		(26,586)		(76,827)		(223,998)		(39,693)		−		−		−	−	−	(8,517)	−	(692,721)	(2,101,668)	(187,156)	(3,540,428)	3,027,554	(512,874)
Cost of services, excluding depreciation and amortization																																																	−		−		−		−		−		−		−		(22,209)		−	−	−	(6,167)	−	(1,160)	−	−	(29,536)	26,158	(3,378)
Depreciation and amortization																																																	(21,053)		(7,563)		(9,178)		(83,657)		(74,335)		(9,103)		−		(10,075)		−	−	−	(11,979)	−	−	−	−	(226,943)	608	(226,335)
Exploration in operating units		(31,406	)		(45,111	)		(11,069	)		(7,960	)		-			(603	)		-			-			-			-			-			-			-			-			-			-				-				(96,149	)			-				(96,149	)	(8,917)	(9,040)	(5,864)	(11,613)	(8,727)	(2)	−	−	−	−	−	−	−	−	−	−	(44,163)	−	(44,163)
Depreciation and amortization		(18,541	)		(11,403	)		(6,756	)		(11,393	)		(53,637	)		(67,542	)		(27	)		(253	)		(10,904	)		-			(16	)		(221	)		(10,968	)		(986	)		-			-				-				(192,647	)			-				(192,647	)
Mining royalties		(1,687	)		(21,482	)		(381	)		(314	)		(2,726	)		(1,021	)		-			-			-			-			-			-			-			-			-			-				-				(27,611	)			-				(27,611	)	(1,955)	(5,220)	(418)	(1,857)	(2,953)	(429)	−	−	−	−	−	−	−	−	−	−	(12,832)	−	(12,832)

Total operating costs		(170,195	)		(175,321	)		(41,839	)		(43,059	)		(234,594	)		(150,039	)		(27	)		(9,985	)		(36,154	)		-			(16	)		(221	)		(22,653	)		(191,027	)		(728,691	)		(1,553,040	)			(107,913	)			(3,464,774	)			2,639,801				(824,973	)	(160,448)	(76,562)	(42,046)	(173,954)	(310,013)	(49,227)	−	(32,284)	−	−	−	(26,663)	−	(693,881)	(2,101,668)	(187,156)	(3,853,902)	3,054,320	(799,582)

Gross profit (loss)		70,275			69,424			12,827			3,682			(3,983	)		28,883			(27	)		2,648			21,158			12,675			24,323			394			2,836			48			50,215			831,114				90,960				1,217,452				(973,634	)			243,818		25,568	(17,660)	(1,964)	14,221	(10,761)	(5,707)	−	27,406	15,687	22,297	615	(1,060)	−	45,421	788,398	54,017	956,478	(888,172)	68,306

Operating expenses, net
Administrative expenses		(13,265	)		(13,810	)		(4,582	)		(2,708	)		(11,802	)		(1,980	)		(7,024	)		(4,492	)		(2,450	)		(12,245	)		(112	)		(227	)		(635	)		(12,083	)		(8,780	)		-				(4,144	)			(100,339	)			18,647				(81,692	)	(16,115)	(5,209)	(3,561)	(16,512)	(8,865)	(2,223)	(2,416)	(4,073)	(11,607)	(188)	(363)	(1,310)	(4,894)	(1,744)	−	(4,638)	(83,718)	7,421	(76,297)
Selling expenses																																																	(6,876)		(258)		(403)		(3,940)		(10,856)		(321)		−		(1,115)		−	−	−	(1,324)	−	(1,722)	−	(1,163)	(27,978)	3,665	(24,313)
Exploration in non-operating areas		-			-			-			-			(1,939	)		(4,619	)		(17,102	)		-			-			-			-			-			-			(4,129	)		-			-				-				(27,789	)			1,200				(26,589	)	(2,534)	−	−	−	(2,011)	(2,784)	(90)	−	−	−	−	−	(4,492)	−	−	−	(11,911)	32	(11,879)
Selling expenses		(4,632	)		(1,075	)		(845	)		(1,549	)		(10,650	)		(938	)		-			-			(1,124	)		-			-			-			(1,154	)		(115	)		(3,695	)		(131,391	)			(1,128	)			(158,296	)			136,563				(21,733	)
Impairment loss of long-lived assets		-			-			-			-			-			-			-			-			-			-			-			-			-			-			(889,499	)		-				-				(889,499	)			889,499				-
Impairment recovery (loss) of long-lived assets																																																	−		−		(2,083)		−		−		−		−		−		−	−	−	−	−	−	−	−	(2,083)	−	(2,083)
Reversal (provision) of contingent and others																																																	(183)		1		(148)		127		2,079		(98)		(40)		166		−	−	−	−	1,067	−	−	−	2,971	(3)	2,968
Other, net		2,265			764			(556	)		(323	)		276			4,237			1,271			1,912			10,527			-			11			(16	)		546			9,169			(122,151	)		(24,107	)			755				(115,420	)			133,812				18,392		(4,147)	(8,104)	(776)	(3,767)	(6,568)	(1,119)	(419)	13,813	−	135	79	341	(2,686)	(35,987)	−	(5,667)	(54,872)	40,157	(14,715)

Total operating expenses, net		(15,632	)		(14,121	)		(5,983	)		(4,580	)		(24,115	)		(3,300	)		(22,855	)		(2,580	)		6,953			(12,245	)		(101	)		(243	)		(1,243	)		(7,158	)		(1,024,125	)		(155,498	)			(4,517	)			(1,291,343	)			1,179,721				(111,622	)	(29,855)	(13,570)	(6,971)	(24,092)	(26,221)	(6,545)	(2,965)	8,791	(11,607)	(53)	(284)	(2,293)	(11,005)	(39,453)	−	(11,468)	(177,591)	51,272	(126,319)

Operating profit (loss)		54,643			55,303			6,844			(898	)		(28,098	)		25,583			(22,882	)		68			28,111			430			24,222			151			1,593			(7,110	)		(973,910	)		675,616				86,443				(73,891	)			206,087				132,196		(4,287)	(31,230)	(8,935)	(9,871)	(36,982)	(12,252)	(2,965)	36,197	4,080	22,244	331	(3,353)	(11,005)	5,968	788,398	42,549	778,887	(836,900)	(58,013)
Other income (expense),net
Share in the results of associates under equity method		-			-			-			-			-			-			-			-			4,579			(9	)		-			(448,017	)		-			(370,381	)		-			-				-				(813,828	)			448,507				(365,321	)
Other income (expense), net
Share in the results of associates and joint ventures																																																	−		−		−		−		(44)		−		−		10,374		−	−	(53,143)	−	45,778	−	−	−	2,965	44,745	47,710
Finance income																																																	−		−		−		−		417		2,006		14		263		15	30	10	277	7,751	18,859	10,356	549	40,547	(30,872)	9,675
Finance costs		(379	)		(197	)		(87	)		(41	)		(12,554	)		(2,614	)		(300	)		(545	)		(10,564	)		(10	)		(2	)		(14	)		(962	)		(5,156	)		(15,107	)		(80,438	)			(1,614	)			(130,584	)			99,004				(31,580	)	(532)	(733)	(1,002)	(505)	(11,440)	(3,715)	(561)	(7,483)	(89)	(4)	(6)	(990)	(16,249)	(58,059)	(115,877)	(3,598)	(220,843)	178,670	(42,173)
Net gain (loss) from currency exchange difference		(203	)		(59	)		(61	)		(46	)		(270	)		65			562			5			(138	)		426			(93	)		5			222			2,223			(13,741	)		7,857				(117	)			(3,363	)			6,001				2,638		(124)	76	3	(12)	(191)	14	(156)	62	(119)	(9)	(9)	208	(481)	2,902	5,574	277	8,015	(8,749)	(734)
Finance income		3			3			1			-			256			87			-			8			820			12			-			4			1			7,480			2,132			954				38				11,799				(4,969	)			6,830

Total other income (expense), net		(579	)		(253	)		(147	)		(87	)		(12,568	)		(2,462	)		262			(532	)		(5,303	)		419			(95	)		(448,022	)		(739	)		(365,834	)		(26,716	)		(71,627	)			(1,693	)			(935,976	)			548,543				(387,433	)
Total other income (expenses), net																																																	(656)		(657)		(999)		(517)		(11,258)		(1,695)		(703)		3,216		(193)	17	(53,148)	(505)	36,799	(36,298)	(99,947)	(2,772)	(169,316)	183,794	14,478

Profit (loss) before income tax		54,064			55,050			6,697			(985	)		(40,666	)		23,121			(22,620	)		(464	)		22,808			849			24,127			(447,871	)		854			(372,944	)		(1,000,626	)		603,989				84,750				(1,009,867	)			754,630				(255,237	)	(4,943)	(31,887)	(9,934)	(10,388)	(48,240)	(13,947)	(3,668)	39,413	3,887	22,261	(52,817)	(3,858)	25,794	(30,330)	688,451	39,777	609,571	(653,106)	(43,535)
Income tax		(1,814	)		(1,895	)		(424	)		(365	)		7,851			(18,256	)		(245	)		(178	)		(9,224	)		(245	)		(6,761	)		-			461			(22,409	)		(43,126	)		(263,082	)			(27,894	)			(387,606	)			334,102				(53,504	)
Current income tax																																																	−		−		−		−		(25)		(35)		−		(4,044)		(1,223)	(6,546)	(39)	−	−	(64,927)	(298,074)	(26,335)	(401,248)	389,337	(11,911)
Deferred income tax																																																	−		−		−		−		15,410		(5,382)		−		(5,515)		91	−	−	1,554	31,344	−	−	15,017	52,519	(15,018)	37,501
Profit (loss) from continuing operations																																																	(4,943)		(31,887)		(9,934)		(10,388)		(32,855)		(19,364)		(3,668)		29,854		2,755	15,715	(52,856)	(2,304)	57,138	(95,257)	390,377	28,459	260,842	(278,787)	(17,945)
																																																																								10,374
Profit (loss) from continued operations		52,250			53,155			6,273			(1,350	)		(32,815	)		4,865			(22,865	)		(642	)		13,584			604			17,366			(447,871	)		1,315			(395,353	)		(1,043,752	)		340,907				56,856				(1,397,473	)			1,088,732				(308,741	)
Loss from discontinued operations																																																																											(10,514)

Loss from discontinued operations, see note 1(e)																																																															(19,073	)

Net loss																																																															(327,814	)
Loss for the year																																																																											(28,459)

Total assets		105,950			46,085			25,118			16,958			763,092			246,106			745,510			22,481			379,964			6,226			7,439			427,439			120,038			2,593,838			2,045,825			7,635,623				334,555				15,522,247				(11,255,832	)			4,266,415		146,486	46,750	41,858	425,297	725,973	138,458	398,838	382,481	13,822	6,252	458,212	104,335	2,371,464	2,327,714	7,809,424	379,915	15,777,279	(11,670,005)	4,107,274
Total liability		35,148			26,536			19,733			7,302			353,184			129,689			15,413			11,647			222,324			3,102			2,684			148			29,751			556,172			1,160,102			2,796,342				131,051				5,500,328				(4,281,126	)			1,219,202

Total liabilities																																																	42,265		36,945		35,045		34,142		329,869		68,100		23,223		183,426		6,007	2,286	101	20,918	407,153	1,838,002	2,460,175	125,097	5,612,754	(4,473,680)	1,139,074
Other segment information
Investment in associates		-			-			-			-			-			-			-			-			-			-			-			-			-			1,536,607			-			-				-				1,536,607				-				1,536,607
Additions to mining concessions, development costs, property, plant and equipment		28,899			3,452			759			2,729			51,289			14,995			255,673			27			4,236			39			-			-			3,719			1,017			-			-				-				366,834				-				366,834
Investment in associates and joint ventures																																																	-		-		-		-		−		−		−		89,786		-	-	232,154	-	2,073,745	−	−	−	2,395,685	(907,438)	1,488,247
Capital Expenditures																																																	31,479		1,323		1,559		9,641		28,298		1,629		26,494		223		85	-		1,443	453	−	−	−	102,627	−	102,627
Changes in estimates of mine closures plans																																																	176		10,493		2,430		2,277		5,122		5,021		-					-		-	1,203				26,722	−	26,722
Fair value for contingent consideration liability																																																	-		-		-		-		-		-		-		-		-	-	-	-	(655)	−	−	−	(655)	−	(655)
Accounts receivable from sale of assets																																																	-		-		-		-		-		-		-		21,023		-	-	-	-	625	−	−	−	21,648	−	21,648

Notes to the consolidated financial statements(continued)

														Equity accountedinvestees
	Uchucchacua (Operation)	Orcopampa (Operation)	Julcani (Operation)	Tambomayo (Operation)	Colquijirca (Operation)	La Zanja (Operation)	Exploration and development mining projects	Energy generation and transmission	Insurance brokerage	Rental of mining concessions	Holding of investment in shares	Industrial activities	Corporate	Minera Yanacocha S.R.L.	Sociedad Minera Cerro Verde S.A.A	Compañía Minera Coimolache S.A.	Total operating segments	Adjustments and eliminations	Total
	US$(000)	US$(000)	US$(000)	US$(000)	US$(000)	US$(000)	US$(000)	US$(000)	US$(000)	US$(000)	US$(000)	US$(000)	US$(000)	US$(000)	US$(000)	US$(000)	US$(000)	US$(000)	US$(000)
Year 2018
Results:
Continuing operations
Operating income:
Net sale of goods	257,282	153,003	34,104	225,281	333,560	96,611	−	−	−	−	−	6,655	−	635,393	3,054,026	225,447	5,021,362	(3,915,033)	1,106,329
Net sale of services	−	−	−	−	−	−	−	62,962	14,986	−	615	19,908	−	21,965	−	−	120,436	(96,435)	24,001
Royalty income	−	−	−	−	−	−	−	−	−	20,385	−	−	−	−	−	−	20,385	−	20,385
Total operating income	257,282	153,003	34,104	225,281	333,560	96,611	−	62,962	14,986	20,385	615	26,563	−	657,358	3,054,026	225,447	5,162,183	(4,011,468)	1,150,715

Operating costs
Cost of sales of goods, excluding depreciation and amortization	(151,817)	(97,006)	(26,558)	(92,829)	(216,560)	(68,993)	−	−	−	−	−	(6,280)	−	(596,164)	(2,216,663)	(170,866)	(3,643,736)	3,030,355	(613,381)
Cost of services, excluding depreciation and amortization	−	−	−	−	−	−	−	(25,499)	−	−	−	(8,966)	−	(2,217)	−	−	(36,682)	32,364	(4,318)
Depreciation and amortization	(26,181)	(8,802)	(3,353)	(77,029)	(67,666)	(34,088)	−	(10,248)	−	−	−	(11,483)	−	−	−	−	(238,850)	(29)	(238,879)
Exploration in operating units	(20,898)	(29,563)	(8,646)	(20,553)	(9,996)	(74)	−	−	−	−	−	−	−	−	−	−	(89,730)	−	(89,730)
Mining royalties	(2,243)	(13,669)	(237)	(1,936)	(2,345)	(957)	−	−	−	−	−	−	−	−	−	−	(21,387)	(1)	(21,388)
Total operating costs	(201,139)	(149,040)	(38,794)	(192,347)	(296,567)	(104,112)	−	(35,747)	−	−	−	(26,729)	−	(598,381)	(2,216,663)	(170,866)	(4,030,385)	3,062,689	(967,696)
Gross profit (loss)	56,143	3,963	(4,690)	32,934	36,993	(7,501)	−	27,215	14,986	20,385	615	(166)	−	58,977	837,363	54,581	1,131,798	(948,779)	183,019

Operating expenses, net
Administrative expenses	(24,119)	(15,100)	(2,524)	(17,822)	(9,906)	(3,435)	(3,143)	(3,972)	(11,900)	(220)	(512)	(1,627)	2,377	(2,783)	−	(5,644)	(100,330)	23,231	(77,099)
Selling expenses	(8,213)	(775)	(356)	(3,046)	(12,201)	(784)	−	(1,173)	−	−	−	(924)	−	(2,627)	−	(1,135)	(31,234)	4,286	(26,948)
Exploration in non-operating areas	(18,339)	−	−	−	(7,199)	(5,002)	(2,883)	−	−	−	−	−	(4,091)	−	−	−	(37,514)	1,207	(36,307)
Reversal (provision) of contingent and others	6,784	(121)	947	1,263	(3,711)	(57)	6,130	(56)	−	−	−	2	(111)	−	−	−	11,070	178	11,248
Impairment recovery (loss) of long-lived assets	−	−	−	−	−	5,693	−	−	−	−	−	−	−	−	−	−	5,693	−	5,693
Other, net	(5,953)	(3,386)	(1,050)	(5,599)	32,565	(669)	138	562	−		2,773	194	(2,235)	(76,155)	−	(325)	(59,140)	57,832	(1,308)
Total operating expenses, net	(49,840)	(19,382)	(2,983)	(25,204)	(452)	(4,254)	242	(4,639)	(11,900)	(220)	2,261	(2,355)	(4,060)	(81,565)	−	(7,104)	(211,455)	86,734	(124,721)

Operating profit (loss)	6,303	(15,419)	(7,673)	7,730	36,541	(11,755)	242	22,576	3,086	20,165	2,876	(2,521)	(4,060)	(22,588)	837,363	47,477	920,343	(862,045)	58,298
Other income (expense), net
Share in the results of associates and joint ventures	−	−	−	−	−	−	−	8,589	−	−	(25,517)	−	15,081	−	−	−	(1,847)	703	(1,144)
Finance income	−	−	−	−	418	1,649	−	179	−	21	8	127	9,293	11,448	28,089	357	51,589	(41,904)	9,685
Finance costs	(308)	(395)	(95)	(262)	(10,365)	(1,946)	(222)	(7,576)	(2)	(11)	(25)	(932)	(17,194)	(39,024)	(426,733)	(2,935)	(508,025)	469,603	(38,422)
Net gain (loss) from currency exchange difference	196	168	8	209	108	(224)	(846)	(346)	19	18	2	(482)	(206)	(2,056)	6,161	(852)	1,877	(3,261)	(1,384)
Total other income (expenses), net	(112)	(227)	(87)	(53)	(9,839)	(521)	(1,068)	846	17	28	(25,532)	(1,287)	6,974	(29,632)	(392,483)	(3,430)	(456,406)	425,141	(31,265)

Profit (loss) before income tax	6,191	(15,646)	(7,760)	7,677	26,702	(12,276)	(826)	23,422	3,103	20,193	(22,656)	(3,808)	2,914	(52,220)	444,880	44,047	463,937	(436,904)	27,033
Current income tax	(768)	(559)	(72)	(656)	(8,332)	(24)	−	−	−	(6,025)	(444)	(2)	−	(30,368)	(325,170)	(23,405)	(395,825)	378,943	(16,882)
Deferred income tax	−	−	−	−	(10,803)	(1,220)	−	(7,584)	−	−	−	106	9,514	1,071	−	4,942	(3,974)	(6,023)	(9,997)
Profit (loss) from continuing operations	5,423	(16,205)	(7,832)	7,021	7,567	(13,520)	(826)	15,838	3,103	14,168	(23,100)	(3,704)	12,428	(81,517)	119,710	25,584	64,138	(63,984)	154

Loss from discontinued operations																			(11,808)

Loss for the year																			(11,654)

Total assets	126,374	39,725	39,537	461,335	773,554	158,718	372,344	366,354	12,154	7,154	520,484	106,391	2,421,547	2,047,472	7,554,712	361,669	15,369,524	(11,152,303)	4,217,221
Total liabilities	45,227	30,749	29,469	28,502	340,735	68,615	18,986	197,152	4,597	2,653	603	20,671	425,893	1,463,749	2,445,840	125,307	5,248,748	(4,061,092)	1,187,656
Other segment information
Investment in associates and joint ventures	−	−	−	−	−	−	−	−	−	−	−	−	1,473,382	−	−	−	1,473,382	−	1,473,382
Capital Expenditures	18,429	6,225	2,984	18,858	29,572	13,159	17,141	118	−	−	−	1,816	2,968	−	−	−	111,270	−	111,270
Changes in estimates of mine closures plans	4,101	1,003	16,484	(447)	19,926	(6,915)	9,063	−	−	−	−	−	(341)	−	−	−	42,874	−	42,874
Fair value for contingent consideration liability	−	−	−	−	−	−	1,815	−	−	−	−	−	−	−	−	−	1,815	−	1,815
Accounts receivable from sale of assets	−	−	−	−	−	−	−	−	−	−	1,622	−	1,093	−	−	−	2,715	−	2,715

Notes to the consolidated financial statements(continued)


															Equity accounted investees
	Uchucchacua (Operation)	Orcopampa (Operation)	Julcani (Operation)	Tambomayo (Operation)	Colquijirca (Operation)	La Zanja (Operation)	Exploration and development mining projects	Construction and engineering	Energy generation and transmission	Insurance brokerage	Rental of mining concessions	Holding of investment in shares	Industrial activities	Corporate	Minera Yanacocha S.R.L.	Sociedad Minera Cerro Verde S.A.A	Compañía Minera Coimolache S.A.	Total operating segments	Adjustments and eliminations	Total
	US$(000)	US$(000)	US$(000)	US$(000)	US$(000)	US$(000)	US$(000)	US$(000)	US$(000)	US$(000)	US$(000)	US$(000)	US$(000)	US$(000)	US$(000)	US$(000)	US$(000)	US$(000)	US$(000)	US$(000)
Year 2017
Results:
Continuing operations
Operating income:
Net sale of goods	272,334	256,960	42,785	118,966	322,653	165,319	-	-	-	-	-	-	6,317	34,650	645,176	3,202,931	203,790	5,271,881	(4,084,675)	1,187,206
Net sale of services	-	-	-	-	-	-	-	10,603	60,639	14,377	-	615	19,658	-	21,870	-	-	127,762	(98,065)	29,697
Royalty income	-	-	-	-	-	-	-	-	-	-	20,739	-	-	-	-	-	-	20,739	-	20,739
Total operating income	272,334	256,960	42,785	118,966	322,653	165,319	-	10,603	60,639	14,377	20,739	615	25,975	34,650	667,046	3,202,931	203,790	5,420,382	(4,182,740)	1,237,642
Operating costs
Cost of sales of goods, excluding depreciation and amortization	(143,288)	(115,574)	(31,190)	(53,555)	(193,874)	(102,474)	-	-	-	-	-	-	(6,043)	(34,029)	(746,918)	(1,768,238)	(121,021)	(3,316,204)	2,711,554	(604,650)
Cost of services, excluding depreciation and amortization	-	-	-	-	-	-	-	(9,393)	(25,556)	-	-	-	(9,354)	-	(2,062)	-	-	(46,365)	33,411	(12,954)
Depreciation and amortization	(23,899)	(8,846)	(8,122)	(42,789)	(57,199)	(48,385)	-	(129)	(9,651)	-	-	-	(11,134)	-	-	-	-	(210,154)	-	(210,154)
Exploration in operating units	(27,068)	(38,820)	(13,009)	(9,543)	-	(871)	-	-	-	-	-	-	-	-	-	-	-	(89,311)	-	(89,311)
Mining royalties	(2,280)	(22,436)	(354)	(998)	(3,317)	(1,499)	-	-	-	-	-	-	-	-	-	-	-	(30,884)	-	(30,884)
Total operating costs	(196,535)	(185,676)	(52,675)	(106,885)	(254,390)	(153,229)	-	(9,522)	(35,207)	-	-	-	(26,531)	(34,029)	(748,980)	(1,768,238)	(121,021)	(3,692,918)	2,744,965	(947,953)
Gross profit (loss)	75,799	71,284	(9,890)	12,081	68,263	12,090	-	1,081	25,432	14,377	20,739	615	(556)	621	(81,934)	1,434,693	82,769	1,727,464	(1,437,775)	289,689
Operating expenses, net
Administrative expenses	(19,473)	(18,281)	(2,878)	(9,139)	(13,061)	(2,814)	(1,604)	(3,606)	(2,423)	(12,288)	(90)	(413)	(1,203)	443	(4,760)	-	(3,829)	(95,419)	14,753	(80,666)
Selling expenses	(6,078)	(1,016)	(605)	(1,387)	(10,914)	(881)	-	-	(1,264)	-	-	-	(775)	(167)	(3,922)	(141,669)	(946)	(169,624)	146,581	(23,043)
Exploration in non-operating areas	(2,676)	-	-	(3,214)	(1,976)	(2,870)	(2,771)	-	-	-	-	-	-	(5,052)	-	-	-	(18,559)	297	(18,262)
Reversal (provision) of contingent and others	(7,040)	(1)	(460)	(1,002)	-	(1,370)	(4,657)	100	312	-	-	-	-	378	-	-	-	(13,740)	-	(13,740)
Impairment recovery (loss) of long-lived assets	-	-	-	-	-	(21,620)	-	-	-	-	-	-	-	-	-	-	-	(21,620)	-	(21,620)
Write –off of stripping activity asset	-	-	-	-	(13,573)	-	-	-	-	-	-	-	-	-	-	-	-	(13,573)	-	(13,573)
Other, net	(1,799)	(715)	(1,403)	(175)	(2,922)	(970)	(94)	1,129	(94)	(4)	(1)	-	216	(2,012)	(63,512)	(258,826)	(587)	(331,769)	318,539	(13,230)
Total operating expenses, net	(37,066)	(20,013)	(5,346)	(14,917)	(42,446)	(30,525)	(9,126)	(2,377)	(3,469)	(12,292)	(91)	(413)	(1,762)	(6,410)	(72,194)	(400,495)	(5,362)	(664,304)	480,170	(184,134)
Operating profit (loss)	38,733	51,271	(15,236)	(2,836)	25,817	(18,435)	(9,126)	(1,296)	21,963	2,085	20,648	202	(2,318)	(5,789)	(154,128)	1,034,198	77,407	1,063,160	(957,605)	105,555
Other income (expense),net
Share in the results of associates and joint ventures	-	-	-	-	-	-	-	-	8,573	-	-	(66,187)	-	21,194	-	-	-	(36,420)	49,627	13,207
Finance income	-	-	-	-	179	670	-	-	139	1	7	1	79	5,614	5,831	5,350	220	18,091	(12,574)	5,517
Finance costs	(285)	(354)	(106)	(372)	(12,017)	(1,919)	(131)	(370)	(10,354)	(6)	(2)	(2)	(941)	(8,980)	(23,766)	(216,912)	(3,304)	(279,821)	245,270	(34,551)
Net gain (loss) from currency exchange difference	31	(63)	(75)	10	310	48	537	105	294	(75)	(41)	(4)	497	1,365	3,636	13,288	(174)	19,689	(16,750)	2,939
Total other income (expense), net	(254)	(417)	(181)	(362)	(11,528)	(1,201)	406	(265)	(1,348)	(80)	(36)	(66,192)	(365)	19,193	(14,299)	(198,274)	(3,258)	(278,461)	265,573	(12,888)
Profit (loss) before income tax	38,479	50,854	(15,417)	(3,198)	14,289	(19,636)	(8,720)	(1,561)	20,615	2,005	20,612	(65,990)	(2,683)	13,404	(168,427)	835,924	74,149	784,699	(692,032)	92,667
Income tax	(1,101)	(1,085)	(153)	(538)	(3,903)	6,841	-	(400)	(3,491)	(742)	(6,044)	(38)	1,818	(9,052)	(7,026)	(486,043)	(23,362)	(534,319)	516,431	(17,888)
Profit (loss) from continued operations	37,378	49,769	(15,570)	(3,736)	10,386	(12,795)	(8,720)	(1,961)	17,124	1,263	14,568	(66,028)	(865)	4,352	(175,453)	349,881	50,787	250,380	(175,601)	74,779
Loss from discontinued operations																				(10,344)
Net profit																				64,435
Total assets	146,464	54,114	20,922	538,057	792,594	190,310	342,759	14,004	360,610	9,004	6,611	988,841	109,669	1,950,147	2,019,332	7,691,007	380,534	15,614,979	(11,282,166)	4,332,813
Total liabilities	49,723	42,242	18,099	32,501	388,899	87,008	14,527	5,153	205,247	4,616	2,378	414	20,245	431,505	1,360,217	2,501,845	150,743	5,315,362	(4,046,176)	1,269,186
Other segment information
Investment in associates and joint ventures	-	-	-	-	-	-	-	-	-	-	-	-	-	1,536,887	-	-	-	1,536,887	-	1,536,887
Capital Expenditures	18,127	12,674	1,951	131,119	61,060	17,326	13,733	3	852	14	-	-	459	2,189	-	-	-	259,507	-	259,507
Changes in estimates of mine closures plans	1,380	3,710	(761)	404	5,326	462	67	-	-	-	-	-	-	6	-	-	-	10,594	-	10,594
Fair value for contingent consideration liability	-	-	-	-	-	-	-	-	-	-	-	-	-	1,773	-	-	-	1,773	-	1,773
Accounts receivable from sale of assets	-	-	-	-	-	-	-	4,053	-	-	-	-	-	1,318	-	-	-	5,371	-	5,371

~~F-92~~

Notes to the consolidated financial statements(continued)

Equity accounted investees
Ucchuchacua
(Operation) Orcopampa
(Operation) Julcani
(Operation) Mallay
(Operation) Colquijirca
(Operation) La Zanja
(Operation) Exploration
and
development
mining
projects Construction
and
engineering Energy
generation
and
transmission Insurance
brokerage Rental of
mining
concessions Holding of
investment in
shares Industrial
activities Corporate Minera
Yanacocha
S.R.L. Sociedad
Minera Cerro
Verde S.A.A Compañía
Minera
Coimolache
S.A. Total
operating
segments Adjustments and
eliminations Total
US$(000) US$(000) US$(000) US$(000) US$(000) US$(000) US$(000) US$(000) US$(000) US$(000) US$(000) US$(000) US$(000) US$(000) US$(000) US$(000) US$(000) US$(000) US$(000) US$(000)

Year 2015
Results:
Continuing operations
Operating income
Net sale of goods 166,055 254,118 50,254 32,018 171,294 161,007 - - - - - - 3,649 168,667 1,031,174 1,115,617 177,347 3,331,200 (2,484,931 ) 846,269
Net sale of services - - - - - - - 48,758 48,339 11,929 - - 13,399 - 10,625 - - 133,050 (82,211 ) 50,839
Royalty income - - - - - - - - - - 32,414 - - - - - - 32,414 - 32,414

Total operating income 166,055 254,118 50,254 32,018 171,294 161,007 - 48,758 48,339 11,929 32,414 - 17,048 168,667 1,041,799 1,115,617 177,347 3,496,664 (2,567,142 ) 929,522
Operating costs
Cost of sales of goods (126,728 ) (112,707 ) (26,725 ) (20,709 ) (158,804 ) (106,750 ) - - - - - - - (169,236 ) (751,736 ) (862,004 ) (104,549 ) (2,439,948 ) 1,926,458 (513,490 )
Cost of services - - - - - - - (48,544 ) (20,767 ) - - - (16,820 ) - (2,524 ) - - (88,655 ) 29,043 (59,612 )
Exploration in operating units (27,784 ) (41,705 ) (12,699 ) (7,539 ) - (41 ) - - - - - - - - - - - (89,768 ) 69 (89,699 )
Depreciation and amortization (15,767 ) (17,313 ) (11,349 ) (15,439 ) (45,752 ) (104,984 ) (17 ) (850 ) (10,260 ) - (54 ) (226 ) (9,545 ) (1,027 ) - - - (232,583 ) - (232,583 )
Mining royalties (1,142 ) (23,877 ) (337 ) (234 ) - (1,597 ) - - - - - - - (1 ) - - - (27,188 ) - (27,188 )

Total operating costs (171,421 ) (195,602 ) (51,110 ) (43,921 ) (204,556 ) (213,372 ) (17 ) (49,394 ) (31,027 ) - (54 ) (226 ) (26,365 ) (170,264 ) (754,260 ) (862,004 ) (104,549 ) (2,878,142 ) 1,955,570 (922,572 )

Gross profit (loss) (5,366 ) 58,516 (856 ) (11,903 ) (33,262 ) (52,365 ) (17 ) (636 ) 17,312 11,929 32,360 (226 ) (9,317 ) (1,597 ) 287,539 253,613 72,798 618,522 (611,572 ) 6,950

Operating expenses, net
Administrative expenses (10,739 ) (16,698 ) (3,623 ) (2,080 ) (19,181 ) (2,251 ) (1,444 ) (7,859 ) (3,422 ) (11,296 ) (106 ) (209 ) (654 ) (11,370 ) (26,325 ) - (2,185 ) (119,442 ) 35,070 (84,372 )
Exploration in non-operating areas - - - - (2,366 ) (8,954 ) (15,892 ) - - - - - - (5,685 ) - - - (32,897 ) 2,287 (30,610 )
Selling expenses (3,552 ) (851 ) (1,055 ) (1,424 ) (9,056 ) (1,207 ) - - (806 ) - - - (1,411 ) (3 ) (3,534 ) (56,215 ) (1,111 ) (80,225 ) 60,860 (19,365 )
Impairment loss of long-lived assets - - - - - (3,803 ) - - - - - - - - - - (672 ) (4,475 ) 672 (3,803 )
Other, net 1,836 (1,182 ) (125 ) (67 ) (2,657 ) (687 ) (1,095 ) 7,417 (305 ) (4 ) - 793 98 6,329 (82,846 ) (26,600 ) 765 (98,330 ) 92,595 (5,735 )

Total operating expenses, net (12,455 ) (18,731 ) (4,803 ) (3,571 ) (33,260 ) (16,902 ) (18,431 ) (442 ) (4,533 ) (11,300 ) (106 ) 584 (1,967 ) (10,729 ) (112,705 ) (82,815 ) (3,203 ) (335,369 ) 191,484 (143,885 )

Operating profit (loss) (17,821 ) 39,785 (5,659 ) (15,474 ) (66,522 ) (69,267 ) (18,448 ) (1,078 ) 12,779 629 32,254 358 (11,284 ) (12,326 ) 174,834 170,798 69,595 283,153 (420,088 ) (136,935 )
Other income (expense),net
Share in the results of associates under equity method - - - - - - - 6,561 478 2 - (187,269 ) - (268,463 ) - - - (448,691 ) 275,316 (173,375 )
Finance costs (195 ) (235 ) (152 ) (108 ) (10,096 ) (3,684 ) (215 ) (1,413 ) (8,817 ) (21 ) (4 ) (1 ) (842 ) (4,043 ) -22,734 (16,010 ) (51 ) (68,621 ) 41,049 (27,572 )
Net gain (loss) from currency exchange difference 539 461 378 75 (3,832 ) (1,973 ) (1,797 ) (1,393 ) (1,586 ) (165 ) 45 4 (2,162 ) (2,287 ) (251 ) (75,770 ) (1,300 ) (91,014 ) 77,321 (13,693 )
Finance income 5 5 2 - 154 16 - 182 23 13 - - - 10,785 673 512 23 12,393 (1,367 ) 11,026

Total other income (expense), net 349 231 228 (33 ) (13,774 ) (5,641 ) (2,012 ) 3,937 (9,902 ) (171 ) 41 (187,266 ) (3,004 ) (264,008 ) (22,312 ) (91,268 ) (1,328 ) (595,933 ) 392,319 (203,614 )

Profit (loss) before income tax (17,472 ) 40,016 (5,431 ) (15,507 ) (80,296 ) (74,908 ) (20,460 ) 2,859 2,877 458 32,295 (186,908 ) (14,288 ) (276,334 ) 152,522 79,530 68,267 (312,780 ) (27,769 ) (340,549 )
Income tax (518 ) (602 ) (140 ) (78 ) 4,109 5,702 - (4,386 ) (3,887 ) (299 ) (9,186 ) (87 ) 584 (5,975 ) (602,717 ) (46,246 ) (29,861 ) (693,587 ) 678,824 (14,763 )

Profit (loss) from continued operations (17,990 ) 39,414 (5,571 ) (15,585 ) (76,187 ) (69,206 ) (20,460 ) (1,527 ) (1,010 ) 159 23,109 (186,995 ) (13,704 ) (282,309 ) (450,195 ) 33,284 38,406 (1,006,367 ) 651,055 (355,312 )

Loss from discontinued operations, see note 1(e) (20,233 )

Net loss (375,545 )

Total assets - - - - 739,941 220,331 53,214 31,463 393,318 5,979 9,397 997,835 118,012 3,677,307 2,965,430 7,852,692 238,175 17,303,094 (12,755,913 ) 4,547,181
Total liability - - - - 364,455 106,846 3,514 29,599 235,695 3,457 3,508 2,831 31,479 516,241 736,605 3,354,318 63,119 5,451,667 (4,293,722 ) 1,157,945

Other segment information
Investment in associates - - - - - - - - - - - - - 3,519 989,130 988,725 62,609 2,043,983 - 2,043,983
Additions to mining concessions, development costs, property, plant and equipment 22,669 3,151 4,795 3,234 55,073 62,968 57,173 527 6,159 85 - 1,205 2,140 66,918 - - - 286,097 - 286,097

~~F-93~~

~~Notes to the consolidated financial statements~~ ~~(continued)~~

Equity accounted investees
Ucchuchacua
(Operation) Orcopampa
(Operation) Julcani
(Operation) Mallay
(Operation) Colquijirca
(Operation) La Zanja
(Operation) Exploration
and
development
mining
projects Construction
and
engineering Energy
generation
and
transmission Insurance
brokerage Rental of
mining
concessions Holding of
investment in
shares Industrial
activities Corporate Minera
Yanacocha
S.R.L.
Sociedad
Minera Cerro
Verde S.A.A Compañía
Minera
Coimolache
S.A. Total
operating
segments Ucchuchacua
(Operation) Orcopampa
(Operation)
US$(000) US$(000) US$(000) US$(000) US$(000) US$(000) US$(000) US$(000) US$(000) US$(000) US$(000) US$(000) US$(000 US$(000) US$(000) US$(000) US$(000) US$(000) US$(000) US$(000)

Year 2014
Results:
Continuing operations
Operating income
Net sale of goods 202,543 264,049 49,767 42,974 210,002 185,286 - - - - - - 483 187,503 1,165,299 1,467,097 192,369 3,967,372 (3,008,086 ) 959,286
Net sale of services - - - - - - - 66,853 38,906 10,608 - - 13,493 - 20,705 - - 150,565 (79,406 ) 71,159
Royalty income - - - - - - - - - - 36,867 - - - - - - 36,867 - 36,867

Total operating income 202,543 264,049 49,767 42,974 210,002 185,286 - 66,853 38,906 10,608 36,867 - 13,976 187,503 1,186,004 1,467,097 192,369 4,154,804 (3,087,492 ) 1,067,312

Operating costs
Cost of sales of goods (149,251 ) (113,467 ) (26,364 ) (22,583 ) (122,995 ) (84,381 ) - - - - - - (2,769 ) (186,650 ) (910,705 ) (797,481 ) (100,649 ) (2,517,295 ) 2,018,581 (498,714 )
Cost of services - - - - - - - (68,964 ) (19,252 ) - - - (9,934 ) - (22,422 ) - - (120,572 ) 42,645 (77,927 )
Exploration in operating units (26,633 ) (51,814 ) (10,981 ) (7,807 ) - (120 ) - - - - - - - (2 ) - - - (97,357 ) - (97,357 )
Depreciation and amortization (15,293 ) (30,560 ) (11,769 ) (24,742 ) (26,974 ) (72,847 ) - (717 ) (8,683 ) - (74 ) (231 ) (7,224 ) (868 ) - - - (199,982 ) 26,983 (172,999 )
Mining royalties (1,893 ) (24,113 ) (466 ) (401 ) - (555 ) - - - - - - - - - - - (27,428 ) - (27,428 )

Total operating costs (193,070 ) (219,954 ) (49,580 ) (55,533 ) (149,969 ) (157,903 ) - (69,681 ) (27,935 ) - (74 ) (231 ) (19,927 ) (187,520 ) (933,127 ) (797,481 ) (100,649 ) (2,962,634 ) 2,088,209 (874,425 )

Gross profit (loss) 9,473 44,095 187 (12,559 ) 60,033 27,383 - (2,828 ) 10,971 10,608 36,793 (231 ) (5,951 ) (17 ) 252,877 669,616 91,720 1,192,170 (999,283 ) 192,887

Operating expenses, net
Administrative expenses (12,351 ) (16,077 ) (3,289 ) (2,719 ) (17,634 ) (5,920 ) (3,184 ) (16,135 ) (4,354 ) (8,901 ) (113 ) (208 ) (376 ) (7,828 ) (38,262 ) - (2,073 ) (139,424 ) 45,671 (93,753 )
Exploration in non-operating areas - - - - (5,085 ) - (14,399 ) - - - - - - (3,540 ) - - - (23,024 ) (26,983 ) (50,007 )
Selling expenses (3,416 ) (955 ) (1,067 ) (1,755 ) (7,103 ) (1,441 ) - - (323 ) - - - (147 ) (5 ) (4,458 ) (54,210 ) (1,078 ) (75,958 ) 59,746 (16,212 )
Impairment loss of long-lived assets - - - - - - - - - - - - - - (541,141 ) - - (541,141 ) 541,141 -
Other, net 1,338 657 (4,661 ) 921 226 (2,833 ) 569 8,070 7,718 109 (1 ) 651 (77 ) 3,930 (77,781 ) (3,629 ) 929 (63,864 ) 67,033 3,169

Total operating expenses, net (14,429 ) (16,375 ) (9,017 ) (3,553 ) (29,596 ) (10,194 ) (17,014 ) (8,065 ) 3,041 (8,792 ) (114 ) 443 (600 ) (7,443 ) (661,642 ) (57,839 ) (2,222 ) (843,411 ) 686,608 (156,803 )

Operating profit (loss) (4,956 ) 27,720 (8,830 ) (16,112 ) 30,437 17,189 (17,014 ) (10,893 ) 14,012 1,816 36,679 212 (6,551 ) (7,460 ) (408,765 ) 611,777 89,498 348,759 (312,675 ) 36,084

Other income (expense), net
Share in the results of associates under equity method - - - - - - - (6,987 ) (2,186 ) - - (160,379 ) - (91,962 ) - - - (261,514 ) 186,914 (74,600 )
Finance costs (294 ) (170 ) (153 ) (67 ) (4 ) (1,728 ) (140 ) (1,223 ) (8,838 ) (15 ) (3 ) (2 ) (722 ) (760 ) (23,504 ) (369 ) (583 ) (38,575 ) 27,299 (11,276 )
Net gain (loss) from currency exchange difference 354 332 124 66 (1,031 ) (1,525 ) (446 ) (757 ) (1,021 ) 8 (50 ) (4 ) (1,107 ) (3,400 ) 1,142 2,284 (1,465 ) (6,496 ) (1,961 ) (8,457 )
Gain on business combination - - - - - - - - - - - - - 59,852 - - - 59,852 - 59,852
Finance income 10 13 4 (278 ) - - - - 8 - - - 3,951 298 2,443 47 6,496 1,912 8,408

Total other income (expense), net 70 175 (25 ) (1 ) (1,313 ) (3,253 ) (586 ) (8,967 ) (12,045 ) 1 (53 ) (160,385 ) (1,829 ) (32,319 ) (22,064 ) 4,358 (2,001 ) (240,237 ) 214,164 (26,073 )

Profit (loss) before income tax
Income tax current (4,886 ) 27,895 (8,855 ) (16,113 ) 29,124 13,936 (17,600 ) (19,860 ) 1,967 1,817 36,626 (160,173 ) (8,380 ) (39,779 ) (430,829 ) 616,135 87,497 108,522 (98,511 ) 10,011
Income tax deferred - - - - (21,621 ) (12,388 ) - 567 (4,835 ) (368 ) (10,996 ) (48 ) 978 (17,301 ) 30,491 (238,529 ) (36,089 ) (310,139 ) 244,318 (65,821 )

Profit (loss) from continued operations (4,886 ) 27,895 (8,855 ) (16,113 ) 7,503 1,548 (17,600 ) (19,293 ) (2,868 ) 1,449 25,630 (160,221 ) (7,402 ) (57,080 ) (400,338 ) 377,606 51,408 (201,617 ) 145,807 (55,810 )

Discontinued operations
Loss from discontinued operations, see note 1(e) (5,830 )

Net loss (61,640 )

Total assets - - - - 765,143 278,836 50,370 87,546 403,660 6,265 14,727 1,208,772 130,803 3,778,132 3,483,169 5,771,984 205,059 16,184,466 (11,512,192 ) 4,672,274
Total liability - - - - 311,001 96,147 5,726 95,466 225,409 3,109 5,727 166 29,472 294,027 803,392 1,306,894 51,720 3,228,256 (2,318,107 ) 910,149

Other segment information
Investment in associates - - - - - - - - - - - - - 3,519 1,185,971 982,206 52,685 2,224,381 - 2,224,381
Additions to mining concessions, development costs, property, plant and equipment 12,668 8,963 699 963 105,477 29,113 83,723 7,516 17,948 227 - - - 15,081 - - - 282,378 - 282,378

~~F-94~~

~~Notes to the consolidated financial statements~~ ~~(continued)~~

Reconciliation of segment profit (loss)

The reconciliation of segment profit (loss) to the consolidated profit (loss) from continued operations follows:

	2016			2015			2014			2019			2018			2017
	US$(000)			US$(000)			US$(000)				US$(000)			US$(000)			US$(000)

Segments loss		(1,397,473	)		(1,006,367	)		(201,617	)
Segments profit (loss)											260,842			64,138			250,380
Elimination of profit of equity accounted investees, not consolidated (owned by third parties)		645,989			203,912			(108,861	)		(323,578	)		(63,777	)		(225,215	)
Elimination of intercompany sales		(251,502	)		(232,380	)		(242,022	)		(71,951	)		(74,637	)		(108,973	)
Elimination of intercompany cost of sales		250,157			228,914			229,968
Elimination of cost of sales and operating expenses intercompany											71,697			76,780			106,726
Elimination of share in the results of subsidiaries and associates		448,507			448,691			261,514			44,745			1,582			49,627
Others		(4,419	)		1,918			5,208			300			(3,932	)		2,234

Consolidated profit (loss) from continued operations		(308,741	)		(355,312	)		(55,810	)		(17,945	)		154			74,779

Reconciliation of segment assets

The reconciliation of segment assets to the consolidated assets follows:

	2016			2015			2014			2019			2018			2017
	US$(000)			US$(000)			US$(000)				US$(000)			US$(000)			US$(000)

Segments assets		15,522,247			17,303,094			16,184,466			15,777,279			15,369,524			15,614,979
Elimination of assets of equity accounted investees, not consolidated (owned by third parties)		(10,016,003	)		(8,128,519	)		(6,727,205	)		(10,517,053	)		(9,963,853	)		(10,090,873	)
Elimination of equity pick up investments of the subsidiaries and associates of the Parent company		(1,047,758	)		(4,486,717	)		(4,615,191	)
Elimination of the subsidiaries and associates of the Parent company											(1,111,454	)		(1,184,240	)		(1,186,783	)
Elimination of intercompany receivables		(192,958	)		(138,703	)		(156,456	)		(64,708	)		(32,444	)		(32,769	)
Others		887			(1,974	)		(13,340	)		23,210			28,234			28,259

Consolidated assets		4,266,415			4,547,181			4,672,274			4,107,274			4,217,221			4,332,813

Reconciliation of segment liabilities

The reconciliation of segment liabilities to the consolidated liabilities follows:

	2016			2015			2014			2019			2018			2017
	US$(000)			US$(000)			US$(000)				US$(000)			US$(000)	��		US$(000)

Segments liabilities		5,500,328			5,451,667			3,228,256			5,612,754			5,248,748			5,315,362
Elimination of liabilities of equity accounted investees, not consolidated		(4,087,495	)		(4,154,042	)		(2,162,006	)		(4,423,274	)		(4,034,896	)		(4,012,805	)
Elimination of intercompany payables		(192,958	)		(138,703	)		(156,456	)		(50,395	)		(27,822	)		(32,769	)
Others		(673	)		(977	)		355			(11	)		1,626			(602	)

Consolidated liabilities		1,219,202			1,157,945			910,149			1,139,074			1,187,656			1,269,186

Notes to the consolidated financial statements(continued)

Disaggregated revenue information

Set out below is the disaggregation of the Group’s revenue from contracts with customers:

	Uchucchacua (Operation)			Tambomayo (Operation)			Orcopampa (Operation)			Julcani (Operation)			Colquijirca (Operation)			La Zanja (Operation)			Energy generation and transmission		Insurance brokerage		Rental of mining concessions		Holding of investment in shares		Industrial activities		Corporate		Total operating segments			Adjustments and eliminations			Total
		US$(000)			US$(000)			US$(000)			US$(000)			US$(000)			US$(000)			US$(000)		US$(000)		US$(000)		US$(000)		US$(000)		US$(000)		US$(000)			US$(000)			US$(000)
Year 2019
Revenues by type of customers:
Sales by customers -
External		184,982			186,668			58,796			39,639			294,842			43,894			-		-		-		-		6,046		-		814,867			-			814,867
Inter-segment		-			-			-			-			62			-			-		-		-		-		-		-		62			(62	)		-
		184,982			186,668			58,796			39,639			294,904			43,894			-		-		-		-		6,046		-		814,929			(62	)		814,867
Services -
External		-			-			-			-			-			-			7,974		15,687		-		-		-		-		23,661			-			23,661
Inter-segment		-			-			-			-			-			-			51,716		-		-		615		19,557		-		71,888			(71,888	)		-
		-			-			-			-			-			-			59,690		15,687		-		615		19,557		-		95,549			(71,888	)		23,661
Royalties -
External		-			-			-			-			-			-			-		-		22,297		-		-		-		22,297			-			22,297
		184,982			186,668			58,796			39,639			294,904			43,894			59,690		15,687		22,297		615		25,603		-		932,775			(71,950	)		860,825

Revenues by geographic region:
Metal and concentrates sales -
Peru		143,512			79,631			4,833			10,451			236,844			683			-		-		-		-		1,086		-		477,040			(62	)		476,978
America- other than Peru		-			79,537			53,963			-			-			37,326			-		-		-		-		943		-		171,769			-			171,769
Asia		13,622			27,365			-			6,598			58,060			-			-		-		-		-		-		-		105,645			-			105,645
Europe		27,848			135			-			22,590			-			5,885			-		-		-		-		4,017		-		60,475			-			60,475
		184,982			186,668			58,796			39,639			294,904			43,894			-		-		-		-		6,046		-		814,929			(62	)		814,867
Services -
Peru		-			-			-			-			-			-			59,690		15,527		-		615		19,557		-		95,389			(71,888	)		23,501
America - other than Peru		-			-			-			-			-			-			-		130		-		-		-		-		130			-			130
Europe		-			-			-			-			-			-			-		30		-		-		-		-		30			-			30
		-			-			-			-			-			-			59,690		15,687		-		615		19,557		-		95,549			(71,888	)		23,661
Royalties -
Peru		-			-			-			-			-			-			-		-		22,297		-		-		-		22,297			-			22,297
		184,982			186,668			58,796			39,639			294,904			43,894			59,690		15,687		22,297		615		25,603		-		932,775			(71,950	)		860,825

Revenues by type of good or services:
Sales by metal -
Gold		-			134,387			58,737			278			18,104			42,698			-		-		-		-		-		-		254,204			(10	)		254,194
Silver		159,713			38,112			263			40,889			57,903			1,300			-		-		-		-		-		-		298,180			(9	)		298,171
Copper		-			-			-			79			238,327			-			-		-		-		-		-		-		238,406			(102	)		238,304
Zinc		38,143			19,867			-			-			91,307			-			-		-		-		-		-		-		149,317			-			149,317
Lead		29,735			14,016			-			1,627			43,763			-			-		-		-		-		-		-		89,141			-			89,141
Manganese sulfate		-			-			-			-			-			-			-		-		-		-		6,046		-		6,046			-			6,046
		227,591			206,382			59,000			42,873			449,404			43,998			-		-		-		-		6,046		-		1,035,294			(121	)		1,035,173
Commercial deductions		(42,609	)		(19,714	)		(204	)		(3,234	)		(154,500	)		(104	)		-		-		-		-		-		-		(220,365	)		59			(220,306	)
		184,982			186,668			58,796			39,639			294,904			43,894			-		-		-		-		6,046		-		814,929			(62	)		814,867
Sales by services -		-			-			-			-			-			-			59,690		15,687		-		615		19,557		-		95,549			(71,888	)		23,661
Royalties income -		-			-			-			-			-			-			-		-		22,297		-		-		-		22,297			-			22,297
		184,982			186,668			58,796			39,639			294,904			43,894			59,690		15,687		22,297		615		25,603		-		932,775			(71,950	)		860,825

Notes to the consolidated financial statements(continued)

	Uchucchacua (Operation)			Tambomayo (Operation)			Orcopampa (Operation)			Julcani (Operation)			Colquijirca (Operation)			La Zanja (Operation)			Energy generation and transmission		Insurance brokerage		Rental of mining concessions		Holding of investment in shares		Industrial activities		Corporate		Total operating segments			Adjustments and eliminations			Total
		US$(000)			US$(000)			US$(000)			US$(000)			US$(000)			US$(000)			US$(000)		US$(000)		US$(000)		US$(000)		US$(000)		US$(000)		US$(000)			US$(000)			US$(000)
Year 2018
Revenues by type of customers:
Sales by customers -
External		257,840			225,339			153,240			33,864			339,414			96,600			-		-		-		-		6,655		-		1,112,952			-			1,112,952
Inter-segment		-			-			-			-			167			-			-		-		-		-		-		-		167			(167	)		-
		257,840			225,339			153,240			33,864			339,581			96,600			-		-		-		-		6,655		-		1,113,119			(167	)		1,112,952

Services -
External		-			-			-			-			-			-			9,015		14,986		-		-		-		-		24,001			-			24,001
Inter-segment		-			-			-			-			-			-			53,947		-		-		615		19,909		-		74,471			(74,471	)		-
		-			-			-			-			-			-			62,962		14,986		-		615		19,909		-		98,472			(74,471	)		24,001
Royalties -
External		-			-			-			-			-			-			-		-		20,385		-		-		-		20,385			-			20,385
		257,840			225,339			153,240			33,864			339,581			96,600			62,962		14,986		20,385		615		26,564		-		1,231,976			(74,638	)		1,157,338

Revenues by geographic region:
Metal and concentrates sales -
Peru		170,986			63,049			10,808			15,261			257,559			2,770			-		-		-		-		751		-		521,184			(167	)		521,017
America- other than Peru		-			159,530			142,432			-			-			67,756			-		-		-		-		906		-		370,624			-			370,624
Asia		29,382			-			-			9,115			82,022			-			-		-		-		-		-		-		120,519			-			120,519
Europe		57,472			2,760			-			9,488			-			26,074			-		-		-		-		4,998		-		100,792			-			100,792
		257,840			225,339			153,240			33,864			339,581			96,600			-		-		-		-		6,655		-		1,113,119			(167	)		1,112,952
Services -
Peru		-			-			-			-			-			-			62,962		14,787		-		615		19,909		-		98,273			(74,561	)		23,712
America - other than Peru		-			-			-			-			-			-			-		199		-		-		-		-		199			90			289
		-			-			-			-			-			-			62,962		14,986		-		615		19,909		-		98,472			(74,471	)		24,001
Royalties -
Peru		-			-			-			-			-			-			-		-		20,385		-		-		-		20,385			-			20,385
		257,840			225,339			153,240			33,864			339,581			96,600			62,962		14,986		20,385		615		26,564		-		1,231,976			(74,638	)		1,157,338


Revenues by type of good or services:
Sales by metal -
Gold		11			150,939			149,092			28			18,463			93,358			-		-		-		-		-		-		411,891			(14	)		411,877
Silver		217,843			54,109			5,243			35,307			46,060			3,583			-		-		-		-		-		-		362,145			(23	)		362,122
Copper		-			-			(221	)		129			275,119			-			-		-		-		-		-		-		275,027			(266	)		274,761
Zinc		45,194			18,197			-			-			101,275			-			-		-		-		-		-		-		164,666			-			164,666
Lead		36,238			6,703			-			1,996			40,618			-			-		-		-		-		-		-		85,555			-			85,555
Manganese sulfate		-			-			-			-			-			-			-		-		-		-		6,655		-		6,655			-			6,655
		299,286			229,948			154,114			37,460			481,535			96,941			-		-		-		-		6,655		-		1,305,939			(303	)		1,305,636
Commercial deductions		(41,446	)		(4,609	)		(874	)		(3,596	)		(141,954	)		(341	)		-		-		-		-		-		-		(192,820	)		136			(192,684	)
		257,840			225,339			153,240			33,864			339,581			96,600			-		-		-		-		6,655		-		1,113,119			(167	)		1,112,952
Sales by services -		-			-			-			-			-			-			62,962		14,986		-		615		19,909		-		98,472			(74,471	)		24,001
Royalties income -		-			-			-			-			-			-			-		-		20,385		-		-		-		20,385			-			20,385
		257,840			225,339			153,240			33,864			339,581			96,600			62,962		14,986		20,385		615		26,564		-		1,231,976			(74,638	)		1,157,338

~~F-95~~

Notes to the consolidated financial statements(continued)

~~32.~~

~~Derivative financial instruments~~

~~(a)~~

~~Hedge derivative financial instruments -~~

~~The volatility of copper prices during the last years has caused the management of the subsidiary El Brocal to enter into future contracts which are recorded under cash flow hedge accounting, see note~~ ~~2.4(v).These contracts managed during the third quarter of 2016~~ are intended to reduce the volatility of the cash flows attributable to the fluctuations in the cooper price, according to the risk strategy approved by the Board of Directors of this subsidiary. These contracts are intended to reduce the volatility of the cash flows attributable to the fluctuations in the cooper price from October 2016 to March 2017, i~~n accordance with existing copper concentrate sales commitments, which are related to 50 percent of the annual production of copper.~~

As of December 31, 2016, the fair value of open forward contracts amounts to a liability of US$3,863,000. As of December 31, 2015, the fair value of open forward contracts amounts to a liability of US$10,643,000 and t~~he effectiveness of these contracts has not been observed since no significant element of ineffectiveness has appeared.~~

~~(b)~~

~~Embedded derivative of commercial contracts -~~

The Group’s sales of concentrates are based on commercial contracts, under which a provisional sales value is determined based on future quotations (forward). The adjustment to sales is considered an embedded derivative, which is required to be separated from the host contract. Commercial contracts are linked to market prices (London Metal Exchange) at the dates of the expected settlements of the open positions as of December 31, 2016 and 2015. The embedded derivative does not qualify for hedge accounting; therefore, changes in the fair value are recorded as an adjustment to net sales.

~~Embedded derivatives held by the Group as of December 31, 2016 are:~~

~~Quotations~~

~~Metal~~

~~Quantity~~

~~Period of~~
~~quotations 2017~~

~~Provisional~~

~~Future~~

~~Metal~~

~~US$~~

~~US$(000)~~

~~Copper~~

~~29,121 DMT~~

~~January – April~~

~~2,985.28 -5,824.00~~

~~5,535.76 – 5,642.25~~

~~397~~

~~Gold~~

~~15,370 DMT~~

~~January – February~~

~~1,139.75 – 1,145.90~~

~~1,151.00 – 1,179.40~~

~~481~~

~~Silver~~

~~17,124 Oz~~

~~January – April~~

~~16.32 – 19.35~~

~~16.42 – 16.66~~

~~(1,825~~

)

~~Lead~~

~~23,636 DMT~~

~~January – April~~

~~1,871.58 – 2,380.60~~

~~2,017.00 – 2,080.00~~

~~(801~~

)

~~Zinc~~

~~29,407 DMT~~

~~January – March~~

~~2,291.08 – 2,732.10~~

~~2,578.00 – 2,612.50~~

~~(172~~

)

~~Other~~

~~15,082 Oz~~

~~396~~

~~Total liability, net~~

~~(1,524~~

)


	Uchucchacua (Operation)			Orcopampa (Operation)			Julcani (Operation)			Tambomayo (Operation)			Colquijirca (Operation)			La Zanja (Operation)			Construction and engineering		Energy generation and transmission		Insurance brokerage		Rental of mining concessions		Holding of investment in shares		Industrial activities		Corporate			Total operating segments			Adjustments and eliminations			Total
		US$(000)			US$(000)			US$(000)			US$(000)			US$(000)			US$(000)			US$(000)		US$(000)		US$(000)		US$(000)		US$(000)		US$(000)		US$(000)			US$(000)			US$(000)			US$(000)
Year 2017
Revenues by type of customers:
Sales by customers -
External		266,482			256,957			41,120			118,376			333,097			132,108			-		-		-		-		-		6,317		34,016			1,188,473			-			1,188,473
Inter-segment		-			-			-			-			-			31,887			-		-		-		-		-		-		-			31,887			(31,887	)		-
		266,482			256,957			41,120			118,376			333,097			163,995			-		-		-		-		-		6,317		34,016			1,220,360			(31,887	)		1,188,473

Services -
External		-			-			-			-			-			-			5,908		9,412		14,377		-		-		-		-			29,697			-			29,697
Inter-segment		-			-			-			-			-			-			4,695		51,227		-		-		615		19,658		-			76,195			(76,195	)		-
		-			-			-			-			-			-			10,603		60,639		14,377		-		615		19,658		-			105,892			(76,195	)		29,697
Royalties -
External		-			-			-			-			-			-			-		-		-		20,739		-		-		-			20,739			-			20,739
		266,482			256,957			41,120			118,376			333,097			163,995			10,603		60,639		14,377		20,739		615		25,975		34,016			1,346,991			(108,082	)		1,238,909

Revenues by geographic region:
Metal and concentrates sales -
Peru		209,300			17,774			13,049			34,337			239,317			32,607			-		-		-		-		-		852		705			547,941			(31,887	)		516,054
America - other than Peru		-			239,183			-			84,039			459			125,875			-		-		-		-		-		3,776		18,531			471,863			-			471,863
Asia		19,078			-			12,140			-			89,501			-			-		-		-		-		-		-		-			120,719			-			120,719
Europe		38,104			-			15,931			-			3,820			5,513			-		-		-		-		-		1,689		14,780			79,837			-			79,837
		266,482			256,957			41,120			118,376			333,097			163,995			-		-		-		-		-		6,317		34,016			1,220,360			(31,887	)		1,188,473
Services -
Peru		-			-			-			-			-			-			10,014		60,639		14,205		-		615		19,658		-			105,131			(90,228	)		14,903
America - other than Peru		-			-			-			-			-			-			589		-		172		-		-		-		-			761			14,033			14,794
		-			-			-			-			-			-			10,603		60,639		14,377		-		615		19,658		-			105,892			(76,195	)		29,697
Royalties -
Peru		-			-			-			-			-			-			-		-		-		20,739		-		-		-			20,739			-			20,739
		266,482			256,957			41,120			118,376			333,097			163,995			10,603		60,639		14,377		20,739		615		25,975		34,016			1,346,991			(108,082	)		1,238,909

Revenues by type of good or services:
Sales by metal -
Gold		345			247,909			-			80,796			20,301			160,489			-		-		-		-		-		-		32,875			542,715			(31,733	)		510,982
Silver		256,608			9,595			40,384			27,285			54,629			4,434			-		-		-		-		-		-		1,257			394,192			(935	)		393,257
Copper		-			598			192			-			267,737			-			-		-		-		-		-		-		-			268,527			-			268,527
Zinc		31,814			-			-			7,914			130,790			-			-		-		-		-		-		-		-			170,518			-			170,518
Lead		32,244			-			4,660			4,735			44,318			-			-		-		-		-		-		-		-			85,957			-			85,957
Manganese sulfate		-			-			-			-			-			-			-		-		-		-		-		6,317		-			6,317			-			6,317
Indium														66			-			-		-		-		-		-		-		-			66			-			66
		321,011			258,102			45,236			120,730			517,841			164,923			-		-		-		-		-		6,317		34,132			1,468,292			(32,668	)		1,435,624
Commercial deductions		(54,529	)		(1,145	)		(4,116	)		(2,354	)		(184,744	)		(928	)		-		-		-		-		-		-		(116	)		(247,932	)		781			(247,151	)
		266,482			256,957			41,120			118,376			333,097			163,995			-		-		-		-		-		6,317		34,016			1,220,360			(31,887	)		1,188,473
Sales by services -		-			-			-			-			-			-			10,603		60,639		14,377		-		615		19,658		-			105,892			(76,195	)		29,697
Royalties income -		-			-			-			-			-			-			-		-		-		20,739		-		-		-			20,739			-			20,739
		266,482			256,957			41,120			118,376			333,097			163,995			10,603		60,639		14,377		20,739		615		25,975		34,016			1,346,991			(108,082	)		1,238,909

~~F-96~~

Notes to the consolidated financial statements(continued)

~~Embedded derivatives held~~

32.

Derivative financial instruments

Hedge derivative financial instruments -

(a)

The volatility of copper prices during the last years has caused the Management of the subsidiary El Brocal to enter into future contracts.These contractsare intended to reduce the volatility of the cash flows attributable to the fluctuations in the copper and zinc price in accordance with existing copper concentrate sales commitments, which are related to 50 percent of the annual production of copper and 25 percent of the production of two years of zinc,according to the risk strategy approved by the Board of Directors.

There is an economic relationship between the hedged items and the hedging instruments as the terms of the foreign exchange and commodity forward contracts match the terms of the expected highly probable forecast transactions. The Group has established a hedge ratio of 1:1 for the hedging relationships as the underlying risk of the commodity forward contracts are identical to the hedged risk components. To test the hedge effectiveness, the Group uses the hypothetical derivative method and compares the changes in the fair value of the hedging instruments against the changes in fair value of the hedged items attributable to the hedged risks.

The hedge ineffectiveness can arise from:

Differences in the timing of the cash flows of the hedged items and the hedging instruments

Different indexes (and accordingly different curves) linked to the hedged risk of the hedged items and hedging instruments

The counterparties’ credit risk differently impacting the fair value movements of the hedging instruments and hedged items

Changes to the forecasted amount of cash flows of hedged items and hedging instruments

For the years 2019, 2018 and 2017, no hedge ineffectiveness was recorded.

As of December 31, 2019, there are not any hedge contract. As of December 31, 2018, the fair value of the hedge contracts amounts to an assets of US$2.8 million. The counterparty in ORI as of December 31, ~~2015 are:~~2018, net of deferred income tax, amounts to a positive balance of US$1,946,000, and it is show in the equity account of “Other reserves of equity”. During 2019, 2018 and 2017, the effect in profit or loss was a gain of US$4.3 million, loss of US$1.4 million and loss of US$10.9 million, respectively, and it is show in the “Net sales of goods” caption, see note 20(b).

Notes to the consolidated financial statements(continued)

~~Quotations~~

~~Metal~~

~~Quantity~~

~~Period of~~
~~quotations 2016~~

~~Provisional~~

~~Future~~

~~Fair value,~~
~~net~~

~~US$~~

~~US$(000)~~

~~Copper~~

~~41,359 DMT~~

~~January - April~~

~~4,629.00 – 5,223.05~~

~~4,525.50 - 4,796.00~~

~~(1,549~~

)

~~Gold~~

~~16,145 OZ~~

~~January~~

~~961.79 – 1,070.10~~

~~1,086.65 – 1,109.09~~

~~(633~~

)

~~Silver~~

~~3,215,862 OZ~~

~~January - March~~

~~12.66 – 15.71~~

~~14.30 – 14.31~~

~~(244~~

)

~~Lead~~

~~16,990 DMT~~

~~January – April~~

~~1,641.40 – 1,732.13~~

~~1,658.00 – 1,789.00~~

~~408~~

~~Zinc~~

~~12,329 DMT~~

~~January – March~~

~~1,510.41 – 1,672.50~~

~~1,495.75 – 1,609.00~~

~~316~~

~~Gold~~

~~342 OZ~~

~~January - April~~

~~1,066.26 – 1,124.53~~

~~1,109.05 – 1,109.27~~

~~Total asset, net~~

~~(1,694~~

)

The table below presents the composition of open transactions included in thehedge derivative financial instruments as of December 31, 2018:

			Quotations
Quotation period	Metric Ton		Fixed		Futures		Fair value
								US$(000)
January 2019		1,000		7,345		5,961		1,381
February 2019		1,000		7,352		5,968		1,378

		2,000						2,759

33.

Financial - risk management objectives and policies

The Group’s principal financial liabilities, other than derivatives, comprise of trade accounts and other payables, and financial obligations. The main purpose of these financial instruments is to finance the Group’s operations. The Group’s principal financial assets include cash and cash equivalents and trade and other receivables that derive directly from its operations.

The Group is exposed to market risk, credit risk and liquidity risk. The Group’s Management oversees the management of these risks. ~~It is supported by a~~A committee that advises on financial ~~risks.~~risks supports it. This committee provides assurance to management that the ~~Group's~~Group’s financial risk activities are governed by appropriate policies and procedures and that financial risks are identified, measured and managed in accordance with the Group’s policies and risk objectives. All derivative activities for risk management purpose are carried out by internal specialists that have the appropriate skills, experience and supervision.

There were no changes in the objectives, policies or processes during the years ended December 31, ~~2016, 2015~~2019, 2018 and ~~2014.~~2017.

The Board of Directors reviews and agrees policies for managing each of these risks, which are described below:

(a)

Market risk -

Market risk is the risk that the fair value of the future cash flows from financial instruments will fluctuate because of changes in market prices. Market risks that apply to the Group comprise ~~three~~four types of risk: exchange rate risk, commodity risk, ~~and~~ interest rate ~~risk.~~risk and other risk of price, such as the risk of the stock price. Financial instruments affected by market risks include time deposits, financial obligations, embedded derivatives and derivative financial instruments.

The sensitivity analyses in this section relate to the positions as of December 31, ~~2016, 2015~~2019 and ~~2014,~~2018 and have been prepared considering that the proportion of financial instruments in foreign currency are constant.

~~F-97~~

Notes to the consolidated financial statements(continued)

(a.1)

Exchange rate risk

The exchange rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. The Group’s exposure to the risk of changes in foreign exchange relates primarily to the Group´s operating activities in ~~Soles.~~soles. The Group mitigates the effect of exposure to exchange-rate risk by carrying out almost all of its transactions in its functional currency.

~~On the other hand, the Group has contracted hedges exchange rate to mitigate this risk on their loans obtained in soles.~~ Excluding loans in soles, Management maintains smaller amounts in ~~Soles~~soles in order to cover its needs in this currency (primarily taxes).

A table showing the effect on results of a reasonable change in foreign-currency exchange rates is presented below, with all other variables kept constant:

	Exchange-rate increase/decrease			Effect on loss before income tax			Exchange-rate increase/decrease		Effect on profit (loss) before income tax
				US$(000)					US$(000)
2016

2019
Exchange rate		+10	%		(924	)	10	%	4,053
Exchange rate		-10	%		926		(10	%)	(3,545	)

2015
2018
Exchange rate		+10	%		6,233		10	%	1,695
Exchange rate		-10	%		(7,618	)	(10	%)	(1,681	)

2014
2017
Exchange rate		+10	%		5,950		10	%	2,474
Exchange rate		-10	%		(7,271	)	(10	%)	(2,459	)

(a.2)

Commodity price risk

The Group is affected by the price volatility of the commodities. The price of mineral sold by the Group has fluctuated historically and is affected by numerous factors beyond its control.

The Group manages its commodity price risk primarily ~~through the use of~~using sales commitments in customer contracts and hedge contracts for the metals sold by the subsidiary El Brocal.

The subsidiary El Brocal entered into derivative contracts that qualified as cash flow hedges, with the intention of covering the risk resulting from the fall in the prices of the metals. These derivative contracts are recorded as assets or liabilities in the statements of financial position and are stated at fair value. To the extent that these hedges were effective in offsetting future cash flows from the sale of the related production, changes in fair value are deferred in an equity ~~account.~~account under “Other reserves of equity”. The deferred amounts were reclassified to the appropriate sales when production was sold.

(a.3)

Interest rate risk -

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Group’s exposure to the risk of changes’ in market interest rates relates to the Groups’ long-term financial obligations with floating interest rates.

~~F-98~~

Notes to the consolidated financial statements(continued)

A table showing the effect in profit or loss of the variations of interest rates:

	Increase/decrease of Libor rate		Effect on results			Increase/decrease of LIBOR			Effect on profit (loss) before income tax
	(percentage rates)		US$(000)				(percentage rates)			US$(000)
2016
2019
Interest rate		+10		333			10			(306	)
Interest rate		-10		(333	)		(10	)		306

2015
2018
Interest rate		+10		294			10			(277	)
Interest rate		-10		(294	)		(10	)		277

2014
2017
Interest rate		+10		110			10			(677	)
Interest rate		-10		(110	)		(10	)		677

(b)

Credit risk -

Credit risk is the risk that counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The Group is exposed to credit risk from its operating activities (primarily trade receivable) and from its financing activities, including deposits with banks and other financial instruments.

The Group invests the excess cash in financial leading institutions, sets conservative credit policies and constantly evaluates the market conditions in which it operates.

Trade accounts receivable are denominated in U.S. dollars. The Group’s sales are made to domestic and foreign customers. See concentration of spot sales in note ~~21(b)~~20(b). An impairment analysis is performed on an individual basis.

Credit risk is limited to the carrying amount of the financial assets to the date of consolidated statements of financial position, which is composed, by cash and cash equivalents, trade and other receivables and derivative financial instruments.

Notes to the consolidated financial statements(continued)

Set out below is the information about the credit risk exposure on the Group’s trade and other receivables:

			Days past due
	Current		<30 days		30 – 90 days		>90 days			Total
	US$(000)		US$(000)		US$(000)		US$(000)			US$(000)

As of December 31, 2019 -
Trade receivables		204,096		-		-		22,016			226,112
Other receivables		125,409		42,390		4,332		10,006			182,137
Expected credit loss		-		-		-		(32,022	)		(32,022	)

Total		329,505		42,390		4,332		-			376,227
As of December 31, 2018 -
Trade receivables		146,701		-		-		22,013			168,714
Other receivables		58,584		44,773		2,250		10,089			115,696
Expected credit loss		-		-		-		(32,102	)		(32,102	)

Total		205,285		44,773		2,250		-			252,308

(c)

Liquidity risk -

Prudent management of liquidity risk implies maintaining sufficient cash and cash equivalents and the possibility of committing or having financing committed through an adequate number of credit sources. The Group believes that maintains suitable levels of cash and cash equivalents and has sufficient credit capacity to get access to lines of credit in leading financial entities.

The Group continually monitors its liquidity risk based on cash flow projections.

~~F-99~~

Notes to the consolidated financial statements(continued)

An analysis of the Group’s financial liabilities classified according to their aging is presented below, based on undiscounted contractual payments:

Less than
1 year Between 1
and 2 years Between 2
and 5 years More than 5
years Total
US$(000) US$(000) US$(000) US$(000) US$(000)

As of December 31,2016 -
Bank loans 55,000 - - - 55,000
Trade and other payables 253,062 - - 15,982 269,044
Derivative financial instruments 3,863 - - - 3,863
Embedded derivative for sale of concentrates 1,524 - - - 1,524
Financial obligation 70,420 �� 113,070 503,029 - 686,519
Contingent consideration liability - 3,305 6,603 32,840 42,748

Total 383,869 116,375 509,632 48,822 1,058,698

As of December 31, 2015 -
Bank loans 298,984 - - - 298,984
Trade and other payables 235,691 - - 15,057 250,748
Derivative financial instruments 10,643 - - - 10,643
Embedded derivative for sale of concentrates 1,694 - - - 1,694
Financial obligation 62,560 92,571 238,504 - 393,635
Contingent consideration liability - - 8,050 29,118 37,168

Total 609,572 92,571 246,554 44,175 992,872

	Less than		Between 1		Between 2		More than 5
	1 year		and 2 years		and 5 years		years		Total
	US$(000)		US$(000)		US$(000)		US$(000)		US$(000)

As of December 31, 2019 -
Bank loans		55,486		-		-		-		55,486
Trade and other payables		152,070		616		-		-		152,686
Financial obligation – capital		262,088		131,588		125,154		48,568		567,398
Financial obligation – interest		22,597		11,225		11,880		1,449		47,151
Lease – capital		3,692		1,514		2,297		-		7,503
Lease – interest		73		143		404		-		620
Contingent consideration liability		-		-		4,905		35,166		40,071

Total		496,006		145,086		144,640		85,183		870,915

As of December 31, 2018 -
Bank loans		95,613		-		-		-		95,613
Trade and other payables		176,811		639		-		-		177,450
Financial obligation – capital		46,166		346,401		195,463		-		588,030
Financial obligation – interest		31,017		28,359		6,024		-		65,400
Contingent consideration liability		-		-		5,904		32,472		38,376

Total		349,607		375,399		207,391		32,472		964,869

(d)

Capital management -

For purposes of the ~~Group's~~Group’s capital management, capital is based on all equity accounts. The objective of capital management is to maximize shareholder value.

The Group manages its capital structure and makes adjustments to meet the changing economic market conditions. The ~~Group's~~Group’s policy is to fund all projects of short and long term with their own operating resources. To maintain or adjust the capital structure, the Group may change the policy of paying dividends to shareholders, return capital to shareholders or issue new shares.

~~F-100~~

Notes to the consolidated financial statements(continued)

34.

Fair value measurement

Fair value disclosure of assets and liabilities according to its hierarchy -

The following table provides the fair value measurement hierarchy of the Group’s assets and liabilities:

Fair value measurement using
Total Quoted prices
in active
markets
(Level 1) Significant
observable
inputs
(Level 2) Significant
non-observable
inputs
(Level 3)
US$(000) US$(000) US$(000) US$(000)

As of December 31, 2016
Liabilities measured at fair value:
-  Embedded derivatives for concentrates sales, net 1,524 - 1,524 -
- Contingent consideration liability 19,343 - - 19,343
-  Hedge instruments 3,863 - 3,863 -

As of December 31, 2015
Liabilities measured at fair value:
-  Embedded derivatives for concentrates sales, net 1,694 - 1,694 -
- Contingent consideration liability 16,994 - - 16,994
-  Hedge instruments 10,282 - 10,282 -

		Fair value measurement using:
	Total		Quoted prices in active markets (Level 1)	Observable inputs (Level 2)	Unobservable inputs (Level 3)
	US$(000)		US$(000)	US$(000)	US$(000)

As of December 31, 2019 -
Assets and liabilities measured at fair value:
Fair value of account receivable	165,546		-	165,546	-
Contingent consideration liability	16,410		-	-	16,410
Hedge instruments	-		-	-	-

As of December 31, 2018 -
Assets and liabilities measured at fair value:
Fair value of account receivable	107,549		-	107,549	-
Contingent consideration liability	15,755		-	-	15,755
Hedge instruments	2,759		-	2,759	-

Financial instruments whose fair value is similar to their book value –

For financial assets and liabilities such as cash and cash equivalents, trade and other receivables, trade and other payables that are liquid or have short-term maturities (less than three months), it is estimated that their book value is similar to their fair value. The derivatives are also recorded at the fair value so that differences do not need to be reported.

The fair value of ~~embedded derivatives~~account receivable is determined using valuation techniques with information directly observable in the market (future metal quotations).

Financial instruments at fixed and variable rates -

The fair value of financial assets and liabilities at fixed and variable rates at amortized cost is determined by comparing the market interest rates at the time of their initial recognition to the current market rates with regard to similar financial instruments. The estimated fair value of deposits that accrue interest is determined by means of cash flows discounted using the prevailing market interest rates in the currency with similar maturities and credit risks.

Based on the foregoing, there are no important existing difference between the value in books and the ~~reasonable~~fair value of the assets and financial liabilities as of December 31, ~~2016~~2019 and ~~2015.~~2018.

There were no transfers between Level 1and Level 2 during 2019.

During 2019 and 2018, the fair value of the investment property amounted to US$544,000. There is not an independent valuation for investment property.

Notes to the consolidated financial statements(continued)

35.

Events after the reporting period

COVID-19 (Corona Virus Disease 2019)

Our operations are subject to risks related to outbreaks of infectious diseases. For example, the recent outbreak of coronavirus COVID-19, a virus causing potentially deadly respiratory tract infections originating in China, has already and will continue to negatively cause further volatility in prices of precious metals. Additionally, a severe market disruption will likely entail decreased demand for our products and otherwise impact our operations and the operations of our customers, suppliers and other stakeholders. The Peruvian Government has issued a series of executive decrees declaring a national emergency and significantly restricting general circulation throughout the country.

In accordance with these restrictions and within the framework of the Company’s pandemic response plan, we have limited our operations to those which are strictly necessary to ensure that our mine pumping systems, water treatment plants, energy supply, hydroelectric substations, health services and overall minimum safety conditions remain in place. Other than in respect of these minimum back-up operations, as of the date of this annual report, our mining processing facilities are completely halted. The company intends to immediately resume operations once it receives notice from the authorities that restrictions have been lifted. The ultimate severity of the Coronavirus outbreak is uncertain at this time and therefore we cannot predict the impact it may have on the world, the Peruvian economy, international financial markets, or ultimately on our financial condition, results of operations, production, sales, margins and cash flow from operations, our access to debt markets, covenants compliance, asset impairments, among others.

Syndicated Term Loan

On April 2, 2020, we entered into a second amendment to the Syndicated Term Loan, pursuant to which, as of the date of this annual report, borrowings under the Syndicated Term Loan bear interest at a rate per annum equal to LIBOR plus 1.90%. Principal under the Syndicated Term Loan shall be payable in five consecutive and semi-annual installments of US$41,250,000 beginning in October 2022 and one final payment of US$68,750,000 in April 2025 (on which date all amounts outstanding shall be payable).

~~F-101~~

Minera Yanacocha S.R.L. and Subsidiary

Consolidated Financial Statements for the years 2019, 2018 and 2017, together with the Report of Independent Auditors Registered Public Accounting Firm

F-124

Minera Yanacocha S.R.L. and Subsidiary

Consolidated Financial Statements for the years ~~2016, 2015~~2019, 2018 and ~~2014,~~2017, together with the Report of Independent Registered Public Accounting Firm

Content
	~~F-102~~

~~Minera Yanacocha S.R.L. and Subsidiary~~

~~Consolidated Financial Statements for the years 2016, 2015 and 2014, together with the Report of Independent Registered Public Accounting Firm~~

~~Content~~

Report of Independent ~~Registered Public Accounting Firm~~Auditors	~~F-104~~F-125

Consolidated Financial Statements

Consolidated statements of financial position	~~F-106~~F-127
Consolidated statements of comprehensive income	~~F-107~~F-128
Consolidated statements of changes in equity	~~F-108~~F-129
Consolidated statements of cash flows	~~F-109~~F-130
Notes to the consolidated financial statements	~~F-110~~F-131

~~F-103~~

Report of Independent Registered Public Accounting Firm

To the Partners and the Board of Directors of Minera Yanacocha S.R.L. ~~and Subsidiary~~

Opinion on the Financial Statements

We have audited the accompanying consolidated statements of financial ~~statements~~position of Minera Yanacocha S.R.L. ~~(a Peruvian~~and subsidiary (the Company) ~~and Subsidiary, which comprise the consolidated statements of financial position~~ as of December 31, ~~2016~~2019 and ~~2015,~~2018, and ~~the~~ related consolidated statements of comprehensive income, ~~statements of~~ changes in equity and ~~statements of~~ cash flows for each of the three years in the period ended December 31, ~~2016~~2019, and ~~2015. These~~the related notes (collectively referred to as the “consolidated financial ~~statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.~~

~~We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States)~~statements”). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. We were not engaged to perform an audit of the Company´s internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis of designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company´s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management and evaluating the overall financial statements presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements ~~referred to above~~ present fairly, in all material respects, the consolidated financial position of ~~Minera Yanacocha S.R.L and Subsidiary as of~~the Company at December 31, ~~2016~~2019 and ~~2015,~~2018, and the consolidated results of ~~their~~its operations and ~~their~~its cash flows for each of the three years ~~then~~in the period ended December 31, 2019, in ~~accordance~~conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board ~~(“IASB”)~~ which differ in certain respects from the accounting principles generally accepted in the United States of America (see notes 2324 and 2425 to the consolidated financial statements).

~~Lima, Peru,~~

~~February 28, 2017~~

~~Countersigned by:~~

~~Paredes, Burga & Asociados S. Civil de R. L.~~

~~/s/ Victor Burga~~

~~Victor Burga~~

~~C.P.C.C. Register No. 14859~~

~~F-104~~

~~Report of Independent Registered Public Accounting Firm~~ ~~(continued)~~

~~March 30, 2015~~

~~To the Partners of~~

~~Minera Yanacocha S.R.L.~~

~~In our opinion, the accompanying consolidated statements of comprehensive income, changes in equity and cash flows~~Basis for the year ended December 31, 2014, present fairly, in all material respects, the results of operations and cash flows of Minera Yanacocha S.R.L. and Subsidiary for the year ended December 31, 2014 in conformity with International Financial Reporting Standards, as issued by the International Accounting Standards Board.Opinion

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on ~~these~~the Company’s consolidated financial statements based on our ~~audit.~~ audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our ~~audit of these statements~~audits in accordance with the standards of the ~~Public Company Accounting Oversight Board (United States). These~~PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material ~~misstatements. An~~misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit ~~includes~~of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Report of Independent Registered Public Accounting Firm(continued)

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence ~~supporting~~regarding the amounts and disclosures in the consolidated financial ~~statements, assessing~~statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, ~~and~~as well as evaluating the overall presentation of the consolidated financial ~~statements presentation.~~statements. We believe that our ~~audit provides~~audits provide a reasonable basis for our opinion.

Paredes, Burga & Asociados S. Civil de R. L.

~~Countersigned by~~A member practice of Ernst & Young Global Limited

~~Gaveglio, Aparicio y Asociados S. Civil de R.L.~~

~~/s/ Francisco Patino (partner)~~
~~Peruvian Certified Public Accountant~~
~~Registration No. 01-25611~~

~~Lima, Peru~~

/s/Mayerling Zambrano R.

We have served as the Company’s auditor since 2015.

Lima, Peru,

April 8, 2020

~~F-105~~

Minera Yanacocha S.R.L. and Subsidiary

Consolidated statements of financial position

As of December 31, ~~2016~~2019 and ~~2015~~2018

	Note		2016		2015		Note		2019			2018
			US$(000)		US$(000)				US$(000)			US$(000)

Assets
Current assets
Cash and cash equivalents		5		677,524		943,761		5		818,503			723,208
Trade and other receivables, net		6		40,975		26,389		6		18,962			32,610
Prepaid income tax				18,175		-				-			19,239
Value added tax credit				73,227		80,641				32,831			29,828
Inventories, net		7		71,298		56,764		7		54,245			54,527
Stockpiles and ore on leach pads, net		8		226,357		237,610		8		134,923			100,593
Prepaid expenses				337		517				991			753

Total current assets				1,107,893		1,345,682				1,060,455			960,758

Non-current assets
Available-for-sale financial assets		9		16,454		15,803
Restricted cash								13		48,617			48,127
Trade and other receivables, net								6		23,648			23,290
Financial instruments at fair value								9		24,417			22,610
Stockpiles and ore on leach pads, net		8		111,889		208,483		8		105,023			138,778
Property, plant and equipment, net		10		799,131		1,364,610		10		1,038,294			840,454
Intangible assets, net				10,518		30,852				10,547			12,384
Deferred tax asset								15(g)		1,071			1,071

Total non-current assets				937,992		1,619,748				1,251,617			1,086,714

Total assets				2,045,885		2,965,430				2,312,072			2,047,472

Liabilities and partners’ equity
Current liabilities
Trade and other payables		11		66,474		78,430		11		76,484			83,464
Income tax payable				-		12,346		15(j)		23,153			3,552
Current provisions		12		68,662		41,781
Current provisions, other accruals and liabilities								12		90,940			41,154

Total current liabilities				135,136		132,557				190,577			128,170
Non-current provisions		12		1,025,025		604,048
Non-current liabilities
Debt instruments								13		43,927			42,430
Non-current provisions, other accruals and liabilities								12		1,587,856			1,293,149

Total non-current liabilities										1,631,783			1,335,579
Total liabilities				1,160,161		736,605				1,822,360			1,463,749
Partners' equity, net
Partners' contributions		13		398,216		398,216

Partners’ equity
Partners’ contributions								14		378,505			378,505
Additional paid-in-capital				226		226				(21,758	)		(21,758	)
Retained earnings				487,282		1,830,383				133,315			228,572
Other reserves										(350	)		(1,596	)

Total equity				885,724		2,228,825				489,712			583,723
Total liabilities and partners’ equity, net				2,045,885		2,965,430

Total liabilities and partners’ equity										2,312,072			2,047,472

The accompanying notes are an integral part of this consolidated financial statement

~~F-106~~

Minera Yanacocha S.R.L. and Subsidiary

Consolidated statements of comprehensive income

For the years ended December 31, ~~2016, 2015~~2019, 2018 and ~~2014~~2017

Note 2016 2015 2014
US$(000) US$(000) US$(000)

Operating income
Revenue from sales 15 761,193 1,031,174 1,165,299
Other operating income 17,713 10,625 30,300
Total gross income 778,906 1,041,799 1,195,599
Operating costs
Costs applicable to sales 16 (776,394 ) (751,736 ) (920,300 )
Other operating costs (2,951 ) (2,524 ) (22,422 )
Total operating costs (779,345 ) (754,260 ) (942,722 )
Gross (loss) profit (439 ) 287,539 252,877
Operating expenses
Operating expenses, net 17 (71,496 ) (82,846 ) (77,781 )
Administrative expenses 18 (8,780 ) (26,325 ) (38,262 )
Selling expenses (3,695 ) (3,534 ) (4,458 )
Impairment loss 10(b) (889,499 ) - (541,141 )
Total operating expenses (973,470 ) (112,705 ) (661,642 )
Operating (loss) profit (973,909 ) 174,834 (408,765 )
Other expenses, net
Finance income 2,132 673 298
Finance costs 19 (15,107 ) (22,734 ) (23,504 )
Net (loss) gain from currency exchange difference (13,741 ) (251 ) 1,142
Total other expenses, net (26,716 ) (22,312 ) (22,064 )
(Loss) income before income tax (1,000,625 ) 152,522 (430,829 )
Income tax (expense) benefit 14(c) (43,127 ) (602,717 ) 30,491
Loss for the year (1,043,752 ) (450,195 ) (400,338 )
Comprehensive loss:
Loss for the year (1,043,752 ) (450,195 ) (400,338 )
Other comprehensive income (loss) to be reclassified as profit or loss in subsequent periods:
Changes in the fair value of available-for-sale financial asset, net of tax effect 9 651 (757 ) 65
Total comprehensive loss for the year (1,043,101 ) (450,952 ) (400,273 )

~~F-107~~

	Note		2019			2018			2017
			US$(000)			US$(000)			US$(000)

Revenue from contracts with customers
Sales		16		734,526			658,653			670,905
Other operating revenue		16		4,776			21,965			21,870
Total revenue				739,302			680,618			692,775

Costs applicable to sales		17		(692,721	)		(619,424	)		(772,647	)
Other operating costs				(1,160	)		(2,217	)		(2,062	)
Total operating costs				(693,881	)		(621,641	)		(774,709	)
Gross profit (loss)				45,421			58,977			(81,934	)

Operating expenses
Operating expenses, net		18		(35,987	)		(76,155	)		(63,514	)
Administrative expenses		19		(1,744	)		(2,783	)		(4,760	)
Selling expenses				(1,722	)		(2,627	)		(3,921	)
Total operating expenses				(39,453	)		(81,565	)		(72,195	)
Operating profit (loss)				5,968			(22,588	)		(154,129	)

Finance income		2.4(n)(iv)		18,430			11,448			5,831
Finance costs		20		(57,629	)		(39,024	)		(23,766	)
Net gain (loss) from currency exchange difference				2,902			(2,056	)		3,636
Loss before income tax				(30,329	)		(52,220	)		(168,428	)
Income tax expense		15(h)		(64,928	)		(29,297	)		(7,026	)
Loss for the year				(95,257	)		(81,517	)		(175,454	)

Comprehensive loss:
Loss for the year				(95,257	)		(81,517	)		(175,454	)
Other comprehensive (loss) income to be reclassified as profit or loss in subsequent periods:
Fair value of financial instruments				1,246			(91	)		(3,244	)

Total comprehensive loss for the year				(94,011	)		(81,608	)		(178,698	)

The accompanying notes are an integral part of this consolidated financial statement

Minera Yanacocha S.R.L. and Subsidiary

Consolidated statements of changes in equity

For the years ended December 31, ~~2016, 2015~~2019, 2018 and ~~2014~~2017

Capital
stock Adicional Paid-
in-capital Retanied
earnings Total
US$(000) US$(000) US$(000) US$(000)

As of January 1, 2014 398,216 226 2,681,608 3,080,050
Loss for the year - - (400,338 ) (400,338 )
Other comprehensive income for the year - - 65 65
Total comprehensive loss - - (400,273 ) (400,273 )

As of December 31, 2014 398,216 226 2,281,335 2,679,777
Loss for the year - - (450,195 ) (450,195 )
Other comprehensive loss for the year - - (757 ) (757 )
Total comprehensive loss - - (450,952 ) (450,952 )

As of December 31,2015 398,216 226 1,830,383 2,228,825
Loss for the year - - (1,043,752 ) (1,043,752 )
Other comprehensive income for the year - - 651 651
Total comprehensive loss - - (1,043,101 ) (1,043,101 )
Dividends declared and paid, note 13(c) - - (300,000 ) (300,000 )
As of December 31, 2016 398,216 226 487,282 885,724

~~F-108~~

	Capital stock			Additional Paid-in-capital			Retained earnings			Other reserves			Total
	US$(000)			US$(000)			US$(000)			US$(000)			US$(000)

As of January 1, 2017		398,216			226			485,543			1,739			885,724
Loss for the year		-			-			(175,454	)		-			(175,454	)
Other comprehensive income for the year		-			-			-			(3,244	)		(3,244	)
Total comprehensive loss		-			-			(175,454	)		(3,244	)		(178,698	)
Treasury shares, note 14(a)		-			(47,911	)		-			-			(47,911	)
As of December 31, 2017		398,216			(47,685	)		310,089			(1,505	)		659,115
Loss for the year		-			-			(81,517	)		-			(81,517	)
Other comprehensive loss for the year		-			-			-			(91	)		(91	)
Total comprehensive loss		-			-			(81,517	)		(91	)		(81,608	)
Treasury shares reduction, note 14(a)		(19,711	)		19,711			-			-			-
Proceeds from sale of shares, note 13		19,471			28,440			-			-			47,911
Acquisition of debt instruments, note 13		(19,471	)		(22,224	)		-			-			(41,695	)
As of December 31,2018		378,505			(21,758	)		228,572			(1,596	)		583,723
Loss for the year		-			-			(95,257	)		-			(95,257	)
Other comprehensive income for the year		-			-			-			1,246			1,246
Total comprehensive loss		-			-			(95,257	)		1,246			(94,011	)

As of December 31, 2019		378,505			(21,758	)		133,315			(350	)		489,712

The accompanying notes are an integral part of this consolidated financial statement

Minera Yanacocha S.R.L. and Subsidiary

Consolidated statement of cash flows

For the years ended December 31, ~~2016, 2015~~2019, 2018 and ~~2014~~2017

Note 2016 2015 2014
US$(000) US$(000) US$(000)
Cash flow from operating activities
Loss for the year (1,043,752 ) (450,195 ) (400,338 )
Adjustments to reconcile profit after income tax to net cash flows from operating activities:
Impairment loss 10 889,499 - 541,141
Depreciation and amortization 140,712 223,142 360,334
Deferred income tax - 483,804 (168,761 )
Unwinding of discount of the provision for reclamation 12(b) 14,104 22,075 22,914
Write-off of fixed assets 17 14,036 2,411 3,520
Loss (gain) for fixed asset sales (311 ) 508 (1,226 )
Write-down of ore on leach pads to realizable value 8(b) 100,179 64,497 95,859
Reversal of the write-down of ore on leach pads to realizable value 8(b) (106,103 ) (137,293 ) (80,107 )
Allowance for obsolescence of materials and supplies 7(b) (609 ) 1,049 (736 )
Working capital adjustments:
Net (increase) decrease in operating assets:
Trade and other receivables (14,586 ) 41,842 28,382
Prepaid Income Tax (18,175 ) - -
Value added tax credit 7,414 3,701 36,606
Inventories and Stockpiles and ore on leach pads 99,237 120,113 15,252
Prepaid expenses 180 160 1,650
Available for sale financial assets 9 (651 ) 1,081 (93 )
Net (increase) decrease in operating liabilities:
Trade and other payables (10,654 ) (60,569 ) 6,910
Income tax payable (12,346 ) (23,090 ) (29,264 )
Provisions 92,493 (7,779 ) (46,435 )
Reclamation liabilities paid 12(b) (10,467 ) (11,007 ) (10,419 )
Net cash and cash equivalents provided by operating activities 140,200 274,450 375,189
Cash flow from investing activities
Purchase of property, plant and equipment (106,908 ) (118,429 ) (216,181 )
Proceeds from sale of property, plant and equipment 471 1,116 40,651
Net cash and cash equivalents used in investing activities (106,437 ) (117,313 ) (175,530 )
Cash flow from financing activities
Dividends declared and paid 13(c) (300,000 ) - -
Net cash and cash equivalents used in financing activities (300,000 ) - -
Net (decrease) increase in cash and cash equivalents (266,237 ) 157,137 199,659
Cash and cash equivalents at beginning of year 943,761 786,624 586,965
Cash and cash equivalents at end of year 677,524 943,761 786,624
Transactions with no effects in cash flows:
Addition of asset retirement and mine closure 351,798 10,434 64,520

~~F-109~~

	Note		2019			2018			2017
			US$(000)			US$(000)			US$(000)

Cash flow from operating activities
Loss for the year				(95,257	)		(81,517	)		(175,454	)
Adjustments to reconcile profit after income tax to net cash flows from operating activities:
Depreciation and amortization		17		144,862			156,212			87,783
Provision of closure mines		17		142,129			16,285			124,214
Deferred income tax		15(f)		-			(1,071	)		-
Unwinding of discount of the provision for closure mines		12(b)		36,709			36,015			21,769
Unwinding of discount of debt instruments		20		1,497			735			-
Write-off of fixed assets		18		1,204			-			1,368
Loss (gain) for fixed asset sales		18		(5,996	)		624			(603	)
Write-down of ore inventories to realizable value		8(b)		33,464			90,365			77,385
Reversal of the write-down of on ore inventories to realizable value		8(b)		(74,666	)		(63,778	)		(99,219	)
Allowance for obsolescence of materials and supplies		7(b)		(1,417	)		439			1,804
Working capital adjustments:
Net (increase) decrease in operating assets:
Trade and other receivables				13,290			(7,580	)		(7,345	)
Income tax collected (paid)				19,239			14,160			5,400
Value added tax credit				(3,003	)		13,856			29,543
Inventories and stockpiles and ore on leach pads				42,326			7,120			103,334
Prepaid expenses				(238	)		(345	)		(71	)
Financial assets at fair value		9		(561	)		299			(5,000	)
Net increase (decrease) in operating liabilities:
Trade and other payables				(6,980	)		1,708			17,800
Income tax payable				32,201			8,897			8,287
Provisions, other accruals and liabilities				30,082			(2,494	)		(46,918	)
Closure of mining units paid		12(b)		(23,889	)		(19,842	)		(21,376	)
				284,996			170,088			122,701
Income tax paid				(12,600	)		(8,863	)		(27,911	)
Net cash and cash equivalents provided by operating activities				272,396			161,225			94,790

Cash flow from investing activities
Purchase of property, plant and equipment		10		(184,403	)		(117,636	)		(51,624	)
Restricted cash		13		(490	)		(48,127	)		-
Proceeds from sale of property, plant and equipment		18		8,088			4,821			2,235

Net cash and cash equivalents used in investing activities				(176,805	)		(160,942	)		(49,389	)

Cash flow from financing activities
Proceeds from sale of shares		13		-			47,911			-
Payments for treasury shares		14(a)		-			-			(47,911	)
Payment of principal portion of lease liabilities		2.3		(296	)		-			-

Net cash and cash equivalents provided by (used in) financing activities				(296	)		47,911			(47,911	)
Net increase (decrease) in cash and cash equivalents				95,295			48,194			(2,510	)
Cash and cash equivalents at beginning of year				723,208			675,014			677,524
Cash and cash equivalents at end of year				818,503			723,208			675,014

Transactions with no effects in cash flows:
Addition of asset retirement and mine closure		10		158,967			27,275			97,326
Increase of right-of-use assets		10		1,045			-			-

The accompanying notes are an integral part of this consolidated financial statement.

Minera Yanacocha S.R.L. and Subsidiary

Notes to the consolidated financial statements

For the years ~~2016, 2015~~2019, 2018 and ~~2014~~2017

Identification and business activities of the Company

(a)

Identification -

Minera Yanacocha S.R.L. hereinafter “the Company” or “Yanacocha”, was incorporated in Peru on January 14, 1992 and commenced operations in 1993. The Company is currently engaged in the production, ~~of gold and~~ exploration and development of gold ~~and copper~~ under the mining concessions it owns or that are owned by S.M.R.L. Chaupiloma Dos de Cajamarca ~~("Chaupiloma"~~(“Chaupiloma”). Future projects could include the production, exploration and development of copper as well.

The Company is 51.35% owned by Newmont Second Capital Corporation, a 100% indirectly owned subsidiary of Newmont Mining Corporation ~~("Newmont"~~(“Newmont”, the ultimate Parent company), 43.65% owned by Compañia Minera Condesa S.A., which is 100% owned by Compañia de Minas Buenaventura S.A.A. (“Buenaventura”) and 5% owned by ~~the International Finance Corporation.~~Summit Global Management II VB, a wholly-owned subsidiary of Sumitomo Corporation, see note 13.

The ~~majority~~controlling Partners ~~ofthe~~of the Company (or their affiliates) also own the ~~majority~~controlling interest in Chaupiloma. In accordance with a mining lease agreement, amended and effective on January 1, 1994, the Company pays Chaupiloma a 3% royalty based on quarterly production ~~soId~~sold at current market prices, after deducting refinery and transportation costs. The royalty agreement expires in 2032.

The Company’s legal domicile is at La Paz avenue No. 1049 office 401, Miraflores, Lima Peru.

(b)

Business activities-

In order to perform its activities, the Company is required to obtain mining concessions or provisional permits for exploration and processing concessions for the treatment of mining ores from the Peruvian Ministry of Energy and Mines (“MEM”). Under Peru’s current legal and regulatory regime, these mining and processing rights are maintained by meeting a minimum annual level of production or investment and by the annual payment of a concession fee. A fine is payable for the years in which minimum production or investment requirements are not met. The ~~Company's~~Company holds mining concessions which exploration and processing rights do not expires as long as the Company comply with the legal requirements. To date the Company has complied with all the applicable legal requirements related to its concession rights.

The Company’s operations are located ~~near~~approximately 375 miles (604 kilometers) north of Lima and 30 miles (48 kilometers) north of the city of Cajamarca ~~province ofPeru~~ and ~~currently include~~are primarily accessible by paved roads. The Yanacocha property began production in 1993 and consists of the following open pit mines: ~~Chaquicocha, Cerro Yanacocha,~~the La Quinua Complex, ~~(La Quinua, El Tapado, El Tapado Oeste), Wester Oxide pits (La Quinua Sur~~the Yanacocha Complex, the Carachugo Complex and ~~Cerro Negro Oeste), Eastern Oxide pits (Quecher Norte) and Carachugo Alto. Mining activities in~~ Maqui ~~Maqui, Marleny and Cerro Negro Este ceased during 2016.~~Maqui. In addition, The Company has four leach pads (La Quinua, Yanacocha, Carachugo and Maqui Maqui), three gold processing plants (Pampa Larga, Yanacocha Norte and La Quinua), one limestone processing facility (China Linda) and one mill (Yanacocha Gold Mill).

Notes to the consolidated financial statements(continued)

The La Quinua Complex is currently mining material from the La Quinua Sur and the Tapado Oeste Layback and is scheduled to finish mining operations in 2020.

The Yanacocha Complex mines material from the Yanacocha Layback and Yanacocha Pinos, which are scheduled to finish mining operations in 2020, respectively. The Yanacocha Complex began operations in 1997 and has had limited mining operations in recent years.

The Carachugo Complex and Maqui Maqui mined material from multiple mines that are no longer in operation. In addition, the Carachugo Complex processes material from the Quecher Main project, which is a new open pit within the existing footprint of Yanacocha. This project will add oxide production at Yanacocha and will extend the life of the Yanacocha operation to 2027.

Yanacocha’s gold processing plants are located adjacent to the solution storage ponds and are used to process gold-bearing solutions from Yanacocha’s leach pads through a network of solution-pumping facilities and ~~one mill. Gold-bearing ores are transported~~the Yanacocha Gold Mill processes high-grade gold ore to ~~one of four leach pads~~produce a gold-bearing solution for ~~gold recovery using conventional heap-leaching or milling,~~treatment at the La Quinua processing plant, followed by Merrill - Crowe zinc precipitation and smelting where a final ~~doré~~dore product is poured. The dore is then shipped offsite for refining and is sold on the worldwide gold markets.

Gold mining requires the use ~~ofspecialized~~of specialized facilities and technology. The Company relies heavily on such facilities and technology to maintain production levels. Also, the cash flows and profitability ~~ofthe Company's~~of the Company’s operations are significantly affected by the market price ~~ofgold.~~of gold. Gold prices can fluctuate widely and are affected by numerous factors beyond the ~~Company's~~Company’s control. During ~~2016, 2015~~2019, 2018 and ~~2014,~~2017 the Company produced ~~0.66~~527,000, 515,000 and 660,000 ounces of gold, respectively.

Brownfield exploration and development for new reserves is ongoing, including the development of the Quecher Main project within the existing footprint of Yanacocha. In addition, we continue to evaluate the potential for mining sulfide gold and copper mineralization.

Quecher Main project

This project is expected to add oxide production at Yanacocha, leverage existing infrastructure and enable potential future growth at Yanacocha. First production was achieved in late 2018 with commercial production started on October of 2019. The Quecher Main extends the life of the Yanacocha operation to 2027 with average annual gold production of about 200,000 ounces unaudited per year (on a consolidated basis) between 2020 and 2025. Development capital costs (excluding capitalized interest) since approval were US$193 million ~~0.92~~(US$96.8 million ~~and 0.97 million ounces ofgold, respectively.~~for the year 2019).

Conga project

The Conga Project consists of two gold-copper porphyry deposits located northeast of the Yanacocha operating area in the provinces of Celendin, Cajamarca and Hualgayoc. There is no exploration ~~and/or~~and (or) development of new reserves, ~~as development of~~ the ~~project's development and~~ reserve balances reported for Conga in 2014 were reclassified to ~~mineral resources~~mineralized material in 2015.

~~F-110~~

Notes to the consolidated financial statements(continued)

~~As a result of local political and community protests, construction and development~~Construction activities aton the Conga project were ~~largely~~ suspended on November 30, 2011, at the request of Peru’s central government following increasing protests in ~~November 2011. The results~~Cajamarca by anti-mining activists led by the regional president. At the request of the Peruvian ~~Central Government’s initiated Environmental Impact Assessment (“EIA”)~~central government, the environmental impact assessment prepared in connection with the project, which was previously approved by the central government in October 2010, was reviewed by independent experts in an effort to resolve allegations around the environmental viability of Conga. This review ~~were reported on April 20, 2012. The review indicated~~concluded that the ~~project’s EIA met Peruvian~~environmental impact assessment complied with international standards and ~~International Standards. The review made~~provided some recommendations to ~~provide additional~~improve water ~~capacity and social funds, which~~management. Yanacocha has ~~largely accepted. Yanacocha announced~~focused on the ~~decision~~construction of water reservoirs prior to ~~move~~ the ~~project forward on a “water-first” approach on June 22, 2012. In the first half of 2014, a Conga Restart Study was completed to identify and test alternatives to advancing~~ development of the project. Following this assessment, a new plan was developed to reduce spending to focus on only the most critical work – protecting people and assets, engaging with communities, and maintaining existingother project ~~infrastructure – while maintaining optionality. Newmont will not proceed with the full~~facilities. However, development of Conga ~~without social acceptance, solid~~is contingent upon generating acceptable project ~~economics~~returns and ~~potentially another partner to help defray costs~~getting local community and ~~risk; it is currently difficult to predict when or whether such events may occur.~~government support. Under the current social and political environment, the Company does not anticipate being able to develop Conga for at least the next five years. Due to the uncertainty surrounding the project’s development, the Company has allocated its exploration and development capital to other projects in recent years, and the Conga project is currently in care and maintenance. Should the Company be unable to develop the Conga ~~Project,~~project, the Company may have to consider other alternatives for the project, which may result in ~~an impairment.~~a future impairment charge. The total assets at Conga as of December 31, ~~2016~~2019 and ~~2015~~2018 were US$~~502.8~~458.2 million and US$~~501.4~~484.5 million, respectively.

Sulfides project

This project represents a stream of sulfide resources development that will be achieved by processing high-grade metal dominant sulfide ores from Yanacocha Verde Phase 1 and Chaquicocha underground deposits within Yanacocha’s operational footprint, through an integrated process flow sheet that includes the addition of new flotation, pressure oxidation, neutralization, solvent extraction and electrowinning facilities. The Sulfides project is in the development stage, and the Company expects to begin with the construction of the project in the first quarter of the year 2021.

(c)

Approval of consolidated financial statements -

The consolidated financial statements as of December 31, ~~2016~~2019 were approved by the Company’s Management on ~~February 28, 2017~~April 8, 2020, and subsequent events have been considered through that date. They will then be presented for approval by the Company’s shareholders in ~~its opinion, will be approved without changes at~~ the ~~Partners’ Meeting~~first half of 2020. Those shareholders have the authority to ~~be held within~~approve and or otherwise modify the ~~terms established by Law.~~consolidated financial statements.

~~The~~Notes to the consolidated financial statements ~~as of December 31, 2015 and 2014 were issued with the approval of the Partners’ Meeting held on March 31, 2016 and March 26, 2015, respectively.~~(continued)

Basis for preparation, consolidation and accounting policies

2.1.

Basis of preparation -

The consolidated financial statements of the Company have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standard Board (“IASB”) ~~and interpretations issued by the IFRS Interpretations Committee (“IFRIC”), in effect at December 31, 2016.~~.

The consolidated financial statements have been prepared under the historical cost basis, except for ~~available-for-sale~~accounts receivables and financial assets which are measured at their fair value.

The consolidated financial statements are presented in U.S. dollars and all values are rounded to the nearest thousands, except when otherwise indicated.

The preparation of consolidated financial statements requires that Management use judgments, estimates and assumptions, as detailed in note 3.

~~These~~The Company adopted IFRS 16, Leases on January 1, 2019, using the modified retrospective approach, and accordingly, no comparative information is included on the prior periods. See note 2.3.

Besides the comparative information arising from the application of IFRS 16 mentioned in the previous paragraph, these consolidated financial statements provide comparative information in respect of the prior periods.

2.2.

Basis of consolidation -

The consolidated financial statements comprise the financial statements of the Company and its subsidiary (San Jose Reservoir Trust, a separate Peruvian legal entity created to ensure the continuity of the Company’s operations in the San Jose Reservoir after ~~2018).~~

~~F-111~~

~~Notes to~~ the ~~consolidated financial statements~~ ~~(continued)~~end of operations at Yanacocha).

Control is achieved when the Company is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. Specifically, the Company controls an investee if, and only if, the Company has:

Power over the investee (i.e., existing rights that give it the current ability to direct the relevant activities of the investee).

Exposure, or rights, to variable returns from its involvement with the investee.

The ability to use its power over the investee to affect its returns.

Generally, there is a presumption that a majority of voting rights result in control. To support this presumption and when the Company has less than a majority of the voting or similar rights of an investee, the Company considers all relevant facts and circumstances in assessing whether it has power over an investee, including:

The contractual arrangement with the other vote holders of the investee.

Rights arising from other contractual arrangements.

The Company’s voting rights and potential voting rights or a combination of rights.

The Company re-assesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control. Consolidation of a subsidiary begins when the Company obtains control over the subsidiary and ceases when the Company loses control of the subsidiary. Assets, liabilities, income and expenses of a subsidiary acquired or disposed of during the year are included in the consolidated financial statements from the date the Company gains control until the date the Company ceases to control the subsidiary.

Notes to the consolidated financial statements(continued)

When necessary, adjustments are made to the financial statements of the subsidiary to bring its accounting policies into line with the Company’s accounting policies.

All intra-group assets and liabilities, equity, income, expenses and cash flows are eliminated in full on consolidation.

A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity transaction.

~~F-112~~

~~Notes to the consolidated financial statements~~ ~~(continued)~~

2.3.

Changes in accounting policies and disclosures -

~~Certain~~

The Company applied IFRS 16 Leases and IFRIC 23 Uncertainty over Income Tax Treatment for the first time. The nature and effect of the changes as a result of adoption of this new accounting standards is described below.

Several other amendments and ~~amendments are effective~~interpretations apply for ~~annual periods beginning on or after January 1, 2016. However, they~~the first time in 2019, but do not have an impact on the ~~annual~~ consolidated financial statements of the ~~Company and, hence, have not been disclosed.~~Company. The Company has not early adopted any ~~standard, interpretation~~standards, interpretations or ~~amendment~~amendments that ~~has~~have been issued but isare not yet effective.

IFRS 16 Leases

IFRS 16 supersedes IAS 17 Leases, IFRIC 4 Determining whether an Arrangement contains a Lease, SIC-15 Operating Leases-Incentives and SIC-27 Evaluating the Substance of Transactions Involving the Legal Form of a Lease. The standard sets out the principles for the recognition, measurement, presentation and disclosure of leases and requires lessees to recognize most leases on the balance sheet.

Lessor accounting under IFRS 16 is substantially unchanged from IAS 17. Lessors will continue to classify leases as either operating or finance leases using similar principles as in IAS 17. Therefore, IFRS 16 does not have an impact for leases where the Company is the lessor.

Notes to the consolidated financial statements(continued)

The Company adopted IFRS 16 using the modified retrospective approach with accumulative-effect adjustment recorded at beginning of the period of adoption (January 1, 2019). Therefore, upon adoption, the Company recognize and measure leases without revising comparative period information or disclosure. The Company also elected to use the recognition exemptions for lease contracts that, at the commencement date, have a lease term of 12 months or less and do not contain a purchase option (short-term leases), and lease contracts for which the underlying asset is of low value (low-value assets).

The effect of adopting IFRS 16 is, as follows:

Impact on the consolidated statement of financial position

	31 December 2019		1 January 2019
		US$(000)		US$(000)
Assets
Right-of-use assets		584		342
Total		584		342
Liabilities
Provisions and other accruals		596		362
Total		596		362

Impact on the consolidated statement of profit or loss

	31 December 2019
		US$(000)

Cost of sales (depreciation)		(270	)
Operating profit		(270	)
Finance costs		(36	)
Profit or loss for the period		(306	)

Impact on the consolidated statement of cash flows

	31 December 2019
		US$(000)

Lease payments		(270	)
Interest paid		(26	)
Net cash flows		(296	)

There is no impact on other comprehensive income.

Notes to the consolidated financial statements(continued)

The lease liabilities were determined using an incremental borrow rate of 5.23%. In addition, the reconciliation between the balance of assets and liabilities as of January 1, 2019 under IFRS 16 compared with operating leases under IAS 17 as of December 31, 2018 is as follows:

	US$(000)

Operating lease commitments disclosed as of December 31, 2018	450
Exceptions:
- Short-term leases not recognized as a liability	(88	)
Additional lease liability recognized as of January 1, 2019	362
Plus: Lease liability already recognized as of December 31, 2018	-

Lease liability as of January 1, 2019	362

IFRIC Interpretation 23 Uncertainty over Income Tax Treatment

The Interpretation addresses the accounting for income taxes when tax treatments involve uncertainty that affects the application of IAS 12 Income Taxes. It does not apply to taxes or levies outside the scope of IAS 12, nor does it specifically include requirements relating to interest and penalties associated with uncertain tax treatments. The Interpretation specifically addresses the following:

Whether an entity considers uncertain tax treatments separately.

The assumptions an entity makes about the examination of tax treatments by taxation authorities.

How an entity determines taxable profit (tax loss), tax bases, unused tax losses, unused tax credits and tax rates.

How an entity considers changes in facts and circumstances.

The Company applies significant judgement in identifying uncertainties over income tax treatments. Therefore, it assessed whether the Interpretation had an impact on its consolidated financial statements. Upon adoption of the Interpretation, the Company considered whether it has any uncertain tax positions, particularly those relating to deductible expenses. The Company’s tax filings include deductions related to deductible expenses and the taxation authorities may challenge those tax treatments. The Company determined, based on its tax compliance that it is probable that its tax treatments will be accepted by the taxation authorities.

The Interpretation did not have an impact on the consolidated financial statements of the Company.

F-138

Notes to the consolidated financial statements(continued)

2.4.

Summary of significant accounting policies and practices -

(a)

Foreign currencies -

The consolidated financial statements are presented in U.S. dollars, which is also the Company's functional currency.

Transactions and balance

Transactions in foreign currency (a currency other than functional currency) are initially recorded by the Company at the exchange rates prevailing at the time of the ~~transactions.~~transactions published by the Superintendence of Banking and Insurance and Pension Fund Administrators (AFP for its acronym in Spanish).

Monetary assets and liabilities denominated in other currencies are translated into the U.S. dollar at exchange rates prevailing at the statements of financial position dates. Gains or losses from exchange differences arising from the settlement or translation of monetary assets and liabilities are recognized in the consolidated statements of comprehensive income. Non-monetary assets and liabilities recognized in terms of historical cost are translated using the exchange rates prevailing at the dates of the initial transactions.

Transactions in Soles (S/)

Transactions in Soles are completed using exchange rates published by the AFP. As of December 31, 2019, the exchange rates for U.S. dollars published by this Institution were US$0.3020 for buying and US$0.3015 for selling (US$0.2968 for buying and US$0.2959 for selling as of December 31, 2018), and have been applied by the Company for the assets and liabilities accounts, respectively.

As of December 31, 2019 and 2018, the Company presents the following assets and liabilities originally denominated in Soles by its equivalent in U.S. dollars:

	2019		2018
		US$(000)		US$(000)

Assets
Cash and cash equivalents		5,140		7,563
Trade and other receivables		27,990		27,335
Prepaid income tax		-		19,239
Value added tax credit		32,831		29,828
Total assets		65,961		83,965

Liabilities
Trade and other payables		13,085		9,586
Income tax payable		23,153		3,552
Provisions, other accruals and liabilities		29,633		3,970
Total liabilities		65,871		17,108
Net asset position		90		66,857

F-139

Notes to the consolidated financial statements(continued)

For the year ended December 31, 2019, the Company recognized a net gain from currency exchange difference for US$2,902 (net loss for US$2,056 and gain for US$3,636 as of December 31, 2018 and 2017; respectively) inthe caption “Net gain (loss) from currency exchange difference” of the consolidated statements of comprehensive income.

(b)

Financial instruments - Initial recognition and subsequent measurement -

A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.

(i)

Financial assets -

Initial recognition and measurement

Financial assets are classified, at initial recognition, ~~as financial assets~~and subsequently measured at amortized cost, fair value through other comprehensive income (OCI), and fair value through profit or ~~loss, loans and receivables, held-to-maturity investments, available-for-sale~~loss.

The classification of financial assets at initial recognition depends on the financial asset’s contractual cash flow characteristics and the Company’s business model for managing them. With the exception of trade receivables that do not contain a significant financing component or ~~derivatives designated as hedging instruments in an effective hedge, as appropriate. All~~for which the Company has applied the practical expedient, the Company initially measures a financial ~~assets are recognized initially~~asset at its fair value plus, in the case of a financial ~~assets~~asset not ~~recorded~~ at fair value through profit or loss, transaction ~~costs~~costs. Trade receivables that do not contain a significant financing component or for which the Company has applied the practical expedient are measured at the transaction price as disclosed in section (n) Revenue from contracts with customers.

In order for a financial asset to be classified and measured at amortized cost or fair value through OCI, it needs to give rise to cash flows that are ~~attributable~~solely payments of principal and interest (SPPI) on the principal amount outstanding. This assessment is referred to as the ~~acquisition of~~SPPI test and is performed at an instrument level.

The Company’s business model for managing financial assets refers to how it manages its financial assets in order to generate cash flows. The business model determines whether cash flows will result from collecting contractual cash flows, selling the financial ~~asset.~~assets, or both.

Purchases or sales of financial assets that require delivery of assets within a time frame established by regulation or convention in the market place (regular way trades) are recognized on the trade date.

Financial assets of the Company comprise cash and cash equivalents, trade and other receivables, net and ~~available-for-sale~~ financial ~~assets.~~

assets at fair value through OCI with recycling of cumulative gains and losses and financial assets at fair value through profit or loss.

~~F-113~~

Notes to the consolidated financial statements(continued)

Subsequent measurement -

For purposes of subsequent measurement, financial assets are classified in four categories:

Financial assets at amortized cost (debt instruments).

Financial assets at fair value through OCI with recycling of cumulative gains and losses (debt instruments).

Financial assets designated at fair value through OCI with no recycling of cumulative gains and losses upon derecognition (equity instruments).

Financial assets at fair value through profit or loss.

Financial assets at amortized cost (debt instruments) -

Financial assets at amortized cost are subsequently measured using the effective interest (EIR) method and are subject to impairment. Gains and losses are recognized in profit or loss when the asset is derecognized, modified or impaired.

The Company’s financial assets at amortized cost includes other receivables, net. See note 6 for more information on accounts receivables.

Financial assets at fair value through OCIwith recycling of cumulative gains and losses(debt instruments) –

For debt instruments at fair value through OCI, interest income, foreign exchange revaluation and impairment losses or reversals are recognized in the consolidated statements of comprehensive income and computed in the same manner as for financial assets measured at amortized cost. The remaining fair value changes are recognized in OCI. Upon derecognition, the cumulative fair value change recognized in OCI is recycled to profit or loss.

The Company’s investments in the San Jose Reservoir Trust are classified as financial assets at fair value through OCI as of December 31, 2019 and 2018.

Financial assets designated at fair value through OCI with no recycling of cumulative gains and losses upon derecognition (equity instruments) -

Debt instruments at fair value through OCI includes investments in quoted debt instruments included under other non-current financial assets.

Gains and losses on these financial assets are never recycled to profit or loss. Dividends are recognized as other income in the statements of comprehensive income when the right of payment has been established, except when the Company benefits from such proceeds as a recovery of part of the cost of the financial asset, in which case, such gains are recorded in OCI. Equity instruments designated at fair value through OCI are not subject to impairment assessment.

Notes to the consolidated financial statements(continued)

The Company does not have financial assets classified in this category.

Financial assets at fair value through profit or loss -

Financial assets at fair value through profit or loss are carried in the consolidated statement of financial position at fair value with net changes in fair value recognized in the consolidated statements of comprehensive income.

This category includes derivative instruments and listed equity investments which the Company had not irrevocably elected to classify at fair value through OCI. Dividends on listed equity investments are recognized as other income in the consolidated statements of comprehensive income when the right of payment has been established.

As of December 31, 2019, the Company has nominal investments related to the San Jose Reservoir Trust as financial assets at fair value through profit or loss.

A derivative embedded in a hybrid contract, with a financial liability or non-financial host, is separated from the host and accounted for as a separate derivative if: the economic characteristics and risks are not closely related to the host; a separate instrument with the same terms as the embedded derivative would meet the definition of a derivative; and the hybrid contract is not measured at fair value through profit or loss. Embedded derivatives are measured at fair value with changes in fair value recognized in profit or loss. Reassessment only occurs if there is either a change in the terms of the contract that significantly modifies the cash flows that would otherwise be required or a reclassification of a financial asset out of the fair value through profit or loss category.

This category also applies to financial assets that are intended to be held for an indefinite period of time and may be sold in response to needs for liquidity, or in response to changes in the market conditions (Note 9).

Derecognition-

A financial asset (or, where applicable a part of a financial asset or part of a group of similar financial assets) is primarily derecognized when:

~~Loans~~The rights to receive cash flows from the asset have expired; or

The Company has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a pass-through arrangement; and ~~receivables.~~either (a) the Company has transferred substantially all the risks and rewards of the asset or, (b) the Company has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.

Notes to the consolidated financial statements(continued)

When the Company has transferred its rights to receive cash flows from an asset or has entered into a pass-through arrangement, it evaluates if and to what extent, it has retained the risk and rewards of ownership. When it has neither transferred nor retained substantially all of the risks and rewards of the asset, nor transferred control of the asset, the Company continues to recognize the transferred asset to the extent of the Company’s continuing involvement. In that case, the Company also recognizes an associated liability. The transferred asset and the associated liability are measured on a basis that reflects the rights and obligations that the Company has retained.

Impairment of financial assets -

The Company recognizes an allowance for expected credit losses (ECLs) for all debt instruments not held at fair value through profit or loss. ECLs are based on the difference between the contractual cash flows due in accordance with the contract and all the cash flows that the Company expects to receive, discounted at an approximation of the original effective interest rate. The expected cash flows will include cash flows from the sale of collateral held or other credit enhancements that are integral to the contractual terms.

ECLs are recognized in two stages. For credit exposures for which there has not been a significant increase in credit risk since initial recognition, ECLs are provided for credit losses that result from default events that are possible within the next 12-months (a 12-month ECL). For those credit exposures for which there has been a significant increase in credit risk since initial recognition, a loss allowance is required for credit losses expected over the remaining life of the exposure, irrespective of the timing of the default (a lifetime ECL).

For trade receivables and contract assets, the Company applies a simplified approach in calculating ECLs. Therefore, the Company does not track changes in credit risk, but instead recognizes a loss allowance based on lifetime ECLs at each reporting date. The Company has established a provision matrix that is based on its historical credit loss experience, adjusted for forward-looking factors specific to the debtors and the economic environment.

The Company considers a financial asset in default when contractual payments are 90 days past due. However, in certain cases, the Company may also consider a financial asset to be in default when internal or external information indicates that the Company is unlikely to receive the outstanding contractual amounts in full before taking into account any credit enhancements held by the Company. A financial asset is written off when there is no reasonable expectation of recovering the contractual cash flows.

Notes to the consolidated financial statements(continued)

(ii)

Financial liabilities-

Initial recognition and measurement-

Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss, loans and borrowings, payables, or as derivatives designated as hedging instruments in an effective hedge, as appropriate.

All financial liabilities are recognized initially at fair value and, in the case of loans and borrowings and payables, net of directly attributable transaction costs.

The Company’s financial liabilities include trade and other payables.

Subsequent measurement -

The measurement of financial liabilities depends on their classification, as described below:

Financial liabilities at fair value through profit or loss -

Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial liabilities designated upon initial recognition as at fair value through profit or loss.

Financial liabilities are classified as held for trading if they are incurred for the purpose of repurchasing in the near term. This category also includes derivative financial instruments entered into by the Company that are not designated as hedging instruments in hedge relationships as defined by IFRS 9. Separated embedded derivatives are also classified as held for trading unless they are designated as effective hedging instruments.

Gains or losses on liabilities held for trading are recognized in the consolidated statements of comprehensive income.

Financial liabilities designated upon initial recognition at fair value through profit or loss are designated at the initial date of recognition, and only if the criteria in IFRS 9 are satisfied. The Company has not designated any financial liability as at fair value through profit or loss.

Loans and borrowings -

After initial recognition, interest-bearing loans and borrowing are subsequently measured at amortized cost using the effective interest rate method. Gains and losses are recognized in the consolidated statements of profit and cost when the liabilities are derecognized as well as through the amortization process.

Notes to the consolidated financial statements(continued)

Amortized cost is calculated taking into account any discount or premium on acquisition and fees or costs that are an integral part of the effective interest rate. Amortization under the effective interest rate method is included as financial costs in the consolidated statements of profit or loss. This category generally applies to interest-bearing loans and borrowings.

Trade and other payables are subsequently measured at amortized cost.

Derecognition -

A financial liability is derecognized when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognized in the consolidated statements of comprehensive income.

(iii)

Offsetting of financial instruments -

Financial assets and financial liabilities are offset and the net amount is reported in the consolidated statements of financial position if there is a currently enforceable legal right to offset the recognized amounts and there is an intention to settle on a net basis, to realize the assets and settle the liabilities simultaneously.

(c)

Current versus non-current classification -

The Company presents assets and liabilities in the consolidated statements of financial position based on current or non-current classification.

An asset is classified as current when it is:

Expected to be realized or intended to be sold or consumed in the normal operating cycle;

Held primarily for the purpose of trading;

Expected to be realized within twelve months after the reporting period, or

Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period.

All other assets are classified as non-current.

A liability is current when it is:

Expected to be settled in the normal operating cycle;

Held primarily for the purpose of trading;

Due to be settled within twelve months after the reporting period, or

There is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period.

The Company classifies all other liabilities as non-current.

Notes to the consolidated financial statements(continued)

Deferred tax assets and liabilities are classified as non-current assets and liabilities.

(d)

Cash and cash equivalents -

Cash and cash equivalents include cash in hand, deposits held at call with banks and other short-term highly liquid investments with original maturities of three months or less.

Restricted cash includes guarantee deposits in escrow accounts related to Sumitomo’s shares acquisition (see note 13) and is excluded from cash and cash equivalents being included in other current assets or long-term assets depending on restrictions.

(e)

Stockpiles, ore on leach pads and inventories -

Costs that are incurred in or benefit the productive process are accumulated as stockpiles, ore on leach pads and inventories. Stockpiles, ore on leach pads and inventories are carried at the lower of weighted average cost or net realizable value. Net realizable value represents the estimated future sales price of the product based on current and long-term metals prices, less the estimated costs to complete production and bring the product to sale. Write-downs of stockpiles, ore on leach pads and inventories to net realizable value are reported as a component of costs applicable to sales. The current portion of stockpiles, ore on leach pads and inventories is determined based on the expected amounts to be processed within the next twelve months. Stockpiles, ore on leach pads and inventories not expected to be processed within the next twelve months are classified as
non-current. The major classifications are as follows:

(i)

Stockpiles -

Stockpiles represent ore that has been extracted from the mine and is available for further processing. Stockpiles are measured by estimating the number of tons added and removed from the stockpile, the number of contained ounces (based on assay data) and the estimated metallurgical recovery rates (based on the expected processing method). Stockpile ore tonnages are verified by periodic surveys. Costs are allocated to stockpiles based on relative values of material stockpiled and processed using current mining costs incurred up to the point of stockpiling the ore, including applicable overhead and depreciation and amortization relating to mining operations, and removed at each stockpile's weighted average cost per recoverable unit as material is processed.

(ii)

Ore on leach pads -

The recovery of gold from certain gold oxide ores is achieved through the heap leaching process. Under this method, oxide ore is placed on leach pads where it is treated with a chemical solution, which dissolves the gold contained in the ore. The resulting gold-bearing solution is later processed in a plant where the gold is recovered. Costs are added to ore on leach pads based on current mining costs, including applicable overhead and depreciation and amortization relating to mining operations, as well as leaching costs incurred in the leaching process. Costs are removed from ore on leach pads as ounces are recovered based on the weighted average cost per estimated recoverable ounce of gold on the leach pad.

Notes to the consolidated financial statements(continued)

The estimates of recoverable gold on the leach pads are calculated from the quantities of ore placed on the pads (measured tons added to the leach pads), the grade of ore placed on the leach pads (based on assay data) and a recovery percentage (based on ore type). In general, the leach pads recover between 50% and 95% of the ultimate recoverable ounces in the first year of leaching, declining each year thereafter until the leaching process is complete.

Although the quantities of recoverable gold placed on the leach pads are reconciled by comparing the grades of ore placed on the pads to the quantities of gold actually recovered (metallurgical balancing), the nature of the leaching process inherently limits the ability to precisely monitor inventory levels. As a result, the metallurgical balancing process is constantly monitored and estimates are refined based on actual results over time. The Company's operating results typically are not materially impacted by variations between the estimated and actual recoverable quantities of gold on its leach pads in the ordinary course of business. Variations between actual and estimated quantities resulting from changes in assumptions and estimates that do not result in write-downs to net realizable value are accounted on a prospective basis.

(iii)

In-process inventory-

In-process inventories represent materials that are currently in the process of being converted to a saleable product. Conversion processes vary depending on the nature of the ore and the specific processing facility, and include mill in-circuit and leach in-circuit. In-process material is measured based on assays of the material fed into the process and the projected recoveries of the respective plants. In-process inventories are valued at the weighted average cost of the material fed into the process attributable to the source material coming from the mines, stockpiles and (or) leach pads plus the in- process conversion costs, including applicable amortization relating to the process facilities incurred to that point in the process.

(iv)

Precious metals inventory -

Precious metals include gold dore and (or) gold bullion. Precious metals that result from the Company's mining, processing activities are valued at the weighted average cost of the respective in-process inventories incurred prior to the refining process, plus applicable refining costs.

(v)

Materials and supplies -

Materials and supplies are valued at the lower of weighted average cost or replacement value. Cost includes applicable taxes and freight.

(f)

Property, plant and equipment -

Property, plant and equipment is stated at cost, net of accumulated depreciation and accumulated impairment losses, if any.

Notes to the consolidated financial statements(continued)

The cost of an element of property, plant and equipment comprises the following: the acquisition price or manufacturing cost, including non-reimbursable customs and taxes and any cost necessary to place the asset in operating condition, as anticipated by Management; the estimate of the rehabilitation obligation and, in the case of qualified assets, the financing costs.

The purchase price or construction cost corresponds to the total amount paid and fair value of any other consideration provided to acquire the asset. Subsequent costs attributable to property, plant and equipment are capitalized only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably, otherwise the cost is charged to production or expense.

Maintenance and repair expenses are charged to the production cost or expense, as necessary, in the period when incurred.

Disbursements incurred to replace a component of an item or element of property, plant and equipment are capitalized separately, writing-off the carrying amount of the component being replaced. In the event the component replaced has not been considered as a separate component of the asset item, the replacement value of the new component is used to estimate the carrying amount of the assets being replaced.

Assets in the construction stage are capitalized on a separate caption of property plant and equipment. At their completion, the cost is transferred to the appropriate category. Assets under construction are not depreciated.

Depreciation

Land is not depreciated. Other than land, depreciation of property, plant and equipment is calculated using the straight-line method to allocate their cost less their residual value over their estimated useful lives and in the case of assets assigned to the production process of Yanacocha, under the lower of (i) that determined under the units of production method or (ii) the useful life of the mine. The useful lives as follows:

Land improvements	Between 2 and 4 years
Buildings and constructions	Between 5 and 10 years
Machinery and equipment	Between 3 and 10 years
Vehicles	Between 3 and 4 years
Furniture and fixtures	Between 3 and 4 years
Other equipment	Between 3 and 4 years
Computer equipment	Between 3 and 4 years
Leach pads and assets retirement and mine closure	Useful life of the mine and (or) process facilities

F-148

Notes to the consolidated financial statements(continued)

The assets' useful lives and residual values are reviewed, and adjusted if appropriate, at each date of the consolidated statement of financial position. Any changes in these estimates are prospectively adjusted.

Disposal of assets

Property, plant and equipment items are written-off at the date they are sold or when no economic benefits are expected from their further use or sale. Gains and losses on disposals of assets are determined by comparing the proceeds with their carrying amounts. These gains or losses are included in the consolidated statements of comprehensive income.

(g)

Mining rights -

Mining rights include acquired interests in production, development and exploration stage properties. The mineral interests are capitalized at their fair value at the acquisition date.

The value of such assets is primarily driven by the nature and amount of mineralized material believed to be contained in such properties. Production stage mining rights represent interests in operating properties that contain proven and probable reserves. Development stage mineral interests represent interests in properties under development that contain proven and probable reserves.

Exploration stage mineral interests represent interests in properties that are believed to potentially contain mineralized material consisting of (i) mineralized material such as inferred material within pits; mineralized material with insufficient drill spacing to qualify as proven and probable reserves; and mineralized material in close proximity to proven and probable reserves; (ii) around-mine exploration potential not immediately adjacent to existing reserves and mineralization, but located within the immediate mine area; (iii) other mine-related exploration potential that is not part of current mineralized material and is comprised mainly of material outside of the immediate mine area; (iv) greenfield exploration potential that is not associated with any other production, development or exploration stage property, as described above; or (v) any acquired right to explore or extract a potential mineral deposit.

Exploration costs are capitalized when reserves at the location are established and reported in the Reserves and Resource information published annually by Newmont in its Form 10-K. At this point, exploration costs are capitalized as mine development or as a component of property, plant and equipment, as appropriate.

The Company's mining rights generally are enforceable regardless of whether proven and probable reserves have been established. The Company has the ability and intent to renew mineral interests where the existing term is not sufficient to recover all identified and valued proven and probable reserves and (or) undeveloped mineralized material.

Mining rights are presented in the caption of property, plant and equipment, net.

Notes to the consolidated financial statements(continued)

(h)

Mine development -

Mine development costs include engineering and metallurgical studies, drilling and other related costs to delineate an ore body, and the removal of overburden to initially expose an ore body at open pit surface mines. Costs incurred before mineralization are classified as proven and probable reserves are expensed as “exploration and advanced projects” as part of the “Operating expenses” caption in the consolidated statements of comprehensive income. The capitalization of mine development project costs, that meet the definition of an asset, begins once mineralization is classified as proven and probable reserves.

Drilling and related costs are capitalized for an ore body where proven and probable reserves exist; and the activities are directed at obtaining additional information on the ore body or converting mineralized material to proven and probable reserves. AII other drilling and related costs are expensed as incurred. Drilling costs incurred during the production phase for operational ore control are allocated to inventory costs and then included as a component of the “Costs applicable to sales” caption in the consolidated statements of comprehensive income.

The cost of removing overburden and waste materials to access the ore body at an open-pit mine prior to the production phase are referred to as "pre-stripping costs." Pre-stripping costs are capitalized during the development of an open-pit mine. Where multiple open pits exist at a mining complex utilizing common processing facilities, pre-stripping costs are capitalized at each pit. The removal and production of the minimum saleable materials may occur during development and related revenue is recorded as “Other operating revenue”, net of incremental mining and processing costs. See Note 2.4(i) below.

If any of the criteria are not met, the production stripping costs are charged to profit or loss as part of the “costs applicable to sales” caption in the consolidated statements of comprehensive income as they are incurred.

Mine development costs are amortized using the units-of production ("UOP") method based on estimated recoverable ounces in proven and probable reserves. To the extent that these costs benefit an entire ore body, they are amortized over the estimated life of the ore body. Costs incurred to access specific ore blocks or areas that only provide benefit over the life of that area are amortized over the estimated life of that specific ore block or area.

Mine development costs are presented in the caption of Property, plant and equipment, net.

Notes to the consolidated financial statements(continued)

(i)

Stripping activity asset -

The Company accounts for stripping costs incurred during the production phase of a surface mining in accordance with IFRIC 20 "Stripping costs in the production phase of as surface mine" whereby a stripping asset is recognized if, and only if, all of the following are met:

It is probable that the future economic benefit (improved access to the ore body) associated with the stripping activity will flow to the Company;

The Company can identify the component of the ore body for which access has been improved; and

The costs relating to the stripping activity associated with that component can be measured reliably.

The primary components of the ore body on a pit by pit basis as well as within major pits are identified. Based on these components, stripping activities are analyzed and costs are assigned based on whether they pertained to current inventory production or improved access to future ore bodies (or components of an ore body).

Based on this analysis, the Company allocates the costs associated with improved access as a “stripping activity asset”. This allocation is based on the volume of waste and ore extracted in the period compared to expected volume life-of-mine per component of ore body.

Costs allocated to the production stripping activity asset are subsequently depreciated. Depreciation of the production stripping asset was calculated on a systematic basis ("waste-to-ore tons ratio") method over the expected useful life of the identified component of the ore body that becomes more accessible as a result of the stripping costs. This depreciation is a production cost.

(j)

Impairment of non-financial assets -

The carrying amounts of non-financial assets are reviewed for impairment whenever events or changes in circumstances indicate the carrying value may not be recoverable. If there are indicators of impairment, a review is undertaken to determine whether the carrying values are in excess of the recoverable amount. The recoverable amount is determined as the higher of (i) an asset's fair value, less costs of disposal, and (ii) its value in use. Such review is undertaken on an asset by asset basis, except where such assets do not generate cash flows independently from other assets, in which case the review is undertaken at the cash generating unit level. The Company identified two separate cash generating units: Yanacocha and Conga.

Notes to the consolidated financial statements(continued)

Future cash flows are estimated based on quantities of recoverable minerals, expected gold and other commodity prices (considering current and historical prices, trends and related factors), production levels, operating costs, capital requirements and reclamation costs, all based on life-of-mine plans and the appropriate discount rate. These estimates, used in the determination of future cash flows, are based on numerous assumptions and it is possible that actual future cash flows will be significantly different than the estimates, as actual future quantities of recoverable minerals, gold and other commodity prices, production levels, costs and capital and interest rates are each subject to significant risks and uncertainties.

If the carrying amount of an asset exceeds its recoverable amount, an impairment loss is recorded in the consolidated statement of comprehensive income to reflect the asset at the lower amount. In assessing the recoverable amount for assets, the relevant future cash flows expected to arise from the fair value less costs of disposal have been discounted to their present value.

An impairment loss is reversed in the consolidated statement of comprehensive income if there is a change in estimate used to determine recoverable amount since the prior impairment loss was recognized.

The carrying amount of an asset is increased to the recoverable amount but not beyond the carrying amount net of depreciation or amortization which would have arisen if the prior impairment loss had not been recognized. After such a reversal the depreciation charge is adjusted in future periods to allocate the asset's revised carrying amount, less any residual value, on a systematic basis over its remaining useful life.

(k)

Intangible assetsincludingcomputer software -

Intangible assets acquired separately are measured on initial recognition at cost. The cost of intangible assets acquired in a business combination is their fair value at the date of acquisition. Following initial recognition, intangible assets are carried at cost less any accumulated amortization (calculated on a straight-line basis over their useful lives).

The useful lives of intangible assets are assessed as either finite or indefinite.

Intangible assets with finite live are amortized over their useful economic lives and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortization period and the amortization method for an intangible asset with a finite useful life are reviewed at least at the end of each reporting period. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset are considered to modify the amortization period or method, as appropriate, and are treated as changes in accounting estimates. The amortization expense on intangible assets with finite lives is recognized in the consolidated statements of comprehensive income in the expense category that is consistent with the function of the intangible assets. All intangible assets of the Company have finite lives.

Notes to the consolidated financial statements(continued)

Gains or losses arising from derecognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognized in the statements of comprehensive income when the asset is derecognized.

(l)

Provisions -

General -

Provisions are recognized when the Company has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation, and the amount has been reliably estimated. If the time value of money is significant, provisions are discounted using pre-tax rates, which reflect, when appropriate, the liabilities' specific risks. The reversal of the discount due to the passage of time originates the increase of the obligation which is recognized with a charge to the consolidated statements of comprehensive income as a finance cost.

Provisions are reviewed periodically and are adjusted to reflect the best estimate available as of the date of the consolidation statements of financial position. The expenses related to other provisions are presented in the consolidated statements of comprehensive income.

Disclosure of contingent obligations is provided when their existence will only be confirmed by future events or their amount cannot be reliably measured. Contingent assets are not recognized and are disclosed only if it is probable that the Company will generate future economic benefits.

Provision for closure of mining units -

The Company records a provision for mine closure when a legally enforceable obligation arises, which is independent of the full depletion of the mine reserves.

Provisions for closure of mining units or “reclamation obligations” are recognized when incurred and recorded as liabilities at the best estimate of the expenditure required to settle the obligation.

The Company recognizes a liability for closure of mining units once the obligation has been properly measured. The liability is initially recognized at the present value of the estimated costs. The liability is accreted over time for the change in present value based on discounted rates that reflects current market assessments and the risk specify to the liability through periodic charges to earnings. In addition, the asset retirement cost is capitalized as part of the asset's carrying value and amortized over the life of the related asset as “asset retirement and mine closure” or “reclamation costs” as part of the property, plant and equipment caption. Reclamation costs are periodically adjusted to reflect changes in the estimated present value resulting from the passage of time and revisions to the estimates of either the timing or amount of the reclamation costs. The estimated reclamation obligation is based on when spending for an existing disturbance is expected to occur. The Company reviews, on an annual basis, unless otherwise deemed necessary, the reclamation obligation at each mine site.

Notes to the consolidated financial statements(continued)

Changes in the estimated timing of closure or changes to the estimated future costs are dealt with prospectively by recognizing an adjustment to the provision for closure liability and a corresponding adjustment to the related mining asset. Any reduction in the provision for closure and, therefore, any deduction from the mining asset to which it relates, may not exceed the carrying amount of the mining asset. If it does, any excess over the carrying amount is taken immediately to the consolidated statements of comprehensive income.

If the change in estimate results in an increase in the provision for closure and, therefore, an addition to the carrying value of the mining asset, the Company considers whether this is an indication of impairment of the asset as a whole, and if so, the Company performs an impairment test.

Reclamation costs related to an inactive mine site are immediately recognized as expenses in the consolidated statements of comprehensive income.

(m)

Treasury shares -

The Company’s own equity instruments that are reacquired (treasury shares) are recognized at cost and deducted from equity. No gain or loss is recognized in profit or loss on the purchase, sale, issue or cancellation of the Company’s own equity instruments. Any difference between the carrying amount and the consideration, if reissued, is recognized as additional paid-in-capital in equity. The voting rights related to treasury shares are cancelled for the Company and no dividends on such shares are allocated.

(n)

Revenue from contracts with customers -

The Company is principally engaged in the business of producing gold and concentrated copper/silver. Revenue from contracts with customers is recognized when control of the goods is transferred to the customer at an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods.

The Company has concluded that it is the principal in its revenue contracts because it typically controls the goods before transferring them to the customer.

Trade receivables (not subject to provisional pricing) are non-interest bearing and are generally on terms of 30 days.

The disclosures of significant accounting judgements, estimates and assumptions relating to revenue from contracts with customers are provided in note 3.

Notes to the consolidated financial statements(continued)

(i)

Contract balances -

Contract assets

A contract asset is the right to consideration in exchange for goods or services transferred to the customer. If the Company performs by transferring goods or services to a customer before the customer pays consideration or before payment is due, a contract asset is recognised for the earned consideration that is conditional.

The Company does not have any contract assets as performance and a right to consideration occurs within a short period of time and all rights to consideration are unconditional.

Trade receivables

A receivable represents the Company’s right to an amount of consideration that is unconditional.

Contract liabilities

A contract liability is the obligation to transfer goods or services to a customer for which the Company has received consideration (or an amount of consideration is due) from the customer. If a customer pays consideration before the Company transfers goods or services to the customer, a contract liability is recognized when the payment is made or the payment is due (whichever is earlier). Contract liabilities are recognised as revenue when the Company performs under the contract.

There are not contract liabilities.

Cost to obtain a contract

The Company’s contracts do not involve any sales commissions because its contracts are globally negotiated by its Corporate. Therefore, the Company does not recognize any costs to obtain a contract.

(ii)

Sales of gold -

Gold sales relate to unrefined gold dore that is sold under spot sales contracts to banks (customer). The Company initially negotiate with the banks the quantity of gold bullion to be required which is delivered in terms of unrefined gold dore to a selected refiner (the refiner is not the customer). The performance obligation is satisfied once the shipment confirmation is issued at the time the refinery receives the dore, allowing payment from the banks to the Company in full in cash in accordance to contracts with the banks.

All risk of loss and damage of the gold dore passes to the refiner upon reception; however, control of the product does not pass to the refiner, it is simply providing processing services to the Company.

Notes to the consolidated financial statements(continued)

The Company has identified only one performance obligation related to the sale of gold dore.

Revenue is recognized at a point in time when control passes to the bank, which is when the payment is ensured at the same time when the refinery’s shipment confirmation is issued to the bank. This generally occurs after the dore’s refinery shipments are confirmed, not being required to physically delivered the gold dore to the banks but resides in the mint. However, the bank has title, is required to pay for the gold bullion and is able to direct the use of the gold bullion by instructing the refiner to transfer metal credits to or from its metal account, and is exposed to the risks and rewards of the gold bullion.

The date of shipment’s confirmation and delivery might be different arising differences between the prices used. Therefore, these sales are subject to subsequent adjustments due the variation of assays. All these matters are resolved according a settlement process specified in the contract which result in the issue of debit/credit notes according to the assays results.

With these arrangements, there are no advance payments received from the banks, no conditional rights to consideration, so no contract assets are recognised. A trade receivable is recognised at the date of sale and it is usually paid on cash once delivery confirmation is issued. The contract is entered into and the transaction price is determined at outturn by virtue of the shipment confirmation being subject to further price adjustments when difference between delivery and shipment dates arises. Also, given each spot sale represents the enforceable contract and all performance obligations are satisfied at that time, there are no remaining performance obligations (unsatisfied or partially unsatisfied) requiring disclosure.

(iii)

Sales of copper and silver concentrate -

Copper and silver in concentrate are sold under Free on Board (FOB) Incoterms and this represents the enforceable contract. The performance obligation is the delivery of the concentrateat the point where control passes to the customer.

The majority of the Company’s sales of copper and silver in concentrate allow for price adjustments based on the market price at the end of the relevant quotation period (QP) stipulated in the contract. These are referred to as provisional pricing arrangements and are such that the selling price for metal in concentrate is based on prevailing spot prices on a specified future date after shipment to the customer. Adjustments to the sales price occur based on movements in quoted market prices up to the end of the QP. The period between provisional invoicing and the end of the QP can be between one and three months.

Notes to the consolidated financial statements(continued)

Revenue is recognized when control passes to the customer, which occurs at a point in time when the copper, silver in concentrate is physically transferred onto a vessel, train, conveyor or other delivery mechanism. The revenue is measured at the amount to which the Company expects to be entitled, being the estimate of the price expected to be received at the end of the QP, i.e., the forward price, and a corresponding trade receivable is recognized.

For these provisional pricing arrangements, any future changes that occur over the QP are embedded within the provisionally priced trade receivables and are, therefore, within the scope of IFRS 9 and not within the scope of IFRS 15. Given the exposure to the commodity price, these provisionally priced trade receivables will fail the cash flow characteristics test within IFRS 9 and will be required to be measured at fair value through profit or loss up from initial recognition and until the date of settlement. These subsequent changes in fair value are recognized in the consolidated statements of comprehensive income and other comprehensive income each period and presented in “Other operating revenue”. Changes in fair value over, and until the end of, the QP, are estimated by reference to updated forward market prices for gold and copper as well as taking into account relevant other fair value considerations as set out in IFRS 13, including interest rate and credit risk adjustments.

Sales for copper, silver and the subsequent changes in fair value of the trade receivable are presented in the caption “Other operating revenue”.

(iv)

Interest income-

As of December 31, 2019, 2018 and 2017 this caption mainly includes interest from short-term money market funds and interest from current bank accounts for an amount of US$18,430, US$11,448 and US$5,831, respectively.

(o)

Benefits to employees -

In accordance to Peruvian laws, employees are entitled to receive one month paid vacation per year and one-month salary bonus paid in July and December.

In addition, employees are entitled to receive one -month salary per year (approximately) as severance indemnity which are deposited in advance with a bank elected by the employee.

Notes to the consolidated financial statements(continued)

If employees are dismissed without cause, they are entitled to a mandatory severance pay that is set at 1.5 monthly salaries for each year of service. The maximum severance payment is twelve salaries.

(p)

Workers’ profit sharing -

The Company recognizes workers’ profit sharing in accordance with IAS 19, “Employees Benefits". Workers' profit sharing is calculated in accordance with the Peruvian law (Legislative Decree No. 892), and the applicable rate is 8% over the taxable net base of current year. According to Peruvian law, the limit in the workers' profit sharing that an employee can receive is equivalent to 18 months of wages, and any excess above such limit has be transferred to the Regional Government and “National Fund for Employment’s Promotion and Training” (“FONDOEMPLEO”). The workers’ profit sharing is recorded as part of cost applicable to sales, see note 17.

(q)

Taxes -

Current income tax -

Current income tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from, or paid to, the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted at the reporting date in Peru.

Current income tax relating to items recognized directly in other comprehensive income or equity is recognized in other comprehensive income or equity and not in profit or loss. Management periodically evaluates positions taken in the tax returns with respect to situations where applicable tax regulations are subject to interpretation and establishes provisions where appropriate.

Deferred income tax -

The Company accounts for income and mining taxes using the liability method, recognizing certain temporary differences between the financial reporting basis of the Company's liabilities and assets and the related income tax basis for such liabilities and assets. This method generates a net deferred income tax liability or net deferred income tax asset for the Company, as measured by the statutory tax rates that have been enacted or substantively enacted by the end of the reporting period.

The Company derives its deferred income tax charge or benefit by recording the change in the net deferred income tax liability or net deferred income tax asset balance for the year, based on Peruvian income and mining tax laws.

Notes to the consolidated financial statements(continued)

Deferred income tax assets are recognized only to the extent that it is probable that future taxable profit will be available against which the temporary differences, and the carry-forward of unused tax credits can be utilized.

Deferred tax related to items recognized in other comprehensive income or equity is recognized in other comprehensive income or equity and not in profit or loss.

Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred income tax assets and liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities where there is an intention to settle the balances on a net basis.

Peruvian mining royalties and special mining tax –

In accordance with Law No. 28258, as amended by Law No. 29788, mining royalties are payable as the higher of either as a specified percentage of operating profit or 1% of revenues. If the mining royalty is calculated as a percentage of operating profit, marginal rates ranging from 1% to 12% that increase progressively for companies with higher operating margins will apply.

Therefore, obligations arising from Mining Royalties and Special Mining Tax are recognized as income tax under the scope of IAS 12. Both, Mining Royalties and Special Mining Tax generated deferred tax assets and liabilities which must be measured using the average rates expected to apply to operating profit in the quarter in which the Company expects to reverse temporary differences.

Value added tax -

Expenses and assets are recognized net of the amount of sales tax, except:

(i)

(ii)

When receivables and payables are stated with the amount of sales tax included.

The net amount of sales tax recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the consolidated statements of financial position.

Notes to the consolidated financial statements(continued)

(r)

Fair value measurement -

The Company measures its financial instruments, such as, derivatives and embedded derivatives, at fair value as of the date of the consolidated statements of financial position.

Fair value is the price that would be received to sell an asset, or paid to transfer a liability, in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either:

In the principal market for the asset or liability, or

In the absence of a principal market, in the most advantageous market for the asset or liability.

The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximizing the use of relevant observable inputs and minimizing the use of unobservable inputs.

Level 1 - Quoted (unadjusted) market prices in active markets for identical assets or liabilities.

Level 2 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable.

Level 3 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable.

For assets and liabilities that are recognized in the consolidated statements of financial position on a recurring basis, the Company determines whether transfers have occurred between levels in the hierarchy by reassessing categorization (based on the lowest-level input that is significant to the fair value measurement as a whole) at the end of each reporting period.

The Company's Management determines the policies and procedures for both recurring fair value measurement and non-recurring measurement. At each reporting date, the Company's Management analyzes the movements in the values of assets and liabilities which are required to be re-measured or re-assessed as per the Company’s accounting policies.

For the purpose of fair value disclosures, the Company has determined classes of assets and liabilities based on the nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy as explained above.

Notes to the consolidated financial statements(continued)

(s)

Leases –

The Company assesses at contract inception whether a contract is, or contains, a lease. That is, if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.

Company as a lessee

The Company applies a single recognition and measurement approach for all leases, except for short-term leases and leases of low-value assets. The Company recognizes lease liabilities to make lease payments and right-of-use assets representing the right to use the underlying assets.

(i)

Right-of-use assets -

The Company recognizes right-of-use assets at the commencement date of the lease (i.e., the date the underlying asset is available for use). Right-of-use assets are measured at cost, less any accumulated depreciation and impairment losses, and adjusted for any remeasurement of lease liabilities. The cost of right-of-use assets includes the amount of lease liabilities recognized, initial direct costs incurred, and lease payments made at or before the commencement date less any lease incentives received. Right-of-use assets are depreciated on a straight-line basis over the shorter of the lease term and the estimated useful lives of the assets, as follows:

Buildings 5 to 10 years

Plant and equipment 3 to 10 years

If ownership of the leased asset transfers to the Company at the end of the lease term or the cost reflects the exercise of a purchase option, depreciation is calculated using the estimated useful life of the asset.

The right-of-use assets are also subject to impairment. Refer to the accounting policies in section (j) Impairment of non-financial assets.

(ii)

Lease liabilities -

At the commencement date of the lease, the Company recognizes lease liabilities measured at the present value of lease payments to be made over the lease term. The lease payments include fixed payments (including in-substance fixed payments) less any lease incentives receivable, variable lease payments that depend on an index or a rate, and amounts expected to be paid under residual value guarantees.

The lease payments also include the exercise price of a purchase option reasonably certain to be exercised by the Company and payments of penalties for terminating the lease, if the lease term reflects the Company exercising the option to terminate. Variable lease payments that do not depend on an index or a rate are recognized as expenses (unless they are incurred to produce inventories) in the period in which the event or condition that triggers the payment occurs.

Notes to the consolidated financial statements(continued)

In calculating the present value of lease payments, the Company uses its incremental borrowing rate at the lease commencement date because the interest rate implicit in the lease is not readily determinable. After the commencement date, the amount of lease liabilities is increased to reflect the accretion of interest and reduced for the lease payments made. In addition, the carrying amount of lease liabilities is remeasured if there is a modification, a change in the lease term, a change in the lease payments (e.g., changes to future payments resulting from a change in an index or rate used to determine such lease payments) or a change in the assessment of an option to purchase the underlying asset.

The Company’s lease liabilities are included in other accounts payable.

(iii)

Short-term leases and leases of low-value assets -

The Company applies the short-term lease recognition exemption to its short-term leases of machinery and equipment (i.e., those leases that have a lease term of 12 months or less from the commencement date and do not contain a purchase option). It also applies the lease of low-value assets recognition exemption to leases of office equipment that are considered to be low value. Lease payments on short-term leases and leases of low value assets are recognized as expense on a straight-line basis over the lease term.

(t)

Reclassifications of comparative information –

Royalties expenses

The Company reclassified royalties expenses for US$23 million and US$26 million in years 2018 and 2017; respectively. Such royalties were presented reducing revenues from the “Revenue from sales” caption and now are presented as part of the “cost applicable to sales” caption.

	2018 As previously reported	Reclassifications	2018 Modified
	US$(000)	US$(000)	US$(000)

Consolidated Statements of comprehensive income
Sales	635,393	23,260	658,653
Cost applicable to sales	(596,164)	(23,260)	(619,424)

	2017 As previously reported	Reclassifications	2017 Modified
	US$(000)	US$(000)	US$(000)

Consolidated Statements of comprehensive income
Sales	645,176	25,729	670,905
Cost applicable to sales	(746,918)	(25,729)	(772,647)

Notes to the consolidated financial statements(continued)

Income tax payable

The Company reclassified the amount of US$3.5 million related to mining taxes payable. Such taxes were presented in the “Trade and other payables” caption and now are presented as part of the “Income tax payable” caption.

	2018 As previously reported		Reclassifications			2018 Modified
		US$(000)		US$(000)			US$(000)

Consolidated Statements of financial position
Trade and other payables		87,016		(3,552	)		83,464
Income tax payable		-		3,552			3,552

Significant judgments, estimates and assumptions

The preparation of the Company’s consolidated financial statements requires Management to make judgments, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the accompanying disclosures, and the disclosure of contingent liabilities. The estimates and assumptions are continuously evaluated and based on Management’s experience and other facts, including the expectations about future events which are reasonable under the current situation. Uncertainty about these estimates and assumptions could result in outcomes that require material adjustment to the carrying amount of assets and liabilities affected in future periods. Further information on each of these areas and how they impact the various accounting policies are described below and also in the relevant notes to the consolidated financial statements.

3.1.

Judgments

In the process of applying the Company’s accounting policies, Management has made the following judgments, which have the most significant effect on the amounts recognized in the consolidated financial statements:

(a)

Contingencies -

(b)

Development start date -

The Company assesses the status of each exploration project to determine when the development phase begins. One of the criteria used to evaluate the development start date is when the Company determines that the property can be economically developed based on the results of feasibility studies.

Notes to the consolidated financial statements(continued)

(c)

Production start date -

The Company assesses the stage of each mine under development to determine when a mine moves into the production phase. The determination of the start date is based on the unique nature of each mining project; such as the complexity of the project and its location. The Company considers various relevant criteria to assess when the production phase is considered to have commenced. Some of the criteria used to identify the production start date include, but are not limited to:

Completion of a reasonable period of testing of the mine plant and equipment.

Ability to produce metal in saleable form (within specifications).

Ability to sustain ongoing production of metal.

When a mine development /construction project moves into the production phase, the capitalization of certain mine development costs ceases and the cost of mining waste ore are either regarded as forming part of the cost of inventory or expensed, except for costs that qualify for capitalization relating to mining asset additions or improvements. It is also at this point that depreciation or amortization commences.

(d)

Useful life of property, plant and equipment -

(e)

Revenue from contracts with customers -

The Company applied the judgement for determining the timing of satisfaction of services of revenue from contracts with customers. The Company concluded that the performance obligation is completed once the shipment confirmation is issued when the refinery receives the Dore, allowing the fully payment in cash according the contracts. As a result, all risk of loss and damage of the gold dore pass to refiner upon reception.

The Company determined that the only performance obligation is the sale of gold dore.

3.2.

Estimates and assumptions -

The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are described below. The Company based its assumptions and estimates on parameters available when the consolidated financial statements were prepared. Existing circumstances and assumptions about future developments, however, may change due to market change or circumstances arising beyond the control of the Company. Such changes are reflected in the assumptions when they occur.

Notes to the consolidated financial statements(continued)

(a)

Determination of mineral reserves and resources -

The Company calculates its reserves using methods generally applied by mining and industry according to SEC guidance. All estimated reserves represent estimated quantities of mineral proven and probable that under current conditions can be economically and legally processed.

The process of estimating quantities of reserves is complex and requires making subjective decisions when evaluating all geological, geophysical, engineering and economic information available. Reviews could occur on reserve estimates due to, among others, revisions to the data or geological assumptions, changes in prices, production costs and results of exploration activities. Changes in estimated reserves could affect the carrying value of mining concessions, development costs and property, plant and equipment, the charges in result for depreciation and amortization, and the carrying amount of the provision for closure of mining units.

(b)

Units of production depreciation -

Estimated economically recoverable reserves are used in determining the depreciation and (or) amortization of mine-specific assets.

This results in a depreciation/amortization charge proportional to the depletion of the anticipated remaining life-of-mine production. Each mine’s life is assessed at least annually to evaluate (i) physical life limitations and (ii) present assessments of economically recoverable reserves of the mine property. These calculations require the use of estimates and assumptions, including the amount of recoverable reserves. Changes in estimates are accounted for prospectively.

(c)

Provision for closure mining units -

The Company assesses its provision for closure of mining units at each reporting date. The ultimate rehabilitation costs are uncertain, and cost estimates can vary in response to many factors, including estimates of the extent and costs of closure activities, technological changes, regulatory changes, cost increases as compared to the inflation rates, and changes in discount rates. These uncertainties may result in future actual expenditure differing from the amounts currently provided. The provision at reporting date represents Management’s best estimate of the present value of the future closure costs required.

(d)

Inventories -

Inventories are classified as current or non-current depending on the length of time that Management estimates will be used in the production or extraction for each mining unit.

Notes to the consolidated financial statements(continued)

Inventories are measured at the lower of its weighted average cost or its net realizable value. Net realizable value tests are performed at each reporting date and represent the estimated future sales price of the product the entity expects to realize when the product is processed and sold, less estimated costs to complete production and bring the product to sale.

Stockpiles and ore on leach pads are measured by estimating the number of tons added and removed from the stockpile and leach pads, the number of contained gold ounces, assay data, and the estimated recovery percentage based on the expected processing method. Stockpile and ore on leach pad tonnages are verified by periodic surveys.

For minerals inside leach platform inventories, reasonable estimation methods are employed because it is generally impracticable to determine the mineral contained in leach platforms by physical count. The quantity of material delivered to leach platforms are based on surveyed volumes of mined material and daily production records. Sampling and assaying determine the estimated ore grades of material delivered to leach platforms.

(e)

Impairment of non-financial assets -

The Company assesses each asset or cash generating unit in each reporting period to determine whether any indication of impairment exists (e.g. fluctuation of gold prices, community relations and social license to operate). Where an indicator of impairment exists, a formal estimate of the recoverable amount is made, which is considered to be the higher of (i) the fair value less costs of disposal and (ii) value in use. The assessments require the use of estimates and assumptions such as long-term commodity prices, discount rates and operating costs, among others. These estimates and assumptions are subject to risk and uncertainty.

The fair value of mining assets is calculated by the present value of future cash flows arising from the continued use of the asset, which include some estimates, such as the cost of future expansion plans, using assumptions that a third party might consider. The future cash flows are discounted to their present value using a discount rate that reflects current market assessment of the value of money over time, as well as specific risks of the asset or cash-generating unit under evaluation.

The Company has determined the operations of its mining units Yanacocha and Conga as the cash generating units.

Notes to the consolidated financial statements(continued)

Standards issued but not effective

The new and amended standards and interpretations that are issued, but not yet effective, up to the date of issuance of the Company’s consolidated financial statements are disclosed below. The Company intends to adopt these new and amended standards and interpretations, if applicable, when they become effective.

Amendments to IAS 1 and IAS 8: Definition of Material

In October 2018, the IASB issued amendments to IAS 1 Presentation of Financial Statements and

IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors to align the definition of ‘material’ across the standards and to clarify certain aspects of the definition. The new definition states that, ’Information is material if omitting, misstating or obscuring it could reasonably be expected to influence decisions that the primary users of general-purpose financial statements make on the basis of those financial statements, which provide financial information about a specific reporting entity.

The amendments to the definition of material is not expected to have a significant impact on the Company’s consolidated financial statements.

Cash and cash equivalents

(a)

This caption is made up as follows:

	2019		2018
		US$(000)		US$(000)

Petty cash		22		33
Bank accounts		56,822		111,319
Term deposits (b)		761,659		611,856

		818,503		723,208

(b)

The term deposit balance is made up as follows:

	2019		2018
		US$(000)		US$(000)

JP Morgan		501,916		401,495
Citibank		214,282		210,361
BNP Paribas		45,461		-

		761,659		611,856

The bank accounts and term deposits yield interest at market rates. The carrying amounts approximate the fair value due to the short maturity of these balances, which are less than 90 days.

Notes to the consolidated financial statements(continued)

Trade and other receivables, net

(a)

This caption is made up as follows:

	2019			2018
		US$(000)			US$(000)

Trade receivables, net
Foreign clients		683			7,389
Other receivables
Advances to suppliers		9,872			16,897
Tax claims		3,946			3,532
Credit of tax on net assets		23,648			23,290
Related entities, note 22(c)		598			794
Other		5,247			5,382
		43,311			49,895

Allowance for expected credit losses (b)		(1,384	)		(1,384	)
		41,927			48,511

Total trade and other receivables, net		42,610			55,900

By maturity:
Current		18,962			32,610
Non current		23,648			23,290

Total		42,610			55,900

Classification by nature:
Financial receivables		15,016			29,078
Non-financial receivables		27,594			26,822

		42,610			55,900

The trade receivables are related to concentrate sold (copper and silver by-products). At December 31, 2019 and 2018 there were no material collectability issues that required an allowance for expected credit losses on the trade receivable balance.

Trade receivables (not subject to provisional pricing) are non-interest bearing and are generally negotiated on terms of 30 days.

Notes to the consolidated financial statements(continued)

(b)

The allowance for expected credit losses had the following movement during the years 2019, 2018 and 2017:

	2019		2018		2017
		US$(000)		US$(000)		US$(000)

Opening balance		1,384		1,384		1,407
Deductions		-		-		(23	)
Ending balance		1,384		1,384		1,384

Inventories, net

(a)

This caption is made up as follows:

	2019			2018
		US$(000)			US$(000)

Precious metals		8,021			6,878
Leach in-circuit		5,158			1,835
Mill in-circuit		1,332			4,002
Materials and supplies		45,832			49,327
		60,343			62,042

Allowance for obsolescence of materials and supplies (b)		(6,098	)		(7,515	)

		54,245			54,527

(b)

The allowance for obsolescence of material and supplies had the following movement during the years 2019, 2018 and 2017:

	2019			2018			2017
		US$(000)			US$(000)			US$(000)

Opening balance		7,515			7,076			5,272
Provision for impairment of materials and supplies		1,898			1,887			2,896
Reversal of provision for impairment of materials and supplies		(3,315	)		(1,448	)		(1,092	)

Ending balance		6,098			7,515			7,076

Reversals of impaired materials are due to disposals of impaired materials that offset the accumulative provision in each period.

Notes to the consolidated financial statements(continued)

Stockpiles and ore on leach pads, net

(a)

This caption is made up as follows:

	2019			2018
	US$(000)			US$(000)
Current portion -
Stockpiles		23,769			35,065
Ore on leach pads		139,991			106,931
Net realizable value adjustment (b)		(28,837	)		(41,403	)

		134,923			100,593
Non-current portion -
Stockpiles		35,888			41,814
Ore on leach pads		88,223			144,688
Net realizable value adjustment (b)		(19,088	)		(47,724	)

		105,023			138,778

(b)

The provision for net realizable value adjustment had the following movement during the years 2019, 2018 and 2017:

	2019		2018		2017
	US$(000)		US$(000)		US$(000)

Opening balance, note 17	89,127		62,540		84,374
Provision	33,464		90,365		77,385
Reversal of provision	(74,666	)	(63,778	)	(99,219	)

Ending balance, note 17	47,925		89,127		62,540

Provision reversals correspond to improvements of the overall long-term market conditions that reduced the gap between stockpiles and leach pads’ cost and their net realizable value.

Notes to the consolidated financial statements(continued)

9.	Financial instruments at fair value
	In November 2008, the Company funded the San Jose Reservoir Trust an amount of US$13 million to ensure the continuity of the Company's operations in the San Jose Reservoir after 2018. Such trust is irrevocable and is a separate legal entity of the Company. The grantor is the Company, the trustee is the Banco de Crédito del Perú and the beneficiary is the Company; therefore, the Company consolidates the trust.

	As of December 31, 2019 and 2018, the assets in the trust amount to US$24,417 and US$22,610, respectively and are represented by financial instruments at fair value.

	During the years ended December 31, 2019, 2018 and 2017, an increase in fair value of the debt instruments was recognized in other comprehensive income for the amount of US$1,246, and a decrease of US$91 and US$3,244 during 2018 and 2017. During the years ended December 31, 2019 and 2018 the change in fair value of the investments in marketable stocks for US$821 and (US$10), respectively, were recognized as Finance income and Finance costs in the consolidated statements of comprehensive income.

Notes to the consolidated financial statements(continued)

10.

Property, plant and equipment, net

(a)

Below is presented the movement in cost:


	Opening balance		Additions		Sales and disposals			Transfer/Other changes			Final balances
	US$(000)		US$(000)		US$(000)			US$(000)			US$(000)

Year 2019
Cost-
Land		9,459		-		-			7,594			17,053
Land improvements		36,454		-		(7,472	)		-			28,982
Building and constructions		298,328		-		(26,556	)		(218	)		271,554
Machinery and equipment		244,560		-		(46,286	)		18,598			216,872
Leach pads		1,723,270		-		-			93,956			1,817,226
Vehicles		9,921		-		(1,043	)		524			9,402
Furniture and fixtures		2,556		-		-			-			2,556
Other equipment		58,924		-		(3,712	)		4,050			59,262
Work in progress		444,688		184,403		-			(192,392	)		436,699
Mining rights		37,521		-		-			-			37,521
Right of use asset		-		1,045		-			-			1,045
Asset retirement and mine closure		534,398		158,967		-			-			693,365
Stripping activity asset		148,487		-		-			3,007			151,494
Mine development		760,647		-		-			63,509			824,156

		4,309,213		344,415		(85,069	)		(1,372	)		4,567,187

Accumulated depreciation and amortization
Land improvements		35,583		101		(7,369	)		-			28,315
Building and constructions		247,979		5,702		(26,579	)		(973	)		226,129
Machinery and equipment		204,255		21,780		(42,978	)		973			184,030
Leach pads		1,656,002		38,286		-			-			1,694,288
Vehicles		9,855		16		(1,043	)		-			8,828
Furniture and fixtures		2,556		-		-			-			2,556
Other equipment		56,522		1,326		(3,712	)		-			54,136
Mining rights		29,457		-		-			-			29,457
Right of use asset		-		461		-			-			461
Asset retirement and mine closure		424,008		54,818		-			-			478,826
Stripping activity asset		146,058		1,667		-			-			147,725
Mine development		656,484		17,658		-			-			674,142

		3,468,759		141,815		(81,681	)		-			3,528,893

Net cost		840,454										1,038,294

Notes to the consolidated financial statements(continued)


	Opening balance		Additions		Sales and disposals			Transfer/Other changes			Final balances
	US$(000)		US$(000)		US$(000)			US$(000)			US$(000)

Year 2018
Cost-
Land		9,459		-		-			-			9,459
Land improvements		36,454		-		-			-			36,454
Building and constructions		297,798		-		-			530			298,328
Machinery and equipment		286,865		-		(72,442	)		30,137			244,560
Leach pads		1,722,786		-		-			484			1,723,270
Vehicles		11,024		-		(1,171	)		68			9,921
Furniture and fixtures		2,556		-		-			-			2,556
Other equipment		57,773		-		(265	)		1,416			58,924
Work in progress		400,410		117,636		-			(73,358	)		444,688
Mining rights		37,521		-		-			-			37,521
Asset retirement and mine closure		507,123		27,275		-			-			534,398
Stripping activity asset		148,487		-		-			-			148,487
Mine development		722,355		-		-			38,292			760,647

		4,240,611		144,911		(73,878	)		(2,431	)		4,309,213

Accumulated depreciation and amortization
Land improvements		35,143		440		-			-			35,583
Building and constructions		240,348		7,631		-			-			247,979
Machinery and equipment		249,975		20,887		(66,607	)		-			204,255
Leach pads		1,621,266		34,736		-			-			1,656,002
Vehicles		11,024		2		(1,171	)		-			9,855
Furniture and fixtures		2,556		-		-			-			2,556
Other equipment		55,914		828		(220	)		-			56,522
Mining rights		29,457		-		-			-			29,457
Asset retirement and mine closure		356,345		67,663		-			-			424,008
Stripping activity asset		143,252		2,806		-			-			146,058
Mine development		639,450		17,034		-			-			656,484

		3,384,730		152,027		(67,998	)		-			3,468,759

Net cost		855,881										840,454

Additions to work in progress in 2018 and 2019 are primarily related to the Quecher Main project. As of December 31, 2019, the Company does not have material commitments related to this project.

The depreciation and amortization expense for the year ended December 31, 2019 and 2018 was recorded in the “Cost applicable to sales” caption in the consolidated statement of comprehensive income.

Notes to the consolidated financial statements(continued)

(b)

Impairment of long-lived assets -

In accordance with the accounting policies and processes, each asset or Cash Generating Unit “CGU” is evaluated annually at year end, to determine whether there are any indications of impairment. If any such indications of impairment exist, a formal estimate of the recoverable amount is performed. The Company has two CGU’s: Yanacocha mine and Conga project.

In December 2017 and 2018, the Company performed a formal evaluation of its cash generating units and concluded that there were no impairment indicators at December 31, 2018 and 2017, respectively. In this assessment the Management considered that the Company had been complying with the estimated results for each year included in the last impairment calculation.

During 2019, the Company’s Management identified as an impairment indicator the significant increase of the asset retirement and mine closure, as a result the Company had to determinate the recoverable amount for its CGU Yanacocha. Regarding to CGU Conga the Management did not identify any important indicator. As a result of this analysis the Company concluded that no additional impairment loss on CGU Yanacocha was required to be recorded as the recoverable amount exceeded the carrying amount of the CGU’s assets.

In assessing whether impairment was required, the carrying value of the asset or CGU was compared with its recoverable amount. The recoverable amount is the higher of the CGU’s fair value less costs to sell (FVLCS) and value in use (VIU). Given the nature of the Company’s activities, information on the fair value of an asset is usually difficult to obtain unless negotiations with potential purchasers or similar transactions are taking place. Consequently, the recoverable amount for each CGU was estimated based on estimated discounted future estimated cash flows expected to be generated from the continued use of the CGUs using market based commodity price and exchange assumptions, estimated quantities of recoverable minerals, production levels, operating costs and capital requirements, and its eventual disposal, based on the latest life of mine (LOM) plans. These cash flows were discounted using a real pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the CGU.

Estimates included quantities of recoverable minerals, production levels, operating costs and capital requirements and sourced from the planning process, including the life of mine (LOM) plans, one-year budgets and CGU-specific studies.

Key assumptions used for the impairment testing as of December 31, 2019:

The determination of fair value less cost to sell was most sensitive to the following key assumptions:

Production volumes.

Commodity prices.

Discount rate.

Cost / EBIT

Notes to the consolidated financial statements(continued)

Production volumes: Estimated production volumes are based on detailed life-of-mine plans and take into account development plans for the mines agreed by management as part of planning process. Production volumes are dependent on a number of variables, such as: the recoverable quantities; the production profile; the cost of the development of the infrastructure necessary to extract the reserves; the production costs; the contractual duration of mining rights; and the selling price of the commodities extracted.

As each producing mining unit has specific reserve characteristics and economic circumstances, the cash flows of the mines were computed using appropriate individual economic models and key assumptions established by management. The production profiles used were consistent with the reserves and resource volumes approved as part of the Company’s process for the estimation of proved and probable reserves and resource estimates.

Commodity prices: Forecasted commodity prices were based on management’s estimates and were derived from forward price curves and long-term views of global supply and demand, building on past experience of the industry and consistent with external sources. These prices were adjusted to arrive at appropriate consistent price assumptions for the different qualities and type of commodities, or, where appropriate, contracted prices were applied.

Estimated prices for the current and long-term periods that have were used to estimate future revenues were as follows:

	Current	Long-term
	US$	US$

Gold (per ounce)	1,481	1,300
Copper (per pound)	3.0	3.0

Discount rate: In calculating the fair value less cost to sell, a pre-tax discount rate of 7.1% was applied to the pre-tax cash flows. This discount rate was derived from the Company’s pre-tax weighted average cost of capital (WACC), with appropriate adjustments made to reflect the risks specific to the CGU.

Notes to the consolidated financial statements(continued)

11.

Trade and other payables

(a)

This caption is made up as follows:

	2019	2018
	US$(000)	US$(000)

Trade payables (b)
Domestic suppliers	45,671	48,847
Related entities, note 22(c)	11,426	10,846
	57,097	59,693
Other payables
Remuneration and similar benefits payable	11,365	22,907
Other taxes payable	5,326	728
Royalties payable to the Peruvian State	2,696	136
	19,387	23,771
	76,484	83,464

(b)

Trade payables arise mainly from the acquisition of materials, supplies and spare parts and services provided by third parties. These obligations have current maturities, accrue no interest, are not secured and are mostly denominated in U.S. dollars.

12.

Provisions, other accruals and liabilities

(a)

This caption is made up as follows:

	2019	2018
	US$(000)	US$(000)

Provisions
Provision for closure of mining units and exploration projects (b)	1,608,380	1,294,464
Provision of social responsibility (c)	18,326	18,010
Other provisions	2,484	2,785
	1,629,190	1,315,259

Other accruals and liabilities
Interests payable, see note 24	16,840	-
Workers’ profit sharing payable (e)	12,793	3,920
Accrual of operating costs (d)	11,238	11,442
Accrual of capital expenditure	8,139	3,682
Right of use liability	596	-
	49,606	19,044
Total provisions, other accruals and liabilities	1,678,796	1,334,303

Notes to the consolidated financial statements(continued)

	2019	2018
	US$(000)	US$(000)

Classification by maturity:
Current portion	90,940	41,154
Non-current portion	1,587,856	1,293,149

	1,678,796	1,334,303

(b)

Provision for closure of mining units and explorations projects -

The Company's mining and exploration activities are subject to various laws and regulations governing the protection of the environment. These laws and regulations are continually changing and are generally becoming more restrictive. The Company conducts its operations so as to protect the public health and environment and believes its operations are in compliance with all applicable laws and regulations in all material respects. The Company has made, and expects to make in the future, expenditures to comply with such laws and regulations, but cannot predict the amount of such future expenditures. Estimated future reclamation costs are based principally on legal and regulatory requirements.

The provision for closure of mining units comprises activities to be carried out by the Company in the restoration of mines and adjacent areas in the completion stage of the gold extraction process. Such activities include the restoration of mining locations, water treatment plant operations, as well as reforestation and land treatments.

The movement of the provision for closure of mining units for 2019, 2018 and 2017 is broken down as follows:

	2019	2018	2017
	US$(000)	US$(000)	US$(000)

Opening balance	1,294,464	1,234,731	1,012,888
Additional provisions	301,096	43,560	221,450
Payments	(23,889)	(19,842)	(21,376)
Unwinding of discount, note 20	36,709	36,015	21,769
Ending balance	1,608,380	1,294,464	1,234,731

Classification by maturity
Current portion	39,156	19,325	19,455
Non-current portion	1,569,224	1,275,139	1,215,276
	1,608,380	1,294,464	1,234,731

The provision for closure of mining units and exploration projects represents the present value of the closure costs that are expected to be incurred between the years 2020 and 2069.

Notes to the consolidated financial statements(continued)

There were minimal changes to the updated closure plan in 2017 prior to submitting to Peruvian regulators in September 2017. The regulators completed their review and approved the updated closure plan in November 2017.

During the years ended December 31, 2019, 2018 and 2017, the Company recorded an increase to the reclamation liability of US$301 million, US$44 million and US$206 million, respectively. The increase to the reclamation obligation resulted in an increase to the recorded asset retirement cost asset of US$159 million (US$27.2 million and US$97 million in 2018 and 2017, respectively) related to the producing portions of the mine (see note 10) and a non-cash charge to reclamation expense for the year ended December 31, 2019 of US$142 million (US$16.3 million and US$124.1 million as December 31, 2018 and 2017, respectively) related to the areas of Carachugo, Yanacocha, Maqui Maqui and Cerro Negro operations no longer in production (see note 17). The increase of the 2019 reclamation obligation is mainly due to higher water treatment costs, whereas in 2018 the increase was mainly due to new disturbance costs from the Quecher Main project and changes in the labor cost estimate. The discount rates used in the calculation of the provision as December 31, 2019, 2018 and 2017 were between 0.2% and 0.3%.

(c)

Provision of social responsibility -

The provision of social responsibility relates to community commitments to develop projects near the mine site, including training and support for other activities such as building infrastructure and donations.

The movement of the provision for social responsibility for 2019, 2018 and 2017 is broken down as follows:

	2019			2018			2017
		US$(000)			US$(000)			US$(000)

Opening balance		18,010			21,689			24,335
Additional provisions		888			-			-
Payments		(572	)		(3,679	)		(2,646	)
Ending balance		18,326			18,010			21,689

Classification by maturity
Current portion		761			8,351			-
Non-current portion		17,565			9,659			21,689

		18,326			18,010			21,689

Notes to the consolidated financial statements(continued)

(d)

Accrual of operating cost -

The accrual of operating cost relates to the accruals of services received by the Company as part of its operations that were pending to be invoiced such as power, maintenance, contractors and others.

(e)

Workers' profit sharing -

In accordance with Peruvian legislation, the Company maintains an employee profit sharing plan equal to 8% of annual taxable income. Distributions to employees under the plan are based 50% on the number of days that each employee worked during the preceding year and 50% on proportionate annual salary levels.

13.

Debt instruments

On June 14, 2018, the Company approved the sale of 63,922,565 shares of Minera Yanacocha, S.R.L. to Summit Global Management II BV, a wholly-owned subsidiary of Sumitomo Corporation (“Sumitomo”) for a consideration of US$47,911. The transaction resulted in Sumitomo owning 5% of Minera Yanacocha, S.R.L. with Newmont Second Capital Corporation and Buenaventura’s ownership percentages decreasing to 51.35% and 43.65%, respectively.

Under the terms of the transaction, Sumitomo has the option to require the Company to repurchase the 5% interest in Minera Yanacocha, S.R.L. if the Yanacocha Sulfides project does not adequately progress by June 2022 or if the project is approved with an incremental rate of return below a contractually agreed upon rate. Under the terms of the sales agreement, the cash paid by Sumitomo at closing has been placed in an escrow for repayment in the event the option is exercised. As of December 31, 2019 and December 31, 2018, the Company holds US$48,617 and US$48,127, respectively in an escrow account with Citibank New York and generates interest at a market rate. This balance is included in the caption Restricted Cash in the consolidated statement of financial position. The restricted cash is not available to finance the Company’s day-to-day operations and, therefore, has been excluded from cash and cash equivalents for the purposes of the consolidated statement of cash flows. It has been disclosed as a non-current asset.

The shares held by Sumitomo meet the definition of a compound instrument and is classified as a liability (with a portion recorded to equity) in the consolidated financial statements of the Company. The difference between the present value of the compound instrument at the date of the transaction for an amount of US$41,695 and the gross redemption amount of US$47,911 was recorded as additional paid-in-capital in equity for an amount of US$6,216 at the date of the transaction.

The value of the compound instrument as of December 31, 2019 and December 31, 2018 amounts to US$43,927 and US$42,430, respectively. For the years ended December 31, 2019 and December 31, 2018 the unwinding of the discount was recognized in the caption “Finance costs” in the consolidated statement of comprehensive income for an amount of US$1,497 and US$735, respectively, see note 20.

Notes to the consolidated financial statements(continued)

14.

Partners’ equity

(a)

Partners’ contributions -

As of December 31, 2019 and December 31, 2018, Partners’ contributions comprise 1,214,528,739 common partnership interests at par value of one Peruvian Sol each, fully subscribed and paid-in (equivalent to US$398,216 at the historical exchange rate). Such partnership interest includes 656,484,745 common partnership interests that are owned by foreign investors.

On December 21, 2017, Minera Yanacocha purchased back 63,922,565 partnership interests owned by International Finance Corporation (“IFC”) for US$47,911, which represented 5% of the capital stock of the Company. On February 19, 2018, the Board of the partners approved the reduction of 63,922,565 of the common partnership interests equivalent to US$19,711. On June 14, 2018, the Board of the partners approved the sale of 63,922,565 partnership units to Summit Global Management II BV, see note 13.

Under current Peruvian regulations, there is no restriction on the remittance of dividends or repatriation of foreign investment, except as discussed in sections below.

The legal structure of the Company is that of a Peruvian limited liability partnership. Major features of such legal structure are: (i) the number of Partners cannot exceed 20, (ii) capital comprises the partnership interests, and (iii) there is no obligation to create a legal reserve.

(b)

Retained earnings -

Distribution of earnings to Partners other than legal entities domiciled in Peru is subject to a withholding income tax charged to the partners.

Until December 31, 2017, by Law No. 30296 published on December 31, 2014, for individuals and non-resident legal entities, the applicable tax rate was 6.8% for dividend distributions in cash or non-monetary assets for fiscal year 2017. Pursuant to Legislative Decree No. 1261, published on December 10, 2016 and effective as of January 1, 2017, the applicable tax rate to the distribution of cash dividends and non-monetary assets for the year 2017 onwards is 5%.

(c)

Dividends declared and paid -

On February 15, 2016, the Executive Committee unanimously agreed to distribute dividends in the amount of US$300 million, in proportion to its shareholding, which corresponds to a portion of the accumulated results as of December 31, 2014, which were generated in 2011.

Notes to the consolidated financial statements(continued)

15.

Tax Situation

(a)

Current tax regime -

The Company and its subsidiary are subject to the Peruvian tax regime. The main tax regulations issued during 2018 were the following:

Since January 1, 2019, the applicable treatment of royalties and remuneration for services rendered by non-domiciled was modified (Legislative Decree No. 1369).

The rules that regulate the obligation of legal persons and / or legal entities to inform the identification of their final beneficiaries (Legislative Decree No. 1372) were established.

In July 2018, Law No. 30823 was published. Under this Law, the Congress delegated to the Executive Power the power to legislate on various issues, including tax and financial matters. In this sense, the main tax regulations issued are the following:

(i)

The Tax Code was modified in order to provide greater guarantees to taxpayers in the application of the general anti-avoidance rule (Rule XVI of the Preliminary Title of the Tax Code); as well as to provide the Tax Administration with tools for its effective implementation.

(ii)

Rules have been established for the accrual of income and expenses for tax purposes since January 1, 2019. Until 2018, there was no normative definition of this concept, so in many cases, accounting rules were used for its interpretation.

(b)

Tax stabilization agreements -

The Company has entered into the following tax stability agreements, each with a term of 15 years:

Mine	Effective	Date of the Tax Agreement	Tax Regimes in Force

Cerro Yanacocha	January 1, 2000	September 16, 1998	May 22, 1997
La Quinua	January 1, 2004	August 25, 2003	August 25, 2003

The Cerro Yanacocha tax stabilization agreement expired on January 1, 2015 and La Quinua tax stabilization agreement expired on January 1, 2019.

The La Quinua tax stabilization guaranteed the Company's use of the tax regime shown in the table above and permitted maintenance of its accounting records in U.S. dollars for tax purposes.

The Company determines taxable income based on its understanding and that of its legal advisors, of applicable tax legislation. Taxable income differs from pre-tax income disclosed within these consolidated financial statements by those items that the applicable tax legislation deems to be non-taxable or non-deductible.

Notes to the consolidated financial statements(continued)

On December 31, 2014, the Peruvian Government enacted modifications to Income Tax regulations, applicable beginning in 2015. Among the modifications, a progressive income tax rate reduction was approved as follows: 28% for fiscal year 2016; 27% for fiscal years 2017 and 2018; and 26% from 2019, onward.

Pursuant to Legislative Decree No. 1261, published on December 10, 2016 and effective as of January 1, 2017, the applicable tax rate on the taxable income is 29.5%. The income tax for La Quinua, until January 1, 2019, was 29% according to the tax stabilization agreement entered into with the Peruvian government.

(c)

Years open to tax review -

During the four years following the year of filing the tax return, the tax authorities have the power to review and, as applicable, correct the income tax computed by the Company. In that regard, the tax returns of the years 2015 to 2019 are open to assessment. The fiscal year 2014 is under examination by the Tax Authority (SUNAT).

(d)

Transfer pricing -
For purposes of determining the Income Tax, the transfer prices for transactions with related companies and companies domiciled in territories with little or no taxation must be supported with documentation and information on the valuation methods used and the criteria considered for their determination. Tax Administration can request this information based on analysis of the Company's operations.

(e)

Other mining taxes -

(i)

Law No. 29788, Mining Royalties

On September 28, 2011, the Peruvian Government enacted new legislation to comprise a new mining tax payable to the Peruvian Government for extracting metallic and non-metallic mineral resources from its mining concessions.

Pursuant to this legislation, the mining royalty is payable quarterly based on sales and operating profit determined in accordance with IFRS. The royalty amount due is 1% of revenue. An additional mining tax due is calculated based on the level of operating profit up to a maximum applicable rate of 12%. This component of the new mining tax only applies to those projects that are not covered by a tax stabilization agreement. During 2019, 2018, and 2017, the amounts included in cost of production related to mining royalties were US$7,360, US$1,273 and US$3,140, respectively. During 2019 the amount included in mining tax expense related to mining royalties were US$1,563 and during 2018 and 2017 there were no amounts included in mining tax expense.

(ii)

Law No. 29789, Special Mining Tax

The Special Mining Tax ("IEM") applies to mines not covered by a tax stabilization agreement. The IEM is payable on a quarterly basis with rates ranging from 2% to 8.4% of operating profit determined, in accordance with IFRS.

Notes to the consolidated financial statements(continued)

The rate varies depending on the level of operating profit. During the years ended December 31, 2019, 2018 and 2017 the amounts included in income and mining tax expense were US$9,702, US$592, and US$1,418, respectively.

(iii)

Law No. 29790, Special Mining Burden

The Special Mining Burden ("GEM") applies to mines covered by a tax stabilization agreement. The GEM is payable on a quarterly basis with rates ranging from 4% to 13.12% of operating profit, determined in accordance with IFRS. The rate varies depending on the level of operating profit margin. The GEM applied to operations at La Quinua in 2018 and 2017. This resulted in US$8,230 and US$3,526, respectively, of additional Income and mining tax expense.

(iv)

Law No. 29471, Supplementary Fund

The Supplementary Fund for retirement of mining applies to metallurgical and steel workers, affiliated to the National Pension System (“SNP”) and the Private Pension System (“PPS”); and is applicable since May 11, 2012. This Fund is formed by employee and employer contributions which are distributed according to the following detail:

Employers will contribute 0.5% of the annual income before taxes.

Employees will contribute 0.5% of their monthly gross salary.

The employer's contributions are paid before tax; therefore these amounts are deductible expenses for the year.

The new pension fund tax is calculated based on annual income and is payable quarterly. During the years ended December 31, 2019, 2018 and 2017 the amounts included in Income and mining tax expense amounted to US$728, US$39 and US$29, respectively.

(f)

Peruvian income tax -

The Company's income tax provision consisted of the following:

	2019			2018			2017
		US$(000)			US$(000)			US$(000)

Current Peruvian income tax		42,978			12,525			3,877
Royalties and mining taxes		11,444			8,822			4,944
Income tax from prior years		8,459			8,900			(2,006	)
Fines from previous years, note 24		4,056			-			-
Other taxes		993			121			211
Income tax prior years refunds (*)		(3,002	)		-			-
Current income tax expense		64,928			30,368			7,026
Deferred income tax expenses (benefit)		-			(1,071	)		-

Income tax expense		64,928			29,297			7,026

(*)

Tax refunds were obtained through tax courts resolutions regarding to outstanding tax claims of the income tax payments performed on year 2004.

Notes to the consolidated financial statements(continued)

(g)

Deferred income tax asset -

As of December 31, 2019 and 2018, the Company maintains a deferred income tax asset for US$1,071 recorded in year 2018. The recognized deferred income tax asset corresponds entirely to additional tax credits that can be recovered by reducing the income tax paid of open periods subject to review of the tax authority.

(h)

Reconciliation of income tax expense (benefit) -

Below is a reconciliation of tax expense and the accounts profit multiplied by the statutory tax rate for the years 2019, 2018 and 2017:

	2019			2018			2017
		US$(000)			US$(000)			US$(000)

Loss before income tax		(30,329	)		(52,220	)		(168,428	)
Peruvian statutory tax rate		29.5	%		29.5	%		29.5	%
Income tax income		(8,947	)		(15,405	)		(49,686	)
Valuation allowance on deferred tax asset		46,473			23,771			50,960
Effect of change in translation to US dollars		(4,217	)		-			-
Mining taxes		8,068			6,260			3,530
Non-deductible expenses		13,045			6,962			4,204
Difference in income tax rate applicable to La Quinua at 29%		-			(176	)		(124	)
Income tax prior years (refunds) / payments		6,450			7,885			(1,858	)
Fines from prior years, note 24		4,056			-			-

Total income tax expense		64,928			29,297			7,026

(i)

The main tax regulations issued during 2019 are as follows–

(i)

Modified, starting in January 1, 2019, the treatment applicable to the royalties and fees for services provided by non-domiciled recipients, eliminating the obligation to pay an amount equivalent to the withholding when the costs or expenses are booked, and must now withhold the corresponding income tax at the time of their payment or retribution accreditation (Legislative Decree No. 1369).

(ii)

Established rules governing the obligation of legal persons and (or) legal entities to report the identification of their final beneficiaries (Legislative Decree No. 1372). These rules are applicable to legal persons domiciled in the country, pursuant to article 7 of the Income Tax Law, and to legal entities in the country. The obligation is applicable for non-domiciled legal entities and legal entities constituted abroad while: a) have a branch, agency or another permanent establishment in the country; b) the person (natural or legal entity) who manage the autonomous patrimony or foreign investment funds, or the natural or legal person who has the quality of guard or administrator, is domiciled in the country; and, c) any part of a consortium is domiciled in the country. This obligation will be fulfilled by submitting to the tax authority of sworn statement information, which should contain the final beneficiary information and be submitted, in compliance with the regulations and in the deadlines established through a resolution of the Tax Authority.

Notes to the consolidated financial statements(continued)

(iii)

Changed the tax code in the implementation of the General Anti-Avoidance Rule – GAAR (Rule XVI of the preliminary title of the Tax Code (Legislative Decree No. 1422).

The GAAR is intended to prevent taxpayers from entering into transactions that would allow them to minimize their tax liabilities. The Tax authority will be entitled to apply the GAAR in ordinary tax audits since July 19, 2012; however, the tax authority will have to obtain the approval from a committee before applying the GAAR.

Other rules regarding the GAAR are:

(a)

Jointly Liability of Legal Representatives – the legal representatives will be jointly liable for the tax debt as a result of the application of the GAAR by the Tax Authority.

(b)

Tax Planning approval by the Board of Directors - Up to March 29, 2019 board of Directors should approve (ratify or modify) all the tax planning of their entities since July 19, 2012. The members of the board will be liable for the tax assessment as a result of the application of the GAAR.

(j)

As of December 31, 2019, the Company determined a current income tax payable of US$20,276 (Prepaid income tax credit of US$19,239 as December 31, 2018) and mining taxes payable for US$2,877 (US$3,552 as December 31, 2018). The current income tax payable of year 2019 includes the current income tax offset by the credits of the period, and the income tax contingencies, see note 24, for US$7,913 and US$12,363; respectively.

16.

Revenue from contracts with customers

(a)

The Company’s revenues are mainly from sales of gold ounces. The table below presents the net sales to customers by geographic region:

	2019		2018		2017
		US$(000)		US$(000)		US$(000)

Sales and services by geographic region:
Metal sales
Europe (Switzerland)		734,526		518,664		491,887
America		-		139,989		179,018

		734,526		658,653		670,905

(b)

Other operating revenue is made up as follows:

	2019		2018		2017
		US$(000)		US$(000)		US$(000)

Copper and silver in concentrate		4,098		20,442		17,509
Others		678		1,523		4,361

		4,776		21,965		21,870

For the year ended December 31, 2019, 2018 and 2017, the amount of the subsequent changes in fair value of the trade receivable were US$176, US$15 and US$346, respectively and are presented as part of the caption “Copper and silver in concentrate”.

Notes to the consolidated financial statements(continued)

(c)

Concentration of sales -

In 2019, the 100% of Dore sales was performed to Royal Bank of Canada consigned to Argor Hereaus (Switzerland) and no copper concentrate sales performed during the period. As of December 31, 2018, 79% to Switzerland (Scotia Mocatta consigned to Valcambi 52% and Royal Bank of Canada consigned to Argor Hereaus 27%) and 21% to United States of America (Dore across Scotia Mocatta consigned by Asahi 20% and Copper Concentrate to MCC Non Ferrous Trading 0.1%). Related to Copper Concentrate as of December 31, 2019 and 2018, 100% of accounts receivables are related to MCC Non Ferrous Trading.

The Company's sales of gold and concentrates are delivered to investment banks and national and international well-known companies. Some of these clients have long-term sales contracts with the Company for the supply of the production from the Company’s mines.

17.

Costs applicable to sales

This caption is made up as follows:

	2019			2018			2017
		US$(000)			US$(000)			US$(000)

Beginning balance of finished goods and in-process		341,213			345,489			446,503
Beginning balance of provision for net realizable value, note 8(b)		(89,127	)		(62,540	)		(84,374	)
Royalties to related parties, note 1(a) and note 22		22,297			20,385			20,739
Mining royalties to the government		9,255			2,875			4,990
Consumption of supplies		200,036			215,863			240,881
Personnel expenses		72,325			82,645			99,702
Other services		41,120			43,671			66,408
Maintenance		26,645			22,585			24,033
Power		23,619			24,203			23,565
Depreciation and amortization		144,862			156,212			87,783
Workers' profit sharing		12,804			3,837			1,242
Provision of closure mines, note 12(b)		142,129			16,285			124,124
Ending balance of provision for net realizable value, note 8(b)		47,925			89,127			62,540
Ending balance of finished goods and in-process		(302,382	)		(341,213	)		(345,489	)

		692,721			619,424			772,647

For the years ended December 31, 2019, 2018 and 2017, the cost of inventories recognized in cost of sales was US$326,790, US$327,459 and US$456,647, respectively.

Notes to the consolidated financial statements(continued)

18.

Operating expenses, net

This caption is made up as follows:

	2019			2018			2017
		US$(000)			US$(000)			US$(000)

Exploration and advanced projects		33,669			62,643			51,694
Severance program		2,210			8,678			9,419
Cost of sales from the sale of fixed assets		2,092			5,445			1,632
Tax fine		2,019			3,954			-
Write-off of fixed assets		1,204			-			1,368
Revenue from sale of fixed assets		(8,088	)		(4,821	)		(2,235	)
Others, net		2,881			256			1,636
		35,987			76,155			63,514

19.

Administrative expenses

This caption is made up as follows:

	2019		2018		2017
		US$(000)		US$(000)		US$(000)

Management expenses		1,341		1,317		3,395
Other		403		1,466		1,365

		1,744		2,783		4,760

20.

Finance costs

This caption is made up as follows:

	2019		2018		2017
		US$(000)		US$(000)		US$(000)

Unwinding of the discount of the provision for mining closure, note 12(b)		36,709		36,015		21,769
Interests on tax contingency and others, see note 24		16,938		161		128
Commissions of guarantee letters		2,485		2,113		1,869
Unwinding of debt instruments, note 13		1,497		735		-
		57,629		39,024		23,766

F-187

Notes to the consolidated financial statements(continued)

21.

Commitments and contingencies

Unitization of properties -

In December 2000, as a result of the unitization plan carried out by the Partners, the Company signed several asset transfer and mining lease agreements with related entities. The main conditions are:

The Company must pay to Chaupiloma, 3% of the quarterly net sales, according to the lease agreement. The mining rights subject to this 3% royalty are those identified in the lease agreement as part of the “Area of Influence of Chaupiloma”. Some of these mining rights are in exploitation and the rest of them in exploration.

The Company must pay to Los Tapados S.A., 3% of the quarterly net sales proceeds of mineral extracted from the transferred and leased concessions of Los Tapados S.A. The transferred and leased concessions of Los Tapados S.A. are also subject to a previously existing royalty on the minerals. These mining rights are in exploitation and others inactive.

Legal proceedings -

Conga project Constitutional claim -

On October 18, 2012, Marco Antonio Arana Zegarra filed a constitutional claim against the Ministry of Energy and Mines and Yanacocha requesting the Court to order the suspension of the Conga project as well as to declare not applicable the October 27, 2010, directorial resolution approving the Conga project Environmental Impact Assessment (“EIA”). On October 23, 2012, a Cajamarca judge dismissed the claims based on formal grounds finding that: (i) plaintiffs had not exhausted previous administrative proceedings; (ii) the directorial resolution approving the Conga EIA is valid, and was not challenged when issued in the administrative proceedings; (iii) there was inadequate evidence to conclude that the Conga project is a threat to the constitutional right of living in an adequate environment and; (iv) the directorial resolution approving the Conga project EIA does not guarantee that the Conga project will proceed, so there was no imminent threat to be addressed by the Court. The plaintiffs appealed the dismissal of the case. The Civil Court of the Superior Court of Cajamarca confirmed the above mentioned resolution and the plaintiff presented an appeal. On March 13, 2015, the Constitutional Court published its ruling stating that the case should be sent back to the first court with an order to formally admit the case and start the judicial process in order to review the claim and the proofs presented by the plaintiff. Yanacocha has answered the claim. Neither the Company nor Yanacocha can reasonably predict the outcome of this litigation.

The Company has not established a provision in the accompanying financial statements for a loss arising from this contingency, which it does not consider probable.

Notes to the consolidated financial statements(continued)

Environmental -

The Peruvian government agency responsible for environmental evaluation and inspection, Organismo Evaluacion y Fiscalizacion Ambiental (“OEFA”), conducts periodic reviews of the Yanacocha site. In 2011 to 2019, OEFA issued notices of alleged violations of OEFA standards to Yanacocha and Conga relating to past inspections. OEFA has resolved some alleged violations with minimal or no findings. In 2015 and 2016, the water authority of Cajamarca issued notices of alleged regulatory violations, and resolved some allegations in 2017 with no findings. The experience with OEFA and the water authority is that in the case of a finding of violation, remedial action is often the outcome rather than a significant fine. The alleged OEFA violations currently range from zero to 17,642 units and the water authority alleged violations range from zero to 10 units, with each unit having a potential fine equivalent to approximately 1,260 dollars based on current exchange rates with a total potential fine amount for outstanding matters of (US$0 to US$22,200). Yanacocha and Conga are responding to all notices of alleged violations, but cannot reasonably predict the outcome of the agency allegations.

The Company has not established a provision in the accompanying financial statements for a loss arising from this contingency, which it does not consider probable.

Open tax procedures -

The Tax Authority has the right to examine, and, if necessary, amend the Company’s income tax provision for the last four years. The Company’s income tax filings for the years 2014 through 2017 are open to examination by the tax authorities. For value added tax, the periods open for examination are the years 2015 through 2018. To date, National Tax Supervisor “SUNAT” has concluded its review of the Company’s tax exams through the year 2013. For years 2003 and 2009, the Company is in the claim and appeal process.

In the Company Management’s and legal advisors’ opinion, there are sound legal grounds to sustain the Company’s tax positions; as a result, Management expects to obtain favorable results on these processes and any additional tax assessment would not be significant to the consolidated financial statements.

For the periods pending of examination, due to the many possible interpretations of current legislation, it is not possible to determine whether or not future reviews will result in tax liabilities for the Company. In the event that additional taxes are payable, including interest and surcharges, as a result of the Tax Authority reviews, they will be charged to expense in the period assessed. However, in Management’s and legal advisors’ opinion, any additional tax assessment would not be significant to the consolidated financial statements.

Tax contingencies -

Withholding income tax for fiscal years 2002 and 2003 -

The Tax Administration challenged the withholding tax rate applied on the technical assistance services provided by a non-resident supplier. The services were executed in Peru and also abroad; however, the Company was not able to prove that during the tax audit. Based on that, the Tax Administration considers that the services were wholly executed in Peru; therefore, the withholding tax rate should be 30% instead of 12%. Currently there is no contingency in this regard. The tax liability has been paid by the Company.

Notes to the consolidated financial statements(continued)

Tax Dispute related to the amortization of the contractual rights –

In 2000, Yanacocha paid Buenaventura and Minas Conga S.R.L. a total of US$29 million to assume their respective contractual positions in mining concession agreements with Chaupiloma Dos de Cajamarca S.M.R.L. The contractual rights allowed Yanacocha the opportunity to conduct exploration on the concessions, but not a purchase of the concessions. The tax authority alleges that the payments to Buenaventura and Minas Conga S.R.L. were acquisitions of mining concessions requiring the amortization of the amounts under the Peru Mining Law over the life of the mine. Yanacocha expensed the amounts at issue in the initial year since the payments were not for the acquisition of a concession but rather these expenses represent the payment of an intangible and therefore, amortizable in a single year or proportionally for up to ten years according to Income Tax Law. In 2010, the tax court in Peru ruled in favor of Yanacocha and the tax authority appealed the issue to the judiciary. The first appellate court confirmed the ruling of the tax court in favor of Yanacocha. However, in November, 2015, a Superior Court in Peru made an appellate decision overturning the two prior findings in favor of Yanacocha. Yanacocha has appealed the Superior Court ruling to the Peru Supreme Court. On January 18, 2019, the Peru Supreme Court issued notice that three judges support the position of the tax authority and two judges support the position of Yanacocha. Because four votes are required for a final decision, an additional judge was selected to issue a decision and the parties conducted oral arguments in April 2019. In early February 2020, the additional judge ruled in favor of the tax authority, finalizing a decision of the Peru Supreme Court against Yanacocha, see note 24. Yanacocha will file an action objecting to the fines and interest associated with the underlying decision of the Peru Supreme Court. The potential outstanding liability in this matter amounts up to US$61 million. It is not possible to fully predict the outcome of this litigation.

Letters of Guarantee -

The Company has signed Letters of Guarantee with various financial institutions in accordance with the Mine Closure Regulation approved by Supreme Decree No. 033-2005 of the Ministry of Energy and Mines. The table below sets out the outstanding signed commitments at year ends by financial institution.

	2019		2018		2017
		US$(000)		US$(000)		US$(000)

Scotiabank		253,317		235,000		190,000
Pacífico Surich		200,000		-		-
La Positiva		70,000		-		-
Rimac (Travelers)		60,000		-		-
Banco de Credito del Peru (a)		-		114,251		123,729
BBVA Continental		-		190,000		190,000

		583,317		539,251		503,729

(a)

Letters of guarantee of Banco de Credito del Peru include US$6,321 related to San Jose Reservoir Trust in 2017. In 2019 and 2018 letters of guarantee were not required.

Notes to the consolidated financial statements(continued)

Letters of guarantee shall come into force if the Company fails to execute in whole or in part the mine closure plan.

22.

Transactions with related parties

(a)

The main transactions carried out by the Company with its related parties in the years 2019, 2018 and 2017 were:

	2019		2018		2017
		US$(000)		US$(000)		US$(000)
Royalties accrued:
Affiliates:
S.M.R.L. Chaupiloma Dos de Cajamarca, note 17 and 1(a)		22,297		20,385		20,739
Services rendered by:
Affiliates:
Newmont Peru S.R.L. (management services) (b)		10,729		12,837		8,985
Newmont International Services		10,822		5,181		281
Newmont USA Limited		4,118		5,381		5,607

(b)

Management services including key personnel are provided by a related party.

(c)

As a result of the transactions indicated in the paragraph (a), the Company had the following accounts receivable and payable from and (or) to affiliates:

	2019		2018
		US$(000)		US$(000)
Balance receivable from related parties, note 6
Newmont International Services Limited		168		194
Newmont USA Limited		144		207
Suriname Gold Company		135		-
NVL, USA Limited, Delaware		102		321
Newmont Peru S.R.L.		26		22
Newmont Global Employment Limited		20		22
Suriname Gold Company LLC		-		18
Newmont USA Limited – Carlin		-		10
Others		3		-
		598		794
Balance payable for related parties, note 11
S.M.R Chaupiloma Dos de Cajamarca		4,863		5,461
Newmont International Service Limited		3,297		2,059
Newmont Peru S.R.L.		1,101		1,460
Newmont Technologies Limited.		1,042		634
Newmont USA Limited.		1,034		1,067
Newmont US Carlin Limited		3		163
Others		86		2
		11,426		10,846

AII the balances above are of current maturity, have no specific guarantees and are not interest bearing.

Notes to the consolidated financial statements(continued)

For the years ended December 31, 2019, 2018 and 2017, there is no allowance for expected credit losses related to related parties accounts.

23.

Financial - risk management objectives and policies

The Company's operations are exposed to certain financial risks: some market risks (foreign exchange risk, interest rate risk and price risk, credit risk and liquidity risk). The Company's overall risk management program focuses on the unpredictability of financial markets and seeks to minimize potential adverse effects on the Company's financial performance. The most important aspects in risk management are the following:

(a)

Market risks -

(i)

Foreign exchange risk -

Foreign exchange risk exposure arises from exchange rate fluctuations of balances denominated in different currencies than the U.S. dollar. Since transactions and balances denominated in foreign currency are not significant, the current exchange rate risk exposure is limited. Management has decided to assume the exchange risk exposure with the results of the Company's operations; therefore it has not engaged in hedging activities.

(ii)

Interest rate risk -

The Company does not maintain significant interest-bearing assets or liabilities; therefore, net income (loss) and cash flows of the Company are substantially independent from the changes in market interest rates.

(iv)

Price risk -

The Company's financial instruments exposed to price risk are limited to its trade accounts receivable (exposed to gold price) and its available-for-sale financial assets, none of which show a material balance at the end of year, therefore no significant impact on the consolidated financial statements has arisen due to changes in their price that would need to be disclosed.

(b)

Credit risk -

The Company evaluates the concentration of risk with respect to trade receivables as low, as its customers are located in Canada and operate in largely independent markets. The Company's products (refined golddore) are negotiated in international markets being subject to the global demand, as a result it does not concentrate risks related to limited number of clients. The Company counts with counterparties with high credit-rating, and have not had any significant default event arising from risk concentration.

Notes to the consolidated financial statements(continued)

Credit risk is managed on a group basis by Newmont according to its policies. Financial instruments exposed to credit risk are cash and cash equivalents, investments in debt and equity instruments, trade accounts receivable and other accounts receivable. For banks and financial institutions, only independently rated parties with a minimum "A" rating are accepted. Regarding trade accounts receivable, according to the practice in the latest years, collections have generally been in full. A credit review of the portfolio is performed quarterly to determine any deterioration in credit quality. The Company does not foresee any significant losses that may arise from this risk.

Set out below is the information about the credit risk exposure on the Company’s trade and other receivables:

			Days past due						Total US$(000)
	Current US$(000)		< 30 days US$(000)		30 – 90 days US$(000)		> 90 days US$(000)

As of December 31, 2019
Trade receivables		-		5,047		7,976		1,993		15,016
Total				5,047		7,976		1,993		15,016
As of December 31, 2018
Trade receivables		3,870		564		81		24,563		29,078
Total		3,870		564		81		24,563		29,078

(c)

Liquidity risk -

Management administrates its exposure to liquidity risk through financing from internal operations, Company's partners and maintaining good relationships with local and foreign banks in order to maintain adequate levels of credit available. The Company currently has no existing bank lines of credit.

The following table represents the analysis of the Company's financial liabilities, considering the remaining period to reach such maturity as of the consolidated statement of financial position date (see notes 11 and 12):

	2019		2018
	Less than 1 year		Less than 1 year
	US$(000)		US$(000)

Trade accounts payable		45,671		48,847
Accounts payable to related parties		11,426		10,846
Lease liabilities		290		-
		57,387		59,693

Notes to the consolidated financial statements(continued)

(d)

Capital risk management -

The Company's objectives for managing capital are to safeguard the Company's ability to continue as a going concern in order to provide expected returns for partners and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital.

The Company manages its capital structure and makes adjustments to meet the changing economic market conditions. The Company's policy is to fund all projects of short and long term with their own operating resources. To maintain or adjust the capital structure, the Company may change the policy of paying dividends to shareholders, return capital to shareholders or issue new shares. No formal dividend policy exists.

(e)

Fair value measurement -

Fair value accounting establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements).

As required by accounting guidance, assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The Company's assets that are measured at fair value on a recurring basis (at least annually) correspond to the San José Reservoir Trust assets and the accounts receivable from the sales of copper and silver concentrate subject to provisional pricing.

The Company's San José Reservoir Trust assets are made up of marketable equity and debt securities that are valued using quoted market prices in active markets and as such are classified within Level 1 of the fair value hierarchy. The fair value of the marketable equity securities is calculated as the quoted market price of the marketable equity security multiplied by the quantity of shares held by the Company.

There were no transfers between Level 1and Level 2 during 2019.

The Company's impairment loss is valued using valuation techniques to determine the WACC rate. These valuation techniques maximize the use of observable market data where it is available and rely as little as possible on entity specific estimates as such is classified within Level 2 of the fair value hierarchy.

Notes to the consolidated financial statements(continued)

Carrying value versus fair value

Set out below is a comparison of the carrying amount and fair value of the Company’s financial instruments, other than those which carrying amounts are reasonable approximation of fair value:

	Carrying amount			Fair value
		2019	2018		2019	2018
		US$(000)	US$(000)		US$(000)	US$(000)

Financial assets:
Cash and cash equivalents		818,503	723,208		818,503	723,208
Trade and other receivables, net		15,016	29,078		15,016	29,078
Restricted cash		48,617	48,127		50,353	48,601
Financial assets at fair value		23,648	23,290		23,648	23,290
		905,784	823,703		907,520	824,177

	Carrying amount			Fair value
		2019	2018		2019	2018
		US$(000)	US$(000)		US$(000)	US$(000)

Financial liabilities:
Trade and other payables		76,484	83,464		76,484	83,464
Provisions and other accruals		596	-		596	-
Debt instrument		43,927	42,430		43,927	42,430
		121,007	125,894		121,007	125,894

Management assessed that the fair values of cash and short-term deposits, trade receivables, trade payables and other current liabilities approximate their carrying amounts largely due to short-term maturities of these instruments. Trade receivables subject to provisional pricing are already carried at fair value.

24.

Summary of significant differences between accounting principles followed by the Company and U.S. Generally Accepted Accounting Principles

The Company's financial statements have been prepared in accordance with International Financial Reporting Standards which differs in certain respects from U.S. GAAP. The effects of these differences are reflected in note 25 and are principally related to the items discussed in the following paragraphs:

(a)

Impairment -

Under IFRS, the Company estimates the recoverable amount of an asset whenever there is an indication that the asset may be impaired. The recoverable amount is the higher of the fair value less costs of disposal and its value in use. Value in use is the present value of the future cash flows expected to be derived from an asset or cash-generating unit. Impairment loss previously recorded is reversible in subsequent periods under certain conditions.

Under IFRS, the Company recorded in 2013 and 2016 an impairment loss related to its Conga and Yanacocha CGU for US$1,126 million and US$1,342 million, respectively. In 2019, 2018 and 2017, the Company did not recognize any impairment loss.

Notes to the consolidated financial statements(continued)

Under US GAAP, the Company used undiscounted cash flows to perform an impairment evaluation. In 2019, 2018 and 2017, no impairment indicators were identified for its Yanacocha and Conga CGU. In 2016, the Company recorded an impairment loss related to its Yanacocha CGU for US$ 933.2 million.

For reconciling the net income/loss and net equity from US GAAP to IFRS, the Company eliminates the higher depreciation recorded under US GAAP corresponding to the impaired assets under IFRS.

(b)

Stripping activity asset -

Under IFRS, the stripping costs in the production phase of a surface mine are accounted according to the accounting principles disclosed in note 2, consequently the stripping activity asset is capitalized as stripping activity asset and has an impact in the depreciation expense.

Under U.S. GAAP, the costs of clearing removal (stripping cost of production) incurred during the production stage are recorded as part of the production cost of inventories, accordingly, such costs are recorded on the income statement at an earlier time than IFRS.

(c)

Reclamation and mine closure –

Under IFRS, the liability is measured in accordance with IAS 37 and IFRIC 1. Upward and downward revisions in the amount of undiscounted estimated cash flows are discounted using the current market-based discount rate (this includes changes in the time value of money and the risks specific to the liability), see note 2.4(k).

Under IFRS, the Company updates the discount rate used to discount its liability at the closing date, this change in the discount rate has an impact (increase/decrease) in the asset retirement cost and reclamation liability.

Under US GAAP, upward revisions in the amount of undiscounted estimated cash flows are discounted using the current credit-adjusted risk-free rate. Downward revisions in the amount of undiscounted estimated cash flows are discounted using the credit-adjusted risk-free rate that existed when the original liability was recognized.

Under US GAAP, there are no requirements of update the discount rate.

(d)

Inventories -

Under IFRS, the cost of inventory mainly includes a lower depreciation as a result of the reduced value of property, plant and equipment due to the impairments recorded in prior years, the impact of the stripping activity asset and workers' profit sharing.

Under US GAAP, the cost of inventory is affected by a different depreciation since the impairment recognized under US GAAP is different than the one recognized under IFRS. According to US GAAP, the workers' profit sharing is excluded of the inventory costing.

(e)

Contingencies -

Under IFRS, a provision is recognized when:

●

An entity has a present obligation (legal or constructive) as a result of a past event.

●

It is probable that an outflow of resources will be required to settle the obligation.

●

A reliable estimate of the obligation can be made.

Notes to the consolidated financial statements(continued)

For the purposes of IAS 37, “probable” is defined as more likely than not and refers to a probability of greater than 50%.

Under US GAAP, a loss contingency is recognized if both of the following conditions are met: It is probable (likely to occur) that an asset had been impaired or a liability has been incurred. The amount of loss can be reasonably estimated. The meaning of “probable” under ASC 450 is “the future event or events are likely to occur” (generally interpreted as between 70%-80%).

(f)

Debt instruments -

Under IFRS, the shares held by Sumitomo (see note 13) meet the definition of a compound instrument according to IAS 32. As a result, it is classified as a liability (with a portion recorded to equity) until the option expires, in which case it will be required to be classified it as equity. There is no gain or loss on conversion at maturity. In the case the option is executed, both the liability and the equity would be reversed with a credit to cash.

Under USGAAP, the shares held by Sumitomo are classified as temporary equity – contingently redeemable non-controlling interest (“CRNCI”) according ASC 480-10-S99-3A; as a long as the option is not expired or it is exercised the CRNCI is recorded at fair value of inception which was determined to be equal to the purchase price.

(g)

Subsequent events -

Under IFRS, the settlement after the reporting period of a court case that confirms that the entity had a present obligation at the end of the reporting period is an adjusting event after the reporting period.

During 2019, the Company recognized a liability in tax payable, interest and fines for US$ 29 million related to a court case in accordance with IAS 37 Provisions, Contingent Liabilities and Contingent Assets, including the amount of the income tax to pay and the additional penalties and interests. See Note 21.

Under USGAAP, a change in facts after the reporting date but before the financial statements are issued or are available in relation to a tax position which is effectively settled through litigat ion shall be recognized in the period in which the change in facts occurs, therefore the Company recognized the tax claim in the first quarter of 2020.

(h)

Deferred income tax -

The differences between US GAAP and IFRS are re-measurements that lead to different temporary differences. The Company has to account for such differences.

As the Company does not recognize deferred income tax assets, there is no differences to reconcile.

(i)

Deferred workers’ profit sharing -

Under IFRS, the worker’s profit sharing is calculated based on the Company’s taxable income and is recorded as an employee benefit (cost of production or administrative expenses, depending on the function of the workers).

Under US GAAP, the workers’ profit sharing is treated in a similar way as income tax since both are calculated based on the Company’s taxable income. Therefore, the Company calculates a deferred workers’ profit sharing resulting from the taxable and deductible and deductible temporary differences.

Notes to the consolidated financial statements(continued)

As the Company does not recognize deferred workers’ profit sharing assets in USGAAP, there is no differences to reconcile.

25.

Reconciliation between net income and Partners' Equity determined under IFRS and U.S. GAAP

The following is a summary of the adjustment to net income for the years ended December 31, 2019, 2018 and 2017, and to partners' equity as of December 31, 2019, 2018 and 2017 that would be required if U.S. GAAP had been applied instead of IFRS in the consolidated financial statements:

	2019			2018			2017
	US$(000)			US$(000)			US$(000)

Income (loss) under U.S. GAAP		3,316			(69,068	)		(131,243	)
Items increasing (decreasing) reported net profit:
Reversal of depreciation of assets impaired under IFRS, note 24(a)		205,653			320,424			294,454
Reversal of depreciation of assets impaired under USGAAP, note 24(a)		(204,276	)		(254,006	)		(237,906	)
Stripping activity asset, note 24(b)		(7,533	)		(18,227	)		(6,360	)
Reclamation and mine closure, note 24(c)		(54,873	)		20,537			(76,963	)
Asset retirement costs, note 24(c)		(14,504	)		(89,280	)		(35,911	)
Inventories, note 24(d)		7,740			10,217			17,169
Contingencies, note 24(e)					(1,228	)		-
Debt instrument interest, note 24(f)		(1,497	)		(735	)		-
Recognition of account receivable to tax authority		-			-			2,405
Interest regarding tax claim, note 24(g)		(16,839	)		-			-
Income tax payable, including fines, note 24(g)		(12,168	)		-			-
Others		(276	)		(151	)		(1,099	)
		(98,573	)		(12,449	)		(44,211	)
Loss under IFRS		(95,257	)		(81,517	)		(175,454	)

Contingencies, note 24(e)		(1,228	)		(1228	)		-
Income tax payable contingency, including fines note 24(g)		(12,168	)		-			-
Interest regarding tax claim, note 24(g)		(16,939	)		-			-
Others		(3,072	)		(2,776	)		(2,624	)
		(1,176,679	)		(1,078,077	)		(1,023,932	)
Partners' equity under IFRS		489,712			583,723			659,115

Notes to the consolidated financial statements(continued)

	2019			2018			2017(i)
		US$(000)			US$(000)			US$(000)

Partners' equity under U.S. GAAP		1,666,362			1,661,800			1,683,047
Items increasing (decreasing) reported Partners' equity:
Impairment loss for IFRS, note 24(a)		(2,469,188	)		(2,469,188	)		(2,469,188	)
Reversal of depreciation of assets impaired under IFRS, note 24(a)		1,200,337			994,684			674,260
Elimination of impairment loss recorded under U.S. GAAP, note 24(a)		933,200			933,200			933,200
Reversal of depreciation of assets impaired under U.S. GAAP note 24(a)		(696,188	)		(491,912	)		(237,906	)
Stripping activity asset, note 24(b)		3,729			15,773			34,000
Asset retirement cost, note 24(c)		59,160			1,026			84,671
Reclamation and mine closure, note 24(c)		(139,834	)		(12,323	)		(27,225	)
Inventories, note 24(d)		4,837			(2,903	)		(13,120	)
Debt instruments, note 24(f)		(43,927	)		(42,430	)		-
Contingencies, note 24(e)		(1,228	)		(1,228	)		-
Income tax payable contingency, including fines note 24(g)		(12,168	)		-			-
Interest regarding tax claim, note 24(g)		(16,839	)		-			-
Others		1,459			(2,776	)		(2,624	)
		(1,176,650	)		(1,078,077	)		(1,023,932	)
Partners' equity under IFRS		489,712			583,723			659,115

Contingencies, note 24(e)		(1,228	)		(1,228	)		-
Income tax payable contingency, including fines note 24(g)		(12,168	)		-			-
Interest regarding tax claim, note 24(g)		(16,839	)		-			-
Others		(3,072	)		(2,776	)		(2,624	)
		(1,176,679	)		(1,078,077	)		(1,023,932	)
Partners' equity under IFRS		489,712			583,723			659,115

26.

New USGAAP Accounting Pronouncements

Recently Issued Accounting Pronouncements -

Leases –

In February 2016, Accounting Standard Update - “ASU” No. 2016-02 was issued related to leases. This new guidance modifies the classification criteria and requires leases to recognize the assets and liabilities arising from most leases on the balance sheet. This update is effective in fiscal years, including interim periods, beginning after December 15, 2018 and early adoption is permitted. The Company adopted this standard on 1 January 2019, no differences were noted to IFRS.

In June 2016, Financial Accounting Standards Board- “FASB” issued an ASU that changes the impairment model for most financial assets and certain other instruments, and will also require expanded disclosures. Under the expected credit loss (CECL) model, entities will be required to recognize an estimate of credit losses expected to occur over the remaining life of the financial assets, including estimating future economic conditions and the effect those conditions have on expected credit losses.

In August 2018, FASB issued an ASU that aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with those for capitalizing implementation costs incurred to develop or obtain internal use software. For public entities, this ASU is effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years, with early adoption permitted. This ASU must be applied either retrospectively or prospectively to all implementation costs incurred after the date of adoption. The Company is currently evaluating the impact this ASU will have on its financial statements.

In August 2018, FASB issued an ASU makes minor changes to the disclosure requirements for employers that sponsor defined benefit pension and/or other postretirement benefit plans. For public entities, this ASU is effective for fiscal years ending after December 15, 2020, with early adoption permitted. This ASU must be applied on a retrospective basis to all periods presented. The Company is currently evaluating the impact this ASU will have on its financial statements.

In December 2019, FASB issued an ASU that simplifies the accounting for income taxes by eliminating certain exceptions related to the approach for intra-period tax allocation, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences. For public entities, this ASU is effective for fiscal years ending after December 15, 2020, and interim periods within those fiscal years, with early adoption permitted, including adoption in an interim period. This ASU must be applied on a retrospective basis to all periods presented. The Company is currently evaluating the impact this ASU will have on its financial statements.

Notes to the consolidated financial statements(continued)

27.

Subsequent Event

In early February 2020, the Peru Supreme Court issued its conclusion, whereby the Company received notification of an unfavorable result in the Tax Dispute related to the amortization of contractual rights, see note 21Tax Contingencies, “Tax Dispute related to the amortization of contractual rights” for which it recorded a liability in tax payable for US$8 million and in addition recorded interest and fines for US$16.8 and US$4 million; respectively, in the consolidated financial statements as of December 31, 2019, see notes 15(f) and note 20.

Subsequent to December 31, 2019, the COVID-19 outbreak has had a material impact on the global economy, the scale and duration of which remain uncertain. Depending on the length of time and extent of the impact which could include potential mine closures, gold price volatility or supply chain disruption, this could materially impact the Company results of operations, cash flows and financial condition.

Sociedad Minera Cerro Verde S.A.A.

Financial Statements for the years 2019, 2018 and 2017 together with the Report of Independent Registered Public Accounting Firm

Sociedad Minera Cerro Verde S.A.A.

Financial Statements for the years 2019, 2018 and 2017 together with the Report of Independent Registered Public Accounting Firm

Content

Report of Independent Registered Public Accounting Firm	F-203

Financial Statements

Statement of financial position	F-205
Statements of comprehensive income	F-206
Statements of changes in equity	F-207
Statements of cash flows	F-208
Notes to the financial statements	F-210

Report of Independent Registered Public Accounting Firm

To the Shareholders and the Board of Directors of Sociedad Minera Cerro Verde S.A.A.

Opinion on the Financial Statements

We have audited the accompanying statement of financial position of Sociedad Minera Cerro Verde S.A.A., (the Company) as of December 31, 2019 and 2018, and the related statements of comprehensive income, changes in equity and cash flows for each of the three years in the period ended December 31, 2019, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2019 and 2018, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2019, in conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board, which differ in certain respects from the accounting principles generally accepted in the United States of America (see notes 24 and 25 to the financial statements).

Basis for Opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Report of Independent Registered Public Accounting Firm(continued)

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Paredes, Burga & Asociados S. Civil de R.L.

A member practice of Ernst & Young Global Limited

/s/ Katherine Villanueva
We have served as the Company’s auditor since 2007.
Lima, Peru
April 9, 2020

Sociedad Minera Cerro Verde S.A.A.

Statement of financial position

As of December 31, 2019 and 2018

	Note	2019		2018
		US$(000)		US$(000)
Assets
Current assets
Cash and cash equivalents	2(d),3		481,491		501,182
Trade accounts receivable, net			1,887		1,715
Other accounts receivable, net	2(d)		6,529		5,765
Trade accounts receivable - Related parties	2(d),4,22		453,070		413,351
Other non-financial assets	6		105,680		57,575
Inventories, net	2(f),5		552,197		457,074
Prepayments			14,074		18,418
Total current assets			1,614,928		1,455,080
Non - current assets
Property, plant and equipment, net	2(g),7		5,690,851		5,602,902
Inventories	2(f),5		255,123		286,375
Intangible assets, net	2(h)		9,337		10,289
Other non-financial assets	6		239,185		200,066
Total non-current assets			6,194,496		6,099,632
Total assets			7,809,424		7,554,712
Liabilities and equity, net
Current liabilities
Other financial liabilities	2(e),10		8,855		-
Trade accounts payable	2(e),8		224,920		231,136
Income tax payable	13(b)		13,505		12,424
Provision related to benefits to employees	2(m)		34,249		42,569
Other accounts payable	2(e),9		99,380		101,254
Accounts payable - Related parties	2(e),4		4,014		6,014
Other provisions	2(j),11		35,863		15,357
Total current liabilities			420,786		408,754
Non - current liabilities
Other financial liabilities	2(e),10		902,820		1,022,810
Accounts payable - Related parties	2(e),4		10,074		8,860
Other accounts payable	2(e),9		362,464		215,070
Provision related to benefits to employees	2(m)		32,509		32,509
Other provisions	2(j),11		278,419		342,331
Deferred income tax liability, net	2(l),13(g)		369,789		228,248
Income tax liabilities	13(b)		83,314		187,258
Total non-current liabilities			2,039,389		2,037,086
Total liabilities			2,460,175		2,445,840
Shareholders’ equity
Capital stock	12		990,659		990,659
Other capital reserves	12		198,132		198,132
Retained earnings			4,160,458		3,920,081
Total shareholders’ equity			5,349,249		5,108,872

Total liabilities and shareholders’ equity			7,809,424		7,554,712

Sociedad Minera Cerro Verde S.A.A.

Statements of comprehensive income

For the years ended December 31, 2019, 2018 and 2017

	Note		2019			2018			2017
			US$(000)			US$(000)			US$(000)

Sales		14		2,890,066			3,054,026			3,202,931
Cost of sales		15		(1,954,749	)		(2,010,972	)		(1,768,238	)
Gross Margin				935,317			1,043,054			1,434,693

Operating expenses
Selling expenses		16		(109,483	)		(137,008	)		(141,669	)
Other operating expenses		17		(38,116	)		(68,683	)		(258,826	)
Other operating income				680			-			-
				(146,919	)		(205,691	)		(400,495	)
Operating Profit				788,398			837,363			1,034,198

Financial income		19		10,356			28,089			5,350
Financial expenses		18		(115,877	)		(426,733	)		(216,912	)
Exchange differences, net				5,574			6,161			13,288
				(99,947	)		(392,483	)		(198,274	)

Profit before income tax				688,451			444,880			835,924

Income tax expense		13(b)		(298,074	)		(325,170	)		(486,043	)

Net profit for the year				390,377			119,710			349,881

Basic and diluted profit per share		20		1.115			0.342			1.000

Sociedad Minera Cerro Verde S.A.A.

Statements of changes in equity

For the years ended December 31, 2019, 2018 and 2017

	Note		Capital stock		Other capital reserves		Retained earnings			Total
			US$(000)		US$(000)		US$(000)			US$(000)

Balance as of January 1, 2017				990,659		198,132		3,650,490			4,839,281

Net profit for the year				-		-		349,881			349,881

Balance as of December 31, 2017		12		990,659		198,132		4,000,371			5,189,162

Cash dividends declared				-		-		(200,000	)		(200,000	)
Net profit for the year				-		-		119,710			119,710

Balance as of December 31, 2018		12		990,659		198,132		3,920,081			5,108,872

Cash dividends declared				-		-		(150,000	)		(150,000	)
Net profit for the year				-		-		390,377			390,377

Balance as of December 31, 2019		12		990,659		198,132		4,160,458			5,349,249

Sociedad Minera Cerro Verde S.A.A.

Statements of cash flows

For the years ended December 31, 2019, 2018 and 2017

	Note	2019			2018			2017
		US$(000)			US$(000)			US$(000)

Operating activities
Net profit for the year	20		390,377			119,710			349,881
Adjustments to reconcile net profit for the year with the cash provided from operating activities for:
Income tax expense	13		317,205			366,998			486,043
Nonmonetary adjustments
Depreciation and amortization	15		535,000			512,298			456,467
Accretion on remediation and mine closure provision	11		4,048			4,322			4,595
Net loss on sale of property, plant and equipment			279			964			185
Mining royalty dispute - charges	13		66,122			379,282			348,560
Mining royalty dispute - payments			(186,953	)		(56,186	)		(52,787	)
Net changes in assets and liabilities
Trade accounts receivable			(39,300	)		67,475			(38,922	)
Other accounts receivable			3,535			1,954			(5,776	)
Inventories	5		(63,871	)		(49,371	)		32,101
Other non-financial assets			(38,741	)		(76,186	)		226,969
Trade accounts payable			4,503			29,419			(13,663	)
Other accounts payable			37,150			48,130			49,915
Provisions related to benefits to employees			(8,276	)		(50,440	)		33,258
Other provisions			52,559			(11,561	)		70,648
Interest paid (not included in the financing activities)			(37,226	)		(47,442	)		(50,510	)
Income tax			(216,369	)		(430,810	)		(282,273	)
Net cash and cash equivalents provided by operating activities			820,042			808,556			1,614,691

Statements of cash flows (continued)

	Note	2019			2018			2017
		US$(000)			US$(000)			US$(000)

Investing activities
Sales of property, plant and equipment			1,243			109			37
Purchases of property, plant and equipment	7,8		(283,459	)		(280,183	)		(152,769	)
Stripping activity asset			(197,038	)		(177,327	)		(153,623	)
Net cash and cash equivalents used in investing activities			(479,254	)		(457,401	)		(306,355	)

Financing activities
Payments of loans	10(b)		(200,000	)		(250,000	)		(353,333	)
Dividends	12(c)		(150,000	)		(200,000	)		-
Payments of leasing	10(a)		(10,479	)		-			(161	)
Proceeds from loans			-			-			233,333
Payments of shareholders loans			-			-			(606,014	)
Debt issuance costs			-			-			(12,085	)
Net cash and cash equivalents used in financing activities			(360,479	)		(450,000	)		(738,260	)

Net (decrease) increase in cash and cash equivalents			(19,691	)		(98,845	)		570,076
Cash and cash equivalents at beginning of year			501,182			600,027			29,951

Cash and cash equivalents at the end of the year	3		481,491			501,182			600,027

Transactions with no effects in cash flows:
Provision for remediation and mine closure	11(b)		41,130			(32,017	)		(3,710	)

Sociedad Minera Cerro Verde S.A.A.

Notes to the Financial Statements

As of December 31, 2019, 2018 and 2017

Identification and business activity

(a)

Identification -

Sociedad Minera Cerro Verde S.A.A. (the Company) was incorporated in Peru on August 20, 1993, as a result of the privatization process of certain mining units carried out by the Peruvian State in that year. The Company’s shares began being listed on the Lima Stock Exchange on November 14, 2000.

Through its subsidiary Cyprus Climax Metals Company, Freeport Minerals Corporation (FMC), a wholly owned subsidiary of Freeport-McMoRan Inc. (Freeport), owns 53.56% of the voting shares of the Company. SMM Cerro Verde Netherlands B.V. (SMM Cerro Verde), a subsidiary of Sumitomo Metal Mining Company Ltd. (Sumitomo), owns 21.00%, Compañía de Minas Buenaventura S.A.A. (Buenaventura) owns 19.58%, and other stakeholders own the remaining 5.86%.

The Company’s legal address is Jacinto Ibañez Street N°315 - Parque Industrial, Arequipa in the city of Arequipa and the ore deposit is located 20 miles southwest of that city (Asiento Minero Cerro Verde S/N Uchumayo – Arequipa).

(b)

Business activity -

The Company’s activities are regulated by the Peruvian General Mining Law and comprise the extraction, production and sale of copper cathodes, copper concentrate and molybdenum concentrate.

Cerro Verde’s operation consists of an open-pit copper mine, with a processing capacity of 548,500 metric ton-per-day that includes (i) concentrator facilities with a 409,500 metric ton-per-day capacity (361,500 metric ton-per-day before the expansion approved by the Ministry of Energy and Mines during 2018), (ii) solution extraction and electrowinning (SX/EW) leaching facilities with leach copper production derived from a 39,000 metric ton-per-day crushed leach facility and (iii) a run-of-mine (ROM) leach system with a capacity of 100,000 metric ton-per-day. This SX/EW leaching operation has a production capacity of approximately 200 million pounds of copper per year. The leaching and flotation process carried out at these plants are part of the benefit concession “Planta de Beneficio Cerro Verde.”

(c)

Financial statements approval -

The financial statements for the year ended December 31, 2019, were approved by Company’s Management on April 9, 2020 and the subsequent events have been considered through those dates.

Notes to the Financial Statements(continue)

Significant accounting principles and policies

The significant accounting policies applied in the preparation of the financial statements are summarized below:

(a)

Basis of presentation -

The financial statements of the Company have been prepared in accordance with International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB). IFRS includes International Accounting Standards (IAS) and pronouncements of the Interpretations Committees (SIC and IFRIC).

The financial statements have been prepared based on historical cost, except for accounts receivable and/or payable related to embedded derivatives, which have been measured at fair value (see Note 2(d)). The financial statements are presented in United States dollars (US$) and include the years ended December 31, 2019, 2018 and 2017. Unless otherwise indicated, all values have been rounded to the nearest thousand.

(b)

Use of judgments, estimates and assumptions -

The preparation of financial statements in conformity with IFRS requires management to make judgments, estimates and assumptions in order to determine the amounts of the assets and liabilities, and the disclosure of contingent assets and liabilities as of December 31, 2019 and 2018, and the amounts of reported revenues and expenses for the years ended December 31, 2019, 2018 and 2017.

Information about significant judgments, estimates and assumptions made by Management in the preparation of the financial statements follows:

(b.1)

Judgments -

(i)

Contingencies -

By their nature, contingencies will be resolved only when one or more uncertain future events occur or fail to occur. The assessment of the existence and potential amount of contingencies inherently involves the exercise of significant judgment and the use of estimates regarding the outcome of future events.

(ii)

Stripping cost -

The Company incurs waste removal costs (stripping costs) during the development and production phases of its surface mining operations. Production stripping costs can be incurred both in relation to the production of inventory in that period and the creation of improved access and mining flexibility in relation to ore to be mined in the future. The former are included as part of the costs of inventory, while the latter are capitalized as a stripping activity asset, as part of the “Property, plant and equipment” caption, where certain criteria are met.

Notes to the Financial Statements(continue)

Once the Company has identified its production stripping for its surface mining operation, it identifies the separate components of the ore body. An identifiable component is a specific volume of the ore body that is made more accessible by the stripping activity. Significant judgment is required to identify and define these components, and to determine the expected volumes (e.g., in tons) of waste to be stripped and ore to be mined in each of these components.

(b.2)

Estimates and assumptions -

(i)

Determination of mineral reserves -

Mineral reserves are the part of a mineral deposit that can be economically and legally extracted from the mine concessions. The Company estimates its mineral reserves based on information compiled by individuals qualified in reference to geological data about the size, depth and form of the ore body, and requires geological judgments in order to interpret the data.

The estimation of recoverable reserves involves numerous uncertainties with respect to the ultimate geology of the ore body, including quantities, grades and recovery rates. Estimating the quantity and grade of mineral reserves requires the Company to determine the size, shape and depth of the ore body by analyzing geological data. In addition to the geology, assumptions are required to determine the economic feasibility of mining the reserves, including estimates of future commodity prices and demand, future requirements of capital and production costs, and estimated exchange rates. Revisions in reserve or resource estimates have an impact on the value of mining properties, property, plant and equipment, provisions for cost of mine closure, recognition of assets for deferred taxes and depreciation and amortization of assets.

(ii)

Units of production depreciation -

Estimated mineral reserves are used in determining the depreciation and/or amortization of mine-specific assets. This results in a depreciation/amortization charge proportional to the depletion of the anticipated remaining life-of-mine production. The life of each item, which is assessed at least annually, is impacted by both its physical life limitations and present assessments of economically recoverable reserves of the mine property at which the asset is located. These calculations require the use of estimates and assumptions, including the amount of recoverable reserves.

(iii)

Provision for remediation and mine closure-

The Company assesses its provision for remediation and mine closure quarterly. It is necessary to make estimates and assumptions in determining this provision, including cost estimates of activities that are necessary for the rehabilitation of the site, technological and regulatory changes, interest rates and inflation rates. As discussed in note 2(j), estimated changes in the fair value of the provision for remediation and mine closure or the useful life of the related assets are recognized as an increase or decrease in the book value of the provision and related asset retirement cost (ARC) in accordance with IAS 16, “Property, Plant and Equipment.”

According to the Company’s accounting policies, the provision for remediation and mine closure represents the present value of the costs that are expected to be incurred in the closure period of the operating activities of the Company. Closure budgets are reviewed regularly to take into account any significant change in the studies conducted. Nevertheless, the closure costs of mining units will depend on the market prices for the closure work required, which would reflect future economic conditions. Also, the timing of disbursements depends on the useful life of the mine, which are based on estimates of future commodity prices.

Notes to the Financial Statements(continue)

If any change in the estimate results in an increase to the provision for remediation and mine closure and related ARC, the Company shall consider whether or not this is an indicator of impairment of the assets and will apply impairment tests in accordance with IAS 36, “Impairments of Assets.”

(iv)

Inventories -

Net realizable value tests are performed at least annually and represent the estimated future sales price of the product based on prevailing spot metals prices, less estimated costs to complete production and bring the inventory to sale. Additionally, in calculating the net realizable value of the Company’s long-term stockpiles, Management also considers the time value of money.

Mill and leach stockpiles generally contain lower grade ores that have been extracted from the ore body and are available for copper recovery. Mill stockpiles contain sulfide ores and recovery of metal is through milling and concentrating. Leach stockpiles contain oxide ores and certain secondary sulfide ores and recovery of metal is through exposure to acidic solutions that dissolve contained copper and deliver it in solution to extraction processing facilities.

Because it is generally impracticable to determine copper contained in mill and leach stockpiles by physical count, reasonable estimation methods are employed. The quantity of material delivered to mill and leach stockpiles is based on surveyed volumes of mined material and daily production records. Sampling and assaying of blast hole cuttings determine the estimated copper grades of material delivered to mill and leach stockpiles.

Expected copper recovery rates for mill stockpiles are determined by metallurgical testing. The recoverable copper in mill stockpiles, once entered into the production process, can be produced into copper concentrate almost immediately.

Notes to the Financial Statements(continue)

Expected copper recovery rates for leach stockpiles are determined using small-scale laboratory tests, historical trends and other factors, including mineralogy of the ore and rock type. Total copper recovery in leach stockpiles can vary significantly depending on several variables, including type of copper recovery, mineralogy and the size of the rock. For newly placed material of active stockpiles, as much as 80 percent of total copper recovery may be extracted during the first year, and the remaining copper may be recovered over many years. Processes and recovery rates are monitored continuously, and recovery rate estimates are adjusted periodically as additional information becomes available and as related technology changes.

(v)

Asset impairment -

Management has determined that the Company’s operations consist of one cash generating unit. The Company’s operations are evaluated at least annually in order to determine if there are impairment indicators. If any such indication exists, the Company makes an estimate of the recoverable amount, which is the higher of: (i) the fair value less costs of disposal or (ii) the value in use. These assessments require the use of estimates and assumptions, including long-term commodity prices, discount rates, operating costs, and others.

Fair value is defined as the amount that would be obtained from the sale of the asset in an arm’s length transaction between willing and knowledgeable parties. The fair value of assets is generally determined as the current value of future cash flows derived from the continuous use of the asset, which includes estimates, such as the cost of future expansion plans and eventual disposal, while applying assumptions that an independent market participant may take into account. The cash flows are discounted by applying a discount rate that reflects the current market, the time value of money and the risks specific to the asset.

(c)

Currency -

The financial statements are presented in United States (US) dollars, which is also the Company’s functional currency.

Foreign currency transactions are those carried out in a currency other than the functional currency. Foreign currency transactions are translated into the functional currency by applying the exchange rate in force on the date the transaction takes place. Monetary assets and liabilities denominated in foreign currencies are converted using the functional currency spot rate in force at the reporting date.

Gains and losses as a result of the difference in the exchange rate when currency items are liquidated or when converting currency items at exchange rates that are different from those used for their initial recognition are recognized in the statement of comprehensive income of the period.

Notes to the Financial Statements(continue)

The Company uses Peruvian Sol (S/) exchange rates published by the Superintendent of Banks, Insurance and Pension Fund Administrators. The published exchange rates were S/3.311 for US$1 for buying and S/3.317 for US$1 for selling as of December 31, 2019, and S/3.369 for US$1 buying and S/3.379 for US$1 for selling as of December 31, 2018. These rates have been applied to the appropriate asset and liability accounts.

(d)

Financial assets –

Initial recognition and measurement -

At initial recognition, financial assets are classified and measured at either amortized cost, or fair value through profit or loss.

The classification of financial assets at initial recognition depends on the financial asset’s contractual cash flow characteristics and the Company´s business model for managing them. With the exception of trade receivables that do not contain a significant financing component, the Company initially measures a financial asset at its fair value plus, in the case of a financial asset not at fair value through profit or loss, transaction costs. Trade receivables that do not contain a significant financing component are measured at the transaction price determined under IFRS 15, “Revenue from Contracts with Costumers.”

Cash and cash equivalents -

Cash and cash equivalents are financial assets that may be liquidated immediately, such as bank checking accounts, and other liquid investments with original maturities of three months or less.

Accounts Receivables -

The Company’s receivables include current and long-term trade and other accounts receivable. These receivables are stated at their transaction value, net of an allowance for expected credit lose. Trade accounts receivable are generated primarily from the Company’s concentrate and cathode sales, are denominated in US dollars, have current maturities, do not bear interest and have no specific guarantees.

Receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market.

Subsequent measurement -

For purposes of subsequent measurement, financial assets are classified in two categories:

Financial assets at amortized cost (debt instruments).

~~Held-to-maturity investments.~~Financial assets at fair value through profit or loss.

Notes to the Financial Statements(continue)

Financial assets at amortized cost (debt instruments) -

This category is the most relevant to the Company. The Company measures financial assets at amortized cost if both of the following conditions are met:

The financial asset is held within a business model with the objective to collect contractual cash flows, and

~~Available-for-sale~~The contractual terms of the financial ~~investments.~~asset give rise, on specified dates, to cash flows that are solely payments of principal and interest on the principal amount outstanding.

Financial assets at amortized cost are subsequently measured using the effective interest rate method and are subject to impairment. Gains and losses are recognized in the statements of comprehensive income when the asset is derecognized, modified or impaired.

This category generally applies to trade and other receivables, net.

Financial assets at fair value through profit or loss --

Financial assets at fair value through profit or loss include financial assets held for trading, ~~and~~ financial assets designated upon initial recognition at fair value through profit or ~~loss.~~loss or financial assets mandatorily required to be measured at fair value. Financial assets are classified as held for trading if they are acquired for the purpose of selling or repurchasing in the near term. Derivatives, including separated embedded derivatives, are also classified as held for trading unless they are designated as effective hedging ~~instruments as defined by IAS 39.~~instruments. Financial assets with cash flows that are not solely payments of principal and interest are classified and measured at fair value through profit or loss, irrespective of the business model.

Financial assets at fair value through profit or loss are carried in the ~~consolidated~~ statements of financial position at fair value with net changes in fair value ~~presented as finance costs (negative changes) or finance revenue (positive changes)~~recognized in the ~~consolidated~~ statements of comprehensive income.

~~Derivatives~~Embedded derivatives -

Copper Sales -

The Company’s copper sales are provisionally priced at the time of shipment. The provisional prices are finalized in a specified future month based on quoted London Metal Exchange (LME) monthly average prices. The Company receives market prices based on prices in the specified future month, which results in price fluctuations recorded through revenues until the date of settlement. The Company records revenues and invoices customers at the time of shipment based on then-current LME prices, which results in an embedded ~~in host contracts are accounted for as separate derivatives and recorded at fair value if their economic characteristics and risks are not closely related~~derivative that is required to ~~those of~~be separated from the ~~host contracts and the host contracts are not held for trading or designated at fair value though profit or loss. These~~main contract. The Company’s embedded derivatives from sales are measured at fair value ~~with changes in fair value recognized in profit or loss.~~(based on LME spot copper prices) and presented as gains/losses on provisionally priced trade receivables.

~~Loans and receivables~~-

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. After initial measurement, such financial assets are subsequently measured at amortized cost using the effective interest rate method, less impairment. The losses arising from impairment are recognized in the consolidated statements of profit or loss.

~~This category generally applies to trade and other receivables, net. See note 6 for more information on accounts receivable.~~

~~Held-to-maturity investments -~~

Non-derivative financial assets with fixed or determinable payments and fixed maturities are classified as held to maturity when the Company has the positive intention and ability to hold them to maturity. The Company did not have any held-to-maturity investments as of December 31, 2016 and 2015.

~~F-114~~

Notes to the ~~consolidated financial statements~~Financial Statements ~~(continued)~~(continue)

Molybdenum Sales -

The Company’s molybdenum sales are also provisionally priced at the time of shipment. The Company records revenues and invoices customers at the time of shipment based on the arithmetic mean of the high and lowMetals Week Dealer Oxide (MWDO) price. The provisional prices are finalized in a future month, according to the period of quotation, which results in price fluctuations recorded through revenues until the date of settlement, which also results in an embedded derivative that is required to be separated from the main contract.

~~Available-for-sale (AFS) financial assets~~Derecognition -

The available-for-sale financial assets include equity investments and debt securities. Equity investments classified as available-for-sale are those that are neither classified as held for trading nor designated at fair value through profit or loss. Debt securities in this category are those that are intended to be held for an indefinite period of time and may be sold in response to needs for liquidity, or in response to changes in the market conditions (Note 9).

After initial measurement, AFS financial investments are subsequently measured at fair value with unrealized gains or losses recognized in other comprehensive income and credited in the unrealized gain on available-for-sale investments until investment is derecognized, at which time the cumulative gain or loss is recognized in other operating income, or the investment is determined to be impaired, when the cumulative loss is reclassified from the AFS reserve to the consolidated statement of profit or loss in finance costs. Interest earned whilst holding AFS financial investments is reported as interest income using the effective interest rate method.

~~Derecognition -~~

A financial asset (or, where applicable a part of a financial asset or part of a group of similar financial assets) is primarily derecognized when:

The rights to receive cash flows from the asset have ~~expired.~~expired; or

The Company has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a pass-through arrangement; and either (a) the Company has transferred substantially all the risks and rewards of the asset or, (b) the Company has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.

When the Company has transferred its rights to receive cash flows from an asset or has entered into a pass-through arrangement, it evaluates if and to what extent, it has retained the risk and rewards of ownership. When it has neither transferred nor retained substantially all of the risks and rewards of the asset, nor transferred control of the asset, the Company continues to recognize the transferred asset to the extent of the Company´s continuing involvement. In that case, the Company also recognizes an associated liability. The transferred asset and the associated liability are measured on a basis that reflects the rights and obligations that the Company has retained.

Impairment of financial assets -

The Company ~~assesses,~~recognizes an allowance for expected credit losses for all debt instruments not held at ~~each reporting date, whether~~fair value through profit or loss. Expected credit losses are based on the difference between the contractual cash flows due in accordance with the contract and all the cash flows that the Company expects to receive, discounted at an approximation of the original effective interest rate. The expected cash flows will include cash flows from the sale of collateral held or other credit enhancements that are integral to the contractual terms.

Expected credit losses are recognized in two stages. For credit exposures for which there ~~is objective evidence~~has not been a significant increase in credit risk since initial recognition, expected credit losses are provided for credit losses that ~~a financial asset or group of financial assets is impaired. An impairment exists if one or more~~result from default events that are possible within the next 12-months (12-month expected credit losses). For those credit exposures for which there has ~~occurred~~been a significant increase in credit risk since ~~the~~ initial recognition, a loss allowance is required for credit losses expected over the remaining life of the ~~asset (an incurred "loss event") has an impact on the estimated future cash flows~~exposure, irrespective of the ~~financial asset or~~timing of the ~~group of financial assets that can be reliably estimated.~~

~~Evidence of impairment may include indications that the debtors or a group of debtors is experiencing significant financial difficulty,~~ default or delinquency in interest or principal payments, the probability that they will enter bankruptcy or other financial reorganization and observable data indicating that there is a measurable decrease in the estimated future cash flows, such as changes in economic conditions that correlate with defaults.(lifetime expected credit losses).

~~F-115~~

Notes to the ~~consolidated financial statements~~Financial Statements ~~(continued)~~(continue)

~~Financial~~For trade receivables and contract assets, ~~carried at amortized cost~~

~~For financial assets carried at amortized cost,~~ the Company ~~first assesses whether impairment exists individually for financial assets that are individually significant, or collectively for financial assets that are not individually significant. If~~applies a simplified approach in calculating expected credit losses. Therefore, the Company ~~determines that no objective evidence of impairment exists for an individually assessed financial asset, whether significant or~~does not ~~it includes the asset~~track changes in ~~a group of financial assets with similar~~ credit risk, ~~characteristics and collectively assesses them for impairment. Assets that are individually assessed for impairment and for which an impairment~~but instead recognizes a loss is, or continues to be, recognized are not included in a collective assessment of impairment. Assets that are individually assessed for impairment and for which an impairment loss is, or continues to be, recognized are not included in a collective assessment of impairment.allowance based on the financial asset’s lifetime expected credit losses at each reporting date.

The ~~amount of any impairment loss identified is measured as~~Company considers a financial asset in default when contractual payments are 180 days past due. However, in certain cases, the difference between the assets’ carrying amount and the present value of estimated future cash flows (excluding future expected credit losses that have not yet been incurred). The present value of the estimated future cash flows is discounted at theCompany may also consider a financial ~~asset’s original effective interest rate. If a loan has a variable interest rate, the discount rate for measuring any impairment loss is the current effective interest rate.~~

~~The carrying amount of the~~ asset is reduced through the use of an allowance account and the amount of the loss is recognized in the consolidated statement of profit or loss. Interest income (recorded as finance income in the consolidated statement of profit or loss) continues to be ~~accrued on~~in default when internal or external information indicates that the ~~reduced carrying amount and~~Company is ~~accrued using~~unlikely to receive the ~~rate of interest used to discount~~outstanding contractual amounts in full before taking into account any credit enhancements held by the ~~future cash flows for the purpose of measuring the impairment loss. Loans together with the associated allowance are~~Company. A financial asset is written off when there is no ~~realistic prospect~~reasonable expectation of future recovery and all collateral has been realized or has been transferred to the Company. If, in a subsequent year, the amount of the estimated impairment loss increases or decreases because of an event occurring after the impairment was recognized, the previously recognized impairment loss is increased or reduced by adjusting the allowance account. Any amount that would have been decommissioned and is subsequently recovered is recovery is credited less finance costs in the consolidated statement of profit or loss.

~~F-116~~

~~Notes to the consolidated financial statements(continued)~~

~~Available-for-sale (AFS) financial investments~~

~~For AFS financial investments, the Company assesses at each reporting date whether there is objective evidence that an investment or a group of investments is impaired.~~

In the case of equity investments classified as AFS, objective evidence would include a significant or prolonged decline in the fair value of the investment below its cost. “Significant” is evaluated against the original cost of the investment and “prolonged” against the period in which the fair value has been below its original cost. Where there is evidence of impairment, the cumulative loss measured as the difference between the acquisition cost and the current fair value, less any impairment loss on that investment previously recognized in the consolidated statement of profit or loss is removed from other comprehensive income and recognized in the consolidated statement of profit or loss. Impairment losses on equity investment are not reversed through profit or loss; increases in their fair value after impairment are recognized in other comprehensive income.

~~(ii)~~

~~Financial liabilities –~~

~~Initial recognition and measurement -~~

Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss, accounts payable, financial obligations, or as derivatives designated as hedging instruments in an effective hedge, as appropriate.

~~All financial liabilities are recognized initially at fair value and, in the case of interest-bearing loans and borrowings and payables, net of directly attributable transaction costs.~~

~~The Company’s financial liabilities include trade and other payables, and embedded derivatives related to mineral sales.~~

~~Subsequent measurement -~~

~~The measurement of financial liabilities depends on their classification. Trade and other payables are subsequently measured at amortized cost.~~

~~Derecognition~~-

~~A financial liability is derecognized when the obligation under the liability is discharged, cancelled or expires.~~

When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognized in the consolidated statements of comprehensive income.

~~F-117~~

~~Notes to the consolidated financial statements~~ ~~(continued)~~

~~(iii)~~

~~Offsetting of financial instruments -~~

~~(c)~~

~~Cash and cash equivalents -~~

Cash and cash equivalents include cash in hand, deposits held at call with banks and other short-term highly liquid investments with original maturities of three months or less. Restricted cash is excluded from cash and cash equivalents and is included in other current assets or long-term assets depending on restrictions.

~~(d)~~

~~Stockpiles, ore on leach pads and inventories -~~

Costs that are incurred in or benefit the productive process are accumulated as stockpiles, ore on leach pads and inventories. Stockpiles, ore on leach pads and inventories are carried at the lower of average cost or net realizable value. Net realizable value represents the estimated future sales price of the product based on current and long-term metals prices, less the estimated costs to complete production and bring the product to sale. Write-downs of stockpiles, ore on leach pads and inventories to net realizable value are reported as a component of costs applicable to sales. The current portion of stockpiles, ore on leach pads and inventories is determined based on the expected amounts to be processed within the next twelve months. Stockpiles, ore on leach pads and inventories not expected to be processed within the next twelve months are classified as
~~non-current. The major classifications are as follows:~~

~~(i)~~

~~Stockpiles -~~

Stockpiles represent ore that has been extracted from the mine and is available for further processing. Stockpiles are measured by estimating the number of tons added and removed from the stockpile, the number of contained ounces (based on assay data) and the estimated metallurgical recovery rates (based on the expected processing method). Stockpile ore tonnages are verified by periodic surveys. Costs are allocated to stockpiles based on relative values of material stockpiled and processed using current mining costs incurred up to the point of stockpiling the ore, including applicable overhead and depreciation and amortization relating to mining operations, and removed at each stockpile's average cost per recoverable unit as material is processed.

~~(ii)~~

~~Ore on leach pads -~~

The recovery of gold from certain gold oxide ores is achieved through the heap leaching process. Under this method, oxide ore is placed on leach pads where it is treated with a chemical solution, which dissolves the gold contained in the ore. The resulting gold-bearing solution is later processed in a plant where the gold is recovered. Costs are added to ore on leach pads based on current mining costs, including applicable overhead and depreciation and amortization relating to mining operations. Costs are removed from ore on leach pads as ounces are recovered based on the average cost per estimated recoverable ounce of gold on the leach pad.

~~F-118~~

~~Notes to the consolidated financial statements~~ ~~(continued)~~

Although the quantities of recoverable gold placed on the leach pads are reconciled by comparing the grades of ore placed on the pads to the quantities of gold actually recovered (metallurgical balancing), the nature of the leaching process inherently limits the ability to precisely monitor inventory levels. As a result, the metallurgical balancing process is constantly monitored and estimates are refined based on actual results over time. Historically, the Company's operating results have not been materially impacted by variations between the estimated and actual recoverable quantities of gold on its leach pads. Variations between actual and estimated quantities resulting from changes in assumptions and estimates that do not result in write-downs to net realizable value are accounted for on a prospective basis.

~~(iii)~~

In-~~processinventory~~ -

In-process inventories represent materials that are currently in the process of being converted to a saleable product. Conversion processes vary depending on the nature of the ore and the specific processing facility, and include mill in-circuit and leach in-circuit. In-process material is measured based on assays of the material fed into the process and the projected recoveries of the respective plants. In-process inventories are valued at the average cost of the material fed into the process attributable to the source material coming from the mines, stockpiles and/or leach pads plus the in- process conversion costs, including applicable amortization relating to the process facilities incurred to that point in the process.

~~(iv)~~

~~Precious metals inventory -~~

Precious metals include gold Dore and/or gold bullion. Precious metals that result from the Company's mining, processing activities are valued at the average cost of the respective in-process inventories incurred prior to the refining process, plus applicable refining costs.

~~(v)~~

~~Materials and supplies -~~

~~Materials and supplies are valued at the lower of average cost or replacement value. Cost includes applicable taxes and freight.~~

~~F-119~~

~~Notes to the consolidated financial statements~~ ~~(continued)~~

~~(e)~~

~~Property, plant and equipment -~~

The cost of an element of property, plant and equipment comprises the following: the acquisition price or manufacturing cost, including non-reimbursable customs and taxes and any cost necessary to place the asset in operating condition, as anticipated by Management; the initial estimate of the rehabilitation obligation and; in the case of qualified assets, the financing costs.

~~Maintenance and repair expenses are charged to the production cost or expense, as necessary, in the period when incurred.~~

Expenses incurred to replace a component of an item or element of property, plant and equipment are capitalized separately, writing-off the carrying amount of the component being replaced. In the event the component replaced has not been considered as a separate component of the asset item, the replacement value of the new component is used to estimate the carrying amount of the assets being replaced.

~~Assets in the construction stage are capitalized as separate components. At their completion, the cost is transferred to the appropriate category. Work in progress is not depreciated.~~

~~Depreciation~~

Land is not depreciated. Other than land, depreciation of property, plant and equipment is calculated using the straight-line method to allocate their cost less their residual value over their estimated useful lives and in the case of assets assigned to the production process of Yanacocha, under the lower of that determined under the units of production method or the useful life of the mine, as follows:

~~Land improvements~~	~~25 years~~
~~Buildings~~	~~Between 5 and 25 years~~
~~Plant and equipment~~	~~Between 3 and 15 years~~
~~Vehicles~~	~~Between 3 and 5 years~~
~~Furniture and fittings~~	~~Between 3 and 10 years~~
~~Other equipment~~	~~Between 3 and 10 years~~
~~Computer equipment~~	~~Between 3 and 8 years~~
~~Assets retirement cost~~	~~Useful life of the mine and/or process facilities~~

~~F-120~~

~~Notes to the consolidated financial statements~~ ~~(continued)~~

~~Disposal of assets~~

~~(f)~~

~~Mineral Interests -~~

~~Mineral interests include acquired interests in production, development and exploration stage properties. The mineral interests are capitalized at their fair value at the acquisition date.~~

The value of such assets is primarily driven by the nature and amount of mineralized material believed to be contained in such properties. Production stage mineral interests represent interests in operating properties that contain proven and probable reserves. Development stage mineral interests represent interests in properties under development that contain proven and probable reserves.

Exploration costs are capitalized when reserves at the location are declared in the Reserves and Resource information published annually by Newmont in its form 10-K. At this point, exploration costs are capitalized as mine development or as a component of property, plant and equipment, as appropriate.

The Company's mineral rights generally are enforceable regardless of whether proven and probable reserves have been established. The Company has the ability and intent to renew mineral interests where the existing term is not sufficient to recover all identified and valued proven and probable reserves and/or undeveloped mineralized material.

~~F-121~~

~~Notes to the consolidated financial statements~~ ~~(continued)~~

~~Mineral interests are presented in the caption of property, plant and equipment, net.~~

~~(g)~~

~~Mine development -~~

Mine development costs include engineering and metallurgical studies, drilling and other related costs to delineate an ore body, and the removal of overburden to initially expose an ore body at open pit surface mines. Costs incurred before mineralization is classified as proven and probable reserves are expensed and classified as Exploration or Advanced projects, research and development expense. Capitalization of mine development project costs, that meet the definition of an asset, begins once mineralization is classified as proven and probable reserves.

The cost of removing overburden and waste materials to access the ore body at an open-pit mine prior to the production phase are referred to as "pre-stripping costs." Pre-stripping costs are capitalized during the development of an open-pit mine. Where multiple open pits exist at a mining complex utilizing common processing facilities, pre-stripping costs are capitalized at each pit. The removal and production of de minimis saleable materials may occur during development and are recorded as Other income, net of incremental mining and processing costs. See (h) below.

The production phase of an open-pit mine commences when saleable minerals, beyond a de minimis amount, are produced. Stripping costs incurred during the production phase of a mine are variable production costs that are included as a component of inventory to be recognized in Costs applicable to sales in the same period as the revenue from the sale of inventory. The Company's definition of a mine and the mine's production phase may differ from that of other companies in the mining industry resulting in incomparable allocations of stripping costs to deferred mine development and production costs.

~~Mine development costs are presented in the caption of Property, plant and equipment, net.~~

~~F-122~~

~~Notes to the consolidated financial statements~~ ~~(continued)~~

~~(h)~~

~~Stripping activity asset -~~

~~It is probable that the future economic benefit (improved access to the ore body) associated with the stripping activity will flow to the entity;~~

~~The entity can identify the component of the ore body for which access has been improved; and~~

~~The costs relating to the stripping activity associated with that component can be measured reliably.~~

Based on this analysis, the Company allocated the costs associated with improved access as a “stripping activity asset”. This allocation is based on the volume of waste and ore extracted in the period compared to expected volume life-of-mine per component of ore body.

~~(i)~~

~~Impairment of non-financial assets -~~

The carrying amounts of non-financial assets are reviewed for impairment whenever events or changes in circumstances indicate the carrying value may not be recoverable. If there are indicators of impairment, a review is undertaken to determine whether the carrying values are in excess of the recoverable amount. The recoverable amount is determined as the higher of an asset's fair value, less costs of disposal, and its value in use. Such review is undertaken on an asset by asset basis, except where such assets do not generate cash flows independently from other assets, in which case the review is undertaken at the cash generating unit level. The Company identified two separate cash generating units: Yanacocha and Conga.

If the carrying amount of an asset exceeds its recoverable amount, an impairment loss is recorded in the statement of comprehensive income to reflect the asset at the lower amount. In assessing the recoverable amount for assets, the relevant future cash flows expected to arise from the fair value less costs of disposal have been discounted to their present value.

~~F-123~~

~~Notes to the consolidated financial statements~~ ~~(continued)~~

~~An impairment loss is reversed in the statement of comprehensive income if there is a change in estimate used to determine recoverable amount since the prior impairment loss was recognized.~~

~~(j)~~

~~Provisions -~~

~~General -~~

Provisions are recognized when the Company has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation, and the amount has been reliably estimated. If the time value of money is significant, provisions are discounted using pre-tax rates, which reflect, when appropriate, the liabilities' specific risks. The reversal of the discount due to the passage of time originates the increase of the obligation which is recognized with a charge to the statement of comprehensive income as a finance cost.

Provisions are reviewed periodically and are adjusted to reflect the best estimate available as of the date of the consolidation statement of financial position. The expenses related to other provisions are presented in the consolidated statement of comprehensive income.

~~Asset Retirement Obligation -~~

Reclamation obligations are recognized when incurred and recorded as liabilities at the best estimate of the expenditure required to settle the obligation. The liability is accreted over time through periodic charges to earnings. In addition, the asset retirement cost is capitalized as part of the asset's carrying value and amortized over the life of the related asset. Reclamation costs are periodically adjusted to reflect changes in the estimated present value resulting from the passage of time and revisions to the estimates of either the timing or amount of the reclamation costs. The estimated reclamation obligation is based on when spending for an existing disturbance is expected to occur. The Company reviews, on an annual basis, unless otherwise deemed necessary, the reclamation obligation at each mine site.

~~(k)~~

~~Revenue recognition -~~

Revenue from the sale of gold is recognized net of treatment and refining charges, when persuasive evidence of an arrangement exists, the price is determinable, the product has been delivered, risk and title has been transferred to the customer and collection of the sales price is reasonably assured.

Sales contracts for copper, silver and carbon incorporate provisional pricing at the date of delivery of the mineral ore. The final price is an average market price for a particular future period. Revenue from provisionally priced sales of copper, silver and carbon fine is recognized when risks and rewards of ownership are transferred to the customer, generally at the date of delivery, and revenue can be measured reliably. At this date, the amount of revenue to be recognized will be estimated based on the forward market price of the commodity being sold.

~~F-124~~

~~Notes to the consolidated financial statements~~ ~~(continued)~~

~~Revenues from silver and copper sales are credited to Costs applicable to sales as a by-product credit. Royalties paid based on revenue are charged to revenue.~~

~~(l)~~

~~Taxes -~~

~~Current income tax -~~

~~Deferred income tax -~~

The Company's deferred income tax assets include certain future tax benefits. The Company determines valuation allowance to any portion of those deferred income tax assets when it believes, based on the weight of available evidence, it is more likely than not that some portion or all of the deferred income tax asset will not be realized (Note 14).

~~Deferred income tax assets are recognized only to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilized.~~

~~Sales tax -~~

~~Expenses and assets are recognized net of the amount of sales tax, except:~~

~~(i)~~

~~(ii)~~

~~When receivables and payables are stated with the amount of sales tax included.~~

~~F-125~~

~~Notes to the consolidated financial statements(continued)~~

~~The net amount of sales tax recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the consolidated statements of financial position.~~

~~(m)~~

~~Fair value measurement -~~

~~The Company measures its financial instruments, such as, derivatives and embedded derivatives, at fair value as of the date of the consolidated statements of financial position.~~

~~In the principal market for the asset or liability, or~~

~~In the absence of a principal market, in the most advantageous market for the asset or liability.~~

~~Level 1 - Quoted (unadjusted) market prices in active markets for identical assets or liabilities.~~

~~Level 2 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable.~~

~~Level 3 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable.~~

~~Significant judgments, estimates and assumptions~~

~~F-126~~

~~Notes to the consolidated financial statements~~ ~~(continued)~~

~~3.1.~~

~~Judgments~~

~~(a)~~

~~Contingencies -~~

~~(b)~~

~~Development start date -~~

~~(c)~~

~~Production start date -~~

~~Level of capital expenditure incurred compared to the original construction cost estimates.~~

~~Completion of a reasonable period of testing of the mine plant and equipment.~~

~~Ability to produce metal in saleable form (within specifications).~~

~~Ability to sustain ongoing production of metal.~~

When a mine development /construction project moves into the production phase, the capitalization of certain mine development costs ceases and costs are either regarded as forming part of the cost of inventory or expensed, except for costs that qualify for capitalization relating to mining asset additions or improvements. It is also at this point that depreciation or amortization commences.

~~3.2.~~

~~Estimates and assumptions~~

The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are described below. The Company based its assumptions and estimates on parameters available when the consolidated financial statements were prepared. Existing circumstances and assumptions about future developments, however, may change due to market change or circumstances arising beyond the control of the Company. Such changes are reflected in the assumptions when they occur.

~~F-127~~

~~Notes to the consolidated financial statements~~ ~~(continued)~~

~~(a)~~

~~Determination of mineral reserves and resources -~~

The Company calculates its reserves using methods generally applied by mining and industry according to international guidelines. All estimated reserves represent estimated quantities of mineral proven and probable that under current conditions can be economically and legally processed.

The process of estimating quantities of reserves is complex and requires making subjective decisions when evaluating all geological, geophysical, engineering and economic information available. Reviews could occur on reserve estimates due to, among others, revisions to the data or geological assumptions, changes in prices, production costs and results of exploration activities. Changes in estimated reserves could affect the carrying value of mining concessions, development costs and property, plant and equipment, the charges in result for depreciation and amortization, and the carrying amount of the provision for closure of mining units.

~~(b)~~

~~Units of production depreciation -~~

~~Estimated economically recoverable reserves are used in determining the depreciation and/or amortization of mine-specific assets.~~

This results in a depreciation/amortization charge proportional to the depletion of the anticipated remaining life-of-mine production. The life of each item, which is assessed at least annually, has regard to both its physical life limitations and present assessments of economically recoverable reserves of the mine property at which the asset is located. These calculations require the use of estimates and assumptions, including the amount of recoverable reserves. Changes in estimates are accounted for prospectively.

~~(c)~~

~~Mine rehabilitation provision -~~

The Company assesses its mine rehabilitation provision at each reporting date. The ultimate rehabilitation costs are uncertain, and cost estimates can vary in response to many factors, including estimates of the extent and costs of rehabilitation activities, technological changes, regulatory changes, cost increases as compared to the inflation rates, and changes in discount rates. These uncertainties may result in future actual expenditure differing from the amounts currently provided. The provision at reporting date represents Management’s best estimate of the present value of the future rehabilitation costs required.

~~(d)~~

~~Inventories, net -~~

~~F-128~~

~~Notes to the consolidated financial statements(continued)~~

~~(e)~~

~~Impairment of non-financial assets -~~

The Company assesses each asset or cash generating unit in each reporting period to determine whether any indication of impairment exists. Where an indicator of impairment exists, a formal estimate of the recoverable amount is made, which is considered to be the higher of the fair value less costs of disposal and value in use. The assessments require the use of estimates and assumptions such as long-term commodity prices, discount rates and operating costs, among others. These estimates and assumptions are subject to risk and uncertainty.

~~The Company has determined the operations of Yanacocha and Conga as the cash generating units.~~

~~Standards issued but not effective~~

The standards and interpretations that are issued, but not yet effective, up to the date of issuance of the Company’s financial statements that the Company reasonably expects will have an impact on its disclosures, financial position or performance when applied at a future date are disclosed below. The Company intends to adopt these standards, if applicable, when they become effective. Of the other standards and interpretations that are issued, but not yet effective, as these are not expected to impact the Company, they have not listed.

~~IFRS 9 Financial Instruments -~~

In July 2014, the IASB issued the final version of IFRS 9 Financial Instruments that replaces IAS 39 and all previous versions of IFRS 9. IFRS 9 brings together all three aspects of the accounting for financial instruments project: classification and measurement, impairment and hedge accounting. IFRS 9 is effective for annual periods beginning on or after January 1, 2018, with early application permitted. Except for hedge accounting, retrospective application is required, but the provision of comparative information is not compulsory. For hedge accounting, the requirements are generally applied prospectively, with some limited exceptions.

~~F-129~~

~~Notes to the consolidated financial statements(continued)~~

~~IFRS 15 Revenue from Contracts with Customers -~~

In May 2014, IFRS 15 was issued related to revenue from contracts with customers. The new standard provides a five-step approach to be applied to all contracts with customers and also requires expanded disclosures about revenue recognition. The effective date of IFRS is for annual periods, beginning on or after January 1, 2018. Early adoption is permitted.

The Company is currently performing an assessment of the revised standards and impacts on the Company’s Consolidated Financial Statements and disclosures. Management is still in the process of completing their assessment of the impacts; however, based on a preliminary analysis, the Company does not expect it to have a material impact on the Consolidated Financial Statements. Additionally, the Company continues to assess the potential impacts on insurance payments, variable consideration on concentrate sales, and refining fee classification under the new standard. Based on preliminary findings, the Company does not expect these areas to have a significant impact on revenue recognition. The Company expects to have an update to the impacts of the standard in second quarter of 2017.

The Company anticipates adopting the new standard effective January 1, 2018. Either a full retrospective application or a modified retrospective application, with the cumulative effect of initially applying the guidance recognized at the date of initial application, is required. The Company currently anticipates adopting the standard using the modified retrospective approach with the cumulative effect of initially applying the amended guidance recognized at January 1, 2018.

~~IFRS 16 Leases~~

IFRS 16 was issued in January 2016 and it replaces IAS 17 Leases. IFRS 16 sets out the principles for the recognition, measurement, presentation and disclosure of leases and requires lessees to account for all leases under a single on-balance sheet model similar to the accounting for finance leases under IAS 17. The standard includes two recognition exemptions for lessees – leases of ’low-value’ assets (e.g., personal computers) and short-term leases (i.e., leases with a lease term of 12 months or less). IFRS 16 is effective for annual periods beginning on or after 1 January 2019. Early application is permitted, but not before an entity applies IFRS 15.

~~In 2017, the Company plans to assess the potential effect of IFRS 16 on its consolidated financial statements.~~

~~F-130~~

~~Notes to the consolidated financial statements(continued)~~

~~Cash and cash equivalents~~

~~(a)~~

~~This caption is made up as follows:~~

2016 2015
US$(000) US$(000)

Petty cash 45 51
Bank accounts 118,853 142,725
Term deposits (b) 558,626 800,985
677,524 943,761

~~The term deposits balance is made as follows:~~

2016 2015
US$(000) US$(000)

Citi Bank 150,564 620,025
JP Morgan 408,062 180,960
558,626 800,985

~~(b)~~

~~The bank accounts and term deposits yield interest at market rates. Because of the short maturity of these balances, less than 90 days, the carrying amounts approximate their fair value.~~

~~Trade and other receivables, net~~

~~(a)~~

~~This caption is made up as follows:~~

2016 2015
US$(000) US$(000)

Trade receivables, net
Foreign clients 9,965 5,181

Other receivables
Advances to suppliers 18,024 13,052
Tax claims 6,955 5,273
Other minors 6,623 4,079
Related entities, note 21(b) 815 248
32,417 22,652
Allowance for doubtful accounts (b) (1,407 ) (1,444 )
31,010 21,208
Total trade and other receivables, net 40,975 26,389

~~The trade and other receivables have current maturities.~~

~~F-131~~

~~Notes to the consolidated financial statements(continued)~~

~~There are no trade receivables that are due at December 31, 2016 and 2015.~~

~~(b)~~

~~The allowance for doubtful accounts had the following movement during the years 2016, 2015 and 2014:~~

2016 2015 2014
US$(000) US$(000) US$(000)

Opening balance 1,444 1,788 5,934
Additions - 88 812
Deductions (37 ) (432 ) (4,958 )
Ending balance 1,407 1,444 1,788

In Company’s Management opinion, the allowance for doubtful accounts balance is sufficient to adequately cover the risks of failure as of the date of the consolidated statement of financial position.

~~Inventories, net~~

~~(a)~~

~~This caption is made up as follows:~~

2016 2015
US$(000) US$(000)

Precious metals 15,012 404
Leach in-circuit 6,378 5,950
Mill in-circuit 2,493 1,580
Materials and supplies 52,687 54,711
76,570 62,645

Allowance for obsolescence of materials and supplies (b) (5,272 ) (5,881 )
71,298 56,764

~~(b)~~

~~The allowance for obsolescence of material and supplies had the following movement during the years 2016, 2015 and 2014:~~

2016 2015 2014
US$(000) US$(000) US$(000)

Opening balance 5,881 4,832 5,568

Provision for impairment of materials and supplies 3,104 5,060 2,849

Reversal of provision for impairment of materials and supplies (3,713 ) (4,011 ) (3,585 )

Ending balance 5,272 5,881 4,832

~~F-132~~

~~Notes to the consolidated financial statements(continued)~~

~~Stockpiles and ore on leach pads, net~~

~~(a)~~

~~This caption is made up as follows:~~

2016 2015
US$(000) US$(000)

Current portion -
Stockpiles 92,309 91,920
Ore on leach pads 209,471 210,517
Provision for net realizable value adjustment (b) (75,423 ) (64,827 )
226,357 237,610

Non-current portion -
Stockpiles 41,997 95,484
Ore on leach pads 78,843 138,470
Provision for net realizable value adjustment (b) (8,951 ) (25,471 )
111,889 208,483

~~(b)~~

~~The provision for net realizable value adjustment had the following movement during the years 2016, 2015 and 2014:~~

2016 2015 2014
US$(000) US$(000) US$(000)

Opening balance 90,298 163,094 147,342
Provision, note 16 100,179 64,497 95,859
Reversal of provision (106,103 ) (137,293 ) (80,107 )
Ending balance 84,374 90,298 163,094

~~Available-for-sale financial assets~~

In November 2008, the Company funded the San Jose Reservoir Trust for US$13 million to ensure the continuity of the Company's operations in the San Jose Reservoir after 2018. Such trust is irrevocable and is a separate legal entity of the Company. The grantor is the Company, the trustee is the Banco de Credito del Peru and the beneficiary is the Company; therefore, the Company consolidates the trust. As of December 31, 2016, the trust total balance is US$16,454,000 and is presented as Available-for-sale financial assets (trust total balance of US$15,803,000 as of December 31, 2015).

During 2016, these investments, denominated in U.S. dollars, accrued profits net of taxes of US$651,000 (losses of US$757,000 and profits of US$65,000 in 2015 and 2014, respectively) which are included in other comprehensive income (loss).

~~F-133~~

~~Notes to the consolidated financial statements(continued)~~

~~10.~~

~~Property, plant and equipment, net~~

~~(a)~~

~~Below is presented the movement in cost:~~

Opening
balance Additions Sales and disposals Transfer/Other
changes Impairment
loss Final
balances
US$(000) US$(000) US$(000) US$(000) US$(000) US$(000)

Year 2016
Cost-
Land 15,296 - - 201 (12,257 ) 3,240
Land improvements 22,730 - - - (17,978 ) 4,752
Building and constructions 674,480 - (26,410 ) 26,396 (153,555 ) 520,911
Machinery and equipment 322,690 - (122,618 ) 21,360 (45,468 ) 175,964
Leach pads 571,388 - - 16,781 (106,747 ) 481,422
Vehicles 8,124 - (6,402 ) - (6 ) 1,716
Furniture and fixtures 2,031 - - - - 2,031
Other equipment 68,983 353 - 217 (3,631 ) 65,922
Work in progress 600,355 78,609 - (70,282 ) - 608,682
Mining rights 33,800 - (3,313 ) - (10,985 ) 19,502
Asset retirement and mine closure 256,337 351,798 - - (370,550 ) 237,585
Stripping activity asset 176,517 26,148 - - (32,631 ) 170,034
Mine development 485,932 - - 5,079 (118,421 ) 372,590
3,238,663 456,908 (158,743 ) (248 ) (872,229 ) 2,664,351

Accumulated depreciation and amortization
Land improvements 10,478 - - (511 ) - 9,967
Building and constructions 383,710 61,530 (22,705 ) - - 422,535
Machinery and equipment 213,062 22,694 (112,175 ) - - 123,581
Leach pads 545,921 12,501 - - - 558,422
Vehicles 7,775 2,735 (6,352 ) - - 4,158
Furniture and fixtures 2,002 9 - - - 2,011
Other equipment 57,470 1,425 - - - 58,895
Mining rights 19,744 - - - - 19,744
Asset retirement and mine closure 169,237 18,768 - - - 188,005
Stripping activity asset 138,178 3,992 - - - 142,170
Mine development 326,476 8,745 - 511 - 335,732
1,874,053 132,399 (141,232 ) - - 1,865,220
Net cost 1,364,610 799,131

~~F-134~~

~~Notes to the consolidated financial statements(continued)~~

Opening
balance Additions Sales and disposals Transfer/Other
changes Final
balances
US$(000) US$(000) US$(000) US$(000) US$(000)

Year 2015
Cost-
Land 15,335 - (272 ) 233 15,296
Land improvements 22,730 - - - 22,730
Building and constructions 622,928 - (304 ) 51,856 674,480
Machinery and equipment 322,441 - (25,211 ) 25,460 322,690
Leach pads 571,388 - - - 571,388
Vehicles 9,278 - (1,186 ) 32 8,124
Furniture and fixtures 2,031 - - - 2,031
Other equipment 64,137 225 (58 ) 4,679 68,983
Work in progress 593,906 99,336 - (92,887 ) 600,355
Mining rights 33,800 - - - 33,800
Asset retirement and mine closure 245,903 10,434 - - 256,337
Stripping activity asset 157,649 18,868 - - 176,517
Mine development 475,441 - - 10,491 485,932
3,136,967 128,863 (27,031 ) (136 ) 3,238,663

Accumulated depreciation and amortization
Land improvements 15,812 - - (5,334 ) 10,478
Building and constructions 310,906 72,899 (95 ) - 383,710
Machinery and equipment 213,795 20,999 (21,732 ) - 213,062
Leach pads 519,142 26,779 - - 545,921
Vehicles 8,086 800 (1,111 ) - 7,775
Furniture and fixtures 1,991 11 - - 2,002
Other equipment 55,928 1,600 (58 ) - 57,470
Mining rights 19,744 - - - 19,744
Asset retirement and mine closure 121,102 48,135 - - 169,237
Stripping activity asset 138,178 - - - 138,178
Mine development 276,954 44,188 - 5,334 326,476
1,681,638 215,411 (22,996 ) - 1,874,053
Net cost 1,455,329 1,364,610

~~Additions to work in progress in 2016 are primarily related to the Water treatment project and Yanacocha Laybacks Checkpoint 2A and Asset Componetization project.~~

~~The depreciation and amortization expense for the year ended December 31, 2016 was recorded as Cost applicable to sales in the statement of comprehensive income.~~

~~F-135~~

~~Notes to the consolidated financial statements(continued)~~

~~(b)~~

~~Impairment of long-lived assets~~

In accordance with its accounting policies and processes, each asset or Cash Generating Unit “CGU” is evaluated annually at year end, to determine whether there are any indications of impairment. If any such indications of impairment exist, a formal estimate of the recoverable amount is performed. The Company has two CGU: Yanacocha mine and Conga project.

In assessing whether impairment is required, the carrying value of the asset or CGU is compared with its recoverable amount. The recoverable amount is the higher of the CGU’s fair value less costs of disposal (FVLCD) and value in use (VIU). Given the nature of the Company’s activities, information on the fair value of an asset is usually difficult to obtain unless negotiations with potential purchasers or similar transactions are taking place. Consequently, the recoverable amount for each CGU is estimated based on estimated discounted future estimated cash flows expected to be generated from the continued use of the CGUs using market based commodity price and exchange assumptions, estimated quantities of recoverable minerals, production levels, operating costs and capital requirements, and its eventual disposal, based on the latest life of mine (LOM) plans. These cash flows are discounted using a real pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the CGU.

Estimates include quantities of recoverable minerals, production levels, operating costs and capital requirements and sourced from out planning process, including the LOM plans, one-year budgets and CGU-specific studies.

As a result of the recoverable amount analysis performed during the year, the Company recorded an impairment loss related to Yanacocha mine of US$889.5 million (US$872.2 million and US$17.3 million related to property, plant and equipment and intangible assets, respectively). In 2015, Company did not recognize impairment loss.~~In 2014, the Company recorded an impairment loss amounting to US$541.1 million related to Conga project, and no loss was recorded for Yanacocha mine.~~

~~Key assumptions used for the impairment testing as of December 31, 2016:~~

~~The determination of value in use is most sensitive to the following key assumptions:~~

~~Production volumes~~

~~Commodity prices~~

~~Discount rate~~

Production volumes: Estimated production volumes are based on detailed life-of-mine plans and take into account development plans for the mines agreed by management as part of planning process. Production volumes are dependent on a number of variables, such as: the recoverable quantities; the production profile; the cost of the development of the infrastructure necessary to extract the reserves; the production costs;recovering the contractual ~~duration of mining rights; and the selling price of the commodities extracted.~~

~~F-136~~

~~Notes to the consolidated financial statements(continued)~~

As each producing mining unit has specific reserve characteristics and economic circumstances, the cash flows of the mines are computed using appropriate individual economic models and key assumptions established by management. The production profiles used were consistent with the reserves and resource volumes approved as part of the Company’s process for the estimation of proved and probable reserves and resource estimates.

Commodity prices: Forecasted commodity prices are based on management’s estimates and are derived from forward price curves and long-term views of global supply and demand, building on past experience of the industry and consistent with external sources. These prices were adjusted to arrive at appropriate consistent price assumptions for the different qualities and type of commodities, or, where appropriate, contracted prices were applied. These prices are reviewed at least annually.

~~Estimated prices for the current and long-term periods that have been used to estimate future revenues are as follows:~~

Current Long-term
US$ US$

Gold (per ounce) 1,221 1,300

~~Discount rate: In calculating the value in use, a pre-tax discount rate of 7.1% was applied to the pre-tax~~ cash flows. ~~This discount rate is derived from the Company’s post-tax weighted average cost of capital (WACC), with appropriate adjustments made to reflect the risks specific to the CGU.~~

~~11.~~

~~Trade and other payables~~

~~(a)~~

~~This caption is made up as follows:~~

2016 2015
US$(000) US$(000)

Trade payables (b)
Domestic suppliers 44,634 56,447
Related entities, note 21(b) 9,052 10,972
53,686 67,419

Other payables
Remuneration and similar benefits payable 8,516 8,981
Royalties payable to the Peruvian State 1,098 1,541
Taxes payable 3,174 489
12,788 11,011
66,474 78,430

~~F-137~~

~~Notes to the consolidated financial statements(continued)~~

~~(b)~~

Trade payables arise mainly from the acquisition of materials, supplies and spare parts and services provided by third parties. These obligations, have current maturities, accrue no interest, are not secured and are mostly denominated in U.S. dollars.

~~12.~~

~~Provisions~~

~~(a)~~

~~This caption is made up as follows:~~

2016 2015
US$(000) US$(000)

Provision for closure of mining units and exploration projects (b) 1,012,888 578,959
Provision of social responsability 24,335 29,083
Workers’ profit sharing payable (c) 13,005 19,526
Accrual of operating costs 19,650 13,319
Other provisions 23,809 4,942
1,093,687 645,829

Classification by maturity:
Current portion 68,662 41,781
Non-current portion 1,025,025 604,048
1,093,687 645,829

~~(b)~~

~~Provision for closure of mining units and explorations projects~~

The liability for reclamation or the Asset retirement obligation (“ARO”) comprises activities carried out by the Company in the restoration of mines and adjacent areas in the completion stage of the gold extraction process. Such activities include the restoration of mining locations, water treatment plant operations, as well as reforestation and land treatments.

~~F-138~~

~~Notes to the consolidated financial statements(continued)~~

~~The movement of the ARO for 2016, 2015 and 2014 is broken down as follows:~~

2016 2015 2014
US$(000) US$(000) US$(000)

Opening balance 578,959 557,457 460,127
Additional provisions 430,292 10,434 84,835
Payments (10,467 ) (11,007 ) (10,419 )
Unwinding of discount, note 19 14,104 22,075 22,914
Final balance 1,012,888 578,959 557,457

Classification by maturity
Current portion 15,636 6,698 15,112
Non-current portion 997,252 572,261 542,345
1,012,888 578,959 557,457

The Company is conducting a comprehensive study of the current Yanacocha long-term mining and closure plans as part of the requirement to submit an updated closure plan to Peruvian regulators every five years. The revised closure plan will be submitted to Peruvian regulators in the second half of 2017. The revised closure plan may require the Company to provide additional reclamation bonding for Yanacocha.

On December 7, 2016, the Company presented its current assessment of the Yanacocha closure plan to the Board of Directors after completing its review of preliminary changes to Yanacocha closure plan based on revised long-term mining plans, the study work completed to date and in connection with the Company’s annual process to evaluate and update all asset retirement obligations. As a result, the Company recorded an increase to the reclamation obligation at Yanacocha of US$430 million. The increase to the reclamation obligation resulted in an increase to the recorded asset retirement cost asset of US$352 million related to the producing portions of the mine (note 10) and a non-cash charge to reclamation expense for the year ended December 31, 2016 of US$78 million related to the areas of Yanacocha’s operations no longer in production. The increase to the reclamation obligation is primarily due to higher estimated long-term water management costs, heap leach earthworks and related support activities.

The Company determined that an impairment indicator existed as a result of the updated long-term mining and closure plans and the related increases in estimated future closure costs that resulted in the increase to the asset retirement cost asset. As much, Yanacocha’s long-lived assets were tested for recoverability and an assessment of impairment was performed, which resulted in a non-cash impairment charge of US$889 million. See note 10 for further information regarding the impairment of long-lived assets recorded for Yanacocha as of December 31, 2016.

~~F-139~~

~~Notes to the consolidated financial statements(continued)~~

~~(c)~~

~~Workers' profit sharing~~

~~13.~~

~~Partners’ equity, net~~

~~(a)~~

~~Partners’ contributions -~~

~~Partners’ contributions comprise1,278,451,304 common partnership interests at par value of one Peruvian Sol each, fully subscribed and paid-in. Such partnership interest includes 720,407,310 shares that are owned by foreign investors.~~

~~Under current Peruvian regulations, there is no restriction on the remittance of dividends or repatriation of foreign investment, except as discussed in sections below.~~

~~(b)~~

~~Retained earnings -~~

~~Distribution of earnings to Partners other than legal entities domiciled in Peru is subject to a withholding income tax charged to the partners.~~

Until December 31, 2016, by Law N° 30296 published on December 31, 2014, for individuals and non-resident legal entities, the applicable tax rate was 6.8% for dividend distributions in cash or non-monetary assets for fiscal year 2016. Pursuant to Legislative Decree N° 1261, published on December 10, 2016 and effective as of January 1, 2017, the applicable tax rate to the distribution of cash dividends and non-monetary assets for the year 2017 onwards will be 5%.

~~(c)~~

~~Dividends declared and paid -~~

On February 15, 2016, the board of Directors unanimously agreed to distribute dividends in the amount of US$300 million, in proportion to its shareholding, which corresponds to a portion of the accumulated results as of December 31, 2014, which have been generated in 2011.

~~14.~~

~~Tax Situation~~

~~(a)~~

~~Tax stabilization agreements~~

~~The Company has entered into the following tax stability agreements, each with a term of 15 years:~~

~~Mine~~	~~Effective~~	~~Date of the Tax~~ ~~Agreement~~	~~Tax Regimes in Force~~

~~Cerro Yanacocha~~	~~January 1, 2000~~	~~September 16, 1998~~	~~May 22, 1997~~
~~La Quinua~~	~~January 1, 2004~~	~~August 25, 2003~~	~~August 25, 2003~~

~~F-140~~

~~Notes to the consolidated financial statements(continued)~~

~~The Cerro Yanacocha tax stabilization agreement expired on January 1, 2015 and is no longer in effect.~~

~~The agreement for La Quinua guarantees the Company's use of the tax regime shown in the table above and permits maintenance of its accounting records in U.S. dollars for tax purposes.~~

The Company determines taxable income based on its understanding and that of its legal advisors, of applicable tax legislation. Taxable income differs from pre-tax income disclosed within these financial statements by those items that the applicable tax legislation deems to be non-taxable or non-deductible.

The income tax rate at December 31, 2016 and 2015 is 28% on taxable income, after deducting the employee's share that is calculated at a rate of 8 percent on taxable income, except for the rate applied in La Quinua which was 29%.

On December 31, 2014, the Peruvian Government enacted modifications to Income Tax regulations, applicable beginning in 2015. Among the modifications, a progressive income tax rate reduction was approved as follows: 28% for fiscal years 2015 and 2016; 27% for fiscal years 2017 and 2018; and 26% from 2019, onward.

~~Pursuant to Legislative Decree N° 1261, published on December 10, 2016 and effective as of January 1, 2017, the applicable tax rate on the taxable income will be 29.5 percent.~~

~~(b)~~

~~Other mining taxes~~

~~(i)~~

~~Law N°29788, Mining Royalties~~

On 28 September 2011, the Peruvian Government enacted new legislation to comprise a new mining tax payable to the Peruvian Government for extracting metallic and non-metallic mineral resources from its mining concessions.

Pursuant to this legislation, the mining royalty is payable quarterly based on sales and operating profit determined in accordance with IFRS. The royalty amount due is 1% of revenue. An additional mining tax due is calculated based on the level of operating profit up to a maximum applicable rate of 12%. This component of the new mining tax only applies to those projects that are not covered by a tax stabilization agreement. During 2016, 2015 and 2014, the amounts included in cost of production related to mining royalties were US$3,742,000, US$8,291,000 and US$7,247,000, respectively and during 2016 and 2015 there were no amounts included in mining tax expense, in 2014 the amount included in mining tax expense was US$1,714,000.

~~(ii)~~

~~Law N°29789, Special Mining Tax~~

~~F-141~~

~~Notes to the consolidated financial statements(continued)~~

The rate varies depending on the level of operating profit. During 2016, 2015 and 2014 the amounts included in income and mining tax expense were US$3,259,000, US$1,838,000 and US$5,479,000, respectively.

~~(iii)~~

~~Law N°29790, Special Mining Burden~~

The Special Mining Burden ("GEM") applies to mines covered by a tax stabilization agreement. The GEM is payable on a quarterly basis with rates ranging from 4% to 13.12% of operating profit, determined in accordance with IFRS. The rate varies depending on the level of operating profit margin. The GEM applied to operations at Cerro Yanacocha and La Quinua in 2016, 2015 and 2014. This resulted in US$6,945,000, US$19,883,000 and US$7,156,000, respectively, of additional Income and mining tax expense.

~~(iv)~~

~~Law N°29471, Supplementary Fund~~

~~Employers will contribute 0.5% of the annual income before taxes.~~

~~Employees will contribute 0.5% of their monthly gross salary.~~

~~The employer's contributions are paid before tax; therefore these amounts are deductible expenses for the year.~~

The new pension fund tax is calculated based on annual income and is payable quarterly. During 2016 and 2015, the amounts included in Income and mining tax expense amounted to US$141,870 and US$459,000, respectively.

~~(c)~~

~~Peruvian income tax~~

~~The Company's income tax provision consisted of the following:~~

2016 2015 2014
US$(000) US$(000) US$(000)

Current Peruvian tax returns 41,105 98,319 123,007
Royalties and mining taxes 10,249 21,721 14,349
Other taxes 323 639 914
Income tax prior year adjustments (2,092 ) (1,766 ) -
Income tax prior years refunds (6,458 ) - -
Current income tax expense 43,127 118,913 138,270
Deferred income tax expense (benefit) - 483,804 (168,761 )
Income tax expense (benefit) 43,127 602,717 (30,491 )

~~F-142~~

~~Notes to the consolidated financial statements(continued)~~

~~(d)~~

~~Deferred income tax asset~~

~~Components of deferred income tax assets (liabilities) are as follows:~~

2016 2015
US$(000) US$(000)

Deferred income tax assets, net
Property, plant and mine development 608,783 303,385
Reclamation 160,261 110,633
Accounts payable and accrued expenses 64,703 66,261
Inventories 60,018 24,887
Other 3,077 4,838
896,842 510,004
Allowance of deferred income tax asset (896,842 ) (510,004 )
Net deferred income tax asset - -

In December 2016, the Company recorded a valuation allowance on its deferred income tax asset of US$386 million (US$510 million during 2015) to the extent that it is not probable that taxable profit will be available against which the deductible temporary differences can be utilized.

~~(e)~~

~~Reconciliation of income tax expense (benefit) –~~

~~Below is a reconciliation of tax expense and the accounts profit multiplied by the statutory tax rate for the years 2016, 2015 and 2014:~~

2016 2015 2014
US$(000) US$(000) US$(000)

Income (loss) before income tax (1,000,625 ) 152,522 (430,829 )
Peruvian statutory tax rate 28 % 28 % 30 %
Income tax expense (income) (280,175 ) 42,706 (129,249 )
Valuation allowance on deferred tax asset 403,763 510,004 -
Effect of change in income tax rate (83,667 ) 16,576 65,020
Mining taxes 7,392 15,639 10,044
Non-deductible expenses 3,296 15,288 24,832
Adjustment due to income tax rate applicable to la Quinua (1,024 ) 2,504 (1,138 )
Income tax prior years refunds (6,458 ) - -
Total income tax expense (benefit) 43,127 602,717 (30,491 )

~~F-143~~

~~Notes to the consolidated financial statements(continued)~~

~~15.~~

~~Revenue from sales~~

~~The Company’s revenues are mainly from sales of gold ounces. The table below presents the net sales to customers by geographic region:~~

2016 2015 2014
US$(000) US$(000) US$(000)

Sales and services by geographic region:
Metal sales
Suiza 558,723 754,335 851,577
America 233,043 315,686 358,880
791,766 1,070,021 1,210,457

Royalties, note 1(a) and 21 (24,339 ) (32,414 ) (36,867 )
Mining royalties to the government (6,234 ) (6,433 ) (8,291 )
761,193 1,031,174 1,165,299

~~16.~~

~~Costs applicable to sales~~

~~This caption is made up as follows:~~

2016 2015 2014
US$(000) US$(000) US$(000)

Beginning balance of finished goods and in-process 544,325 660,763 669,938
Beginning balance of provision for net realizable value, note 8(b) (90,298 ) (163,094 ) (147,342 )
Consumption of supplies 228,376 210,384 246,106
Personnel expenses 87,258 102,867 87,290
Other services 73,779 76,490 82,805
Maintenance 36,213 38,646 38,526
Power 27,270 27,713 24,942
Depreciation and amortization 140,712 223,142 360,334
Workers' profit participation 12,394 28,852 35,055
Reclamation expenses related to leach pads, note 12(b) 78,494 - 20,315
Ending balance of provision for net realizable value, note 8(b) 84,374 90,298 163,094
Ending balance of finished goods and in-process (446,503 ) (544,325 ) (660,763 )
776,394 751,736 920,300

~~F-144~~

~~Notes to the consolidated financial statements(continued)~~

~~17.~~

~~Operating expenses, net~~

~~This caption is made up as follows:~~

2016 2015 2014
US$(000) US$(000) US$(000)

Exploration and advanced projects 49,580 64,230 58,880
Severance program 9,659 14,904 16,438
Write-off of fixed assets 14,036 2,411 3,520
Cost of fixed assets sold 160 1,624 39,425
Income from fixed asset sales (471 ) (1,116 ) (40,651 )
Others, net (1,468 ) 793 169
71,496 82,846 77,781

~~18.~~

~~Administrative expenses~~

~~This caption is made up as follows:~~

2016 2015 2014
US$(000) US$(000) US$(000)

Management expenses 7,191 18,108 19,938
Community development expenses and external affairs - 6,297 15,653
Other 1,589 1,920 2,671
8,780 26,325 38,262

~~19.~~

~~Finance costs~~

Financial costs for the years ended December 31, 2016, 2015 and 2014 are mainly related to the unwinding of the discount of the reclamation and mine closure liability amounting to US$14,104,000, US$22,075,000 and US$22,914,000, respectively. See note 12(b).

~~20.~~

~~Commitments and contingencies~~

~~Unitization of properties -~~

~~In December 2000, as a result of the unitization plan carried out by the Partners, the Company signed several asset transfer and mining lease agreements with related entities. The main conditions are:~~

The Company must pay to S.M.R.L. Coshuro (“Coshuro”) and Buenaventura, 3% of the quarterly net sales, according to the transfer agreement. The mining rights subject to this 3% royalty are those identified in the transfer agreement, and are located out of the “Area of Influence of Chaupiloma” and within the “Area of Influence of the Joint Venture”. These mining rights are currently under exploration.

~~F-145~~

~~Notes to the consolidated financial statements(continued)~~

~~Legal proceedings -~~

~~Mercury spill in Choropampa -~~

In June 2000, a transport contractor of Yanacocha spilled approximately 151 kilograms of elemental mercury near the town of Choropampa, Peru, which is located 53 miles (85 kilometers) southwest of the Yanacocha mine. Elemental mercury is not used in Yanacocha’s operations but is a by-product of gold mining and was sold to a Lima firm for use in medical instruments and industrial applications. A comprehensive health and environmental remediation program was undertaken by Yanacocha in response to the incident. In August 2000, Yanacocha paid under protest a fine of 1,740,000 Peruvian soles (approximately US$0.5 million) to Peruvian government. Yanacocha has entered into settlement agreements with a number of individuals impacted by incident. As compensation for the disruption and inconvenience caused by the incident, Yanacocha entered into agreements with and provided a variety of public works in the three communities impacted by this incident. Yanacocha cannot predict the likelihood of additional expenditures related to this matter.

Additional lawsuits relating to the Choropampa incident were filed against Yanacocha in the local courts of Cajamarca, Peru, in May 2002 by over 900 Peruvian citizens. A significant number of the plaintiffs in these lawsuits entered into settlement agreements with Yanacocha prior to filing such claims. In April 2008, the Peruvian Supreme Court upheld the validity of these settlement agreements, which the Company expects to result in the dismissal of all claims brought by previously settled plaintiffs. Yanacocha also entered into settlement agreements with approximately 350 additional plaintiffs. The claims asserted by approximately 200 plaintiffs remain. In 2011, Yanacocha was served with 23 complaints alleging grounds to nullify the settlements entered into between Yanacocha and the plaintiffs. Yanacocha has answered the complaints and the court has dismissed several of the matters and the plaintiffs have filled appeals. All appeals were referred to the Civil Court of Cajamarca, which affirmed the decisions of the lower court judge. The plaintiffs have filed appeals of such orders before the Supreme Court. Some of these appeals were dismissed by the Supreme Court in favor of Yanacocha and others are pending resolution. Yanacocha will continue to vigorously defend its position. Yanacocha can not reasonably estimate the ultimate loss relating to such claims.

~~Action for Constitutional Relief against Conga Project Exploitation -~~

On October 18, 2012, Marco Antonio Arana Zegarra ("Marco Arana") filed a constitutional claim against the Ministry of Energy and Mines and Yanacocha requesting the Court to order to cease any threats of violation to life in an adequate and balanced environment; so that Court declared the suspension of the exploitation of the Conga Project and avoid Directorial Resolution No.351-2010-MEM/AM dated on October 27, 2010 that approved the Conga Environmental Impact Assessment.

~~F-146~~

~~Notes to the consolidated financial statements(continued)~~

By Court resolution No.1 dated October 23, 2012, the action was dismissed. On November 5, 2012, resolution No.1 was appealed by plaintiff and the hearing at Superior Court was held on March 4, 2013. The Cajamarca Superior Court confirmed the ruling of the judge that dismissed the claim.

On May 23, 2013, Marco Arana filed for a Constitutional remedy against the Cajamarca Superior Court decision and on June 3, 2013, the Cajamarca Superior Court accepted the Constitutional remedy filed by Marco Arana and the file has been sent to the Constitutional Court. On September 25, 2013, the Constitutional Court heard oral arguments from the parties and we are waiting their decision. To date the case maintains the same status.

~~On March 13~~^th, 2015, the Constitutional Court issued a resolution declaring the nullity of all judicial proceedings carried out after the first resolution issued in this case by the first instance judge. The Constitutional Court determined that the claim should be admitted, which means that the validity of the EIA should be reviewed in the judicial process by the first instance judge. Yanacocha was notified of the claim and answered the claim and presented motions to dismiss the claim on November 2015. We are waiting for the first instance judge to declare if he accepts the motions to dismiss or continues with the court case.

~~A similar claim has been filed against the Conga EIA by Mr. Carlos Raul Rodriguez Ramirez. Its status is the same as the claim filed by Marco Arana.~~

~~Environmental -~~

The Peruvian government agency responsibility agency responsible for environmental evaluation and inspection, Organismo Evaluacion y Fiscalizacion Ambiental (“OEFA”), conducts periodic reviews of the Yanacocha site. In 2011, 2012, 2013, 2015, 2016 and January 2017, OEFA issued notices of alleged violations of OEFA standards to Yanacocha relating to past inspections. OEFA has resolved with minimal or no findings. In 2015 and 2016, the water authority of Cajamarca issued notices of alleged regulatory violations, and resolved some allegations in early 2017 with no findings. The experience with OEFA and the water authority is that in the case of a finding of violation, remedial action is often the outcome rather than a significant fine. The alleged OEFA violations currently range from zero to 101,730 tax units and the water authority alleged violations range from zero to 40,000 tax units, being each tax unit equivalent to approximately US$1,200 based on current exchange rates. Yanacocha is responding to all notices of alleged violations, but cannot reasonably predict the outcome of the agency allegations.

~~F-147~~

~~Notes to the consolidated financial statements(continued)~~

~~Letters of Guarantee -~~

The Company has signed Letters of Guarantee with various financial institutions in accordance with the Mine Closure Regulation approved by Supreme Decree No.033-2005 of the Ministry of Energy and Mines. The table below sets out the outstanding signed commitments at year ends by financial institution. In general, these letters of guarantee are renewed annually.

2016 2015
US$(000) US$(000)

Banco de Credito del Peru (a) 188,000 156,000
BBVA Continental 120,000 100,000
Scotiabank 120,000 100,000
428,000 356,000

~~(a)~~

~~Letters of guarantee of Banco de Credito del Peru include US$7,626,000 and US$6,222,000 related to San Jose Reservoir Trust in 2016 and 2015, respectively.~~

~~These three letters of guarantee shall come into force if the Company fails to execute in whole or in part the mine closure plan.~~

~~Open tax procedures -~~

The Tax Authority has the right to examine, and, if necessary, amend the Company’s income tax provision for the last four years. The Company’s income tax filings for the years 2012 through 2016 are open to examination by the tax authorities. For value added tax, the periods open for examination are the years 2013 through 2016. To date, the Tax Authority has concluded its review of the Company’s tax exams through the year 2011. For years 2002 through 2009, the Company is in the claim and appeal process. The tax authority is auditing the value added tax from July 2015 to June 2016.

In Management’s and legal advisors’ opinion, there are sound legal grounds to sustain the Company’s tax positions; as a result, Management expects to obtain favorable results on these processes and any additional tax assessment would not be significant to the consolidated financial statements.

~~F-148~~

~~Notes to the consolidated financial statements(continued)~~

~~Tax contingencies -~~

~~Withholding income tax for fiscal years 2002 and 2003 -~~

The Tax Administration challenged the withholding tax rate applied on the technical assistance services provided by a non-resident supplier. The services were executed in Peru and also abroad; however, the Company was not able to prove that during the tax audit. Based on that, the Tax Administration considers that the services were wholly executed in Peru; therefore, the withholding tax rate should be 30% instead of 12%. The amount of the contingency involved is S/16.6 million (US$4.9 million). In Management's and its legal counsel’s opinion, that consideration has no support and the Company should obtain a favorable outcome in the appeal initiated against the tax authorities.

~~Health Contributions - ESSALUD -~~

The Tax Administration considers that the bonus for closing the collective agreement and the collateral benefits granted to the unionized and non-unionized employees qualify as remunerative concepts; hence, taxed with the contribution to ESSALUD. The contingency amounts to S/10.6 million (US$3.2 million) for 2011 and 2012.~~In Management's and its legal counsel’s opinion, that interpretation has no support and the Company should obtain a favorable outcome in the appeal initiated against the tax authorities.~~

~~21.~~

~~Transactions with related parties~~

~~(a)~~

~~The main transactions carried out by the Company with its related parties in the years 2016, 2015 and 2014 were:~~

2016 2015 2014
US$(000) US$(000) US$(000)

Royalties paid:
S.M.R.L. Chaupiloma Dos de Cajamarca, note 15 and 1(a) 24,339 32,414 36,867

Services rendered by:
Newmont Peru S.R.L. (management services) 10,420 24,644 35,974
Newmont USA Limited 6,438 9,076 6,192

~~(b)~~

~~As a result of the transactions indicated in the paragraph (a), the Company had the following accounts receivable and payable from/to associates:~~

2016 2015
US$(000) US$(000)

Balance receivable from related parties, note 6
Newmont USA Limited 389 80
Suriname Gold Company LLC. 281 -
Newmont Technologies Limited 120 23
Newmont Peru S.R.L. 15 68
Newmont Mining Services Pty Ltd. - 77
Others 10 -
815 248
Balance payable for related parties, note 11
S.M.R Chaupiloma Dos de Cajamarca 5,846 7,214
Newmont USA Limited 1,403 1,769
Newmont Technologies Limited 1,007 715
Newmont Peru S.R.L. 742 1,183
Newmont International Service Limited 26 77
Others 28 14
9,052 10,972

~~F-149~~

~~Notes to the consolidated financial statements(continued)~~

~~AII the balances above are of current maturity, have no specific guarantees and are not interest bearing.~~

~~22.~~

~~Financial - risk management objectives and policies~~

The Company's operations are exposed to certain financial risks: some market risks (foreign exchange risk, interest rate risk and price risk), credit risk and liquidity risk. The Company's overall risk management program focuses on the unpredictability of financial markets and seeks to minimize potential adverse effects on the Company's financial performance. The most important aspects in risk management are the following:

~~(a)~~

~~Market risks -~~

~~(i)~~

~~Foreign exchange risk -~~

~~(ii)~~

~~Interest rate risk -~~

~~(iii)~~

~~Price risk-~~

~~F-150~~

~~Notes to the consolidated financial statements(continued)~~

~~(b)~~

~~Credit risk-~~

Credit risk is managed on a group basis by Newmont according to its policies. Financial instruments exposed to credit risk are cash and cash equivalents, investments in debt and equity instruments, trade accounts receivable and other accounts receivable. For banks and financial institutions, only independently rated parties with a minimum "A" rating are accepted. Regarding trade accounts receivable, according to the practice in the latest years, collections have generally been at full. A credit review of the portfolio is performed quarterly to determine any deterioration in credit quality. The Company does not foresee any significant losses that may arise from this risk.

~~(c)~~

~~Liquidity risk-~~

2016 2015
Less than 1 year Less than 1 year
US$(000) US$(000)

Trade accounts payable 44,634 56,447
Accounts payable to related parties 9,052 10,972
Remuneration and similar benefits payable 8,516 8,981
62,202 76,400

~~(d)~~

~~Capital risk management -~~

~~In order to maintain or adjust the capital structure, the Company may adjust the amount of dividends paid to its partners. No formal dividend policy exists.~~

~~(e)~~

~~Fair value estimation -~~

Fair value accounting establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements).

~~F-151~~

~~Notes to the consolidated financial statements(continued)~~

~~23.~~

~~Summary of significant differences between accounting principlesfollowed by the Company and U.S. Generally Accepted Accounting Principles~~

The Company's financial statements have been prepared in accordance with International Financial Reporting Standards which differs in certain respects from U.S. GAAP. The effects of these differences are reflected in note 24 and are principally related to the items discussed in the following paragraphs:

~~(a)~~

~~Impairment -~~

In 2016, the Company recognize an impairment loss related to Yanacocha of US$889 million. In 2015, the Company did not recognize impairment loss. In 2014, the Company recorded impairment losses amounting to US$541 million related to Conga, and no amount for Yanacocha.

Under US GAAP, the Company uses undiscounted cash flows to perform an impairment evaluation (step 1) an if there is an indicator uses discounted cash flows to determinate the impairment loss (step 2). In 2016, the Company recognized an impairment loss related to Yanacocha of US$933 million. No impairment losses were determined for Yanacocha and Conga cash-generating units in 2015.

~~For reconciling the net income/loss and net equity from US GAAP to IFRS, the Company eliminates the higher depreciation recorded under US GAAP corresponding to the impaired assets under IFRS.~~

~~(b)~~

~~Deferred workers’ profit participation~~

~~Under IFRS, the workers’ profit participation is recorded as an employee benefit that is recorded as cost of production or administrative expense, depending of the function of the workers.~~

Under US GAAP, the workers’ profit sharing is treated in a similar way as income tax since both are calculated based on the Company’s taxable income. Therefore, the Company calculates a deferred workers’ profit participation resulting from the taxable and deductible temporary differences.

For reconciling the net income/loss and net equity from US GAAP to IFRS, the Company eliminates the deferred workers’ profit participation and its corresponding valuation allowance recorded in the current year.

~~(c)~~

~~Stripping activity asset -~~

~~Under IFRS, the stripping costs in the production phase of a surface mine are accounted for according to the accounting principles disclosed in note 2.~~

~~F-152~~

~~Notes to the consolidated financial statements(continued)~~

~~Under U.S. GAAP, the costs of clearing removal (stripping cost of production) incurred during the production stage are recorded as part of the production cost of inventories.~~

~~(d)~~

~~Reclamation and mine closure –~~

Under IFRS, the liability was measured in accordance with IAS 37 and IFRIC 1. Upward and downward revisions in the amount of undiscounted estimated cash flows are discounted using the current market-based discount rate (this includes changes in the time value of money and the risks specific to the liability), see note 2.4 (j).

~~(e)~~

~~Inventories -~~

~~Under IFRS, the cost of inventory mainly includes less depreciation as a result of the reduced base of property, plant and equipment due to the impairment recorded in prior years.~~

~~Under US GAAP, the cost of inventory considers a higher depreciation since the items of property, plant and equipment have not been impaired.~~

~~(f)~~

~~Deferred income tax –~~

The differences between US GAAP and IFRS are re-measurements that lead to different temporary differences. According to the accounting policies in Note 2.4 (l), the Company has to account for such differences.

During 2015, the Company recorded a valuation allowance of the deferred income tax asset recorded under IFRS which was higher by US$321.6 million compared to the valuation allowance recorded under US GAAP, mainly as a result of the impairment losses of prior years recorded under IFRS.

~~F-153~~

~~Notes to the consolidated financial statements(continued)~~

~~24.~~

~~Reconciliation between net income and Partners' Equity determined under IFRS and U.S. GAAP~~

The following is a summary of the adjustment to net income for the years ended December 31, 2016, 2015 and 2014 and to partners' equity as of December 31, 2016 and 2015 that would be required if U.S. GAAP had been applied instead of IFRS in the consolidated financial statements:

2016 2015 2014
US$(000) US$(000) US$(000)

Loss under IFRS (1,043,752 ) (450,195 ) (400,338 )
Items increasing (decreasing) reported net profit:
Impairment loss, note 23(a) and 10(b) 889,499 - 541,141
Reversal of depreciation of assets impaired under IFRS, note 23(a) (101,855 ) (125,943 ) (79,809 )
Elimination of impairment loss recorded under U.S. GAAP, note 23(a) (933,200 ) - -
Elimination of the valuation allowance of the deferred workers’ profit participation, note 23(b) - (41,909 ) -
Stripping activity asset, note 23(c) (22,156 ) (18,868 ) (23,212 )
Reclamation and mine closure, note 23(d) (22,278 ) (12,049 ) 427
Inventories, note 23(e) 36,076 20,903 (17,428 )
Deferred workers' profit participation, note 23(b) - 2,790 29,003
Valuation allowance of deferred income tax, note 23(f) - 321,622 -
Deferred income tax of reconciliation items, note 23(f) - 43,441 (93,062 )
Others 6,347 8,049 11,364
Loss under U.S. GAAP (1,191,319 ) (252,159 ) (31,914 )

2016 2015
US$(000) US$(000)

Partners' equity under IFRS 885,724 2,228,825
Items increasing (decreasing) reported Partners' equity:
Impairment loss, note 23(a) 2,469,188 1,579,689
Reversal of depreciation of assets impaired under IFRS, note 23(a) (379,806 ) (277,951 )
Elimination of impairment loss recorded under U.S. GAAP, note 23(a) (933,200 ) -
Elimination of the valuation allowance of the deferred workers’ profit participation, note 23(b) - (41,909 )
Stripping activity asset, note 23(c) (41,069 ) (18,913 )
Reclamation and mine closure, note 23(d) (74,402 ) (52,124 )
Inventories, note 23(e) 30,289 (5,787 )
Deferred workers' profit participation, note 23(b) - 40,935
Valuation allowance of deferred income tax, note 23(f) - 321,622
Deferred income tax related to reconciliation items, note 23(f) - (310,341 )
Others (28,403 ) (45,057 )
Partners' equity under U.S. GAAP 1,928,321 3,418,989

~~F-154~~

~~Notes to the consolidated financial statements(continued)~~

~~25.~~

~~New U.S. GAAP Accounting Pronouncements~~

~~Recently Issued Accounting Pronouncements -~~

~~Restricted Cash -~~

In November 2016, ASU No. 2016-18 was issued related to the inclusion of restricted cash in the statements of cash flows. This new guidance requires that a statement of cash flows explain the change during the period in the total of cash, cash equivalents and amounts generally described as restricted cash or restricted cash equivalents. This update is effective in fiscal years, including interim periods, beginning after December 15, 2017 and early adoption is permitted. The adoption of this guidance will result in the inclusion of the restricted cash balance within the overall cash balance and removal of the changes in restricted cash activity.

~~Intra-Entity Transfer –~~

In October 2016, ASU No. 2016-16 was issued related to the intra-entity transfer of assets other than inventory. This new guidance requires entities to recognize the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs. This update is effective in fiscal years, including interim periods, beginning after December 15, 2017 an early adoption is permitted. The Company is currently evaluating this guidance and the corresponding impact.

~~Statements of Cash Flows –~~

In August 2016, ASU No. 2016-15 was issued related to the statement of cash flows. This new guidance addresses eight specific cash flow issues with the objective of reducing the existing diversity in practice in how certain cash receipts and cash payments are presented and classified in the statement of cash flows. This update is effective in fiscal years, including interim periods, beginning after December 15, 2017 and early adoption is permitted. The Company is currently evaluating this guidance and the corresponding impact.

~~Leases –~~

In February 2016, ASU No. 2016-02 was issued related to leases. This new guidance modifies the classification criteria and requires leases to recognize the assets and liabilities arising from most leases on the balance sheet. This update is effective in fiscal years, including interim periods, beginning after December 15, 2018 and early adoption is permitted. The Company is currently evaluating this guidance and the corresponding impact.

~~Inventory –~~

In July 2015, ASU No. 2015-11 was issued related to inventory, simplifying the subsequent measurement of inventories by replacing the lower of cost or market test with a lower of cost and net realizable value test. The update is effective in fiscal years, including interim periods, beginning after December 15, 2016 and early adoption is permitted. The Company does not expect the updated guidance to have a material impact.

~~F-155~~

~~Notes to the consolidated financial statements(continued)~~

~~Revenue recognition –~~

In May 2014, ASU No. 2014-09 was issued related to revenue from contracts with customers. This ASU was further amended in August 2015, March 2016, April 2016, May 2016 and December 2016 by ASU No. 2016-08, No. 2016-10, No. 2016-12 and No. 2016-20, respectively. The new standard provides a five-step approach to be applied to all contracts with customers and also requires expanded disclosures about revenue recognition. In August 2015, the effective date was deferred to reporting periods, including interim periods, beginning after December 15, 2017 and will be applied retrospectively. Early adoption is not permitted.

The Company is currently performing an assessment of the revised standards and impacts on the Company’s Consolidated Financial Statements and disclosures. Management is still in the process of completing their assessment of the impacts; however, based on a preliminary analysis, anticipates the standard having a potential impact to the timing of revenue recognition due to a potential change in timing of when control is transferred to the customer. The Company continues to evaluate the potential impacts due to timing of revenue recognition, but does not expect it to have a material impact on the Consolidated Financial Statements. Additionally, the Company continues to assess the potential impacts on insurance payments, variable consideration on concentrate sales, and refining fee classification under the new standard. Based on preliminary findings, the Company does not expect these areas to have a significant impact on revenue recognition. The Company expects to have an update to the impacts of the standard in second quarter of 2017.

The Company anticipates adopting the new standard effective January 1, 2018. The guidance may be applied retrospectively for all periods presented or retrospectively with the cumulative effect of initially applying the guidance recognized at the date of initial application. The Company currently anticipates adopting the standard retrospectively with the cumulative effect of initially applying the amended guidance recognized at January 1, 2018.

~~F-156~~

~~Sociedad Minera Cerro Verde S.A.A.~~

~~Financial Statements for the years 2016, 2015 and 2014~~
~~together with the Report of Independent Registered Public Accounting Firm~~

~~F-157~~

~~Sociedad Minera Cerro Verde S.A.A.~~

~~Financial Statements for the years 2016, 2015 and 2014~~
~~together with the Report of Independent Registered Public Accounting Firm~~

~~Content~~

~~Report of Independent Registered Public Accounting Firm~~	~~F-159~~

~~Financial Statements~~

~~Statements of financial position~~	~~F-160~~
~~Statements of comprehensive income~~	~~F-161~~
~~Statements of changes in equity~~	~~F-162~~
~~Statements of cash flows~~	~~F-163~~
~~Notes to the financial statements~~	~~F-165~~

~~F-158~~

~~Report of Independent Registered Public Accounting Firm~~

~~To the Board of Directors and Shareholders of Sociedad Minera Cerro Verde S.A.A.~~

We have audited the accompanying financial statements of Sociedad Minera Cerro Verde S.A.A. (a Peruvian company, subsidiary of Freeport - McMoRan Inc.), which comprise the statements of financial position as of December 31, 2016 and 2015, and the statements of comprehensive income, statements of changes in equity and statements of cash flows for the years ended December 31, 2016, 2015 and 2014. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. We were not engaged to perform an audit of the Company´s internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis of designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company´s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Sociedad Minera Cerro Verde S.A.A. as of December 31, 2016 and 2015, and the results of operations and its cash flows for the years ended December 31, 2016, 2015 and 2014, in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (“IASB”) which differ in certain respects from the accounting principles generally accepted in the United States of America (see note 24 to the financial statements).

~~Lima, Peru,~~

~~February 28, 2017~~

~~Countersigned by:~~

~~Paredes, Burga & Asociados S. Civil de R.L.~~

~~/s/ Victor Burga~~

~~Víctor Burga~~

~~C.P.C.C. Register No.14859~~

~~F-159~~

~~Sociedad Minera Cerro Verde S.A.A.~~

~~Statements of financial position~~

~~As of December 31, 2016 and 2015~~

Note 2016 2015
US$(000) US$(000)
Assets
Current assets
Cash and cash equivalents 2(d), 3 29,951 5,952
Trade accounts receivable (net) 1,162 13,948
Other accounts receivable (net) 2(d), 5 70,043 2,771
Trade accounts receivable - Related parties 2(d), 4 375,306 199,368
Prepayments 5,473 7,320
Inventories 2(g), 6 425,566 394,867
Other non-financial assets 7 311,007 432,299
1,218,508 1,056,525
Non - current assets
Prepayments 39 -
Property, plant and equipment, net 2(h), 8 5,807,740 6,077,289
Intangible assets 12,198 16,905
Other non-financial assets 7 597,138 701,973
6,417,115 6,796,167

Total assets 7,635,623 7,852,692

Liabilities and equity, net
Current liabilities
Other financial liabilities 2(e), 10 161 43,169
Accounts payable 2(e), 9 168,357 432,418
Other accounts payable 3,619 2,112
Accounts payable - Related parties 2(e), 4 27,134 12,042
Provision related to benefits to employees 48,039 20,536
Provisions, short term 2(k), 11 24,458 33,509
Income tax payable 21,863 4,731
Total current liabilities 293,631 548,517
Non - current liabilities
Other financial liabilities 2(e), 10 1,995,843 2,381,995
Accounts payable - Related parties 2(e), 4 7,132 6,850
Long –term provisions 2(k), 11 164,622 163,803
Deferred income tax liability, net 2(m),13(g) 335,114 253,153
2,502,711 2,805,801
Total liability 2,796,342 3,354,318

Shareholder´s Equity 12
Capital Stock 990,659 990,659
Other capital reserves 198,132 198,132
Retained earnings 3,650,490 3,309,583

Total Shareholder´s equity 4,839,281 4,498,374

Total liabilities and Shareholder´s equity 7,635,623 7,852,692

~~The accompanying notes are an integral part of this financial statement.~~

~~F-160~~

~~Sociedad Minera Cerro Verde S.A.A.~~

~~Statements of comprehensive income~~

~~For the years ended December 31, 2016, 2015 and 2014~~

Note 2016 2015 2014
US$(000) US$(000) US$(000)

Sales of goods 14 2,384,154 1,115,617 1,467,097
Cost of sales 15 (1,553,040 ) (862,004 ) (797,481 )
Gross profit 831,114 253,613 669,616

Operating expenses
Selling expenses 16 (131,391 ) (56,215 ) (54,210 )
Other operating expenses 17 (24,107 ) (26,739 ) (5,873 )
Other operating income - 139 2,244
(155,498 ) (82,815 ) (57,839 )
Operating profit 675,616 170,798 611,777

Other income (expenses)
Financial income 954 512 2,443
Financial expenses 18 (80,438 ) (16,010 ) (369 )
Exchange differences, net 7,857 (75,770 ) 2,284
(71,627 ) (91,268 ) 4,358

Profit before income tax 603,989 79,530 616,135
Income tax expense 13(g) (263,082 ) (46,246 ) (238,529 )

Profit for the year 340,907 33,284 377,606

Basic and diluted earnings per share 19 0.974 0.095 1.08

~~The accompanying notes are an integral part of this financial statement.~~

~~F-161~~

~~Sociedad Minera Cerro Verde S.A.A.~~

~~Statements of changes in equity~~

~~For the years ended December 31, 2016, 2015 and 2014~~

Note Capital
stock Other capital
reserves Retained
earnings Total
US$(000) US$(000) US$(000) US$(000)

Balance as of January 1, 2014 12 990,659 198,132 2,898,693 4,087,484

Profit for the year - - 377,606 377,606

Balance as of December 31, 2014 12 990,659 198,132 3,276,299 4,465,090

Profit for the year - - 33,284 33,284

Balance as of December 31, 2015 12 990,659 198,132 3,309,583 4,498,374

Profit for the year - - 340,907 340,907

Balance as of December 31, 2016 12 990,659 198,132 3,650,490 4,839,281

~~The accompanying notes are an integral part of this financial statement.~~

~~F-162~~

~~Sociedad Minera Cerro Verde S.A.A.~~

~~Statements of cash flows~~

~~For the years ended December 31, 2016, 2015, and 2014~~

Note 2016 2015 2014
US$(000) US$(000) US$(000)

Operating activities
Profit for the year 340,907 33,284 377,606

Adjustments to reconcile with the profit for the period with the cash provided from operating activities for:
Income tax expense 13(g) 263,082 46,246 238,529
Nonmonetary adjustments
Depreciation, Amortization and Depletion 15 472,997 244,477 164,985
Unwinding of discount for remediation and mine closure provision 11(b) 4,391 3,985 2,537

Net loss on sale of Property, Plant and Equipment 982 661 4,722
Impairment of property, plant and equipment - - 781

Net changes in assets and liabilities
��
Trade accounts receivable and other accounts receivable (159,110 ) (23,111 ) 121,435
Inventories (30,699 ) (162,325 ) (15,542 )
Other non-financial assets 132,713 (271,852 ) (409,159 )

Trade accounts payable and other accounts payable 85,939 106,685 4,430
Provisions related to benefits to employees 27,503 (23,876 ) (13,717 )
Other provisions (59,851 ) 8,640 35,808

Interest paid (not included in the financing Activities) (64,325 ) (36,233 ) (10,402 )
Income tax (68,557 ) (121,027 ) (315,369 )

Net cash and cash equivalents provided by (used in) operating activities 945,972 (194,446 ) 186,644

~~F-163~~

~~Statements of cash flows(continued)~~

Note 2016 2015 2014
US$(000) US$(000) US$(000)

Investing activities
Sales of property, plant and equipment 235 409 356
Withdraw of time deposits - - 226,772
Purchase of property, plant and equipment 8 (421,610 ) (1,663,738 ) (1,640,287 )
Stripping activity asset 8 (61,261 ) (111,819 ) (49,122 )
Purchase of intangibles - (9,509 ) (7,178 )
Other cash payments related to investing activities 3,832 - -

Net cash and cash equivalents used in investing activities (478,804 ) (1,784,657 ) (1,469,459 )

Financing activities
Proceeds from loans 10 350,000 1,896,000 475,000
Proceeds from shareholders loans 10(b) - 600,000 -
Payments of loans 10 (793,000 ) (528,000 ) -
Debt issuance costs - (2,356 ) (27,024 )
Amortization of leasing (169 ) (163 ) (157 )

Net cash and cash equivalents provided by (used in) financing activities (443,169 ) 1,965,481 447,819

Net increase (net decrease) in cash and cash equivalents 23,999 (13,622 ) (834,996 )
Cash and cash equivalents at beginning of year 5,952 19,574 854,570

Cash and cash equivalents at end of year 29,951 5,952 19,574

Transactions with no effects in cash flows :

Provision for remediation and mine closure 11 (16,091 ) 33,803 68,840

~~The accompanying notes are an integral part of this financial statement~~

~~F-164~~

~~Sociedad Minera Cerro Verde S.A.A.~~

~~Notes to the Financial Statements~~

~~As of December 31, 2016, 2015 and 2014~~

~~Identification and business activity~~

~~(a)~~

~~Identification -~~

Sociedad Minera Cerro Verde S.A.A. (the Company) was incorporated in Peru on August 20, 1993 as a result of the privatization process of certain mining units carried out by the Peruvian State in that year. The Company’s shares were listed on the Lima Stock Exchange on November 14, 2000.

Through its subsidiary Cyprus Climax Metals Company, Freeport Minerals Corporation (FMC), a wholly owned subsidiary of Freeport-McMoRan Inc. (Freeport), owns 53.56% of the voting shares of the Company. SMM Cerro Verde Netherlands B.V. (a subsidiary of Sumitomo Metal Mining Company Ltd.) owns 21% of the voting shares of the Company, Compañía de Minas Buenaventura S.A.A. owns 19.58%, and other stakeholders own the remaining 5.86%.

The Company’s legal address is Jacinto Ibañez Street N°315 - Parque Industrial, Arequipa in the city of Arequipa and the ore deposit is located southwest of that city (Asiento Minero Cerro Verde S/N Uchumayo – Arequipa).

~~(b)~~

~~Business activity -~~

~~The Company’s activities are regulated by the Peruvian General Mining Law and comprise the extraction, production and sale of copper concentrate and cathode.~~

~~Expansion of operations -~~

In September 2015, the expansion project commenced operations and achieved full capacity operating rates during the first quarter of 2016. The project, with a cost of US $5.3 billion, expanded the processing capacity from 120,000 metric tons of ore per day to 360,000 metric tons of ore per day.

This expansion was financed with senior unsecured loans received by several banks led by Citibank N.A. and with shareholders’ loans, currently subordinated to the senior unsecured loans previously mentioned. (See Note 10)

~~(c)~~

~~Financial statements approval –~~

The financial statements for the year ended December 31, 2016, were approved by the Company’s Management on February 28, 2017, and, in Management’s opinion, they will be approved without changes at the Board of Directors and Shareholders’ Meetings to be held in the first quarter of 2017. The financial statements for the year ended December 31, 2015, were approved at the Board of Directors and Shareholders’ Meetings on March 30, 2016.

~~F-165~~

~~Notes to the Financial Statements~~ ~~(continue)~~

~~Significant accounting principles and policies~~

~~The significant accounting policies applied in the preparation of the financial statements are summarized below:~~

~~(a)~~

~~Basis of presentation -~~

The financial statements have been prepared based on historical cost, except for accounts receivable and/or payable related to the embedded derivative, which have been measured at fair value (see Note 2(d)). The financial statements are presented in United States dollars (US$) and include the years ended December 31, 2016, 2015 and 2014. Unless otherwise indicated, all values have been rounded to the nearest thousand.

~~(b)~~

~~Use of judgments, estimates and assumptions -~~

The preparation of financial statements in conformity with IFRS requires management to make estimates and assumptions in order to determine the amounts of the assets and liabilities, and the disclosure of contingent assets and liabilities as of December 31, 2016 and 2015, and the amounts of reported revenues and expenses for the years ended December 31, 2016, 2015 and 2014.

~~Information about estimations and judgments by Management in the preparation of the financial statements follows:~~

~~(b.1)~~

~~Judgments –~~

~~(i)~~

~~Contingencies –~~

~~(ii)~~

~~Stripping cost –~~

The Company incurs waste removal costs (stripping costs) during the development and production phases of its surface mining operations. During the production phase, stripping costs (production stripping costs) can be incurred both in relation to the production of inventory in that period and the creation of improved access and mining flexibility in relation to ore to be mined in the future. The former are included as part of the costs of inventory, while the latter are capitalized as a stripping activity asset, where certain criteria are met.

Once the Company has identified its production stripping for each surface mining operation, it identifies the separate components of the ore bodies for each of its mining operations. An identifiable component is a specific volume of the ore body that is made more accessible by the stripping activity. Significant judgment is required to identify and define these components, and also to determine the expected volumes (e.g., in tons) of waste to be stripped and ore to be mined in each of these components.

~~F-166~~

~~Notes to the Financial Statements~~ ~~(continue)~~

~~(b.2)~~

~~Estimates and assumptions –~~

~~(i)~~

~~Determination of mineral reserves –~~

Mineral reserves are the part of a mineral deposit ore that can be economically and legally extracted from the mine concessions. The Company estimates its mineral reserve based on information compiled by individuals qualified in reference to geological data about the size, depth and form of the ore body, and requires geological judgments in order to interpret the data.

~~(ii)~~

~~Units of production depreciation –~~

~~(iii)~~

~~Provision for remediation and mine closure –~~

The Company assesses its provision for remediation and mine closure quarterly. It is necessary to make estimates and assumptions in determining this provision, including cost estimates of activities that are necessary for the rehabilitation of the site, technological and regulatory changes, interest rates and inflation rates. As discussed in note 2(k), estimated changes in the fair value of the provision for remediation and mine closure or the useful life of the related assets are recognized as an increase or decrease in the book value of the provision and related asset retirement cost (ARC) in accordance with IAS 16, “Property, Plant and Equipment”.

~~F-167~~

~~Notes to the Financial Statements~~ ~~(continue)~~

~~(iv)~~

~~Inventories -~~

Because it is generally impracticable to determine copper contained in mill and leach stockpiles by physical count, reasonable estimation method is employed. The quantity of material delivered to mill and leach stockpiles is based on surveyed volumes of mined material and daily production records. Sampling and assaying of blast holes cuttings determine the estimated copper grades of material delivered to mill and leach stockpiles.

~~F-168~~

~~Notes to the Financial Statements~~ ~~(continue)~~

~~(v)~~

~~Asset impairment –~~

Management has determined that the Company’s operations consist of one cash generating unit. Therefore, the Company’s operations are evaluated at least annually in order to determine if there are impairment indicators. If any such indication exists, the Company makes an estimate of the recoverable amount, which is the greater of the fair value less costs to sell and the value in use. These assessments require the use of estimates and assumptions, such as long-term commodity prices, discount rates, operating costs, and others.

~~(c)~~

~~Currency-~~

~~The financial statements are presented in United States (US) dollars which is also the Company’s functional currency.~~

Foreign currency transactions are considered to be those which are carried out in a currency other than the functional currency. Foreign currency transactions are translated into the functional currency by applying the exchange rate in force on the date the transaction takes place. Monetary assets and liabilities denominated in foreign currencies are converted using the functional currency spot rate in force at the reporting date.

~~F-169~~

~~Notes to the Financial Statements~~ ~~(continue)~~

The Company uses Peruvian Sol (S/) exchange rates published by the Superintendent of Banks, Insurance and Pension Fund Administrator. The published exchange rates were S/3.352 for US$1 for buying and S/3.360 for US$1 for selling as of December 31, 2016, and S/3.408 for US$1 buying and S/3.413 for US$1 for selling as of December 31, 2015. These rates have been applied to the appropriate asset and liability accounts.

~~(d)~~

~~Financial assets -~~

The Company determines the classification of its financial assets at initial recognition in accordance with IAS 39, “Financial Instruments: Recognition and Measurement”. Financial assets are recognized initially at fair value plus the direct costs attributable to the transaction. The Company’s financial assets include cash and cash equivalents, accounts receivable and embedded derivatives.

~~Cash and cash equivalents -~~

~~Cash and cash equivalents are financial assets that may be liquidated immediately, such as bank checking accounts, and other liquid investments with original maturities of three months or less.~~

~~Accounts Receivables -~~

The Company’s receivables include current and long-term trade and other accounts receivable. These receivables are stated at their transaction value, net of an allowance for doubtful accounts. Trade accounts receivable are generated primarily from the Company’s concentrate and cathode sales, are denominated in US dollars, have current maturities, do not bear interest and have no specific guarantees.

Receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. After initial measurement, receivables are subsequently carried at amortized cost using the effective interest method less any provision for impairment (i.e. allowance for doubtful accounts).

The Company assesses whether, as of the date of the financial statements, there is objective evidence of impairment in the value of the receivable. Any resulting impairment is measured as the difference between the book value of the receivable and the present value of the estimated future cash flows, discounted at an original effective interest rate or one applicable to a similar transaction. The carrying amount of the receivable is reduced by means of an allowance account and recognized in the statements of comprehensive income.

~~Embedded derivatives -~~

The Company’s embedded derivatives from sales are measured at fair value (based on LME spot copper prices) with subsequent changes recognized in the statements of comprehensive income until the month of settlement.

(e)

Financial liabilities -

All financial liabilities are recognized initially at fair value and in the case of accounts payable and other financial liabilities, net of directly attributable transaction costs. The Company´s financial liabilities include loans, trade and other accounts payables and other financial ~~liabilities and embedded derivatives.~~liabilities.

~~F-170~~

~~Notes to the Financial Statements~~ ~~(continue)~~

~~Loans-~~

Loans -

Loans are initially recognized at their fair value, net of directly attributable transaction costs. After initial recognition, loans are subsequently measured at amortized cost using the effective interest rate method. Gains and losses are recognized in the ~~statement~~statements of comprehensive income when the liabilities are derecognized as well as through the amortization process.

~~(f)~~

~~Offsetting of financial instruments –~~

Derecognition -

~~Financial assets and~~A financial ~~liabilities~~liability is derecognized when the associated obligation is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are ~~offset~~substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the ~~net amount reported~~recognition of a new liability. The difference in the respective carrying amounts are recognized in the statements of financial position if, and only if, there is a currently enforceable legal right to offset the recognized amounts and it is management’s intention to settle on a net basis, or to realize the assets and settle the liabilities simultaneously.comprehensive income.

~~(g)~~(f)

Inventories -

Inventories are stated at the lower of cost or net realizable value. Inventory of materials and supplies, as well as saleable products and in-process inventory are determined using the weighted-average cost method. The cost of finished goods and in-process inventory (i.e., stockpiles) includes labor and benefits, supplies, energy and other costs related to the mining and processing of minerals. Net realizable value is determined based on the estimated future sales price ~~based~~using on forward metal prices (for the period they are expected to be processed in), less estimated costs to complete production and bring the inventory to ~~sale.The~~sale. The current portion of ~~work in process~~work-in-process is determined based on the amount the Company expects to process in the next twelve months. Inventories that are not expected to be processed in the next twelve months are classified as long-term inventories.

No adjustments to inventories were required for the years ended December ~~31, 2016~~31,2019, 2018 and ~~2015.~~2017.

~~F-171~~

Notes to the Financial Statements(continue)

Provision for obsolescence -

Obsolescence allowances are established based on an item-by-item analysis by management. Any amount of obsolescence identified is charged to the statements of comprehensive income in the period it is deemed to have occurred.

~~(h)~~(g)

Property, plant and equipment -

Property, plant and equipment are valued at historical cost, including costs that are directly attributed to the construction or acquisition of the asset, net of accumulated depreciation, amortization and impairment.

The initial cost of an asset comprises its purchase price or construction cost, any costs directly attributable to bringing the asset into operation, the initial estimate of the obligation for mine closing and borrowing costs for qualifying assets.

Repairs and/or improvements that increase the economic life of an asset and for which it is probable that there will be future economic benefit to the Company, are recorded as assets. All other maintenance costs are charged to expense as incurred.

Land is not depreciated. Depreciation of assets directly related to the useful life of the mine is calculated using the units-of-production (UOP) method based on the mine’s proven and probable copper reserves. Other assets are depreciated using the straight-line method based on the following estimated useful lives:

		Years

Buildings and other constructions		Between 5 and 35
Machinery and equipment		Between 32 and 2530
Transportation units		Between 5 and 7
Furniture and fixtures		Between 7 and 10
Other equipment		Between 3 and 25

Critical spare parts and other parts which are directly identified with machinery or equipment are included in property, plant and equipment, and the economic life assigned corresponds to the main asset with which they are identified.

An item of property, plant and equipment is retired at the time of its disposal or when no future economic benefits are expected from its use or subsequent disposition. Any gain or loss arising at the time of retirement is calculated as the difference between the proceeds from the sale and the book value of the asset and is included in the statements of comprehensive income in the ~~year~~period the asset is retired.

The residual value and useful economic lives of the Company’s property, plant and equipment are reviewed, and adjusted if appropriate, at each year end.

~~Impairment-~~

Impairment -

At each reporting date, the Company evaluates if there is any indication that an asset could be impaired. If such an indication exists, the Company estimates the recoverable amount of the asset. The recoverable amount of an asset is the greater of (i) its fair value less costs to sell or (ii) its value in use and is determined for the assets of the mine as a whole, since there are no assets that generate cash revenues independently.

Notes to the Financial Statements(continue)

When the book value of an asset exceeds its recoverable amount, the asset is considered impaired and is reduced to its recoverable amount. When evaluating the value in use, the future estimated cash flows are discounted to their present value using an after-tax discount rate that reflects current market evaluations of the time value of money and the specific risks to the asset.

~~F-172~~

~~Notes to the Financial Statements~~ ~~(continue)~~

Losses resulting from the impairment of assets are recognized in the statements of comprehensive income under the categories of expenses consistent with the function of the impaired asset. A previously recognized impairment loss is reversed only if there has been a change in the estimates used to determine the asset’s recoverable amount since the last impairment loss was recognized. The revised valuation cannot exceed the book value that would have been determined, net of depreciation, if an impairment loss for the asset had not been recognized in a previous period. Such a reversal is recognized in the statements of comprehensive income.

~~There was no asset~~The Company did not identify any indicators of impairment ~~loss for the Company~~ for the years ended December 31, ~~2016, 2015~~2019, and ~~2014.~~2018.

~~(i)~~(h)

Intangible Assets –-

Intangible assets are recorded at cost less accumulated amortization. After the initial recognition, the intangible assets are recorded at its cost less accumulated amortization and any accumulated loss for impairment of use, if applicable.

~~(j)~~(i)

Exploration, development and stripping costs -

Exploration costs -

Mineral exploration costs, as well as drilling and other costs incurred for the purpose of converting mineral resources to proven and probable reserves, or identifying new mineral resources at development or production stage properties, are charged to the statements of comprehensive income as incurred.

Development costs --

Development costs are capitalized when the economic and technological feasibility of the project is confirmed, which is generally when the development or project has reached a milestone in accordance with a model established by management.

F-221

Notes to the Financial Statements(continue)

Stripping cost -

In accordance with IFRIC 20, “Stripping Cost in the Production Phase of a Surface Mine,” stripping costs incurred in the production phase are capitalized as a component of property, plant and equipment (see Note 8)7) if the stripping activity improves access to the ore body or enhances an existing asset. The stripping activity asset is subsequently amortized using the UOP method over the ~~life~~component of the ~~mine.~~

~~F-173~~

~~Notes to the Financial Statements~~ ~~(continue)~~ore body benefitted.

~~(k)~~(j)

Provisions -

General -

A provision is recognized when the Company has a present obligation (legal or constructive) as a result of a past event, it is probable that resources of the Company will be required to settle the obligation, and an estimate of the amount of the obligation can be calculated. The expense relating to any provision is presented in the statements of comprehensive income, net of any reimbursement, in the period the provision is established.

If the effect of the time value of money is significant, provisions are discounted by applying a discount rate that reflects, where applicable, the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognized as a financial expense in the statements of comprehensive income.

Mine closure provision -

The Company records a mine closure provision when a contractually or legally enforceable obligation arises. The Company estimates the present value of its future obligation for mine closure and increases the carrying amount of the related asset retirement cost (ARC), which is included in property, plant and equipment in the ~~consolidated~~ statements of financial position. Subsequently, the mine closure provision is accreted to full value over time and recognized as an interest cost considered in the initial fair value estimate. The related ARC is depreciated using the UOP method ~~during~~over the ~~economic~~ life of the mine.

The Company evaluates its mine closure provision on a quarterly basis and makes adjustments to estimates and assumptions, including scope, future costs and discount rates, as applicable. Changes in the fair value of the mine closure provision or the useful life of the related asset are recognized as an increase or decrease in the book value of the provision and the related ARC in accordance with IAS 16, “Property, Plant and Equipment.” Any decrease in the mine closure provision and related ARC cannot exceed the current book value of the asset; amounts over the current book value will be recorded in the statements of comprehensive income.

~~(l)~~(k)

Revenue recognition -

The Company primarily sells copper concentrate and copper cathode in accordance with sales contracts entered into with its customers. Revenues from contracts with customers comprise the fair value of the sale of goods, net of related general sales taxes. ~~The Company recognizes revenue~~Revenue from contracts with customers is recognized when ~~the amount can be reliably measured, it is probable that future economic benefits will flow to the Company and all significant risks (including title and insurance risk) and rewards~~control of ~~ownership have~~goods or services are transferred to the ~~customer. Revenue~~customer at an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods. As such, the Company is ~~not considered reliably measured until all contingencies relating~~the principal in its revenue contracts.

The Company considers whether there are other promises in the contract that are separate performance obligations to which a portion of the transaction price needs to be allocated. The Company consider that the only performance obligation is the delivery of the goods. In determining the transaction price for the sale ~~have been resolved.~~of copper concentrates and copper cathode, the Company considers the effect of variable consideration and the existence of significant financing components.

~~F-174~~

Notes to the Financial Statements(continue)

~~Sales of copper concentrate and copper cathode~~Variable consideration -

~~Local sales of copper cathode are recognized when~~If the consideration in the contract includes a variable amount, the Company ~~has delivered~~estimates the amount of consideration to which it will be entitled in exchange for transferring the goods to the ~~shipping company designated by~~customer. The variable consideration is estimated at contract inception and constrained until it is highly probable that a significant revenue reversal in the ~~customer. Revenue~~amount of cumulative revenue recognized will not occur when the associated uncertainty with ~~foreign sales~~the variable consideration is subsequently resolved. Sales of ~~copper concentrate~~concentrates and ~~copper cathode~~metals at provisional prices include a gain (loss) to be received at the end of the quotation period.

Revenue is recognized ~~when all~~at the amount the entity expects to be entitled – being the estimate of the price expected to be received at the end of the quotation period using the most recently determined estimate of metal in concentrate (based on initial assay results) and the estimated forward price.

The requirements in IFRS 15 on constraint estimates of variable consideration are also applied to determine the amount of variable consideration that can be included in the transaction price.

Significant financing components -

The Company receives short-term advances from its customers. Using the practical expedient in IFRS 15, the Company does not adjust the promised amount of consideration for the effects of a significant ~~risks and rewards~~financing component if it expects, at contract inception, that the period between the transfer of ~~ownership have transferred~~the promised good to the customer ~~which is typically~~and when ~~the inventory has passed over the vessel’s rail at the port of loading.~~customer pays for that good will be one year or less.

~~As described in Note (d), the Company’s copper sales are provisionally priced at the time of shipment.~~ The provisional prices are finalized in a specified future month in accordance with the terms specified in the related sales contract and based on quoted LME monthly average prices. The Company receives market prices in the specified future month, and these sales result in changes recorded to revenues until the specified future month. The Company records revenues and invoices customers at the time of shipment based on then-current LME prices, which results in an embedded derivative that is bifurcated from the host contract.

~~Beginning in 2014, the~~ Company’s revenues are subject to OSINERGMIN (Organismo Supervisor de la ~~Inversion~~Inversión en Energía y Minería) and OEFA (Organismo de Evaluación y Fiscalización Ambiental) royalties. The calculation for the OSINERGMIN royalty contribution is ~~0.16%~~0.13% of invoiced sales for the year ~~2016 (0.19%~~2019 (0.14% for the year ~~2015~~2018 and ~~0.21%~~0.15% for the year ~~2014)~~2017), and the calculation for the OEFA contribution is ~~0.13%~~0.11% of invoiced sales for the year ~~2016 (0.15%~~2019 (0.11% for the ~~years 2015~~year 2018 and ~~2014)~~0.11% for the year 2017). ~~Those~~Such royalties contributions are presented as a reduction of revenues (see Note 14).

Notes to the Financial Statements(continue)

~~(m)~~(l)

Income taxes, deferred taxes and other taxes -

Income taxes-

Income tax assets and liabilities are measured at the amounts expected to be paid to or recovered from the tax authorities. The amount of current tax payable or receivable is the best estimate of the tax amount to be paid or received that reflects uncertainty related to income taxes, if any. The tax rates and tax laws that are applied to compute the amounts are those that are enacted or substantially enacted at the end of the reporting period. The Company calculates the provision for income tax in accordance with the Peruvian tax legislation in force.For the years ~~2016, 2015~~2019, 2018 and ~~2014,~~2017, the Company was subject to an income tax rate of 32% (see Note 13(b)).

Deferred Taxes -

Deferred taxes are presented using the liability method for differences between the tax basis of assets and liabilities and their book value for financial reporting purposes. Deferred tax liabilities are recognized for all taxable differences. Deferred tax assets are recorded for all deductible differences when there is a probability that there could be taxable earnings against which the deductible difference could be applied.

The book value of deferred tax assets is reviewed at the end of each period and reduced to an amount that is more likely than not to be realized against taxable earnings. Deferred tax assets that are not recognized are reassessed at each period and are recognized when it is more likely than not that those future taxable earnings will allow ~~for~~ the deferred tax asset to be recovered.

~~F-175~~

~~Notes to the Financial Statements~~ ~~(continue)~~

Deferred tax assets and liabilities are measured at tax rates that are expected to be applicable during the year when the assets are realized or the liabilities are liquidated, based on the tax rates (and tax laws) that have been enacted or substantively enacted at the end of the ~~period.~~period, and reflects uncertainty related to income taxes, if any. Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset tax assets against tax liabilities and the deferred tax is related to the same entity and the same tax authority.

Mining Taxes -

On September 29, 2011, Law N° 29788 (which amended Law N° 28528) was enacted creating a new mining tax and royalty regime in Peru. Under the new regime, companies that dodid not have stability agreements ~~are~~were subject to ~~a royalty~~the payment of royalties and a special mining tax. Cerro Verde believes its 1998 Stability Agreement exempts from royalties all minerals extracted from its mining concession, irrespective of the method used for processing those materials, and therefore, was not subject to the ~~royalty~~payment of royalties and a special mining tax until ~~its~~the 1998 ~~stability agreement~~Stability Agreement expired on December 31, 2013. See Note 13(d) for further discussion of developments resulting in the recognition of provisions for these disputed royalties and special mining taxes for prior years. Because the Company believes it was not subject to the payment of royalties and a special mining tax, Cerro Verde was subject to special mining burden (GEM) until the expiration of its 1998 Stability Agreement on December 31, 2013.Under the terms of its current 15-year stability agreement (see Note 13(a)), which became effective January 1, 2014, the Company is subject to mining royalties and a special mining tax for all of its mining ~~production (see Note 13(d)), the company pays Mining Royalties and Special Mining Tax.~~production.

Supplementary Retirement Fund –-

On July 9, 2011, Law N° 29741 was enacted and established ~~the creation of~~ a Mining, Metallurgical and Steel Supplementary Retirement Fund (SRF), which is a social security retirement fund for mining, metals and steel industry workers. Under the terms of its current 15-year stability agreement, the Company is subject to SRF, which is calculated as 0.5% of net taxable income.

Notes to the Financial Statements(continue)

~~(n)~~(m)

Benefits to employees -

Salaries and wages, bonuses ~~post-employment benefits~~ and vacations are calculated in accordance with IAS 19, "Employee Benefits" and current Peruvian ~~legislation based on the accrual principle.~~legislation.

Worker’s profit sharing -

The Company recognizes worker’s profit sharing in accordance with IAS 19. Worker’s profit sharing is calculated in accordance with Peruvian laws (Legislative Decree No. 892), and the Company's worker’s profit sharing rate is 8% over the net taxable ~~net~~ base of the current year. According to Peruvian law, the limit in the worker's profit sharing that an employee ~~could~~can receive is equivalent to 18 months of wages, and any excess above such limit is transferred to the Regional Government and the National Fund for Employment’s Promotion and ~~Training.~~Training (“FONDOEMPLEO”). The Company’s ~~workers~~worker’s profit share is recognized as a liability in the statements of financial position and as an operating ~~expenses~~expense in the statements of comprehensive income.

~~F-176~~

~~Notes to the Financial Statements~~ ~~(continue)~~

~~(o)~~(n)

Borrowing cost -

~~Costs~~Borrowing costs directly attributable to the acquisition, construction or production of a qualifying asset are capitalized as finance ~~cost~~costs as part of the asset. A qualifying asset is one whose value is greater than US$1 million and requires at least 12 months to be ready for its intended use. All other borrowing costs are expensed in the period in which they occur. Borrowing costs consist of interest and other costs that the Company incurs in connection with the borrowing of funds.

~~(p)~~(o)

Fair value measurement -

The Company measures its embedded derivatives, at fair value, at each date presented in the statement of financial position.

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data ~~are~~is available to measure fair value, maximizing the use of relevant observable inputs and minimizing the use of unobservable inputs.

Notes to the Financial Statements(continue)

All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorized within the fair value hierarchy, described, as follows, based on the lowest level input that is significant to the fair value measurement as a whole:

	-	Level 1 — Quoted (unadjusted) market prices in active markets for identical assets or ~~liabilities~~liabilities.

	-	Level 2 — Valuation techniques for which the ~~lowest-level~~lowest level input that is significant to the fair value measurement is directly or indirectly ~~observable~~observable.

Level 3 — Valuation techniques for which the lowest level input that is significant to the fair value measurement is ~~unobservable~~unobservable.

~~(q)~~(p)

Basic and diluted earnings per share -

Basic and diluted earnings per share have been calculated based on the weighted average number of common shares outstanding during the period. When the number of shares is modified ~~as a result~~because of capitalization of retained earnings, the net income per basic and diluted shares is adjusted retroactively for all of the periods reported. For the years ~~2016~~2019, 2018 and ~~2015,~~2017, the Company did not have any financial instruments with dilutive effects; as a result, the basic and diluted shares are the same in all periods presented.

~~F-177~~(q)

Changes in accounting policies and disclosures –

IFRS 16, “Leases” -

IFRS 16 introduced a single, on-balance sheet accounting model for lessees and the Company adopted IFRS 16 on January 1, 2019. As a result, the Company, as a lessee, has recognized right-of-use assets representing its rights to use the underlying assets and lease liabilities representing its obligation to make lease payments.

The Company has applied IFRS 16 using the modified retrospective approach, under which the comparative information presented for 2018 has not been restated and it is presented, as previously reported, under IAS 17, “Leases,” and related interpretation.

Definition of a lease -

Previously, the Company determined at contract inception whether a contract was or contained a lease under IFRIC 4, “Determining Whether an Arrangement Contains a Lease.” The Company now assesses whether a contract is, or contains, a lease based on the new definition of a lease. Under IFRS 16, a contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.

Notes to the Financial Statements(continue)

On transition to IFRS 16, the Company elected to apply the practical expedient to grandfather the assessment of which arrangements are leases. It applied IFRS 16 only to contracts that were previously identified as leases. Contract that were not identified as leases under IAS 17 and IFRIC 4 were not reassessed. Therefore, the definition of a lease under IFRS 16 has been applied only to contracts entered into or changed on or after January 1, 2019.

At inception or on reassessment of a contract that contains a lease component, the Company allocates the considerations in the contract to each lease and non-lease component on the basis of their relative stand-alone prices.

As a lessee -

As a lessee, the Company previously classified leases as either operating and finance leases based on its assessments of whether a lease transferred substantially all of the risks and rewards of ownership. Under IFRS 16, all leases are classified as finance leases. The Company has elected the exemption for leases of low-value assets as well as the short-term lease exemption for all asset classes and does not report a lease liability or right-of-use asset for leases of low-value assets or leases with a term of 12 months or less.

The Company presents right-of-use assets in “property, plant and equipment,” the same line item as it presents underlying assets of the same nature that it owns. Leased right-of-use assets are presented in Note 7(b).

The Company recognizes a right-of-use asset and a lease liability at the lease commencement date.

Right-of-use asset -

The right-of use asset is initially measured at cost, and subsequently at cost less any accumulated depreciation and impairments losses, and adjusted for certain re-measurements of the lease liability.

The right-of-use asset is depreciated using the straight-line method from the commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term. The estimated useful lives of right-of-use assets are determined on the same basis as those of property, plant and equipment.

Lease liability -

The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Company’s incremental borrowing rate. The Company does not have any lease contracts in which the implicit rate is readily determinable and as such used its incremental borrowing rate in all lease calculations. The incremental borrowing rates were determined for each lease taking into consideration factors such as the lease term, the nature of the asset, credit risk and economic environment in which the asset was located.

The weighted average incremental borrowing rate at transition was 4.704% per annum.

Notes to the Financial Statements(continue)

The lease liability is subsequently increased by the interest cost on the lease liability and decreased by lease payments made. It is re-measured when there is a change in future lease payments arising from a change in an index rate, if there is a change in the estimate of the amount expected to be payable under a residual value guarantee, or as appropriate, changes in the assessment of whether a purchase option, termination option or extension option is reasonably certain to be exercised.

The lease liabilities as of January 1, 2019 can be reconciled to the operating lease commitments as of December 31, 2018:

	US$(000)

Operating lease commitments as of December 31, 2018 (undiscounted)	152,866
Exclude / deduct
Contracts that do not meet the revised definition of a lease		(25,851	)
Committed leases not commenced at 1 January 2019		-
Effect of discounting		(31,287	)

Discounted recognized lease liabilities as of January 1, 2019		95,728

Lease liabilities are presented in “other financial liabilities” (Note 10).

Lease term -

The Company has applied judgement to determine the lease term for some lease contracts in which it is a lessee and that include renewal options. The assessment of whether the Company is reasonably certain to exercise such options impacts the lease term, which significantly affects the amount of the lease liabilities and right-of-use assets recognized.

Also in relation to those leases under IFRS 16, the Company has recognized depreciation and interest costs which are presented in “cost of sales” (Note 15) and “financial expenses” (Note 18).

IFRIC Interpretation 23, “Uncertainty over Income Tax Treatment”-

The Interpretation addresses the accounting for income taxes when tax treatments involve uncertainty that affects the application of IAS 12, “Income Taxes.” It does not apply to taxes or levies outside the scope of IAS 12, nor does it specifically include requirements relating to interest and penalties associated with uncertain tax treatments. The Interpretation specifically addresses the following:

Whether an entity considers uncertain tax treatments separately.

The assumptions an entity makes about the examination of tax treatments by taxation authorities.

How an entity determines taxable profit or loss, tax bases, unused tax losses, unused tax credits and tax rates.

How an entity considers changes in facts and circumstances.

The Company determines whether to consider each uncertain tax treatment separately or together with one or more other uncertain tax treatments and uses the approach that better predicts the resolution of the uncertainty.

The Company applies significant judgement in identifying uncertainties over income tax treatments.

Notes to the Financial Statements(continue)

The Company adopted IFRIC 23 on January 1, 2019, at that date the Company did not record any impact by IFRIC 23. A summary of the impact from the uncertain tax treatments recognized during 2019, is showed below:

	2019
	US$(000)

Increase in current tax assets		35,701
Increase in current tax liabilities		21,920
Increase in deferred tax liabilities		20,767
Increase in income taxes expense		6,986

During 2019, the Company recognized uncertain tax positions, particularly those relating to depreciation of fixed assets out of the scope of feasibility study, sales commissions with non-related companies and miscellaneous information technology services, based on new information obtained and assed since January 1, 2019.

Several other amendments and interpretations applied for the first time in 2019, but did not have an impact on the financial statements of the Company and, hence have not been disclosed. The Company has not early any standards, interpretations or amendments that have been issued but not yet effective.

(r)

~~New IFRS~~Standards issued but not effective -

Following is a summary of improvements and amendments to IFRS that are not yet effective but will be applicable to the ~~Company.~~Company:

~~IFRS 15 “Revenue from Contracts with Customers”, was issued in May 2014~~Amendments to IAS 1 and establishes a five-step model to account for revenue arising from contracts with customers. Under IFRS 15, revenue is recognized at an amount that reflects the consideration to which an entity expects to be entitled in exchange for transferring goods or services to a customer. The new revenue standard will supersede all current revenue recognition requirements under IFRS. The Company will adopt IFRS 15 on January 1, 2018, and currently expects to apply the modified retrospective approach under which any cumulative effect adjustment would be recorded asIAS 8: Definition of the adoption date. The Company is currently assessing the impact of this guidance on its financial reporting and disclosures, but at this time does not expect the adoption of IFRS 15 to have a material impact on its financial statements.Material -

In October 2018, the IASB issued amendments to IAS 1, “Presentation of Financial Statements” and IAS 8, “Accounting Policies, Changes in Accounting Estimates and Errors” to align the definition of “material” across the standards and to clarify certain aspects of the definition. The new definition states that, “Information is material if omitting, misstating or obscuring it could reasonably be expected to influence decisions that the primary users of general purpose financial statements make on the basis of those financial statements, which provide financial information about a specific reporting entity.” The amendments to the definition of material is not expected to have a significant impact on the Company’s financial statements.

IFRS 9 “Financial Instruments, revised”, effective January 1, 2018, modifies the treatment and classification of financial assets established by IAS 39. The adoption of IFRS 9 is not expected to have a significant effect on the classification and measurement of the Company’s financial assets and liabilities.

IFRS 16 “Leases”, effective January 1, 2019, sets out the principles for the recognition, measurement, presentation and disclosure of leases. For lessees, IFRS 16 eliminates the classification of leases as either operating or financing, and introduces a single lessee accounting model that will require the recognition of (a) assets and liabilities for most leases with a term of more than 12 months and (b) depreciation of lease assets separately from interest on lease liabilities in the income statement. Management is currently evaluating the impact IFRS 16 will have on the Company’s financial reporting and disclosures.

Cash and cash equivalents

This item is made up as follows:

December 31, 2016 December 31, 2015
US$(000) US$(000)

Cash in banks 2,990 5,604
Cash equivalents (a) 26,961 348

29,951 5,952

~~F-178~~

~~Notes to the Financial Statements~~ ~~(continue)~~

	December 31, 2019		December 31, 2018
		US$(000)		US$(000)

Cash in banks		10,119		3,679
Cash equivalents (a)		471,372		497,503

		481,491		501,182

(a)

Cash equivalents ~~comprises~~as of December 31, 2019, includes short-term deposits with Scotiabank Peru of US$125.0 million, Citibank NY of US$85.1 million, Banco BBVA Peru of US$50.0 million and a portfolio of investments in highly marketable liquid investments (investments classified as “AAA” by Standard & Poor’s and Moody’s), of US$211.3 million, which yield variable returns, and are classified as cash equivalents because they are readily convertible to known amounts of cash and management plans to use them for its short-term cash needs. Because of the short maturity of these investments (i.e., less than 90 days), the carrying amount of these investments corresponds to their fair value at the date of the financial statements. Changes in the fair value of these investments are insignificant.

F-229

Notes to the Financial Statements(continue)

Related parties

Accounts receivable from related parties and accounts payable to related parties are made up as follows:

December 31, 2016 December 31, 2015
US$(000) US$(000)

Accounts receivable from related parties
Parent Company
FMC (a) 345,609 180,024
Other related parties
Sumitomo Metal Mining Company, Ltd. (b) 23,552 19,344
Climax Molybdenum Marketing Corporation (c), (d) 6,145 -

375,306 199,368

Accounts payable to related parties
Parent Company
FMC (e) 30,353 14,435
Other related parties
Freeport-McMoRan Sales Company Inc. 3,134 1,684
Minera Freeport-McMoRan South America Ltda 779 901
Freeport Cobalt OY - 141
Minera Freeport-McMoRan South America S.A.C. - 132
Sociedad Contractual Minera El Abra - 535
Climax Molybdenum Marketing Corporation (d) - 1,064
Total accounts payable to related parties 34,266 18,892

Less: accounts payable to related parties, long term (7,132 ) (6,850 )

Total accounts payable, short term 27,134 12,042

~~F-179~~

~~Notes to the Financial Statements~~ ~~(continue)~~

	December 31, 2019			December 31, 2018
	US$(000)			US$(000)

Accounts receivable from related parties
Parent Company
FMC (a)		401,211			409,688
Other related parties
Sumitomo (b)		10,760			12,918
Climax Molybdenum Marketing Corporation (c)		5,022			10,038
Embedded derivatives
Embedded derivatives (d)		36,077			(19,293	)

Total accounts receivable from related parties		453,070			413,351

Classification by measurement
Accounts receivables from related parties (not subject to provisional pricing)		121,995			67,050
Accounts receivables from related parties (subject to provisional pricing)		294,998			365,594
Embedded derivatives (d)		36,077			(19,293	)

		453,070			413,351

Accounts payable to related parties
Parent Company
FMC (e)		10,441			8,860
Other related parties
Freeport-McMoRan Sales Company Inc.		3,086			3,192
Minera Freeport-McMoRan South America Ltda		561			521
PT Freeport Indonesia		-			2,301
Total accounts payable to related parties		14,088			14,874
Less: accounts payable to related parties, long term		(10,074	)		(8,860	)

Total accounts payable, short term		4,014			6,014

(a)

Accounts receivable from FMC mainly correspond to sales of copper concentrate and copper cathode. ~~On October 15, 2006, the~~The Company ~~signed~~has a long-term agreement with FMC through which it committed to sell 20% of its annual copper concentrate production. These amounts exclude adjustments for embedded derivatives (see Notes 5 and 11). On October 15, 2015, the Company signed a long-term agreement with FMC through which ithas committed to sell between 70% and 80% of its annual copper concentrate production ~~from January 1, 2017 to~~through December 31, 2021. Terms of the contracts are reviewed annually.

(b)

~~On June 1, 2005, the~~The Company ~~signed~~has a long-term agreement with Sumitomo ~~Metal Mining Company Ltd., by~~through which it committed to sell 50% of its annual copper concentrate production, through December 31, 2016. These amounts exclude adjustments for embedded derivatives (see Notes 5 and 11). On October 15, 2015, the Company signed a long-term agreement with Sumitomo Metal Mining Company Ltd. through which ithas committed to sell 21% of its annual copper concentrates production ~~from January 1, 2017 to~~through December 31, 2021. Terms of the contracts are reviewed annually.

(c)

~~In November 2014, the~~The Company ~~renewed~~has a long-term agreement with Climax Molybdenum Marketing Corporation (a wholly owned subsidiary of FMC) bythrough which it has committed to sell 100% of its annual molybdenum concentrate production, at a price based on ~~the~~~~Metals Week~~ ~~Dealer Oxide price~~MWDO and under a delivery type known as CIF (cost, insurance and freight) ~~from January 1, 2015~~ through December 31, 2020. ~~These amounts exclude adjustments for embedded derivatives (see Notes 5 and 11).~~

(d)

~~Climax Molybdenum Marketing Corporation is a subsidiary of~~Reflects the ~~parent company.~~embedded derivative adjustment associated with accounts receivable from related parties (See Note 2(d) and 22).

(e)

Accounts payable to FMC is primarily related to stock option benefits (US$10.1 million as of December 31, ~~2016 mainly reflects the purchase~~2019, and US$8.9 million as of ~~a used shovel (US$22.3 Million)~~December 31, 2018).

~~Employee benefits -~~

Short-term and long-term employee benefits are recognized as expenses during the period earned. Benefits received by key management personnel represent ~~0.53%~~0.42% of total revenues for the year ~~2016 (1.76%~~2019 (0.38% for the year ~~2015 and 0.66% for the year 2014)~~2018). For the years ~~2016, 2015~~2019, 2018 and ~~2014, the Company~~2017, Freeport had granted stock option and/or restricted stock unit benefits to certain key management personnel, the amounts of which are not significant at those dates. As of December 31, ~~2016~~2019 and ~~2015,~~2018, the Company does not have any other long-term benefits.

~~Shareholder loans –~~

~~The Company has entered into loans with its shareholders. See Note 10(b) for a discussion of these arrangements.~~

Terms and transactions with related parties –-

Transactions with related parties are made at normal market prices. Outstanding balances are unsecured, interest free and settlement occurs in cash. There have been no guarantees provided or received for any accounts receivables from ~~affiliates. As of~~related parties. For the years ended December 31, ~~2016~~2019, 2018 and ~~2015,~~2017, the Company had not recorded any impairment of accounts receivable from related parties.

Notes to the Financial Statements(continue)

~~Other accounts receivable~~Inventories, net

This item is made up as follows:

December 31,
2016 December 31,
2015
US$(000) US$(000)

Embedded derivatives (Note 21) 67,449 -
Other 2,594 2,771

70,043 2,771

~~F-180~~

~~Notes to the Financial Statements~~ ~~(continue)~~

~~Inventories, net~~

~~This item is made up as follows:~~

	December 31, 2016			December 31, 2015			December 31, 2019			December 31, 2018
	US$(000)			US$(000)			US$(000)			US$(000)

Work-in-process (a)		448,792			445,003
Current
Materials and supplies		251,144			247,107			348,035			308,378
Work-in-process (WIP) (a)								173,190			119,518
Finished goods:
Copper concentrate								23,890			17,949
Copper cathode		8,220			11,865			6,321			8,035
Copper concentrate		15,073			8,948
Molybdenum concentrate		2,763			1,292			1,268			3,205
Materials and supplies in-transit		491			1,315
Less: Provision for obsolescence of materials and supplies		(303	)		(692	)		(507	)		(11	)
Total		726,180			714,838
Less : Long-term work-in-process inventories (see Note 7)		(300,614	)		(319,971	)
								552,197			457,074
Current inventories		425,566			394,867
Non-current
Work-in-process (WIP) (a)								255,123			286,375

Total inventories								807,320			743,449

(a)

~~Work-in-process~~WIP inventories represent mill and leach stockpiles, which contain higher grade ores (mill stockpiles) and medium and lower grade ores (leach stockpiles) that have been extracted from the open pit and are available for copper recovery. Based on the future mine plan production, the Company identifies the portion of inventory that is classified as current or long term. For mill stockpiles, recovery is through milling and concentrating. For leach stockpiles, recovery is through exposure to acidic solutions that dissolve copper and deliver it in a solution to extraction processing facilities.

In fourth-quarter 2019, the Company changed its method of estimating the current portion of its leach and mill stockpiles and revised its December 31, 2018, balances to conform to the new methodology resulting in a US$30.5 million decrease in the current balance and increase in the long-term balance.

~~F-181~~

F-231

Notes to the Financial Statements(continue)

7.6.

Other non-financial assets

This item is made up as follows:

December 31,
2016 December 31,
2015
US$(000) US$(000)

Current
Value added tax credit (a) 308,177 408,202
Other taxes to be recovered 2,830 2,379
Income tax prepayments (b) - 21,718

Total Current 311,007 432,299

Non-Current
Long term inventories (See note 6(a)) 300,614 319,971
Other Receivables (c) 180,741 180,741
Installment program (mining royalties case) (d) 96,233 64,405
Income tax prepayments (b) 19,550 91,879
VAT credit - 44,977

Total Non-Current 597,138 701,973

TOTAL Non-financial assets 908,145 1,134,272

	December 31, 2019		December 31, 2018
	US$(000)		US$(000)

Current
Income tax prepayments (a)		75,521		26,794
Value added tax (VAT) credit		27,414		28,081
Other taxes to be recovered		2,745		2,700
		105,680		57,575

Non-current
Other receivables (b)		186,626		183,208
Income tax prepayments (a)		52,559		16,858
		239,185		200,066

Total other non-financial assets		344,865		257,641

(a)

Mainly attributable to purchases related to the expansion of the Company´s production unit (See Note 1(b)). As of December 31, 2016, the Company expects to recover the VAT credits within the next twelve months.

~~(b)~~

Represents disbursementsmade by the Companyfor the ~~prepaymentofincome~~prepayment of income tax, which the Company expects to use to offset future tax obligations or will be refunded to the Company by SUNAT (Superintendencia Nacional de Administración Tributaria) (see Note 13(b)). The balance at December 31, 2019, also includes income tax benefits from the years 2013 to 2018 as part of the adoption of IFRIC 23 (see Note 2(q)).

~~(c)~~(b)

Represents disbursement made by the Company in connection with disputed tax assessments related to reviews by SUNAT ~~(Superintendencia Nacional de Administración Tributaria)~~ from years ~~2004~~2003 to ~~2010~~2012 (see Note 13(c) and 13(e)). According to current tax procedures and the ~~time frame~~timeframe for resolving these types of claims, ~~the Company~~management and its legal advisors expect resolution of this matter will be favorable to the ~~Company.~~

~~(d)~~

~~Represents payments made under protest by the~~ Company ~~for an installment program approved by SUNAT associated with mining royalties for the period December 2006 to December 2008 (see Note 13(d)). Management~~ and ~~its legal advisors expect that the resolution of this matter~~amounts will be ~~favorable to the Company.~~recoverable.

~~F-182~~

Notes to the Financial Statements(continue)

8.7.

Property, plant and equipment, net

~~The changes in~~Property, plant and equipment consist of owned and leased assets (right-of-use assets), and cost and accumulated depreciation accounts as of December 31, ~~2016~~2019 and 2018 are shown below:

	January 1, 2015		Additions		Disposals			Adjustments and reclassifications			Transfers			December 31, 2015		Additions		Adjustments			Disposals			Transfers			December 31, 2016
	US$(000)		US$(000)		US$(000)			US$(000)			US$(000)			US$(000)		US$(000)		US$(000)			US$(000)			US$(000)			US$(000)			January 1, 2018		Additions		Adjustments			Disposals			Transfers			December 31, 2018		IFRS 16 adoption		Additions			Adjustments			Disposals			Transfers			December 31, 2019
																														US$(000)		US$(000)		US$(000)			US$(000)			US$(000)			US$(000)		US$(000)		US$(000)			US$(000)			US$(000)			US$(000)			US$(000)
Cost
Land		15,275		-		-			-			5,109			20,384		-		-			-			3,299			23,683			24,467		-		-			-			196			24,663		-		-			-			(80	)		322			24,905
Buildings and other constructions		182,908		-		(1,099	)		7,571			2,012,742			2,202,122		-		(11,114	)		(5,633	)		191,586			2,376,961			2,370,042		-		41,089			(9,644	)		48,090			2,449,577		-		-			544			(4,769	)		102,772			2,548,124
Machinery and equipment		2,008,349		-		(19,537	)		(7,571	)		2,222,190			4,203,431		-		11,114			(4,427	)		232,062			4,442,180			4,553,508		-		(41,089	)		(19,426	)		201,057			4,694,050		-		-			(544	)		(30,482	)		191,589			4,854,613
Transportation units		17,202		-		(284	)		-			2,709			19,627		-		-			(730	)		213			19,110			20,557		-		-			(32	)		2,726			23,251		-		-			-			(32	)		3,146			26,365
Furniture and fixtures		790		-		(3	)		-			163			950		-		-			(1	)		-			949			949		-		-			-			-			949		-		-			-			-			-			949
Other equipment		22,261		-		(984	)		-			3,451			24,728		-		-			(1,065	)		1,008			24,671			24,977		-		-			(11	)		525			25,491		-		-			-			(594	)		203			25,100
Construction in progress and in-transit units		2,979,151		1,629,271		-			-			(4,246,364	)		362,058		154,876		-			-			(428,168	)		88,766	(a)		149,661		288,861		-			-			(252,594	)		185,928		-		271,364	(a)		(1,192	)		-			(298,032	)		158,068
Stripping activity asset (see Note 2(j))		151,679		111,819		-			-			-			263,498		61,261		-			-			-			324,759
Asset retirement costs		112,387		3,534		-			33,803			-			149,724		3,743		(16,091	)					-			137,376

Stripping activity asset (see Note 2(i))																															478,382		177,327		-			-			-			655,709		-		197,038			-			-			-			852,747
Asset retirement costs (see Note 11(c))																															136,327		2,724		(32,017	)		-			-			107,034		-		18,834			41,130			-			-			166,998
Right-of-use assets (b)																															-		-		-			-			-			-		95,728		1,342			(700	)		(929	)		-			95,441
		5,490,002		1,744,624		(21,907	)		33,803			-			7,246,522		219,880		(16,091	)		(11,856	)		-			7,438,455			7,758,870		468,912		(32,017	)		(29,113	)		-			8,166,652		95,728		488,578			39,238			(36,886	)		-			8,753,310

Accumulated depreciation
Buildings and other constructions		38,316		20,510		(1,059	)		3,136			-			60,903		88,925		(30	)		(4,936	)		-			144,862			229,627		96,623		5,184			(9,514	)		-			321,920		-		76,199			513			(4,722	)		-			393,910
Machinery and equipment		836,725		151,460		(18,524	)		(3,136	)		-			966,525		275,388		30			(3,964	)		-			1,237,979			1,517,337		292,656		(5,184	)		(18,483	)		-			1,786,326		-		284,097			(513	)		(29,091	)		-			2,040,819
Transportation units		8,248		1,741		(266	)		-			-			9,723		1,828		-			(686	)		-			10,865			12,221		1,784		-			(33	)		-			13,972		-		1,928			-			(28	)		-			15,872
Furniture and fixtures		776		5		(4	)		-			-			777		26		-			(1	)		-			802			834		24		-			-			-			858		-		23			-			-			-			881
Other equipment		11,512		2,054		(984	)		-			-			12,582		2,423		-			(1,052	)		-			13,953			16,400		2,406		-			(10	)		-			18,796		-		1,543			-			(594	)		-			19,745
Stripping activity asset		44,901		66,651		-			-			-			111,552		97,513		-			-			-			209,065			285,327		112,875		-			-			-			398,202		-		155,530			-			-			-			553,732
Asset retirement costs		5,118		2,053		-			-			-			7,171		6,018		-			-			-			13,189			18,700		4,976		-			-			-			23,676		-		3,239			-			-			-			26,915

Right-of-use assets (b)																															-		-		-			-			-			-		-		11,488			-			(903	)		-			10,585
		945,596		244,474		(20,837	)		-			-			1,169,233		472,121		-			(10,639	)		-			1,630,715			2,080,446		511,344		-			(28,040	)		-			2,563,750		-		534,047			-			(35,338	)		-			3,062,459

Net cost		4,544,406													6,077,289													5,807,740			5,678,424													5,602,902		95,728														5,690,851

(a)

~~As of~~For the year ended December 31, ~~2016~~2019, additions to construction in progress ~~corresponds~~primarily relates to (i) the ~~tailings cyclone relocation~~mine maintenance truck shop (US$78.2 million), (ii) the purchase of used haul trucks from PT Freeport Indonesia (a related party) (US$47.1 million), (iii) the purchase of stators for ball mills (US$18.3 million), (iv) the tailing drain expansion (US$15.2 million), (v) a concentrator optimization project (US$12.3 million), (vi) the regrowth of a leach pad (US$10.9 million) and ~~one used shovel (See note 4(e))~~(vii) the staged flotation reactor engineering project (US$6.2 million).

~~F-183~~

Notes to the Financial Statements(continue)

9.(b)

The Company has lease contracts for various items of property, plant and equipment used in its operations. Leases of land have lease terms of 10 years, buildings and other constructions generally have lease terms between 1 and 14 years, and machinery and equipment generally have lease terms between 4 and 14 years.

The Company also has certain leases of machinery with lease terms of 12 months or less and leases of low-value office equipment. The Company has elected and applies the IFRS 16 exemptions for short-term leases and leases of low-value assets for these leases.

Set out below are the carrying amounts of right-of-use assets recognized and the movements during the period:

	January 1, 2019		Additions		Adjustments			Disposals			December 31, 2019
	US$(000)		US$(000)		US$(000)			US$(000)			US$(000)
Cost
Land		11,008		-		(700	)		(457	)		9,851
Buildings and other constructions		55,114		1,192		-			(370	)		55,936
Machinery and equipment		29,606		150		-			(102	)		29,654
		95,728		1,342		(700	)		(929	)		95,441
Accumulated depreciation
Land		-		1,712		-			(457	)		1,255
Buildings and other constructions		-		6,613		-			(344	)		6,269
Machinery and equipment		-		3,163		-			(102	)		3,061
		-		11,488		-			(903	)		10,585
Net cost		95,728										84,856

Trade accounts payable

Trade accounts payable are primarily originated by the acquisition of materials, supplies, services and spare parts. These obligations are primarily denominated in ~~U.S.~~US dollars, have current maturities and do not accrue interest. No guarantees have been granted. ~~The decrease in trade accounts payable during 2016, primarily related to the completion of Cerro Verde’s production unit expansion.~~ As of December 31, ~~2016,~~2019, trade accounts payable includes US$~~12.7~~30.3 million related to capital projects ~~compared to US$279.4~~(US$42.4 million as of December 31, ~~2015.~~2018).

Notes to the Financial Statements(continue)

~~10.~~9.

Other ~~Financial Liabilities (debt)~~accounts payable

This item is made up as follows:

December 31,
2016 December 31,
2015
US$(000) US$(000)

Current Debt
Leases 161 169
Promissory notes - 43,000

Total current debt 161 43,169

Non-Current Debt
Senior unsecured credit facility (a) 1,400,000 1,800,000
Less : Debt issuance cost (10,171 ) (19,072 )

Senior unsecured credit facility, net 1,389,829 1,780,928
Shareholder loans (b) 606,014 600,907
Leases - 160

Total non-current debt 1,995,843 2,381,995

Total Debt 1,996,004 2,425,164

	December 31, 2019		December 31, 2018
	US$(000)		US$(000)
Current
Royalties and mining taxes (a)		95,120		97,263
Other		4,260		3,991

Total current		99,380		101,254

Non-current
Royalties and mining taxes (b)		362,464		215,070

Total other accounts payable		461,844		316,324

(a)

As of December 31, 2019, represents the current portion of the monthly payments of the installment programs for disputed mining royalties for the year 2013 and special mining tax for the period October 2011 through December 2013, for which payments will start in the first quarter of 2020 (US$50.1 million, including interest, deferred interest and penalties of US$29.1 million) and the remaining monthly payments of the installment programs for disputed mining royalties for the period January 2009 through September 2011 and for the year 2012 (US$45.0 million, including interest and penalties of US$26.5 million) (see Note 13(d)).

As of December 31, 2018, represents the current portion of the monthly payments of the new installment programs approved by SUNAT which the Company will start paying in second-quarter 2019, related to disputed mining royalties for the period January 2009 through September 2011 of US$23.8 million and interest, deferral interest and penalties of US$41.4 million. The current amount also includes the remaining monthly payments of the installment program approved by SUNAT related to disputed mining royalties for the years 2006 to 2008 of US$13.2 million and interest and penalties of US$18.9 million.

(b)

As of December 31, 2019, represents the non-current portion of the monthly payments of the installment programs of disputed mining royalties for the period January 2009 through September 2011 and for the years 2012 and 2013 (US$273.8 million, including interest and penalties of US$157.5 million) and special mining tax for the period October 2011 through December 2013 (US$88.7 million (see Note 13(d)).

As of December 31, 2018, represents the non-current portion of the monthly payments of the new installment programs related to disputed mining royalties for the period January 2009 through September 2011 of US$85.5 million and interest and penalties of US$129.6 million.

Notes to the Financial Statements(continue)

10.

Other financial liabilities (debt)

This item is made up as follows:

	December 31, 2019			December 31, 2018
	US$(000)			US$(000)
Current debt:
Lease liabilities (a)		8,855			-

Non-current debt:
Senior unsecured credit facility (b)		830,000			1,030,000
Lease liabilities (a)		76,944			-
Less: Debt issuance cost		(4,124	)		(7,190	)
Total non-current debt		902,820			1,022,810
Total other financial liabilities		911,675			1,022,810

(a)

The lease liability consists of leased land, buildings and other constructions, and machinery and equipment which are used in mine operations. Set out below are the carrying amounts of lease liabilities and the movements during the period:

	2019
	US$(000)
Balance at beginning of the year:		95,728
Additions		550
Interest expense on lease liabilities		5,242
Payments		(10,479	)
Payments of Interest		(5,242	)

Balance at end of the year		85,799

The following are the amounts recognized in profit or loss:

	2019
	US$(000)
Depreciation charge of right-of-use assets, see Note 15		11,488
Interest expense on lease liabilities, see Note 18		5,242
Expense relating to variable lease payments, low-value and short-term leases, see Note 15		7,069

		23,799

The Company has certain lease contracts for machinery and equipment used in mine operations that contain variable payments based on the number of hours that machinery or equipment is used in operations.

(b)

In March 2014, the Company entered into a five-year, US$1.8 billion senior unsecured credit facility with several banks led by Citibank N.A. as the administrative agent. The credit facility allowed for term loan borrowings up to the full amount of the facility, less any amounts issued and outstanding under a US$500 million letter of credit sublimit. Interest on amounts drawn under the term loan is based on London Interbank Offered Rate (LIBOR) plus a spread (currently 1.9%) based on the Company´s total net debt to earnings before interest, taxes, depreciation and amortization (EBITDA) ratio, as defined in the agreement. The disbursements were mainly used to financea portion of the ~~Company´s~~Company’s expansion project.

Notes to the Financial Statements(continue)

In June 2017, the Company entered into an amendment to the senior unsecured credit facility, which extends the maturity and increased the outstanding amount by US$225 million. After the amendment, the balance of the total credit facility was US$1.5 billion. As of December 31, 2019, the Company had repaid US$670 million (US$470 million as of December 31, 2018).

The credit facility ~~amortizes~~calls for amortization in ~~three~~four installments, ~~in amounts necessary for the aggregate borrowings and outstanding letters of credit not to exceed 85%~~with 15% of the ~~US$1.8 billion commitment~~total facility due on ~~September~~December 31, 2020 (fully repaid as of December 31, 2019), 15% due on June 30, ~~2017, 70%~~2021 (fully repaid as of December 31, 2019), 35% due on December 31, 2021 (US$305 million after the March ~~31, 2018,~~2019 repayment) and 35% ~~on September 30, 2018, with the remaining balance~~ due on June 19, 2022 (US$525 million).

Interest on the ~~maturity date of March 10, 2019.~~ credit facility is based on the London Interbank Offered Rate (LIBOR) plus a spread (currently 1.9%) based on the Company´s total net debt to earnings before interest, taxes, depreciation and amortization (EBITDA) ratio, as defined in the agreement.

During the year ~~2016,~~2019, the Company ~~repaid~~recognized charges of US$~~400~~1.3 million (US$1.9 million during the year 2018 and US$2.0 million during the year 2017) for issuance costs related to debt extinguishment caused by the early March 2019 in the statements of ~~the credit facility borrowings and no~~comprehensive income (see Note 18).

No letters of credit were ~~issued. As of December 31, 2016,~~issued and there are no guarantees provided for the credit ~~facility.~~facility as of December 31, 2019.

Restrictive Covenants –

The senior unsecured credit facility contains certain financial ratios that the Company must comply with on a quarterly basis, including a total net debt to EBITDA ratio and an interest coverage ratio, which are defined by the agreement. As of December 31, ~~2016,~~2019, the Company was in compliance with all of its covenants.

~~F-184~~

Notes to the Financial Statements(continue)

~~(b)~~(d)

~~In December 2014,~~Following is the ~~Company entered into shareholder loan agreements with, or affiliates~~movement of ~~FMC, Compañía de Minas Buenaventura SAA and Sumitomo, that are currently subordinated to~~ the ~~senior unsecured credit facility described in section (a) above. These agreements allow~~changes derived from the financing activities for ~~borrowings up to an amount of US$800 million in aggregate. At~~the year ended December 31, 2016, the Company had borrowed US$606 million under these loan agreements (including US$6 million of interest). The interest rate is currently calculated based on the LIBOR rate plus the average rate of the senior unsecured credit facility, plus 0.5% (currently 3.17%). In the event these loans are no longer subordinated to the senior unsecured credit facility, the rate would be LIBOR plus the current spread on the credit facility. The loans mature on December 22, 2019 unless at that time there is senior financing associated with the expansion project that is senior to the loans, in which case the loans mature two years following the maturity of the senior financing.and 2018:

	January 01, 2018			Additions		Payments			Others		December 31, 2018			IFRS 16 adoption		Additions		Payments			Others			December 31, 2019
	US$(000)			US$(000)		US$(000)			US$(000)		US$(000)			US$(000)		US$(000)		US$(000)			US$(000)			US$(000)

Current:
Leases, see Note 10 (a)		-			-		-			-		-			8,119		464		(10,479	)		10,751			8,855

Non-current:
Senior unsecured credit facility		1,280,000			-		(250,000	)		-		1,030,000			-		-		(200,000	)		-			830,000
Debt issuance cost		(11,512	)		-		-			4,322		(7,190	)		-		-		-			3,066			(4,124	)
Leases, see Note 10 (a)		-			-		-			-		-			87,609		86		-			(10,751	)		76,944

Total liabilities from financing activities		1,268,488			-		(250,000	)		4,322		1,022,810			95,728		550		(210,479	)		3,066			911,675

Notes to the Financial Statements(continue)

11.

Provisions

This item is made up as follows:

December 31,
2016 December 31,
2015
US$(000) US$(000)
Current:
Provision for social commitments (a) 11,722 -
Provisions related to services and freight not invoiced 11,231 12,520
Provision for legal contingencies 1,505 -
Provision for remediation and mine closure (b) - 2,142
Embedded derivatives (Note 21) - 18,847

24,458 33,509

Non – current:
Provision for remediation and mine closure (b) 153,313 159,128
Provision for social commitments (a) 4,060 -
Other long-term liabilities 7,249 4,675

164,622 163,803

	December 31, 2019		December 31, 2018
	US$(000)		US$(000)

Current:
Services and freight not invoiced (a)		27,945		11,823
Provision for social commitments (b)		7,677		1,815
Provision for remediation and mine closure (c)		241		-
Provision for legal contingencies		-		1,719
Total current		35,863		15,357

Non–current:
Provision for remediation and mine closure (c)		195,659		131,888
Royalties and mining tax (d)		62,797		191,299
Other long-term liabilities (e)		12,117		11,033
Provision for legal contingencies (e)		4,800		-
Provision for social commitments (b)		3,046		8,111

Total non-current		278,419		342,331

(a)

~~Corresponds to~~As of December 31, 2019, primarily represents the provision for ~~social commitments associated with an irrigation project in La Joya~~services and freights not invoiced (US$~~10.3~~20.9 million) and ~~repaving Alata-Congata Road~~penalties related to land rights with INGEMMET (Instituto Geológico Minero y Metalúrgico), (US$~~5.5~~7.0 million).

(b)

The provision for social commitments as of December 31, 2019, is associated with repaving Alata-Congata Road (US$6.3 million) and an irrigation project in La Joya (US$4.4 million).

(c)

The Company’s mineral exploitation activities are subject to environmental protection standards. In order to comply with these standards, the Company has obtained the approval for the Environment Adequacy Program (PAMA) and for the Environmental Impact Studies (EIA), required for the operation of Cerro Verde’s production unit.

On October 14, 2003, Law N° 28090 was enacted, which regulates the commitments and procedures that entities involved in mining activities must follow in order to prepare, file and implement a mine site closing plan, as well as the respective environmental guarantees that assure compliance with the plan in accordance with protection, conservation and restoration of the environment. On August 15, 2005, the regulations regarding this law were approved.

During 2006, in compliance with the mentioned law, the Company completed the closure plans for its mine site, and presented it to the Ministry of Energy and Mines. ~~On October 5, 2009,~~

Notes to the ~~Ministry of Energy and Mines issued~~Financial Statements(continue)

The closure plans for its mine site was approved by Resolution No 302-2009 ~~MEM-AAA, approving the Company’s mine closure plan.~~MEM-AAM and its modifications were approved by Resolution No 207-2012 MEM-AAM, Resolution No 186-2014 MEM-DGAAM and its last modification, Resolution No 032-2018 MEM-DGAAM. As of December 31, ~~2016,~~2019, pursuant to legal requirements, the Company has issued ~~letters~~a letter of credit to the Ministry of Energy and Mines totaling US$~~28.4~~51.0 million to secure mine closure plans.

~~F-185~~

~~Notes to the Financial Statements~~ ~~(continue)~~

The ~~estimate of~~provision for remediation and mine ~~closing~~closure costs is based on studies prepared by independent consultants and based on current environmental regulations. This provision corresponds mainly to the activities to be performed in order to restore the areas affected by mining activities. The main tasks to be performed include ground removal, soil recovery, and dismantling of plant and equipment.

The table below presents the changes in the provision for remediation and mine closure:

	2016			2015		2019		2018			2017
	US$(000)			US$(000)		US$(000)		US$(000)			US$(000)

Beginning balance		161,270			119,948		131,888		156,859			153,313
Accretion expense		4,391			3,985		4,048		4,322			4,595
Changes in estimates, note 8		(16,091	)		33,803
Additions, note 8		3,743			3,534
Changes in estimates, Note 7							41,130		(32,017	)		(3,710	)
Additions, Note 7							18,834		2,724			2,661

Final balance		153,313			161,270		195,900		131,888			156,859

As of December 31, ~~2016,~~2019, the Company’s provision for remediation and mine closure was US$~~153.3~~195.9 million (reflecting the future value of the provision for remediation and mine closure of US$~~368.8~~374.4 million, discounted using an annual risk-free rate of ~~2.97%~~2.28%). As of December 31, ~~2015,~~2018, the Company’s provision for remediation and mine closure was US$~~161.3~~131.9 million (reflecting the future value of the provision for remediation and mine closure of US$~~368.8~~374.4 million, discounted using an annual risk-free rate of ~~2.81%~~2.99%). As of December 31, 2017, the Company’s provision for remediation and mine closure was US $156.9 million (reflecting the future value of the provision for remediation and mine closure of US $374.4 million, discounted using an annual risk-free rate of 2.73%) The Company considers this liability sufficient to meet the current environmental protection laws approved by the Ministry of Energy and Mines (MEM).

As of December 31, 2019, changes in estimates (US$41.1 million) are mainly due to changes in the escalation ratio.

~~F-186~~(d)

As of December 31, 2019, represents the non-current portion of net assets tax (ITAN) for the years 2010 and 2011 of US$12.1 million and interest and penalties associated with (i) income tax related to disputed mining royalties for the year 2010 of US$42.1 million, (ii) ITAN for the years 2010 and 2011 of US$6.7 million and (iii) SRF for the year 2013 of US$1.9 million.

Notes to the Financial Statements(continue)

As of December 31, 2018, represents the non-current portion of net assets tax (ITAN) for the years 2010, 2011 and 2013 of US$19.6 million and interest and penalties of (i) disputed mining royalties for the period October 2011 through December 2013 of US$70.0 million, (ii) special mining tax for the year 2011 through the year 2013 of US$50.8 million, (iii) income tax related to disputed mining royalties for the year 2010 of US$41.1 million and (iv) ITAN for the years 2010, 2011 and 2013 of US$9.8 million.

(e)

The provision for legal contingencies as of December 31, 2019 is associated with OSINERGMIN and SUNAFIL (National Superintendence of Labor Inspection) fines, which have been impugned by the Company.

12.

Shareholders’ equity, net

(a)

Capital stock -

As of December 31, ~~2016,~~2019, the authorized, subscribed and paid-up capital in accordance with the Company’s by-laws and its related modifications was 350,056,012 common shares.

According to the July 11, 2003, Shareholders Agreement, the nominal value of the shares was denominated in US dollars in an amount of US$0.54 per share. As a consequence of the capitalization of restricted earnings associated with tax benefits (reinvestment credits), in December 2009, the nominal value of the shares was increased to US$2.83 per share.

The quoted price of these shares was US$~~19.11~~19.3 per share as of December 31, ~~2016~~2019 (US$~~14.50~~20.80 per share as of December 31, ~~2015)~~2018).

As of December 31, ~~2016,~~2019, the Company’s capital stock structure is as follows:

Percentage of individual interest in capital	Number of shareholders		Total percentage interest		Number of shareholders		Total percentage interest

Up to 1.00		2,860		4.37		2,829		4.38
From 1.01 to 20.00		2		21.07		2		21.06
From 20.01 to 30.00		1		21.00		1		21.00
From 30.01 to 60.00		1		53.56		1		53.56

		2,864		100.00		2,833		100.00

Notes to the Financial Statements(continue)

(b)

Other capital reserves -

Other capital reserves ~~include~~includes the Company’s legal reserve, which is in accordance with the Peruvian Companies Act, and is created through the transfer of 10% of the earnings for the year up to a maximum of 20% of the paid-in capital. The legal reserve must be used to compensate for losses in the absence of non-distributed earnings or non-restricted reserves, and transfers made to compensate for losses must be replaced with future earnings. This legal reserve may also be used to increase capital stock but the balance must be restored from future earnings.

(c)

Dividend Distribution -

Dividends paid to shareholders, other than domiciled legal entities, are subject to retention of income tax.

~~On December 31, 2014, Law N° 30296 was enacted increasing the withholding tax rate to 6.8% for the years 2015 and 2016, 8.0% for 2017 and 2018 and 9.3% thereafter.~~ On December 10, 2016, Legislative Decree 1261 was enacted reducing the withholding tax rate to 5.0% beginning January 1, 2017. ~~For the years ended December 31, 2016, 2015 and 2014, the Company did not pay dividends.~~

~~F-187~~

At the annual mandatory shareholders meeting held on March 29, 2019, shareholders approved a US$150 million dividend payment (US$0.428503 per common share). The total amount of these dividends was applied against retained earnings. This dividend was paid on April 30, 2019, and complied with the withholding tax rules (4.1%).

~~Notes to~~At the ~~Financial Statements~~ ~~(continue)~~annual mandatory shareholders meeting held on March 23, 2018, shareholders approved a US$200 million dividend payment (US$0.571337 per common share). The total amount of these dividends was applied against retained earnings. This dividend was paid on April 24, 2018, and complied with the withholding tax rules (4.1%).

13.

Tax situation

(a)

On February 13, 1998, the Company signed an Agreement of Guarantees and Measures to Promote Investments with the Government of Peru, under the Peruvian General Mining Law (the 1998 Stability Agreement). Upon approval of the 1998 Stability Agreement, the Company was subject to the tax, administrative and exchange regulations in force at May 6, 1996, for a period of 15 years, beginning January 1, 1999, and ending December 31, 2013.

On July 17, 2012, the Company signed a new Agreement of Guarantees and Measures to Promote Investments with the Government of Peru, under the Peruvian General Mining Law. Upon approval of this stability agreement, the Company became subject to the tax, administrative and exchange regulations in force at July 17, 2012, for a period of 15 years, beginning January 1, 2014, and ending December 31, 2028.

(b)

Under its current 15-year tax stability agreement, the Peruvian income tax rate applicable to the Company is 32%. As of December 31, ~~2016,~~2019, prepayments of income tax, which the Company expects to be used to offset future income tax provisions or will be refunded by SUNAT, ~~was~~totaled US$~~19.6~~128.1 million (see Note 7)6).

For the year ended December 31, 2019, the Company recognized current income tax expense of US$156.5 million (including US$28.4 million of mining royalties, US$18.6 million of special mining tax and US$1.8 million for the SRF), and a deferred income tax expense of US$141.6 million, resulting in total income tax expense of US$298.1 million that has been included in the statements of comprehensive income.

For the year ended December 31, 2018, the Company recognized current income tax expense of US$263.0 million (including US$34.9 million of mining royalties and US$1.5 million for the SRF partially offset by a credit of US$(28.2) million of special mining tax), and a deferred income tax expense of US$62.2 million, resulting in total income tax expense of US$325.2 million that has been included in the statements of comprehensive income.

For the year ended December 31, 2017, the Company recognized current income tax expense of US$655.1 million (including US$102.6 million of special mining tax, US$110.7 million of mining royalties and US$10.9 million for the SRF), and a deferred income tax credit of US$(169.1) million, resulting in total income tax expense of US$486.0 million that has been included in the statements of comprehensive.

Notes to the Financial Statements(continue)

(c)

SUNAT has the right to examine, and if necessary, amend the Company’s income tax ~~provision~~return for the last four years. The Company’s income tax ~~and VAT~~ for the years ~~2012~~2013 through ~~2016~~2018 are open to examination by the tax authorities. ~~The year 2011 is under review by SUNAT for both income tax and VAT.~~ To date, SUNAT has concluded its review of the Company’s income tax and VAT exams through the year ~~2010,~~2012, and the Company is in the claim ~~and~~and/or appeal process for the years ~~2002~~2003 through ~~2010.~~2012.

Due to the many possible interpretations of current legislation, it is not possible to determine whether or not future reviews (including reviews of years pending examination) will result in additional tax liabilities for the Company. If management determines it is ~~probable~~more likely than not that additional taxes are payable, these amounts, including any related interest and penalties, will be charged to expense in that period. In management’s and its legal advisors’ opinions, any possible tax settlement is not expected to be ~~significant~~material to the financial statements.

(d)

Royalties and special mining taxes –

On June 23, 2004, Law N° 28528 was approved, which requires the holder of a mineral concession to pay a royalty in return for the exploitation of metallic and non-metallic minerals. The royalty is calculated using rates ranging from 1% to 3% of the value of concentrate or its equivalent according to the international price of the commodity published by the Ministry of Energy and Mines. As described in Note 13(a), prior to January 1, 2014, the Company determined that these royalties were not applicable ~~to the Company~~ because it operated under the 1998 Stability Agreement with the Peruvian government. However, beginning January 1, 2014, the Company began paying royalties calculated on operating income with rates between 1% to 12% and a new special mining tax for its entire production ~~base~~basis under its current 15-year stability ~~agreement.~~agreement, which became effective January 1, 2014. See Note 13(b) for a summary of amounts recognized by the Company for special mining tax and mining royalties for the years ended December 31, ~~2016, 2015~~2019, 2018 and ~~2014.~~2017.

~~F-188~~

Notes to the Financial Statements(continue)

SUNAT ~~has~~ assessed mining royalties on materials processed by the Company´s concentrator, which commenced operations in late 2006. These assessments cover the period December 2006 to December ~~2007 and~~2013. The Company contested each of these assessments because it believes that its 1998 stability agreement exempts from royalties all minerals extracted from its mining concession, irrespective of the method used for processing such minerals. No assessments can be issued for years ~~2008 to September 2011.~~after 2013, as the Company began paying royalties on all of its production in January 2014 under its new 15-year stability agreement.

~~SUNAT issued resolutions denying the claims made by~~On October 29, 2019, the Company ~~from December 2006 through December 2009. The Company appealed this decision~~completed the payments of disputed assessments related to ~~Tax Court. In July 2013, the Peruvian Tax Tribunal issued two decisions reaffirming assessments~~mining royalties for the period December 2006 ~~through~~to December ~~2008. Decisions by~~2008 that were under an installment program since 2014, Under that installment program, the ~~Tax Court ended~~Company made payments totaling S/711.1 million (US$221.9 million based on the ~~administrative stage~~date of payment exchange rate and US$214.4 million based on the ~~appeal procedures for these assessments.~~December 31, 2019, exchange rate).

On September 18, 2013, the Company filed two administrative demands in the court system. In connection with demands for the periods 2006 to 2007 the Eighteenth Contentious Administrative Court dismissed this claim. On May 2, 2016, Cerro Verde appealed this decision.

With respect to the judiciary appeal related to ~~the assessment~~disputed royalty assessments for the year ~~2008, on December 17, 2014,~~2006-2007, on August 9, 2017, the ~~Eighteenth~~Company filed a cassation appeal before the Supreme Court against the resolution issued by the Seventh Contentious Administrative Court, ~~rendered its decision upholding the Company’s position and nullifying SUNAT’s assessment and the Tax Tribunal´s resolution (S/106.4 million).~~which was admitted in December 2017. The Court’s position also invalidates all penalties and interest assessed by SUNAT for that period (S/139.7 million). In December 2014, SUNAT and the Tax Court appealed this decision. On January 29, 2016, the Sixth Superior Justice Court nullified the decision of the Eighteenth Contentious Administrative Court. On February 23, 2016, the Company appealed the decision tooral hearing before the Supreme ~~Court.~~Court took place on November 20, 2018 and their decision is pending.

In September ~~2013,~~2018, the Peruvian Tax Tribunal confirmed SUNAT’s resolution that ordered the payment of royalties and denied the Company’s request to waive penalties and interest for the period January 2009 through September 2011. The Company elected not to appeal the Tax Tribunal’s decision to the Peruvian Judiciary and in early 2020, the Company ~~filed a Constitutional claim in the court system related to the assessments because~~initiated international arbitration.

In October 2018, SUNAT notified the Company ~~believes that its 1998 Stability Agreement exempted all minerals extracted from its mining concessions from royalties, irrespective of the method used~~demands for ~~processing those minerals. On September 15, 2016, Judiciary court dismissed the constitutional claim and on October 25, 2016, the Company appealed this decision.~~

On October 1, 2013, SUNAT served the Company a demand for payment totaling S/492 million (approximately US$146 million based on the December 31, 2016 exchange rate, including interest and penalties of US$86 million)payments based on the Tax Tribunal’s decisions for the period January 2009 to September 2011. The Company requested, and was granted two installment payment programs, including a six-month deferral and66 equal monthly payments for each one, for the period January 2009 through September 2011. Total debt as of December ~~2006~~31, 2019 is S/1.0 billion(approximately US$314.1 million based on the December 31, 2019, exchange rate, including deferred interest, interest and penalties of US$202.8 million).As of December 31, 2019, the Company has made payments totaling S/315.1 million (US$94.7 million based on the date of payment exchange rate and US$95.0 million based on the December 31, 2019, exchange rate).

On January 18, 2018, the Company received assessments from SUNAT related to mining royalties for the fourth quarter of 2011, on February 15, 2018, the Company appealed these assessments and SUNAT issued resolutions denying this appeal. On November 21, 2018, the Company appealed SUNAT’s resolution to the Tax Court. On December ~~2008. As permitted~~4, 2019, the Company received a resolution denying the appeal of assessments for the fourth quarter of 2011. On December 18, 2019, SUNAT notified the Company of its demands for payment and on December 26, 2019, the Company paid the total debt of S/57.6 million (US$17.3 million based on the date of payment exchange rate and US$17.4 million based on the December 31, 2019, exchange rate). Also, on January 18, 2018, the Company received assessments from SUNAT related to special mining tax from the fourth quarter of 2011 to the fourth quarter of 2012. The Company appealed these assessments and SUNAT issued resolutions denying this appeal. Consequently, the Company appealed these assessments to the Tax Court which was also denied the appeal in July 2019.The Company then requested, and was granted an installment payment program, including a six-month deferral and66 equal monthly payments, for the fourth quarter of 2011 through the fourth quarter of 2012. Total debt as of December 31, 2019, is S/255.8 million(approximately US$77.1 million based on theDecember 31, 2019, exchange rate, including deferred interest, interest and penalties of US$40.5 million).Payments for this installment program will start in the first quarter of 2020.

Notes to the Financial Statements(continue)

On April 18, 2018, the Company received assessments from SUNAT related to mining royalties for the year 2012. On May 17, 2018, the Company appealed these assessments. On January 23, 2019, the Company received a resolution issued by ~~law,~~SUNAT denying the appeal of assessments for the year 2012. The Company decided not to appeal these resolutions.The Company requested, and was granted an installment payment program, ~~that deferred payment for six months~~including a six-month deferral and ~~thereafter satisfies the amount via~~ 66 equal monthly ~~payments. As~~payments, for the year 2012. Total debt as of December 31, ~~2016,~~2019, is S/266.1 million(approximately US$80.2 million based on theDecember31, 2019, exchange rate, including deferred interest, interest and penalties of US$45.7 million). The Company has made payments totaling S/~~323~~65.7 million (US$~~104~~19.5 million based on the date of payment exchange rate and US$9619.8 million based on the December 31, ~~2016~~2019, exchange ~~rates) under~~rate).

On October 10, 2018, the Company received assessments from SUNAT related to mining royalties and special mining tax for the year 2013. On November 7, 2018, the Company appealed these assessments. On May 28, 2019, the Company received resolutions issued by SUNAT denying the appeal of these assessments for the year 2013. The Company decided not to appeal these resolutions. The Company requested, and was granted two installment ~~program, which are presented~~payment programs, including a six-month deferral and 66 equal monthly payments for each one, for the year 2013. As of December 31, 2019, the amount of these assessments, including interest and penalties for mining royalties for the year 2013 is S/183.9 million (approximately US$55.4 million based on the December 31, 2019, exchange rate including interest and penalties of US$29.5 million) and for the special mining tax for the year 2013 is S/151.0 million (approximately US$45.5 million based on the December 31, 2019, exchange rate including interest and penalties of US$22.1 million). Payments for these installment programs will start in the ~~non-current portion~~first quarter of ~~other non-financial assets in~~2020.

In December 2017, as a result of the ~~statements of financial position (see Note 7). Based~~unfavorable Supreme Court decision on the ~~results rendered by the Eighteenth Contentious Administrative Court as is described in the previous paragraph,~~2008 royalty matter, the Company requested ~~an injunction that was accepted by~~ the ~~Judiciary and implied a modification~~return of the ~~installment program excluding~~amounts that would have been in excess for FONAVI (National Housing Fund) (December 2012 to December 2013), GEM (fourth quarter 2011 until the ~~2008 portion through SUNAT´s resolution notified to the Company on October 29, 2015. On August 18, 2016, the Sixth Superior Justice Court nullified the injunction described above~~fourth quarter 2012) and ~~on September 28, 2016, SUNAT modified the Installment payment program to include the 2008 portion.~~customs duties (2013).

~~F-189~~

Notes to the Financial Statements(continue)

In July 2013, a hearing on SUNAT's assessment for 2009 was held, but no decision has been issued by the Tax Tribunal for that year. As of December 31, 2016, the amount of the assessment, including interest and penalties, for the year 2009 was S/268 million (approximately US $80 million based on the December 31, 2016 exchange rate).

In April 2016, the Company received assessments from SUNAT for the year 2010 and for January to September 2011. On May 11, 2016, the Company appealed these assessments. At December 31, 2016, the amount of assessments from SUNAT including interest and penalties for the years 2010 and January to September 2011 is S/543 million (approximately US$162 million based on the December 31, 2016 exchange rate).

As of December 31, 2016, the Company estimates that the total exposure associated with mining royalties for the period from December 2006 to December 2013, including interest and penalties, totals US$544 million (based on the December 31, 2016 exchange rate).

As of December 31, 2016, no provisions were recorded for these assessments or for the amounts paid under the installment payment program because management and its external legal advisors believe the Company’s 1998 Stability Agreement exempted it from these royalties and believes that the resolution will be favorable to the Company and any payments should be recoverable.

(e)

~~Assessments~~Other assessments received from SUNAT ~~(different than mining royalties)~~

The Company has also received assessments from SUNAT for additional taxes (other than the mining royalty and special mining tax explained in ~~(d)~~13(d) above), including penalties and interest. The Company has filed ~~or will file~~ objections to the assessments because it believes it has properly determined and paid its taxes. A summary of these assessments follows:

Year Taxes Penalty and
interest Total
US$(000) US$(000) US$(000)

2002 – 2005 15,909 51,495 67,404
2006 6,545 49,491 56,036
2007 12,376 17,809 30,185
2008 20,797 12,968 33,765
2009 56,198 47,719 103,917
2010 65,997 98,284 164,281
2011 6,332 2,648 8,980
2014 –2016 15,909 - 15,909

200,063 280,414 480,477

~~F-190~~

~~Notes to the Financial Statements~~ ~~(continue)~~

Year	Taxes		Penalty and interest		Total
		US$(000)		US$(000)		US$(000)

2003 – 2005		8,857		39,196		48,053
2006		10,990		51,943		62,933
2007		12,376		17,845		30,221
2008		20,797		12,968		33,765
2009		56,388		51,219		107,607
2010		62,581		107,324		169,905
2011		49,055		65,189		114,244
2012		51,981		11,257		63,238
2014 –2019		38,975		-		38,975

		312,000		356,941		668,941

As of December 31, ~~2016,~~2019, the Company has paid US$~~180.7~~396.5 million ~~(included~~of which US$186.6 million is included in “other ~~non–financial assets-non-current” (See~~non-financial assets, non-current” (see Note 7)6) in the statements of financial ~~position)~~position for these disputed tax ~~assessments, which it believes is collectible. No amounts have been accrued for these~~ assessments.

(f)

As of December 31, ~~2016~~2019 and ~~2015,~~2018, the Company has issued letters of credit to secure tax obligations amounting to S/~~387.5~~1,643.9 million (equivalent to ~~US $115.3~~US$495.6 million) and S/~~383.8~~1,137.4 million (equivalent to US$~~112.5~~336.6 million), respectively, of which ~~S/372.2 million (equivalent to US$110.8 million) and S/369.3 million (equivalent to US$108.2 million)~~ are primarily related to ~~mining royalties for the years ended December 31, 2016 and 2015, respectively.~~royalty matter.

Notes to the Financial Statements(continue)

(g)

The Company recognizes the effect of temporary differences between the accounting base for financial reporting purposes and the tax base. The composition of this item is made up as follows:

	December 31, 2016		December 31, 2015		December 31, 2019			December 31, 2018		December 31, 2017
	US$(000)		US$(000)			US$(000)			US$(000)		US$(000)
Income tax
Deferred income tax
Asset
Royalty accrual						84,546			109,505		127,475
Provision for remediation and mine closure		9,180		5,638		17,309			15,131		12,083
Embedded derivatives for price adjustment of copper concentrate and cathode						(10,742	)		6,050		-
Unpaid vacations		4,055		2,515		6,618			5,937		5,293
Provision for mining taxes		4,003		1,505		3,737			4,120		8,742
SUNAT Assessments						-			4,055		4,077
Cost of net asset for the construction of the tailing dam		2,321		1,682		1,191			2,638		2,007
Development costs		228		332		72			122		183
Price adjustment of copper concentrates and cathode		-		7,849
Leases net assets						(2,454	)		-
Other provisions		5,248		4,750		10,276			10,450		4,240
						110,553			158,008		164,100
		25,035		24,271

Liability
Difference in depreciation method		283,882		245,670
Property, plant and equipment depreciation						429,466			337,642		261,434
Stripping activity asset						33,660			27,464		22,014
Difference in valuation of inventories		25,087		10,997		14,885			16,605		16,264
Price adjustment of copper concentrates and cathode		24,128		-
Stripping activity asset		23,594		17,820

		356,691		274,487
Debt issuance costs						933			1,894		2,663
Lease liabilities						(2,860	)		-		-
Price adjustment of copper concentrate and cathode						-			-		25,840
						476,084			383,605		328,215
Deferred liabilities, net		331,656		250,216		365,531			225,597		164,115

Supplementary Retirement Fund
Supplementary retirement fund
Deferred liability		3,458		2,937		4,258			2,651		1,890

Total deferred income tax liability, net		335,114		253,153		369,789			228,248		166,005

~~F-191~~

Notes to the Financial Statements(continue)

Reconciliation of the income tax rate -

For the years ended December 31, ~~2016, 2015~~2019, 2018 and ~~2014,~~2017, the income tax expense recorded differs from the result of applying the legal rate to the Company’s profit before income tax, as detailed below:

	2016			2015			2014			2019			2018			2017
	US$(000)			US$(000)			US$(000)				US$(000)			US$(000)			US$(000)

Profit before income tax		603,989			79,530			616,135			688,451			444,880			835,924
Income tax rate		32	%		32	%		32	%		32	%		32	%		32	%

Expected income tax expense		193,276			25,450			197,163			220,304			142,362			267,496
Non - deductible expenses		27,788			19,534			7,013			28,181			25,352			25,217
Royalty case											-			143,728			(12,029	)
Uncertain tax positions - IFRIC 23											20,767			-			-
Special mining tax and mining royalties		(12,084	)		(4,672	)		(16,677	)		(15,660	)		(25,165	)		(21,704	)
Income tax rate change effect on deferred taxes for change in Peruvian tax law once the current Stability Contract expires (from 26% to 29.5%)		13,850			-			-
Special mining burden (GEM)											-			(22,334	)		-
Income tax rate change effect on deferred taxes for change in Peruvian tax law once the current Stability Contract expires (from 32% to 31.18%)											(2,746	)		(1,958	)		(1,632	)
Income tax true – ups		1,677			(6,082	)		(6,985	)		(10,255	)		(10,312	)		10,210
Others		(1,913	)		(3,047	)		82			7,620			4,896			(4,125	)

Current and deferred income tax charges to results		222,594			31,183			180,596			248,211			256,569			263,433
Mining taxes charged to results		37,763			14,599			52,116			48,036			65,055			213,280
Supplementary retirement fund charged to results		2,725			464			5,817			1,827			3,546			9,330

		263,082			46,246			238,529			298,074			325,170			486,043

Effective income tax		43.56	%		58.15	%		38,71	%		43.30	%		73.09	%		58.14	%

Notes to the Financial Statements(continue)

Income tax -

The income tax ~~expenses~~expense (benefit) for the years ended December 31, ~~2016, 2015~~2019, 2018 and ~~2014~~2017 is shown below:

2016 2015 2014
US$(000) US$(000) US$(000)
Income tax
Current 141,153 (832 ) 220,454
Deferred 81,441 32,015 (39,858 )

222,594 31,183 180,596

Mining taxes
Current Mining Royalty and Special Mining Tax 37,763 14,599 52,116

Supplementary retirement fund
Current 2,205 54 3,290
Deferred 520 410 2,527

2,725 464 5,817

Income tax expense reported in the statements of comprehensive income 263,082 46,246 238,529

~~F-192~~

~~Notes to the Financial Statements~~ ~~(continue)~~

	2019		2018		2017
		US$(000)		US$(000)		US$(000)

Income tax
Current		107,666		254,767		430,974
Deferred		139,934		61,483		(167,541	)
		247,600		316,250		263,433
Mining taxes
Current mining royalty and special mining tax		47,032		6,661		213,280

Supplementary retirement fund
Current		1,835		1,499		10,897
Deferred		1,607		760		(1,567	)
		3,442		2,259		9,330

Income tax expense reported in the statements of comprehensive income		298,074		325,170		486,043

14.

Sales of goods

(a)

This item is made up ~~of the following:~~as follows:

	For the year ended December 31, 2016					For the year ended December 31, 2015					For the year ended December 31, 2014					For the year ended December 31, 2019				For the year ended December 31, 2018				For the year ended December 31, 2017
	Pounds (000)		US$ (000)			Pounds (000)		US$ (000)			Pounds (000)		US$ (000)				Pounds (000)	US$(000)			Pounds (000)	US$(000)			Pounds (000)	US$(000)

Copper concentrate		995,386		1,967,052			440,071		794,197			375,688		949,459
Copper in concentrate																	912,974	2,294,249			962,113	2,458,088			979,243	2,702,508
Copper cathode		109,128		247,431			104,279		259,830			125,647		393,112			88,875	244,277			86,346	251,908			84,679	241,725
Other (primarily silver and molybdenum concentrate)				176,357					65,343					130,038				358,368				351,934				267,033
Subtotal Sales																		2,896,894				3,061,930				3,211,266
Less: Royalty contributions (see Note 2(k))																		(6,828	)			(7,904	)			(8,335	)

Subtotal Sales				2,390,840					1,119,370					1,472,609
Less: Royalty contributions (see Note 2(l))				(6,686	)				(3,753	)				(5,512	)
Total net sales																		2,890,066				3,054,026				3,202,931

Total Net Sales				2,384,154					1,115,617					1,467,097

Notes to the Financial Statements(continue)

Sales to related parties totaled US$~~2.3~~2.7 billion for the year ended December 31, ~~2016~~2019 (US$~~0.9 billion and US $1.1~~2.9 billion for the ~~years~~year ended December 31, ~~2015~~2018 and ~~2014, respectively)~~US$3.0 billion for the year ended December 31, 2017).

As described in Note 2(d), the Company’s copper sales are provisionally priced at shipment. Adjustments to the provisional prices are recognized as gains and losses in sales of goods through the month of settlement. Adjustments to provisional priced copper and molybdenum sales resulted in an increase to net sales of goods totaling US$~~86.3 million and US$7.9~~56.8 million for the ~~years~~year ended December 31, ~~2016~~2019, and ~~2015, respectively and in lower sales~~a decrease of US$88.8 million for ~~US$42.8 million in~~ the year ~~2014.~~ended December 31, 2018.

(b)

The following table shows net sales by geographic region based on the final destination port:

For the year ended
December 31, 2016 For the year ended
December 31, 2015 For the year ended
December 31, 2014
US$(000) US$(000) US$(000)

Asia 1,865,346 770,272 883,404
North America 213,002 79,244 113,591
Europe 161,844 65,648 170,624
South America (primarily Peru) 150,648 204,206 304,990

2,390,840 1,119,370 1,472,609
Less: Royalty contributions (see Note 2(l)) (6,686 ) (3,753 ) (5,512 )

Total Net Sales 2,384,154 1,115,617 1,467,097

~~F-193~~

~~Notes to the Financial Statements~~ ~~(continue)~~

	For the year ended December 31, 2019			For the year ended December 31, 2018			For the year ended December 31, 2017
		US$(000)			US$(000)			US$(000)

Asia		2,374,350			2,404,530			2,416,826
North America		265,599			295,448			287,174
South America (primarily Peru)		168,077			136,400			193,174
Europe		77,716			209,894			314,092
Central America		11,152			15,658			-
		2,896,894			3,061,930			3,211,266
Less: Royalty contributions (see Note 2(k))		(6,828	)		(7,904	)		(8,335	)

Total net sales		2,890,066			3,054,026			3,202,931

(c)

Concentration of sales –-

For the year ended December 31, ~~2016, 95%~~2019 92% of the Company’s sales were to related entities (FMC, Sumitomo Metal Mining Company and Climax Molybdenum). For ~~2015~~the years ended December 31,2018 and ~~2014, the 80% and 77%~~2017 94% of the Company's sales were to these related entities, respectively.

Notes to the consolidated financial statements(continued)

15.

Cost of sales

This item is made up ~~of the following:~~as follows:

For the year ended
December 31, 2016 For the year ended
December 31, 2015 For the year ended
December 31, 2014
US$(000) US$(000) US$(000)

Materials and supplies 496,918 364,234 333,521
Depreciation and amortization 472,997 244,477 164,985
Energy 229,035 118,019 91,802
Labor (a) 215,839 146,395 171,646
Third parties services 100,897 95,087 87,458
Management Fees 2,793 3,565 4,904
Change in work in process inventory (3,789 ) (118,327 ) (70,523 )
Change in finished goods inventory (3,951 ) 467 (6,774 )
Other costs 42,301 8,087 20,462

1,553,040 862,004 797,481

	For the year ended December 31, 2019			For the year ended December 31, 2018			For the year ended December 31, 2017
	US$(000)			US$(000)			US$(000)

Materials and supplies		693,292			693,316			556,022
Depreciation and amortization		523,512			512,298			456,467
Labor (a)		285,081			357,692			286,058
Energy		228,853			254,243			229,272
Third parties services		181,215			159,514			144,829
Depreciation for right-of-use assets (see Note 7 and 10(a))		11,488			-			-
Variable lease payments, low-value and short-term leases (see Note 10(a))		7,069			-			-
Management Fees		2,923			2,743			2,867
Change in finished goods inventory		(2,290	)		(5,723	)		2,060
Change in work in process inventory		(23,427	)		(8,513	)		51,412
Other costs		47,033			45,402			39,251

		1,954,749			2,010,972			1,768,238

(a)

Labor includes an expense of US$~~36.8~~32.2 million related to profit sharing for the year ended December 31, ~~2016 (credit of US$1.6~~2019 (US$60.2 million for the year ended December 31, ~~2015~~2018 and ~~expense of~~ US$~~45.8~~86.4 million for the year ended December 31, ~~2014)~~2017).

In compliance with corporate policies, the Company recognizes administrative costs directly to cost of production (approximately ~~US$23.4~~U$32 million for the year ended December 31, ~~2016,~~2019, US$~~19.5~~30.7 million for the year ended December 31, ~~2015~~2018 and US$~~20.4~~34.4 million for the year ended December 31, ~~2014)~~2017). The effect of this policy is immaterial to the financial statements as a whole.

16.

Selling Expenses

This item is made up of ~~the following:~~as follows:

	For the year ended December 31, 2016		For the year ended December 31, 2015		For the year ended December 31, 2014		For the year ended December 31, 2019		For the year ended December 31, 2018		For the year ended December 31, 2017
	US$(000)		US$(000)		US$(000)		US$(000)		US$(000)		US$(000)

Concentrate freight		122,431		51,842		50,507		98,933		126,670		131,528
Commissions		5,989		2,729		2,271		5,588		6,048		6,029
Cathode freight		2,148		1,644		1,432		1,890		1,831		1,665
Other		823		-		-		3,072		2,459		2,447

		131,391		56,215		54,210		109,483		137,008		141,669

~~F-194~~

F-251

Notes to the ~~Financial Statements~~consolidated financial statements ~~(continue)~~(continued)

17.

Other ~~operational~~operating expenses

This item is made up ~~of the following:~~as follows:

For the year ended
December 31, 2016 For the year ended
December 31, 2015 For the year ended
December 31, 2014
US$(000) US$(000) US$(000)

Provision for Social Commitment (See Note 11) 15,782 - -
Start-up cost (a) 2,080 19,568 -
Other costs, net 6,245 7,171 5,873

24,107 26,739 5,873

	For the year ended December 31, 2019		For the year ended December 31, 2018		For the year ended December 31, 2017
	US$(000)		US$(000)		US$(000)

Optimization and prefeasibility/feasibility studies (a)		14,919		450		-
Fines and penalties (b)		14,183		-		-
Tax contingencies (c)		6,119		10,711
Other expenses		2,895		2,434		15,028
Royalties, ITAN and penalties (d)		-		55,088		243,798

		38,116		68,683		258,826

(a)

~~Corresponds to start-up costs~~For the year ended December 31, 2019, represents charges related to projects for the ~~new concentrator plant in order~~optimization of the Company’s operating processes.

(b)

Primarily represents land rights penalties with INGEMMET (US$6.8 million), SUNAT penalties related to ~~reach full production capacity, which was achieved during the first quarter of 2016. See Note 1(b)~~2012 income tax audit (US$4.7 million) and OSINERGMIN fines (US$2.7 million).

(c)

Primarily represents non-income tax contingencies related to SUNAT assessments for prior years.

(d)

Primarily represents penalties for income tax related to disputed mining royalties for the year 2006 through the year 2011 of US$33.8 million, penalties on disputed mining royalties for the period January 2009 through December 2013 of US$17.7 million and profit sharing adjustments related to GEM refund of US$3.6 million.

For the year ended December 31, 2017, represents disputed royalties for the period December 2006 through September 2011 of US$174.8 million, ITAN for the years 2009 to 2013 of US$33.6 million, profit sharing adjustments related to mining royalties of US$29.2 million and penalties on disputed royalties for the period December 2006 through the year 2008 of US$6.2 million. Disputed royalties and special mining taxes for the period October 2011 through the year 2013 were recognized in “income tax expense” in the statements of comprehensive income.

F-252

Notes to the consolidated financial statements(continued)

18.

Financial ~~Expenses~~expenses

This item is made up ~~of the following:~~as follows:

For the year ended
December 31, 2016 For the year ended
December 31, 2015 For the year ended
December 31, 2014
US$(000) US$(000) US$(000)

Interest on Senior unsecured credit facility (Note 10(a)) 51,155 35,255 11,137
Interest shareholder loans (Note 10(b)) 19,836 1,181 -
Amortization of debt issuance cost 8,901 5,927 4,381
Other financial expenses 1,880 7,366 1,156
Capitalized Interest (1,334 ) (33,719 ) (16,305 )

80,438 16,010 369

	For the year ended December 31, 2019			For the year ended December 31, 2018			For the year ended December 31, 2017
	US$(000)			US$(000)			US$(000)

Interest on mining royalties (a)		68,107			370,159			144,815
Interest on senior unsecured credit facility ( see Note 10(b))		39,083			49,551			44,678
Interest for leases (see Note 10(a))		5,242			-			-
Other financial expenses		4,882			6,492			10,934
Amortization debt issuance cost		1,768			2,419			4,479
Extinguishment debt - debt issuance cost (see Note 10(b))		1,299			1,902			6,266
Interest on shareholder loans		-			-			7,992
Capitalized Interest		(4,504	)		(3,790	)		(2,252	)

		115,877			426,733			216,912

(a)

For the year ended December 31, 2019, primarily represents charges of interest related to the installment payment programs for SMT for the period October 2011 through December 2013 and disputed mining royalties for the period December 2006 through September 2011 and for the years 2012 and 2013 of US$53.6 million. Amount also includes interest associated with (i) ITAN for the years 2010, 2011 and 2013 of US$10.4 million, (ii) other taxes related to disputed mining royalty of US$2.9 million and (iii) disputed mining royalties for the period October 2011 through December 2011 of US$1.2 million.

For the year ended December 31, 2018, represents (i) interest and interest on penalties associated to disputed mining royalties for the year 2009 through the year 2013 of US$218.7 million, (ii) income tax related to disputed mining royalties for the year 2006 through the year 2011 of US$75.7 million, (iii) SMT for the year 2011 through the year 2013 of US$51.0 million, (iv) ITAN for the years 2009, 2010, 2011 and 2013 of US$12.1 million, (v) interest paid on the royalty installment payment program for the year 2006 through the year 2008 of US$6.1 million, (vi) deferral interest related to the new royalty installment payment programs for the period January 2009 through the period September 2011 of US$5.3 million and (vii) interest of amended tax return for the year 2013 for GEM refund of US$1.3 million.

For the year ended December 31, 2017, represents financial expenses related to interest on royalties, interest paid on the royalty installment payment program and interest on royalty penalties for the period December 2006 through the year 2008 of US$141.7 million and interest on ITAN 2012 of US$3.1 million.

F-253

Notes to the consolidated financial statements(continued)

19.

Financial Income

This item is made up as follows:

	For the year ended December 31, 2019		For the year ended December 31, 2018		For the year ended December 31, 2017
	US$(000)		US$(000)		US$(000)

Special Mining Burden (GEM) (a)		-		18,574		-
Other financial income		10,356		9,515		5,350

		10,356		28,089		5,350

(a)

Represents interest related to the GEM refund from the period October 2012 through December 2013.

20.

Earnings per share

Basic and diluted earnings per share are calculated by dividing earnings by the weighted-average number of outstanding shares during the period. Basic and diluted earnings per common share have been determined as follows:

For the year ended
December 31, 2016 For the year ended
December 31, 2015 For the year ended
December 31, 2014
US$(000) US$(000) US$(000)

Profit for the period (US$) 340,907,000 33,284,000 377,606,000
Weighted average number of share outstanding 350,056,012 350,056,012 350,056,012
Basic and diluted earnings per share (US$) 0.974 0.095 1.08

~~F-195~~

~~Notes to the Financial Statements~~ ~~(continue)~~

	For the year ended December 31, 2019		For the year ended December 31, 2018		For the year ended December 31, 2017
	US$		US$		US$

Profit for the period (US$)		390,377,000		119,710,000		349,881,000
Weighted average number of share outstanding (Note 12(a))		350,056,012		350,056,012		350,056,012
Basic and diluted earnings per share (US$)		1.115		0.342		1.000

~~20.~~21.

Financial risk management

The Company’s activities are exposed to different financial risks. The main risks that could adversely affect the Company’s financial assets and liabilities or future cash flows are: the risk arising from changes in market prices of minerals, interest rate risk, credit risk and capital risk. The Company’s financial risk management program focuses on mitigating potential adverse effects on its financial performance.

Management knows the conditions prevailing in the market and based on its knowledge and experience, manages the risks that are summarized below. The Company’s Board of Directors reviews and approves the policies to manage each of these ~~risks.~~risks:

Notes to the consolidated financial statements(continued)

(a)

Market risk -

Commodity price risk -

The international price of copper has a significant impact on the Company’s operating results. The price of copper has fluctuated historically and is affected by numerous factors beyond the Company’s control. The Company does not hedge its exposure to price fluctuation.

As described in Note 2(d), the Company has price risk through its provisionally priced sales contracts, which provide final pricing in a specified future month (generally three months from the shipment date) based primarily on quoted LME monthly average prices. The Company records revenues and invoices customers at the time of shipment based on then-current LME prices, which results in an embedded derivative on the provisionally priced contract that is adjusted to fair value through revenues each period, using the period-end forward prices, until the date of final pricing. To the extent that final prices are higher or lower than what was recorded on a provisional basis, an increase or decrease to revenues is recorded each reporting period until the date of final pricing (see Note ~~21)~~22).

The table below summarizes the estimated impact on the Company’s profit before income tax for the year 2019, 2018 and 2017 based on a 10% increase or decrease in future copper price while all other variables are held constant. The 10% increase is based on copper prices ranging from US$/pound ~~2.757~~2.865 to US$/pound ~~2.763,~~3.085 (US$/pound 2.974 to US$/pound 2.979 for the year 2018 and US$/pound 3.602 to US$/pound 3.627 for the year 2017), and the 10% decrease is based on copper prices ranging from US$/pound ~~2.256~~2.344 to US$/pound ~~2.261.~~2.524 (US$/pound 2.433 to US$/pound 2.437 for the year 2018 and US$/pound 2.947 to US$/pound 2.967 for the year 2017)).

	Effect on profit before income tax
	US$(000)

December 31, ~~2016~~2019
10% increase in future copper prices		~~88,508~~99,219
10% decrease in future copper prices		(~~88,508~~99,219	)

	~~F-196~~	Effect on profit before income tax
		US$(000)

December 31, 2018
10% increase in future copper prices			72,847
10% decrease in future copper prices			(72,847	)

	Effect on profit before income tax
	US$(000)

December 31, 2017
10% increase in future copper prices		83,955
10% decrease in future copper prices		(83,955	)

F-255

Notes to the ~~Financial Statements~~consolidated financial statements(continued)

Exchange rate risk -

As described in Note 2(c), the Company’s financial statements are presented in US dollars, which is the functional and presentation currency of the Company. The Company’s exchange-rate risk arises mainly frombalances related to tax payments, ~~(continue)~~deposits and other accounts payable in currencies other than the US dollar, principally soles. The Company mitigates its exposure to exchange-rate risk by carrying out almost all of its transactions in its functional currency and management maintains only small amounts in soles to cover its immediate needs (i.e., taxes and compensation) in this currency.

~~Exchange rate risk –~~

As described in Note 2(c), the Company’s financial statements are presented in US dollars, which is the functional and presentation currency of the Company. The Company’s exchange-rate risk arises mainly from~~balancesrelatedtotax payments,~~ deposits and other accounts payable in currencies other than the US dollar, principally Soles. The Company mitigates its exposure to exchange-rate risk by carrying out almost all of its transactions in its functional currency and management maintains only small amounts in Soles to cover its immediate needs (i.e., taxes and compensation) in this currency.

(b)

Liquidity risk -

Liquidity risk arises from situations in which cash might not be available to pay obligations at their maturity date and at a reasonable cost. The Company maintains adequate liquidity by properly managing the maturities of assets and liabilities in such a way that allows the Company to maintain a structural liquidity position (cash available) enabling it to meet liquidity requirements. Additionally, the Company has the ability to obtain funds from financial institutions and shareholders to meet its contractual obligations.

~~F-197~~

Notes to the ~~Financial Statements~~consolidated financial statements(continued) ~~(continue)~~

The following tables show the expected aging of maturity of the Company’s obligations, excluding taxes and accruals, as of December 31, ~~2016~~2019 and ~~2015:~~2018:

On demand Less than 3 months 3 to 12 months 1 to 5 years Total
US$(000) US$(000) US$(000) US$(000) US$(000)

As of December 31, 2016
Trade accounts payable - 168,244 113 - 168,357
Accounts payable to related parties - 27,134 - 7,132 34,266
Other financial liabilities - - 161 1,995,843 1,996,004
Provision related to benefits to employees - 3,807 44,232 - 48,039
Other accounts payable - 2,402 1,217 - 3,619

Total - 201,587 45,723 2,002,975 2,250,285

As of December 31, 2015
Trade accounts payable - 432,418 - - 432,418
Accounts payable to related parties - 12,042 - 6,850 18,892
Other financial liabilities - - 43,169 2,381,995 2,425,164
Provision related to benefits to employees - 14,572 5,964 - 20,536
Other accounts payable - 2,112 - - 2,112

Total - 461,144 49,133 2,388,845 2,899,122

	On demand		Less than 3 months		3 to 12 months		1 to 5 years		More than 5 years		Total
	US$(000)		US$(000)		US$(000)		US$(000)		US$(000)		US$(000)
As of December 31, 2019
Trade accounts payable		-		224,675		245		-		-		224,920
Accounts payable - related parties		-		4,014		-		10,074		-		14,088
Other financial liabilities		-		3		8,852		825,877		76,943		911,675
Other accounts payable		-		40,357		59,023		72,759		289,705		461,844
Total		-		269,049		68,120		908,710		366,648		1,612,527
As of December 31, 2018
Trade accounts payable		-		231,080		56		-		-		231,136
Accounts payable - related parties		-		6,014		-		8,860		-		14,874
Other financial liabilities		-		-		-		1,022,810		-		1,022,810
Other accounts payable		-		7,472		93,782		183,824		31,246		316,324
Total		-		244,566		93,838		1,215,494		31,246		1,585,144

~~F-198~~

Notes to the ~~Financial Statements~~consolidated financial statements(continued) ~~(continue)~~

(c)

Credit Risk -

The Company’s exposure to credit risk arises from a customer’s inability to pay amounts in full when they are due and the failure of third parties in cash and cash equivalent transactions. The risk is limited to balances deposited in banks and financial institutions and for trade accounts receivable at the date of the statements of financial position (the Company sells copper concentrate and cathode and molybdenum concentrate to companies widely recognized in the worldwide mining ~~sector)~~sector and collections are made within 30 days after the fulfilment of the contractual terms). To manage this risk, the Company has established a treasury policy, which only allows the deposit of surplus funds in highly rated institutions, by establishing conservative credit policies and through a constant evaluation of market conditions. Consequently, the Company does not expect to incur losses on accounts involving potential credit risk.

(d)

Capital management -

The objective is to safeguard the Company’s ability to continue as a going concern in order to provide returns for shareholders, benefits for stakeholders and maintain an optimal structure that would reduce the cost of capital.

The Company manages its capital structure, and makes adjustments to it, in light of changes in economic conditions. To maintain or adjust the capital structure, the Company controls dividend payments to shareholders, the return of capital to shareholders and the issuance of new shares. No changes were made to the objectives, policies or processes during the year ended December 31, ~~2016.~~2019.

~~21.~~22.

Embedded derivatives

As discussed in Note 2(d), the Company’s sales create exposure to changes in the market prices of copper and molybdenum which are considered embedded derivatives. As of December 31, ~~2016~~2019 and ~~2015,~~2018, information about the Company’s embedded derivatives is as follows:

As of December 31, 2016

As of December 31, 2019

Pounds
payable

Maturity

Provisional pricing

Forward pricing

Fair value
provision

Pounds
payable

Maturity

Provisional pricing

Forward pricing

Fair value provision

(000)

US$

US$(000)

(000)

US$/Pound

US$(000)

Copper Concentrate

344,787

January 2017 to May 2017

Between 2.091 and 2.656

Between 2.507 and 2.512

68,130

246,441

January 2020 to May 2020

Between 2.567 and 2.774

Between 2.793 and 2.804

39,727

Copper Cathode

7,936

January 2017

Between 2.488 and 2.678

2.507

(1,000

)

4,410

January 2020

2.791

2.793

Molybdenum

3,455

January 2017 to February 2017

Between 5.431 and 5.484

5.542

319

5,370

January 2020 to February 2020

Between 7.857 and 9.724

8.025

(3,031

)

67,449

36,705

(a)

~~F-199~~

Notes to the ~~Financial Statements~~consolidated financial statements(continued) ~~(continue)~~

				As of December 31, 2015									As of December 31, 2018
	Pounds payable		Maturity	Provisional pricing	Forward pricing		Fair value provision			Pounds payable		Maturity	Provisional pricing	Forward pricing	Fair value provision
	(000)			US$	US$		US$(000)			(000)			US$/Pound	US$/Pound	US$(000)

Copper Concentrate		221,659	January 2016 to May 2016	Between 2.076 and 2.433		Between 2.134 and 2.138		(19,696	)		261,530	January 2019 to May 2019	Between 2.675 and 2.834	Between 2.704 and 2.708		(18,848	)
Copper Cathode		3,970	January 2016	2.08		2.14		233			7,711	January 2019	2.810	2.704		(824	)
Molybdenum		1,425	January 2016 to February 2016	Between 3.435 and 3.635		3.95		616			3,545	January 2019 to February 2019	Between 10.787 and 10.810	10.675		(441	)

								(18,847	)							(20,113	)(a)

~~22.~~(a)

Embedded derivative adjustments are recorded on the statement of financial position in “Trade account receivable – related parties” (US$36.1 million as of December 31, 2019, and US$(19.3) million as of December 31, 2018) and “Trade accounts receivable (net)” (US$0.6 million as of December 31, 2019, and US$(0.8) million as of December 31, 2018).

23.

Hierarchy and fair value of financial instruments

Hierarchy:

As of December 31,~~2016~~2019 and ~~2015,~~2018,the only financial ~~asset~~assets carried at fair value ~~is the~~are embedded ~~derivative,~~ derivatives, included in trade accounts receivable and related parties,which isare generated by the sale of copper and molybdenum and measured at fair value based on ~~copper~~commodity prices. The net value of this embedded derivative as of December 31, ~~2016,~~2019, was an asset of ~~US $67.4million~~ ~~(liability of US $18.8~~US$36.7 million(liability of US$20.1 millionas of December 31, ~~2015)~~2018). ~~This embedded derivative is~~Embedded derivatives are categorized within Level 2 of the hierarchy.The fair value of embedded derivatives is determined using valuation techniques using information directly observable in the market (forward prices of metals).

Fair value:

Financial instruments whose fair value is similar to their book value –-

For financial assets and liabilities which are liquid or have short-term maturity (less than three months), such as cash and cash equivalent, accounts receivable, other accounts receivable, accounts payable, other accounts payable, and other current liabilities, it is estimated that their book value is similar to their fair value.

Financial instruments at fixed and variable rates –-

Financial assets and liabilities with fixed or ~~variablerates~~variable rates are recorded at amortized cost and fair value is determined by comparing the market interest rates at the time of their initial recognition to the current market rates with regard to similar financial instruments.

Based on the foregoing, there are no significant differences between book value and fair value of financial instruments (assets and liabilities) as of December 31, ~~2016~~2019 and ~~2015.~~2018.

~~F-200~~

F-259

~~Notes to the Financial Statements~~ ~~(continue)~~

~~23.~~24.

Summary of significant differences between accounting principles followed by the Company and U.S. generally accepted accounting principles

The Company’s financial statements have been prepared in accordance with International Financial Reporting Standards which differs in certain respects from U.S. GAAP. The effects of these differences are reflected in note 2425 and are principally related to the items discussed in the following paragraphs:

(a)

Stripping Cost – IFRIC 20

Under IFRS, the stripping cost of production that is necessary to produce the inventory is recorded as cost of production, while the one that allows access to additional amounts of reserves to be exploited in future periods are capitalized and amortized based on proved and probable reserves of each ore body (component) identified in the open pit.

Under U.S. GAAP, the costs of clearing removal (stripping cost of production) incurred during the production stage are recorded as part of the production cost of inventories.

(b)

Inventories

Under IFRS, the cost inventory includes: the amortization of production-stripping costs and the inventories are determined using ~~theweighted~~the weighted average method.

Under U.S. GAAP, the cost inventory excludes the amortization of production-stripping cost and the inventories are determined using the LIFO method.

(c)

Deferred workers’ profit sharing

Under IFRS, the workers’ profit sharing is calculated based on the Company’s taxable income and is recorded as an employee benefit (cost of production or administrative expense, depending on the function of the workers).

(d)

Deferred income tax –

The differences between US GAAP and IFRS are re-measurements that lead to different temporary differences. According to the accounting policies in Note ~~2.2~~2 (l), the Company has to account for such differences.

~~F-201~~

~~Notes to the Financial Statements~~ ~~(continue)~~

~~24.~~25.

Reconciliation between net income and shareholders' equity determined under IFRS and U.S. GAAP

The following is a summary of the main adjustments to net income for the years ended December 31, ~~2016, 2015~~2019, 2018 and ~~2014~~2017 and to shareholders' equity as of December 31, ~~2016, 2015~~2019, 2018 and ~~2014~~2017 that would be required if U.S. GAAP had been applied instead of IFRS in the financial statements:

	2016			2015			2014			2019			2018			2017
	US$(000)			US$(000)			US$(000)			US$(000)			US$(000)			US$(000)

Net profit under IFRS		340,907			33,284			377,606			390,377			119,710			349,881

Items increasing (decreasing) reported net profit:
Stripping activity asset, net of amortization		36,252			(45,168	)		(4,221	)		(41,508	)		(64,452	)		(77,361	)
Inventories valuation		(19,242	)		12,573			(57,744	)		(53,424	)		(29,515	)		(28,804	)
Asset retirement obligation		1,422			379			(796	)		23			1,351			862
Deferred workers´ profit sharing		(19,007	)		(6,225	)		13,512			(23,449	)		(7,079	)		32,349
Deferred income tax		5,013			9,470			13,329			45,759			33,291			24,529
Other		116			(216	)		(69	)		1,937			(26	)		(25	)

Net income under US GAAP		345,461			4,097			341,617
Net income under U.S. GAAP											319,715			53,280			301,431

	2016			2015			2014			2019			2018			2017
	US$(000)			US$(000)			US$(000)			US$(000)			US$(000)			US$(000)

Shareholders’ equity under IFRS		4,839,281			4,498,374			4,465,090			5,349,249			5,108,872			5,189,162
Items increasing (decreasing) reported shareholder’s equity:
Stripping activity asset, net of amortization		(63,074	)		(99,326	)		(54,158	)		(246,395	)		(204,887	)		(140,435	)
Inventories valuation		(49,940	)		(30,698	)		(43,271	)		(161,683	)		(108,259	)		(78,744	)
Asset retirement obligation		(440	)		(1,862	)		(2,241	)		1,797			1,773			422
Deferred workers´ profit sharing		(27,133	)		(8,126	)		(1,901	)		(25,313	)		(1,863	)		5,216
Deferred income tax		43,728			38,715			29,245			147,307			101,548			68,257
Other		(283	)		(399	)		(183	)		1,603			(334	)		(308	)

Shareholders’ equity under U.S. GAAP		4,742,139			4,396,678			4,392,581			5,066,565			4,896,850			5,043,570

~~25.~~26.

New U.S. GAAP Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board (FASB) issued an Accounting Standard Update (ASU) that provides a single comprehensive revenue recognition model, which will replace most existing revenue recognition guidance, and also requires expanded disclosures. The core principle of the model is that revenue is recognized when control of goods or services has been transferred to customers at an amount that reflects the consideration to which an entity expects to be entitled in exchange for those goods or services. For public entities, this ASU is effective for annual reporting periods beginning after December 15, 2017, and interim reporting periods within that reporting period. Early adoption is permitted for annual reporting periods beginning after December 15, 2016, and interim reporting periods within that reporting period. The Company will adopt this ASU January 1, 2018, and currently expects to apply the modified retrospective approach under which any cumulative effect adjustment would be recorded to retained earnings as of the adoption date. The Company has not yet completed its final review of the impact of this guidance; however, based on the terms of its sales contracts, The Company currently does not anticipate a material impact on its revenue recognition policies or processes. The Company continues to review the impact of the new guidance on its financial reporting and disclosures.

~~F-202~~

~~Notes to the Financial Statements~~ ~~(continue)~~

In January 2016, FASB issued an ASU that amends the current guidance on the classification and measurement of financial instruments. This ASU makes limited changes to existing guidance and amends certain disclosure requirements. For public entities, this ASU is effective for interim and annual periods beginning after December 15, 2017. Early adoption is not permitted, except for the provision on recording fair value changes for financial liabilities under the fair value option. The Company is currently evaluating the impact this ASU will have on its financial reporting and disclosures, but at this time does not expect the adoption of this ASU will have a material impact on its financial statements.

In February 2016, FASB issued an ASU that will require lessees to recognize most leases on the balance sheet. This ASU allows lessees to make an accounting policy election to not recognize a lease asset and liability for leases with a term of 12 months or less and do not have a purchase option that is expected to be exercised. For public entities, this ASU is effective for interim and annual reporting periods beginning after December 15, 2018, with early adoption permitted. This ASU must be applied using the modified retrospective approach for leases that exist or are entered into after the beginning of the earliest comparative period in the financial statements. The Company is currently evaluating the impact this guidance will have on its financial statements.

In March 2016, FASB issued an ASU that simplifies various aspects of the accounting for share-based payment transactions, including the income tax consequences, statutory tax withholding requirements, an accounting policy election for forfeitures and the classification on the statement of cash flows. For public entities, this ASU is effective for interim and annual periods beginning after December 15, 2016, with early adoption permitted. Each of the amendments in this ASU provides specific transition requirements. The Company will adopt this ASU effective January 1, 2017, and adoption will not have a material impact on its financial statements. This ASU requires recognition of excess tax benefits and tax deficiencies in the income statement prospectively beginning in the first quarter of 2017.

In June 2016, FASB issued an ASU that changes the impairment model for most financial assets and certain other instruments, and will also require expanded disclosures. Under the expected credit loss (CECL) model, entities will be required to recognize an estimate of credit losses expected to occur over the remaining life of the financial assets, including estimating future economic conditions and the effect those conditions have on expected credit losses. For public entities, this ASU is effective for interim and annual reporting periods beginning after December 15, 2019, with early adoption permitted. The provisions of the ASU must be applied as a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective. The Company is currently evaluating the impact this ASU will have on its financial statements.

~~26.~~27.

Subsequent Event

~~There have been no subsequent significant~~Subsequent to December 31, 2019, the COVID-19 outbreak has had a material impact on the global economy, the scale and duration of which remain uncertain. Depending on the length of time and extent, this could materially impact the Company results of operations, cash flows and financial ~~and accounting events that may affect the interpretation of these financial statements.~~condition.

~~F-203~~

Title of each class	Trading Symbol	Name of each exchange on which registered
Common shares,nominal (par) value of ten Peruvian Soles per share (“Common Shares”)	BVN	New York Stock Exchange Inc.^* Lima Stock Exchange
	BVN
American Depositary Shares (“ADSs”) representing one Common Share each	BVN	New York Stock Exchange Inc.^٭

~~Common Shares nominal (par) value of S/.10.00 per share~~	~~274,889,924~~

~~Investment Shares nominal (par) value of S/.10.00 per share~~	~~744,640~~

		Page

INTRODUCTION		31

PART I			43

ITEM 1.	Identity of Directors, Senior Management and Advisers	43

ITEM 2.	Offer Statistics and Expected Timetable	43

ITEM 3.	Key Information	43

ITEM 4.	Information on the Company	2122

ITEM 4A.	Unresolved Staff Comments	5956

ITEM 5.	Operating and Financial Review and Prospects	6056

ITEM 6.	Directors, Senior Management and Employees	~~111~~94

ITEM 7.	Major Shareholders and Related Party Transactions	~~117~~99

ITEM 8.	Financial Information	~~118~~101

ITEM 9.	The Offer and Listing	~~121~~104

ITEM 10.	Additional Information	~~122~~106

ITEM 11.	Quantitative and Qualitative Disclosures About Market Risk	~~132~~118

ITEM 12.	Description of Securities Other Than Equity Securities	~~133~~119

PART II			~~135~~121

ITEM 13.	Defaults, Dividend Arrearages and Delinquencies	~~135~~121

ITEM 14.	Material Modifications to the Rights of Security Holders and Use of Proceeds	~~135~~121

ITEM 15.	Controls and Procedures	~~135~~121

ITEM 16A.	Audit Committee Financial Expert	~~137~~124

ITEM 16B.	Code of Ethics	~~137~~124

ITEM 16C.	Principal Accountant Fees and Services	~~137~~124

ITEM 16D.	Exemptions from the Listing Standards for Audit Committees	~~138~~124

ITEM 16E.	Purchases of Equity Securities by the Issuer and Affiliated Purchasers	~~138~~125

ITEM 16F.	Change in Registrant’s Certifying Accountant	~~138~~125

ITEM 16G.	Corporate Governance	~~138~~125


ITEM 16H.	Mine Safety Disclosure	~~138~~125

PART III			~~139~~126

ITEM 17.	Consolidated Financial Statements	~~139~~126

ITEM 18.	Consolidated Financial Statements	~~139~~126

ITEM 19.	Exhibits	~~139~~126

Exchange Rates (Soles per US$)⁽¹⁾
Year	High⁽²⁾		Low⁽²⁾		Average⁽³⁾		Period end⁽⁴⁾
2014		2.990		2.761		2.840		2.989
2015		3.413		2.983		3.187		3.408
2016		3.532		3.244		3.376		3.357

2016		High⁽⁵⁾		Low⁽⁵⁾		Average⁽⁶⁾		Period end⁽⁷⁾
October		3.409		3.353		3.386		3.364
November		3.438		3.356		3.404		3.414
December		3.419		3.357		3.395		3.357

2017
January		3.395		3.274		3.340		3.274
February		3.305		3.247		3.266		3.274
March		3.302		3.244		3.269		3.254

	As of and for the year ended December 31,
	2016			2015			2014			2013⁽⁶⁾			2012⁽⁶⁾
	(US$ in thousands)⁽¹⁾
Statements of profit or loss data:
Continuing operations:
Operating income:
Net sales of goods		1,015,670			846,269			959,286			1,015,966			1,376,179
Net sales of services		28,782			50,839			71,159			79,585			46,664
Royalty income		24,339			32,414			36,867			44,185			67,178
Total operating income		1,068,791			929,522			1,067,312			1,139,736			1,490,021

Operating costs:
Cost of sales of goods, excluding depreciation and amortization		(497,812	)		(513,490	)		(498,714	)		(463,631	)		(540,504	)
Cost of services, excluding depreciation and amortization		(10,754	)		(59,612	)		(77,927	)		(114,120	)		(30,739	)
Exploration in operating units		(96,149	)		(89,699	)		(97,357	)		(98,939	)		(102,907	)
Depreciation and amortization		(192,647	)		(232,583	)		(172,999	)		(133,639	)		(111,025	)
Mining royalties		(27,611	)		(27,188	)		(27,428	)		(29,434	)		(37,496	)
Total operating costs		(824,973	)		(922,572	)		(874,425	)		(839,763	)		(822,671	)
Gross profit		243,818			6,950			192,887			299,973			667,350

Operating expenses:
Administrative expenses		(81,692	)		(84,372	)		(93,753	)		(67,990	)		(94,118	)
Exploration in non-operating areas		(26,589	)		(30,610	)		(50,007	)		(32,805	)		(89,920	)
Selling expenses		(21,733	)		(19,365	)		(16,212	)		(14,842	)		(15,491	)
Excess of workers’ profit sharing		-			-			-			(704	)		(2,164	)
Impairment loss of long-lived assets		-			(3,803	)		-			-			-
Other, net		18,392			(5,735	)		3,169			(1,996	)		19,367
Total operating expenses		(111,622	)		(143,885	)		(156,803	)		(118,337	)		(182,326	)
Operating profit (loss)		132,196			(136,935	)		36,084			181,636			485,024

Other income (expenses), net:
Share in the results of associates under equity method		(365,321	)		(173,375	)		(74,600	)		(114,145	)		478,987
Finance costs		(31,580	)		(27,572	)		(11,276	)		(9,734	)		(8,290	)
Net gain (loss) from currency exchange difference		2,638			(13,693	)		(8,457	)		(7,128	)		1,799

Gain on business combination		-			-			59,852			-			-
Finance income		6,830			11,026			8,408			6,621			9,486
Total other income (expenses), net		(387,433	)		(203,614	)		(26,073	)		(124,386	)		482,038

Profit (loss) before income tax		(255,237	)		(340,549	)		10,011			57,250			967,006
Current income tax		(39,444	)		(14,222	)		(18,815	)		(56,799	)		(130,507	)
Deferred income tax		(14,060	)		(541	)		(47,006	)		(29,154	)		(12,451	)
Profit (loss) from continuing operations		(308,741	)		(355,312	)		(55,810	)		(28,703	)		824,048
Discontinued operations:
Profit (loss) from discontinued operations⁽⁷⁾		(19,073	)		(20,233	)		(5,830	)		(51,033	)		(63,528	)
Net profit (loss)		(327,814	)		(375,545	)		(61,640	)		(79,736	)		760,520
Attributable to equity owners of the parent		(323,492	)		(317,210	)		(76,065	)		(107,257	)		701,100
Attributable to non-controlling interest		(4,322	)		(58,335	)		14,425			27,521			59,420
Net profit (loss)		(327,814	)		(375,545	)		(61,640	)		(79,736	)		760,520
Basic and diluted profit (loss) per share attributable to equity holders of the parent⁽²⁾⁽³⁾		(1.27	)		(1.25	)		(0.30	)		(0.42	)		2.76
Basic and diluted profit (loss) per ADS attributable to equity holders of the parent⁽²⁾⁽³⁾		(1.27	)		(1.25	)		(0.30	)		(0.42	)		2.76
Basic and diluted profit (loss) per share attributable to equity holders of the parent, from continuing operations		(1.20	)		(1.17	)		(0.28	)		(0.09	)		2.98
Dividends per share		0.03			-			0.03			0.31			0.60
Average number of common and investment shares outstanding		254,111,250			254,186,867			254,186,867			254,186,867			254,232,571
Statement of financial position data:

Total assets		4,266,415			4,547,181			4,672,274			4,552,267			4,622,447
Financial obligations		592,342			353,710			383,305			234,397			179,304
Capital stock		750,497			750,497			750,497			750,497			750,540
Total shareholders’ equity		3,047,213			3,389,236			3,762,125			3,824,421			4,011,879

Operating data (unaudited):

Production⁽⁴⁾
Gold (oz.)		357,570			356,367			438,426			462,856			447,472
Silver (oz.)		23,035,110			24,648,761			20,119,162			19,193,075			18,884,824
Proven and probable reserves⁽⁵⁾
Gold (oz.)		1,416,000			1,185,000			1,119,000			1,036,000			1,385,000
Silver (oz.)		160,082,090			134,391,000			139,699,000			136,464,000			154,606,000

	Total Production													Buenaventura’s Equity Share of Production										Total Production (unaudited)													Buenaventura’s Equity Share of Production
UNIT	Buenaventura’s Equity Ownership			Silver (oz.)		Gold (oz.)		Lead (t)		Zinc (t)		Copper (t)		Silver (oz.)		Gold (oz.)		Lead (t)		Zinc (t)		Copper (t)		Buenaventura’s Equity Ownership			Silver (oz.)		Gold (oz.)		Lead (t)		Zinc (t)		Copper (t)		Silver (oz.)		Gold (oz.)		Lead (t)		Zinc (t)		Copper (t)
Orcopampa		100	%		692,318		191,102		-		-		-		692,318		191,102		-		-		-		100	%		18,791		41,660								18,791		41,660
Uchucchacua		100	%		16,212,746		-		10,724		7,227		-		16,212,746		-		10,724		7,227		-		100	%		10,640,913				17,635		19,144				10,640,913				17,635		19,144
Julcani		100	%		3,264,420		246		2,883		-		291		3,264,420		246		2,883		-		291		100	%		2,609,006		150		966				185		2,609,006		150		966				185
Mallay		100	%		1,627,246		1,784		7,383		10,463		-		1,627,246		1,784		7,383		10,463		-
Tambomayo																									100	%		2,556,391		99,245		7,603		9,672				2,556,391		99,245		7,603		9,672
El Brocal		61.32	%		2,634,739		23,511		12,860		57,385		49,170		1,536,807		13,817		7,541		33,775		28,904		61.43	%		4,366,438		18,726		23,599		43,580		43,394		2,682,303		11,504		14,497		26,771		26,657
La Zanja		53.06	%		217,292		139,724		-		-		-		115,295		74,137		-		-		-		53.06	%		97,204		31,500								51,576		16,714
Tantahuatay		40.10	%		711,337		150,816		-		-		-		285,211		60,470		-		-		-		40.10	%		754,306		162,196								302,439		65,032
Yanacocha		43.65	%		457,246		654,934		-		-		-		199,588		285,879		-		-		-		43.65	%		737,239		527,337								321,805		230,183
Cerro Verde		19.58	%		3,773,955		-		-		-		502,495		738,940		-		-		-		98,388		19.58	%		4,685,092								455,305		917,341								89,149
Total Production		100	%		29,591,299		1,162,117		33,850		75,075		551,955		24,672,571		627,434		28,531		51,465		127,584		100	%		24,465,380		880,814		49,803		72,396		498,883		20,100,565		464,488		40,701		55,587		115,990

	Year Ended December 31,
	2014		2015		2016
	(US$ in thousands)
Julcani		691		1,323		759
Uchucchacua		12,668		20,245		28,899
Orcopampa		8,963		8,198		3,451
Colquijirca and Marcapunta		41,045		37,571		51,289
Conenhua		670		5,003		3,779
Mallay		963		2,259		2,729

	Year Ended December 31,⁽¹⁾⁽²⁾						Year Ended December 31, (Unaudited)⁽¹⁾⁽²⁾
	2014		2015		2016		2017		2018		2019
Gold (oz.)		438,426		356,367		357,570		405,004		338,189		191,281
Silver (oz.)		19,728,191		24,648,761		23,035,110		25,515,049		26,264,109		20,288,743
Zinc (t)		26,706		68,184		75,075		67,458		76,119		72,397
Lead (t)		22,185		37,072		33,850		40,915		44,972		49,803
Copper (t)		43,557		32,400		49,460		45,289		46,400		43,578

Exploration Projects⁽¹⁾⁽²⁾	Buenaventura’s Effective Participation			Principal Partners	Property Hectares		Observed Mineralization	Total Exploration Expenditures During					Buenaventura’s Effective Participation		Property Hectares		Observed Mineralization	Total Exploration Expenditures During
at March 31, 2017								2015		2016
at March 31, 2020												at March 31, 2020						2018		2019
								(US$ in millions)										(US$ in millions)
Tambomayo		100	%			37,502	Gold, Silver, Lead and Zinc		11.19		7.52
Yumpaq														100.00%		4,426	Silver		18.05		2.53
San Gabriel		100	%			56,900	Gold, Silver and Copper		1.33		7.40			100.00%		57,900	Gold, Silver and Copper		0.93		0.08
Palla Palla		100	%			8,216	Gold and Silver		0.42		0.85
Daniela		100	%			20,600	Copper and Gold		-		0.51
Ccelloccasa		100	%			9,826	Gold and Silver		0.19		0.24			100.00%		11,123	Gold and Silver		0.33		0.03
Trapiche		100	%			36,798	Copper and Molybdenum		0.64		0.62			100.00%		39,595	Copper, Molybdenum		0.31		-
Mayra														100.00%		4,767	Silver, Gold		-		-
San Gregorio		61.32	%			4,382	Zinc		0.03		0.03			61.43%		4,303	Zinc		-		-
Brownfield exploration									2.24		4.62
Other minor projects									16.04		4.80
Gaby														100.00%		800	Silver, Gold		-		-
Other minor																			9.85		9.24
Total exploration in non-operating areas									30.61		26.59								36.31		11.88

Operating Units	Observed Mineralization	Total Exploration Expenditures During 2015				Total Exploration Expenditures During 2016				Observed Mineralization	Total Exploration Expenditures During 2018				Total Exploration Expenditures During 2019
		Total		Buenaventura		Total		Buenaventura			Total		Buenaventura		Total		Buenaventura
		(US$ in millions)				(US$ in millions)					(US$ in millions)				(US$ in millions)
Buenaventura’s Units:
Tambomayo										Gold		20.55		20.55		11.61		11.61
Orcopampa	Silver and Gold		41.71		41.71		31.41		31.41	Silver and Gold		29.56		29.56		9.04		9.04
Uchucchacua	Silver, Lead and Zinc		27.78		27.78		45.11		45.11	Silver, Lead and Zinc		20.90		20.90		8.92		8.92
Colquijirca										Copper, Zinc, Lead and Silver		10.0		10.0		8.73		8.73
Julcani	Silver		12.70		12.70		11.07		11.07	Silver		8.65		8.65		5.86		5.86
Mallay	Zinc, Lead and Silver		7.54		7.54		7.96		7.96
Breapampa	Gold		1.82		1.82		-		-
La Zanja	Gold		0.04		0.04		0.60		0.60	Gold		0.07		0.07		0.00		0.00
Marcapunta	Copper and Gold		0.00		0.00		-		-
Total												89.73		89.73		44.16		44.16

	Gold				Silver
	Average Annual Market Price		Our Average Annual Price⁽¹⁾		Average Annual Market Price		Our Average Annual Price⁽¹⁾
	US$/oz.⁽²⁾		US$/oz.		US$/oz.⁽³⁾		US$/oz.
2018		1,268.49		1,267.99		15.71		15.09
2019		1,393.71		1,405.36		16.20		16.36
2020 (through March 31, 2020)		1,582.80		1,691.81		16.90		17.16

	Year ended December 31,⁽¹⁾				Year ended December 31,⁽¹⁾
Product	2015		2016		2018		2019
	(US$ in thousands)				(US$ in thousands)
Gold		419,541		440,603		411,877		254,194
Silver		313,418		385,989		362,122		298,171
Lead		55,445		58,690		85,555		89,141
Zinc		102,110		142,425		164,666		149,317
Copper		131,356		224,649		274,761		238,304

	Percent of Concentrates and Gold Bullion Sales						Percent of Concentrates and Gold Bullion Sales
	2015			2016			2018			2019
Export Sales:
Asahi Refining Canada Ltd and Asahi Refining USA Inc.		50.58			38.53			32.96			21.12
Lois Dreyfus Commodities Metal Suisse SA		2.06			3.43
IXM S.A. (formerly Louis Dreyfus Commodities Metal Suisse SA)								1.69			0.3
Mercuria Energy Trading SA		1.43			3.40			3.30			2.9
Metalor Technologies		-			2.76			2.36			0.73
N.V. Umicore SA		3.75			2.38			0.90			0.8
MRI Trading AG		0.99			1.46			1.10			1.25
Werco Trade AG		2.07			-
Others		1.98			8.52			10.66			14.19
Total Export Sales		62.86	%		60.48	%		52.97	%		41.29	%

Domestic Sales:
Andina Trade S.A.C		0.36			0.67
Glencore Peru S.A.C		23.43			20.74
Trafigura Peru S.A.C		6.73			7.58
Andina Trade S.A.C.								1.12			3.26
Glencore Peru S.A.C.								17.40			16.27
Trafigura Peru								12.77			24.77
Sudamericana Trading SRL		2.85			2.14			3.61			0.64
Lois Dreyfus Commodities Peru S.R.L		2.45			3.23
Optamine S.A.C		0.17			-
IXM Trading Peru S.A.C. (formerly Lois Dreyfus Commodities Peru S.R.L)								9.89			11.35
Others		1.15			5.16			0.83			2.42
Total Domestic Sales		37.14	%		39.52	%		47.03	%		58.71	%
Total Sales		100	%		100	%		100	%		100	%

	Wet tons		Wet tons		Wet tons		Wet tons		Wet tons		Wet tons
Concentrate	2017		2018		2019		2020		2021		2022
Uchucchacua’s Silver-Lead		80,000		33,000		0		91,200		25,600		23,000
Uchucchacua’s Zinc		24,500		24,500		6,400		93,000		-		-
Julcani’s Silver-Lead		6,400		5,600		0
Mallay’s Silver-Lead		17,800		0		0
Mallay’s Zinc		21,600		5,000		0
Uchucchacua’s Silver								76,800		77,900		73,100
Julcani’s Silver-Lead⁽¹⁾								4,550		4,400		4,400
Julcani’s Silver								3,500		-		-
Tambomayo’s Silver-Lead		6,000		3,000		0		15,800		5,000		5,000
Tambomayo’s Zinc		6,000		3,000		0		15,300		1,500		1,500
El Brocal’s Copper		225,000		232,000		179,000		244,000		325,700		265,000
El Brocal’s Lead-Silver		51,000		63,000		30,000
El Brocal’s Zinc		152,000		167,000		55,000

Buenaventura
Mine/Project	Type of Study	Approving Resolution	Date of Approval
~~Orcopampa~~Yumpaq	EIAsd 2^ndModification	~~041-2016-MEM-DGAAM~~	~~04.02.2016~~

~~La Zanja SRL~~
~~Mine/Project~~	~~Type of Study~~	~~Approving Resolution~~	~~Date of Approval~~
~~La Zanja~~	~~4th Modification~~	~~268-2016-MEM/~~232-2019-MINEM/DGAAM	~~09.09.2016~~December 26, 2019
Trapiche	EIAsd 5^thModification
~~Coimolache~~
~~Mine/Project~~	~~Type of Study~~	~~Approving Resolution~~	~~Date of Approval~~
~~Tantahuatay~~	~~2nd Modification~~	~~311-2016-MEM/~~148-2019-MINEM/DGAAM	~~26.10.2016~~August 26, 2019

~~La Zanja SRL~~Subsidiaries
Mine/Project	Type of Study	Approving Resolution	Date of Approval
La Zanja	~~2nd Modification PdC~~Closure Plan 2^ndUpdate	~~078-2016-MEM-DGAAM~~071-2019-MEM-DGAAM	~~16.03.2016~~May 17, 2019
Colquijirca	Closure Plan 2^ndUpdate	077-2019/MEM-DGAAM	May 23, 2019

	†	All entities in this chart, with the exception of Minera Julcani S.A. de C.V. (which is organized in Mexico), Compañía de Minas Buenaventura Chile Ltda. (which is organized in Chile) ~~and~~, BISA Argentina S.A.( which is organized in Argentina) and Tinka Resources Limited (which is organized in ~~Argentina),~~Canada) are incorporated in Peru.

	Year Ended December 31,⁽¹⁾
	2015⁽²⁾⁽³⁾		2016⁽²⁾⁽³⁾
Mining Operations:
Ore mined (t)		177,948		173,865
Average gold grade (g/t)		0.22		0.12
Average silver grade (g/t)		597.66		606.83
Average lead grade (%)		1.55		1.76
Average copper grade (%)		0.21		0.18
Production:
Gold (oz.)		607		246
Silver (oz.)		3,266,453		3,264,420
Lead (t)		2,592		2,883
Copper (t)		339		291
Recovery rate (silver) (%)		95.52		96.25
Cost applicable to sales per oz. of gold⁽⁴⁾	US$	955	US$	825
Cost applicable to sales per oz. of silver⁽⁴⁾	US$	12.30	US$	11.62
Cost applicable to sales per ton of lead⁽⁴⁾	US$	1,425	US$	1,241
Cost applicable to sales per ton of copper⁽⁴⁾	US$	4,416	US$	2,837

	Year Ended December 31,⁽¹⁾
	2018⁽²⁾⁽³⁾		2019⁽²⁾⁽³⁾
Mining Operations:
Ore mined (t)		109,025		123,818
Average gold grade (g/t)		0.04		0.09
Average silver grade (g/t)		726.27		681.16
Average lead grade (%)		1.01		0.86
Average copper grade (%)		0.16		0.16
Production:
Gold (oz.)		71		150
Silver (oz.)		2,482,907		2,609,006
Lead (t)		1,048		966
Copper (t)		169		185
Recovery rate (silver) (%)		97.41		96.22
Cost applicable to sales per oz. of silver⁽⁴⁾	US$	14.98	US$	13.49
Cost applicable to sales per ton of lead⁽⁴⁾	US$	2,191	US$	1,585
Cost applicable to sales per ton of copper⁽⁴⁾	US$	7,392	US$	4,788

	Year Ended December 31,⁽¹⁾
	2018		2019⁽¹⁾⁽²⁾
Mining Operations:
Ore mined (t)		557,364		640,914
Average gold grade (g/t)		7.75		5.80
Average silver grade (g/t)		252.25		141.21
Average lead grade (%)		1.49		1.35
Average Zinc grade (%)		2.16		1.99
Production:
Gold (oz.)		129,172		99,245
Silver (oz.)		3,929,808		2,556,391
Lead (t)		4,220		7,603
Zinc (t)		8,685		9,672
Recovery rate (silver) (%)		85.11		87.76
Recovery rate (gold) (%)		91.15		83.10
Cost applicable to sales per oz. of gold⁽³⁾	US$	626	US$	679
Cost applicable to sales per oz. of silver⁽³⁾	US$	7.77	US$	8.92
Cost applicable to sales per ton of lead⁽³⁾	US$	1,186	US$	1,045
Cost applicable to sales per ton of Zinc⁽³⁾	US$	1,551	US$	1,876

	Orcopampa⁽³⁾		Uchucchacua⁽⁴⁾		Julcani⁽⁵⁾		Mallay⁽⁶⁾		Tambomayo⁽⁷⁾		La Zanja⁽⁸⁾		Tantahuatay⁽⁹⁾		Colquijirca^(10)(11)		Marcapunta^(10)(12)		Total/ Average		Orcopampa⁽³⁾	Uchucchacua⁽⁴⁾	Julcani⁽⁵⁾	Tambomayo⁽⁶⁾	La Zanja⁽⁷⁾	Tantahuatay⁽⁸⁾	Colquijirca⁽⁹⁾	Marcapunta⁽¹⁰⁾	Total/Average

Ore Reserves (t)		514,434		2,712,540		190,476		99,399		642,765		9,588,337		72,118,232		52,499,000		9,413,000		147,778,183	153,866	3,913,183	166,957	359,825	354,424	52,565,887	6,097,263	19,837,230	83,448,635
Grade:
Gold (g/t)		14.64		-		0.31		0.46		6.04		0.52		0.40		-		0.50		0.34	12.38		0.207	4.89	0.40	0.35		0.51	0.39
Silver (g/t)		45.82		418.32		650.53		293.37		419.39		9.78		8.07		25.34		18.69		25.46	18.64	266.94	654.09	104.46	9.05	6.94	65.61	25.48	0.95
Copper (%)		-		-		0.52		-		-		-		-		0.82		2.04		0.42			0.45				0.16	1.53	0.38
Zinc (%)		-		1.98		-		7.17		1.41		-		-		1.26		-		0.49		2.09		2.00			2.48		0.29
Lead (%)		-		1.46		2.29		4.58		0.93		-		-		0.50		-		0.21		1.25	2.09	1.48			1.19		0.16

Content:
Gold (oz.)		242,047		-		1,905		1,471		124,731		159,767		931,153		-		151,317		1,612,391	61,261		1,112	56,514	4,600	590,658		322,970	1,037,116
Silver (oz.)		757,846		36,481,810		3,983,806		937,529		8,666,923		3,015,471		18,717,041		42,766,810		5,647,800		120,975,036	92,224	33,583,879	3,511,027	1,208,403	103,135	11,732,995	12,861,713	16,251,210	79,344,585
Copper (t)		-		-		990		-		-		-		-		428,810		192,025		621,825			748				9,756	303,163	313,667
Zinc (t)		-		53,803		-		7,129		9,034		-		-		659,255		-		729,221		81,791		7,186			151,029		240,006
Lead (t)		-		39,541		4,365		4,551		6,004		-		-		261,493		-		315,953		48,753	3,490	5,318			72,842		130,403

	Proven and Probable Reserves at December 31, 2016^ǂ
	Tonnage (thousands of DST)		Average Gold Grade (oz./DST)		Ounces Contained (thousands of ounces)
Quecher Main		98,872		0.02		1,513
Marleny		2,976		0.02		70
Yanacocha		11,829		0.01		146
Yanacocha Layback		2,016		0.07		135
La Quinua Sur		22,882		0.01		316
Tapado Oeste Layback		31,659		0.01		460
Cerro Negro		23,064		0.04		886
Transition Stockpile		5,231		0.03		143
Deep Transitional Stockpile		5,441		0.06		325
Gold Mill Stockpile		636		0.05		34
Maqui Maqui Leach Pad		184		0.04		8
Carachugo Leach Pad		168		0.02		4
Yanacocha Leach Pad		231		0.03		6
La Quinua Leach Pad		16,137		0.02		312
Total		221,326		0.02		4,358

	·●	fair value of contingent ~~consideration; and~~consideration

Property, Plant and Equipment		Estimated Years of Useful Life
Buildings, constructions and other		~~Between~~ 6 ~~and~~to 20
Machinery and equipment		~~Between~~ 5 ~~and~~to 10
Transportation units		5
Furniture and fixtures		10
Computer equipment		4

Sales by metal	Year ended December 31,
	2015			2016			Variation			Variation
	(US$ in thousands)
Gold (a)…		419,541			440,603			21,062			5.02	%
Silver (b).		313,418			385,989			72,571			23.15	%
Lead (c).		55,445			58,690			3,245			5.85	%
Zinc (d).		102,110			142,425			40,315			39.48	%
Copper (e).		131,356			224,649			93,293			71.02	%
Manganese sulfate		3,649			5,982			2,333			63.94	%
		1,025,519			1,258,338			232,819			22.70	%
Commercial deductions (f)		(196,145	)		(244,414	)		48,269			24.61	%
Adjustments to prior period liquidations		7,467			4,611			(2,856	)		(38.25	)%
Embedded derivatives from sale of concentrate		(388	)		880			1,268			n.a.
Hedge operations		9,816			(3,745	)		(13,561	)		n.a.
Total sales by metal		846,269			1,015,670			169,401			20.02	%

Average Realized Price	Year ended December 31,							Year ended December 31,
	2015		2016		Variation
								2018		2019		Variation
Gold (US$/oz.)		1,151.44		1,244.24		8.20	%		1,267.99		1,405.35		11	%
Silver (US$/oz.)		15.06		17.65		17.20	%		15.08		16.36		8	%
Lead (US$/t)		1,711.87		1,977.53		15.52	%		2,140.58		1,938.07		(9	)%
Zinc (US$/t)		1,838.86		2,266.85		23.27	%		2,680.81		2,490.6		(7	)%
Copper (US$/t)		4,514.93		4,918.52		8.94	%		6,277.40		5,808.47		(7	)%

Volume Sold	Year ended December 31,							Year ended December 31,
	2015		2016		Variation*			2018		2019		Variation
Gold (oz.)		364,831		354,116		(2.94	)%		324,825		180,876		(44	)%
Silver (oz.)		20,811,046		21,863,019		(0.05	)%		24,004,977		18,224,320		(24	)%
Lead (t)		32,389		29,678		(8.37	)%		39,968		45,995		15	%
Zinc (t)		55,529		62,829		13.15	%		61,424		59,953		(2	)%
Copper (t)		29,094		45,674		56.99	%		43,770		41,027		(6	)%

Sales by services	Year ended December 31,
	2018			2019			Variation			Variation
	(US$ in thousands)
Energy generation and transmission		62,962			59,690			(3,272	)		(5	)%
Industrial Activities		19,908			19,557			(351	)		(2	)%
Insurance Brokerage		14,986			15,687			701			5	%
Holding of investments in shares		615			615			-			-	%
Adjustments and eliminations intercompany		(74,470	)		(71,888	)		2,582			(3	)%
Total sales of services		24,001			23,661			(340	)		(1	)%

Operating Expenses (Income)	Year ended December 31,
	2015		2016			Variation			Variation
	(US$ in thousands)
Administrative expenses (a)		84,372		81,692			(2,680	)		(3.18	)%
Exploration in non-operating areas (b)		30,610		26,589			(4,021	)		(13.14	)%
Selling expenses		19,365		21,733			2,368			12.23	%
Impairment loss of long-lived assets (c)		3,803		-			(3,803	)		(100.00	)%
Other, net (d)		5,735		(18,392	)		(24,127	)		N.A.
Total operating expenses (income)		143,885		111,622			(32,263	)		(22.42	)%

Mining Segment	Volume Sold for the year ended December 31, 2016										Volume Sold for the year ended December 31, 2019 (Unaudited)
	Gold (oz.)		Silver (oz.)		Lead (t)		Zinc (t)		Copper (t)		Gold (oz.)		Silver (oz.)		Lead (t)		Zinc (t)		Copper (t)
Julcani		32		3,090,967		2,679		-		54		179		2,480,173		839		-		14
Mallay		1,041		1,426,986		6,775		8,728		-
Orcopampa		188,511		680,708		-		-		48		40,702		15,049		-		-		-
Uchucchacua		279		14,739,128		8,349		5,295		-		-		9,808,791		15,347		15,315		-
Tambomayo												96,636		2,318,435		7,211		7,850		-
La Zanja		151,189		229,055		-		-		-		30,710		80,880
Colquijirca		13,062		1,696,175		11,874		48,806		45,572		12,649		3,520,992		22,598		36,788		41,013

Mining Segment	Volume Sold for the year ended December 31, 2015										Unaudited Volume Sold for the year ended December 31, 2018
	Gold (oz.)		Silver (oz.)		Lead (t)		Zinc (t)		Copper (t)		Gold (oz.)		Silver (oz.)		Lead (t)		Zinc (t)		Copper (t)
Julcani		94		3,493,166		2,478		-		103		11		2,368,497		915		-		17
Mallay		396		1,134,528		6,612		7,482		-
Orcopampa		214,821		555,314		-		-		-		116,719		335,761		-		-		42
Uchucchacua		38		12,666,673		6,560		4,750		-		216		14,443,456		17,071		16,811		-
Tambomayo												119,211		3,570,382		3,268		7,143		-
La Zanja		142,300		324,151		-		-		-		74,370		228,894		-		-		-
Colquijirca		7,181		2,637,215		16,739		43,297		28,991		14,297		3,058,987		18,713		37,470		43,710

Mining Segment	2016 vs 2015 Change ()%															2019 vs 2018 Change (%)
	Gold (oz.)			Silver (oz.)			Lead (t)			Zinc (t)			Copper (t)			Gold (oz.)			Silver (oz.)			Lead (t)			Zinc (t)			Copper (t)
Julcani		(66	)%		(12	)%		8	%		-			(48	)%		1527	%		5	%		-8	%			%		-18	%
Mallay		163	%		26	%		2	%		17	%		-
Orcopampa		(12	)%		23	%		-			-			(100	)%		-65	%		-96	%			%			%		-100	%
Uchucchacua		634	%		16	%		27	%		11	%		-			-100	%		-32	%		-10	%		-9	%			%
Tambomayo																	-19	%		-35	%		121	%		10	%			%
La Zanja		6	%		(29	)%		-			-			-			-59	%		-65	%			%			%			%
Colquijirca		82	%		(36	)%		(29	)%		13	%		57	%		-12	%		15	%		21	%		-2	%		-6	%

Sales of goods – Mining Segments	Year ended December 31,										Year ended December 31,
	2015		2016		Variation			Variation			2018		2019		Variation			Variation
	(US$ in thousands)										(US$ in thousands)
Julcani(a)		50,254		54,666		4,412			8.78	%		34,104		40,082		5,978			18	%
Mallay (a)		32,018		46,741		14,723			45.98	%
Orcopampa		254,118		244,745		(9,373	)		(3.69	)%
Ucchuchacua (b)		166,055		240,470		74,415			44.81	%
Orcopampa (b)												153,003		58,902		(94,101	)		(62	)%
Ucchuchacua (c)												257,282		186,016		(71,266	)		(28	)%
Tambomayo (d)												225,281		188,175		(37,106	)		(16	)%
La Zanja(e)		161,007		178,922		17,915			11.13	%		96,611		43,520		(53,091	)		(55	)%
Colquijirca ~~(c)~~(f)		171,294		230,611		59,317			34.63	%		333,560		299,252		(34,308	)		(10	)%

Operating Expenses – Mining Segments	Year ended December 31,
	2018		2019		Variation		Variation
	(US$ in thousands)
Julcani		2,983		6,971		3,988		134	%
Orcopampa (a)		19,382		13,570		(5,812)		(30)	%
Ucchuchacua (b)		49,840		29,855		(19,985)		(40)	%
Tambomayo		25,204		24,092		(1,112)		(4)	%
La Zanja		4,254		6,545		2,291		54	%
Colquijirca (c)		452		26,221		25,769		5,701	%