UNITED STATES 

SECURITIES AND EXCHANGE COMMISSION 

WASHINGTON, D.C. 20549

FORM 20-F

☐     REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) 

OF THE SECURITIES EXCHANGE ACT OF 1934

OR

☒     ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) 

OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2020

OR

☐     TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE 

SECURITIES EXCHANGE ACT OF 1934

OR

☐     SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) 

OF THE SECURITIES EXCHANGE ACT OF 1934

Date of event requiring this shell company report

For the transition period from ___________ to __________

Commission file number 001-14370

COMPAÑÍA DE MINAS BUENAVENTURA S.A.A.

(Exact name of Registrant as specified in its charter)

BUENAVENTURA MINING COMPANY INC.

(Translation of Registrant’s name into English)

REPUBLIC OF PERU 

(Jurisdiction of incorporation or organization)

LAS BEGONIAS 415 FLOOR 19, 

SAN ISIDRO, LIMA 27, PERU 

(Address of principal executive offices)

Daniel Domínguez, Chief Financial Officer

Telephone: (511) 419-2540 

Facsimile: (511) 419-2502

E-mail: daniel.dominguez@buenaventura.pe

Address: CARLOS VILLARAN 790
SANTA CATALINA, LIMA 13, PERU

(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)

Securities registered or to be registered pursuant to Section 12(b) of the Act:

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.٭

Securities registered or to be registered pursuant to Section 12(g) of the Act: None

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act: None

Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report.

Common Shares nominal (par) value of S/.10.00 per share     253,715,190

Investment Shares nominal (par) value of S/.10.00 per share     271,677

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes ☒     No ☐

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.

Yes ☐     No ☒

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ☒     No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes ☒     No ☐  

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or an emerging growth company. See definition of “accelerated filer,” “large accelerated filer,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☒ Accelerated filer ☐ Non-accelerated filer ☐ Emerging growth company ☐

If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards† provided pursuant to Section 13(a) of the Exchange Act.

☐

† The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:

U.S. GAAP ☐ International Financial Reporting Standards as issued by  the International Accounting Standards Board ☒  Other ☐

If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow.

Item 17 ☐          Item 18 ☐

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐     No ☒

* Not for trading but only in connection with the registration of ADSs pursuant to the requirements of the Securities and Exchange Commission. 

TABLE OF CONTENTS

		Page
INTRODUCTION		3
PART I		5
ITEM 1.	Identity of Directors, Senior Management and Advisers	5
ITEM 2.	Offer Statistics and Expected Timetable	5
ITEM 3.	Key Information	5
ITEM 4.	Information on the Company	25
ITEM 4A.	Unresolved Staff Comments	66
ITEM 5.	Operating and Financial Review and Prospects	66
ITEM 6.	Directors, Senior Management and Employees	103
ITEM 7.	Major Shareholders and Related Party Transactions	108
ITEM 8.	Financial Information	110
ITEM 9.	The Offer and Listing	113
ITEM 10.	Additional Information	114
ITEM 11.	Quantitative and Qualitative Disclosures About Market Risk	126
ITEM 12.	Description of Securities Other Than Equity Securities	127
PART II		129
ITEM 13.	Defaults, Dividend Arrearages and Delinquencies	129
ITEM 14.	Material Modifications to the Rights of Security Holders and Use of Proceeds	129
ITEM 15.	Controls and Procedures	129
ITEM 16A.	Audit Committee Financial Expert	131
ITEM 16B.	Code of Ethics	131
ITEM 16C.	Principal Accountant Fees and Services	131
ITEM 16D.	Exemptions from the Listing Standards for Audit Committees	131
ITEM 16E.	Purchases of Equity Securities by the Issuer and Affiliated Purchasers	132
ITEM 16F.	Change in Registrant’s Certifying Accountant	132
ITEM 16G.	Corporate Governance	132
ITEM 16H.	Mine Safety Disclosure	132
PART III		133
ITEM 17.	Consolidated Financial Statements	133
ITEM 18.	Consolidated Financial Statements	133
ITEM 19.	Exhibits	133

 2 

INTRODUCTION

Presentation of Financial Information

As used in this Annual Report on Form 20-F, or “Annual Report,” unless the context otherwise requires, references to “we,” “us,” “our,” “Company,” “BVN” and “Buenaventura” mean Compañía de Minas Buenaventura S.A.A. and its consolidated subsidiaries. Unless otherwise specified or the context otherwise requires, references to “$,” “US$,” “Dollars” and “U.S. Dollars” are to United States Dollars and references to “S/.,” “Sol” or “Soles” are to Peruvian Soles, the legal currency of the Republic of Peru, or “Peru”.

We present our consolidated financial statements (the “Consolidated Financial Statements”) in accordance with International Financial Reporting Standards (“IFRS”), as issued by the International Accounting Standards Board (“IASB”).

Unless otherwise specified, references to a value denominated in “t” or “tons” refer to tons; the terms “g” or “gr” refer to metric grams; the terms “oz.” or “ounces” refer to troy ounces of a fineness of 999.9 parts per 1,000, equal to 31.1035 grams.

Pursuant to the rules of the United States Securities and Exchange Commission (the “SEC”), this Annual Report includes certain separate financial statements and other financial information of Minera Yanacocha S.R.L., or “Yanacocha,” and Sociedad Minera Cerro Verde S.A.A., or “Cerro Verde.” Yanacocha and Cerro Verde maintain their financial books and records in U.S. Dollars and present their financial statements in accordance with IFRS as issued by the IASB.

We record our investments in Yanacocha and Cerro Verde in accordance with the equity method as described in “Item 5. Operating and Financial Review and Prospects—Buenaventura—A. Operating Results—General” and Note 2.4(f) to the Consolidated Financial Statements. Our partnership interest in Yanacocha was calculated at 43.65% for the year ended December 31, 2020, 2019 and 2018. As of December 31, 2018, 2019 and 2020, our equity interest in Cerro Verde was 19.58%.

Forward-Looking Statements

This Annual Report contains “forward-looking statements” as defined in the U.S. Private Securities Litigation Reform Act of 1995 and are intended to be covered by the safe harbor provided for under these sections. Our forward-looking statements are based on management’s assumptions and beliefs in light of the information currently available to it and may include, without limitation:

• our, Yanacocha’s and Cerro Verde’s costs and expenses;

• estimates of future costs applicable to sales;

• estimates of future exploration and production results;

• plans for capital expenditures;

• expected commencement dates of mining or metal production operations; and

• estimates regarding potential cost savings and operating performance.

The words “anticipate,” “may,” “can,” “plan,” “believe,” “estimate,” “expect,” “project,” “intend,” “likely,” “will,” “should,” “to be” and any similar expressions are intended to identify those assertions as forward-looking statements. In making any forward-looking statements, we believe that the expectations are based on reasonable assumptions. We caution readers that those statements are not guarantees of future performance and our actual results may differ materially from those anticipated, projected or assumed in the forward-looking statements. Important factors that can cause our actual results to differ materially from those anticipated in the forward-looking statements include:

• our, Yanacocha’s and Cerro Verde’s results of exploration;

• the results of our joint ventures and our share of the production of, and the income received from, such joint ventures;

• commodity prices;

• production rates;

 3 

• geological and metallurgical assumptions;

• industry risks;

• timing of receipt of necessary governmental permits or approvals;

• regulatory changes;

• political risks;

• inaccurate estimates of reserves or mineralized material not in reserve;

• anti-mining protests or other potential issues with local community relationships;

• labor relations;

• pandemics, or the future outbreak of any other highly infectious or contagious disease, including the COVID-19 pandemic;

• the effects of a pandemic or epidemic and any subsequent mandatory regulatory restrictions or containment measures environmental risks;

• our ability to finance capital expenditures;

• our ability to replace reserves as they become depleted;

• our ability to maintain positive relationships with the communities in which we operate;

• information technology failures;

• risks relating to tailings dams;

• legal proceedings and their effect on our existing financing agreements;

• any future defaults in respect of our outstanding debt agreements; and

• other factors described in more detail under “Item 3. Key Information—D. Risk Factors.”

Many of the assumptions on which our forward-looking statements are based are likely to change after our forward-looking statements are made, including, for example, commodity prices, which we cannot control, and our, Yanacocha’s and Cerro Verde’s production volumes and costs, some aspects of which we may or may not be able to control. Further, we may make changes to our business plans that could or will affect our results. We do not intend to update our forward-looking statements, notwithstanding any changes in our assumptions, changes in our business plans, our actual experience or other changes, and we undertake no obligation to update any forward-looking statements more frequently than required by applicable securities laws. 

 4 

PART I

ITEM 1. Identity of Directors, Senior Management and Advisers

Not applicable.

ITEM 2. Offer Statistics and Expected Timetable

Not applicable.

ITEM 3. Key Information

 5 

A. Selected Financial Data

Selected Financial Information and Operating Data

This selected financial information should be read in conjunction with, and is qualified in its entirety by reference to, the Consolidated Financial Statements, including the notes thereto appearing elsewhere in this Annual Report. The selected financial information as of December 31, 2019 and 2020 and for the years ended December 31, 2018, 2019 and 2020 is derived from the consolidated statements of financial position, consolidated statements of profit or loss and consolidated statements of other comprehensive income, included in the Consolidated Financial Statements appearing elsewhere in this Annual Report. The selected financial information as of December 31, 2016, 2017 and 2018 and for the years ended December 31, 2016 and 2017 has been derived from a consolidated statement of financial position, consolidated statements of profit or loss and consolidated statements of other comprehensive income, respectively, which are not included in this Annual Report. The report of Paredes, Burga & Asociados S. Civil de R.L. (a member firm of Ernst & Young Global Limited) on our Consolidated Financial Statements as of December 31, 2019 and 2020 and for the years ended December 31, 2018, 2019 and 2020 appears elsewhere in this Annual Report. The Consolidated Financial Statements are prepared and presented in accordance with IFRS as issued by the IASB, which differs in certain respects from U.S. GAAP. The operating data presented below is derived from our records and has not been subject to audit. The financial information and operating data presented below should be read in conjunction with “Item 5. Operating and Financial Review and Prospects—Buenaventura,” the Consolidated Financial Statements and the related Notes thereto and other financial information included in this Annual Report. 

	As of and for the year ended December 31,
	2020			2019			2018			2017			2016
							(US$ in thousands)(1)
Statements of profit or loss data:
Continuing operations:
Operating income:
Sales of goods		637,619			821,930			1,106,329			1,187,206			1,015,670
Sales of services		20,285			23,661			24,001			29,697			28,782
Royalty income		18,638			22,297			20,385			20,739			24,339
Total operating income		676,542			867,888			1,150,715			1,237,642			1,068,791
Operating costs:
Cost of sales of goods, excluding depreciation and amortization		(393,888	)		(512,874	)		(613,381	)		(604,650	)		(497,812	)
Unabsorbed cost due to production stoppage		(27,758	)		-			-			-			-
Cost of sales of services, excluding depreciation and amortization		(1,554	)		(3,378	)		(4,318	)		(12,954	)		(10,754	)
Depreciation and amortization		(189,620	)		(226,335	)		(238,879	)		(210,154	)		(192,647	)
Exploration in operating units		(28,044	)		(44,163	)		(89,730	)		(89,311	)		(96,149	)
Mining royalties		(11,749	)		(12,832	)		(21,388	)		(30,884	)		(27,611	)
Total operating costs		(652,613	)		(799,582	)		(967,696	)		(947,953	)		(824,973	)
		23,929			68,306			183,019			289,689			243,818
Gross profit Operating expenses, net:
Administrative expenses		(67,185	)		(76,297	)		(77,099	)		(80,666	)		(81,692	)
Selling expenses		(18,533	)		(24,313	)		(26,948	)		(23,043	)		(21,733	)
Write –off of stripping activity asset		(11,633	)		-			-			(13,573	)		-
Exploration in non- operating areas		(8,475	)		(11,879	)		(36,307	)		(18,262	)		(26,589	)
Reversal (provision) for contingencies and others		(4,150	)		2,968			11,248			(13,740	)		(565	)
Impairment recovery(loss) of long-lived assets		2,083			(2,083	)		5,693			(21,620	)		-
Other, net		2,690			(14,715	)		(1,308	)		(13,230	)		18,957
Total operating expenses, net		(105,203	)		(126,319	)		(124,721	)		(184,134	)		(111,622	)
Operating profit (loss)		(81,274	)		(58,013	)		58,298			105,555			132,196
Other income (expenses), net:
Finance income		2,411			9,675			9,685			5,517			6,830
Finance costs		(37,822	)		(42,173	)		(38,422	)		(34,551	)		(31,580	)
Share in the results of associates and joint ventures		(9,517	)		47,710			(1,144	)		13,207			(365,321	)
Net gain (loss) from currency exchange difference		(4,116	)		(734	)		(1,384	)		2,939			2,638
Profit (loss) before income tax		(130,318	)		(43,535	)		27,033			92,667			(255,237	)
Current income tax		(9,924	)		(11,911	)		(16,882	)		(23,713	)		(39,444	)
Deferred income tax		(15,506	)		37,501			(9,997	)		5,825			(14,060	)
Profit (loss) from continuing operations		(155,748	)		(17,945	)		154			74,779			(308,741	)
Discontinued operations:
Net profit (Loss) from discontinued operations (2)		5,409			(10,514	)		(11,808	)		(10,344	)		(19,073	)
Net profit (loss)		(150,339	)		(28,459	)		(11,654	)		64,435			(327,814	)
Attributable to equity owners of the parent		(135,718	)		(12,208	)		(13,445	)		60,823			(323,492	)
Attributable to non-controlling interest		(14,621	)		(16,251	)		1,791			3,612			(4,322	)
Net profit (loss)		(150,339	)		(28,459	)		(11,654	)		64,435			(327,814	)
Basic and diluted profit (loss) per share attributable to equity holders of the parent(3)(4)		(0.53	)		(0.05	)		(0.05	)		0.24			(1.27	)
Basic and diluted profit (loss) per ADS attributable to equity holders of the parent(3)(4)		(0.53	)		(0.05	)		(0.05	)		0.24			(1.27	)
Basic and diluted profit (loss) per share attributable to equity holders of the parent, from continuing operations		(0.56	)		(0.01	)		(0.02	)		0.28			(1.20	)
Dividends per share		0.00			0.09			0.09			0.09			0.03
Average number of common and investment shares outstanding		253,986,867			253,986,867			253,986,867			253,986,867			253,986,867
Statement of financial position data:
Total assets		3,979,617			4,107,274			4,217,221			4,332,813			4,266,415
Capital stock		750,497			750,497			750,497			750,497			750,497
Total shareholders’ equity		2,799,857			2,968,200			3,029,565			3,063,627			3,047,213
Operating data (unaudited):
Production (5)
Gold (oz.)		134,000			191,281			338,189			405,646			356,367
Silver (oz.)		11,947,919			20,288,743			26,264,109			26,624,431			24,648,761
Proven and probable reserves(6)
Gold (oz.)		3,064,110			3,051,511			1,000,266			1,246,255			1,405,489
Silver (oz.)		176,659,433			203,416,773			193,336,266			148,573,934			159,920,310

 6 

(1) Except per share, per ADS, outstanding shares and operating data.

(2)

During 2020, Buenaventura sold its Mallay mining unit which was classified as discontinued in 2019 under IFRS 5 “Non-current Assets Held for Sale and Discontinued Operations”. The sale price was US$10 million (US$8.5 million plus VAT) with a related cost of US$3.6 million net of income from the reversal of a provision for mining unit closure of US$5.1 million. As of December 31, 2020, Buenaventura has collected US$2.0 million and the remaining balance will be paid in two installments of US$4.0 million in November 2021 and in November 2022.

(3)

Profit (loss) per share has been calculated for each year as net profit (loss) divided by average number of shares outstanding during the year. As of December 31, 2019 and 2020, we had 253,715,190 Common Shares outstanding, exclusive of 21,174,734 treasury shares. As of December 31, 2016, 2017, 2018, 2019 and 2020, we had 271,677 of Investment Shares (as defined below) outstanding, exclusive of 472,963 treasury shares as of December 31, 2016, 2017, 2018, 2019 and 2020.

(4) We have no outstanding options, warrants or convertible securities that would have a dilutive effect on earnings per share. As a result, there is no difference between basic and diluted earnings per share or ADS.

(5) The amounts in this table reflect the total production of all of our consolidated subsidiaries, including Sociedad Minera El Brocal S.A.A., or “El Brocal,” in which we owned a 61.43% controlling equity interest as of December 31, 2020 and 2019, and Minera La Zanja S.R.L., or “La Zanja,” in which we owned a 53.06% controlling equity interest as of December 31, 2020. The production data in this table reflect 100% of El Brocal’s and La Zanja’s production. For the years ended December 31, 2016 to 2020, El Brocal produced 2.6 million, 4.1 million, 3.9 million, 4.4 million and 3.5 million ounces of silver, respectively, of which our equity share was 1.6 million, 2.5 million, 2.4 million, 2.7 million and 2.2 million ounces of silver per year, respectively, and La Zanja produced 139,724, 127,118, 71,630, 31,500 and 17,228 ounces of gold, respectively, of which our equity share per year was 74,137, 67,449, 38,007, 16,714 and 9,141 ounces of gold, respectively, and 217,292, 280,908, 217,174, 97,204 and 84,641 ounces of silver per year, respectively, of which our equity share was 115,295, 149,050, 115,233, 51,576 and 44,911 ounces of silver per year, respectively. Amounts for 2018, 2019 and 2020 exclude production coming from the operating mines classified as discontinued operations.

(6) The amounts in this table reflect the reserves of all of our consolidated subsidiaries, including El Brocal and La Zanja, in each case as of December 31, 2020. SRK Consulting Perú S.A., an independent consultant, audited the process used to estimate proven and probable ore reserves for Uchucchacua, Tambomayo, Orcopampa, El Brocal and La Zanja. Geominería S.A.C, an independent consultant, audited the process used to estimate proven and probable ore reserves for Julcani. Amounts for 2016, 2017 and 2018 exclude reserves coming from the operating mines classified as discontinued operations. The total amount of reserves does not consider ounces from Pads.

 7 

Yanacocha Selected Financial Information and Operating Data

The following table presents selected financial information and operating data for Yanacocha at the dates and for each of the periods indicated. This information should be read in conjunction with, and is qualified in its entirety by reference to, Yanacocha’s audited consolidated financial statements as of December 31, 2019 and 2020 and for the years ended December 31, 2018, 2019 and 2020, or the Yanacocha Consolidated Financial Statements. The report of Paredes, Burga & Asociados S. Civil de R.L. (a member of Ernst & Young Global Limited) on the Yanacocha Consolidated Financial Statements as of December 31, 2019 and 2020 and for the years ended December 31, 2018, 2019 and 2020 appears elsewhere in this Annual Report. The selected financial information for Yanacocha as of December 31, 2016, 2017 and 2018, and for the years ended December 31, 2016 and 2017 has been derived from consolidated statements of financial position, consolidated statements of profit or loss and consolidated statements of other comprehensive income, respectively, which are not included in this Annual Report. Yanacocha’s audited consolidated financial statements as of December 31, 2016, 2017, 2018, 2019 and 2020 were audited by Paredes, Burga & Asociados S. Civil de R.L. (a member firm of Ernst & Young Global Limited). The Yanacocha Consolidated Financial Statements are prepared and presented in accordance with IFRS as issued by the IASB. The operating data presented below, which are based on 100% of Yanacocha’s production and reserves, are derived from Yanacocha’s records and have not been subject to audit. The financial information presented below should be read in conjunction with “Item 5. Operating and Financial Review and Prospects—Yanacocha,” the Yanacocha Consolidated Financial Statements and the related Notes thereto and other financial information included in this Annual Report.

	As of and for the year ended December 31,
	2020			2019			2018			2017			2016
	(US$ in thousands)(1)
Statement of comprehensive income:
Operating income:
Sales(2)		592,394			734,526			635,393			645,176			784,453
Other operating income		27,768			4,776			21,965			21,870			17,713
Total		620,162			739,302			657,358			667,046			802,166
Costs applicable to sales		(666,456	)		(692,721	)		(596,164	)		(746,918	)		(799,654	)
Other operating costs		(1,247	)		(1,160	)		(2,217	)		(2,062	)		(2,951	)
Total operating costs		(667,703	)		(693,881	)		(598,381	)		(748,980	)		(802,605	)
Gross profit (loss)		(47,541	)		45,421			58,977			(81,934	)		(43	)
Operating expenses:
Operating expenses, net		(34,322	)		(35,987	)		(76,155	)		(63,514	)		(71,49	)
Administrative expenses		(1,227	)		(1,744	)		(2,783	)		(4,760	)		(8,780	)
Selling expenses		(1,922	)		(1,722	)		(2,627	)		(3,921	)		(3,695	)
Impairment loss		-			-			-			-			(889,499	)
Operating profit (loss)		(85,012	)		5,968			(22,588	)		(154,129	)		(973,90	)
Finance income		8,100			18,430			11,448			5,831			2,132
Finance costs		(36,699	)		(57,629	)		(39,024	)		(23,766	)		(15,107	)
Net gain (loss) from currency exchange difference		1,180			2,902			(2,056	)		3,636			(13,74	)
Income (loss) before income tax		(112,431	)		(30,329	)		(52,220	)		(168,428	)		(1,000,625	)
Income tax expense		(53,018	)		(64,928	)		(29,297	)		(7,026	)		(43,127	)
Loss for the year		(165,449	)		(95,257	)		(81,517	)		(175,454	)		(1,043,752	)
Comprehensive income (loss):
Loss for the year		(165,449	)		(95,257	)		(81,517	)		(175,454	)		(1,043,752	)
Other comprehensive income (loss) to be reclassified as profit or loss in subsequent periods
Fair value of financial instruments		123			1,246			(91	)		(3,244	)		651
Total comprehensive loss for the year		(165,326)			(94,011)			(81,608)			(178,698)			(1,043,101)
Statement of financial position:
Total assets		2,313,438			2,312,072			2,047,472			2,019,395			2,045,885
Capital stock		378,505			378,505			378,505			398,216			398,216
Total partners’ equity		324,386			489,712			583,723			659,115			885,724
Dividends per share		0.000			0.000			0.00			0.00			0.025
U.S. GAAP
Net income (loss)		(263,543	)		3,316			(69,068	)		(131,243	)		(1,198,139	)
Total equity		1,402,962			1,666,382			1,661,800			1,683,047			1,865,445
Operating data (unaudited)
Gold produced (oz.)		340,052			527,336			514,564			534,692			654,934
Gold proven and probable reserves (Total Yanacocha) (oz.)		6,627			6,938			7,423			3,830			4,362
Gold proven and probable reserves attributable to the Company based on equity participation (oz.)(3)		2,893			3,028			3,240			1,760			1,904

(1) Except operating data

(2)  Royalties netted to sales 

(3)  Company’s equity participation in Yanacocha was 43.65% for all the years, except for 2017 when such participation was 45.95%. 

 8 

Cerro Verde Selected Financial Information and Operating Data

The following table presents selected financial information and operating data for Cerro Verde as of the end of and for each of the periods indicated. This information should be read in conjunction with, and is qualified in its entirety by reference to, Cerro Verde’s audited financial statements as of December 31, 2019 and 2020 and for the years ended December 31, 2018, 2019 and 2020, or the Cerro Verde Financial Statements. The selected financial information as of December 31, 2016, 2017 and 2018 and for the years ended December 31, 2016 and 2017 have been derived from Cerro Verde’s financial statements that are not included in this Annual Report. The report of Paredes, Burga & Asociados S. Civil de R.L. (a member firm of Ernst & Young Global Limited ) on Cerro Verde’s financial statements appears elsewhere in this Annual Report. The Cerro Verde Financial Statements are prepared and presented in accordance with IFRS as issued by the IASB, which differs in certain respects from U.S. GAAP, as indicated in Note 24 and Note 25 to the Cerro Verde Financial Statements. The operating data presented below, which are based on 100% of Cerro Verde’s production and reserves, are derived from Cerro Verde’s records and have not been subject to audit. The financial information presented below should be read in conjunction with “Item 5. Operating and Financial Review and Prospects—Cerro Verde,” the Cerro Verde Financial Statements and the related Notes thereto and other financial information included in this Annual Report.

	As of and for the year ended December 31,
	2020			2019			2018			2017			2016
	(US$ in thousands)(1)
Statement of comprehensive income:
Sales of goods		2,538,593			2,896,894			3,061,930			3,211,266			2,390,840
Costs of sales of goods		(1,809,255	)		(1,961,577	)		(2,018,876	)		(1,776,573	)		(1,559,726	)
Gross profit		729,338			935,317			1,043,054			1,434,693			831,114
Operating expenses
Selling expenses		(97,680	)		(109,483	)		(137,008	)		(141,669	)		(131,391	)
Other operating (expenses), income net		(32,327	)		(37,436	)		(68,683	)		(258,826	)		(24,107	)
		(130,007	)		(146,919	)		(205,691	)		(400,495	)		(155,498	)
Operating profit		599,331			788,398			837,363			1,034,198			675,616
Financial income		2,350			10,356			28,089			5,350			954
Financial expenses		(142,675	)		(115,877	)		(426,733	)		(216,912	)		(80,438	)
Foreign exchange gain differences, net		52,464			5,574			6,161			13,288			7,857
Profit before income tax		511,470			688,451			444,880			835,924			603,989
Income tax expense		(236,926	)		(298,074	)		(325,170	)		(486,043	)		(263,082	)
Net Profit for the year		274,544			390,377			119,710			349,881			340,907
Basic and diluted earnings per share		0.784			1.115			0.342			1.000			0.974
Dividends per share		–			0.428503			0.571337			–			–
Weighted average number of shares outstanding		350,056,012			350,056,012			350,056,012			350,056,012			350,056,012
Statement of financial position data:
Total assets		7,767,459			7,809,424			7,554,712			7,691,007			7,635,623
Capital Stock		990,659			990,659			990,659			990,659			990,659
Total shareholder’s equity		5,635,328			5,359,323			5,117,732			5,197,309			5,197,027
U.S. GAAP
Profit for the year		275,686			319,715			53,280			301,431			345,461
Total shareholder’s equity		5,249,727			4,972,580			4,801,651			4,947,658			4,645,212
Operating data (unaudited):
Production:
Copper (in thousands of recoverable pounds)		820,101			1,003,776			1,049,430			1,062,210			1,107,810
Proven and probable reserves - Tonnage:
Copper proven and probable reserves (Total Cerro Verde) (in metric tons)		4,077,480			4,265,232			4,324,461			3,577,276			3,673,229
Copper proven and probable reserves (attributable to the Company based on equity participation) (in metric tons) (2)		798,371			835,132			846,729			700,431			719,218

(1)	Except per share and operating data.
(2)	BVN’s equity participation in Cerro Verde was 19.58% for all the years shown.

 9 

B. Capitalization and Indebtedness

Not applicable.

C. Reasons for the Offer and Use of Proceeds

Not applicable. 

 10 

D. Risk Factors

Factors Relating to the Company

We have incurred losses in the past and may incur losses in the future.

For the years ended December 31, 2020, 2019 and 2018, our net profit (loss) was $(150.3) million, $(28.5) million and $(11.7) million. We may incur losses in the future and there can be no assurance that we will be able to operate profitably during future periods. If we are unable to operate profitably during future periods, and are not successful in obtaining additional financing, we could be forced to cease certain exploration and evaluation programs and mine development activities as a result of insufficient cash resources.

Our financial performance is highly dependent on the performance of our partners under our mining exploration and operating agreements.

Our participation in joint venture mining exploration projects and mining operations with other experienced mining companies is an integral part of our business strategy. Our partners, co-venturers and other shareholders in these projects generally contribute capital to cover the expenses of the joint venture or provide critical technological, management and organizational expertise. The results of these projects can be highly dependent upon the efforts of our joint venture partners and we rely on them to fulfill their obligations under our agreements. For example, our Yanacocha joint venture with Newmont Mining Corporation, a Delaware corporation, or “Newmont Mining,” depends on Newmont Peru Limited, Peruvian Branch, or “Newmont Peru,” to provide management and other expertise to the Yanacocha project. If our counterparts do not carry out their obligations to us or to third parties, or any disputes arise with respect to the parties’ respective rights and obligations, the value of our investment in the applicable project could be adversely affected and we could incur significant expenses in enforcing our rights or pursuing remedies. We cannot assure you that our current or future partners will fulfill their obligations under our agreements with them. In addition, we may be unable to exert control over strategic decisions made with respect to such projects. See “Item 4. Information on the Company—Yanacocha” and “Item 4. Information on the Company—Buenaventura—B. Business Overview—Exploration.”

Our financial performance is highly dependent on the prices of gold, silver, copper and other metals.

The results of our operations are significantly affected by the market price of specific metals, which are cyclical and subject to substantial price fluctuations. Our revenues and the revenues of Yanacocha, in which we have a material equity investment, are derived primarily from the sale of gold and silver and the revenues of Cerro Verde, in which we have a material equity investment, are derived primarily from copper sales. The prices that we, Yanacocha and Cerro Verde obtain for gold, silver, copper and ore concentrates containing such metals, as applicable, are directly related to world market prices for such metals. Such prices have historically fluctuated widely and are affected by numerous factors beyond our control, including (i) the overall demand for and worldwide supply of gold, silver, copper and other metals; (ii) levels of supply and demand for a broad range of industrial products; (iii) the availability and price of competing commodities; (iv) international economic and political trends; (v) currency exchange fluctuations (specifically, the U.S. Dollar relative to other currencies); (vi) expectations with respect to the rate of inflation; (vii) interest rates; (viii) actions of commodity markets participants; and (ix) global or regional political or economic crises.

We have in the past engaged in hedging activities, such as forward sales and option contracts, to minimize our exposure to fluctuations in the prices of gold, silver and other metals; however, we and our wholly-owned subsidiaries no longer hedge the price at which our gold and silver will be sold. In addition, neither Yanacocha nor Cerro Verde engages in hedging activities. As a result, the prices at which we, Yanacocha and Cerro Verde sell gold, silver, copper and ore concentrates, as applicable, are fully exposed to the effects of changes in prevailing market prices. See “Item 11. Quantitative and Qualitative Disclosures About Market Risk” and Note 33 to the Consolidated Financial Statements. For information on gold and silver prices for each of the years in the five-year period ended December 31, 2019, see “Item 4. Information on the Company—Buenaventura—B. Business Overview—Sales of Metal Concentrates.”

On December 31, 2020 and March 31, 2021, the morning fixing price for gold on the London Bullion Market was US$1,891.1 per ounce and US$1,685.4 per ounce, respectively.  On December 31, 2020 and March 31, 2021, the afternoon fixing spot price of silver on the London market, or “London Spot,” was US$26.485 per ounce and US$24.000 per ounce, respectively.  On December 31, 2020 and March 31, 2021, the London Metal Exchange Settlement Price for copper was US$7,741.5 per ton and US$8,850.5 per ton, respectively.   

 11 

The world market prices of gold, silver and copper have historically fluctuated widely. We cannot predict whether metal prices will rise or fall in the future. A continued decline in the market price of one or more of these metals could adversely impact our revenues, net income and cash flows and adversely affect our ability to meet our financial obligations. If prices of gold, silver and/or copper should decline below our cash costs of production and remain at such levels for any sustained period, we could determine that it is not economically feasible to continue production at any or all of our mines. We may also curtail or suspend some or all of our exploration activities, which may result in our depleted reserves not being replenished. This could further reduce revenues by reducing or eliminating the profit that we currently expect from reserves. Such declines in price and/or reductions in operations could cause significant volatility in our financial performance and adversely affect the trading prices of our Common Shares and ADSs.

The COVID-19 pandemic has and may continue to adversely impact our business, financial condition, and results of our operations, the global economy, and the demand for and prices of oil and natural gas. The unprecedented nature of the current situation makes it impossible for us to identify all potential risks related to the pandemic or estimate the ultimate adverse impact that the pandemic may have on our business.

The COVID-19 pandemic and the actions taken by third parties, including, but not limited to, governmental authorities, businesses and consumers, in response to the pandemic have adversely impacted the global economy and created significant volatility in the global financial markets. Business closures, restrictions on travel, “stay-at-home” or “shelter-in-place” orders, and other restrictions on movement within and among communities have significantly reduced demand for and the prices of oil and natural gas. As of the date of this annual report, efforts to contain COVID-19 have not been successful in many regions, vaccination programs have encountered delays, and the global pandemic remains ongoing. A continued prolonged period of such reduced demand, the failure to timely distribute or the ineffectiveness of any vaccines, the failure to develop adequate treatments, and other adverse impacts from the pandemic may materially adversely affect our business, financial condition, cash flows, and results of operations.

Our operations rely on our workforce being able to access our mines, structures and facilities located upon or used in connection with our mining activities. Additionally, because we have implemented remote working procedures for a significant portion of our workforce for health and safety reasons and/or to comply with applicable national, state, and/or local government requirements, we rely on such persons having sufficient access to our information technology systems, including through telecommunication hardware, software and networks. If a significant portion of our workforce cannot effectively perform their responsibilities, whether resulting from a lack of physical or virtual access, quarantines, illnesses, governmental actions or restrictions, information technology or telecommunication failures, or other restrictions or adverse impacts resulting from the pandemic, our business, financial condition, cash flows, and results of operations may be materially adversely affected.

The unprecedented nature of the current situation resulting from the COVID-19 pandemic makes it impossible for us to identify all potential risks related to the pandemic or estimate the ultimate adverse impact that the pandemic may have on our business, financial condition, cash flows, or results of operations. Such results will depend on future events, which we cannot predict, including the scope, duration and potential reoccurrence of the COVID-19 pandemic or any other localized epidemic or global pandemic, the distribution and effectiveness of vaccines and treatments and the actions taken by third parties, including, but not limited to, governmental authorities, customers, contractors and suppliers, in response to the COVID-19 pandemic or any other epidemics or pandemics. The COVID-19 pandemic and its unprecedented consequences have amplified, and may continue to amplify, the other risks identified in this annual report.

Economic, mining and other regulatory policies of the Peruvian government, as well as political, regulatory and economic developments in Peru, may have an adverse impact on our, Yanacocha’s and Cerro Verde’s businesses.

Our, Yanacocha’s and Cerro Verde’s activities in Peru require us 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 (the “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. Although we are, and Yanacocha and Cerro Verde have informed us that they are, current in the payment of all amounts due in respect of mining and processing concessions, failure to pay such concession fees, processing fees or related fines for two consecutive years could result in the loss of one or more mining rights and processing concessions, as the case may be.

Mining companies are also required to pay the Peruvian government mining royalties and/or mining taxes. See “Item 4. Information on the Company—Buenaventura—B. Business Overview—Regulatory Framework—Mining Royalties and Taxes.” We cannot assure you that the Peruvian government will not impose additional mining royalties or taxes in the future or that such mining royalties or taxes will not have an adverse effect on our, Yanacocha’s or Cerro Verde’s results of operations or financial condition. In addition, future regulatory changes, changes in the interpretation of existing regulations or stricter enforcement of such regulations, including changes to our concession agreements, may increase our compliance costs and could potentially require us to alter our operations. We cannot assure you that future regulatory changes will not adversely affect our business, financial condition or results of operations. 

 12 

Environmental and other laws and regulations may increase our costs of doing business, restrict our operations or result in operational delays.

Our, Yanacocha’s and Cerro Verde’s exploration, mining and milling activities, as well our and Yanacocha’s smelting and refining activities, are subject to a number of Peruvian laws and regulations, including environmental laws and regulations.

Additional matters subject to regulation include, but are not limited to, concession fees, transportation, production, water use and discharges, power use and generation, use and storage of explosives, surface rights, housing and other facilities for workers, reclamation, taxation, labor standards, mine safety and occupational health.

We anticipate additional laws and regulations will be enacted over time with respect to environmental matters. The development of more stringent environmental protection programs in Peru could impose constraints and additional costs on our, Yanacocha’s and Cerro Verde’s operations and require us, Yanacocha and Cerro Verde to make significant capital expenditures in the future. Although we believe that we are substantially in compliance, and Yanacocha and Cerro Verde have advised us that they are substantially in compliance, with all applicable environmental regulations, we cannot assure you that future legislative or regulatory developments will not have an adverse effect on our, Yanacocha’s or Cerro Verde’s business or results of operations. See “Item 4. Information on the Company—Buenaventura—B. Business Overview—Regulatory Framework—Environmental Matters” and “—Permits” and “Item 4. Information on the Company—Yanacocha—B. Business Overview—Environmental Matters.”

Our and Yanacocha’s ability to successfully obtain key permits and approvals to explore for, develop and successfully operate mines will likely depend on our and Yanacocha’s ability to do so in a manner that is consistent with the creation of social and economic benefits in the surrounding communities. Our and Yanacocha’s ability to obtain permits and approvals and to successfully operate in particular communities or to obtain financing may be adversely impacted by real or perceived detrimental events associated with our and Yanacocha’s activities or those of other mining companies affecting the environment, human health and safety or the surrounding communities. Delays in obtaining or failure to obtain government permits and approvals may adversely affect our and Yanacocha’s operations, including our and Yanacocha’s ability to explore or develop properties, commence production or continue operations.

Our metals exploration efforts are highly speculative in nature and may not be successful.

Precious metals exploration, particularly gold exploration, is highly speculative in nature, involves many risks and is frequently unsuccessful. We cannot assure you that our, Yanacocha’s or Cerro Verde’s metals exploration efforts will be successful. Once mineralization is discovered, it may take a number of years from the initial phases of drilling before production is possible, during which time the economic feasibility of production may change. Substantial expenditures are required to establish proven and probable ore reserves through drilling, to determine metallurgical processes to extract the metals from the ore and, in the case of new properties, to construct mining and processing facilities. As a result of these uncertainties, we cannot assure you that our or Yanacocha’s exploration programs will result in the expansion or replacement of current production with new proven and probable ore reserves.

We base our estimates of proven and probable ore reserves and estimates of future cash operating costs largely on the interpretation of geologic data obtained from drill holes and other sampling techniques and feasibility studies. Advanced exploration projects have no operating history upon which to base estimates of proven and probable ore reserves and estimates of future cash operating costs. Such estimates are, to a large extent, based upon the interpretation of geologic data obtained from drill holes and other sampling techniques, feasibility studies which derive estimates of cash operating costs based upon anticipated tonnage and grades of ore to be mined and processed, the configuration of the ore body, expected recovery rates of the mineral from the ore, comparable facility and equipment operating costs, anticipated climatic conditions and other factors. As a result, it is possible that actual cash operating costs and economic returns based upon proven and probable ore reserves may differ significantly from those originally estimated. Moreover, significant decreases in actual over expected prices may mean reserves, once found, will be uneconomical to produce. It is not unusual in new mining operations to experience unexpected problems during the start-up phase. See “Item 4. Information on the Company—Yanacocha—C. Property, Plants and Equipment—Our Properties—Reserves,” “—Yanacocha—C. Property, Plants and Equipment—Yanacocha’s Properties—Reserves” and “Item 5. Operating and Financial Review and Prospects—Cerro Verde—A. Operating Results” for the price per ounce used by us, Yanacocha and Cerro Verde, respectively, to calculate our respective proven and probable reserves.

Increased operating costs could affect our profitability.

Costs at any particular mining location frequently are subject to variation due to a number of factors, such as changing ore grade, changing metallurgy and revisions to mine plans in response to the physical shape and location of the ore body. In addition, costs are affected by the price of commodities, such as fuel and electricity, as well as by the price of labor. Commodity costs are at times subject to volatile price movements, including increases that could make production at certain operations less profitable. Reported costs may be affected by changes in accounting standards. A material increase in costs at any significant location could have a significant effect on our profitability. 

 13 

Our business is capital-intensive and we may not be able to finance necessary capital expenditures required to execute our business plans.

Precious metals exploration requires substantial capital expenditures for the exploration, extraction, production and processing stages and for machinery, equipment and experienced personnel. Our estimates of the capital required for our projects may be preliminary or based on assumptions we have made about the mineral deposits, equipment, labor, permits and other factors required to complete our projects. If any of these estimates or assumptions change, the actual timing and amount of capital required may vary significantly from our current anticipated costs. In addition, we may require additional funds in the event of unforeseen delays, cost overruns, design changes or other unanticipated expenses. We may also incur debt in future periods or reduce our holdings of cash and cash equivalents in connection with funding future acquisitions, existing operations, capital expenditures or in pursuing other business opportunities. Our ability to meet our payment obligations will depend on our future financial performance, which will be affected by financial, business, economic and other factors, many of which we are unable to control. There can be no assurance that we or Yanacocha will generate sufficient cash flow or that we will have access to sufficient external sources of funds in the form of outside investment or loans to continue exploration activities at the same or higher levels than in the past or that we will be able to obtain additional financing, if necessary, on a timely basis and on commercially acceptable terms.

Estimates of proven and probable reserves are subject to uncertainties and the volume and grade of ore actually recovered may vary from our estimates.

The proven and probable ore reserve figures presented in this Annual Report are our, Yanacocha’s and Cerro Verde’s estimates, and there can be no assurance that the estimated levels of recovery of gold, silver, copper and certain other metals will be realized. Such estimates depend on geological interpretation and statistical inferences or assumptions drawn from drilling and sampling analysis, which may prove to be materially inaccurate. Actual mineralization or formations may be different from those predicted. As a result, reserve estimates may require revision based on further exploration, development activity or actual production experience, which could materially and adversely affect such estimates. No assurance can be given that our, Yanacocha’s or Cerro Verde’s mineral resources constitute or will be converted into reserves. Market price fluctuations of gold, silver and other metals, as well as increased production costs or reduced recovery rates, may render proven and probable ore reserves containing relatively lower grades of mineralization uneconomic to exploit and may ultimately result in a restatement of proven and probable ore reserves. Moreover, short-term operating factors relating to the reserves, such as the processing of different types of ore or ore grades, could adversely affect our or Yanacocha’s profitability in any particular accounting period. See “Item 4. Information on the Company—Yanacocha—C. Property, Plants and Equipment—Our Properties—Reserves” and “Item 4. Information on the Company—Yanacocha—C. Property, Plants and Equipment—Yanacocha’s Properties—Reserves.”

We and Yanacocha may be unable to replace reserves as they become depleted by production.

As we and Yanacocha produce gold, silver, zinc and other metals, we and Yanacocha deplete our respective ore reserves for such metals. To maintain production levels, we and Yanacocha must replace depleted reserves by exploiting known ore bodies and locating new deposits. Exploration for gold, silver and the other metals produced is highly speculative in nature. Our and Yanacocha’s exploration projects involve significant risks and are often unsuccessful. Once a site is discovered with mineralization, we and Yanacocha may require several years between initial drilling and mineral production, and the economic feasibility of production may change during such period. Substantial expenditures are required to establish proven and probable reserves and to construct mining and processing facilities. There can be no assurance that current or future exploration projects will be successful and there is a risk that our depletion of reserves will not be offset by new discoveries. See “Item 4. Information on the Company—Buenaventura—B. Business Overview—Exploration,” “—Yanacocha—B. Business Overview—Environmental Matters,” “—Yanacocha—C. Property, Plants and Equipment—Our Properties,” “—Yanacocha—C. Property, Plants and Equipment—Yanacocha’s Properties,” “—Yanacocha—C. Property, Plants and Equipment—Reserves,” and “Item 5. Operating and Financial Review and Prospects—Cerro Verde—A. Operating Results” for a summary of our, Yanacocha’s and Cerro Verde’s estimated proven and probable reserves as of December 31, 2020.

Our operations are subject to risks, many of which are not insurable.

The business of mining, smelting and refining gold, silver, copper and other metals is generally subject to a number of risks and hazards, including industrial accidents, labor disputes, unavailability of materials and equipment, unusual or unexpected geological conditions, changes in the regulatory environment, environmental hazards and weather and other natural phenomena such as earthquakes, most of which are beyond our control. Such occurrences could result in damage to, or destruction of, mining properties or production facilities, personal injury or death, environmental damage, delays in mining, monetary losses and possible legal liability. We, Yanacocha and Cerro Verde each maintain insurance against risks that are typical in the mining industry in Peru and in amounts that we, Yanacocha and Cerro Verde believe to be adequate but which may not provide adequate coverage in certain circumstances. No assurance can be given that such insurance will continue to be available at economically feasible premiums or at all. Insurance against certain risks (including certain liabilities for environmental pollution or other hazards as a result of exploration and production) is not generally available to us or to other companies within the industry. 

 14 

Legal proceedings could have a material adverse effect on our business.

We are involved in legal proceedings against the Peruvian National Customs and Tax Administration Superintendence (“SUNAT”) in connection with ongoing tax disputes relating to an audit in respect of the Company’s income tax payments for the years 2007 and 2008 (and the tax consequences in respect of the years 2009 and 2010), in which SUNAT refused to recognize the Company’s deductions in respect of contracts for physical deliveries and certain contractual payments made by the Company on the basis that such payments would, according to SUNAT, correspond to an early settlement of financial derivative contracts in situations where the Company did not establish the purpose or risks covered by such instruments. 

On November 26, 2020, following the intervening tax court’s decision to dismiss the Company’s appeal against certain Administrative Resolutions issued by SUNAT in connection with the above-referenced matter, SUNAT began collection proceedings in an aggregate amount of 2,107.5 million soles (approximately US$585.4 million), comprised of the original claim of 373.3 million soles (approximately US$103.7 million) plus penalties and accrued interest according to SUNAT’s estimations. On December 30, 2020, we entered into a deferral and payment plan in respect of the amounts claimed by SUNAT as described in “—In the past, we have defaulted on certain obligations under our existing Syndicated Term Loan for which we have obtained a waiver; however, we cannot assure you that we will be able to obtain additional waivers in the event of future defaults” below. As a result of our entering into such arrangements, on April 13, 2021, Fitch downgraded our credit rating to “BB” from “BB+”.

We will continue to pursue appeals on this matter in Peruvian courts.  These legal proceedings may be costly and time consuming and there can be no guarantee in respect of the final outcome of these proceedings or that SUNAT will not bring future claims against us.

In the past, we have defaulted on certain obligations under our existing Syndicated Term Loan for which we have obtained a waiver; however, we cannot assure you that we will be able to obtain additional waivers in the event of future defaults.

Following the commencement of collection proceedings by SUNAT described in “—Legal proceedings could have a material adverse effect on our business,” the Company filed a request for deferral and payment plan of the amounts claimed by SUNAT in order to make such tax payments over a 67 month term, in addition to making interest payments in connection with such payments. The requested payment plan consists of an initial payment in an amount equal to 14% of the amount claimed by SUNAT and 66 equal installments for the remaining amounts. In order to finalize the deferral and payment agreement with SUNAT, the Company was required to deliver Letters of Credit in an amount equal to the aggregate claimed amount in accordance with applicable law. To satisfy this requirement, on December 30, 2020, the Company entered into a syndicated letters of credit agreement (the “Syndicated L/C Agreement”) with a group of financial entities and following delivery of the Letters of Credit, SUNAT approved the Company’s payment plan.

The collection proceedings, the incurrence of debt under the Syndicated L/C Agreement and the granting of certain liens described below constituted an event of default under an outstanding syndicated loan facility (as amended from time to time, the “Syndicated Term Loan”), in the amount of US$275 million among us, as borrower, Compañía Minera Condesa S.A. ( “Condesa”), Inversiones Colquijirca S.A. (“Colquijirca”) and Consorcio Energético Huancavelica S.A. (“Conenhua”), as guarantors, Banco de Crédito del Perú, as administrative agent, and the lenders party thereto.  As such, prior to the execution of the Syndicated L/C Agreement, on December 29, 2020, Buenaventura entered into a forbearance agreement (as amended from time to time, the “Forbearance Agreement”) with a majority of the lenders and the administrative agent under the Syndicated Term Loan, pursuant to which such creditors agreed, among other matters, not to exercise any acceleration rights under the Syndicated Term Loan in connection with any potential non-compliance with the incurrence of debt, negative pledge, consolidated interest coverage ratio or consolidated net leverage ratio as a result of our incurrence of debt (and the granting of certain collateral) pursuant to the Syndicated Letters of Credit, through April 28, 2021.

Additionally, as a requirement to the execution of the Syndicated L/C Agreement and the Forbearance Agreement, the lenders party to such agreements required Buenaventura to (1) enter into a temporary intercreditor agreement (Acuerdo Transitorio entre Acreedores) (the “Temporary Intercreditor Agreement”) which regulates the relationship between the letter of credit providers under the Syndicated L/C Agreement, a majority of the lenders and the administrative agent under the Syndicated Term Loan, certain hedge providers and the Company; and (2) grant a first lien in respect of the shares or quotas, as applicable, owned by (a) Buenaventura in Empresa de Generación Huanza S.A., Yanacocha, Sociedad Minera El Brocal S.A.A and Sociedad Minera Cerro Verde S.A.A. and (b) Condesa in Buenaventura, as collateral for the secured obligations under the Temporary Intercreditor Agreement, the Syndicated Term Loan and the company’s outstanding hedge agreements. 

 15 

On April 28, 2021, we entered into an amendment and waiver to the Syndicated Term Loan which superseded the Forbearance Agreement, pursuant to which the lenders under the Syndicated Term Loan agreed to amend certain terms of the Syndicated Term Loan and to cure any and all past defaults triggered by the collection proceedings, the incurrence of debt and the granting of collateral relating to the Syndicated Letters of Credit.

We cannot assure you that we will not breach the covenants under these or other of our debt instruments in the future and, in such event, that we would be able to obtain the required waivers from our creditors. Failure to successfully obtain waivers could force us to precipitate the sale of assets, including on unfavorable terms, to repay these debt instruments. Moreover, if we are not able to renegotiate the terms of these debt instruments or repay them promptly, our ability to obtain financings could be impaired, which may have a material adverse effect on our business, financial condition and results of operations.

Increases in equipment costs, energy costs and other production costs, disruptions in energy supply and shortages in equipment and skilled labor may adversely affect our results of operations.

In recent years, there has been a significant increase in mining activity worldwide in response to increased demand and significant increases in the prices of natural resources. The opening of new mines and the expansion of existing ones have led to increased demand for, and increased costs and shortages of, equipment, supplies and experienced personnel. These cost increases have significantly increased overall operating and capital budgets of companies like ours, and continuing shortages could affect the timing and feasibility of expansion projects.

Energy represents a significant portion of our production costs. Our principal energy sources are electricity, purchased petroleum products and natural gas. An inability to procure sufficient energy at reasonable prices or disruptions in energy supply could adversely affect our profits, cash flow and growth opportunities. Our production costs are also affected by the prices of commodities we consume or use in our operations, such as sulfuric acid, grinding media, steel, reagents, liners, explosives and diluents. The prices of such commodities are influenced by supply and demand trends affecting the mining industry in general and other factors outside our control and such prices are at times subject to volatile movements. Increases in the cost of these commodities or disruptions in energy supply could make our operations less profitable, even in an environment of relatively high copper, gold or silver prices. Increases in the costs of commodities that we consume or use may also significantly affect the capital costs of new projects.

We may be adversely affected by labor disputes.

Our ability to achieve our goals and objectives is dependent, in part, on maintaining good relations with our employees. A prolonged labor disruption at any of our material properties could have a material adverse impact on our results of operations. We, Compañía Minera Coimolache S.A., or “Coimolache,” Yanacocha and Cerro Verde have all experienced strikes or other labor-related work stoppages in the past.

As of December 31, 2020, unions represented approximately 24% of our and our subsidiaries’ employees, including Coimolache’s employees and contractors. Although we consider our relationship with our employees to be positive, there can be no assurance that we will not experience strikes or other labor-related work stoppages that could have a material adverse effect on our operations and/or operating results in the future.

Our, Yanacocha’s and Cerro Verde’s operations are subject to political and social risks.

Our, Yanacocha’s and Cerro Verde’s exploration and production activities are potentially subject to political and social risks. Over the past several years, we and Yanacocha have been the target of local political protests. In recent years, certain areas in the south and northern highlands of Peru with significant mining developments have experienced strikes and protests related to the environmental impact of mining activities. Such strikes and protests have resulted in commercial disruptions and a climate of uncertainty with respect to future mining projects. As a result of local political and community protests, construction and development activities at the Conga project were largely suspended in November 2011. The results of the Peruvian Central Government’s Environmental Impact Assessment (“EIA”) independent review were reported on April 20, 2012. The review indicated the project’s EIA met Peruvian and international standards. The review made recommendations to provide additional water capacity and social funds, which Yanacocha has largely accepted. Yanacocha announced the decision to advance the project on a “water-first” basis 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 by focusing only on the most critical work (protecting people and assets, engaging with communities and maintaining existing project infrastructure), while maintaining optionality. Newmont Mining will not proceed with the full development of the Conga project without social acceptance, solid economic projections and, potentially, another partner to help defray costs and risk. It is difficult to predict when or whether such events may occur. Under the current social and political environment, we do not anticipate being able to develop the Conga project in the foreseeable future. The continued delay and evaluation of other alternatives may result in a potential accounting impairment or further reclassification of mineralized material. 

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During 2020, the Peruvian Central Government continued to support responsible mining as a vehicle for the growth and future development of Peru. However, we are unable to predict whether the Peruvian Central Government will continue to take similar positions in the future. The regional government of Cajamarca and other political parties have actively opposed the Conga project in the past. We cannot predict future positions of either the Peruvian Central Government or regional governments towards foreign investment, mining concessions, land tenure or other regulation, or the impact that these positions or changes in law may have on Yanacocha or Conga. Such changes may include increased labor regulations, environmental and other regulatory requirements, and additional taxes and royalties. We may also be exposed to protests, community demands and road blockages. Any change in government positions or laws on these issues could adversely affect the assets and operations of Yanacocha or Conga, which could have a material adverse effect on our results of operations and financial position. Additionally, the inability to develop Conga or operate at Yanacocha could have an adverse impact on our growth and production in the region.

We cannot assure you that these types of incidents will not continue or that similar incidents will not occur in areas in which we and Yanacocha operate, or that the continuation or intensification of community protests will not adversely affect our or Yanacocha’s exploration and production activities or our or Yanacocha’s results of operations or financial condition.

In addition, during 2011, Peru enacted Law No. 29785, the Law of Prior Consultation for Indigenous and Native Communities (Ley del Derecho a la Consulta Previa a los Pueblos Indígenas y Originarios, Reconocido en el Convenio 169 de la Organización Internacional del Trabajo). Implementing regulations thereunder were approved by Supreme Decree No. 001-2012-MC, which became effective on April 2, 2012. This law establishes a prior consultation procedure that the Peruvian government must undertake in concert with any local indigenous communities whose collective rights may be directly affected by new legislative or administrative measures, including the granting of new mining concessions. The implementing regulations specify the form and circumstances of the required consultation and the manner in which agreements will be formalized, and cap the consultation process at 120 calendar days. Under the law, the Peruvian governmental body responsible for issuing or approving the administrative measure or decree in question, rather than the affected local indigenous community, retains the right to approve or reject the relevant legislative or administrative matter following such consultation. However, to the extent that any future projects operated by us, Yanacocha or Cerro Verde require legislative or administrative measures that impact local indigenous communities, the required prior consultation procedure may result in delays, additional expenses or failure to obtain approval for such new project.

We could face geotechnical challenges, which could adversely impact our production and profitability.

No assurances can be given that unanticipated adverse geotechnical and hydrological conditions, such as landslides and pit wall failures, will not occur in the future or that such events will be detected in advance. Geotechnical instabilities can be difficult to predict and are often affected by risks and hazards outside of our control, such as severe weather and considerable rainfall, which may lead to periodic floods, mudslides, wall instability and seismic activity, which may result in slippage of material.

Geotechnical failures could result in limited or restricted access to mine sites, suspension of operations, government investigations, increased monitoring costs, remediation costs, loss of ore and other impacts, which could cause one or more of our projects to be less profitable than currently anticipated and could result in a material adverse effect on our results of operations and financial position.

We rely on contractors to conduct a significant portion of our operations and mine development projects.

A significant portion of our operations and mine development projects are currently conducted by contractors. As a result, our operations are subject to a number of risks, some of which are outside our control, including:

• failure of a contractor to perform under its agreement;

• interruption of operations or increased costs if a contractor ceases its business due to insolvency or other unforeseen events;

• failure of a contractor to comply with applicable legal and regulatory requirements, to the extent it is responsible for such compliance; and

• problems of a contractor with managing its workforce, labor unrest or other employment issues.

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In addition, we may incur liability to third parties as a result of the actions of our contractors. The occurrence of one or more of these risks could adversely affect our results of operations and financial position.

We are exposed to behaviors incompatible with our, Yanacocha and Cerro Verde’s ethics and compliance standards.

Given the large number of contracts that we are a party to with our suppliers and partners in Yanacocha and Cerro Verde, the geographic distribution of our operations and the great variety of parties that we interact with in the course of our business, we are subject to the risk that our employees, contractors and other persons having relations with us may misappropriate our assets, manipulate our assets or information or engage in money laundering or the financing of terrorism, for such person’s personal or business advantage. Our systems for identifying and monitoring these risks may not be effective to fully mitigate them in all circumstances. Such acts may result in material financial losses or reputational harm to us. 

We are not, and do not intend to become, regulated as an investment company under the U.S. Investment Company Act of 1940, as amended (the “Investment Company Act”), and if we were deemed an “investment company” under the Investment Company Act, applicable restrictions could make it impractical for us to operate as contemplated.

As of December 31, 2020, we owned a 43.65% partnership interest in Yanacocha and a 19.58% equity interest in Cerro Verde. These interests may constitute “investment securities” for purposes of the Investment Company Act.

Under the Investment Company Act, an investment company is defined in relevant part to include (i) any company that is or holds itself out as being engaged primarily, or proposes to engage primarily, in the business of investing, reinvesting or trading in securities and (ii) any company that owns or proposes to acquire investment securities having a value exceeding 40% of such company’s total assets (exclusive of certain items) on an unconsolidated basis. Issuers that are investment companies within the meaning of the Investment Company Act, and which do not qualify for an exemption from the provisions of such act, are required to register with the Securities and Exchange Commission (the “SEC”) and are subject to substantial regulations with respect to capital structure, operations, transactions with affiliates and other matters. If we were deemed to be an investment company and did not qualify for an exemption from the provisions of the Investment Company Act, we would be required to register with the SEC and would be subject to such regulations, which would be unduly burdensome and costly for us and possibly adversely impact us.

We received an order from the SEC on April 19, 1996 declaring us to be primarily engaged in a business other than that of an investment company and, therefore, not an investment company within the meaning of the Investment Company Act. We intend to conduct our operations and maintain our investments in a manner, and will take appropriate actions as necessary, to ensure we will not be deemed to be an investment company in the future. The SEC, however, upon its motion or upon application, may find that the circumstances that gave rise to the issuance of the order no longer exist, and as a result may revoke such order. There can be no assurance that such order will not be revoked.

Our or Yanacocha’s inability to maintain positive relationships with the communities in which we operate may affect our or Yanacocha’s reputation and financial condition.

Our and Yanacocha’s relationships with the communities in which we operate are critical to ensuring the future success of our existing operations and the construction and development of our projects. Adverse publicity generated by non-governmental organizations or local communities related to extractive industries generally, or our or Yanacocha’s operations specifically, could have an adverse effect on our reputations or financial condition and may impact our relationships with the communities in which we operate. In addition, following the enactment of Law No. 29785, the Law of Prior Consultation for Indigenous and Native Communities in 2011, the Peruvian government must undertake a prior consultation procedure in concert with local indigenous communities whose collective rights may be directly affected by new legislative or administrative measures, including the granting of new mining concessions. Implementing regulations under Law No. 29785 were approved by Supreme Decree No. 001-2012-MC, which became effective on April 2, 2012. The implementing regulations specify the form and circumstances of the required consultation and the manner in which agreements will be formalized, and cap the consultation process at 120 calendar days. Our and Yanacocha’s national reputation for maintaining positive relationships with the communities in which we operate may affect the outcome of any such prior consultation process involving approvals that we or Yanacocha seek for new projects. While we and Yanacocha are committed to operating in a socially responsible manner, there is no guarantee that our efforts in this regard will mitigate this potential risk. We and Yanacocha have implemented extensive community relations and security and safety initiatives to anticipate and manage social issues that may arise at our operations. See “Item 4. Information on the Company—Yanacocha—B. Business Overview.” 

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The Conga project is located within close proximity of existing operations at Yanacocha. Due to local political and community protests, construction and development activities at the Conga project were largely suspended in November 2011. The results of the Peruvian Central Government-initiated EIA, independent review, announced on April 20, 2012, confirmed that Yanacocha’s initial EIA met Peruvian and international standards. The review made recommendations to provide additional water capacity and social funds, which Yanacocha has largely accepted. Yanacocha announced its decision to move the project forward on a “water first” basis on June 22, 2012, which consists of building the originally planned community water reservoirs before resuming any mine development. As a result, during 2013 the project was focused on building water reservoirs, completing the remaining engineering activities, and accepting delivery of the main equipment purchases. In 2013, the Chailhuagon reservoir was completed. There can be no assurance that Yanacocha will be able to continue to develop the Conga project. Should Yanacocha be unable to continue with the current development plan at the Conga project, we or our mining partners in this project may reprioritize and reallocate capital to development alternatives, which may result in a potential accounting impairment. See “Item 4. Information on the Company—Yanacocha—B. Business Overview—Environmental Matters.

Deterioration in our financial position or a downgrade of our ratings by a credit rating agency could increase our borrowing costs and our business relationships could be adversely affected.

Credit rating agencies could downgrade our ratings either due to factors specific to Buenaventura, a prolonged cyclical downturn in the precious metals mining industries, macroeconomic trends (such as global or regional recessions) or trends in credit and capital markets more generally. For instance, on April 3, 2020, Moody’s Investors Service downgraded our unsecured corporate rating from “Ba2” to “B1” due to the deterioration of the commodities markets and a downturn in the precious metals mining sector, as well as concerns about our liquidity. On April 13, 2021, Fitch downgraded our credit rating to “BB” from “BB+” as a result of our entering into a deferral and payment plan in respect of the amounts claimed by SUNAT as described in “—In the past, we have defaulted on certain obligations under our existing Syndicated Term Loan for which we have obtained a waiver; however, we cannot assure you that we will be able to obtain additional waivers in the event of future defaults.”

A deterioration of our financial position or a further downgrade of any of our credit ratings for any reason could increase our borrowing costs and have an adverse effect on our business relationships with customers and suppliers. A subsequent downgrade could adversely affect our existing financings, limit access to the capital or credit markets, or otherwise adversely affect the availability of other new financing on favorable terms, if at all, result in more restrictive covenants in agreements governing the terms of any future indebtedness that we incur, increase our borrowing costs, or otherwise impair our business, financial condition and operating results.

Our tailings dams are subject to significant environmental, safety and engineering challenges and risks that could adversely affect our business.

The rupture of a tailings dam or similar structure may cause severe damages. Currently, the Company owns 18 tailings dams, consisting of seven active and 11 inactive (those in the process of being closed or remediated) tailing dams, and other geotechnical structures. All seven active and one of the inactive tailings dams were built using the “downstream” raising method or were raised with filtered/compacted tailings. The remaining inactive tailings dams were built using the “upstream” raising method, which could present stability risks, especially related to liquefaction.

Management of these facilities is regulated in the jurisdiction where we operate and our programs are designed to comply with applicable national laws, permits and approved environmental impact studies.

The failure of tailings dams could cause loss of life and severe personal, property and environmental damages, which could further have an adverse effect on our business, results of operations and reputation.

We could be subject to information technology system failures, network disruptions, and breaches in data security which could negatively affect our business, financial position, results of operations, and cash flows.

As dependence on digital technologies is expanding, cyber incidents, including deliberate attacks or unintentional events have been increasing worldwide. Computers and telecommunication systems are used to conduct our exploration, development and production activities and have become an integral part of our business. We use these systems to analyze and store financial and operating data, as well as to support our internal communications and interactions with business partners. Cyber-attacks could compromise our computer and telecommunications systems and result in additional costs as well as disruptions to our business operations or the loss of our data. 

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A cyber-attack involving our information systems and related infrastructure, or those of our business partners, could disrupt our business and negatively impact our operations in a variety of ways, such as, among others:

• an attack on the computers which control our mining operations could cause a temporary interruption of our production while contingency manual systems are brought online;

• a cyber-attack on our accounting or accounts payable systems could expose us to liability to employees and third parties if their sensitive personal information is obtained;

• possible loss of material information, which in turn could delay productive processes and selling efforts, causing economic losses; or

• a cyber-attack on a service provider could result in supply chain disruptions, which could delay or halt our major development projects.

The laws of Peru related to anti-bribery and anti-corruption are still developing and could be less stringent than those of other jurisdictions, and our risk management and internal controls may not be successful in preventing or detecting all violations of law or of company-wide policies.

Our business is subject to a significant number of laws, rules and regulations, including those relating to anti-bribery and anti-corruption. However, the Peruvian regulatory regime related to anti-bribery and anti-corruption legislation is still developing and could be less stringent than anti-bribery and anti-corruption legislation which has been implemented in other jurisdictions.

In addition, our existing compliance processes and internal control systems may not be sufficient to prevent or detect all inappropriate practices, fraud or violations of law by our employees, contractors, agents, officers or any other persons who conduct business with or on behalf of us. We may in the future discover instances in which we have failed to comply with applicable laws and regulations or internal controls. If any of our employees, contractors, agents, officers or other persons with whom we conduct business engage in fraudulent, corrupt or other improper or unethical business practices or otherwise violate applicable laws, regulations or our own internal compliance systems, we could become subject to one or more enforcement actions by Peruvian or foreign authorities (including the U.S. Department of Justice) or otherwise be found to be in violation of such laws, which may result in penalties, fines and sanctions and in turn adversely affect our reputation, business, financial condition and results of operations.

The climatic phenomenon El Niño and other natural phenomena such as earthquakes and floods may have a material and adverse effect on us.

Peru has experienced natural phenomena in the past such as earthquakes, other geologic events and flooding. A major earthquake could damage the infrastructure necessary for our operations. In addition, increased rainfall from the weather phenomenon known as “El Niño,” which typically occurs every two to seven years, can contribute to flooding and mudslides, which could damage roads and highways providing access to our facilities. Peru has also experienced droughts caused by low rainfall. If such events occur in the future, we may suffer damage to, or destruction of, properties and equipment, or losses not covered by our insurance policies, as well as temporary disruptions to our services, which may materially and adversely affect us. If a significant number of our employees were affected by a natural disaster, our ability to conduct business could be impaired.

Factors Relating to Peru

Peruvian political conditions may have an adverse impact on our, Yanacocha’s and Cerro Verde’s business.

All of our, Yanacocha’s and Cerro Verde’s operations are conducted in Peru. Accordingly, our, Yanacocha’s and Cerro Verde’s business, financial condition or results of operations could be affected by changes in economic or other policies of the Peruvian government or other political, regulatory or economic developments in Peru. 

Peru has experienced political instability from time to time, spanning a succession of regimes with differing economic policies and programs. Although Peru has been widely considered a stable democracy in recent years, more recently in 2019 the country slid into a protracted political crisis when the then-President of the country (Mr. Vizcarra) took executive action to dissolve the Peruvian Congress and called for a new election of congressional members. After such actions, the now-former members of the legislative body voted to suspend the President for twelve months, and appointed the Vice President as interim president, who resigned from the position the following day. In January 2020, the Peruvian Constitutional Court ruled that the President’s closing of Congress was constitutional and legally valid, and new congressional elections were held that resulted in a highly fragmented Congress. Following these elections, the Peruvian executive and legislative branches have been at odds over several important economic and social measures, including initiatives to address the economic and social impact of the COVID-19 pandemic on Peru. In October 2020, a group of congressmen introduced a motion to hold impeachment proceedings against the then-standing President, as a result of allegations that he received illicit payments from construction companies when he was the governor of Moquegua between 2011 and 2014. In November 2020, Congress approved the impeachment of the then-standing President and, because Peru did not have any designated Vice President at such time, the then-President of Congress assumed the role of acting President. Following multiple protests across the country, the then-President of Congress resigned his role of acting President, and Congress elected congressman Francisco Rafael Sagasti Hochhausler as president of Congress, and therefore as acting President. 

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Peru’s general elections to elect the president of the republic, two vice-presidents and all 130 members of congress for 2021-2026, were held on April 11, 2021. As a result, the candidates for president, Mr. Jose Pedro Castillo Terrones and Mrs. Keiko Sofia Fujimori Higuchi obtained the highest number of votes but no outright majority, giving place to a ballotage presidential run-off scheduled to be held on June 6, 2021. We cannot be certain whether the new Peruvian government to be elected in June 2021 will continue to pursue business-friendly and open-market economic policies that stimulate economic growth and stability.

The new government will need to reach consensus with Congress as no political party has achieved clear majority and, otherwise, will be fragmented, with at least ten political parties holding minority representations in Congress.

Confrontations between the different branches of government and the political landscape in Peru could materially and adversely affect us.

In 2020, the political situation in Peru was unstable, and there were several confrontations between the different branches of government. As result of such confrontations, the former president Martin Vizcarra was removed from office and the congress appointed Manuel Merino as his successor in November 2020. Manuel Merino resigned due to social unrest and Francisco Sagasti was appointed by the congress (following the Constitutional process) as the new President through July 2021. Peru’s general elections to elect the president of the republic, two vice-presidents and all 130 members of congress for 2021-2026, were held on April 11, 2021. As a result, the candidates for president, Mr. Jose Pedro Castillo Terrones and Mrs. Keiko Sofia Fujimori Higuchi obtained the highest number of votes but no outright majority, giving place to a ballotage presidential run-off scheduled to be held on June 6, 2021.

The political instability caused by these events could affect macroeconomic conditions in the country, including currency volatility. This political instability can  have a material adverse effect on our business, prospects, financial condition, results of operations or cash flows.

Inflation, reduced economic growth and fluctuations in the Sol exchange rate may adversely affect our financial condition and results of operations.

Prior to 1994, Peru periodically experienced high inflation, slow or negative economic growth and substantial currency devaluation. The inflation rate in Peru, as measured by the Indice de Precios al Consumidor and published by Instituto Nacional de Estadística e Informática has fallen from a high of 7,649.7% in 1990 to 2.0% in 2020. Our revenues and operating expenses are primarily denominated in U.S. Dollars. If inflation in Peru were to increase without a corresponding devaluation of the Sol relative to the U.S. Dollar, our financial position and results of operations, and the market price of our Common Shares and ADSs, could be affected. Although the Peruvian government’s stabilization plan has significantly reduced inflation since 1999, and the Peruvian economy has experienced strong growth in recent years, there can be no assurance that inflation will not increase from its current level or that such growth will continue in the future at similar rates or at all.

Among the economic circumstances that could lead to a devaluation would be the decline of Peruvian foreign reserves to inadequate levels. Peru’s foreign reserves at December 31, 2020 were US$74.7 billion as compared to US$68.3 billion at December 31, 2019 as per the Banco Central de Reserva. Although actual foreign reserves must be maintained at levels that will allow the succeeding government the ability to manage the Peruvian economy and to assure monetary stability in the near future, there can be no assurance that Peru will be able to maintain adequate foreign reserves to meet its foreign currency denominated obligations, or that Peru will not devalue its currency should its foreign reserves decline.

Peru’s current account deficit is being funded partially by foreign direct investment. There can be no assurance that foreign direct investment will continue at current levels, particularly if adverse political or economic developments in Peru arise, a development that may also contribute to devaluation pressure. 

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In the past, Peru experienced significant levels of domestic terrorist activity. It is possible that a resurgence of terrorism in Peru may occur in the future, which would have a material adverse effect on the Peruvian economy and, ultimately, on us.

In the late 1980s and early 1990s, Peru experienced significant levels of terrorist activity targeted against, among others, the government and private sector. These activities were attributed mainly to two local terrorist groups, Sendero Luminoso and the Túpac Amaru Revolutionary Movement.

Both terrorist groups suffered significant defeats in the 1990s, including the arrest of their leaders, considerably limiting their activities after the 2000s. Although we believe that terrorist organizations no longer pose as significant a risk as they did in the 1980s and early 1990s, a small group of terrorists primarily engaged in drug trafficking, still operate in remote mountainous and jungle areas in central and southern Peru. Despite the suppression of most terrorist activity, terrorist activity and the illegal drug trade continue to be key challenges for Peruvian authorities. Any violence derived from the drug trade or a resumption of large-scale terrorist activities could hurt our operations and businesses. If a resurgence of terrorism in Peru occurs, it could affect the Peruvian economy and us.

Another source of risk is related to political and social unrest in areas where mining, oil and gas operations take place. In recent years, Peru has experienced protests against mining projects in several regions around the country. On several occasions, local communities have opposed these operations and accused them of polluting the environment and hurting agricultural and other traditional economic activities. Social demands and conflicts may occur in the future which may have a material adverse effect on our business, financial condition and the Peruvian economy.

Deterioration in economic and market conditions in Latin America, Peru and other emerging market countries could affect the prices of our Common Shares and American Depositary Receipts (“ADRs”).

Although economic conditions are different in each country, the reaction of investors to developments in one country is likely to cause the capital markets in other countries to fluctuate. For example, political and economic events, such as the crises in Venezuela, Ecuador, Bolivia, Brazil and Argentina, have influenced investors’ perceptions of risk with regard to Peru. The negative investor reaction to developments in Latin America, particularly in our neighboring countries, may adversely affect the market for securities issued by countries in the region, cause foreign investors to decrease the flow of capital into Latin America and introduce uncertainty about plans for further integration of regional economies.

Peruvian exchange and investment control policies could affect dividends paid to holders of Common Shares and ADRs.

Peruvian law currently imposes no restrictions on the ability of companies operating in Peru to transfer foreign currency from Peru to other countries, to convert Peruvian currency into foreign currency or foreign currency into Peruvian currency or to remit dividends abroad, or on the ability of foreign investors to liquidate their investment and repatriate their capital. Before 1991, Peru had restrictive exchange controls and exchange rates. During the latter part of the 1980s, exchange restrictions prevented payment of dividends to our shareholders in the United States (the “U.S.”) in U.S. Dollars. Accordingly, should such or similar controls be instituted, dividends paid to holders of Common Shares and, consequently, holders of ADRs, could be affected. There can be no assurance that the Peruvian government will continue to permit such transfers, remittances or conversion without restriction. See “Item 10. Additional Information—D. Exchange Controls.”

Holders of our securities may find it difficult to enforce judgments against us outside of Peru.

We are organized under the laws of Peru. A significant majority of our directors and officers reside outside the U.S. (principally in Peru). All or a substantial portion of our assets or the assets of such persons are located outside the U.S. As a result, it may not be possible for investors to effect service of process within the U.S. upon us or upon such persons or to enforce against them in federal or state courts in the U.S. judgments predicated upon the civil liability provisions of the federal securities laws of the U.S. We have been advised by our Peruvian counsel that there is uncertainty as to the enforceability, in original actions in Peruvian courts, of liabilities predicated solely under the U.S. federal securities laws and as to the enforceability in Peruvian courts of judgments of U.S. courts obtained in actions predicated upon the civil liability provisions of the U.S. federal securities laws. 

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Factors Relating to the Common Shares and ADSs

The concentration of our capital stock ownership with certain members of the Benavides Family may limit our stockholders’ ability to influence corporate matters.

As of March 31, 2021, two of our directors (and their families), Roque Benavides and Raul Benavides (who transferred his shares to his children), all of which are members of the immediate and extended family of the late Alberto Benavides de la Quintana, our founder and former Chairman (collectively, the “Benavides Family”) held an aggregate of 10.92% of Buenaventura’s outstanding share capital (including outstanding Common Shares and investment shares with a nominal (par) value of ten Peruvian Soles per share, which do not entitle their holders to voting rights (“Investment Shares”)). In addition, certain other members of the Benavides Family are believed to hold a significant number of our Common Shares in aggregate.  While the Benavides Family is not, to our knowledge, acting together as a group to vote their Common Shares, there can be no assurance that the Benavides Family will not, in the future, form a group for the purpose of voting their Common Shares or exerting influence over the management and policies of Buenaventura.  Because of the significant aggregate ownership interest held by individual members of the Benavides Family, the Benavides Family could have the power to elect a significant number of the outstanding directors and exercise significant influence over the outcome of substantially all matters to be decided by a vote of shareholders.

In addition, under the terms of the amended and restated deposit agreement dated May 3, 2002 (as further amended and restated as of November 12, 2003, the “Amended and Restated Deposit Agreement”), among us, The Bank of New York Mellon (formerly The Bank of New York), as depositary, or the “Depositary”, and the owners and beneficial owners of ADSs, or the Amended and Restated Deposit Agreement, relating to our ADSs, if holders of ADSs do not provide the Depositary with timely instructions for the voting of Common Shares represented by such ADRs, the Depositary will be deemed to be instructed to give a person designated by us, which could be a member of the Benavides Family, a discretionary proxy to vote such shares, unless we inform the Depositary that we do not wish such proxy to be given.

Shareholders’ rights under Peruvian law may be fewer and less well-defined than shareholders’ rights in other countries, including the U.S.

Our shareholders have fewer and less well-defined rights under applicable Peruvian law than they might have as shareholders of a corporation incorporated in a jurisdiction of the U.S. or certain other countries. For example, Peruvian law does not provide for proceedings by which non-controlling shareholders may file class action lawsuits or shareholder derivative actions against controlling shareholders or officers and directors, and the procedural requirements to file shareholder actions in Peru differ from those of the U.S. As a result, holders of our shares may face difficulty enforcing their rights. 

U.S. securities laws do not require us to disclose as much information to investors as a U.S. issuer is required to disclose, and you may receive less information about us than you might otherwise receive from a comparable U.S. company.

The corporate disclosure requirements applicable to us may not be equivalent to the requirements applicable to a U.S. company and, as a result, you may receive less information about us than you might otherwise receive in connection with a comparable U.S. company. We are subject to the periodic reporting requirements of the United States Securities Exchange Act of 1934, as amended, or the Exchange Act, that apply to “foreign private issuers.” The periodic disclosure required of foreign private issuers under the Exchange Act is more limited than the periodic disclosure required of U.S. issuers.

A sale of a substantial number of shares by the Benavides Family could have an adverse impact on the price of our Common Shares and ADSs.

The sale of a substantial number of our shares by members of the Benavides Family, or a market perception of the intention of members of the Benavides Family to sell a substantial number of shares, could materially and adversely affect prevailing market prices for the Common Shares and ADSs. There is no contractual restriction on the disposition of shares of our share capital by our shareholders, including the Benavides Family. Furthermore, under the Ley General de Sociedades Peruanas, or “Peruvian Companies Law,” any restriction on the free sale of shares in a sociedad anónima abierta (publicly held corporation) such as we are, is null and void.

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Holders of ADSs may be unable to exercise preemptive rights and accretion rights available to the Common Shares underlying the ADSs.

Holders of the ADSs are, under Peruvian law, entitled to exercise preemptive rights and accretion rights on the Common Shares underlying the ADSs in the event of any future capital increase by us unless (x) the increase is approved, expressly stating that the shareholders have no preemptive rights to subscribe and pay for the Common Shares to be issued in such increase, by holders of Common Shares holding at least 40% of the Common Shares at a properly called meeting with a proper quorum and (y) the increase is not designed to improve directly or indirectly the shareholding of any shareholder. However, U.S. holders of ADSs may not be able to exercise through the Depositary for the ADSs the preemptive rights and accretion rights for Common Shares underlying their ADSs unless a registration statement under the Securities Act of 1933, as amended, or the “Securities Act,” is effective with respect to such rights or an exemption from the registration requirement thereunder is available. Any such rights offering would have a dilutive effect upon shareholders who are unable or unwilling to exercise their rights. We intend to evaluate, at the time of any rights offering, the costs and potential liabilities associated with any registration statement as well as the associated benefits of enabling the holders of ADSs to exercise such rights and will then make a decision as to whether to file such a registration statement. Therefore, no assurance can be given that we will file any such registration statement. To the extent that holders of ADSs are unable to exercise such rights because a registration statement has not been filed and no exemption from such registration statement under the Securities Act is available, the Depositary will, to the extent practicable, sell such holders’ preemptive rights or accretion rights and distribute the net proceeds thereof, if any, to the holders of ADSs, and such holders’ equity interest in us will be diluted proportionately. The Depositary has discretion to make rights available to holders of ADSs or to dispose of such rights and to make any net proceeds available to such holders. If, by the terms of any rights offering or for any other reason, the Depositary is not able to make such rights or such net proceeds available to any holder of ADSs, the Depositary may allow the rights to lapse. 

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ITEM 4. Information on the Company

In this Item 4, we present information first with respect to Buenaventura, followed by information with respect to Yanacocha, in which we had a 43.65% partnership interest as of December 31, 2020.

BUENAVENTURA

A. History and Development

Overview

We are Peru’s largest publicly traded precious metals company in terms of market capitalization and we are engaged in the exploration, mining and processing of gold, silver, copper and (to a lesser extent) other metals in Peru. We currently operate the Orcopampa, Uchucchacua, Julcani and Tambomayo mines and have controlling interests in three other mining companies that operate the Colquijirca-Marcapunta, Tantahuatay and La Zanja mines. We also own an electric power transmission company, a hydroelectric plant and a processing plant, as well as non-controlling interests in several other mining companies, including a significant ownership interest in Yanacocha, a Peruvian partnership that operates the largest gold mine in South America, and Cerro Verde, a Peruvian company that operates a copper mine located in the south of Peru. For the year ended December 31, 2020, our consolidated sales were US$676.5 million and our consolidated net loss was US$150.3 million.

Discontinued operations.  During 2016, we decided to change the classification of three mining units (Poracota, Recuperada and Shila-Paula) that had been mining units held for sale and began the final closing process for these mines. In December 2016, we sold the Antapite mining unit. In 2016, we started the final closing process for the Breapampa mining unit. As a result, income, costs and expenses related to this mining unit were classified as discontinued operations for the years 2016, 2015 and 2014. During 2017, we sold the Breapampa and Recuperada mining units.

During 2020, Buenaventura sold its Mallay mining unit which had been classified as a discontinued operation during 2019 under IFRS 5 “Non-current Assets Held for Sale and Discontinued Operations.” The sale price was US$10 million (US$8.5 million plus VAT) with a related cost of US$3.6 million net of income from the reversal of provision for mining unit closure of US$5.1 million. As of December 31, 2020, Buenaventura has collected US$2.0 million from the sale, and the remaining balance will be paid in two installments of US$4 million each in November 2021 and 2022. See Note 1(e) and Note 2.4(w) to the Consolidated Financial Statements.

The table below summarizes the total production and our equity share of production for the Orcopampa, Uchucchacua, Julcani, Tambomayo, El Brocal, La Zanja, Coimolache, Yanacocha and Cerro Verde mines for the year ended December 31, 2020:

	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)
Orcopampa		100%		9,069		41,129								9,069		41,129
Uchucchacua		100%		5,000,312				5,151		5,223				5,000,312				5,151		5,223
Julcani		100%		1,676,731		315		408				127		1,676,731		315		408				127
Tambomayo		100%		1,668,582		63,477		6,550		5,266				1,668,582		63,477		6,550		5,266
El Brocal		61.43%		3,508,585		11,852		20,066		54,909		30,608		2,155,324		7,280		12,326		33,731		18,802
La Zanja		53.06%		84,641		17,228								44,911		9,141
Coimolache		40.10%		699,361		106,017								280,409		42,507
Yanacocha		43.65%		2,140,361		340,052								934,268		148,433
Cerro Verde		19.58%		3,384,056								371,992		662,598								72,836
Total Production		100%		18,171,697		580,069		32,175		65,399		402,727		12,432,202		312,282		24,436		44,221		91,766

Compañía de Minas Buenaventura S.A.A., a sociedad anónima abierta (publicly held corporation) under the laws of Peru, was originally established in 1953 as a corporation (sociedad anónima) under the laws of Peru. Our registered office is located at Las Begonias 415, 19^th floor, Lima 27, Peru, telephone no. 511-419-2500. Our website may be found at http://www.buenaventura.com. The information on our website is not a part of, and is not incorporated into, this document.

The SEC maintains an internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC. All of the SEC filings made electronically by the Company are available to the public on the SEC website at www.sec.gov (commission file number 1-14370). 

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History

During the first several decades of our operations, we focused on the exploration and development of silver mines in Peru, including our Julcani, Orcopampa and Uchucchacua mines. Beginning in the early 1980s, we began to explore for gold and other metals in Peru, in order to diversify our business and reduce our dependence on silver. We expanded our mineral reserves through property acquisition and intensive exploration programs which were designed to increase reserves and production of gold. We also conducted exploration leading to the discovery of gold mineralization and subsequent production of gold at our Orcopampa, La Zanja, Breapampa and Tambomayo mines. In addition, we made significant equity investments in Yanacocha, which operates an open-pit gold mine in Peru, Cerro Verde, which operates an open-pit copper mine in Peru, and Coimolache, which owns the Tantahuatay gold mine that we operate. As a result of these initiatives, the majority of our revenues are now derived from the production of gold, silver and copper.

Business Strategy

Our strategy is to sustain our position as Peru’s largest, publicly-traded gold and silver mining company by expanding our reserves and production. We are currently engaged in an active exploration and mine development program and participate in several mining exploration projects with Newmont Mining, Southern Copper Corporation, Corporación Aceros Arequipa S.A. and Compañía de Minas Caudalosa S.A.C. In addition, we seek to increase the efficiency and capacity of our mining operations. We are aware of our social and environmental responsibilities and aim to excel in the prevention, mitigation and rehabilitation of mining-related disturbances.

Maintaining an Active Exploration Program

During the years ended December 31, 2020, 2019 and 2018, we spent US$8.5 million, US$11.9 million and US$36.3 million, respectively, on “exploration in non-operating areas” and US$28.0 million, US$44.2 million and US$89.7 million, respectively, on “exploration in operating units.” Our “exploration in non-operating areas” mainly focused on the Emperatriz exploration projects. Such amounts were lower than in 2019 due mainly to the COVID-19 pandemic. Our “exploration in operating units” were mainly focused in the Tambomayo, Uchucchacua and Colquijirca units.

In 2021, we intend to invest approximately between US$40.0 and US$50.0 million in exploration in operating units (mainly in Tambomayo, Orcopampa, Uchucchacua and El Brocal) and between US$10.0 and US$20.0 million in exploration in non-operating areas.

Participation in Mining Exploration Agreements

In addition to managing and operating precious metals mines, we participate in mining exploration agreements with mining partners to reduce risks, gain exposure to new technologies and diversify revenues to include other base metals, such as copper and zinc. See “B. Business Overview—Exploration.” We believe that maintaining our focus on mining operations complements our partnership strategy because the engineering and geological expertise gained from such operations enhances our ability to participate in and contribute to those projects.

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Capital Expenditures

Our capital expenditures during the past three years have related principally to the acquisition of new mining properties, construction of new facilities and renewal of plant and equipment, excluding cost for mine closures and rights of use asset, during a given period. Capital expenditures relating to exploration are not included in the table below and are discussed separately in “B. Business Overview— Exploration.” Our presentation of capital expenditures may not be comparable to other similarly titled measures used by other companies. Set forth below is information concerning capital expenditures incurred by us in respect of each of our principal operating mines (not including capital expenditures for administrative purposes or other non-mining or non-energy subsidiaries) and by category of expenditure:

	Year Ended December 31,
	2018		2019		2020
	(US$ in thousands)
Colquijirca and Marcapunta		29,572		28,298		23,955
San Gabriel		6,419		10,315		14,852
Uchucchacua		18,429		31,479		10,443
Molle Verde		10,722		16,179		9,796
Río Seco		1,816		1,443		4,611
Tambomayo		18,858		9,641		3,531
Orcopampa		6,225		1,323		1,064
Julcani		2,984		1,559		1,059
La Zanja		13,159		1,629		825
Huanza		7		223		271
Conenhua		111		-		100
Mallay		1,810		-		-
Others		1,158		538		1,039
Total (1)		111,270		102,627		71,546

	Year Ended December 31,
	2018		2019		2020
	(US$ in thousands)
Fixed assets		836		716		239
Work in progress		67,096		44,319		27,322
Development costs		43,338		57,592		43,985
Total		111,270		102,627		71,546

(1) Excluding additions of costs for mine closures of US$61.2 million, US$26.7 million and US$31.6 million and right of use assets of US$0 million US$3.7 million and US$6.2 million during a given period as of December 31, 2018, 2019 and 2020, respectively.

We partially funded the El Brocal Expansion and the construction of the Huanza hydroelectric power plant with leasing facilities. See “Item 5. Operating and Financial Review and Prospects—Buenaventura—B. Liquidity and Capital Resources—Long-Term Debt.”

We have budgeted approximately US$80 to US$95 million for capital expenditures for 2021.We continuously evaluate opportunities to expand our business within Peru, as well as in other countries as opportunities arise, and expect to continue to do so in the future. We may in the future decide to acquire part or all of the equity of, or undertake other transactions with, other companies involved in the same business as us or in other related businesses. However, there can be no assurance that we will decide to pursue any such new activity or transaction.

B. Business Overview

We mainly produce refined gold and silver, either as concentrates or doré bars, and other metals such as lead, zinc and copper as concentrates that we distribute and sell locally and internationally. The following table sets forth the production of the Orcopampa, Tambomayo, Uchucchacua, Julcani, La Zanja and Colquijirca-Marcapunta mines by type of product for the last three years, calculated in each case on the basis of 100% of the applicable mine’s production. Production from Cerro Verde, Yanacocha and Coimolache are not included in these production figures.

	Year Ended December 31 (Unaudited) (1)(2)
	2018		2019		2020
Gold (oz.)		338,189		191,281		134,000
Silver (oz.)		26,264,109		20,288,743		11,947,919
Zinc (t)		76,119		72,397		65,399
Lead (t)		44,972		49,803		32,175
Copper (t)		46,400		43,578		30,735

(1) The amounts in this table reflect the total production of all of our consolidated subsidiaries, including El Brocal and La Zanja.

(2) Amounts exclude production from the operating mines that are classified as discontinued operations.

Exploration

We view explorations as our primary means of generating value for our shareholders, and we maintain a portfolio of active exploration projects at various stages of exploration for mineral resources in Peru. During 2020, 2019 and 2018, we spent US$8.5 million, US$11.9 million and US$36.3 million, respectively on “exploration in non-operating areas” investments and US$28.0 million, US$44.2 million and US$89.7 million, respectively on “exploration in operating units” investments mainly focused in the Tambomayo, Uchucchacua and Colquijirca mining units. 

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During 2021, we expect to invest approximately US$40.0 to US$50.0 million in these exploration activities.

Our exploration department develops programs and budgets for individual projects each year and we allocate, subject to board approval, the proper amount to fund each particular exploration program. Because of the nature of mining exploration and to maintain flexibility to take advantage of opportunities, we allocate budgeted amounts by property or project only in the case of high probability of success. We also allocate non-budgeted amounts over the course of the year to new projects that our technical team considers highly prospective.

We have active joint venture exploration agreements with other mining companies, including Newmont Peru S.R.L., Minera Barrick Misquichilca, Southern Copper Corporation, Regulus Resources, Alianza Minerals and Minera Bateas. Additionally, we now hold 19.3% of the current outstanding shares of Tinka Resources Limited. Consequently, we have access to promising mining projects through exploration of our own mining properties as well as third-party properties while sharing the exploration and development risks with recognized partners, and increasing our exposure to new exploration technologies, while expanding our knowledge and experiences of management, geologists and engineers. In these mining exploration agreements, we may be the operator, an equity participant, the manager or a combination of these and other functions.

The following table lists our principal exploration projects in non-operating areas, our effective participation in each project, our partners with respect to each project, the total number of hectares in each project, observed mineralization of each project and the exploration expenditures for each project during 2018, 2019 and 2020.

Exploration	Buenaventura’s Effective Participation		Property Hectares		Observed	Total Exploration Expenditures During
Projects (1)(2)	at March 31, 2021				Mineralization	2018		2019		2020
								(US$ in millions)
Yumpaq		100.00%		7,147	Silver, Lead and Zinc		18.05		2.53		-
San Gabriel		100.00%		7,700	Gold, Silver and Copper		0.93		0.08		-
Ccelloccasa		100.00%		1,985	Gold and Silver		0.33		0.03		0.19
Don Jorge		100.00%		7,481	Silver, Lead and Zinc		-		-		0.1
Mayra		100.00%		4,767	Silver, Gold		-		-		-
Gaby		100.00%		800	Silver, Gold		0.08		-		-
San Gregorio		61.43%		4,303	Zinc		-		-		-
Emperatriz		53.06%		466	Copper, Gold and Silver		3.17		2.23		4.60
Other minor							13.75		7.01		3.58
Total exploration in non-operating areas							36.31		11.88		8.47

(1) In addition to these projects, we continue to conduct exploration at all of our operating mines and our subsidiaries.

(2) Only includes explorations conducted by Buenaventura.

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The following table lists the mines in which we directed our principal explorations efforts, mineralization of each mine and the exploration expenditures for 2019 and 2020.

Operating Units	Observed Mineralization	Total Exploration Expenditures During 2019				Total Exploration Expenditures During 2020
		Total		Buenaventura		Total		Buenaventura
		(US$ in millions)				(US$ in millions)
Tambomayo	Gold		11.61		11.61		7.15		7.15
Uchucchacua	Silver, Lead and Zinc		8.92		8.92		6.73		6.73
Colquijirca	Copper, Zinc, Lead and Silver		8.73		8.73		5.79		5.79
Orcopampa	Silver and Gold		9.04		9.04		5.20		5.20
Julcani	Silver		5.86		5.86		3.17		3.17
Total			44.16		44.16		28.04		28.04

The following is a brief summary of current exploration activities conducted by Buenaventura directly and through joint exploration agreements, which we believe represent the best prospects for discovering new reserves. There can be no assurance, however, that any of our current exploration projects will result in viable mineral production or that any of the mineralization identified to date will ultimately result in an increase in our ore reserves. Set forth below is a map of our principal exploration projects in Peru as of December 31, 2020.

Exploration Projects in Non-Operating Areas

Yumpaq. The Yumpaq project is located four kilometers northeast of the Uchucchacua mine. This project is an epithermal silver-manganese deposit hosted by Cretaceous limestone. Mineralization is structurally influenced by the Cachipampa fault, which also influences significant areas of silver mineralization at the Uchucchacua mine. In 2021, we plan to explore the southwest extension of the Camila vein and other veins. 

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Trapiche. The Trapiche project is operated by Molle Verde S.A.C, which is a wholly-owned subsidiary of Buenaventura. The project is located in the Apurimac region and belongs to the Andahuaylas-Yauri belt, which contains several iron, copper and gold deposits.  

The pre-feasibility study by M3 was completed in 2020. The construction of the metallurgical laboratory at site was postponed to 2021 due to the COVID-19 pandemic. On-site leaching tests are expected to restart during 2021 and completed in 2022. The “Linea Base” of the Environmental Impact Assessment has progressed significantly and we expect delivery to the relevant authority in the second half of 2021.

As of December 31, 2020, Trapiche had ore reserves of 283,200 thousand metric tons at 0.51% Cu. This represents 1,444 thousand copper metric tons.

San Gabriel. The San Gabriel project is wholly-owned by Buenaventura.. The project is located in the Moquegua region in southern Peru. This deposit is an intermediate sulfidation deposit hosted by the diatreme breccia body at the sediment-intrusive contact. 

During 2020, the geological model was reevaluated. As part of this reevaluation, 91,913 meters of drill core were re-logged and a new geological model was completed at the end of October. Based on this model, a resources update has been delivered to SRK (Peru) for validation. In 2021, we plan to invest US$ 1.67 million to explore other targets around the Canahuire breccia.

As of December 31, 2020, San Gabriel had ore reserves of 11,576 thousand metric tons at 0.15 Au Oz/MT and 0.24 Ag Oz/MT. This represents 1,741 thousand gold ounces and 2,724 thousand silver ounces.

San Gregorio. San Gregorio is located four kilometers south of the Colquijirca mine and consists of carbonate-hosted epithermal zinc-lead deposits. We continued with our efforts to reach an agreement with the local community to re-activate exploration activities.

Ccelloccasa. During 2020, the “Consulta Previa” with local communities was not possible due to the restrictions caused by the COVID-19 pandemic. We expect to continue the “Consulta Previa” in 2021.

Don Jorge, The Project is located in the Puno department and consist of 7,481 hectares of mining concessions. The project consists of series of polymetallic-silver rich veins. By 2021, we expect to obtain all the environmental permits.

Tambomayo. Despite receiving approval from the necessary environmental authorities, we were unable to operate the diamond drilling program under the Mayra and Gaby projects due to social conflicts. We are working with local governments to reinstate exploration programs under these projects.

Exploration in Operating Areas

Orcopampa. During 2020, our explorations were focused on a new vein called “Ramal 4”, which is part of the Pucara vein system. Diamond drilling has defined two ore-shoots with high-grade gold mineralization between 3,690 and 3,440 mine levels. In 2021, we will continue exploring this structure as well as infill-drilling program between 3,690 and 3,540 mine levels. In addition, we will conduct an underground exploration program in the 3,540 mine level to explore other six targets related to the Pucara vein system. 

Tambomayo. In 2020, underground exploration focused on the western extension of the Mirtha vein (e.g., Gisela-Catalina, Mirtha Sur). Drilling identified discontinued and narrow veins with sub-economic silver grades. Finally, we explored the nearmine Mirtha W project with no positive results. For 2021, underground exploration program will focus on the Mirtha W, Olivia NE and Soledad veins. We also expect to drill the nearmine project, Los Diques. 

Uchucchacua. In 2020, the exploration and new resource development was focused in the deepest part of the Gina-Socorro vein, between de 3,610 and 3,510 mine level. Drilling results show continuity of high silver grades with slightly narrower widths. In 2021, we will continue with the infill drilling in Gina-Socorro in order to transform new resources into reserves. In addition, we have defined four new underground exploration areas close to the mine. Finally, we will continue with the exploration tunnel in the 3,610 mine level, which will integrate the Uchucchacua mine with the Yumpag project. 

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Competition

We believe that competition in the metals market is based primarily upon cost. One of Buenaventura’s competitive advantages is that it has a diversified portfolio in terms of commodities (which include gold, silver, copper, zinc and lead) and in a number of assets (with 10 mining operations located in different regions of Peru). Additionally, Buenaventura’s long term business plan relies on three main drivers of value: its portfolio of operations, its portfolio of projects (seeking organic growth with a disciplined capital allocation) and, finally, Buenaventura’s position as a ‘partner of choice’ for several other companies in the mining sector in Peru. We also compete with other mining companies and private individuals for the acquisition of mining concessions and leases in Peru and for the recruitment and retention of qualified employees.

We also sell refined gold, which is derived from our operations at Orcopampa, Tambomayo, Coimolache and La Zanja to Asahi Refining, or “Asahi,” which further refines the gold. During 2020, the price of gold supplied was determined based on, for the gold content, the quotation for gold at the London Gold Market PM fixing in U.S. Dollars, and for the silver content, the quotation for silver at the London Silver Market spot fixing in U.S. Dollars or at spot prices, minus adjustments in price for treatment and refining charges and can include certain penalties that, in accordance with the applicable contract, are deducted from the international fine metal spot price, and that are incurred after the time of sale of the applicable concentrate.  We may elect to have our material toll refined at Asahi’s works and returned to our account for sale to third parties. Pursuant to our agreement, we are responsible for delivering the gold to Asahi’s designated flight at the Lima airport.   

Sales of Metal Concentrates

All of our metal production is sold to smelters and traders, either in concentrate or metal form, such as gold-silver concentrate, silver-lead concentrate, zinc concentrate, lead-gold-copper concentrate, gold-copper concentrate and gold and silver bullion. Our concentrates sales are made under one to three-year, U.S. Dollar-denominated contracts, pursuant to which the selling price is based on world metal prices as follows: generally, in the case of gold and silver-based concentrates, the London Spot settlement prices for gold, less certain allowances, and the London Spot or the U.S. Commodities Exchange settlement price for silver, less certain allowances; and, in the case of base-metal concentrates, such as zinc, lead and copper, the London Metals Exchange (“LME”) settlement prices for the specific metal, less certain allowances. Sales of concentrates and metal allow for price adjustments based on their market price at the end of the relevant quotational period (QP), generally being the month of, the month before, or the month following the scheduled month of shipment or delivery according to the terms of the contracts. Sales of concentrates and metals at provisional prices include a gain (loss) to be received at the end of the QP, based on the spread between the actual price at the end of the QP and the agreed contractual average prices; this is considered a variable portion of the consideration. Changes in the price during the QP are recognized in the ” Sales of goods” caption.

The historical average annual prices for gold and silver per ounce and our average annual gold and silver prices per ounce for each of the last two years and through March 31, 2021 are set forth below:

	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.
2019		1,392.6		1,405		16.2		16.36
2020		1,769.6		1,842		20.5		22.14
2021 (through March 31, 2021)		1,799.8		1,726		26.3		26.98

(1) Our average annual price includes only the consolidated average annual price from our mines.

(2) Average annual gold prices are based on the London PM fix as provided by Metals Week.

(3) Average annual silver prices are based on London Spot prices. 

Most of the sales contracts we enter into with our customers state a specific amount of metal or concentrate the customer will purchase. We have sales commitments from various parties for nearly all of our estimated 2021 production; however, concentrates not sold under any of our contracts may be sold on a spot sale basis to merchants and consumers.

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Sales and Markets

The following table sets forth our total revenues from the sale of gold, silver, lead, zinc and copper in the past two fiscal years:

	Year ended December 31,(1)
Product	2019		2020
	(US$ in thousands)
Gold		254,194		229,590
Silver		298,171		230,498
Lead		89,141		48,426
Zinc		149,317		120,546
Copper		238,304		181,311

(1) Does not include commercial deductions for refinery charges and penalties incurred in 2020 of US$179.7 million and in 2019 of US$220.4 million. 

Approximately 41.29% and 38.56% of our concentrate and gold bullion sales in 2019 and 2020 (without considering adjustments to prior periods liquidations, fair value from sale of concentrate or hedge operations), were sold outside Peru. Set forth below is a table that shows the percentage of sales of concentrate and gold bullion from our mines and gold bullion that was sold to our various customers from 2019 to 2020.

	Percent of Concentrates and Gold Bullion Sales
	2019			2020
Export Sales:
Asahi Refining Canada Ltd and Asahi Refining USA Inc.		21.12			25.92
Berzelius Stolberg GMBH		1.66			4.03
Cliveden Trading AG		3.67			3.34
Daye Qiansheng (HK) Investment Trading Limited		2.26			2.12
Axaya AG		–			1.26
MCC Non Ferrous Trading LLC		0.75			0.87
Others		11.83			1.01
Total Export Sales		41.29	%		38.56	%
Domestic Sales:
Andina Trade S.A.C.		3.26			3.65
Glencore Peru S.A.C.		16.27			16.02
Trafigura Peru		24.77			23.28
Sudamericana Trading SRL		0.64			0.18
IXM Trading Peru S.A.C. (formerly Lois Dreyfus Commodities Peru S.R.L)		11.35			15.52
Others		2.42			2.79
Total Domestic Sales		58.71	%		61.44	%
Total Sales		100	%		100	%

The following table shows our committed sales volumes of silver-lead, gold-silver and zinc concentrates from 2021 to 2023:

	Wet tons		Wet tons		Wet tons
Concentrate	2021		2022		2023
Uchucchacua’s Silver-Lead		30,000		53,500		27,500
Uchucchacua’s Zinc		30,000		24,200		30,000
Uchucchacua’s Silver		10,000		-		-
Julcani’s Silver-Lead (1)		2,800		2,200		-
Julcani’s Silver		1,600		-		-
Tambomayo’s Silver-Lead		18,500		13,000		10,000
Tambomayo’s Zinc		15,800		11,500		7,000
El Brocal’s Copper		209,000		246,000		224,000

Note: The price of the concentrate supplied under the contract is based on specified market quotations minus deductions.  

(1) Represents committed sales volumes from 2021 to 2022.

(2) Represents committed sales volumes for 2021.

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We also sell refined gold, which is derived from our operations at Orcopampa, Tambomayo, Coimolache and La Zanja to Asahi Refining, or “Asahi,” which further refines the gold. During 2020, the price of gold supplied was determined based on, for the gold content, the quotation for gold at the London Gold Market PM fixing in U.S. Dollars, and for the silver content, the quotation for silver at the London Silver Market spot fixing in U.S. Dollars or at spot prices, minus, in each case, certain minimum charges, as well as charges for customs clearance and treatment of the gold (which varies depending on its gold and silver content). We may elect to have our material toll refined at Asahi’s works and returned to our account for sale to third parties. Pursuant to our agreement, we are responsible for delivering the gold to Asahi’s designated flight at the Lima airport.

Hedging/Normal Sales Contracts

 We and our wholly-owned subsidiaries are completely unhedged as to the prices at which our gold and silver will be sold. See “Item 3. Key Information—D. Risk Factors—Factors Relating to the Company—Our financial performance is highly dependent on the prices of gold, silver, copper and other metals.”

El Brocal uses derivative instruments to manage its exposure to changes in the price of metals. 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.

El Brocal’s hedge is classified as a cash flow hedge. The effective portion of gain or loss on the hedging instrument is initially recognized in the consolidated statements of changes in equity, under the caption other equity reserves, while the ineffective portion is recognized immediately in the consolidated statements of profit or loss in the finance costs caption. Yanacocha and Cerro Verde have not engaged in, and are currently not engaged in, gold or copper price hedging activities, such as forward sales or option contracts, to minimize their respective exposures to fluctuations in the price of gold and copper.

From January to December 2020, El Brocal had outstanding hedging commitments amounting to 11,250 fines tons of copper at an average fixed price of US$6,307 per ton.

Regulatory Framework

Mining and Processing Concessions

In Peru, as in many other countries, surface land is owned by private landowners, while the government retains ownership of all subsurface land and mineral resources. Our right to explore, exploit, extract, process and/or produce silver, gold and other metals is granted by the Peruvian government in the form of mining and processing concessions. The rights and obligations of holders of mining concessions, provisional permits and processing concessions and other similar matters are currently set forth in the General Mining Law (Single Unified Text approved by Supreme Decree 014-92-EM), which is administered by MEM.

Pursuant to the General Mining Law, filers of mining claims must obtain a mining concession before they start any mining activity. Depending on the applicable regime, applications for mining concessions must be filed with the regional mining directors of each regional government where the mining concession is located (artisan and small scale miners); or with Instituto Geológico Minero y Metalúrgico the Geological, Mining and Metallurgical Institute of Peru INGEMMET (general regime).

Mining concessions are irrevocable, provided the holder of a mining concession complies with the obligations set forth in the General Mining Law and applicable regulations. Such concessions have an indefinite term, subject to payment of an annual concession fee per hectare granted and achievement of minimum annual production for each hectare, or payment of a penalty when applicable. Failure to achieve annual production targets will result in a penalty. Failure to achieve annual production targets will result in a fine. Failure to pay concession fees or fines for two consecutive years in any mining concession will result in the cancellation of such mining concession. Failure to satisfy minimum annual production thresholds for a specified period of time (currently thirty years beginning the year after the mining concessions were granted for mining concessions granted after October 10, 2008, and thirty years beginning on January 1, 2009 for mining concessions granted before October 10, 2008) could result in cancellation of the mining concessions.

Our and Yanacocha’s processing concessions enjoy the same duration and tenure as our mining concessions, subject to payment of a fee based on nominal capacity of the applicable processing plant. Failure to pay processing fees for two consecutive years will result in the cancellation of the processing concessions.

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Our mining rights and processing concessions are in full force and effect under applicable Peruvian laws. We believe we are in compliance with all material terms and requirements applicable to the mining rights and processing concessions and that we are not subject to any condition, occurrence or event that would cause the revocation, cancellation, lapse, expiration or termination thereof, except that we may, from time to time, allow to lapse, revoke, cancel or terminate mining rights and processing concessions that are not material to the conduct of our business.

In addition to obtaining mining rights from the Peruvian government, applicable Peruvian regulations require us to obtain easements or other rights from private landowners that own the surface land above the mineral resources that we intend to explore or mine. Supreme Decree No. 042-2017-EM requires us to obtain such easements or other rights before commencing exploration activities. We have been actively seeking to acquire land surface rights, easements for land containing prospective geological exploration target sites, deposits that can be exploited in the future and areas suitable for plants or facility sites. Regarding processing concessions, Article 82 of Supreme Decree Nº 020-2020-EM, Regulation for Mining Proceedings, in force and effect since August 9, 2020, requires holders of such concessions to own the land underlying the concession or to have the authorization of the owner of the land. We have been actively seeking to acquire land surface deposits that can be exploited in the future and areas suitable as plant or facility sites

The possibility of developing mining activities in an urban area or urban expansion area is linked to the compatibility of such areas and mining activities. The Law Regulating Mining Concessions in Urban Areas and Urban Expansion Areas and related regulations set forth procedures for the granting of mining rights in urban and urban expansion areas. To grant a mining concession in an urban area and an urban expansion area, MEM is required to receive the approval of the council of the applicable provincial municipality. The council has sixty days to issue its decision. Mining concessions in urban expansion areas are granted for 10-year terms, which may be renewed by MEM subject to the approval of municipal authorities, but cannot exceed 100 hectares.

Law No. 28964, which became effective on January 25, 2007, created the Organismo Supervisor de la Inversión en Energía y Minería (“OSINERGMIN”) as the government agency in charge of regulating and auditing the electricity, hydrocarbon and mining activities of companies. Law No. 28964 provides that the overview and audit of activities related to the environment, mining safety and health regulations may be performed by companies duly certified and approved by OSINERGMIN. However, pursuant to Supreme Decree No. 001-2010-MINAM, OSINERGMIN transferred its environmental supervisory functions to the Environmental Evaluation and Oversight Agency (“OEFA”). Beginning July 22, 2010, OEFA assumed the authority to carry out unexpected audits and levy fines on companies if they fail to comply with enforceable environmental regulations and approved environmental assessments. According to Supreme Decree No. 128-2013-PCM, mining companies are required to make monetary contributions to OSINERGMIN and, according to Supreme Decree No. 130-2013-PCM, monetary contributions are also required to be made to OEFA.

Regarding employee health and safety and employer liability in mining activities, Law 28964 has been amended and replaced by Law 29783. Such employee health and safety and employer liability and related matters are now audited by the Ministry of Labor and Employment (“MINTRA”). Law 29783, as amended by Law 30222, establishes the minimum rules designed to prevent employee safety risks and allocate liabilities in relation to such risks. The main principle of this law is that the employer assumes the economic, legal and any other type of liability arising from accidents or diseases suffered by the employee while working and guarantees the employee’s health and safety in connection with the employee’s work. This legislation entitles labor inspectors to inspect commercial facilities and, under certain circumstances, suspend operations. By Supreme Decree No. 003-2013—TR, MINTRA transferred its security supervisory, audit and sanctioning functions to the National Superintendence of Labour Inspection (“SUNAFIL”). Such law amended the relevant provision of the criminal code, which currently establishes that a person who intentionally breaches the safety and health provisions, and who after being required by the relevant authority, does not adopt the measures contemplated in such provisions, is deemed to jeopardize the life, health or physical integrity of such person’s employees and may be held criminally liable for such behavior.

On July 28, 2016, Supreme Decree No. 024-2016-EM, as amended by Supreme Decree No. 029-2016-EM and Supreme Decree No. 023-2017-EM, relating to Occupational Health and Safety Regulations for Mining was published. These Regulations aim to prevent the occurrence of incidents, work-related accidents and occupational diseases, aiming to promote a culture of prevention of occupational hazards in mining activities. MEM through the General Directorate of Mining, is the competent authority on Occupational Health and Safety policy and regulation. In addition, SUNAFIL is the competent authority for the supervision and enforcement of compliance with legal and technical standards related to Occupational Safety and Health in Mining; while OSINERGMIN is the competent authority to supervise compliance of the legal and technical provisions related to the safety of infrastructure in mining.

COVID-19 pandemic

In response to the COVID-19 pandemic, the Peruvian government issued Supreme Decree N° 044-2020-PCM, as amended, declaring a state of national emergency and halting social mobility. As of March 16, 2020, mining activities were initially permitted, however, only critical operations were allowed which did not include exploration, exploitation, processing and mining transportation.

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Supreme Decree N° 080-2020-PCM, which modified Supreme Decree N° 044-2020-PCM on May 3, 2020, allowed the gradual resumption of economic activities, including large-scale mining. Nevertheless, recovery was not automatic because the companies were obligated to file a monitoring plan with the relevant governmental authority (e.g., the Ministry of Energy and Mines). Relevant governmental authority approval was required to register these monitoring plans on the Ministry of Health web portal, SICOVID.

The “Health Protocol for the implementation of prevention and response measures against COVID-19 in the activities of the Mining Subsector, the Hydrocarbons Subsector and the Electricity Subsector,” approved by means of Ministerial Resolution N° 128-2020-MINEM/DM, determined the structure of the monitoring plan that shall be prepared and submitted by mining companies and their workers and/or contractors that work or provide services in all activities of the mining subsector.

On June 4, 2020, Supreme Decree N° 101-2020-PCM, allowed companies to conduct exploration and exploitation activities, including processing, transportation, storage and mines closure regarding large, middle and small mining.

To address environmental matters during the COVID-19 pandemic, the government issued Urgency Decree N° 026-2020 and Urgency Decree N° 029-2020, suspending deadlines for administrative and judicial procedures with government entities. This decree was extended through June 10, 2020. Legislative Decree N° 1500, issued on May 11, 2020, outlined companies’ compliance with environmental obligations during the pandemic. It allowed companies – including those in the mining sector – to suspend environmental obligations. Such disposition of obligations were later included in R.C.D. 008-2020-OEFA/CD, issued by OEFA, the environmental enforcement agency that regulates environmental obligations and supervises compliance during the pandemic.

According to such regulations, supervision of environmental obligations is linked to the monitoring plan registered by companies on SICOVID. We and our associated companies are in compliance with all COVID-19-related regulations when conducting mining activities.

The term of the state of national emergency imposed by the government through Supreme Decree N° 044-2020-PCM was extended several times and finally ended on November 30, 2020. However, a new state of national emergency was imposed by the government on November 30, 2020 through Supreme Decree N° 184-2020-PCM, starting on December 1, 2020. Under this new decree and its extensions, all mining activities are allowed.

In this regard, by means of Supreme Decree N° 007-2021-EM, published on April 1, 2021, the Ministry of Energy and Mines issued a special measure related to the environmental management instruments of the mining sector. These regulations establish the reprogramming of mining activities and their respective environmental measures, commitments and obligations assumed in the approved Environmental Impact Assessments, Complementary Environmental Management Instruments and their modifications, up to a maximum period of twelve (12) months, counted from the presentation of the reprogramming plan before the competent environmental authority, without implying the modification, reduction and/or incorporation of environmental measures, commitments and/or obligations assumed in the aforementioned studies and instruments, in response to the State of National Emergency for the impact of COVID-19 and the health emergency. The measure is applicable for those activities that could not have been developed due to the impact of the pandemic.

Environmental Matters

In 2005, Peru enacted the General Environmental Law (Law No. 28611), which establishes the main environmental guidelines and principles applicable in Peru. Pursuant to the General Environmental Law, the Ministry of Environment (“MINAM”) issued national environmental regulations, which have gradually replaced prior guidelines governing governmental agencies environmental competencies. OEFA, as the environmental enforcement agency, has the authority to inspect mining operations and fine companies that fail to comply with prescribed environmental regulations and their approved environmental assessments.

In May 1993, the regulation for environmental protection under mining and metallurgical activities (reglamento para la proteccion ambiental en la actividad minero - metalúrgica), was published and approved by Supreme Decree No. 016-93-EM. This regulation required every mining unit that began operations before May 1993 to file a Preliminary Environmental Assessment (“EVAP”) followed by a Program for Environmental Adequacy and Management (“PAMA”). Additionally, an EIA had to be submitted for any new operations. In 2014, this regulation was repealed by Supreme Decree No. 040-2014-EM (reglamento de Protección y Gestión Ambiental para las Actividades de Explotación, Beneficio, Labor General, Transporte y Almacenamiento Minero), approved on November 12, 2014, which regulates mining production, processing, labor, transportation and storage and sets forth a new set of requirements for these activities. Going forward, social and technical teams from MEM will gather the baseline information to regulate these activities. Early involvement by the regulatory authority in environmental assessments processes is expected to shorten approval times.

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In 1996, MEM also issued regulations that establish maximum permissible levels (“LMPs”) of (i) liquid effluents emissions and (ii) elements and compounds present in gaseous emissions resulting from mining activities. Mines and processing plants that were in operation before May 1993 were required to comply with LMPs within 10 years and in the meantime, operators were required to prepare Environmental Adaptation and Management Programs, or PAMAs, that set forth plans to ensure compliance with more stringent LMPs. The first General Water Law was enacted in 1969. In 2008 and 2010, MINAM enacted new water quality standards and new LMPs for liquid effluents, and, in 2009, all Peruvian mining companies were required to submit updated environmental management plans that complied with water quality standards and new LMPs for liquid effluents to MEM. By the end of 2015, Supreme Decree No. 015-2015 - MINAM (the “2015 Decree”) was enacted, modifying water quality standards for designated beneficial uses which apply to mining companies, including Yanacocha, and establishing supplementary provisions related to compliance. In 2017, Environmental Quality Standards (Estándares de Calidad Ambiental) (“ECAs”) for water were modified by Supreme Decree No. 004-2017-MINAM. Permissible maximum limits approved in 2010 are still valid.

The criteria of the 2015 Decree modified the in-stream water quality criteria pursuant to which Yanacocha had been designing water treatment processes and infrastructure, and therefore in February 2017, Yanacocha submitted its proposed modification (PIA) to the previously approved Environmental Impact Assessment to the Mining Ministry (“MINEM”), which remained under review in 2020 and evaluation is expected to take place later in 2021. With the approval of a separate EIA, the new water quality criteria and standards for beneficial uses will go into effect in 2024. Yanacocha expects to adapt the PIA submission in order to reflect these new standards. In the event Yanacocha is unsuccessful in implementing the modifications in compliance with the new regulations and deadlines, it could result in fines and penalties relating to potential intermittent non-compliant exceedances. In addition, if accepted, the treatment options may result in increased costs. These impacts may adversely impact the future cost and financial performance of Yanacocha’s operations.

In May 2008, the MINAM was created by Legislative Decree No. 1013. MINAM’s main functions include formulating and implementing policies and regulations related to environmental matters and pollution control, including regulation of air and water quality standards, through supervision and education.

On March 26, 2013, Supreme Decree No. 002-2013-MINAM regarding soil quality became effective. It approved the ECAs for soils, or “Standards,” which are applicable to any project or activity that may generate an environmental impact. Subsequently, on March 25, 2014, supplementary provisions for the application of the standards were approved through Supreme Decree No. 002-2014-MINAM. Projects operating at the time those regulations came into force were required to submit the first phase of soil characterization within twelve months of the passage of the decree. Buenaventura and its associated companies submitted this information within the required time.

In 2017, new ECAs for soils were approved by Supreme Decree No. 011-2017-MINAM, replacing the ECAs approved by Supreme Decree No. 002-2013-MINAM. The new ECAs are applicable to new environmental assessments that are required to carry out future mining activity in accordance with the mining regulations. With respect to the environmental assessments that were approved prior to the approval of the new ECAs, Supreme Decree No. 002-2013-MINAM will remain applicable and the new ECAs will only be enforced when the approved environmental assessments need to be modified or updated. In 2017, Supreme Decree No. 012-2017-MINAM replaced Supreme Decree No. 002-2014-MINAM, approving new supplementary provisions for application of the new ECAs. Buenaventura and its associated companies have taken into consideration all new environmental regulations when executing its mining activities.

In 2012, Peru enacted Supreme Decree No. 020-2012-EM, which added Chapter XVII to the Mining Proceedings Regulations approved by Supreme Decree No. 018-92-EM. The new provisions require the approval of the General Mining Directorate of MEM or of the relevant regional government before proceeding to start and re-start exploration, development, preparation and exploitation. The authorizations to start and re-start mining activities may need to be pre-approved by MEM if the mining activities affect indigenous or native people.

In addition, in December 2017, a new regulation for Solid Waste Management was approved by Supreme Decree No. 014-2017-MINAM which brought into force the new Law for Integral Management of Solid Waste, approved by Legislative Decree No. 1278 in December 2016. This resulted in new regulations for all extractive productions and services in Peru, including mining, which prioritize the material and energy recovery of solid waste through different methods, including recycling, reuse and co-generation 

Regulations governing mining explorations. In May 2008, the Peruvian government enacted Supreme Decree 020-2008-EM, which governs mining exploration activities and related matters. At the end of 2017, this Supreme Decree was modified by a new regulation for exploration activities. Under Supreme Decree 042-2017-EM, exploration activities fall into two categories: Category I and Category II. Category I exploration activities are those involving no more than 40 drilling platforms or affecting a surrounding area measuring less than 10 hectares in size, while Category II exploration activities are those involving between 40 and 700 drilling platforms and affecting an area measuring greater than 10 hectares. For Category I exploration activities, an Environmental Impact Statement (Declaración de Impacto Ambiental) (“DIA”) is required. For Category II exploration activities, a semi-detailed DIA (“sdDIA”) that incorporates technical, environmental and social matters is required. In addition, the new regulation requires an Environmental Technical Report (Ficha Técnica Ambiental) (“FTA”), which is a complementary environmental assessment for exploration activities that do not have significant negative impacts. Exploration activities must start within twelve months following the date that the DIA or sdDIA is approved. The DIA, the sdDIA and the FTA, as applicable, must be approved before exploration activities begin. Any commitments assumed by mining companies in a DIA, sdDIA or FTA are mandatory and, if they are not fulfilled, OEFA has the authority to fine non-compliant mining companies. The regulation also provides that the holder of mining concessions will perform specified closure and post closure activities during exploration programs. In addition, fines can be imposed if exploration programs begin before the DIA, the sdDIA and the FTA are approved, and the approval of environmental assessments for exploration activities performed within protected natural areas requires the approval of the competent authority. Exploration in Prehispanic Archeological Sites (referred to in Supreme Decree No 004-2000-ED) is forbidden unless expressly authorized by the Ministry of Culture.

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In May 2008, MEM also enacted Supreme Decree No 028-2008-EM, which regulates the citizen participation process within the framework of environmental permit approval. The DIA and sdDIA provide local communities with an opportunity to engage actively in this process.

The regulation for exploration activities Supreme Decree No. 042-2017-EM, was modified by Supreme Decree No. 019-2020 - EM. The most important changes are: the Ministry de Energy and Mines allows the positive administrative silence for FTA, additional assumptions for Prior Communication, the determination of a deadline to OEFA which must conduct the final closure inspection and the rules modifications of Citizen Participation for the FTA.

The following DIAs and sdDIAs were approved in 2020:

Buenaventura
Mine/Project	Type of Study	Approving Resolution	Date of Approval
Trapiche	1st ITS sdDIA 5th Modification	128-2020-MINEM/DGAAM	September 28, 2020

Coimolache
Mine/Project	Type of Study	Approving Resolution	Date of Approval
Coimolache	2nd ITS sdDIA Cienaga	129-2020/MINEM-DGAAM	September 28, 2020
La Zanja	3rd ITS sdDIA 9th Modification	074-2020/MINEM-DGAAM	August 10, 2020

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Regulations Promoting Investments. Supreme Decree 054-2013-PCM was passed to promote investment projects. It allows companies to submit a supporting technical report, ITS (Informe Técnico Sustentatorio), to modify ancillary components, capacity expansions, or introduce technological improvements in exploration and exploitation activities. SENACE (EIAd) and MEM (DIA and sdDIA) will then issue a compliance waiver within no more than 15 working days from the date of submission. This should facilitate the approval of environmental assessments for our new exploration projects and simplify the issuance of certificates of non-existence of archeological remains required for mining projects. In 2020, three ITSs were approved. It is important to mention that in March 2020, Supreme Decree No. 005-2020-EM modified the Supreme Decree No. 040-2014-EM. Some of the key modifications includes:(i) mine components that generates low environmental impacts through prior communication do not need to submit a modification to the IGA for approval; and (ii) extend the possibility to submit ITS more than three times for changes in main components.

On December 28, 2015, the Servicio Nacional de Certificación Ambiental (“SENACE”), which operates under the auspices of MINAM, took responsibility for the assessment and approval of detailed EIA (EIAd) submitted by private, public, or mixed-capital organizations. This development is consistent with the expansion of MINAM’s technical and regulatory capacities. In 2020, EIAs for Yumpaq and Trapiche were prepared under SENACE supervision.

Finally, the Environmental Baseline Elaboration Guidelines (Guía para la elaboración de la Línea Base en el marco del Sistema Nacional de Evaluación del Impacto Ambiental– SEIA) and the Identification and Characterization of Environmental Impacts Guidelines (Guía para la Identificación y Caracterización de Impactos) were approved by Ministerial Resolution No. 036-2018-MINAM in 2018.

Regulations governing mine closures. In 2003, Law No. 28090, Ley que Regula el Cierre de Minas (Law that Regulates the Closing of Mines), established the obligations and procedures that mining companies must follow to prepare, submit and execute plans for the closing of mines, or “Closure Plans,” and the granting of financial environmental guarantees to secure compliance with Closure Plans. We are required to submit a Closure Plan for new projects to MEM within one year following approval of an EIA or PAMA; and inform MEM semi-annually of any progress on the conditions established in the Closure Plan. We are also required to perform the Closure Plan consistent with the schedule approved by MEM during the life of the project; and set up a financial environmental guarantee that covers the estimated amount of the Closure Plan. In addition, Supreme Decree No. 020-2008-EM requires mining companies that perform exploration activities to conduct certain closing activities in accordance with the approved environmental assessment, subject to deferral under certain circumstances, and contemplates a Closure Plan to be submitted by the mining company following the terms and conditions of Supreme Decree Nº 033-2005-EM. Supreme Decree Nº 036-2016-EM modified articles 12 and 17 and included articles 46-A y 66-A of the Supreme Decree Nº 033-2005-EM.

In 2017, our Closure Plans were approved by MEM for all of our mines and advanced explorations activities.

The following mine closure plan modifications were approved in 2020:

Buenaventura
Mine/Project	Type of Study	Approving Resolution	Date of Approval
Orcopampa	Closure Plan 7th Modification	075-2020/MINEM-DGAAM	July 13, 2020
Julcani	Closure Plan 7th Modification	146-2020/MINEM-DGAAM	November 4, 2020
Tambomayo	Update	164-2020/MINEM-DGAAM	December 1, 2020
Mallay	Closure Plan 6th Modification	165-2020/MINEM-DGAAM	December 1, 2020

On November 9, 2009 Supreme Decree No. 078-2009-EM became effective, creating additional environmental obligations for mining concessions holders. Under this provision, mining concessions holders that performed mining activities, including mining exploration, production and processing activities or related activities, without having an environmental certification are required to prepare and perform an environmental remediation plan to address the environmental impact in the areas in which such activities have been conducted. Environmental remediation plans can only be filed once mining activities have ceased and contain a detailed description of all mining facilities and activities performed without the correspondent environmental certification, including maps and related information, a detailed description of the environmental impacts created by such activities, a detailed description of the remediation actions, a detailed description of the compensation that is proposed to be made, a budget and schedule of the remediation activities, including their costs, and a bond in favor of MEM for the cost of the execution of the measures contained in the environmental remediation plan. Once the environmental remediation plan is completed, mining concessions holders are required to inform the auditing entity so it can verify that the actions were carried out as approved. The auditing entity is required to send the respective report to the relevant authority so that the bond may be returned.

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Law No. 28271, Law that Regulates the Environmental Liabilities of Mining Activities (Ley que Regula los Pasivos Ambientales de la Actividad Minera), came into force on July 7, 2004 and serves to regulate the identification of environmental liabilities and financial responsibility for remediation in mining activities, in each case to mitigate any negative impact mining may have with respect to the health of the population, environment and property. Pursuant to Law No. 28271, as amended by Law No. 28526 and Legislative Decree No. 1042, MEM’s technical branch will identify environmental liabilities, mining companies responsible for abandoned mining facilities, mining works and residue deposits that may be linked to such environmental liabilities and holders of inactive mining concessions with mining liabilities. Holders of inactive mining concessions with environmental mining liabilities will be required to submit a Closure Plan and enter into environmental remediation agreements with MEM to perform any studies and work necessary to control and mitigate the risk and effects of any contamination. Regulations under Law No. 28271, Regulations of Environmental Liabilities of Mining Activities (Reglamento de Pasivos Ambientales de la Actividad Minera), were approved by Supreme Decree No. 059-2005-EM. and then modified by Supreme Decree No. 003-2009-EM.

 We have presented Closure Plans to MEM for all our mining concessions with environmental mining liabilities. To date, the Hualchocopa, Lircay, Bella Unión-Paucaray, Chaquelle Ayacucho and Rifle Rumimaqui mining units have all been closed and post-closure activities at each of these units are currently underway.

We anticipate additional laws and regulations relating to environmental matters will be enacted over time. The development of more stringent environmental regulations in Peru could impose additional constraints and additional costs on our operations that would require us to make significant additional capital expenditures in the future. Although we believe that we are substantially in compliance with all known and applicable environmental regulations, there is no assurance that future legislation or regulatory developments will not have an adverse effect on our business or results of operations.

Prior Consultation with Local Indigenous Communities

In 2011, Peru enacted Law No. 29785, the Law of Prior Consultation for Indigenous and Native Communities (Ley del Derecho a la Consulta Previa a los Pueblos Indígenas y Originarios – ILO 169 Convention). This law establishes a prior consultation procedure that the Peruvian government must undertake in concert with local indigenous communities whose collective rights may be directly affected by new legislative or administrative measures. Under this law, the Peruvian governmental agency responsible for issuing or approving the administrative measure or decree in question, rather than the affected local indigenous community, retains the right to approve or reject the relevant legislative or administrative matter following such consultation. However, to the extent that any of our future projects require the promulgation of legislative or administrative measures that impact collective rights of local indigenous communities, the required prior consultation procedure may result in delays, additional expenses or failure to obtain approval for such new project.

Regulations under Law No. 29785 were approved by Supreme Decree No. 001-2012-MC, which became effective on April 2, 2012. These regulations specify the form and circumstances of the required consultation and the manner in which agreements will be formalized, and provide for a consultation process that lasts no more than 120 calendar days. In 2019, Ministerial Resolution No. 304-2019-MINEM/DM was issued, establishing the administrative procedures from the Mining Sector that require prior consultation - in case those procedures affect indigenous communities - which are: (i) processing concession; (ii) authorization to initiate or re-initiate exploration, development or exploitation activities; (iii) mineral transport; and (iv) mining labor.

At the start of the COVID-19 pandemic in 2020, the Peruvian Central Government did not make adequate accommodations and legal modifications for the use of digital tools which, consequently, interrupted the prior consultation process. However, the Peruvian Central Government made efforts to include additional mechanisms for some procedures with established COVID protocols. Additionally, the process has been delayed by local indigenous communities’ involvement of political leaders to communicate the desire for and expectation of increased benefits for their respective communities. We expect this to delay the advance in the San Gabriel project where we have an ongoing process in the fourth stage, and in Yumpaq and Ccelloccasa.

Mine/Project	Type of Study	Administrative Measure
San Gabriel	EIA	Processing concession Authorization to initiate exploitation activities
Yumpag	sdDIA 2nd  Modification	Authorization to initiate exploration
Celloccasa	DIA	Authorization to initiate exploration

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Permits

We believe that our mines and facilities have all necessary material permits to operate. All future exploration projects will require a variety of permits. Although we believe the permits for these projects can be obtained in a timely fashion, permitting procedures are complex, time-consuming, and subject to potential regulatory delay. We cannot predict whether we will be able to renew our existing permits or whether material changes in existing permitting conditions will be imposed. Non-renewal of existing permits or the imposition of additional permitting conditions could have a material adverse effect on our financial condition or results of operations. Moreover, the COVID-19 pandemic slowed down the permitting process all through the mine lifecycle, further delays are to be expected. 

Insurance

We maintain a comprehensive insurance program designed to address specific risks associated with our operations, in addition to covering the insured risks common to major mining companies. Our insurance program is provided through the local Peruvian insurance market and includes employers’ liability, comprehensive third-party general liability and comprehensive automobile liability, all risk property on a replacement basis, including transit risks, as well as business interruption insurance and mining equipment insurance.

Mining Royalties and Taxes

Under Peruvian law, holders of mining concessions are required to pay the Peruvian government a mining royalty (regalia minera) for the exploitation of metallic and non-metallic resources. In accordance with Law No. 28258, as amended by Law No. 29788, mining royalties are payable either as a specified percentage of operating profit or 1% of revenues, whichever is higher. 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. Percentages for the distribution of proceeds from mining royalties were amended by Law No. 28323.

Mining companies that are a party to mining stabilization agreements are not required to pay a mining royalty during the tenure of their stabilization agreements. Although we are not party to any stabilization agreements, Yanacocha currently has effective stabilization agreements for the Yanacocha, La Quinua and Maqui Maqui mines.

In addition to mining royalties, pursuant to Law No. 29789, effective from October 1, 2011, mining operations in Peru are subject to an extraordinary mining tax. Mining companies that do not have taxation stability agreements with the Peruvian government, such as Buenaventura, will pay the “Special Mining Tax” (Impuesto Especial a la Minería). The Special Mining Tax is calculated each quarter as a percentage of operating profit. Marginal rates ranging from 2% to 8.4% that increase progressively for companies with higher operating margins will apply. Mining companies that have stability agreements with the Peruvian government will pay the “Special Mining Duty” (Gravamen Especial a la Minería) created by Law No. 29790. The Special Mining Duty is calculated as a percentage of operating profit, with marginal rates ranging from 4% to 13.12% that increase progressively for companies with higher operating margins.

Safety

During 2020, we experienced 226 reportable injuries (considers Buenaventura, its subsidiaries and Coimolache), including 0 fatal injuries, compared to two fatal injuries in 2019. Under Peruvian legislation, reportable injuries include: accidental injuries resulting in lost-time, fatal accidents, accidents that require medical treatment or result in a loss of consciousness, an inability to perform all job duties on any workday after the injury or the temporary assignment or transfer to another job. Injuries involving first-aid only are not reportable as they are considered minor accidents. Starting in 2017, we expanded classifications parameters to account for lost time due to injuries and external non-mining projects (public roads, health and education facilities constructions) all of which were reported to the Bureau of Labor.

At Buenaventura, we believe that safety is an inherent part of every process, rather than something separate. This means that Safety management is the responsibility of the operational officer in charge of each respective process. Safety is part of our quality indicators and a crosscutting value throughout the Company.

The accident rate fell to 0.16, 90% lower than in 2019 (1.66). One contributing factor has been the reduction of high-risk works between March and June due to the COVID-19 pandemic.

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In light of these results, we must continue to work hard and allocate resources to ensure sustainability through a Critical Risk management approach (operational controls) and the Pact for Life (change in beliefs).

The table below shows Accident Rates based on the number of fatal and lost time accidents (Frequency) and days lost (Severity). The table shows a decreasing trend for Accident Rates between 2019 (1.66) and 2020 (0.16).

Our main activities included the following:

○ Tightening of relationships with unions through awareness-raising sessions called “A Partnership for Life: Together We Can Achieve Sustainable Results.”

○ Reinforcement of BVN and contractor employees’ personal commitment through the activities of the “Pact for Life” program.

○ Deployment of the “Critical Risk Management” initiative, focused on the prevention of fatal accidents and permanent disabling accidents through the implementation of engineering controls.

○ Involvement of all supervision levels, workers and unions through the Participatory Safety approach.

○ Improved efficiency of corrective actions by prioritizing operational engineering controls and by applying ICAM’s accident investigation methodology.

We keep on working towards the achievement of a Safe Production Culture that involves the entire personnel of Buenaventura.

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C. Organizational Structure

As of March 31, 2021, we conducted our mining operations, explorations projects and other activities directly and through various majority-owned subsidiaries, controlled companies and other associate companies as described in the following organizational chart:

† All entities in this chart, with the exception of Minera Julcani S.A. de C.V. (which is organized in Mexico) and Tinka Resources Limited (which is organized in Canada) are incorporated in Peru.

*Compañía Minera Condesa S.A. holds 21,160,260 Common Shares of Compañía de Minas Buenaventura S.A.A., or approximately 7.70% of our total Common Shares.

Intermediate Holding Companies, Subsidiaries and Equity Participations

Compañía Minera Condesa S.A.

Condesa, our wholly-owned subsidiary, is a mining and facilities holding company with both direct and indirect ownership participation in Yanacocha. As a partner in Yanacocha, Condesa shares responsibility for the investments made in the Yanacocha mine. In addition, Condesa holds an equity interest in S.M.R.L. Chaupiloma Dos de Cajamarca (“Chaupiloma”) and, as a result, receives a portion of the royalty revenues paid by Yanacocha to Chaupiloma in an amount equal to its ownership interest. Condesa also holds a 7.70% interest in Buenaventura.

Sociedad Minera Cerro Verde S.A.A.

Buenaventura holds a 19.58% interest in Cerro Verde, which operates an open-pit copper and molybdenum mining complex located 20 miles southwest of Arequipa, Peru. The site is accessible by paved highway. The Cerro Verde mine has been in operation since 1976, and was previously owned by the Peruvian government before its privatization in 1993. Freeport-McMoRan Inc., which is the operator, holds a majority interest in Cerro Verde.

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

Chaupiloma is a Peruvian limited liability company that holds all mining rights for the areas mined by Yanacocha. Chaupiloma receives a royalty that is calculated as a percentage of the total revenues of Yanacocha. We own, directly and indirectly, through our interest in Condesa, a 60% interest in Chaupiloma. Newmont Peru owns the remaining 40% equity interest.

Consorcio Energético Huancavelica S.A. / Empresa de Generación Huanza S.A.

Conenhua is an electrical transmission company that provides electricity to our operations through its transmission facilities. We own 100% of Conenhua and manage its operations. To secure a reliable energy supply from a clean and renewable source for our direct operations and projects at competitive prices, Conenhua, through its subsidiary Empresa de Generación Huanza S.A., or “Huanza,” was commissioned to construct a 90.6 megawatt capacity hydroelectric power plant in the valley of Santa Eulalia. This hydroelectrical plant began operating at full capacity in June 2014.

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Contacto Corredores de Seguros S.A. 

During 2015, Buenaventura paid US$8.8 million to Buenaventura Ingenieros S.A. in order to obtain 99.98% ownership of Contacto Corredores de Seguros S.A., an insurance brokerage company that provides insurance brokerage and related services to us and our affiliates.

Minera Julcani S.A. de C.V.

Minera Julcani S.A. de C.V. is one of our wholly-owned subsidiaries and was created for the purpose of conducting mining activities in Mexico.  Minera Julcani S.A. de C.V. has had no exploration activities since 2014, when the exploration agreement with Surutato Mining, S.A. de C.V., to conduct exploration activities within its property located in Sinaloa, Mexico, was terminated.

Inversiones Colquijirca S.A. / Sociedad Minera El Brocal S.A.A.

El Brocal owns the Colquijirca and Marcapunta Norte mines and the San Gregorio exploration project. El Brocal was formed in 1956 and is engaged in the extraction, concentration and sale of concentrates of polymetallic minerals, mainly copper, zinc, lead and silver. Currently, we own 61.43% of El Brocal through both direct and indirect ownership interests.

Minera La Zanja S.R.L.

La Zanja is located 35 kilometers northwest of the city of Cajamarca. La Zanja, which is currently 53.06% owned by us, began operations in September 2010 as an open-pit mine producing gold and silver.

Compañía Minera Coimolache S.A.

Coimolache is a mining company that owns the Tantahuatay mine which is located in the province and district of Hualgayoc in the Cajamarca region, which is 35 kilometers northwest of the Yanacocha mine. We hold a 40.10% interest and operate this mine, which commenced operations in mid-2011 as an open-pit mine producing gold and silver.

Ferrocarril Central Andino S.A and Ferrovias Central Andina S.A.

We hold a 10% interest in Ferrocarril Central Andino S.A, (FCCA) and Ferrovias Central Andina S.A. (FVCA). Both were incorporated in August 1999 and began operations in that year. FCCA, is an operating company (rail transport). FVCA, is the concessionaire of the central railroad, is dedicated to the infrastructure of the railroad.

Apu Coropuna S.R.L.

Buenaventura currently owns 70% of Apu Coropuna S.R.L., with the other 30% owned by Southern Peru Copper Corporation. Apu Coropuna S.A. was created for the purpose of conducting exploration within properties situated in Castilla, Arequipa.

Procesadora Industrial Rio Seco S.A.

Procesadora Industrial Rio Seco S.A. is our wholly-owned subsidiary that owns and operates a monohydrate manganese sulphate crystallization plant situated in Huaral, Lima. This processing plant allows mining from areas with high silver and manganese content within the Uchucchacua mine, improving silver recovery. The Rio Seco Plant produces high purity manganese sulphate that is used in agriculture and the mining industry.

El Molle Verde S.A.C.

El Molle Verde S.A.C. is our wholly-owned subsidiary that develops the Trapiche project, located in the Apurimac region. See “—B. Business Overview—Exploration Projects in Non-Operating Areas” above for further information about this project.

Tinka Resources Limited

Buenaventura holds 19.3% of Tinka Resources Limited, an exploration and development company that owns 100% of the Ayawilca Project, located at Daniel Alcides Carrión, Pasco.

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YANACOCHA

A. History and Development of Yanacocha

Yanacocha was incorporated in Peru on January 14, 1992 and commenced operations in 1993. Yanacocha is currently engaged in the production, exploration, and development of gold under the mining concessions it owns or that are owned by Chaupiloma. Future projects could include the production, exploration, and development of copper as well.

Yanacocha is located approximately 375 miles (604 kilometers) north of Lima and 30 miles (48 kilometers) north of the city of Cajamarca and is primarily accessible by paved roads. The Yanacocha property began production in 1993 and consists of the following open pit mines: the La Quinua Complex, the Yanacocha Complex, the Carachugo Complex and Maqui Maqui. In addition, Yanacocha 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).

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 2021.

The Yanacocha Complex includes mined material from the Yanacocha Layback and Yanacocha Pinos, which are scheduled to finish operations in 2021, respectively. The Yanacocha Complex began operations in 1997 and has limited mining operations in recent years.

The Carachugo Complex and Maqui Maqui includes mined material from multiples mines that are no longer in operation and continued residual gold leaching. In addition, the Carachugo Complex includes processed material from the Quecher main project, which is a new open pit within the existing footprint of Yanacocha which began operating in October 2019. This project will add oxide production at Yanacocha and will extend the life of the Yanacocha operation to 2027.

In 2020, Yanacocha produced 340,052 ounces of gold, compared to 527,336 ounces of gold produced in 2019. Gold ounces produced decreased 36% primarily due to lower mill throughput because the site was placed on care and maintenance and due to lower leach production driven by lower tons placed on the leach pad.

Yanacocha is 51.35% owned by Newmont Second Capital Corporation. A 43.65% interest in Yanacocha is indirectly held by Buenaventura and the remaining 5% is held by Summit Global Management II VB, a wholly-owned subsidiary of Sumitomo Corporation. Although Yanacocha has no fixed dividend policy, there is an understanding among the partners that the net income not required for sustaining capital expenditures or future development projects should be distributed following approval by the two major shareholders of Yanacocha.

On December 21, 2017, Yanacocha repurchased 63,922,565 of its shares owned by International Finance Corporation (“IFC”) for US$47.9 million, which represented 5% of the capital stock of Yanacocha. On February 19, 2018, the Yanacocha partners approved the reduction of 63,922,565 of the common partnership interests. On June 14, 2018, Yanacocha’s partners approved the issue and sale of 63,922,565 partnership units to Summit Global Management II BV.

B. Business Overview

Description of Yanacocha’s Operations

Yanacocha’s mining activities encompass 246,169 acres (99,621 hectares) that are covered by 160 mining concessions. Yanacocha holds the mining rights related to 53,956 acres (21,835 hectares), covered by 50 concessions. Chaupiloma holds the mining rights to the remaining acres and concessions and has assigned these mining concessions to Yanacocha. Each concession has an initial term of 17 to 30 years, which are renewable at Yanacocha’s request for an additional 17 to 20 year term.

Yanacocha has three processing concessions from Peru’s MEM for its processing facilities: Cerro Yanacocha (La Quinua and Yanacocha leach pads, La Quinua and Yanacocha Norte gold recovery plants and Yanacocha Gold Mill), Yanacocha (Carachugo and Maqui Maqui leach pads and Pampa Larga gold recovery plant) and China Linda (non-metallic processing concessions). 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. The Yanacocha Gold Mill processes high-grade gold ore to produce a gold-bearing solution for treatment at the La Quinua processing plant. The Yanacocha Gold Mill processes between 5.5 and 6.0 million tons per year.

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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 the Yanacocha Gold Mill processes high-grade gold ore to produce a gold-bearing solution for treatment at the La Quinua processing plant, followed by Merrill - Crowe zinc precipitation and smelting where a final doré product is poured. The ore is then shipped offsite for refining and is sold on the international gold markets.

Yanacocha and Chaupiloma each have mining concessions granted by Peru’s Geological, Mining and Metallurgical Institute. Mining concessions grant Yanacocha an exclusive and irrevocable right to carry out exploration and exploitation activities within a specified area. In order to maintain these concessions, Yanacocha must (i) obtain the appropriate permits and rights over the surface lands, (ii) pay annual license fees and (iii) comply with a minimum annual production obligation. For mining concessions granted prior to 2008, concessions will expire if the production obligations are not met by the end of 2038. Mining concessions granted on or after 2008 will expire if minimum production is not attained by 2038, but in the case of mining concessions that are in a situation of exploitation, expiration does not apply.

In Peru, a revised royalty and special mining tax was introduced in October 2011. This tax is dependent on whether or not a stabilization agreement is in effect and is based on a sliding scale, between 1% and 12%. A stabilization agreement was in effect through December 2018 for operations in the La Quinua Complex. 

Quecher Main Project

This project has added oxide production at Yanacocha, leverage existing infrastructure and enable potential future growth at Yanacocha. First production was achieved in late 2018 and commercial production started on October 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 (US$96.8 million 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) development of new reserves, the reserve balances reported for Conga in 2014 were reclassified to mineralized material in 2015.

The Conga project has been the target of local political and community protests, some of which blocked the road between the Yanacocha mine and Conga project complexes and the City of Cajamarca in Peru and resulted in vandalism and equipment damage. While recently roadblocks and protests have diminished and focused on local political activism and labor disputes, the Company cannot predict whether similar or more significant incidents will occur in the future. The recurrence of significant political or community opposition or protests could continue to adversely affect the Conga Project’s development, other new projects in the area and the continued operation of Yanacocha.

Construction activities on the Conga project were suspended in 2011, at the request of Peru’s central government following protests in Cajamarca by anti-mining activists led by the regional president. At the request of the Peruvian central government, the environmental impact assessment prepared in connection with the project was reviewed by independent experts in an effort to resolve allegations around the environmental viability of Conga. This review concluded that the environmental impact assessment complied with international standards and provided recommendations to improve water management. Based on the Company’s internal project portfolio evaluation process, the Company does not anticipate developing Conga in the next ten years. Due to the uncertainty surrounding the project’s development timeline, the Company have allocated our exploration and development capital to other projects in its portfolio. As a result, the Conga project is currently in care and maintenance and the Company continues to evaluate opportunities to sell or find alternative uses for equipment and assets originally acquired for the Conga project. Should the Company be unable to develop the Conga project or conclude that future development is not in the best interest of the business, the Company may consider sale of the project to a third-party or other alternative for the project, which may result in a future impairment charge.

The Central Government of Peru continued to support responsible mining as a vehicle for the growth and future development of Peru in 2020. However, the Company is unable to predict whether the Central government will continue to take similar positions in the future.

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Previous regional governments of Cajamarca and other political parties actively opposed the Conga project in the past. The Company is unable to predict the positions that will be taken in the future and whether such positions or changes in law will affect new projects at Yanacocha or Conga. Such changes may include increased labor regulations, environmental and other regulatory requirements, and additional taxes and royalties, as well as future protests, community demands and road blockages. The Company cannot predict future positions of either the Central or regional government on foreign investment, mining concessions, land tenure or other regulation. Any change in government positions or laws on these issues could adversely affect the assets and operations of Yanacocha or Conga, which could have a material adverse effect on the Company‘s results of operations and financial position.

Should the Company be unable to develop the Conga project, the Company may have to consider other alternatives for the project, which may result in a future impairment charge. The total assets at Conga as of December 31, 2020 and 2019 were US$449.8 million and US$458.2 million, respectively.

Yanacocha 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 construction of the project in the second half of 2021.

Environmental Matters

The Peruvian government agency responsible for environmental evaluation and inspection, Organismo Evaluacion y Fiscalizacion Ambiental (“OEFA”), conducts periodic reviews of the Yanacocha mine. From 2011 to 2020, the OEFA issued notifications of alleged breaches of Yanacocha's environmental standards and environmental management instruments, related to past supervisions. The Water Authority that is in charge of supervising the proper water administration has also issued notices of alleged regulatory violations in previous years. OEFA has resolved in its findings, no cases of environmental deterioration have been identified, as a consequence of malpractice in Yanacocha’s operation. The experience with OEFA, in the case of finding administrative responsibility to Yanacocha, results in a corrective action, in addition to imposing a fine that is calculated by the avoided cost capitalized on the date of issuance of the directorial resolution, multiplied by potential factors of environmental impact. The alleged violations which are currently pending resolution could entail fines ranging from zero to 3,667 tax units (“UITs”) with the Water Authority alleged violations ranging from zero to 10 UITs. Each UIT amounts to, approximately, US$1,210 based on the applicable exchange rate as of the date of this annual report. As a result, the potential for fines in matters pending resolution ranges from US$0 to US$4.45 million. Yanacocha is responding to all notifications of alleged violations, but cannot reasonably predict the outcome of the agency's 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.

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.

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 Yanacocha Tax Dispute. 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. As a result of the decision, the amount of $29 million was recognized during the first quarter of 2020, but Yanacocha filed two actions objecting to potential excessive interest and duplicity of criteria of up to $60 million and $81 million, respectively. It is not possible to fully predict the outcome of this litigation.

By-Laws of Yanacocha

Yanacocha is governed by the Peruvian Companies Law and the estatutos (the combined articles of incorporation and by-laws) of Yanacocha, or the “Yanacocha By-Laws.”

Control Over Major Corporate Events

Pursuant to the Peruvian Companies Law and the Yanacocha By-Laws (including applicable quorum requirements), without the affirmative vote of the partners of Yanacocha representing at least 51% of the voting shares, none of the following may occur:

• an increase or decrease in Yanacocha’s capital;

• the issuance of any debentures;

• any sale of an asset whose book value is at least 50% of the paid-in capital relating to such asset;

• any amendment to the Yanacocha By-Laws to change its business form;

• the merger, consolidation, dissolution or liquidation of Yanacocha; or

• any other amendment of the Yanacocha By-Laws.  

Preemptive Rights

The Peruvian Companies Law and the Yanacocha By-Laws provide preemptive rights to all partners of Yanacocha. In the event of a capital increase, any partner has a preemptive right to pay its pro rata share of such increase to maintain such partner’s existing participation in Yanacocha.

In the event of a proposed transfer, exchange or sale, either voluntary or involuntary, of participation, collectively referred to as the “Offered Participation,” of one or more partners, any partner has a right to acquire the Offered Participation in proportion to its holdings of partners’ capital. If the entire partnership fails to exercise this right or some partners indicate their decision to acquire a smaller share than that to which they are entitled, the other partners will receive an increase, and consequently, the remaining participation will be distributed among them in proportion to such partners’ capital participation and within the maximum limit of the participation they have stated their intention to acquire. Finally, any Offered Participation remaining unsubscribed by the partners must first be offered to Yanacocha before they may be offered to third parties.

In addition, in the event of the occurrence of a change of control (as defined) with respect to a significant partner, or the parent of a significant partner, in Yanacocha, the other significant partner will have the right to acquire the first partner’s participation interest in Yanacocha. No change of control will occur with respect to a significant partner so long as the parent of such partner is publicly traded or if such partner’s parent is acquired, the acquiring company is publicly traded.

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Legal Proceedings

For a discussion of legal proceedings, see Note 21 to the Yanacocha Consolidated Financial Statements.

Other than the legal proceedings described in the Yanacocha Consolidated Financial Statements, Yanacocha is also involved in certain legal proceedings arising in the normal course of its business, none of which individually or in the aggregate is material to Yanacocha or its operations.

Management of Yanacocha

Executive Committee

Pursuant to the Yanacocha By-Laws, Yanacocha’s Executive Committee consists of six members, all of whom are appointed by the partners of Yanacocha. Tom Palmer is the Chairman of Yanacocha’s Executive Committee and Roque Benavides, our Chairman of the Board, serves as the Vice Chairman of Yanacocha’s Executive Committee. The Vice Chairman has the power to preside over the meetings of Yanacocha’s Executive Committee in the Chairman’s absence. The members of the Executive Committee are elected for a three-year term but may continue in their positions until the next election takes place and the newly elected members accept their positions. Alternate members are elected in the same manner as members and can act in place of and with all the authority of members when a member is unavailable, except that an alternate member may not preside over the meetings of Yanacocha’s Executive Committee. The Chairman has the right to cast the deciding vote in the event of a deadlock among Yanacocha’s Executive Committee. 

General Manager/Management Agreement

The Yanacocha By-Laws provide that the Yanacocha Partners’ Meeting has the power to appoint and remove the Manager of Yanacocha; the Executive Committee has the power to appoint and remove other officers of Yanacocha, determine their duties and compensation and grant and revoke powers of attorney. Newmont Peru was named as Yanacocha’s Manager according to a publicly filed deed, and it continues to hold that position. Newmont Peru’s duties as Manager are defined in the Management Contract dated February 28, 1992, as amended, between Yanacocha and Newmont Peru (the “Management Contract”). Pursuant to the Management Contract, Newmont Peru is responsible for managing, conducting, and controlling the day-to-day operations of Yanacocha and keeping Yanacocha’s Executive Committee informed of all operations through the delivery of various written reports. The Management Contract was amended as of December 19, 2000. The amendment extends the term of the Management Contract for a period of 20 years starting at the date of amendment and provides that it may be extended for additional terms of 20 years upon request by Newmont Peru. Newmont Peru, however, may cancel the Management Contract by giving six months’ prior notice to Yanacocha. The Management Contract will be deemed terminated if, due to reasons attributable to the bad management of Yanacocha, except for reasons beyond its control, Newmont Peru is unable to substantially complete the agreed work programs. In exchange for its services as Manager, Newmont Peru receives remuneration of US$2 per ounce of gold production and its equivalent for copper production paid on a quarterly basis, which amount is expected to cover the overhead and administrative expenses for the management of the operations. Also, Newmont Peru may charge Yanacocha for the salaries of employees of Newmont Peru or its affiliates who are directly involved in the operation of Yanacocha.

Control Over Major Corporate Events

See “—By-Laws of Yanacocha” above for a description of certain provisions of Peruvian law and of the Yanacocha By-Laws relating to control over major corporate events.

Preemptive Rights and Rights of First Refusal

See “—By-Laws of Yanacocha” above for a description of certain provisions of Peruvian law and of the Yanacocha By-Laws relating to preemptive rights and rights of first refusal.

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C. Property, Plants and Equipment

Our Properties

Introduction

We currently have four wholly-owned operating mines (Orcopampa, Uchucchacua, Julcani, and Tambomayo) and controlling interests in three mining companies which operate the Colquijirca-Marcapunta, and La Zanja mines. We also own an electric power transmission company, an energy generation company, a chemical processing company, and an insurance brokerage company. We also have non-controlling interests in Yanacocha, Cerro Verde, and Tantahuatay mines. See “Buenaventura—C. Organizational Structure” and “Intermediate Holding Companies, Subsidiaries and Equity Participations.”

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Directly Operated Properties

Orcopampa

The Orcopampa mine is wholly-owned and operated by Buenaventura. We lease the rights to the mining concessions of Orcopampa from a group of private investors. This lease, which expires in 2043, requires us to pay 10% of production value, subject to certain conditions. Operations began at the Orcopampa mine in 1965. In 2020, we made lease payments of US$6.2 million. We operated Orcopampa as a silver mine until the late 1990s, when we also began to mine gold-bearing veins. 

The Orcopampa mine is located in the province of Castilla, in the department of Arequipa, approximately 1,350 kilometers southeast of the city of Lima, at an altitude between 3,800 and 4,500 meters above sea level.

The Orcopampa mine is located in the province of Castilla, department of Arequipa, approximately 1,350 kilometers southeast of the city of Lima, at an altitude between 3,800 and 4,500 meters above sea level. There are two routes of access to the property: (1) through Peru’s Panamericana Highway starting in Lima and continuing to the city of Arequipafor a total distance of 319 km from Orcopampa; and (2) the route between Arequipa and Aplao-Viraco for a total distance of 333 km. The Orcopampa mine is also accessible through a commercial flight from Lima to Arequipa.

The Orcopampa mine consists of an epithermal gold telluride deposit, hosted into lava flows and domes of Sarpane complex (calc-alkaline to high potassium), of early Miocene to Holocene, which forms part of the tertiary metallogenic belt of Southern Peru (Au-Ag).

Mining at Orcopampa is conducted underground using the mechanized bench-and-fill and cut-and-fill methods. Mine ore is processed by the carbon-in-leach method in a plant located in Orcopampa. Electric power is primarily obtained from the Peruvian national electricity grid. Water for operations at Orcopampa is obtained from a lake and local river.

The mining method in Orcopampa’s underground mine is conventional and mechanized cut and fill (Breasting), this method is used to mine ore veins thickness from 0.8 to 5m. Mining is made done by us and a service provider. The equipment used for development and exploration includes single-arm jumbos, bolters, scaler and scoop loaders (4yd3). The equipment used for conventional production are jacklegs, micro-electrical scoops (0.5-2yd3) and for mechanized are single-arm jumbso and diesel scoops loaders (2-4yd3). Ore haulage to surface is done with 20 and 35 m3 tipper trucks and 40m3 loading pocket in Nazareno’s and Prometida’s Shaft. Ore is taken to the process plant with 35 m3 tipper trucks.

As of December 31, 2020, proven and probable ore reserves were 468,938 tons, with 17.24 grams per ton of silver and 9.31 grams per ton of gold.

Set forth below are certain unaudited operating data for the periods shown for Orcopampa, calculated based on 100% of the mine’s production.

	Year Ended December 31,(1)
	2019		2020
Mining Operations:
Ore mined (t)		127,079		88,249
Average gold grade (g/t)		10.30		14.65
Average silver grade (g/t)		5.93		4.07
Production:
Gold (oz.)		41,660		41,129
Silver (oz.)		18,791		9,069
Recovery rate (gold) (%)		96.75		96.41
Recovery rate (silver) (%)		76.76		74.79
Cost applicable to sales per oz. of gold(2)		US$ 1,489		962
Cost applicable to sales per oz. of silver(2)		US$ 17.98		12.78

(1) Incorporates losses for mining dilution and recovery.

(2) Cost applicable to sales per unit of mineral sold is not a measure of financial performance under IFRS and may not be comparable to similarly titled measures of other companies. Cost applicable to sales per ounce of gold or ounce of silver consists of cost applicable to sales for gold or silver sold, divided by the volume of gold or silver produced in the specified period. The cost applicable to sales per unit of mineral sold figures disclosed herein are calculated without adjusting for by-product revenue amounts. We consider cost applicable to sales per unit of mineral to be a key measure in managing and evaluating our operating performance. We believe this measure is widely reported in the precious metals industry as a benchmark for performance, but does not have standardized meanings. You should not consider cost applicable to sales per unit of mineral sold as an alternative to cost of sales determined in accordance with IFRS as an indicator of our operating performance. See “Item 5. Operating and Financial Review and Prospects—Buenaventura—G. Reconciliation of Costs Applicable to Sales and Cost Applicable to Sales per Unit Sold” for a reconciliation of Cost applicable to sales per unit sold to Cost of sales, excluding depreciation and amortization.

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Uchucchacua

The Uchucchacua mine is wholly-owned and operated by Buenaventura. Operations began in 1975 and Uchucchacua remains our largest silver producer. It is located in the province of Oyón, in the department of Lima, approximately 265 kilometers northeast of the city of Lima at an altitude of between 4,000 and 5,000 meters above sea level. The mine site is accessible through the Panamericana Norte highway, following the Lima - Huacho - Sayán - Churín - Oyón - Uchucchacua route for a distance of 283 km.

The Uchucchacua mineral structures are hosted by Mesozoic limestone of the Jumasha Formation and are classified as a mesothermal polymetallic deposit of silver-lead-zinc with important contents of manganese. The main mineralized structures are veins and ore bodies with high-grade silver content.

Mining at Uchucchacua is conducted underground and utilizes the mechanized bench-and-fill and cut-and-fill methods. Ore is processed at a mill located at Uchucchacua. The mill has a rated capacity of 4,200 tons per day and utilizes differential flotation to obtain a lead-silver concentrate and a zinc concentrate, using two circuits of 3,000 tons per day and 1,200 tons per day respectively. Electric power is obtained from the Peruvian national electricity grid, a hydroelectric plant and a diesel generator. Water for operations at Uchucchacua is obtained from three local lakes.

During 2020, the manganese sulfate plant of Rio Seco treated 14,963.3 tons of concentrates from the Uchucchacua mine, with 57.4 ounces per ton of silver, 7.4% lead and 22.9% manganese. Following treatment, 8,844.1 tons were obtained, with 96.3 ounces per ton of silver, 12.4% lead and 2.8% manganese. This process also allowed for the production of 10,546 tons of sulfuric acid of 97.7% purity and 11,765 tons of commercial grade manganese sulfate monohydrated.

As of December 31, 2020, proven and probable ore reserves were 7,616,848 tons, with 300.80 grams per ton of silver, 1.11% lead and 1.93% zinc.

Set forth below are certain unaudited operating data for the periods shown for Uchucchacua, calculated based on 100% of the mine’s production.

	Year Ended December 31,(1)
	2019		2020
Mining Operations:
Ore mined (t)		1,335,018		550,718
Average silver grade (g/t)		281.85		314.20
Average zinc grade (%)		2.20		1.56
Average lead grade (%)		1.52		1.03
Production:
Silver (oz.)		10,640,913		5,000,312
Zinc (t)		19,144		5,223
Lead (t)		17,635		5,151
Recovery rate (silver) (%)		87.96		89.88
Cost applicable to sales per oz. of silver(2)		US$12.15		US$22.24
Cost applicable to sales per ton of zinc(2)		US$2,071		US$2,248
Cost applicable to sales per ton of lead(2)		US$1,310		US$1,621

(1) Incorporates losses for mining dilution and recovery.

(2) Cost applicable to sales per unit of mineral sold is not a measure of financial performance under IFRS and may not be comparable to similarly titled measures of other companies. Cost applicable to sales per ounce of silver, ton of zinc or ton of lead consists of cost applicable to sales for silver, zinc or lead sold, divided by the volume of silver, zinc or lead produced in the specified period. The cost applicable to sales per unit of mineral sold figures disclosed herein are calculated without adjusting for by-product revenue amounts. We consider cost applicable to sales per unit of mineral to be a key measure in managing and evaluating our operating performance. We believe this measure is widely reported in the precious metals industry as a benchmark for performance, but does not have standardized meanings. You should not consider cost applicable to sales per unit of mineral sold as an alternative to cost of sales determined in accordance with IFRS as an indicator of our operating performance. See “Item 5. Operating and Financial Review and Prospects—Buenaventura—G. Reconciliation of Costs Applicable to Sales and Cost Applicable to Sales per Unit Sold” for a reconciliation of Cost applicable to sales per unit sold to Cost of sales, excluding depreciation and amortization.

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Julcani

Julcani is an underground mine that is wholly-owned and operated by us that we acquired in 1953 as our first operating mine. Julcani is located in the province of Angaraes, in the department of Huancavelica, approximately 500 kilometers southeast of Lima at an altitude between 4,200 and 5,000 meters above sea level. There are two routes to access the mine site, both departing from Lima: (1) a first road starting in Lima and continuing to La Oroya followed by Huancayo and Huancavelica for a total distance of 444km; and (2) a second road starting in Lima and continuing to Pisco followed by Huancavelica which is 45kms from the property for a total distance of 499km.

Julcani is a large polymetallic deposit in Central Peru, which principally produces silver that presents mainly as sulpho-salts in many mineralogically complex veins. They are hosted in dacite domes, tuffs, breccias and other tertiary volcanic rocks.

Ore is processed by bulk flotation to obtain a concentrate of silver-lead-copper-gold. The plant has a rated capacity of 585 tons per day. Water for operations in Julcani is obtained from mine drainage (that must be previously treated with lime), from seasonal streams and a small lagoon.

The mining method used in this operation is cut and fill, for which the primary equipment employed are: pneumatic shovels, and locomotives. The mine is currently deepening the mine at level 710 operating with synergistic equipment such as electric shovel, jumbo jet and battery powered locomotives.

Electric power is generated by three hydroelectric plants, Huapa and El Ingenio. We are also connected to the Peruvian national electricity grid.

 As of December 31, 2020, total proven and probable ore reserves were 269,310 tons, with 650.92 grams per ton of silver, 0.21 grams per ton of gold, 1.86% lead and 0.45% copper.

Set forth below are certain unaudited operating data for the periods shown for Julcani, calculated based on 100% of the mine’s production.

	Year Ended December 31,(1)
	2019(2)(3)		2020(2)(3)(4)(5)
Mining Operations:
Ore mined (t)		123,818		71,943
Average gold grade (g/t)		0.09		0.07
Average silver grade (g/t)		681.16		704.98
Average lead grade (%)		0.86		0.63
Average copper grade (%)		0.16		0.18
Production :
Gold (oz.)		150		315
Silver (oz.) (4)		2,609,006		1,676,731
Lead (t)		966		408
Copper (t)		185		127
Recovery rate (silver) (%)		96.22		96.88
Cost applicable to sales per oz. of silver(5)		US$13.49		US$14.27
Cost applicable to sales per ton of lead(5)		US$1,585		US$1,126
Cost applicable to sales per ton of copper(5)		US$4,788		US$1,819

(1) Includes losses due to mining dilution and recovery.

 52 

(2) Includes total Acchilla mine production.

(3) Reflects total recovery percentage of Acchilla ore.

(4) Silver production from 2020, includes 43,742 silver ounces derived from tailings dam retreatment.

(5)   Cost applicable to sales per unit of mineral sold is not a measure of financial performance under IFRS and may not be comparable to similarly titled measures of other companies. Cost applicable to sales per ounce of gold, ounce of silver, ton of lead or ton of copper consists of cost applicable to sales for gold, silver, lead or copper sold, divided by the volume of gold, silver, lead or copper produced in the specified period. The cost applicable to sales per unit of mineral sold figures disclosed herein are calculated without adjusting for by-product revenue amounts. We consider cost applicable to sales per unit of mineral to be a key measure in managing and evaluating our operating performance. We believe this measure is widely reported in the precious metals industry as a benchmark for performance, but does not have standardized meanings. You should not consider cost applicable to sales per unit of mineral sold as an alternative to cost of sales determined in accordance with IFRS as an indicator of our operating performance. See “Item 5. Operating and Financial Review and Prospects—Buenaventura—G. Reconciliation of Costs Applicable to Sales and Cost Applicable to Sales per Unit Sold” for a reconciliation of Cost applicable to sales per unit sold to Cost of sales, excluding depreciation and amortization.  

Tambomayo

Tambomayo is an underground mine that is wholly-owned and operated by us. It is considered an epithermal deposit with quartz veins and mineralization mainly of gold and silver with important contents of lead and zinc. It is located in the province of Caylloma, Arequipa region, at an altitude between 4,550 and 5,000 meters above sea level. There is one route of access to the property through Peru’s Panamericana Highway starting in Lima and going to the city of Arequipa for a total distance of 764 km. Between Arequipa and Tambomayo there is a 300 km road along Cañahuas-Sibayo-Caylloma-Talta Huarahuarco. The site is also accessible through a commercial flight from Lima to Arequipa.

The underground works on the main Mirtha and Paola veins and diamond drilling carried out to date show an economic mineralization that deepens up to approximately 900 meters and it expands over 900 horizontal meters (1,500 horizontal meters as a quartz system), increasing the size of the economic mineralization area to explore. Mining at Tambomayo is conducted underground and utilizes the mechanized bench-and-fill and cut-and-fill methods.

The mining method in Tambomayo’s underground mine is sub level stopping and mechanized bench and fill, this method is used to mine massive ore body (30m between sublevels and 10m stope span). We conduct the ore mining is made while horizontal labor is provided by a service provider. The equipment used for development and exploration includes single-arm jumbos, bolters, scaler and scoop loaders (4-6yd3). The equipment used ins stopes are Simbas (Bolting Cable and Production) and scoops with remote control (6-7yd3). Ore haulage to surface is done with 35 m3 tipper trucks. Ore is taken to the process plant with 35 m3 tipper trucks.

Tambomayo is connected to the Peruvian electricity grid and water for its operations comes from the damming of a stream with seasonal variations in flow.

As of December 31, 2020, total proven and probable ore reserves were 2,338,910 tons, with 126.94 grams per ton of silver, 3.32 grams per ton of gold, 1.00% lead and 1.50% zinc.

 53 

Set forth below are certain unaudited operating data for the periods shown for Tambomayo, calculated based on 100% of the mine’s production.

	Year Ended December 31,(1)
	2019		2020(1)(2)
Mining Operations:
Ore mined (t)		640,914		510,405
Average gold grade (g/t)		5.80		5.10
Average silver grade (g/t)		141.36		123.44
Average lead grade (%)		1.35		1.45
Average zinc grade (%)		1.99		1.92
Production:
Gold (oz.)		99,245		63,477
Silver (oz.)		2,556,391		1,668,582
Lead (t)		7,603		6,550
Zinc (t)		9,672		5,266
Recovery rate (silver) (%)		87.76		82.39
Recovery rate (gold) (%)		83.11		75.80
Cost applicable to sales per oz. of gold(3)		US$679		US$941
Cost applicable to sales per oz. of silver(3)		US$8.92		US$12.85
Cost applicable to sales per ton of lead(3)		US$1,045		US$1,013
Cost applicable to sales per ton of zinc(3)		US$1,876		US$1,774

(1) Includes losses due to mining dilution and recovery.

(2) Includes total Tambomayo mine production.

(3) Cost applicable to sales per unit of mineral sold is not a measure of financial performance under IFRS and may not be comparable to similarly titled measures of other companies. Cost applicable to sales per ounce of gold, ounce of silver, ton of lead or ton of copper consists of cost applicable to sales for gold, silver, lead or copper sold, divided by the volume of gold, silver, lead or copper produced in the specified period. The cost applicable to sales per unit of mineral sold figures disclosed herein are calculated without adjusting for by-product revenue amounts. We consider cost applicable to sales per unit of mineral to be a key measure in managing and evaluating our operating performance. We believe this measure is widely reported in the precious metals industry as a benchmark for performance, but does not have standardized meanings. You should not consider cost applicable to sales per unit of mineral sold as an alternative to cost of sales determined in accordance with IFRS as an indicator of our operating performance. See “Item 5. Operating and Financial Review and Prospects—Buenaventura—G. Reconciliation of Costs Applicable to Sales and Cost Applicable to Sales per Unit Sold” for a reconciliation of Cost applicable to sales per unit sold to Cost of sales, excluding depreciation and amortization.

 54 

La Zanja

The La Zanja mine is located in the district of Pulan, province of Santa Cruz, department of Cajamarca, to 48 kilometers northwest of the Yanacocha gold mine, at an average altitude of 3,500 meters above sea level. Access to the operation site is available through the Panamericana Norte highway from Lima to Cajamarca followed by a departmental road network that leads to Pulán where the mining concession is located. La Zanja is operated by Buenaventura, in which we hold a 53.06% equity interest.

During 2020, the operation focused on the San Pedro Sur and Pampa Verde open pits. Reinterpretation geological exploration was also carried out in projects with resources and reserves. The operation is carried out with outsourced equipment, which includes loading equipment of 2.4 – 4.7 m3 and hauling equipment of 20 - 22 m3. The average material moved is 10ktons per day.

La Zanja is located within a large area of hydrothermal alteration, mainly related to epithermal gold deposits in high sulphidation environments, in addition to some bonanza Au vein epithermal systems, Cu-Au transitional epithermal-porphyry, and breccias pipe Cu-Au-Mo. We have two-ore deposits in production in oxide material: San Pedro Sur and Pampa Verde.

Mining operations are conducted through the open-pit method; the plant utilizes a carbon-in-column circuit as well as a Merrill-Crowe circuit to recover gold from heap leach operations. The gold laden carbon is then transported to Tantahuatay to be processed into doré bars.

In 2020, a total of 16,770 meters of diamond drilling in the Cu-Au exploration project Emperatriz, and the extensions of the corridors Olga and Isabel were confirmed.

Total proven and probable ore reserves as of December 31, 2020 were 5,196,635 tons, with 3.94 grams per ton of silver and 0.39 grams per ton of gold.

Set forth below are certain unaudited operating data for La Zanja, calculated based on 100% of the mine’s production.

	Year Ended December 31,
	2019		2020
Mining Operations:
Ore treated (t)		1,577,645		1,639,008
Average gold grade (g/t)		0.46		0.37
Average silver grade (g/t)		6.73		9.41
Production:
Gold (oz.)		31,500		17,228
Silver (oz.)		97,204		84,641
Cost applicable to sales per oz. of gold(1)		US$1,233		US$1,739
Cost applicable to sales per oz. of silver(1)		US$14.24		US$20.67

(1) Cost applicable to sales per unit of mineral sold is not a measure of financial performance under IFRS and may not be comparable to similarly titled measures of other companies. Cost applicable to sales per ounce of gold or ounce of silver consists of cost applicable to sales for gold or silver sold, divided by the volume of gold or silver produced in the specified period. The cost applicable to sales per unit of mineral sold figures disclosed herein are calculated without adjusting for by-product revenue amounts. We consider cost applicable to sales per unit of mineral to be a key measure in managing and evaluating our operating performance. We believe this measure is widely reported in the precious metals industry as a benchmark for performance, but does not have standardized meanings. You should not consider cost applicable to sales per unit of mineral sold as an alternative to cost of sales determined in accordance with IFRS as an indicator of our operating performance. See “Item 5. Operating and Financial Review and Prospects—Buenaventura—G. Reconciliation of Costs Applicable to Sales and Cost Applicable to Sales per Unit Sold” for a reconciliation of Cost applicable to sales per unit sold to Cost of sales, excluding depreciation and amortization.

 55 

Coimolache

Coimolache is a gold and silver mine located in the district and province of Hualgayoc, in the department of Cajamarca, in northern Peru, at an average altitude of 3,900 meters above sea level. Access to the operation site is available through the Panamericana Norte highway from Lima to Cajamarca followed by a departmental road network that leads to Chugur, where the mining concession is located. Coimolache is operated by Buenaventura, and wholly-owned by Coimolache, in which we hold a 40.095% equity interest.

Geologically, the Coimolache ore deposits are located in a sequence volcano-magmatic hydrothermal, predominant linked to the regional mineralized sector northern of Peru.

Coimolache consists of several areas of epithermal Au-Ag mineralization, contained in oxide material. Below the oxides level of the Cerro Tantahuatay area, there is a significant resource of copper, gold and silver associated to pyrite-enargite-chalcopyrite (sulphides), which are present as disseminations and fracture fillings associated with an epithermal-porphyry transitional zone, breccias bodies multiphases, and porphyry intrusives.

During 2020, the operation was focused on the Tantahuatay 2 and Ciénaga Norte areas. Reinterpretation geological exploration was also performed at projects with resources and reserves. The operation is carried out with outsourced equipment, which includes loading equipment of 5.6 - 3.6 m3 and hauling equipment of 15 - 22 m3. The average material moved is 40ktons per day.

Total proven and probable ore reserves as of December 31, 2020 were 74,616,921 tons, with 7.25 grams per ton of silver and 0.32 grams per ton of gold.

Set forth below are certain unaudited operating data for Coimolache, calculated based on 100% of the mine’s production.

	Year Ended December 31,(1)(2)
	2019		2020
Mining Operations:
Ore treated (t)		13,878,907		12,043,702
Average gold grade (g/t)		0.54		0.43
Average silver grade (g/t)		10.63		15.09
Production:
Gold (oz.)		162,196		106,017
Silver (oz.)		754,306		699,361
Cost applicable to sales per oz. of gold(3)		US$684		US$854
Cost applicable to sales per oz. of silver(3)		US$8.14		US$10.13

(1) Incorporates losses for mining dilution and recovery.

(2) Data reflect mining operations at the Tantahuatay 2 and Ciénaga Norte deposits, as well as GoldField’s stockpile.

(3) Cost applicable to sales per unit of mineral sold is not a measure of financial performance under IFRS and may not be comparable to similarly titled measures of other companies. Cost applicable to sales per ounce of gold or ounce of silver consists of cost applicable to sales for gold or silver sold, divided by the volume of gold or silver produced in the specified period. The cost applicable to sales per unit of mineral sold figures disclosed herein are calculated without adjusting for by-product revenue amounts. We consider cost applicable to sales per unit of mineral to be a key measure in managing and evaluating our operating performance. We believe this measure is widely reported in the precious metals industry as a benchmark for performance, but does not have standardized meanings. You should not consider cost applicable to sales per unit of mineral sold as an alternative to cost of sales determined in accordance with IFRS as an indicator of our operating performance. See “Item 5. Operating and Financial Review and Prospects—Buenaventura—G. Reconciliation of Costs Applicable to Sales and Cost Applicable to Sales per Unit Sold” for a reconciliation of Cost applicable to sales per unit sold to Cost of sales, excluding depreciation and amortization.

Tajo Norte (Colquijirca) and Marcapunta Norte

The Tajo Norte (also known as Colquijirca) and Marcapunta Norte mines are wholly-owned by El Brocal. El Brocal was founded in 1956 and is engaged in the extraction, concentration and sale of concentrates of polymetallic minerals – mainly zinc, copper, lead and silver. Our aggregate direct and indirect equity interest in El Brocal was 61.43% as of December 31, 2020.

 56 

The Tajo Norte and Marcapunta mines are adjacent and are located 285 kilometers east of the city of Lima and 10 kilometers south of the city of Cerro de Pasco. There are three routes of access to the property: (1) Through Peru´s Central Highway starting in Lima and continuing to the city of Colquijirca for a total distance of 240 km, (2) through the Canta - Huaral highway for a total distance of 250 km and (3) a commercial flight from Lima to Jauja followed by travel on the highway from Jauja to Colquijirca for a total distance of 142 km.

El Brocal produces zinc, lead and silver concentrates from the Tajo Norte mine and copper concentrates from the Marcapunta mine. The Colquijirca mine consists of three important polymetallic deposits: (1) Tajo Norte–Smelter, which contains zinc, silver, lead, copper and gold; (2) Marcapunta, which contains an auriferous mineralization in breccia oxides and an arsenic copper enargite mineralization as a continuation of the mineralized mantles of the Marcapunta mine; and (3) San Gregorio, which contains zinc.

In 2020, the ore from both mines were treated in two plants, on an average of 16,147 tons per day. This was during the period when both plants were able to operate normally, in the absence of COVID-19 restrictions.

The Tajo Norte (Colquijirca) and Marcapunta mines primarily rely on a power line connected to the Peruvian national electricity grid.

As in 2019, in 2020, El Brocal continued to focus on optimizing Marcapunta’s mining method, while also seeking the optimization of productivity and production costs, as well as accelerating the conversion of resources to reserves.

The mining method in the Marcapunta mine (Underground) is sub level stoping with long pillars and backfill. This method is used to mine the Copper mantle that has an ore thickness up to 60 m. Mining is made by contactor with its own equipment. The equipment used for development are 2 arm jumbos with 6 yd3 underground loaders. The equipment used for production includes S7 top hammer Simbas with 6 yd3 underground loaders with remote control. Ore haulage to surface is done with 12 m3 15 m3 tipper trucks. Ore is taken to the process plant with 15 m3 and 20 m3 tipper trucks. In 2021, we are planning to use 9 yd3 underground loaders and in the hole hammer. Bench height is also being optimized in new zones from 20 m to 30 m.

Meanwhile, the mining method in Tajo Norte is an open pit. It is a conventional truck and shovel operation, through a contractor. The height of a workbench is 6 m and the equipment used includes DM45 and DML drilling rigs. Loading are by hydraulic excavators EC950E (5.6 m3) and 374D (4.6 m3) and hauling is by G500 B8X4 trucks (24.5 m3). For 2021 we are planning to use 8 excavators and 48 trucks. To maximize mine production, Tajo Norte mine employs a fleet management system that supports the transmission and receipt of data across the mobile fleet, and supports the collection of data which is input directly by equipment operators.

Total proven and probable reserves of Tajo Norte - Smelter (Colquijirca), in the case of the Zinc-Lead-Silver zone, as of December 31, 2020 were 9,840,357 tons, with 85.92 grams of silver per ton, 2.15% of zinc, and 1.00% of lead.

Total proven and probable reserves of Tajo Norte - Smelter (Colquijirca), in the case of the Copper-Silver zone, as of December 31, 2020 were 31,759,551 tons, with 24.90 grams of silver per ton, 1.48% of copper, and 0.21 grams of gold.

Total proven and probable reserves of Marcapunta as of December 31, 2020 were 30,529,941 tons with 32.25 grams of silver per ton, 0.67 grams of gold per ton and 1.29% of copper.

 57 

Set forth below are certain unaudited operating data for the Zinc-Lead-Silver zone of Tajo Norte (Colquijirca) mine, calculated based on 100% of the mine’s production.

	Year Ended December 31,(1)
	2019		2020
Mining Operations:
Ore mined (t)		3,407,914		2,782,313
Average silver grade (oz./t)		1.38		1.33
Average zinc grade (%)		2.42		3.54
Average lead grade (%)		1.26		1.17
Production:
Silver (oz.)		2,974,075		2,520,528
Zinc (t)		43,580		54,909
Lead (t)		23,599		20,066
Recovery rate (silver) (%)		63.32		68.02
Recovery rate (zinc) (%)		52.86		55.70
Recovery rate (lead) (%)		55.00		61.55
Cost applicable to sales per ton of zinc(2)		US$2,007		US$1,923

(1) Incorporates losses for mining dilution and recovery.

(2)   Represents cost applicable to sales per ton of zinc for El Brocal. Cost applicable to sales per unit of mineral sold is not a measure of financial performance under IFRS and may not be comparable to similarly titled measures of other companies. Cost applicable to sales per ton of zinc consists of cost applicable to sales for zinc divided by the volume of zinc produced in the specified period. The cost applicable to sales per unit of mineral sold figures disclosed herein are calculated without adjusting for by-product revenue amounts. We consider cost applicable to sales per unit of mineral to be a key measure in managing and evaluating our operating performance. We believe this measure is widely reported in the precious metals industry as a benchmark for performance, but does not have standardized meanings. You should not consider cost applicable to sales per unit of mineral sold as an alternative to cost of sales determined in accordance with IFRS as an indicator of our operating performance. See “Item 5. Operating and Financial Review and Prospects—Buenaventura—G. Reconciliation of Costs Applicable to Sales and Cost Applicable to Sales per Unit Sold” for a reconciliation of Cost applicable to sales per unit sold to Cost of sales, excluding depreciation and amortization.  

Set forth below are certain unaudited operating data for the Copper-Silver zone of Tajo Norte (Colquijirca) mine, calculated based on 100% of the mine’s production.

	Year Ended December 31,(1)
	2019		2020
Mining Operations:
Ore mined (t)		-		91,477
Average silver grade (oz./t)		-		3.80
Average gold grade (gr/t)		-		0.04
Average copper grade (%)		-		1.04
Production:
Silver (oz.)		-		175,556
Gold (oz)		-		36
Copper (t)		-		570
Recovery rate (silver) (%)		-		50.51
Recovery rate (gold) (%)		-		27.41
Recovery rate (copper) (%)		-		59.97
Cost applicable to sales per ton of copper(2)(3)		-		US$5,135

(1) Incorporates losses for mining dilution and recovery.

(2)   Represents cost applicable to sales per ton of zinc for El Brocal. Cost applicable to sales per unit of mineral sold is not a measure of financial performance under IFRS and may not be comparable to similarly titled measures of other companies. Cost applicable to sales per ton of zinc consists of cost applicable to sales for zinc divided by the volume of zinc produced in the specified period. The cost applicable to sales per unit of mineral sold figures disclosed herein are calculated without adjusting for by-product revenue amounts. We consider cost applicable to sales per unit of mineral to be a key measure in managing and evaluating our operating performance. We believe this measure is widely reported in the precious metals industry as a benchmark for performance, but does not have standardized meanings. You should not consider cost applicable to sales per unit of mineral sold as an alternative to cost of sales determined in accordance with IFRS as an indicator of our operating performance. See “Item 5. Operating and Financial Review and Prospects—Buenaventura—G. Reconciliation of Costs Applicable to Sales and Cost Applicable to Sales per Unit Sold” for a reconciliation of Cost applicable to sales per unit sold to Cost of sales, excluding depreciation and amortization.

 58 

Set forth below are certain unaudited operating data for the Marcapunta mine, calculated based on 100% of the mine’s production.

	Year Ended December 31,(1)
	2019		2020
Mining Operations:
Ore mined (t)		2,926,124		1,659,731
Average silver grade (oz./t)		0.77		0.78
Average gold grade (gr/t)		0.54		0.55
Average copper grade (%)		1.67		1.97
Production:
Silver (oz.)		1,392,363		812,501
Gold (oz.)		18,726		11,816
Copper (t)		43,394		30,038
Recovery rate (silver) in copper (%)		62.07		62.98
Recovery rate (gold) in copper (%)		37.03		40.09
Recovery rate copper (%)		88.68		91.83
Cost applicable to sales per ton of copper(2)		US$5,385		US$5,135

(1) Incorporates losses for mining dilution and recovery.

(2) Represents cost applicable to sales per ton of copper for El Brocal. Cost applicable to sales per unit of mineral sold is not a measure of financial performance under IFRS and may not be comparable to similarly titled measures of other companies. Cost applicable to sales per ton of copper consists of cost applicable to sales for copper divided by the volume of copper produced in the specified period. The cost applicable to sales per unit of mineral sold figures disclosed herein are calculated without adjusting for by-product revenue amounts. We consider cost applicable to sales per unit of mineral to be a key measure in managing and evaluating our operating performance. We believe this measure is widely reported in the precious metals industry as a benchmark for performance, but does not have standardized meanings. You should not consider cost applicable to sales per unit of mineral sold as an alternative to cost of sales determined in accordance with IFRS as an indicator of our operating performance. See “Item 5. Operating and Financial Review and Prospects—Buenaventura—G. Reconciliation of Costs Applicable to Sales and Cost Applicable to Sales per Unit Sold” for a reconciliation of Cost applicable to sales per unit sold to Cost of sales, excluding depreciation and amortization.

Reserves

We calculate our ore reserves by methods generally applied within the mining industry and in accordance with SEC Industry Guide 7. All mineral reserves are estimates of proven and probable ore quantities that under present conditions may be economically mined and processed.

We continue to report our reserves in accordance with the SEC’s Industry Guide 7, and we have currently engaged all necessary parties in order to transition to the new SEC rules governing disclosures on mining properties (Regulation S-K, Subpart 1300), including reporting of reserves and resources within the period required by the SEC (currently expected to be in respect of our annual report on Form 20-F for the fiscal year ending December 31, 2021). The new SEC rules align SEC disclosure requirements more closely with global regulatory practices and standards, as embodied in standards developed by the Committee for Mineral Reserves International Reporting Standards.

The proven and probable ore reserve figures presented in this Annual Report are estimates, and no assurance can be given that the level of recovery of gold, silver and certain other metals will be realized. See “Item 3. Key Information—D. Risk Factors—Factors Relating to the Company—Estimates of proven and probable reserves are subject to uncertainties and the volume and grade of ore actually recovered may vary from our estimates.”

The term “reserves” refers to mineral deposits that could be economically and legally extracted or produced at the time of reserve determination. The term “proven reserves” means ore reserves for which (a) quantity is computed from dimensions revealed in outcrops, trenches, workings or drill holes, and grade and/or quality are computed from the results of detailed sampling, and (b) the sites for inspection, sampling and measurement are spaced so closely and the geologic character is so well defined that size, shape, depth and mineral content of reserves are well established. The term “probable reserves” means ore reserves for which quantity and grade and/or quality are computed from information similar to that used for proven reserves, but the sites for inspection, sampling and measurement are farther apart or are otherwise less adequately spaced. The degree of assurance, although lower than that for proven reserves, is high enough to assume continuity between points of observation.

As of December 31, 2020, our total proven and probable gold reserves, including our equity share in the proven and probable reserves of El Brocal (61.43%), La Zanja (53.06%), Coimolache (40.10%) and Yanacocha (43.65%), were estimated to be 5.90 million ounces of gold, representing a 2% decrease compared to our total proven and probable reserves as of December 31, 2019, which were estimated to be 6.06 million ounces of gold.

 59 

Gold Reserves:

	Company’s Equity (in %)		Total Ounces (in thousands)		Total ounces attributable to the Company based on equity participation (in thousands)
Orcopampa		100.00		140		140
Julcani		100.00		2		2
Tambomayo		100.00		249		249
La Zanja		53.06		65		34
Coimolache (Oxides)		40.10		774		310
El Brocal Marcapunta		61.43		655		402
El Brocal (Tajo Norte Smelter – Cu – Ag)		61.43		211		130
Yanacocha		43.65		6,627		2,893
San Gabriel		100.00		1,741		1,741
Total Gold Reserves				10,463		5,903

As of December 31, 2020, our total proven and probable silver reserves, including our equity share in El Brocal (61.43%), La Zanja (53.06%), Coimolache (Tantahuatay) (40.10%), Yanacocha (43.65%) and Cerro Verde (19.58%) were estimated to be 214.81 million ounces of silver, representing a 12% decrease over our total proven and probable reserves as of December 31, 2019, which were estimated to be 244.21 million ounces of silver. 

Silver Reserves:

	Company’s Equity (in %)		Total Ounces (in thousands)		Total ounces attributable to the Company based on equity participation (in thousands)
Uchucchacua		100.00		73,662		73,662
Julcani		100.00		5,636		5,636
Orcopampa		100.00		260		260
Tambomayo		100.00		9,546		9,546
La Zanja		53.06		659		350
Coimolache Oxides		40.10		17,385		6,970
El Brocal (Tajo Norte – Smelter-Cu-Ag)		61.43		25,352		15,574
El Brocal (Tajo Norte – Smelter-Zn-Pb-Ag)		61.43		27,169		16,690
El Brocal Marcapunta		61.43		31,651		19,443
Yanacocha		43.65		96,554		42,146
Cerro Verde (Millable)		19.58		111,370		21,806
San Gabriel		100.00		2,724		2,724
Total Silver Reserves				401,968		214,807

As of December 31, 2020, our total proven and probable copper reserves, including our equity share in Julcani (100.0%), El Brocal (61.43%), Trapiche (100.0%), Yanacocha (43.65%) and Cerro Verde (19.58%) were estimated to be 4.78 million metric tons of cooper, representing a 1% decrease compared to our total proven and probable reserves as of December 31, 2019, which were estimated to be 4.84 million metric tons of copper.

 60 

Copper Reserves:

	Company’s Equity (in %)		Total Metric Tons (in thousands)		Metric Tons attributable to the Company based on equity participation (in thousands)
Julcani		100.00		1		1
El Brocal Marcapunta		61.43		393		241
El Brocal (Tajo Norte – Smelter –Cu-Ag)		61.43		469		288
San Gabriel		100.00		7		7
Trapiche		100.00		1,444		1,444
Yanacocha		43.65		697		304
Cerro Verde (Millable)		19.58		12,572		2,462
Cerro Verde (Leachable)		19.58		148		29
Total Copper Reserves				15,731		4,777

As of December 31, 2020, our total proven and probable molybdenum reserves, including our equity share in Cerro Verde (19.58%) were estimated to be 61 thousand million metric tons of molybdenum, representing a 2% decrease over our total proven and probable reserves as of December 31, 2019, which were estimated to be 62 thousand million metric tons of molybdenum.

Molybdenum Reserves:

	Company’s Equity (in %)		Total Metric Tons (in thousands)		Metric Tons attributable to the Company based on equity participation (in thousands)
Cerro Verde		19.58		312		61
Total Molybdenum Reserves				312		61

The following table lists 100% of proven and probable ore reserves, as of December 31, 2020, for each of our consolidated mining operations and the Coimolache mine, in which we have a 40.10% equity interest. The reserves shown in the table below are the total reserves for each mine and do not reflect our equity share of reserves in non-wholly-owned mines.

	Proven Ore Reserves as of December 31, 2020 (1) (2) (3) (4) (5) (6)
	Orcopampa		Uchucchacua		Julcani		Tambomayo		La Zanja		Coimolache		Tajo Norte (Zn-Pb-Ag)		Tajo Norte (Cu-Ag)		Marcapunta		Total/Average
Ore Reserves (t)		202,409		2,681,054		168,899		1,206,338		3,073,204		58,573,288		4,110,314		11,049,159		11,087,315		92,151,981
Grade:
Gold (g/t)		10.44				0.29		3.52		0.38		0.33				0.24		0.63		0.40
Silver (g/t)		19.80		274.78		650.68		156.44		4.31		6.37		88.96		22.39		28.07		25.50
Copper (%)						0.48										1.43		1.28		0.33
Zinc (%)				1.93				1.40						2.09						0.17
Lead (%)				1.15		1.97		0.97						1.03						0.10
Content:
Gold (oz.)		67,926				1,442		136,488		37,178		614,820				84,906		224,798		1,167,558
Silver (oz.)		128,866		23,685,202		3,532,716		6,067,303		426,337		11,992,795		11,755,498		7,955,394		10,005,846		75,549,958
Copper (t)						802										158,446		141,960		301,208
Zinc (t)				51,731				16,901						85,906						154,537
Lead (t)				30,875		3,328		11,719						42,336						88,259

 61 

	Probable Ore Reserves as of December 31, 2020 (1) (2) (3) (4) (5) (6)
	Orcopampa		Uchucchacua		Julcani		Tambomayo		La Zanja		Coimolache		Tajo Norte (Zn-Pb-Ag)		Tajo Norte (Cu-Ag)		Marcapunta		Total/Average
Ore Reserves (t)		266,529		4,935,793		100,411		1,132,572		2,123,430		16,043,633		5,730,043		20,710,392		19,442,625		70,485,430
Grade:
Gold (g/t)		8.45				0.14		3.10		0.40		0.31				0.19		0.69		0.41
Silver (g/t)		15.29		314.93		651.62		95.53		3.41		10.45		83.67		26.13		34.63		51.09
Copper (%)						0.40										1.50		1.29		0.80
Zinc (%)				1.93				1.60						2.19						0.34
Lead (%)				1.09		1.67		1.04						0.97						0.17
Content:
Gold (oz.)		72,451				356		112,939		27,418		159,349				125,487		429,725		928,085
Silver (oz.)		130,995		49,976,776		2,103,269		3,478,499		232,755		5,391,879		15,413,817		17,396,730		21,645,015		115,769,734
Copper (t)						402										310,656		250,991		562,050
Zinc (t)				95,215				18,160						125,488						238,862
Lead (t)				53,971		1,673		11,743						55,581						122,968

	Proven & Probable Ore Reserves as of December 31, 2020 (1) (2) (3) (4) (5) (6)
	Orcopampa		Uchucchacua		Julcani		Tambomayo		La Zanja		Coimolache		Tajo Norte (Zn-Pb-Ag)		Tajo Norte (Cu-Ag)		Marcapunta		Total/Average
Ore Reserves (t)		468,938		7,616,847		269,310		2,338,910		5,196,635		74,616,921		9,840,357		31,759,551		30,529,940		163,213,911
Grade:
Gold (g/t)		9.31				0.23		3.32		0.39		0.33				0.21		0.67		0.36
Silver (g/t)		17.11		300.80		651.03		126.90		3.94		7.25		85.88		24.83		32.25		36.48
Copper (%)						0.45										1.48		1.29		0.53
Zinc (%)				1.93				1.50						2.15						0.24
Lead (%)				1.11		1.86		1.00						1.00						0.13
Content:
Gold (oz.)		140,376				1,799		249,427		64,596		774,169				210,752		654,523		2,095,643
Silver (oz.)		259,861		73,661,978		5,635,985		9,545,803		659,092		17,384,674		27,169,315		25,352,124		31,650,860		190,660,600
Copper (t)						1,205										469,102		392,951		863,258
Zinc (t)				146,946				35,060						211,394						393,400
Lead (t)				84,846		5,001		23,462						97,917						211,226

(1)	The amounts in this table reflect the reserves of all of our consolidated subsidiaries, including El Brocal and La Zanja, in each case of December 31, 2020. As of December 31, 2020, SRK Consulting Perú S.A., an independent consultant, audited the process used to estimate proven and probable ore reserves for Uchucchacua, Tambomayo, Orcopampa, El Brocal, Tantahuatay and La Zanja. Geominería S.A.C., an independent consultant, audited the process used to estimate proven and probable ore reserves for Julcani
(2)	For the year ended December 31, 2020, reserves for our wholly owned and subsidiary mines were calculated using the following prices: US$1,600 per ounce of gold, US$ 20.00 per ounce of silver, US$ 2,300 per metric ton of zinc, US$1,900 per metric ton of lead and US$ 6,500 per metric ton of copper.
(3)	Variable metallurgical recovery assumptions (as a function of grade and relative metal distribution in individual concentrates).
(4)	Commercial terms based on historical data.
(5)	Variable cut-offs estimated by mining method and mining area and based on historical data and costs.
(6)	Variable modifying factors (dilution and mining recoveries) based on ground conditions and proposed mining method.

 62 

Yanacocha’s Properties

Operating Properties

For operating data (including ore mined, average gold grade of ore mined and gold production) for each of Yanacocha’s operating properties and a description of how ore is processed and the source of electricity and water for each of Yanacocha’s operating properties, see “—Yanacocha— B. Business Overview—Description of Yanacocha’s Operations.”

Yanacocha is located approximately 375 miles (604 kilometers) north of Lima and 30 miles (48 kilometers) north of the city of Cajamarca and is primarily accessible by paved roads. The Yanacocha property began production in 1993 and consists of the following open pit mines: the La Quinua Complex, the Yanacocha Complex, the Carachugo Complex and Maqui Maqui. In addition, Yanacocha 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)

Yanacocha’s mining activities encompass 246,169 acres (99,621 hectares) that are covered by 160 mining concessions. MYSRL holds the mining rights related to 53,956 acres (21,835 hectares), covered by 50 concessions. Chaupiloma holds the mining rights to the remaining acres and concessions and has assigned these mining concessions to Yanacocha. Each concession has an initial term of 17 to 30 years, which are renewable at Yanacocha’s request for an additional 17 to 20 year term.

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 2021.The Yanacocha Complex mines material from the Yanacocha Layback and Yanacocha Pinos, which are scheduled to finish mining operations in 2021. 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 leach pad processes oxide material from the Quecher Main project, which is a new open pit within the existing footprint of Yanacocha which began operating in October 2019. This project will add oxide production at Yanacocha and will extend the life of the Yanacocha operation to 2027. During 2020, the ounce production of the project was 55,000 ounces.

Yanacocha has three processing concessions from Peru’s MEM for its processing facilities: Cerro Yanacocha (La Quinua and Yanacocha leach pads, La Quinua and Yanacocha Norte gold recovery plants and Yanacocha Gold Mill), Yanacocha (Carachugo and Maqui Maqui leach pads and Pampa Larga gold recovery plant) and China Linda (non-metallic processing concessions). 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. The Yanacocha Gold Mill processes high-grade gold ore to produce a gold-bearing solution for treatment at the La Quinua processing plant. The Yanacocha Gold Mill processes between 5.5 and 6.0 million tons per year, however, during 2020, the tons processed were substantially lower given the COVID-19 restrictions and also given that the plant is reaching the end of its useful life in 2021.

Yanacocha is an epithermal type deposit of high sulfidation hosted in volcanic rock formations. Gold is associated with iron-oxides and pyrite. Material is evaluated for gold grade and cyanide solubility and then placed on leach pads or in stockpiles for processing through the Yanacocha Gold Mill accordingly. Yanacocha’s available mining fleet consists of two shovels, four excavators, two loaders and 31 233-ton haul trucks.

Brownfield exploration and development for new reserves is ongoing and we continue to evaluate the potential for mining sulfide gold and copper mineralization.

Power is supplied to the operation by Engie Energia Peru SA.

Yanacocha’s gross property, plant and mine development at December 31, 2020 was $4,685. Yanacocha produced 340,052 ounces of gold (148,433 attributable ounces of gold) in 2020 and reported 2.9 million attributable ounces of gold reserves and 669.60 million attributable pounds of copper reserves at December 31, 2020. 

Yanacocha also owns the Conga project, which is located approximately 16 miles (25 kilometers) northeast of Yanacocha and is currently in care and maintenance. Due to uncertainty surrounding the project and political risks related to the project’s development, the Company has allocated its exploration and development capital to other projects in recent years. Should the Company be unable to develop the Conga project, the Company may have to consider other alternatives for the project, which may result in a future impairment charge for the project.

 63 

Reserves

 Proven and probable reserves are based on extensive drilling, sampling, mine modeling and metallurgical testing from which economic feasibility is determined. Under the Management Contract, Newmont Mining, in conjunction with Yanacocha, calculates Yanacocha’s reserves by methods generally applied within the mining industry and in accordance with SEC Industry Guide 7. Reserves represent estimated quantities of proven and probable ore that under present and anticipated conditions may be economically mined and processed.

As of December 31, 2020, Yanacocha’s total proven and probable reserves (excluding the Conga project, the reserves for which were reclassified as resources or NRM as of December 31, 2015) were estimated to be 6.6 million ounces of gold, representing an 4% decrease over Yanacocha’s total proven and probable reserves as of December 31, 2019, which were estimated to be 6.9 million ounces of gold.

The following tables detail proven and probable gold reserves for Yanacocha as of December 31, 2020 and 2019:

Gold Reserves as of December 31, 2020 (1)(2)(3)
	Proven Reserves						Probable Reserves						Proven and Probable Reserves
Deposits/Districts	Tonnage (in thousand metric tons)		Grade (gr/ton)		Ounces (in thousands)		Tonnage (in thousand metric tons)		Grade (gr/ton)		Ounces (in thousands)		Tonnage (in thousand metric tons)		Grade (gr/ton)		Ounces (in thousands)		Metallurgical Recovery
Total Yanacocha(2)		11,215		0.64		230		187,396		1.06		6,397		198,611		1.04		6,627		71	%
Attributable to BVN (3)		4,896		0.64		100		81,798		1.06		2,792		86,694		1.04		2,893		71	%

Gold Reserves as of December 31, 2019 (1)(2)(3)
	Proven Reserves						Probable Reserves						Proven and Probable Reserves
Deposits/Districts	Tonnage (in thousand metric tons)		Grade (gr/ton)		Ounces (in thousands)		Tonnage (in thousand metric tons)		Grade (gr/ton)		Ounces (in thousands)		Tonnage (in thousand metric tons)		Grade (gr/ton)		Ounces (in thousands)		Metallurgical Recovery
Total Yanacocha(2)		22,172		0.72		512		199,662		1.00		6,426		221,834		0.97		6,938		76	%
Attributable to BVN (3)		9,678		0.72		223		87,152		1.00		2,805		96,831		0.97		3,028		76	%

(1) Proven and probable reserves, as of December 31, 2020 and 2019 reserves were calculated at an estimated gold price of $1,200 per ounce and $1,200 per ounce, respectively, unless otherwise noted.

(2) The reserves shown for Yanacocha are the total reserves of the mine and do not indicate our equity share.

(3) Based on BVN’s 43.65% equity participation in Yanacocha.

The following table provides grade and content information for the Yanacocha copper reserves as of December 31, 2020 and 2019:

Copper Reserves as of December 31, 2020 (1)(2)(3)
	Proven Reserves						Probable Reserves						Proven and Probable Reserves
Deposits/Districts	Tonnage (in thousand metric tons)		Grade (%)		Lbs. (in millions)		Tonnage (in thousand metric tons)		Grade (%)		Lbs. (in millions)		Tonnage (in thousand metric tons)		Grade (%)		Lbs. (in millions)		Metallurgical Recovery
Total Yanacocha (2)		-		-		-		112,404		0.62		1,530		112,404		0.62		1,534		83	%
Attributable to BVN (3)		-		-		-		49,065		0.62		668		49,065		0.62		670		83	%

Copper Reserves as of December 31, 2019 (1)(2)(3)
	Proven Reserves						Probable Reserves						Proven and Probable Reserves
Deposits/Districts	Tonnage (in thousand metric tons)		Grade (%)		Lbs. (in millions)		Tonnage (in thousand metric tons)		Grade (%)		Lbs. (in millions)		Tonnage (in thousand metric tons)		Grade (%)		Lbs. (in millions)		Metallurgical Recovery
Total Yanacocha (2)		-		-		-		104,388		0.63		1,455		104,388		0.63		1,455		83	%
Attributable to BVN (3)		-		-		-		20,439		0.63		635		20,439		0.63		635		83	%

(1) Proven and probable reserves, as of December 31, 2020 and 2019 were calculated at an estimated copper price of $2.75 per pound.

(2) The reserves shown for Yanacocha are the total reserves of the mine and do not indicate our equity share.

(3) Based on BVN’s 43.65% equity participation in Yanacocha

 64 

Cerro Verde’s Properties 

Reserves

The following tables provide grade and content information for the Cerro Verde copper, silver and molybdenum reserves as of December 31, 2020 and 2019:

Copper Reserves as of December 31, 2020(1)(2)(3)
	Proven Reserves						Probable Reserves						Proven and Probable Reserves
Deposits/Districts	Tonnage (in million metric tons)		Grade (%)		Lbs. (in millions)		Tonnage (in million metric tons)		Grade (%)		Lbs. (in millions)		Tonnage (in million metric tons)		Grade (%)		Lbs. (in millions)		Metallurgical Recovery
Total Cerro Verde(2)		750		0.38		5,342		3,327		0.36		22,701		4,077		0.36		28,043		86.2	%
Attributable to BVN (3)		147		0.38		1,046		651		0.36		4,445		798		0.36		5,491		86.2	%

Copper Reserves as of December 31, 2019(1)(2)(3)
	Proven Reserves						Probable Reserves						Proven and Probable Reserves
Deposits/Districts	Tonnage (in million metric tons)		Grade (%)		Lbs. (in millions)		Tonnage (in million metric tons)		Grade (%)		Lbs. (in millions)		Tonnage (in million metric tons)		Grade (%)		Lbs. (in millions)		Metallurgical Recovery
Total Cerro Verde(2)		874		0.37		6,083		3,391		0.35		22,581		4,265		0.35		28,664		85.9	%
Attributable to BVN (3)		171		0.37		1,191		664		0.35		4,421		835		0.35		5,612		85.9	%

(1) Proven and probable reserves, as of December 31, 2020 and 2019 were calculated at an estimated copper price of $2.50 per pound respectively.

(2) The reserves shown for Cerro Verde are the total reserves of the mine and do not indicate our equity share.

(3) Based on BVN’s 19.58% equity participation in Cerro Verde.

Silver Reserves as of December 31, 2020 (1)(2)(3)
	Proven Reserves						Probable Reserves						Proven and Probable Reserves
Deposits/Districts	Tonnage (in million metric tons)		Grade (g/t)		Ounces (in millions)		Tonnage (in million metric tons)		Grade (g/t)		Ounces (in millions)		Tonnage (in million metric tons)		Grade (g/t)		Ounces (in millions)		Metallurgical Recovery
Total Cerro Verde(2)		701		2.02		20		3,302		1.91		91		4,002		1.93		111		44.9	%
Attributable to BVN (3)		137		2.02		4		646		1.91		18		784		1.93		22		44.9	%

Silver Reserves as of December 31, 2019 (1)(2)(3)
	Proven Reserves						Probable Reserves						Proven and Probable Reserves
Deposits/Districts	Tonnage (in million metric tons)		Grade (g/t)		Ounces (in millions)		Tonnage (in million metric tons)		Grade (g/t)		Ounces (in millions)		Tonnage (in million metric tons)		Grade (g/t)		Ounces (in millions)		Metallurgical Recovery
Total Cerro Verde(2)		809		1.97		23		3,361		1.87		90		4,170		1.89		113		44.7	%
Attributable to BVN (3)		158		1.97		5		658		1.87		18		816		1.89		22		44.7	%

(1) Proven and probable reserves, as of December 31, 2020 and 2019 were calculated at an estimated silver price of $15 per ounce respectively.

(2) The reserves shown for Cerro Verde are the total reserves of the mine and do not indicate our equity share.

(3) Based on BVN’s 19.58% equity participation in Cerro Verde.

 65 

Molybdenum Reserves as of December 31, 2020 (1)(2)(3)
	Proven Reserves						Probable Reserves						Proven and Probable Reserves
Deposits/Districts	Tonnage (in million metric tons)		Grade (%)		Lbs. (in millions)		Tonnage (in million metric tons)		Grade (%)		Lbs. (in millions)		Tonnage (in million metric tons)		Grade (%)		Lbs. (in millions)		Metallurgical Recovery
Total Cerro Verde(2)		701		0.02		140		3,302		0.01		548		4,002		0.01		689		54.4	%
Attributable to BVN (3)		137		0.02		27		646		0.01		107		784		0.01		135		54.4	%

Molybdenum Reserves as of December 31, 2019 (1)(2)(3)
	Proven Reserves						Probable Reserves						Proven and Probable Reserves
Deposits/Districts	Tonnage (in million metric tons)		Grade (%)		Lbs. (in millions)		Tonnage (in million metric tons)		Grade (%)		Lbs. (in millions)		Tonnage (in million metric tons)		Grade (%)		Lbs. (in millions)		Metallurgical Recovery
Total Cerro Verde(2)		809		0.02		153		3,361		0.01		545		4,170		0.01		699		54.3	%
Attributable to BVN (3)		158		0.02		30		658		0.01		107		816		0.01		137		54.3	%

(1) Proven and probable reserves, as of December 31, 2020 and 2019 were calculated at an estimated molybdenum price of $10 per pound respectively.

(2) The reserves shown for Cerro Verde are the total reserves of the mine and do not indicate our equity share.

(3) Based on BVN’s 19.58% equity participation in Cerro Verde.

ITEM 4A. Unresolved Staff Comments

None.

ITEM 5. Operating and Financial Review and Prospects

In this Item 5, we present information first with respect to Buenaventura, followed by information with respect to Yanacocha, in which we have a 43.65% partnership interest, followed by information with respect to Cerro Verde, in which we have a 19.58% equity interest. We record our investments in Yanacocha and Cerro Verde in accordance with the equity method as further described in “Item 5. Operating and Financial Review and Prospects—Buenaventura—A. Operating Results—General” and Note 2.4(f) to the Consolidated Financial Statements

BUENAVENTURA

Introduction

The following discussion should be read in conjunction with the Consolidated Financial Statements as of December 31, 2019 and 2020 and for the years ended December 31, 2018, 2019 and 2020 and the related Notes thereto included elsewhere in this Annual Report, and (ii) Item 5 to our annual report for the year ended December 31, 2019 (the “2019 20-F”). The Consolidated Financial Statements are prepared and presented in accordance with IFRS as issued by the IASB. We present our consolidated financial statements in U.S. Dollars.

A. Operating Results

General

Overview. We were established in 1953 and are one of Peru’s leading producers of gold, silver and other metals. Our consolidated financial statements comprise all of our accounts and those of our subsidiaries, which include:

• the Julcani, Tambomayo, Uchucchacua and Orcopampa mining units;

• the Colquijirca, Marcapunta and La Zanja mines, which are owned by our non-wholly-owned consolidated subsidiaries;

• Chaupiloma, which receives a royalty payment from Yanacocha;

• Condesa, which is mainly a holding company for internal investments and investments in Yanacocha and other affiliated mining companies;

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• Conenhua, which is mainly engaged in the transmission of electric power to Yanacocha and other mining companies;

• other minor subsidiaries; and

• discontinued operations.

We also have material equity investments in (i) Yanacocha, which is an equity investee engaged in the exploitation and commercialization of gold, (ii) Cerro Verde, which is an equity investee engaged in the exploitation and commercialization of copper and (iii) Coimolache, which is an equity investee engaged in the exploitation and commercialization of gold and silver. We account for these investments under the equity method.

Yanacocha. Historically, a substantial part of our net loss before income tax was derived from our equity interest in Yanacocha. As of December 31, 2020, we had a 43.65% equity participation in Yanacocha, through our wholly-owned subsidiary, Condesa. Our partnership interest in Yanacocha is accounted for under the equity method and is included under the caption “Investment in associates” on our consolidated statements of financial position. Although Yanacocha has no fixed dividend policy, there is an understanding among the partners that the net income not required for sustaining capital expenditures or future development projects should be distributed after agreement between the three major shareholders, Newmont Mining, Sumitomo and Buenaventura.

Cerro Verde. As of December 31, 2020, we had a 19.58% equity participation in Cerro Verde, which allows us to exercise significant influence over this company. As a result, we account for our investment in Cerro Verde using the equity method. Although Cerro Verde has no fixed dividend policy, there is an understanding that earnings not required for capital expenditures or future development projects are expected to be distributed.

Results of operations. The primary factors affecting our results of operations are:

• the amount of gold, silver, zinc and copper produced and sold;

• prevailing world market prices for gold, silver, zinc and copper;

• commercial terms with respect to the sale of ore concentrates; and

• our operating expenses.

Gold and silver price hedging. Our revenues and earnings are strongly influenced by world market prices for gold, silver, zinc and copper that fluctuate widely and over which we have no control. Depending upon the metal markets and other conditions, we may from time to time hedge our gold and silver sales to decrease our exposure to fluctuations in the prices of these metals. We and our wholly-owned subsidiaries are currently completely unhedged as to the price at which our gold and silver will be sold. As a result, we are fully exposed to the effects of changes in prevailing market prices of gold and silver.

Operating costs and expenses. Operating costs and expenses consist of:

• operating costs, which are direct production costs, the major component of operating expenses;

• exploration costs in operational mining sites;

• depreciation and amortization expenses;

• exploration costs in non-operational mining areas;

• administrative expenses, which principally consist of personnel expenses;

• royalties, which consist of payments to third parties and the Peruvian government to operate leased mining rights; and

• selling expenses, which principally consist of freight expenses.

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Reserves. We utilize geological mapping, projection of ore-bearing structures, diamond drilling, core logging and chemical assaying, in addition to drifting along previously indicated mineralization, to replace and grow reserves. In addition, we use metallurgical test-work of core and bulk samples as a follow-up activity to prove the amenability of any previously indicated mineralization to certain extraction methods available on site. We continuously analyze this information with respect to tonnage, precious-metals average grades, metallurgical recoveries and economic value and allocate funds preferentially to those projects that have the best potential to sustain or enhance profitable mine production in the near-term. Our mining operations are primarily conducted underground and consist of deposits that are difficult to explore and measure in advance of mining and in which the value or prospects for ore based on geologic evidence exceeds the value based on proved reserves throughout most of the life of mines supported by them, or extramensurate deposits.

In addition, underground mine infrastructure, such as declines, shafts and/or dewatering/ore haulage crosscuts, that facilitate access to ore reserves are constructed and categorized as mine development. We consider such underground mine infrastructure vital to assure sustainable mine production and reserve production. The design, construction and implementation of our underground mine infrastructure are presented and supervised by our operations manager with the Board of Directors’ (the “Board”) approval. We capitalize mine development and mineral land costs incurred after we have approved the feasibility of the conceptual study of a project. Upon commencement of production, we amortize these costs over the expected life of the mining area, based on proven and probable reserves and other factors.

Our other mining operations are smaller and have variable fluctuations in production and reserves due to complexities of the ore located in certain mining operations (such as the Colquijirca mine); the sale of certain mining operations; partial and temporary closures of mining operations; and the production of silver only as by-product of gold (such as the Orcopampa mine).

Net income and net distributable income. Under Peruvian law, each company is required to establish a legal reserve equal to at least 20% of its paid-in capital on an unconsolidated basis. An annual contribution of at least 10% of net income must be made until such legal reserve equals 20% of paid-in capital. The legal reserve may offset losses or be capitalized. However, following any instance in which the reserve is used, Peruvian law calls for mandatory replenishment of the reserve.

Royalties. Royalty expenses consist mainly of payments made by us pursuant to lease agreements relating to mining rights for the Orcopampa mine. Specifically, we pay the lessor a royalty of 10% of the value of the concentrates produced. We are also required to pay the Peruvian government mining royalties and taxes. In addition to mining royalties, pursuant to Law No. 29789, effective October 1, 2011, mining operations in Peru are subject to an extraordinary mining tax. See “Item 4. Information on the Company—Buenaventura—B. Business Overview—Regulatory Framework—Mining Royalties and Taxes.”

Environmental protection laws and related regulations. Our business is subject to Peruvian laws and regulations relating to the exploration and mining of mineral properties, as well as the possible effects of such activities on the environment. We conduct our operations substantially in accordance with such laws and regulations.

Discontinued operations. During 2016, we decided to change the classification of three mining units (Poracota, Recuperada and Shila-Paula) that had been mining units held for sale and began the final closing process for these mines. As a result, income, costs and expenses related to this mining unit were classified as discontinued operations for the years 2016, 2015 and 2014. In December 2016, we sold the Antapite mining unit and we started the final closing process for the Breapampa mining unit. During 2017, we sold the Breapampa and Recuperada mining units. During 2020, we sold Mallay mining unit classified as discontinued during 2019. See Note 1(e) and Note 2.4(w) to the Consolidated Financial Statements.

SUNAT litigation. Buenaventura is involved in legal proceedings against SUNAT in connection with SUNAT’s refusal to recognize Buenaventura’s deductions in respect to contracts for physical deliveries and certain contractual payments made by the Company during the years 2007 and 2008, as well as tax loss which was offset in 2009 and 2010.

During 2007 and 2008, Buenaventura modified its gold client contracts, shifting from a fixed price arrangement to a variable price arrangement which allowed the Company to appropriately benefit from improved market prices. This change incurred significant expenses for Buenaventura during the 2007-2008 two-year transition period, which also impacted the income tax payable by Buenaventura for said fiscal years. However, the modified pricing structure also favorably impacted Buenaventura’s financial results with a corresponding increase in Buenaventura’s income tax payment to SUNAT.  

SUNAT’s position is that Buenaventura should disregard the additional expenses incurred in connection with the shift to variable price arrangement for purposes of calculating its income tax for fiscal years 2007 and 2008. According to SUNAT, said payments correspond to an early settlement of financial derivative contracts in situations where the Company did not establish the purpose or risks covered by such instruments. Additionally, SUNAT does not recognize the tax losses which the Company offset during fiscal years 2009 and 2010, related to the losses incurred during fiscal years 2007 and 2008.  

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The claim for the years 2007, 2008, 2009 and 2010 initially amounted to 373.3 million soles (approximately US$103.7 million) which, according to SUNAT’s estimations, amounted to 2,107.5 million soles (approximately US$585.4 million) including penalties and accrued interest as of the date of commencement of the collection proceedings.  

On November 26, 2020, following the intervening tax court’s decision to dismiss the Company’s appeal against certain Administrative Resolutions issued by SUNAT in connection with the above-referenced matter, SUNAT began collection proceedings in respect of such amounts. Following the commencement of such collection proceedings by SUNAT, the Company filed a request for deferral and payment plan of the amounts claimed by SUNAT in order to make such tax payments over a 67 month term, in addition to making interest payments in connection with such payments. The requested payment plan consists of an initial payment in an amount equal to 14% of the amount claimed by SUNAT and 66 equal installments for the remaining amounts. In order to finalize the deferral and payment agreement with SUNAT, the Company was required to deliver Letters of Credit (as described below under “—Issuance of letters of credit and default under our Syndicated Term Loan”) in an amount equal to the aggregate claimed amount in accordance with applicable law. To satisfy this requirement, on December 30, 2020, the Company entered into the Syndicated L/C Agreement with a group of financial entities, as described below and following delivery of the Letters of Credit, SUNAT approved the Company’s payment plan.

We will continue to pursue appeals on this matter in Peruvian courts.

Issuance of letters of credit and default under our Syndicated Term Loan. As set forth above, following the commencement of collection proceedings by SUNAT the Company, on December 30, 2020, the Company entered into the Syndicated L/C Agreement with a group of financial entities in order to satisfy the requirements under applicable law for the approval of the Company’s request for deferral and fractioning of claims.

As a result of the commencement of the collection proceedings, the incurrence of debt under the Syndicated L/C Agreement and the granting of certain liens described, the Company defaulted under its Syndicated Term Loan. As such, prior to the execution of the Syndicated L/C Agreement, on December 29, 2020, Buenaventura entered into the Forbearance Agreement with a majority of the lenders and the administrative agent under the Syndicated Term Loan, pursuant to which such creditors agreed, among other matters, not to exercise any acceleration rights under the Syndicated Term Loan in connection with any potential non-compliance with the incurrence of debt, negative pledge, consolidated interest coverage ratio or consolidated net leverage ratio as a result of our incurrence of debt (and the granting of certain collateral) pursuant to the Syndicated Letters of Credit, through April 28, 2021.

Additionally, as a requirement to the execution of the Syndicated L/C Agreement and the Forbearance Agreement, the lenders party to such agreements required Buenaventura to (1) enter into a temporary intercreditor agreement (Acuerdo Transitorio entre Acreedores) (the “Temporary Intercreditor Agreement”) which regulates the relationship between the letter of credit providers under the Syndicated L/C Agreement, a majority of the lenders and the administrative agent under the Syndicated Term Loan, certain hedge providers and the Company; and (2) grant a first lien in respect of the shares or quotas, as applicable, owned by (a) Buenaventura in Empresa de Generación Huanza S.A., Yanacocha, Sociedad Minera El Brocal S.A.A and Sociedad Minera Cerro Verde S.A.A. and (b) Condesa in Buenaventura, as collateral for the secured obligations under the Temporary Intercreditor Agreement, the Syndicated Term Loan and the company’s outstanding hedge agreements.

On April 28, 2021, we entered into an amendment and waiver to the Syndicated Term Loan which superseded the Forbearance Agreement, pursuant to which the lenders under the Syndicated Term Loan agreed to amend certain terms of the Syndicated Term Loan and to cure any and all past defaults triggered by the collection proceedings, the incurrence of debt and the granting of collateral relating to the Syndicated Letters of Credit. See “Item 5. Operating and Financial Review and Prospects—Buenaventura—A. Operating Results—General— Issuance of letters of credit and default under our Syndicated Term Loan.”

See Note 29 (d) to the Consolidated Financial Statements for additional information. 

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Critical Accounting Policies and Estimates

The following is a discussion of our application of critical accounting policies that require our management, or “Management,” to make certain assumptions about matters that are highly uncertain at the time the accounting estimate is made, and where different estimates that Management reasonably could have used in the current period, or changes in the accounting estimate that are reasonably likely to occur from period to period, would have a material impact on our consolidated financial statements. Management has identified the following accounting estimates and policies as critical:

• Determination of mineral reserves and resources;

• unit-of-production depreciation;

• closure of mining units provision;

• inventories;

• impairment of non-financial assets;

• deferred income tax and recoverability; and

• fair value of contingent consideration

Other significant accounting policies include:

• contingencies;

• development start date;

• production start date;

• useful life of property, plant and equipment;

• revenue from contracts with customers.

We also have certain accounting policies that we consider important, such as our policies for investments carried at fair value, and exploration costs that do not meet the definition of critical accounting estimates, as they do not require Management to make estimates or judgments that are subjective or highly uncertain.

Management has discussed the development and selection of our critical accounting estimates with the Audit Committee of the Board.

Determination of mineral reserves and resources

Recoverable proven and probable reserves and resources are the part of a mineral deposit than can be economically and legally extracted or produced at the time of the reserve and resources 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 and resources requires Buenaventura to determine the size, shape and depth of its ore bodies by analyzing geological data, such as sampling of drill holes, tunnels and other underground workings. In addition to the geology of Buenaventura’s mines, assumptions are required to determine the economic feasibility of mining these reserves, including estimates of future commodity prices and demand, the mining methods Buenaventura used and the related cost incurred to develop and mine its reserves and resources. The process to estimate proven and probable ore reserves and resources is audited by an independent consultant each year.

All estimated reserves and resources represent estimated quantities of mineral proven and probable that under current conditions can be economically and legally processed. 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 the depreciation of development costs, property, plant and equipment related directly to mining activity, the provision for mine closure, the assessment of the deferred asset’s recoverability and the amortization period for development costs.

Unit-of-production depreciation

Reserves and resources are used in determining the depreciation and amortization of mine-specific assets. This results in a depreciation or amortization charge proportional to the depletion of the anticipated remaining life of mine production. Each mine’s life is assessed 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 are recorded prospectively.

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This results in a depreciation or amortization charge which is proportional to the depletion of the anticipated remaining life-of-mine production. The life of each item, which is assessed at least annually, is determined based on both its physical life limitations and present assessments of economically recoverable reserves of the mine property where 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.

Closure of mining units provision

We record a provision for mine closure when a legally enforceable obligation arises, which is independent of the full depletion of the mine reserves. Once such an obligation has been appropriately measured, it is recorded by creating a liability equal to the amount of the obligation and recording a corresponding increase to the carrying amount of the related long-lived asset (mine development cost and property, plant and equipment). Over time, the amount of the obligation changes, impacting recording and accretion expenses. Additionally, the capitalized cost is depreciated and/or amortized based on the useful lives of the related assets.

Any difference in the settlement of the liability will be recorded in the results of the period in which such settlement occurs. The changes in the fair value of an obligation or the useful life of the related assets that occur from the revision of the initial estimates should be recorded as an increase or decrease in the book value of each of the obligation and related asset.

Following our accounting treatment, as of December 31, 2020, we have recorded an accrual for mine closure costs of US$277.7 million to comply with governmental requirements for environmental remediation for Buenaventura and its mining subsidiaries. Please see Note 15(b) to the Consolidated Financial Statements.

We assess our provision for closure of mining units annually. This assessment entails significant estimates and assumptions because there are a number of factors that will affect the ultimate liability for this obligation. These factors include estimating the scope and costs of closing activities, technological changes, regulatory changes, increases in costs compared to inflation rates and changes in the discount rates. Such estimates or assumptions may result in actual expenses in the future that differ from the amounts provisioned at the time the provisions were established. The provision at the date of this report represents our best estimate of the present value of future costs for the closure of mining units.

Inventories

Inventories are classified as short-term or long-term depending on the length of time that management estimates will be needed to reach the production state of concentrate extraction for each mining unit.

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 at the reporting date, less estimated costs to complete production and bring the product to sale. Additionally, management also considers the time value of money in calculating the net realizable value of our long-term inventories.

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.

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Impairment of non-financial assets

We determine whether the operations of each mining unit are cash generating units, considering each mining unit operation independently. We assess at each reporting date whether there is an indication that an asset may be impaired. If any such indication exists, we estimate the asset’s recoverable amount. An asset’s recoverable amount is (i) the fair value less costs of disposal and (ii) value in use and is determined for an individual asset (cash-generating unit) unless the asset does not generate cash inflows that are clearly independent of those from other assets or groups of assets. These assessments require the use of estimates and assumptions such as long-term commodity prices, discount rates, operating costs and others. These estimates and assumptions are subject to risk and uncertainty.

A cash-generating unit is the smallest identifiable group of assets that generates cash inflows from continuing use that are independent of the cash inflow generated by other assets or groups of assets. We have determined the operations of each mining unit as a single cash generating unit.

In assessing value in use, the estimated future cash flows are discounted to their present value using a discount rate that reflects current market assessments of the time value of money and the risks specific to the asset.

At each reporting date, we update our assessment of the recoverability of the book value of our long-term assets under the procedures established by IAS 36 – “Impairment of Assets” for all of our mining units. As a result, we recorded impairment losses and recoveries of the provision during 2017, 2018, 2019 and 2020.

In 2018, we recorded an impairment reversal related to our La Zanja mining property of US$5.7 million as a result of the analysis of the recovery amount. In addition, as a result of the disposal of assets, we recorded a reversal in our impairment provision related to our Shila Paula mining unit of US$2.8 million. This provision was previously recorded in 2016.

In 2019, we recorded an impairment for US$2.1 million as a result of the analysis of the recoverable amount of our Julcani mining unit. The main factors considered in the impairment analysis were reserves and life of the mine.

In 2020, we recorded a reversal in our impairment provision related to our Julcani mining unit of US$2.1 million. This provision was previously recorded in 2019.

 These impairment charges have not had an impact on our operating cash flows. Cash flows used to assess recoverability of our long-lived assets and measure the carrying value of our mining operations were derived from current business plans using near-term price forecasts reflecting of the current environment and Management’s projections for long-term average metal prices and operating costs.

Our asset impairment evaluations required us to make several assumptions in the discounted cash flow valuation of (i) our individual mining operations, including near and long-term metal price assumptions, production volumes, estimates of commodity-based and other input costs and (ii) proven and probable reserve estimates, including any costs to develop the reserves and the timing of producing the reserves, as well as the appropriate discount rate. Our December 31, 2019 and 2020 impairment evaluations were based on price assumptions reflecting prevailing metals prices for the following years.

We believe events that could result in additional impairment of our long-lived assets include, but are not limited to, (i) decreases in future metal prices, (ii) decreases in estimated recoverable proven and probable reserves and (iii) any event that might otherwise have a material effect on mine site production levels or costs.

Deferred income tax asset and recoverability

In preparing our annual consolidated financial statements, we estimate the actual amount of taxes currently payable or receivable as well as deferred tax assets and liabilities attributable to temporary differences between the tax and book bases of assets and liabilities. Deferred income tax assets and liabilities are measured using tax rates applicable to taxable income in the years in which these temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates and laws is recognized in income in the period in which such changes are enacted.

All deductible temporary differences and loss carry-forwards generate the recognition of deferred assets to the extent that it is probable that they can be used in calculating taxable income in future years. Deferred income tax liability is recognized for all deductible temporary differences and tax loss carry-forwards, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences and unused tax losses can be utilized. The carrying amount of the deferred income tax asset is reviewed at each consolidated statement of financial position 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 asset to be utilized. Unrecognized deferred assets are reassessed at each consolidated statement of financial position date.

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Deferred assets and liabilities are offset if there is a legal right to set them off and the taxes deferred relate to the same entity and the same tax authority.

Deferred tax assets, including those resulting from unused tax losses, require that we assess the likelihood that we would generate taxable earnings in future periods to apply the deferred tax assets. Estimated future taxable income is based on projections of cash flow from operations and application of the tax law existing in each jurisdiction. To the extent to which actual future cash flows and taxable income differ significantly from those estimated, our ability to realize the deferred tax assets posted as of the reporting date may be affected.

In addition, future changes in the tax law in jurisdictions where we operate could limit our ability to obtain tax deductions in future periods.

As of December 31, 2019 and 2020, unrecognized deferred income tax assets related to tax - loss carryforward, difference in depreciation and amortization rates and provision for closure of mining units, net amounted to US$50.2 million and US$52.5 million, respectively. Related to the investment in associates, the unrecognized deferred income tax asset by US$64.2 million as of December 31, 2020 (US$60.4 million as of December 31, 2019).

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.

Contingencies

Contingent liabilities, when identified, are assessed as either remote, possible or probable. Contingent liabilities are recorded in the consolidated financial statements when it is probable that future events will confirm them and when their amount can be reasonably estimated. Contingent liabilities deemed as possible are only disclosed, together with a possible debit range, when determinable, in notes to the Consolidated Financial Statements.

Contingent assets are not recognized in the consolidated financial statements; however, they may be disclosed in notes to the consolidated financial statements if it is probable that such contingent assets will be realized. See Note 29(c) and (d) to the Consolidated Financial Statements.

Determining contingencies inherently involves the exercise of judgment and calculation of the estimated outcomes of future events.

Development start date

We assess the status of each exploration project of our mining units to determine when the development phase begins. One of the criteria used to evaluate the development start date is when we determine that the property can be economically developed.

Production start date

We assess the stage of each mine under development to determine when a mine moves into the production stage. The criteria used to assess the start date are determined based on the nature of each mining project, the complexity of a plant and its location. We consider various relevant criteria for assessing when the mine is substantially complete and ready for its planned use. Some of these criteria are the level of capital expenditure compared to development cost estimates, a reasonable testing period for the mine’s plant and equipment and the ability to produce ongoing production of metal.

When a mine development project moves into the production stage, the capitalization of certain costs ceases, and they are considered as inventory or expenses, except for costs that qualify for capitalization relating to mining asset additions or improvements, underground mine development or mineable reserve development. It is also at this point that depreciation or amortization commences.

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Useful life of property, plant and equipment

Straight-line method

Depreciation is calculated under the straight-line method of accounting considering the lower of estimated useful lives of the asset or estimated reserves of the mining unit. The useful lives are the following:

Property, Plant and Equipment	Estimated Years of Useful Life
Buildings, constructions and other		6 to 20
Machinery and equipment		5 to 10
Transportation units		5
Furniture and fixtures		10
Computer equipment		4

An item of property, plant and equipment is de-recognized upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising from de-recognizing an asset (calculated as the difference between the proceeds from the sale and the book value of the asset) is included in the consolidated statement of profit or loss in the year the asset is de-recognized.

Revenues from contracts with customers

According to our accounting policies, revenue is recognized when control of goods or services is transferred to the customer in an amount equal to the consideration that we expect to receive in exchange for those goods and services.

Revenues from sales of concentrates and metals are recognized at the point in the time when control of the asset is transferred to the customer. Revenues related to services, such as energy generation and transmission, industrial services, and other services, are recognized over time.

See Note 2.4(q) to the Consolidated Financial Statements.

Recent Developments

Since March 2021, Buenaventura has been assessing different possibilities, such as the issuance of bonds or the disposition of certain assets (including its participation in associates and subsidiaries), in order to satisfy its financial obligations and expansion requirements. As of the date of this report, the Company’s board of directors has not approved any such transactions or asset dispositions, and therefore there is no effect on any of Buenaventura’s financial reporting as of and for the period ended December 31, 2020.

Results of Operations for the Years Ended December 31, 2020 and 2019

Sales of goods. Sales of goods decreased by 22%, mainly due to the net effect of a decrease in both volume of metal sold (explained by the production reduction related to the State of National Emergency due to the COVID-19 pandemic) and variations in the average realized prices, as set forth in the chart below:

Sales of goods	Year ended December 31,
	2019			2020			Variation			Variation
	(US$ in thousands)
Silver (a)		298,171			230,498			(67,673	)		(23	)%
Gold (b)		254,194			229,590			(24,604	)		(10	)%
Copper (c)		238,304			181,311			(56,993	)		(24	)%
Zinc (d)		149,317			120,546			(28,771	)		(19	)%
Lead (e)		89,141			48,426			(40,715	)		(46	)%
Manganese sulfate		6,046			4,051			(1,995	)		(33	)%
		1,035,173			814,422			(220,751	)		(21	)%
Commercial deductions (f)		(220,306	)		(179,748	)		40,558			(18	)%
Hedge operations (g)		4,322			(6,464	)		N.A.			N.A.
Fair value of accounts receivable		2,347			5,154			2,807			120	%
Adjustments to prior period liquidations		394			4,255			3,861			980	%
Total sales of goods		821,930			637,619			(184,311	)		(22	)%

(a) Silver sales. The decrease in silver sales is mainly due to decreases of 43% in the volume of silver sales in Uchucchacua, Julcani, Tambomayo, and Colquijirca mining units, partially offset by an increase in the average realized price in 35%.

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(b) Gold Sales. The decrease in gold sales is mainly due to decreases of 31% in the volume of gold sales which was primarily due to decreases in the volume sold in the Tambomayo and La Zanja mining units, partially offset by an increase in the average realized price in 31%.

(c) Copper sales. The decrease in copper sales is mainly due to decreases of 29% in the volume of copper sales of Colquijirca mining unit, partially offset by an increase in the average realized price in 8%.

(d) Zinc sales. The decrease in zinc sales is mainly due to decreases in the average realized price in 10% and volume sold in 10%, which was primarily due to decreases in the volume sold Uchucchacua and Tambomayo mining units.

(e) Lead sales. The decrease in lead sales is mainly due to decreases in the average realized price by 12% and volume sold by 38%, which was primarily due to decreases in the volume sold Uchucchacua, Colquijirca, and Tambomayo mining units.

(f) Commercial deductions. The decrease in 18% in the commercial deduction is mainly explained by the decrease in sales. Sales of goods figures are obtained by deducting the commercial deductions which corresponds to adjustments in price for treatment and refining charges and can include certain penalties that, in accordance with the applicable contract, are deducted from the international fine metal spot price, and that are incurred after the time of sale of the applicable concentrate.

(g) Hedge operations. Sales of goods figures are obtained by considering the variation in the fair value of the hedge operations related to sales.

The following tables reflect the average realized prices and volumes of gold, silver, lead, zinc and copper sold during the years ended December 31, 2019 and 2020, as well as the variation in such average realized prices and volumes recorded for these years:

Average Realized Price	Year ended December 31,
	2019		2020		Variation
Gold (US$/oz.)		1,405.35		1,841.96		31	%
Silver (US$/oz.)		16.36		22.14		35	%
Lead (US$/t)		1,938.07		1,708.25		(12	)%
Zinc (US$/t)		2,490.60		2,233.55		(10	)%
Copper (US$/t)		5,808.47		6,259.49		8	%

Volume Sold	Year ended December 31,
	2019		2020		Variation
Gold (oz.)		180,876		124,644		(31	)%
Silver (oz.)		18,224,320		10,410,476		(43	)%
Lead (t)		45,995		28,348		(38	)%
Zinc (t)		59,953		53,971		(10	)%
Copper (t)		41,027		28,966		(29	)%

Sales of services. Sales of services decreased by 14%, as set forth in the chart below:

Sales by services	Year ended December 31,
	2019		2020		Variation			Variation
	(US$ in thousands)
Insurance brokerage		15,687		14,753		(934	)		(6	)%
Energy generation and transmission (a)		7,974		5,532		(2,442	)		(31	)%
Total sales of services		23,661		20,285		(3,376	)		(14	)%

(a) Energy generation and transmission. The decrease of 31% in the sales of energy generation and transmission is mainly due to decreases of 70% in sales of Consorcio Energético de Huancavelica S.A. due to in September 2019 we sold energy transmission systems in the areas of Huancavelica, Trujillo, Cajamarca, Callalli – Ares and Lorema.

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Royalty income. In 2020, royalty income received by our subsidiary Chaupiloma amounted to US$18.6 million, representing a decrease of 16% from the US$22.3 million in royalty income received in 2019. This decrease was due to decrease in the sales of Yanacocha due to the COVID-19 pandemic restrictions. We hold a 60% interest in Chaupiloma, to which Yanacocha pays a royalty that corresponds to 3% of its net sales.

Total operating costs. Total operating costs in 2020 decreased by 18% compared to 2019 as indicated in the following table:

Operating Costs	Year ended December 31,
	2019			2020			Variation			Variation
	(US$ in thousands)
Cost of sales of goods, excluding depreciation and amortization (a)		(512,874	)		(393,888	)		118,986			(23	)%
Unabsorbed cost due to production stoppage (b)		-			(27,758	)		(27,758	)		100	%
Cost of sales of services, excluding depreciation and amortization		(3,378	)		(1,554	)		1,824			(54	)%
Depreciation and amortization (c)		(226,335	)		(189,620	)		36,715			(16	)%
Exploration in operating units (d)		(44,163	)		(28,044	)		16,119			(36	)%
Mining royalties		(12,832	)		(11,749	)		1,083			(8	)%
Total operating costs		(799,582	)		(652,613	)		146,969			(18	)%

(a) Cost of sales of goods, excluding depreciation and amortization. The decrease in cost of sales of goods was mainly due to decrease in our Colquijirca, Uchucchacua, Orcopampa and Tambomayo mining units in US$53.8 million, US$28.4 million, US$17.6 million and US$12.7 million, respectively. The decrease in cost of sales across Buenaventura’s mining unit is explained by the production reduction related to the State of National Emergency due to the COVID-19 pandemic, which paralyzed operations since March 16, 2020 until the second quarter of 2020, as follows:

- Colquijirca, Uchucchacua and Tambomayo mining units reinitiated operations on May 16, 2020.

- Orcopampa, Julcani, and La Zanja mining units reinitiated operations on June 16, 2020.

(b) Unabsorbed cost due to production stoppage. Due to the State of National Emergency related to the COVID-19 pandemic, Buenaventura’s mining units have operated below the planned volume. The allocation of fixed production overheads to the costs of conversion is based on the normal capacity of the production facilities under IAS 2, Inventories and unabsorbed overheads are recognized as an expense in the period in which they are incurred. Cost of sales related to the unabsorbed costs attributable to the coronavirus outbreak are presented separately from the rest of cost of sales. In 2020, unabsorbed production costs during the Company’s production stoppage totaled US$27.8 million.

(c) Depreciation and amortization. The decrease in the cost of depreciation and amortization was mainly due to decrease in our Colquijirca, Tambomayo and Uchucchacua mining units in US$14.9 million, US$10.9 million and US$4.3 million, respectively. The decrease is explained by the production reduction related to the State of National Emergency due to the COVID-19 pandemic, which paralyzed operations since March 16, 2020 until the second quarter of 2020.

(d) Exploration in operating units. The decrease in exploration in operating units was mainly due to decrease in our Tambomayo, Orcopampa, Julcani and Uchucchacua mining units in US$4.5 million, US$3.8 million, US$2.7 million and US$2.2 million, respectively. The decrease is explained by the effects of COVID-19 pandemic.

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Total operating expenses. Operating expenses in 2020 decreased with those of 2019 due to changes in the following components:

Operating Expenses, net	Year ended December 31,
	2019			2020			Variation			Variation
	(US$ in thousands)
Administrative expenses (a)		(76,297	)		(67,185	)		9,112			(12	)%
Selling expenses (b)		(24,313	)		(18,533	)		5,780			(24	)%
Exploration in non-operating areas		(11,879	)		(8,475	)		3,404			(29	)%
Write –off of stripping activity asset (c)		-			(11,633	)		(11,633	)		100	%
Impairment loss (reversal) of long-lived assets (d)		(2,083	)		2,083			N.A.			N.A.
Provision (reversal) for contingences and others (e)		2,968			(4,150	)		N.A.			N.A.
Other, net (f)		(14,715	)		2,690			N.A.			N.A.
Total operating expenses, net		(126,319	)		(105,203	)		21,116			(17	)%

(a) Administrative expenses. The decrease in administrative expense was mainly explained by a decrease in Uchucchacua mining unit and Conenhua mainly explained by:

- US$7.0 million decrease in Uchucchacua mining unit due to the successful cost containment and expense reduction during the year, which was partially offset by the adverse effects of Peru’s current State of National Emergency.

- US$1.2 million decrease in Conenhua mainly explained by a decrease in the personnel expenses. The reduction of personnel was related to the sale of energy transmission systems.

(b) Selling expenses. The decrease in the selling expenses is mainly explained by the decrease in the shipping costs and transportations services expenses mainly in the Uchucchacua and Colquijirca and mining units in US$3.1 million and US$1.8 million, respectively mainly explained by:

- Decrease in transportation services in Uchucchacua and Colquijirca mining units in US$1.7 million and US$0.7 million, respectively, as a result of the decrease in the volume sold.

- Decrease in shipping costs in Colquijirca and Uchucchacua mining units in US$1.2 million and US$1.0 million, respectively, as a result of the decrease in the volume sold.

(c) Write –off of stripping activity asset. In December 2020, as a result of the review of the mineral reserve balances, the subsidiary El Brocal wrote off the phase 9 for a total of 1,102,117 DMT at a value of US$11,633,000. The write-off corresponds to a loss of reserves due to variation in technical and economic parameters such as, decrease in estimated prices; increased cut-off; percentage decrease in payable items; and new block model.

(d) Impairment reversal / loss of long-lived assets. During 2020, we identified impairment indicators in our Julcani, Orcopampa, and Uchucchacua mining units. Buenaventura evaluated and concluded that there is no impairment as a result of the analysis of the recoverable amount of said units based on their value in use. Instead, Buenaventura recognized a reversal for impairment of long-lived assets for US$2.1 million derived from the evaluation of its Julcani mining unit (recognized as a provision for impairment for US$2.1 million as of December 31, 2019).

(e) Provision (reversal) for contingences and others. The variation is explained mainly because during 2020 we recognized tax contingences provisions expenses for US$2.7 million and environmental contingencies for US$1.6 million compared to an income related to a reversal of US$2.4 million related to negotiations with communities during 2019.

(f) Other, net. The variation forms an expense of US$14.7 million in 2019 compared to an income of US$2.7 million in 2020 is primarily due to the net effect of:

- an income of US$4.4 million during 2020 related to insurance claim recovery of the subsidiary El Brocal. This recovery is related to the insurance compensation for the damage suffered by the fire in the electric motor of the 16x22 Dominium Mill located on the first plant that occurred in August 2019.

- an income of US$13.3 million during 2019 due to a sale of energy transmission systems in the areas of Huancavelica, Trujillo, Cajamarca, Callalli – Ares and Lorema.

- a decrease of US$3.4 million in expenses related to changes in provisions for exploration projects.

- a decrease of US$2.6 million in the expenses related to impairment of spare parts and supplies,

- a decrease of US$2.3 million in the expenses related to withdrawals and disposals of property, machinery and equipment.

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Other income (expense) captions. Other income (expenses) captions in 2020 decreased with those of 2019 due to changes in the following components:

Other income (expense) captions	Year ended December 31,
	2019			2020			Variation			Variation
	(US$ in thousands)
Shares in the results of associates and joint venture (a)		47,710			(9,517	)		N.A.			N.A.
Finance income (b)		9,675			2,411			(7,264	)		(75	)%
Finance costs		(42,173	)		(37,822	)		4,351			(10	)%
Net (loss) from currency exchange difference		(734	)		(4,116	)		(3,382	)		461	%

(a) Shares in the results of associates and joint ventures. Shares in the results of associates and joint venture changed from a gain of US$47.7 million in 2019 to a loss of US$9.5 million in 2020. The variation is primarily due to the net effect of a decrease of US$30.6 million and US$22.7 million in our share of Minera Yanacocha S.R.L. and Sociedad Minera Cerro Verde S.A.A., respectively.

See “Item 5. Operating and Financial Review and Prospects—Yanacocha” and “Item 5. Operating and Financial Review and Prospects—Cerro Verde” for more information

(b) Finance income. Finance income decreased mainly explained by: (i) a decrease of US$3.9 million in the interest on time deposits due to a reduction of time deposits during 2020, and (ii) a decrease of US$3.6 million in the dividends income due to during 2019 Buenaventura received dividends from its investment in other minor investments.

Income tax. Provisions for income tax changed from an income of US$25.6 million in 2019 to an expense of US$25.4 million in 2020, due to the deferred income tax that changed from an income of US$37.6 million in 2019 to an expense of US$15.3 million in 2020. The changed is mainly explained by a higher deferred asset related to tax-loss carryforward due to a higher tax-loss during 2020, partially offset by the effects of (i) a lower deferred asset related to impairment of loss of long-lived assets, and (ii) a higher deferred liability of effect of fluctuations of exchange rates.

Non-controlling interest income (loss). Non-controlling interest income decreased from a loss of US$16.2 million in 2019 to a loss of US$14.6 million in 2020 due to changes in the results of the profit (loss) in the following subsidiaries:

Non-controlling interest income (loss)	Year ended December 31,
	2019			2020			Variation			Variation
	(US$ in thousands)
Profit (loss) allocated to material non-controlling interest:
Sociedad Minera El Brocal S.A.A.		(13,432	)		(12,895	)		537			(4	)%
Minera La Zanja S.R.L.		(9,090	)		(6,905	)		2,185			(24	)%
Apu Coropuna S.R.L.		(14	)		(22	)		(8	)		57	%
S.M.R.L. Chaupiloma Dos de Cajamarca		6,286			5,201			(1,085	)		(17	)%
Other minor		(1	)		-			1			(100	)%
		(16,251	)		(14,621	)		1,630			(10	)%

Net income (loss). As a result of the foregoing, net loss increased from of US$28.5 million in 2019 to a loss of US$150.3 million in 2020. Net loss was 3% of revenues in 2019 and net loss was 22% of revenues in 2020.

Results of Operations for the Years Ended December 31, 2020 and 2019 by Segment

We present the operating results for each of our operating segments for the years ended December 31, 2019 and 2020 in more detail in Note 31 to the Consolidated Financial Statements.

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Sales of goods – Mining Segments

The following tables set forth the volumes of gold, silver, lead, zinc and copper sold at each of our mining segments during the years ended December 31, 2020 and 2019, as well as the variation in such volumes sold for the year ended December 31, 2020 as compared to the year ended December 31, 2019:

Sales of goods - Mining Segment	Volume Sold for the year ended December 31, 2020 (Unaudited)
	Gold (oz.)		Silver (oz.)		Lead (t)		Zinc (t)		Copper (t)
Julcani		133		1,542,568		306		-		18
Orcopampa		41,757		8,113		-		-		-
Uchucchacua		2		4,566,624		4,209		4,066		-
Tambomayo		57,633		1,474,485		6,009		4,463		-
La Zanja		1,291		18,975		-		-		-
Colquijirca		7,390		2,696,506		17,824		45,442		28,948

Mining Segment	Volume Sold for the year ended December 31, 2019 (Unaudited)
	Gold (oz.)		Silver (oz.)		Lead (t)		Zinc (t)		Copper (t)
Julcani		179		2,480,173		839		-		14
Orcopampa		40,702		15,049		-		-		-
Uchucchacua		-		9,808,791		15,347		15,315		-
Tambomayo		96,636		2,318,435		7,211		7,850		-
La Zanja		30,710		80,880
Colquijirca		12,649		3,520,992		22,598		36,788		41,013

Mining Segment	2020 vs 2019 Change (%)
	Gold (oz.)			Silver (oz.)			Lead (t)			Zinc (t)			Copper (t)
Julcani		(26	)%		(38	)%		(63	)%		-			30	%
Orcopampa		3	%		(46	)%		-			-			-
Uchucchacua		-			(53	)%		(73	)%		(73	)%		-
Tambomayo		(40	)%		(36	)%		(17	)%		(43	)%		-
La Zanja		(96	)%		(77	)%		-			-			-
Colquijirca		(42	)%		(23	)%		(21	)%		24	%		(29	)%

The change in sales of goods for the year ended December 31, 2020 as compared to the year ended December 31, 2019 is mainly explained by the changes in volume sold, as presented in the following chart:

Sales of goods – Mining Segments	Year ended December 31,
	2019		2020		Variation			Variation
	(US$ in thousands)
Julcani (a)		40,082		32,034		(8,048	)		(20	)%
Orcopampa (b)		58,902		77,825		18,923			32	%
Uchucchacua (c)		186,016		90,420		(95,596	)		(51	)%
Tambomayo (d)		188,175		142,833		(45,342	)		(24	)%
La Zanja (e)		43,520		2,531		(40,989	)		(94	)%
Colquijirca (f)		299,252		255,275		(43,977	)		(15	)%

(a)	Julcani. Sales of goods decreased in 20% in 2020 compared to 2019 due to the net effect of a 32% increase in the average realized silver price and a 38% decrease in the quantity of silver sold at that unit.
(b)	Orcopampa. Sales of goods increased in 32% in 2020 compared to 2019 due to the net effect of a 29% increase in the average realized gold price and a 3% increase in the quantity of gold sold at that unit.
(c)	Uchucchacua. Sales of goods decreased in 51% in 2020 compared to 2019 due to the net effect of a 32% increase in the average realized price and a 53% decrease in the quantity of silver sold at that unit.
(d)	Tambomayo. Sales of goods decreased in 24% in 2020 compared to 2019 due to the net effect of a 35% and 31% increase in the average realized silver and gold prices, respectively and a 36% and 40% decrease in the quantity of silver and gold sold, respectively at that unit.
(e)	La Zanja. Sales of goods decreased in 94% in 2020 compared to 2019 due to a net effect of a 41% increase in the average realized gold price, and a 96% decrease in the quantity of gold sold at that unit to third parties. During 2020, the 92% of La Zanja sales was intercompanies sales and only 8% were to third parties compare to 2019 were 100% of sales were to third parties.
(f)	Colquijirca. Sales of goods decreased in 15% in 2020 compared to 2019 due to an 8% increase in the average realized copper price and a 29% decrease in the quantity of copper sold at that unit.

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Total operating expenses – Mining Segments. The change in operating expenses for the year ended December 31, 2020 as compared to the year ended December 31, 2019 is mainly explained by:

Operating Expenses – Mining Segments	Year ended December 31,
	2019			2020			Variation			Variation
	(US$ in thousands)
Julcani		(6,971	)		(2,050	)		4,921			(71	)%
Orcopampa		(13,570	)		(10,628	)		2,942			(22	)%
Uchucchacua (a)		(29,855	)		(10,169	)		19,686			(66	)%
Tambomayo		(24,092	)		(19,776	)		4,316			(18	)%
La Zanja		(6,545	)		(7,846	)		(1,301	)		20	%
Colquijirca		(26,221	)		(24,923	)		1,298			(5	)%

(a) Uchucchacua. The decrease in total operating expenses was mainly due to:

- a decrease of US$7.0 million in the administrative expenses.

- an income US$3.8 million related to revenue from commercial claims.

- a decrease of US$3.1 million in the selling expenses as a result of the reduction of sales during 2020.

- an income of US$2.7 million related to a reversal for impairment of spare parts and supplies.

Total operating expenses - Other Segments

Operating income (expenses) – Other Segments	Year ended December 31,
	2019			2020			Variation			Variation
	(US$ in thousands)
Insurance brokerage segment		(11,607	)		(10,939	)		668			(6	)%
Corporate		(11,005	)		(11,644	)		(639	)		6	%
Exploration and development mining projects		(2,965	)		(2,209	)		756			(25	)%
Energy generation and transmission segment (a)		8,791			(2,350	)		N.A.			N.A.
Industrial activities		(2,293	)		(1,187	)		1,106			(48	)%
Holding of investment in shares		(284	)		(408	)		(124	)		44	%
Rental of mining concessions		(53	)		(49	)		4			(8	)%

(a) Energy generation and transmission segment. The variation from an income of US$8.8 million in 2019 compared to an expense of US$2.3 million in 2020 was mainly explained by a sale of energy transmission systems in the areas of Huancavelica, Trujillo, Cajamarca, Callalli – Ares and Lorema during 2019, which generated an income of US$13.3 million.

Results of Operations for the Years Ended December 31, 2019 and 2018

See “Item 5. Operating and Financial Review and Prospects” in our 2019 20-F for a comparative discussion of our consolidated results of operations for the year ended December 31, 2019 and 2018.

B. Liquidity and Capital Resources

As of December 31, 2020 and 2019, we had cash and cash equivalents of US$235.5 million and of US$210.0 million, respectively.

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Cash provided by operating activities for the years ended December 31, 2020 and 2019. Net cash and cash equivalents provided by operating activities increased by US$75.8 million, primarily due to the changes shown in the chart below:

Operating activities cash flows	Year ended December 31,
	2019			2020			Variation			Variation
	(US$ in thousands)
Proceeds from sales (a)		783,000			708,196			(74,804	)		(10	)%
Value-added tax and other taxes recovered		45,712			42,967			(2,745	)		(6	)%
Dividends received from related parties (b)		33,388			3,649			(29,739	)		(89	)%
Royalty received		23,001			18,954			(4,047	)		(18	)%
Interest received		4,265			1,658			(2,607	)		(61	)%
Dividends received from investments		-			2,500			2,500			100	%
Proceeds from insurance claim		-			4,381			4,381			100	%
Payments to suppliers and third parties, and other net (c)		(610,737	)		(454,140	)		156,597			(26	)%
Payments to employees (d)		(137,300	)		(129,353	)		7,947			(6	)%
Payments for tax litigation (e)		(36,322	)		(22,386	)		13,936			(38	)%
Interest paid (f)		(28,266	)		(21,653	)		6,613			(23	)%
Income tax and Royalties paid to Peruvian State		(24,935	)		(25,708	)		(773	)		3	%
Payments of mining royalties		(4,741	)		(6,180	)		(1,439	)		30	%
Net cash and cash equivalents provided by operating activities		47,065			122,885			75,820			161	%

(a) The decrease in the proceeds from sales was mainly due to lower sales and production of Buenaventura’s mining units, as described in Results of Operations for the Years Ended December 31, 2020 and 2019 by Segment.

(b)	The decrease in dividends received from Cerro Verde was mainly due to the US$29.4 million in dividends received during 2019 compare to zero dividends received during 2020 from these associates.
(c)	The decrease in payments to suppliers and third parties is mainly explained by the decrease in the operations and ore production by  Buenaventura’s mining units, as described in Results of Operations for the Years Ended December 31, 2020 and 2019 by Segment.
(d)	The decrease in payments to employees was mainly explained by the decrease in the headcount due to  Buenaventura’s De-bottlenecking Program and related optimization of support areas.
(e)	The variation corresponds to different payments made during 2020 and 2019 related to claims with the Tax Administration. See the detail of payments in Note 7(g) of the Consolidated Financial Statements.
(f)	The decrease in the interest paid was mainly explained by a decrease in the interest paid in Buenaventura, Huanza and El Brocal in US$2.6 million, US$2.4 million and US$1.6 million, respectively as a result of changes in the interest rates negotiated with banks by Buenaventura and a decrease in the LIBOR during 2020.

Cash used in investing activities for the years ended December 31, 2020 and 2019. Net cash and cash equivalents used in investing activities decreased by US$43.4 million primarily due to the changes shown in the chart below:

Investing activities cash flows	Year ended December 31,
	2019			2020			Variation			Variation %
	(US$ in thousands)
Proceeds from sale of mining concessions, development costs, property, plant and equipment (a)		726			24,416			23,690			3,263	%
Additions to mining concessions, development costs, property, plant and equipment (b)		(102,627	)		(71,546	)		31,081			(30	)%
Acquisition of investment in associate (c)		-			(13,453	)		(13,453	)		100	%
Payments for acquisition of other assets		(3,700	)		(1,641	)		2,059			(56	)%
Net cash and cash equivalents provided by (used in) investing activities		(105,601	)		(62,224	)		43,377			(41	)%

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(a) The proceeds from sale of assets increase mainly explained by:

• During 2020, we collected US$21.0 million related to the sales of energy transmission systems in the areas of Huancavelica, Trujillo, Cajamarca, Callalli – Ares and Lorema by Buenaventura (through its subsidiary Consorcio Energético de Huancavelica S.A.).

• During 2020, Buenaventura sold its Mallay mining unit classified as discontinued during 2019 under IFRS 5 “Non-current Assets Held for Sale and Discontinued Operations.” The sale price was US$10 million (US$8.5 million plus VAT) with a related cost of US$3.6 million net of income from the reversal of provision for mining unit closure of US$5.1 million. As of December 31, 2020, Buenaventura has collected US$2.0 million and the remaining balance will be paid in two settlements of US$4.0 million each in November 2021 and 2022.

(b) The decrease in capital expenditures was mainly due to the decrease in Uchucchacua, Molle Verde, Tambomayo and Colquijirca units for US$21.0 million, US$6.4 million, US$6.1 million and US$4.3 million, respectively, which was partially offset by an increase in the investments in San Gabriel and Rio Seco for US$4.5 million and US$3.2 million, respectively. See “Item 4: Information on the Company—Buenaventura—A. History and Development—Capital Expenditures.”

(c) In January 2020, Buenaventura acquired 19.30 per cent of common shares on a non-diluted basis from Tinka Resources Ltd., through private placement financing, which represented 65,843,620 common shares of Tinka at a price of C$0.243 per common share, for gross proceeds to Tinka of C$16 million (equivalent to US$13.4 million). See Note 10 (c) of the Consolidated Financial Statements.

Cash provided by (used in) financing activities for the years ended December 31, 2020 and 2019. Net cash and cash equivalents used in financing activities decrease in US$65.4 million primarily due to the changes shown in the chart below:

Financing activities cash flows	Year ended December 31,
	2019			2020			Variation			Variation
	(US$ in thousands)
Proceeds from bank loans		55,000			18,019			(36,981	)		(67	)%
Payments of bank loans		(95,000	)		(7,197	)		87,803			(92	)%
Proceeds from financial obligations		161,894			–			(161,894	)		(100	)%
Payments of financial obligations		(186,152	)		(38,994	)		147,158			(79	)%
Dividends paid to controlling shareholders		(22,098	)		–			22,098			(100	)%
Short-term and low value lease payments		(7,596	)		(4,080	)		3,516			(46	)%
Decrease (Increase) of restricted bank accounts		(166	)		2,134			2,300			(1,386	)%
Dividends paid to non-controlling shareholders		(6,500	)		(5,140	)		1,360			(21	)%
Net cash and cash equivalents used in financing activities		(100,618	)		(35,258	)		65,360			(65	)%

For further information on the SUNAT debt fractioning, the issuance of letters of credit in connection therewith and our prior default under our Syndicated Term Loan, see “—A. Operating Results—General—SUNAT litigation” and “—A. Operating Results—General—Issuance of letters of credit and default under our Syndicated Term Loan.”

Short-Term Debt

We borrow, from time to time, short-term unsecured loans from local Peruvian banks to supplement our working capital needs at favorable short-term interest rates. As of December 31, 2020 and 2019, the amount outstanding under such short-term loans was US$65.8 million and US$55.0 million, respectively. In 2020, we used the proceeds of such short-term loans for general working capital purposes.

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Long-Term Debt

Sociedad Minera El Brocal S.A.A. On October 29, 2019, El Brocal entered into a new financing agreement in an amount of US$161,893,850 with Banco de Crédito del Perú in order to repay a financial leaseback signed in 2015 and a medium-term financing entered into in 2017. The new financing agreement has the following terms and conditions:

	Tranche  A	Tranche B
Principal	US$113,325,695	US$48,568,155
Annual interest rate	3.76 percent	Three-month LIBOR plus 2.39 percent
Term	5 years beginning in October 2019 (matures in October 2024)	7 years beginning in October 2019 (matures in  October 2026)

According to this financing agreement, El Brocal is required to maintain the following financial ratios: (i) Debt service coverage ratio: Higher than 1.3, (ii) Leverage Ratio: Less than 1.0 times, (iii) Indebtedness ratio: Less than 2.25 times. This new financial obligation is collateralized by a security agreement in respect of assets; certain contractual rights, flows and account balances, a real estate mortgage; and a mortgage on certain mining concessions.

In April and July 2020, El Brocal arranged with the Banco de Crédito del Perú to defer the payment of the second and third installment, scheduled for April 30, and July 30, 2020 (each installment in an amount of US$5,396,000 exclusively consisting of principal) through 2 new promissory notes with a maturity of 180 days. The initial due dates of these promissory notes were October 27, 2020 and January 26, 2021, respectively. On October 27, 2020, El Brocal rescheduled the payment of the first promissory note for an additional 180 days, with a new due date on April 24, 2021. This deferring of the second and third installment does not represent changes in terms and conditions of the original loan.

Compliance with El Brocal’s required financial ratios is monitored by El Brocal’ s management. El Brocal obtained a waiver from Banco de Crédito del Perú in connection with any possible breach of its financial ratios as of December 31, 2020.

As of December 31, 2020 and 2019, the amount outstanding under this financing was US$139.7 million and US$161.2 million, respectively.

Empresa de Generación Huanza S.A. The long-term debt of Huanza is made up of: (i) a financial lease agreement entered into on December 2, 2009, with Banco de Crédito del Perú in an aggregate amount of US$119.0 million, for purposes of constructing a hydroelectric power station. Huanza is the lessee under such agreement. On October 29, 2020, as part of Buenaventura’s strategy to preserve cash, Huanza entered into an amendment to this lease agreement (in respect of the final principal installment thereunder, amounting to US$44,191,000), pursuant to which parties agreed to extend the maturity through May 2022 and to modify the interest applicable to the loan to 30-day LIBOR plus a 2.10% margin beginning in December 31, 2020 (compared to the three-month LIBOR plus 2.75% margin applicable as of December 31, 2019), and (ii) a financial lease agreement entered into on June 30, 2014, with Banco de Crédito del Perú in an aggregate amount of US$103.4 million. On October 29, 2020, as part of Buenaventura’s strategy to preserve cash, Huanza entered into an amendment to this lease agreement (in respect of the final principal installment thereunder, amounting to US$68,905,000), pursuant to which parties agreed to extend the maturity through May 2022 and to modify the interest applicable to the loan to 30-day LIBOR plus a 2.10% margin beginning in December 31, 2020 (compared to the three-month LIBOR plus 2.75% margin applicable as of December 31, 2019). As of December 31, 2020 and 2019, the amount outstanding under each lease was US$111.8 million and US$130.5 million, respectively.

 Compañía de Minas Buenaventura S.A.A. On June 27, 2016, in order to repay short-term contracts held as of December 31, 2015, we entered into the Syndicated Term Loan. Obligations under the Syndicated Term Loan are guaranteed by Condesa and Conenhua, our wholly-owned subsidiaries, and Colquijirca, which is 100% owned by us. The term loan agreement governing the Syndicated Term Loan contains certain customary covenants, including certain financial maintenance covenants, and events of default. See Exhibit 2.1. 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). On December 29, 2020, Buenaventura entered into (i) the Forbearance Agreement, and (ii) an Acuerdo Transitorio entre Acreedores with a majority of the lenders and the administrative agent under the Syndicated Term Loan and certain other of our secured creditors, pursuant to which such creditors agreed, among other matters, not to exercise any acceleration rights under the Syndicated Term Loan in connection with any potential non-compliance with the incurrence of debt, negative pledge, consolidated interest coverage ratio or consolidated net leverage ratio as a result of our incurrence of debt (and the granting of certain collateral) pursuant to the Syndicated Letters of Credit, through April 28, 2021. On April 28, 2021, we entered into a third amendment and waiver to the Syndicated Term Loan in order to amend certain terms of the Syndicated Term Loan and to cure any and all past defaults triggered by the collection proceedings and the incurrence of debt relating to the letters of credit.

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Exploration Costs and Capital Expenditures

During 2020, we spent US$8.5 million on “exploration in non-operating areas” and US$28.0 million on “exploration in operating units.” Our “exploration in non-operating areas” investments mainly focused on the Emperatriz exploration projects. Our “exploration in operating units” investments were mainly focused in the Tambomayo, Uchucchacua and Colquijirca units.

We expect that we will meet our working capital, capital expenditure and exploration expense requirements for the next several years from internally generated funds, cash on hand and dividends received from our investments in non-consolidated mining operations, including Yanacocha. Additional financing, if necessary for the construction of any project, is expected to be obtained from borrowings under bank loans and the issuance of debt securities. There can be no assurance, however, that sufficient funding will be available to us from the internal or external sources to finance any future capital expenditure program, or that external funding will be available to us for such purpose on terms or at prices favorable to us. A very significant decline in the prices of gold and silver would be reasonably likely to affect the availability of such sources of liquidity. In addition, if we fund future capital expenditures from internal cash flow, there may be fewer funds available for the payment of dividends.

Recent Accounting Pronouncements

Amendments to IAS 1: Classification of Liabilities as Current or Non-current -

In January 2020, the IASB issued amendments to paragraphs 69 to 76 of IAS 1 to specify the requirements for classifying liabilities as current or non-current. The amendments clarify:

- What is meant by a right to defer settlement.

- That a right to defer must exist at the end of the reporting period.

- That classification is unaffected by the likelihood that an entity will exercise its deferral right.

- That only if an embedded derivative in a convertible liability is itself an equity instrument would the terms of a liability not impact its classification.

The amendments are effective for annual reporting periods beginning on or after January 1, 2023 and must be applied retrospectively. Buenaventura is currently assessing the impact the amendments will have on current practice and whether existing loan agreements may require renegotiation.

Reference to the Conceptual Framework – Amendments to IFRS 3 -

In May 2020, the IASB issued Amendments to IFRS 3 Business Combinations - Reference to the Conceptual Framework. The amendments are intended to replace a reference to the Framework for the Preparation and Presentation of Financial Statements, issued in 1989, with a reference to the Conceptual Framework for Financial Reporting issued in March 2018 without significantly changing its requirements.

The Board also added an exception to the recognition principle of IFRS 3 to avoid the issue of potential ‘day 2’ gains or losses arising for liabilities and contingent liabilities that would be within the scope of IAS 37 or IFRIC 21 Levies, if incurred separately. At the same time, the Board decided to clarify existing guidance in IFRS 3 for contingent assets that would not be affected by replacing the reference to the Framework for the Preparation and Presentation of Financial Statements. The amendments are effective for annual reporting periods beginning on or after January 1, 2022 and apply prospectively.

Property, Plant and Equipment: Proceeds before Intended Use – Amendments to IAS 16 -

In May 2020, the IASB issued Property, Plant and Equipment — Proceeds before Intended Use, which prohibits entities deducting from the cost of an item of property, plant and equipment, any proceeds from selling items produced while bringing that asset to the location and condition necessary for it to be capable of operating in the manner intended by management. Instead, an entity recognizes the proceeds from selling such items, and the costs of producing those items, in profit or loss. The amendment is effective for annual reporting periods beginning on or after January 1, 2022 and must be applied retrospectively to items of property, plant and equipment made available for use on or after the beginning of the earliest period presented when the entity first applies the amendment. The amendments are not expected to have a material impact on Buenaventura.

Onerous Contracts – Costs of Fulfilling a Contract – Amendments to IAS 37 –

In May 2020, the IASB issued amendments to IAS 37 to specify which costs an entity needs to include when assessing whether a contract is onerous or loss-making. The amendments apply a “directly related cost approach.” The costs that relate directly to a contract to provide goods or services include both incremental costs and an allocation of costs directly related to contract activities. General and administrative costs do not relate directly to a contract and are excluded unless they are explicitly chargeable to the counterparty under the contract. The amendments are effective for annual reporting periods beginning on or after January 1, 2022. Buenaventura will apply these amendments to contracts for which it has not yet fulfilled all its obligations at the beginning of the annual reporting period in which it first applies the amendments.

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Amendments to IFRS 7, IFRS 9 and IAS 39 Interest Rate Benchmark Reform -

The amendments to IFRS 9 and IAS 39 Financial Instruments: Recognition and Measurement provide several reliefs, which apply to all hedging relationships that are directly affected by interest rate benchmark reform. A hedging relationship is affected if the reform gives rise to uncertainty about the timing and/or amount of benchmark-based cash flows of the hedged item or the hedging instrument. These amendments have no impact on Buenaventura’s consolidated financial statements as it does not have any interest rate hedge relationships.

C. Research and Development

Not applicable.

D. Trend Information

Other than as disclosed in this Annual Report, we are not aware of any trends, uncertainties, demands, commitments, or events which are reasonably likely to have a material effect upon our net sales or revenues, income from continuing operations, profitability, liquidity or capital resources, or that would cause reported financial information to be not necessarily indicative of future operating results or financial condition.

For our exploration activities, there is no production, sales or inventory in a conventional sense. Our financial success is dependent upon the extent to which we are capable of discovering mineralization and the economic viability of exploration properties. The construction and operation of such properties may take years to complete and the resulting income, if any, cannot be determined with certainty. Further, the sales value of mineralization discovered by us is largely dependent upon factors beyond our control, including the market value of the metals produced at any given time.

E. Off-Balance Sheet Arrangements

Other than in connection with the Syndicated L/C Agreement, there are no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.

For further information on the SUNAT debt fractioning and the issuance of letters of credit in connection therewith, see “—A. Operating Results—General—SUNAT litigation” and “—A. Operating Results—General—Issuance of letters of credit and default under our Syndicated Term Loan.”

F. Tabular Disclosure of Contractual Obligations

The following table shows our contractual obligations as of December 31, 2020:  

	Payments due by Period (US$ in millions)
	Total		Less than 1 year		1-2 years		2-5 Years		More than 5 years
Bank loans – capital		65,793		65,793		–		–		–
Bank loans – interest		1,156		1,156		–		–		–
Trade and other payables		167,852		167,852		–		–		–
Financial obligation – capital		528,405		21,587		175,932		324,815		6,071
Financial obligation – interest		43,271		14,868		13,289		14,911		203
Lease – capital		7,839		3,609		2,010		2,220		–
Lease – interest		362		74		143		145		–
Hedge derivative financial instruments		18,439		15,804		2,635		–		–
Contingent consideration liability		46,670		–		–		9,924		36,746
Total Contractual Cash Obligations		879,787		290,743		194,009		352,015		43,020

As of December 31, 2020, we had no other commercial commitments.

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G. Reconciliation of Costs Applicable to Sales and Cost Applicable to Sales per Unit Sold

Cost applicable to sales and Cost applicable to sales per unit of mineral sold are not measures of financial performance under IFRS, and may not be comparable to similarly titled measures of other companies. We consider Cost applicable to sales and Cost applicable to sales per unit of mineral sold to be key measures in managing and evaluating our operating performance. These measures are widely reported in the precious metals industry as a benchmark for performance, but do not have standardized meanings. You should not consider Cost applicable to sales or Cost applicable to sales per unit of mineral sold as alternatives to cost of sales determined in accordance with IFRS as indicators of our operating performance. Cost applicable to sales and Cost applicable to sales per unit of mineral sold are calculated without adjusting for by-product revenue amounts.

In calculating these figures, we utilize financial records maintained with respect to the various mining units and subsidiaries, each on a standalone basis. Within the stand-alone accounts for each mining unit or subsidiary, we then allocate cost of sales (excluding depreciation and amortization), exploration in operating units and selling expenses in the proportion to each mineral’s commercial value (realized price multiplied by volume sold).

The tables below set forth (i) a reconciliation of consolidated Cost of sales, excluding depreciation and amortization to consolidated Cost applicable to sales, (ii) reconciliations of the components of Cost applicable to sales (by mine and mineral) to the corresponding consolidated line items set forth on our consolidated statements of profit or loss for the years ended December 31, 2020 and 2019 and (iii) reconciliations of Cost of sales, excluding depreciation and amortization to Cost applicable to sales for each of our mining units. The amounts set forth in Cost applicable to sales and Cost applicable to sales per unit sold for each mine and mineral indicated in the tables below can be reconciled to the amounts set forth on our consolidated statements of profit or loss for the years ended December 31, 2020 and 2019 by reference to the reconciliations of Cost of sales, excluding depreciation and amortization (by mine and mineral), Selling Expenses (by mine and metal) expenses and Exploration in operating units (by mine and mineral) to consolidated Cost of sales, excluding depreciation and amortization, consolidated Selling Expenses and Consolidated Exploration in operating units expenses, set forth below.

Set forth below is a reconciliation of consolidated Cost of sales, excluding depreciation and amortization, to consolidated Cost applicable to sales:

	For the year ended December 31,
	2019		2020
	(in thousands of US$)
Consolidated Cost of sales excluding depreciation and amortization		516,252		395,442
Add:
Consolidated Exploration in operating units		44,163		28,044
Commercial Deductions		220,306		179,748
Consolidated Selling Expenses		24,313		18,533
Consolidated Cost applicable to sales		805,034		621,768

Set forth below is a reconciliation of Cost of sales, excluding depreciation and amortization (by mine and mineral) to consolidated Cost of sales, excluding depreciation and amortization:

	For the year ended December 31,
Cost of sales by mine and mineral	2019		2020
	(US$ in thousands)
Julcani, Gold		166		7
Julcani, Silver		24,405		15,961
Julcani, Lead		971		251
Julcani, Copper		47		23
Orcopampa, Gold		51,154		34,315
Orcopampa, Silver		228		81
Orcopampa, Copper		0		0
Uchucchacua, Gold		0		11
Uchucchacua, Silver		79,562		74,134
Uchucchacua, Lead		14,815		5,119
Uchucchacua, Zinc		19,004		6,326
Tambomayo, Gold		47,741		40,648
Tambomayo, Silver		13,540		12,640
Tambomayo, Lead		4,979		4,123
Tambomayo, Zinc		7,058		3,670

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	For the year ended December 31,
Cost of sales by mine and mineral	2019		2020
	(US$ in thousands)
La Zanja, Gold		37,445		30,373
La Zanja, Silver		1,140		2,499
El Brocal, Gold		8,429		5,541
El Brocal, Silver		26,966		25,652
El Brocal, Lead		20,388		12,331
El Brocal, Zinc		42,537		41,583
El Brocal, Copper		110,979		73,408
Non Mining Units		4,697		6,746
		516,252		395,442

Set forth below is a reconciliation of Exploration in operating units expenses (by mine and mineral) to consolidated Exploration in operating units expenses:

	For the year ended December 31,
Exploration in operating units by mine and mineral	2019		2020
	(US$ in thousands)
Julcani, Gold		38		1
Julcani, Silver		5,593		3,112
Julcani, Lead		223		49
Julcani, Copper		11		4
Orcopampa, Gold		9,000		5,186
Orcopampa, Silver		40		12
Orcopampa, Copper		0		0
Uchucchacua, Gold		0		1
Uchucchacua, Silver		6,257		5,830
Uchucchacua, Lead		1,165		403
Uchucchacua, Zinc		1,495		498
Tambomayo, Gold		7,562		4,763
Tambomayo, Silver		2,145		1,481
Tambomayo, Lead		789		483
Tambomayo, Zinc		1,118		430
La Zanja, Gold		2		2
La Zanja, Silver		0		0
El Brocal, Gold		351		202
El Brocal, Silver		1,124		937
El Brocal, Lead		850		450
El Brocal, Zinc		1,774		1,519
El Brocal, Copper		4,627		2,681
Non Mining Units		0		0
		44,163		28,044

Set forth below is a reconciliation of Commercial Deductions (by mine and mineral) to consolidated Commercial Deductions in operation expenses:

	For the year ended December 31,
Commercial Deductions in operating units by mine and mineral	2019		2020
	(US$ in thousands)
Julcani, Gold		19		11
Julcani, Silver		3,084		2,505
Julcani, Lead		122		38
Julcani, Copper		8		5
Orcopampa, Gold		201		234
Orcopampa, Silver		1		9
Orcopampa, Copper		0		0
Uchucchacua, Gold		-1		1

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	For the year ended December 31,
Commercial Deductions in operating units by mine and mineral	2019		2020
	(US$ in thousands)
Uchucchacua, Silver		29,088		18,831
Uchucchacua, Lead		3,324		1,111
Uchucchacua, Zinc		10,197		2,082
Tambomayo, Gold		7,786		6,266
Tambomayo, Silver		4,265		4,023
Tambomayo, Lead		1,497		1,219
Tambomayo, Zinc		6,170		3,585
La Zanja, Gold		102		376
La Zanja, Silver		2		21
El Brocal, Gold		7,438		5,377
El Brocal, Silver		14,730		17,258
El Brocal, Lead		5,495		6,528
El Brocal, Zinc		27,302		41,907
El Brocal, Copper		99,477		68,360
Non Mining Units		0		0
Consolidated Commercial Deductions in operating units		220,306		179,748

Set forth below is a reconciliation of selling expenses (by mine and mineral) to consolidated selling expenses:

	For the year ended December 31,
Selling expenses by mine and mineral	2019		2020
	(US$ in thousands)
Julcani, Gold		3		0
Julcani, Silver		384		430
Julcani, Lead		15		7
Julcani, Copper		1		1
Orcopampa, Gold		257		435
Orcopampa, Silver		1		1
Orcopampa, Copper		0		0
Uchucchacua, Gold		0		0
Uchucchacua, Silver		4,278		2,751
Uchucchacua, Lead		797		190
Uchucchacua, Zinc		1,022		235
Tambomayo, Gold		2,566		2,570
Tambomayo, Silver		728		799
Tambomayo, Lead		268		261
Tambomayo, Zinc		379		232
La Zanja, Gold		312		74
La Zanja, Silver		9		6
El Brocal, Gold		437		317
El Brocal, Silver		1,399		1,468
El Brocal, Lead		1,057		706
El Brocal, Zinc		2,206		2,379
El Brocal, Copper		5,756		4,200
Non Mining Units		2,439		1,471
Consolidated Selling expenses		24,313		18,533

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Set forth below is a reconciliation of Cost of sales, excluding depreciation and amortization, to Cost applicable to sales and Cost applicable to sales per unit of mineral for the Julcani mine:

	JULCANI
	COPPER (t)				GOLD (oz.)				LEAD (t)				SILVER (oz.)
	For the year ended December 31,				For the year ended December 31,				For the year ended December 31,				For the year ended December 31,
	2019		2020		2019		2020		2019		2020		2019		2020
	(US$ in thousands except operating and per unit data)
Cost of Sales, excluding depreciation and amortization		47		23		166		7		971		251		24,405		15,961
Add:
Exploration in units in operation		11		4		38		1		223		49		5,593		3,112
Commercial Deductions		8		5		19		11		122		38		3,084		2,505
Selling expenses		1		1		3		0		15		7		384		430
Cost applicable to sales		66		33		225		19		1,585		345		33,467		22,008
Divide:
Volume Sold (unaudited)		14		18		179		133		839		306		2,480,173		1,542,568
Cost applicable to sales per unit of mineral sold (US$)		4,788		1,819		1,259		143		1,585		1,126		13.49		14.27

Set forth below is a reconciliation of Cost of sales, excluding depreciation and amortization, to cost applicable to sales and Cost applicable to sales per unit of mineral for the Orcopampa mine:

	ORCOPAMPA
	GOLD (oz.)				SILVER (oz.)
	For the year ended December 31,				For the year ended December 31,
	2019		2020		2019		2020
	(US$ in thousands except operating and per unit data)
Cost of Sales, excluding depreciation and amortization		51,154		34,315		228		81
Add:
Exploration in units in operation		9,000		5,186		40		12
Commercial Deductions		201		234		1		9
Selling expenses		257		435		1		1
Cost applicable to sales		60,612		40,169		271		104
Divide:
Volume Sold (unaudited)		40,702		41,757		15,049		8,113
Cost applicable to sales per unit of mineral sold (US$)		1,489		962		17.98		12.78

Set forth below is a reconciliation of Cost of sales, excluding depreciation and amortization, to cost applicable to sales and Cost applicable to sales per unit of mineral for the Uchucchacua mine:

	UCHUCCHACUA
	LEAD (t)				SILVER (oz.)				ZINC (t)
	For the year ended December 31,				For the year ended December 31,				For the year ended December 31,
	2019		2020		2019		2020		2019		2020
					(US$ in thousands except operating and per unit data)
Cost of Sales, excluding depreciation and amortization		14,815		5,119		79,562		74,134		19,004		6,326
Add:
Exploration in units in operation		1,165		403		6,257		5,830		1,495		498
Commercial Deductions		3,324		1,111		29,088		18,831		10,197		2,082
Selling expenses		797		190		4,278		2,751		1,022		235
Cost applicable to sales		20,101		6,823		119,184		101,547		31,718		9,141
Divide:
Volume Sold (unaudited)		15,347		4,209		9,808,791		4,566,624		15,315		4,066
Cost applicable to sales per unit of mineral sold (US$)		1,310		1,621		12.15		22.24		2,071		2,248

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Set forth below is a reconciliation of Cost of sales, excluding depreciation and amortization, to Cost applicable to sales and Cost applicable to sales per unit of mineral for the Tambomayo mine:

	TAMBOMAYO
	GOLD (oz.)				SILVER (oz.)				LEAD (t)				ZINC(t)
	For the year ended December 31,				For the year ended December 31,				For the year ended December 31,				For the year ended December 31,
	2019		2020		2019		2020		2019		2020		2019		2020
	(US$ in thousands except operating and per unit data)
Cost of Sales, excluding depreciation and amortization		47,741		40,648		13,540		12.640		4,979		4,123		7,058		3,670
Add:
Exploration in units in operation		7,562		4,763		2,145		1,481		789		483		1,118		430
Commercial Deductions		7,786		6,266		4,265		4,023		1,497		1,219		6,170		3,585
Selling expenses		2,566		2,570		728		799		268		261		379		232
Cost applicable to sales		65,655		54,247		20,677		18,944		7,532		6,086		14,725		7,917
Divide:
Volume Sold (unaudited)		96,636		57,633		2,318,434		1,474,485		7,211		6,009		7,850		4,463
Cost applicable to sales per unit of mineral sold (US$)		679		941		8.92		12.85		1,045		1,013		1,876		1,774

Set forth below is a reconciliation of Cost of sales, excluding depreciation and amortization, to cost applicable to sales and Cost applicable to sales per unit of mineral for the La Zanja mine:

	LA ZANJA
	GOLD (oz.)				SILVER (oz.)
	For the year ended December 31,				For the year ended December 31,
	2019		2020		2019		2020
	(US$ in thousands except operating and per unit data)
Cost of Sales, excluding depreciation and amortization		37,445		30,373		1,140		2,499
Add:
Exploration in units in operation		2		2		0		0
Commercial Deductions		102		376		2		21
Selling expenses		312		74		9		6
Cost applicable to sales		37,861		30,825		1,151		2,526
Divide:
Volume Sold (unaudited)		30,710		17,730		80,880		122,180
Cost applicable to sales per unit of mineral sold (US$)		1,233		1,739		14.24		20.67

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Set forth below is a reconciliation of Cost of sales, excluding depreciation and amortization, to cost applicable to sales and Cost applicable to sales per unit of mineral for the El Brocal mine:

	EL BROCAL
	COPPER (t)				GOLD (oz.)				LEAD (t)				SILVER (oz.)				ZINC (t)
	For the year ended December 31,				For the year ended December 31,				For the year ended December 31,				For the year ended December 31,				For the year ended December 31,
	2019		2020		2019		2020		2019		2020		2019		2020		2019		2020
	(US$ in thousands except operating and per unit data)
Cost of Sales, excluding depreciation and amortization		110,979		73,408		8,429		5,541		20,388		12,331		26,966		25,652		42,537		41,583
Add:
Exploration in units in operation		4,627		2,681		351		202		850		450		1,124		937		1,774		1,519
Commercial Deductions		99,477		68,360		7,438		5,377		5,495		6,528		14,730		17,258		27,302		41,907
Selling expenses		5,756		4,200		437		317		1,057		706		1,399		1,468		2,206		2,379
Cost applicable to sales		220,840		148,650		16,656		11,437		27,790		20,015		44,219		45,315		73,818		87,388
Divide:
Volume Sold (unaudited)		41,013		28,948		12,648		7,390		22,598		17,824		3,520,992		2,696,506		36,788		45,442
Cost applicable to sales per unit of mineral sold (US$)		5,385		5,135		1,317		1,548		1,230		1,123		12.56		16.80		2,007		1,923

Set forth below is a reconciliation of Cost of sales, excluding depreciation and amortization, to cost applicable to sales and Cost applicable to sales per unit of mineral for non-mining units:

	NON-MINING UNITS TOTAL
	For the year ended December 31,
	2019		2020
	(US$ in thousands)
Cost of Sales, excluding depreciation and amortization		4,697		6,746
Add:
Exploration in units in operation		0		0
Commercial Deductions		0		0
Selling expenses		2,439		1,471
Total Cost applicable to sales		7,136		8,217

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YANACOCHA

Introduction

The following discussion should be read in conjunction with (i) the Yanacocha Consolidated Financial Statements as of December 31, 2019 and 2020 and for the years ended December 31, 2018, 2019 and 2020 and the related Notes thereto included elsewhere in this Annual Report, and (ii) Item 5 to our 2020 20-F. The Yanacocha Consolidated Financial Statements are prepared and presented in accordance with IFRS as issued by the IASB and in U.S. Dollars.

A. Operating Results

Overview

Yanacocha was established in Peru in January 1992 and commenced production activities in 1993. Yanacocha’s operations are located in the Andes Mountains in Northern Peru, in the area of Cajamarca which is located approximately 600 kilometers north of Lima and north of the city of Cajamarca, at an altitude of 4,000 meters above sea level. Yanacocha is 51.35% owned by Newmont Second Capital Corporation, 43.65% owned by Buenaventura through our wholly-owned subsidiary Condesa and 5% owned by Summit Global Management II VB. Yanacocha is managed by Newmont International Services. See “Item 4. Information on the Company—Yanacocha—B. Business Overview—Management of Yanacocha—General Manager/Management Agreement.”

The table below highlights Yanacocha’s key financial and operating results:

Summary of Financial and Operating Performance

	Year Ended December 31,
	2020			2019
Gold sales (in thousands of US$)		592,394			734,526
Gold sold (oz.)		339,068			529,307
Average gold price received (US$/oz.)		1,747			1,388
Other operating expenses, net (in thousands of US$)		(34,322	)		(35.987	)
Loss for the year (in thousands of US$)		(165,449	)		(95,257	)

Gold sales. Gold sales decreased 19%, or US$ 142 million, from 2019 to 2020, Gold production decreased 35% primarily due to lower mill throughput as a result of the site being placed on care and maintenance, in addition to lower ore grade milled as a result of lower ore grade mined and lower leach production driven by lower tons placed on the leach pad.

Costs applicable to sales. Costs applicable to sales include: (i) operating costs, consisting primarily of direct production costs such as mining and treatment of the ore, which are the most significant components of costs applicable to sales, (ii) depreciation and amortization, (iii) write downs of ore on leach pads to net realizable value expense, (iv) reclamation expenses and (v) other costs. Costs applicable to sales per gold ounce increased 50% primarily due to lower ore grade mined, higher strip ratio, higher gold-price driven royalties and higher leach pad inventory adjustments, partially offset by higher by-product credits from silver sales. Depreciation and amortization per gold ounce increased 70% primarily due to higher depreciation rates as a result of Quecher Main achieving commercial production in the fourth quarter of 2019 and the impact of the site being placed on care and maintenance.

Other operating expenses, net. Other operating expenses, net decreased by 0.05% or US$1.7 million from 2019 to 2020, primarily due to lower exploration and advanced projects as a result of the COVID-19 pandemic restrictions during 2020.

Income tax benefit (expense). Yanacocha’s financial and operating results included an income and mining tax expense of US$53 million in 2020 compared to an expense of US$65 million in 2019. The difference was driven by a higher loss before income tax in 2020 for US$ 112 million as compared to a loss before tax of US$ 30 million in 2019 and higher valuation allowance on deferred income tax assets in 2020 for $ 57 million (US$ 46 million in 2019).

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 Critical Accounting Policies

Yanacocha has furnished us with a discussion of its critical accounting policies or methods used in the preparation of its financial statements. Critical accounting policies are those that are reflective of significant judgments and uncertainties and could potentially impact results under different assumptions and conditions. See Note 4 to the Yanacocha Consolidated Financial Statements for a more complete listing of standards issued but not effective.

The standards and interpretations that are issued as of the date of Yanacocha’s financial statements but not yet effective and are reasonably expected to have an impact on its disclosures, financial position or performance when applied at a future date, are disclosed below. Yanacocha intends to adopt these standards, if applicable, when they become effective. The standards and interpretations not expected to impact Yanacocha’s disclosures, financial position or performance are not listed below. See Note 2.4 to the Yanacocha Consolidated Financial Statements for a more complete listing of Yanacocha’s accounting policies.

Results of Operations for the Years Ended December 31, 2020 and 2019

Sales

Gold sales. Gold sales decreased 19%, or US$ 142 million, from 2019 to 2020, due to lower Gold production. Gold ounces produced decreased 35% due to lower mill throughput as a result of the site being placed on care and maintenance, in addition to lower ore grade milled as a result of lower ore grade mined and lower leach production driven by lower tons placed on the leach pad. Yanacocha has not engaged in gold price hedging activities, such as forward sales or option contracts, to minimize its exposure to fluctuations in the price of gold. 

Costs applicable to sales

Costs applicable to sales for the year ending December 31, 2020 and 2019 comprised: 

	2020			2019
	(US$ in thousands)
Beginning balance of finished goods and in-process		302,382			341,213
Beginning balance of provision for net realizable value		(47,925	)		(89,127	)
Royalties to related parties		18,638			22,297
Mining royalties to the government		7,570			9,255
Consumption of supplies		138,041			200,036
Personnel expenses		61,298			72,325
Other services		31,864			41,120
Maintenance		17,415			26,645
Power		20,241			23,619
Depreciation and amortization		140,252			144,862
Workers’ profit participation		17,199			12,804
Incremental costs related to COVID-19 pandemic and care and maintenance		43,672			-
Reclamation expenses		124,780			142,129
Ending balance of provisions for net realizable value		13,287			47,925
Ending balance of finished goods and in-process		(222,258	)		(302,382	)
		666,456			692,721

Costs applicable to sales. Costs applicable to sales include: (i) operating costs, consisting primarily of direct production costs such as mining and treatment of the ore, which are the most significant components of costs applicable to sales, (ii) depreciation and amortization, (iii) write downs of ore on leach pads to net realizable value expense and (iv) other costs. Costs applicable to sales decreased by 4% or US$ 26 million from 2019 to 2020. Costs applicable to sales per ounce of gold increased by 50% from US$1,309 per ounce in 2019 to US$ 1,965 per ounce in 2020.

Operating costs decreased by 35% from US$363 million in 2019 to US$ 269 million in 2020. Operating costs consist primarily of drilling, blasting, loading, hauling, leaching, milling and metal recovery costs

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Reclamation expenses of US$ 125 million are due to a non-cash charge to reclamation expenses for the year ended December 31, 2020 related to the areas of Yanacocha’s operations no longer in production. The decrease in respect of the reclamation obligation of US$ 17 million in 2020 is mainly due to water treatment costs.

Workers’ profit participation increased by 31%, from US$13 million in 2019 to US$ 17 million in 2020. This increase was driven by higher revenues. Workers’ profit participation expense is calculated based on taxable net income, in accordance with Peruvian labor legislation.

The portion of leach pad inventory write-downs associated with costs applicable to sales decreased from US$41.2 million to US$ 34.6 million due to higher realizable price.

 Depreciation, depletion and amortization decreased by 4% from US$145 million in 2019 to US$ 140 million in 2020. This decrease was attributable principally to lower net book value assets and lower remain useful life.

Administrative expenses

Administrative expenses for the years ended December 31, 2020 and 2019 were composed of: 

	2020		2019
	(US$ in thousands)
Management expenses		874		1,341
Other		353		403
		1,227		1,744

Other operating expenses, net

Other operating expenses, net for the years ended December 31, 2020 and 2019 were as follows:

	2020			2019
	(US$ in thousands)
Exploration and advance project		19,279			33,669
Severance program		4,454			2,210
Cost of sales from the sale of fixed assets		30			2,092
Tax fine		11			2,019
Write-off of fixed assets		460			1,204
Revenue from sale of fixed assets		(40	)		(8,088	)
Social responsibility commitments		6,730			-
Others, net		3,398			2,881
		34,322			35,987

Exploration and advanced project costs decreased from US$34 million in 2019 to US$20 million in 2020. This decrease was mainly driven by Sulfides Studies re-scheduled looking for more challenges to increase project’s value due to re-schedule of Stage 3 Supplemental 2 IC and Exploration Projects expenditures, mainly related to drilling was paralyzed in 2020.

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Impairment of long-lived assets

In 2020, Yanacocha Management identified as an impairment reversal indicator the significant increase in the long-term gold price, as a result the Company had to determinate the recoverable amount for its CGU Yanacocha and CGU Conga. As a result of this analysis the Company concluded that no additional impairment or impairment reversal was required to be recorded as the recoverable amount exceeded the carrying amount of the CGUs’ assets.

Income tax provision.

Yanacocha’s financial and operating results included income and mining tax expense of US$53 million in 2020 compared to US$65 million in 2019. This decrease was driven by the higher valuation allowance on deferred income tax assets in 2020 for US$57 million (US$46 million in 2019), favorable effect of change in translation to US dollars for US$23 million (unfavorable US$4 million in 2019), offset by the higher loss before income tax in 2020 for US$112 million (US$30 million loss in 2019).

Net loss

Net loss increased by US$70.3 million, from net loss of US$95.2 million in 2019 to net loss of US$ 165.5 million in 2020, mainly explained by the lower gold sales.

Results of Operations for the Years Ended December 31, 2019 and 2018

See “Item 5. Operating and Financial Review and Prospects” in our 2019 20-F for a comparative discussion of Yanacocha’s consolidated results of operations for the year ended December 31, 2019 and 2018.

B. Liquidity and Capital Resources

As of December 31, 2020, Yanacocha had cash and cash equivalents of US$871 million, substantially all of which were held in U.S. Dollars, as compared to US$819 million as of December 31, 2019.

Cash provided by operating activities

Yanacocha generated net cash flow from operations of US$122 million in 2020 and US$272 million in 2019. The net cash flow from operations in 2020 was -123% or US$150 million lower than in 2019. The decrease was primarily driven by lower Gold Sales.

Cash used in investing activities

Net cash used in investing activities was US$100 million in 2020 compared to US$176 million in 2019. The decrease in cash used in investing activities was mainly due to timing delays driven by COVID-19 restrictions during 2020.

Cash used in financing activities

Net cash used in financing activities was US$0.3 million in 2020, as compared to cash used was US$0.3 million in 2019. There was no material variance.

Capital Expenditures

In 2020, Yanacocha’s principal capital expenditures of US$143 million were mainly related to Sulfides project, Quecher Main development capital spend and asset components.

C. Research and Development

Not applicable.

D. Trend Information

Other than as disclosed in this Annual Report and the Yanacocha Consolidated Financial Statements (included elsewhere in this Annual Report), Yanacocha has informed us that it is not aware of any trends, uncertainties, demands, commitments or events which are reasonably likely to have a material effect upon Yanacocha’s net sales or revenues, income from continuing operations, profitability, liquidity or capital resources, or that would cause reported financial information to not necessarily be indicative of future operating results or financial condition. 

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E. Off-Balance Sheet Arrangements

Yanacocha has informed us that there are no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on Yanacocha’s financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors. 

F. Tabular Disclosure of Contractual Obligations

The following table shows Yanacocha’s contractual obligations as of December 31, 2020:

	Payments due by Period (US$ in millions)
	Total		Less than 1 year		1-3 years		3-5 years		More than 5 years
Debt instruments		45		-		45		-		-
Right of use liability		0.3		0.3		-		-		-
Trade accounts payable		45		45		-		-		-
Other short-term obligations		12		12		-		-		-
Total Contractual Cash Obligations		102.3		57.3		45		-		-

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CERRO VERDE

Introduction

The following discussion should be read in conjunction with the Cerro Verde Financial Statements as of December 31, 2019 and 2020 and for the years ended December 31, 2018, 2019 and 2020 and the related Notes thereto included elsewhere in this Annual Report, and (ii) Item 5 to our 2019 20-F. The Cerro Verde Financial Statements are prepared and presented in accordance with IFRS as issued by the IASB.

A. Operating Results

Overview

We hold a 19.58% interest in Cerro Verde, which operates an open-pit copper and molybdenum mining complex located 20 miles southwest of Arequipa, Peru. The site is accessible by paved highway. The Cerro Verde mine has been in operation since 1976, and was previously owned by the Peruvian government before its privatization in 1993. Freeport-McMoRan Inc. holds a majority interest in Cerro Verde.

The Cerro Verde mine is a porphyry copper deposit that has leachable oxide and secondary sulfide mineralization, and millable primary sulfide mineralization. The predominant oxide copper minerals are brochantite, chrysocolla, malachite and copper “pitch.” Chalcocite and covellite are the most important secondary copper sulfide minerals. Chalcopyrite and molybdenite are the dominant primary sulfides.

In September 2015, Cerro Verde’s expansion project commenced operations. The project 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.

Cerro Verde’s operation consists of an open-pit copper mine, with a processing capacity of 548,500 metric tons-per-day that includes (i) concentrator facilities with a 409,500 metric ton-per-day capacity (361,500 metric tons-per-day prior to the expansion approved by the MEM 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 tons-per-day. This SX/EW leaching operation has a production capacity of approximately 200 million pounds of copper per year.

As a result of the COVID-19 outbreak in Perú, in March 2020 Cerro Verde temporarily transitioned to a care and maintenance status and adjusted its operations to prioritize critical activities in compliance with the Supreme Decree and declaration of National Emergency issued by the Peruvian government in its efforts to contain the outbreak of COVID-19. Cerro Verde has been gradually restoring its operations from the second quarter 2020 onwards. Also, due to the significant negative impacts of the COVID-19 pandemic on the global economy, Cerro Verde evaluated its near-term operating plans with a focus on maximizing cash flow and protecting liquidity in a weak and uncertain economic environment, and to preserve asset values for anticipated improved copper prices as economic conditions recover. The Company will continue to closely monitor health and market conditions to make further adjustments to mine plans as required.

Cerro Verde has sufficient equipment to move an average of 947,000 tons of material per day using a fleet of haul trucks. Copper cathodes and concentrate production are transported approximately 70 miles by truck and rail to the Pacific Port of Matarani for shipment to international markets.

Cerro Verde receives electrical power under long-term contracts with electric utility companies. Water for Cerro Verde’s processing operations comes from renewable sources through a series of storage reservoirs, which Cerro Verde believes will be sufficient to support its currently planned operations.

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Presented in the table below are certain summary financial and operating data regarding Cerro Verde for the years ended December 31, 2019 and 2020:

	As of and for the year ended December 31,
	2019		2020
Income statement data (1)
Sales (US$ in thousands)		2,896,894		2,538,593
Profit for the year (US$ in thousands)		390,377		274,544
Proven and Probable Reserves (2)
Proven:
Leachable ore reserves (metric tons in thousands)		65,000		49,000
Millable ore reserves (metric tons in thousands)		809,000		701,000
Probable:
Leachable ore reserves (metric tons in thousands)		31,000		25,000
Millable ore reserves (tons in thousands)		3,361,000		3,302,000
Average copper grade of leachable ore reserves (%)		0.32		0.29
Average copper grade of millable ore reserves (%)		0.36		0.36
Production (3)
Cathodes (in thousands of recoverable pounds)		88,098		82,487
Concentrates (in thousands of recoverable pounds)		915,678		737,614
Average realized price of copper sold (US$ per ton payable)		6,375		6,766

(1) Derived from Cerro Verde’s financial statements. See the Cerro Verde Financial Statements, including the Notes thereto, appearing elsewhere in this Annual Report.

(2) Reserve calculations are derived from “Item 3. Key Information – A. Selected Financial Data.” Cerro Verde used US$2.50 per pound of copper to determine copper as of December 31, 2020. The calculation or estimation of proven and probable ore reserves for Cerro Verde may differ in some respects from the calculations of proven and probable reserves for us and Yanacocha located elsewhere in this Annual Report. According to Cerro Verde, ore estimates for Cerro Verde are based upon engineering evaluations of assay values derived from samplings of drill holes and other openings. Cerro Verde’s ore estimates include assessments of the resource, mining and metallurgy, as well as consideration of economic, marketing, legal, environmental, social and governmental factors, including projected long-term prices for copper and molybdenum and Cerro Verde’s estimate of future cost trends..

(3) Derived from “Item 3. Key Information – A. Selected Financial Data”

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, the Company determined that these royalties were not applicable 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 under its current 15-year tax stability agreement, which became effective January 1, 2014. The amount to be paid for the mining royalty will be the greater of a progressive rate of the quarterly operating income or 1% of quarterly sales.

SUNAT 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 2013. The Company contested each of these assessments because it considers 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 the Company began paying royalties on all of its production in January 2014 under its new 15-year stability agreement.

Since 2017, the Company recorded charges of S/2.8 billion (approximately US$771.2 million based on the December 31, 2020, exchange rate, including deferred interest, interest and penalties of US$496.5 million) for the royalty and special mining tax assessments for the period December 2006 through the year 2013. Since 2014, the Company has been paying the disputed assessments under protest for the period from December 2006 through December 2013 under installment payment programs. Through December 31, 2020, the Company has made payments totaling S/1.6 billion under these installment programs (US$476.7 million based on the date of payment exchange rate and US$435.2 million based on the December 31, 2020, exchange rate).

On July 13, 2020, the Company requested the application of the Deferral and / or Installment Regime, approved by Legislative Decree No. 1487, which contemplates a reduced interest rate on the debts administered by SUNAT related to the current installment payment programs of special mining tax for the period October 2011 through December 2013. The request includes a six month of deferred interest and thirty installment payments. This request was approved by SUNAT in August 2020.

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During February 2020, the Company requested the initiation of an arbitration proceeding against the Republic of Peru before the International Centre for Settlement of Investment Disputes (ICSID).

On March 31, 2020, Superintendence Resolution 066-2020/SUNAT was published in which new default monthly interest rates were established effective April 1, 2020. The default interest rate in national currency changes from 1.2% to 1% and in the case of foreign currency it changes from 0.6% to 0.5%. Likewise, interest rates for the return of undue or excess payments in national currency (soles) change from 0.50% to 0.42% and in the case of foreign currency (US Dollars) change from 0.30% to 0.25%. Finally, the interest rate on returns due to withholding and/or non-applied perceptions of VAT changes from 1.2% to 1%.

Critical Accounting Policies

Cerro Verde has furnished us with a discussion of its critical accounting policies and methods used in the preparation of its financial statements. Critical accounting policies are defined as those that are reflective of significant judgments and uncertainties and could potentially impact results under different assumptions and conditions. Note 2 to the Cerro Verde Financial Statements includes a summary of the significant accounting policies and methods used in the preparation of the Cerro Verde Financial Statements. The following is a brief discussion of the identified critical accounting policies and the estimates and judgments made by Cerro Verde.

Contingencies

By their nature, contingencies will only 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.

Stripping cost

Cerro Verde 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 asset stripping activities, where certain criteria are met. 

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 Cerro Verde’s long-term stockpiles, Cerro Verde’s 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 a solution to extraction processing facilities.

Because it is generally impracticable to determine copper contained in mill and leach stockpiles by physical count, a 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 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.

Determination of mineral reserves

Mineral reserves are the parts of mineral deposit ore that can be economically and legally extracted from the mine concessions. Cerro Verde 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.

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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 Cerro Verde 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.

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 where the asset is located. These calculations require the use of estimates and assumptions, including the amount of recoverable reserves.

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% 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.

Provision for remediation and Mine Closure

Cerro Verde 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) to the Cerro Verde Financial Statements, 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 Cerro Verde’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 Cerro Verde. 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 is based on estimates of future commodity prices.

If any change in the estimate results in an increase to the provision for remediation and mine closure and related ARC, Cerro Verde 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.”

Impairment of Long-lived Assets

Cerro Verde has determined that its operations consist of one cash generating unit. Therefore, Cerro Verde’s operations are evaluated at least annually in order to determine if there are impairment indicators. If any such indication exists, Cerro Verde 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.

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.

Once Cerro Verde has identified its production stripping costs for each surface mining operation, it identifies the separate components of the ore bodies for each of its mining operations. An identifiable component is the 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.

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Results of Operations for the Years Ended December 31, 2020 and 2019

Sales. Sales, including mark-to-market adjustments for pounds of copper pending settlement, decreased by 12%, from US$2,896.9 million in 2019 to US$2,538.6 million in 2020, principally due to lower sales volume (associated with lower copper production derived from revised operating plans because of COVID-19 pandemic impact). The following table reflects the average realized price and volume sold of copper (both cathode and concentrate) during the years ended December 31, 2019 and 2020:

	Year ended December 31,
	2019		2020		Variation
Average price
Copper (US$ per ton)		6,375		6,766		6	%
Volume sold (unaudited)
Copper (in tons)		454,430		375,185		-17	%

Average realized copper prices per ton increased from US$6,375 in 2019 to US$6,766 in 2020. The volume of copper sold decreased from 454,430 tons in 2019 to 375,185 tons in 2020. The combined effect of these changes resulted in a US$358.3 million decrease in income from sales in 2020 compared to 2019.

Total costs of sales of goods. Total costs of sales of goods decreased from US$1,961.6 million in 2019 to US$1,809.3 million in 2020, due mainly to the net effect of the following:  

(a)       Materials and supplies decreased by 16%, from US$693.3 million in 2019 to US$581.7 million in 2020, mainly due to lower operations and maintenance supplies consumption associated with lower tons mined and lower throughput in mills (primarily due to care and maintenance period in year 2020 due to COVID-19 situation)

(b)       Depreciation and amortization decreased by 9%, from US$535.0 million in 2019 to US$484.2 million in 2020 primarily related to lower units-of-production depreciation (lower copper production), lower amortization of capitalized stripping (lower tons mined).

(c)       Energy costs decreased by 12%, from US$228.9 million in 2019 to US$200.8 million in 2020 due to lower diesel price and consumption and lower power consumption. 

(d)       Benefits associated with work in process inventories increased by 112%, from US$(23.4) million in 2019 to US$(49.6) million in 2020 due to lower mill pounds removed. 

(e)       In year 2020 the company recognized charges totaling US$95.7 million, associated with the COVID-19 pandemic and revised operating plans.

Total operating expenses. Operating expenses decreased by 12%, from US$146.9 million in 2019 to US$130.0 million in 2020 due mainly to the following:  

(a)       Selling expenses decreased by 11%, from US$109.5 million in 2019 to US$97.7 million in 2020, mainly due to a lower land and ocean freight as a result of lower concentrate sold. 

Income tax. Income tax expense, including current and deferred expense, decreased by 21%, from an expense of US$298.1 million in 2019 to an expense of US$236.9 million in 2020 primarily due to lower profit generated in 2020.   

Profit of the year. As a result of the foregoing, profit of the year decreased by 30%, from US$390.4 million in 2019 to US$274.5 million in 2020. As a percentage of net sales, net income was 11% in 2020, compared to 13% in 2019.    

Results of Operations for the Years Ended December 31, 2019 and 2018

See “Item 5. Operating and Financial Review and Prospects” in our 2019 Form 20-F for a comparative discussion of Cerro Verde’s consolidated results of operations for the year ended December 31, 2019 and 2018.

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B. Liquidity and Capital Resources

As of December 31, 2020, Cerro Verde had cash and cash equivalents of US$533.7 million, compared to US$481.5 million as of December 31, 2019.   

Cash provided by operating activities for the years ended December 31, 2020 and 2019. Net cash and cash equivalents provided by operating activities were US$638.3 million in 2020, compared to net cash provided by operating activities of US$820 million in 2019. This change in net cash flow provided by operating activities in 2020 compared to 2019 was mainly attributable to the following factors:

• A decrease in proceeds from sales from US$2,885 million in 2019 to US$2,418 million in 2020.

• A decrease in operational payments from US$1,662 million in 2019 to US$1,554 million in 2020. 

• A decrease in income tax payments and royalty case payments from US$403 million in 2019 to US$226 million in 2020 

Cash used in investing activities for the years ended December 31, 2020 and 2019. Net cash used in investing activities decreased from US$479.3 million in 2019 to US$271.7 million in 2020, mainly due to lower payments related to the purchase of property, plant and equipment in year 2020 associated to COVID-19 pandemic (revised capital needs).    

Cash used in financing activities for the years ended December 31, 2020 and 2019. Net cash and cash equivalents used in financing activities was US$314.4 million in 2020, compared to net cash used in financing activities of US$360.5 million in 2019. The decrease in net cash in financing activities was primarily due to the decision of not making dividends payments in year 2020 (US$150 million was paid in year 2019) partially offset by higher syndicated bank loan payment repayments for US$105 million.  

Long-term Debt

As of December 31, 2020, Cerro Verde had total long-term debt of US$592.4 million mainly in connection with the senior unsecured credit facility and lease liabilities.

C. Research and Development

Not applicable.

D. Trend Information

Other than as disclosed in this Annual Report, Cerro Verde has informed us that it is not aware of any trends, uncertainties, demands, commitments or events which are reasonably likely to have a material effect upon Cerro Verde’s net sales or revenues, income from continuing operations, profitability, liquidity or capital resources, or that would cause reported financial information to not necessarily be indicative of future operating results or financial condition.    

E. Off-Balance Sheet Arrangements

Cerro Verde has informed us that there are no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on Cerro Verde’s financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.

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F. Tabular Disclosure of Contractual Obligations

The following table shows Cerro Verde’s contractual obligations as of December 31, 2020:

			Payments due by Period (US$ in millions)
	Total		Less than 1 year		1-5  years		More than 5 years
Trade and other payables		207,625		207,625		-		-
Accounts payable – related parties		3,446		3,446		-		-
Other financial liabilities		602,668		10,223		560,750		31,695
Other accounts payable		411,857		126,465		285,392		-
Total Contractual Cash Obligations		1,225,596		347,759		846,142		31,695

ITEM 6. Directors, Senior Management and Employees

A. Board of Directors and Senior Management

Our Board is responsible for policy decisions and our overall direction and other corporate matters in accordance with our By-laws and the Peruvian Companies Law. Our executive officers oversee our business and are responsible for the execution of the policy decisions of the Board. The Board, which must be composed of seven members, is elected at the Annual Mandatory Meeting of shareholders (the “Annual Mandatory Meeting”) for a three-year term. The most recent Board election took place in March 2017 and the next one is scheduled to take place in the next Annual Mandatory Meeting, which as of the date of this report is still to be rescheduled once the current emergency restrictions on public gatherings are lifted. See “Item 10. Additional Information—B. Memorandum and Articles of Association.”

Our current directors and executive officers are as follows:

Name	Age	Position	Date First  Appointed	Current Term Ends
Directors
Roque Benavides(1)	66	Chairman of the Board	1980	March 2023
Felipe Ortiz-de-Zevallos	73	Director	2003	March 2023
Marco Antonio Zaldívar	60	Director	2020	March 2023
William Champion	67	Director	2016	March 2023
Diego de la Torre	58	Director	2017	March 2023
Nicole Bernex	71	Director	2018	March 2023
Raúl Benavides (1)	65	Director	2020	March 2023
Executive Officers
Leandro Garcia	53	Chief Executive Officer	2020
Daniel Dominguez	43	Vice President and Chief Financial Officer	2020
Aldo Massa	49	Vice President of Business Development and Commercial	2021
Alejandro Hermoza	59	Vice President Community Relations	2008
Juan Carlos Ortiz	50	Vice President Operations	2018
Gulnara la Rosa	56	General Counsel	2012

(1) Roque Benavides is the brother of Raúl Benavides.

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Set forth below is biographical information concerning members of our board and management.

Roque Benavides, Chairman of the Board and member of the Nominating Committee. Mr. Benavides received his degree in Civil Engineering from the Pontifical Catholic University of Peru (PUCP) in 1977 and his Master of Business Administration from the Henley Business School at the University of Reading in the U.K. in 1980. He completed the Management Development Program at the Harvard Business School in 1985 and the Advanced Management Programme at Oxford University in 1997. He is currently Chairman of the Board and a member of the board of directors of some of the Company’s related entities. He is also a member of the board of directors of Banco de Crédito del Perú and UNACEM. He was previously President of the Peruvian Mining, Oil, and Energy Association (SNMPE) and the Peruvian Confederation of Private Business Institutions (CONFIEP).

Felipe Ortiz-de-Zevallos, Director and member of the Audit Committee, Compensation Committee and Nominating/Corporate Governance Committee. Mr. Ortiz-de-Zevallos has been a member of the Board since August 2003. He was the Rector of the Universidad del Pacífico from 2004 to 2006. He is the founder of Grupo APOYO and has been the president of the organization since 1977. He received his degree in Industrial Engineering from the National University of Engineering (UNI) (and obtained his MSc in Administration and Systems from the University of Rochester. He graduated from the OPM Program at Harvard Business School in 1996. He also served as Peruvian Ambassador to the United States from September 2006 to March 2009.

Marco Antonio Zaldivar, Director. Mr. Zaldívar, a certified Public Accountant, graduated from the Universidad de Lima. He also graduated from PAD’s the Management Development Program at the Universidad de Piura and holds a Master of Business Administration from the Adolfo Ibáñez School of Management, USA. He is also a member of the board of directors of various companies, including Backus & Johnston, Banco Santander and Cementos Pacasmayo. He was previously Chairman of the board of directors of the Lima Stock Exchange and the second Vice President of Confiep.

Diego de la Torre, Director.  Mr. de la Torre holds a bachelor’s degree in Business Administration from Universidad del Pacífico in Lima and his Master in Business Administration from the London Business School in England. He is a cofounder and Chairman of the Board of La Viga and Quikrete Perú. He is also a member of the Advisory Committee of the David Rockefeller Center for Latin American Studies at Harvard University, as well as an economics columnist for the newspaper El Comercio. He was previously a professor at the Universidad del Pacífico for twelve years and a member of the board of directors of several companies and institutions, including Endeavor Perú, IPAE and Perú 2021. Since 2005, he has been the president of the United Nations Global Compact in Peru. In 2013, he received the “Empresario Integral” award given by the Latin American Business Council. Also, in 2015, he was selected among the “Top 100 Influential Leaders” by AACSB International. He has been a member of the Board of Directors since 2017.

Nicole Bernex, Director. Ms. Bernex received her PhD in Geography from the Paul Valéry University of Montpellier (France). She has served as professor of the Department of Humanities of the Pontifical Catholic University of Peru (PUCP), academic director of the Research Center in Applied Geography (CIGA) of the PUCP, president of the Geographic Society of Lima and president emeritus of the Peruvian Forum for Water (GWP Peru). Ms. Bernex is also a member of the National Academy of Sciences of Peru, the esteemed Water Program of the Inter-American Network of Academies of Sciences (IANAS) and the Steering Committee of 2030 WRG. She has been the director of several research projects and programs, including the “Scientific, legal and financial design of the Scientific Institute of Water – ICA” (CONCYTEC-IRD-PUCP) and the “Water, Climate and Development Program – PACyD” of Global Water Partnership South America. She has been published more than 160 times in many books, articles and other publications.

William Champion, Director. Mr. Champion earned his bachelor’s degree in Chemical Engineering and Biology from the University of Arizona, in Tucson, Arizona, United States. He has been a Member of the Board since January 2016 and also serves as a director of Gladiator Mining Group LLC, a private mining investment company based in the United States. With over 40 years of executive, management, and operating experience in the mining sector, Mr. Champion worked at Rio Tinto PLC from 2002 to 2014 in various positions, was managing director of Rio Tinto Coal Australia and Rio Tinto Diamonds, served as president and chief executive officer of Kennecott Utah Copper and worked at Phelps Dodge Mining Company from 1984 to 1995, where he held different positions, including president of Phelps Dodge de Chile.

Raúl Benavides Ganoza, Director. Mr. Benavides earned his bachelor’s degree in Mining Engineering from the University of Missouri—Rolla, Master of Mining Administration from Pennsylvania State University, and completed the Advanced Management Program at Harvard Business School (AMP-160). He has served as President of the IIMP, as well as being the Founder and President of the Mining Safety Institute (ISEM). He is currently the President of the vocational mining school CETEMIN. He has worked at Buenaventura since 1980, and is the Director of 11 related companies.

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Leandro Garcia, Chief Executive Officer. Mr. Garcia earned his bachelor’s degree in business administration and a bachelor’s degree in accounting from Universidad del Pacífico and his Master of Business Administration from the University of Miami in Florida. He completed the Management Development Program at Harvard Business School in 2017. He held the position of Treasury Head at Buenaventura from 1990 to 1997. He also worked as the finance manager at Sociedad Minera El Brocal until 2000. , as general manager of Boticas BTL until 2005, and general manager of Boticas Inkafarma until June 2011. He rejoined Buenaventura as Controller General in July 2011. He has also served as director of Química Suiza Retail, the business that manages the Mi Farma pharmacy chain, from January 2016 until January 2018. Mr. Garcia has also served as Chief Executive Officer of Consorcio Energético de Huancavelica and a director of Sociedad Minera El Brocal, Compañía Minera Condesa y Empresa de Generación Huanza.

Daniel Dominguez, Vice President and Chief Financial Officer. Mr. Dominguez earned his bachelor’s degree in Economics and a Master of Business Administration from Universidad del Pacifico. He also successfully completed the Harvard Business School General Management Program (GMP-16) in 2015 and the London Business School Corporate Finance Program in 2010. Mr. Dominguez has served in several positions at Buenaventura, most recently as Supply Chain Manager since 2017. Prior to this role, he was the Company’s Financial Planning and Investor Relations Manager from 2016 to 2017, Director of Treasury and Financial Planning from 2012 to 2016, and Head of Treasury from 2003 to 2012. He began his career in 2000 as Head of Treasury at IMINSUR, previously a subsidiary of Buenaventura. Since September 2020, he has been appointed as Vice President and Chief Financial Officer.

Aldo Massa, Vice President of Business Development and Commercial. Mr. Massa earned his bachelor’s degree in Business Administration from the Universidad de Lima and received an MBA from Universidad del Pacifico, also in Lima. Mr. Massa served as Buenaventura’s Commercial Manager since February 2020. He has more than 23 years of mining industry experience with Companies including Southern Copper Corporation, part of the Mexico Group, where he held the role of Corporate Commercial Director for Peru, Mexico, the United States and Spain. Since January 2021, he has been appointed as Vice President of Business Development and Commercial.

Juan Carlos Ortiz, Vice President of Operations. Mr. Ortiz earned his bachelor’s degree in mining engineering from the Pontificia Universidad Católica del Peru in 1992. He also holds a Master’s in Engineering, with a focus on Mineral Engineering Management, from Pennsylvania State University. Prior to assuming his new role at Buenaventura, Mr. Ortiz was the Technical Services Manager at Volcan Compañia Minera, a polymetallic mining company and one of the largest producers of zinc, lead and silver in the world, where he was responsible for the departments of Engineering, Projects, Planning and Environmental Matters as well as Volcan’s Alpamarca and Cerro de Pasco operations. Prior to this post, he served Chief Operations Officer at Compañía Minera Milpo (now part of the Nexa Resources Group), where he was responsible for the Cerro Lindo, Atacocha and El Porvenir operations.

Alejandro Hermoza Maraví, Vice President of Labor, Social and Environmental Affairs. Mr. Maraví graduated from the University of Maryland with a bachelor’s degree in Mechanical Engineering and a Master in Engineering and from the Peruvian University of Applied Sciences (UPC) with a Master in Administration. He previously worked as the Development Manager of the Peruvian Confederation of Private Business Institutions (CONFIEP) and has worked at Buenaventura since 2003, where he has held the position of community relations manager from 2008 to 2011 and deputy manager of Administration and Human Resources from 2003 to 2008. In 2011, he completed the Advanced Management Program at Harvard Business School.

Gulnara La Rosa, General Counsel. Ms. La Rosa received her law degree from Pontificia Universidad Católica del Perú in 1992. She also completed the Corporate Law Specialization Program at Universidad de Navarra, Spain, in 1991 and the High Specialization Program of Finance and Corporate Law at ESAN Graduate School of Business, Peru, in 2001. In addition, Ms. La Rosa attended the Management Program for Lawyers at Yale School of Management in 2005 and the Corporate Governance and Performance Program at Yale School of Management in 2012. Ms. La Rosa has worked at Buenaventura since 1990. She was the legal director from 2006 to 2012 and was appointed as legal manager and general counsel in July 2012. Ms. La Rosa served as the head of the Legal Department from 1997 to 2006 and as a staff attorney from 1991 to 1997.

B. Compensation

During the year ended December 31, 2020, the aggregate amount of compensation that we paid to all directors and executive officers was approximately US$13.4 million, including director’s fees accrued in 2019 and paid in 2020. We do not disclose to our shareholders or otherwise make public information with respect to the compensation of our individual directors or executive officers. Please refer to Note 30(d) to the Consolidated Financial Statements for further information. 

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C. Board Practices 

Audit Committee

The Audit Committee, which is composed entirely of independent directors as defined in Section 303A.02 of the New York Stock Exchange’s Listed Company Manual, is responsible for assisting the Board in the appointment of independent auditors, upon delegation of such responsibility by the shareholders at the general meeting of shareholders (the “General Meeting”) and reviewing the scope of internal and external audits. The Audit Committee also reviews compliance with internal control systems, reviews our annual and quarterly consolidated financial statements, reviews consolidated financial statements before their presentation to the Superintendencia del Mercado de Valores, or the “SMV” (formerly known as the Comisión Nacional Supervisora de Empresas y Valores (National Supervisory Commission of Business and Securities) (“CONASEV”)), the Bolsa de Valores de Lima (Lima Stock Exchange) and the SEC and maintains the integrity of the preparation of audits. The members of the Audit Committee are Messrs. Zaldívar, Ortiz-de-Zevallos and de la Torre.

Compensation Committee

The compensation committee is responsible for evaluating executive performance and approving executive compensation, including compensation of the chief executive officer and any stock option compensation plans. The members of the Compensation Committee for 2020 were Messrs. Ortiz-de-Zevallos, Roque Benavides and de la Torre.

Nominating Committee

The Nominating Committee is responsible for preparing the proposals for the General Meetings in respect of the composition of the Board along with the director remuneration to be approved by the shareholders. The members of the Nominating Committee for 2020 were Messrs. Roque Benavides, Morales and Ortiz-de-Zevallos.

Corporate Governance Committee

The corporate governance committee is responsible for monitoring issues and practices related to corporate governance and proposing necessary actions in respect thereof. The members of the Corporate Governance Committee for 2020 were Messrs. Roque Benavides, Morales and Ortiz-de-Zevallos.

Innovation and Sustainability Committee 

The Innovation and Sustainability Committee is responsible for monitoring initiatives and practices related to Innovation and Sustainability. The members of the Innovation and Sustainability Committee for 2020 were Miss Nicole Bernex, Messrs. Roque Benavides, and de la Torre.

D. Employees

As of December 31, 2020 we, including our subsidiaries and Coimolache, had 2,934 employees (including permanent and temporary employees). In addition, we have entered into arrangements with independent contractors that employed 8,985 workers at our operations. We have sought to strengthen our workforce by implementing a qualifications-based hiring policy and, with respect to employees working in the mines, reducing the average age of the workforce. As of December 31, 2020, the average tenure of Buenaventura’s permanent laborers was approximately 10 years.

Of the 2,897 permanent employees (considers employees working on an indefinite term contract) employed by Buenaventura, its subsidiaries and Coimolache, approximately 51% are members of 14 different labor unions (including five unions for clerical workers and nine unions for laborers), representing all aforementioned clerical workers and laborers in collective negotiations. There are also five unions for workers employed by independent contractors that were formed over the last eight years in our mines at Uchucchacua, Orcopampa and Julcani, El Brocal and Coimolache.

Each of the labor unions is company-based with an affiliation to a national union. Administrative personnel are not represented by unions. Labor relations for unionized and non-unionized employees in our production facilities, including compensation and benefits, are governed by collective bargaining agreements, the terms and length of which are negotiated throughout the year as the various collective bargaining agreements come up for renewal. These collective bargaining agreements are typically one year in length and set wages for the applicable period and benefits such as overtime, bonuses and family benefits.

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Compensation received by our employees includes salary, other cash payments (such as overtime, vacation pay and bonuses, including, but not limited to, high altitude and underground mining bonuses) and non-cash benefits. Non-cash benefits include medical insurance, life insurance and training programs for workers and administrative staff. For mine and processing plant workers, benefits also include transportation services, meals or food allowances, education for children of our employees and housing, hospitals and a full range of social services for our permanent employees and their families at town sites near our mines in compliance with mining regulations. We voluntarily provide power, water and sewage services for the camp and houses of the workers as well as for certain towns nearby. In addition, pursuant to a profit-sharing plan mandated by Peruvian labor legislation, employees of mining companies in Peru are entitled to receive the employee profit sharing amount equivalent to 8% of the annual pre-tax profits of their employer, 50% of such profits to be distributed based on the number of days each employee worked during the preceding year and the remaining 50% of such profits to be distributed based on the aggregate annual salary of each employee. Effective January 1, 1997, the annual payment to each employee under the profit sharing plan cannot exceed 18 times such employee’s monthly salary, and any difference between the employee profit sharing amount and the aggregate amount paid to employees must be contributed by us to FONDOEMPLEO, a fund established to promote employment and employee training.  

Under Peruvian law, we may dismiss workers for cause by following certain formal procedures. We may dismiss a worker without cause, provided that we pay such worker a layoff indemnification in an amount equal to one and a half month’s salary for each full year worked plus the pro rata portion for any uncompleted year, not to exceed in the aggregate 12 months’ salary, and subject to the worker’s acceptance. Several decisions adopted by the Peruvian Constitutional Court, holding that an employee is entitled for reinstatement if no cause for dismissal is expressed by the employer or for failure to present evidence supporting the employer’s grounds, have limited our ability to dismiss a worker without cause. However, all employees are entitled to a severance payment upon termination of their employment, regardless of the reason for such termination, equal to approximately one month’s salary for each full year worked plus the pro rata portion for any uncompleted year. Pursuant to the Peruvian labor laws enacted in 1991, we deposit funds for severance payments in a special bank account selected by each employee and for the benefit of such employee, in both May and November of each year (approximately 50% of a monthly salary each time).

Our permanent employees receive the benefit of one of two types of pension arrangements. All workers can choose to enroll in a public pension fund managed by the state (the “ONP” system) or in a private pension fund (the “AFP” system). We are required to withhold from each of the salaries of the employees enrolled in the ONP system 13% of such employee’s salary, and pay such amount to the ONP system and withhold from the salary of each employee enrolled in the AFP system approximately 12.5% of such employee’s salary, and pay such amounts to the respective AFP (exact amount varies from one AFP to another). Additionally, for workers involved in mining and metallurgical processes, an additional 2% is withheld from their salaries, and we contribute an additional 2% to increase their pension funds. We have no liability for the performance of these pension plans. Our independent contractors are responsible for covering severance and pension payments with respect to their employees.

In addition, we pay EsSalud, the Social Health Insurance Institute of Peru, 9% of our total payroll for general health services for all permanent employees. Further, Law No. 26790 also requires us to provide private insurance representing an average payment equal to 1.30% of the payroll of covered employees for employment-related incapacity and death for blue collar employees and other employees exposed to mining-related hazards.

E. Share Ownership

 As of March 31, 2021, our directors and executive officers, as a group, owned 27,740,370 Common Shares, representing 10.93% of all 253,986,867 Common and Investment Shares outstanding.

The share ownership of the Company’s directors and executive officers on an individual basis as of March 31, 2021 is set forth below:

Shareholder	Number of  Common  Shares		Percentage  Beneficial  Ownership of Common  Shares		Number of  Investment  Shares		Percentage  Beneficial  Ownership of Investment  Shares		Number of  Common  Shares and  Investment  Shares		Percentage Beneficial Ownership of Common Shares and Investment Shares
Roque Benavides †		13,912,006		5.48		—		—		13,912,006		5.48
William Champion		—		—		—		—		—		—
Nicole Bernex		—		—		—		—		—		—
Felipe Ortiz-de-Zevallos		—		—		—		—		—		—
Raúl Benavides ††		13,813,836		5.44		—		—		13,813,836		5.44
Diego de la Torre		14,528		0.01		—		—		14,528		0.01
Marco Antonio Zaldivar		—		—		—		—		—		—
Leandro Garcia		—		—		—		—		—		—
Juan Carlos Ortiz		—		—		—		—		—		—
Alejandro Hermoza		—		—		—		—		—		—
Daniel Dominguez		—		—		—		—		—		—
Aldo Massa		—		—		—		—		—		—
Gulnara la Rosa		—		—		—		—		—		—
Directors and Executive Officers as a Group †		27,740,370		10.93		—		—		27,740,370		10.93

† Includes Common Shares owned by the applicable director or officer and his or her spouse.

†† Includes Common Shares owned by the applicable director his sons and daughters.

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ITEM 7. Major Shareholders and Related Party Transactions

A. Major Shareholders

 As of March 31, 2021 we had 253,715,190 Common Shares outstanding, exclusive of 21,174,734 were treasury shares, and 271,677 Investment Shares, exclusive of 472,963 were treasury shares. The Common Shares are voting securities. The table below sets forth certain information concerning ownership of (i) the Common Shares and Investment Shares and (ii) the aggregate Common Shares and Investment Shares, as of March 31, 2021, with respect to each shareholder known to us to own more than 2.5% of the outstanding Common Shares and with respect to all directors and executive officers as a group.

Shareholder	Number of  Common Shares		Percentage  Beneficial  Ownership of Common  Shares (1)(2)		Number of  Investment  Shares		Percentage  Beneficial  Ownership of  Investment  Shares (1)(3)		Number of  Common  Shares and  Investment  Shares		Percentage  Beneficial  Ownership of Common  Shares and  Investment  Shares (1)(4)
Van Eck Associates Corp		25,716,376		10.14		—		—		25,716,376		10.13
T. Rowe Price Associates, INC		18,244,364		7.19		—		—		18,244,364		7.18
Blanca Benavides de Morales		14,133,836		5.57		—		—		14,133,836		5.56
Roque Benavides Ganoza		13,912,006		5.48		—		—		13,912,006		5.48
Raul Benavides Ganoza (5)		13,813,836		5.44		—		—		13,813,836		5.44
Fidelity Management & Research Company		11,492,676		4.53		—		—		11,492,676		4.52
AFP Integra S.A.		10,713,607		4.22		—		—		10,713,607		4.22
Blackrock Fund Advisors		7,035,042		2.77		—		—		7,035,042		2.77
Scotiabank Wealth Management		7,019,009		2.77		—		—		7,019,009		2.76
State Street Global Advisors (SSGA)		6,872,015		2.71		—		—		6,872,015		2.71
Westwood Global Investments, LLC		6,382,161		2.52		—		—		6,382,161		2.51

(1)	The table above excludes treasury shares. As of March 31, 2021 Buenaventura held 14,474 Common Shares and 1,230 Investment Shares and our wholly-owned subsidiary, Condesa, held 21,160,260 Common Shares and 471,733 Investment Shares.
(2)	Percentage calculated on the basis of 253,715,190 Common Shares outstanding, which excludes 21,174,734 treasury shares.
(3)	Percentage calculated on the basis of 271,677 Investment Shares outstanding, which excludes 472,963 treasury shares.
(4)	Percentage calculated on the basis of 253,986,867 Common Shares and Investment Shares outstanding, which excludes 21,647,697 treasury shares.
(5)	Common Shares owned by Raul Benavides’ children.

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As of March 31, 2021, we estimate that 215,339,787 Common Shares were held in the U.S., which represented approximately 84.87% of Common Shares outstanding. The number of institutional record holders of our Common Shares (or of ADSs representing our Common Shares) in the U.S. was 53 institutions.

B. Related Party Transactions

Except as otherwise disclosed herein, no director, senior officer, principal shareholder or any associate or affiliate thereof had any material interest, direct or indirect, in any transaction since the beginning of our last financial year that has materially affected us, or in any proposed transaction that would materially affect us. Except as otherwise disclosed herein, we have entered into no transactions with parties that are not “related parties” but who would otherwise be able to negotiate terms not available on an arm’s-length basis. From time to time in the ordinary course of business, we enter into management, exploration, mine construction, engineering and employment contracts with joint venture companies in which one or more of our direct or indirect subsidiaries holds equity or partnership interests.

The compensation of our key executives (including the related income taxes we assumed in connection therewith) amounted to US$15.5 million in 2018, US$14.4 million in 2019 and US$13.4 million in 2020. Please refer to Note 30(d) to the Consolidated Financial Statements for further information.

Chaupiloma is the legal owner of the mineral rights operated by Yanacocha and receives a 3% royalty based on quarterly sales, after deducting refinery and transportation costs. Royalties amounted to US$20.4 million, US$22.3, and US$18.6 million in 2018, 2019 and 2020, respectively, and are presented as royalty income in our consolidated statements of income.

Condesa did not receive cash dividends from its investment in Yanacocha in 2018, 2019, or 2020.

In 2018 and 2019, we received cash dividends from Sociedad Minera Cerro Verde S.A.A. in an amount of US$39.2 million, US$29.4 million, respectively. We did not receive cash dividends in 2020 from this investment.

We received cash dividends from Coimolache of approximately US$7.6 million in 2018, US$4.0 million in 2019, and US$3.6 million in 2020.

During 2017, we received an advanced payment of US$124.8 million for the long-term loan held with Sociedad Minera Cerro Verde S.A. from 2015.

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In November 2000, Conenhua signed an agreement with Yanacocha for the construction and operation of a 220 kW transmission line between Trujillo and Cajamarca, a 60 kW transmission line between Cajamarca and La Pajuela, and the Cajamarca Norte substation; this agreement also encompassed activities necessary to enlarge the Trujillo substation. In June 2006, an addendum to this contract extended the completion date to June 2007. Concurrently, we and Yanacocha signed a 10-year agreement covering electric energy transmission and infrastructure operation beginning in 2007. In exchange for us operating and managing the transmission project, Yanacocha pays a fee of US$3.7 million with annual maturities. The annual revenues for these services amounted to approximately US$0.4 million in 2017 and 2018, US$0.3 million in 2019, and US$0.3 million in 2020.

C. Interests of Experts and Counsel

Not applicable.

ITEM 8. Financial Information

A. Consolidated Statements and Other Financial Information

Consolidated Financial Statements

See “Item 19. Exhibits” for a list of consolidated financial statements filed under Item 18.

Other Financial Information

Export Sales

See “Item 4. Information on the Company—Buenaventura—B. Business Overview—Sales of Metal Concentrates—Sales and Markets” for information on export sales.

Legal Proceedings

SUNAT litigation

Buenaventura is involved in legal proceedings against SUNAT in connection with SUNAT’s refusal to recognize Buenaventura’s deductions in respect to contracts for physical deliveries and certain contractual payments made by the Company during the years 2007 and 2008, as well as tax loss which was offset in 2009 and 2010.

During 2007 and 2008, Buenaventura modified its gold client contracts, shifting from a fixed price arrangement to a variable price arrangement which allowed the Company to appropriately benefit from improved market prices. This change incurred significant expenses for Buenaventura during the 2007-2008 two-year transition period, which also impacted the income tax payable by Buenaventura for said fiscal years. However, the modified pricing structure also favorably impacted Buenaventura’s financial results with a corresponding increase in Buenaventura’s income tax payment to SUNAT.  

SUNAT’s position is that Buenaventura should disregard the additional expenses incurred in connection with the shift to variable price arrangement for purposes of calculating its income tax for fiscal years 2007 and 2008. According to SUNAT, said payments correspond to an early settlement of financial derivative contracts in situations where the Company did not establish the purpose or risks covered by such instruments. Additionally, SUNAT does not recognize the tax losses which the Company offset during fiscal years 2009 and 2010, related to the losses incurred during fiscal years 2007 and 2008.  

The claim for the years 2007, 2008, 2009 and 2010 initially amounted to 373.3 million soles (approximately US$103.7 million) which, according to SUNAT’s estimations, amounted to 2,107.5 million soles (approximately US$585.4 million) including penalties and accrued interest as of the date of commencement of the collection proceedings.  

On November 26, 2020, following the intervening tax court’s decision to dismiss the Company’s appeal against certain Administrative Resolutions issued by SUNAT in connection with the above-referenced matter, SUNAT began collection proceedings in respect of such amounts. Following the commencement of such collection proceedings by SUNAT, the Company filed a request for deferral and payment plan of the amounts claimed by SUNAT in order to make such tax payments over a 67 month term, in addition to making interest payments in connection with such payments. The requested payment plan consists of an initial payment in an amount equal to 14% of the amount claimed by SUNAT and 66 equal installments for the remaining amounts. In order to finalize the deferral and payment agreement with SUNAT, the Company was required to deliver Letters of Credit in an amount equal to the aggregate claimed amount in accordance with applicable law. To satisfy this requirement, on December 30, 2020, the Company entered into the Syndicated L/C Agreement with a group of financial entities and following delivery of the Letters of Credit, SUNAT approved the Company’s payment plan.

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See Note 29 (d) to the Consolidated Financial Statements for additional information.

Dividends and Dividend Policy

We can distribute three kinds of dividends: (i) cash dividends, which are paid out of our net distributable income for each year, (ii) stock dividends that are akin to stock splits rather than distributions of earnings, which are issued for the purpose of adjusting the book value per share of our stock and (iii) stock dividends for the purpose of capitalizing profits, in each case as described in more detail below. All shares outstanding and fully paid are entitled to share equally in any dividend declared based on the portion of our capital represented by such share. No cash dividend may be declared in respect of a given year unless we have earned net distributable income in respect of such year. However, we may declare dividends during the year. We may make interim provisional payments to shareholders in respect of net distributable income for the current fiscal year, which are referred to as “provisional dividends,” as explained below.

The Board, following the end of each fiscal year, makes a recommendation at the Annual Mandatory Meeting regarding the amount and timing of payments, if any, to be made as dividends on our Common Shares and Investment Shares. The Shareholders Meeting can delegate to the Board the approval to pay interim dividends.

The dividend policy establishes that Buenaventura will distribute an annual cash dividend of at least 20% of net income generated by majority-owned operations and subsidiaries. In the case of Buenaventura’s Associates (Coimolache, Cerro Verde and Yanacocha), 20% of attributable to Buenaventura’s net income will be included if they distribute cash dividends to Buenaventura. In principle there are two kinds of dividend payments: interim dividends, which are approved by the Board and are generally paid during the fourth quarter of the year, and the final dividend payment, which will be paid in accordance with the general shareholders’ meeting resolutions. However, the amount and timing of such payments is subject to the final approval at such Annual Mandatory Meeting and Board meeting, as well as to the availability of earnings to distribute. According to the Peruvian Companies Law, holders of at least 20% of the total Common Shares outstanding can request a dividend of 50% or less of the previous year’s after-tax profits, net of amounts allocated to the legal reserve.

Available earnings are subject to the following priorities. First, the mandatory employee profit sharing of 8% of pre-tax profits (which may differ from pre-tax profits determined under IFRS due to different depreciation treatment and different adjustments of non-taxable income and/or non-deductible expenses) is paid.

Next, remaining earnings are taxed at the standard corporate income tax rate, which is 29.50%. Not less than 10% of such after-tax net profits must then be allocated to a legal reserve, which is not available thereafter except to cover future losses or for use in future capitalizations, in which case it must be replenished again. Amounts reserved are nevertheless included in taxable income. The obligation to fund this reserve continues until the reserve constitutes 20% of the paid-in share capital. In addition, the holders of Common Shares can agree to allocate any portion of the net profits to any special reserve. The remainder of the net profits is available for distribution to shareholders.

Dividends are subject to an additional withholding tax for shareholders that are either (i) individuals, whether domiciled or non-domiciled in Peru, or (ii) non-domiciled companies or entities. For dividends paid out of our accumulated net profits, the withholding tax rate is 5% when the dividend originated from profits earned on or after January 1, 2017. If any tax or other governmental charge will become payable by Scotiabank Peru, as custodian, the Depositary or us with respect to any ADR or any deposited securities represented by the ADSs evidenced by such ADR, such tax or other governmental charge will be payable by the owner or beneficial owner of such ADR to the Depositary.

Dividends paid to domiciled companies or entities are not subject to such withholding tax. If any tax or other governmental charge will become payable by Scotiabank Peru, as custodian, the Depositary or us with respect to any ADR or any deposited securities represented by the ADSs evidenced by such ADR, such tax or other governmental charge will be payable by the owner or beneficial owner of such ADR to the Depositary.

Dividends on issued and outstanding Common Shares and Investment Shares are distributed in accordance with the proportion of the total capital represented by such respective shares. Dividends are distributed pro rata in accordance with the number of Common Shares or Investment Shares. Accordingly, any dividend declared would be apportioned 99.73% to the holders of Common Shares and 0.27% to the holders of Investment Shares. This proportion will not change in the future except and to the extent holders of Common Shares and Investment Shares exercise their preemptive rights disproportionately in any future issuance of Common Shares and Investment Shares, or we issue Common Shares without preemptive rights in accordance with Article 259 of the Peruvian Companies Law.

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Holders of Common Shares and Investment Shares are not entitled to interest on dividend payments.

Holders of ADRs are entitled to receive dividends with respect to the Common Shares underlying the ADSs evidenced by such ADRs, subject to the terms of the related Amended and Restated Deposit Agreement, to the same extent as owners of Common Shares.

To the extent that we declare and pay dividends on the Common Shares, owners of the ADSs on the relevant record date are entitled to receive the dividends payable in respect of the Common Shares underlying the ADSs, subject to the terms of the Amended and Restated Deposit Agreement. Cash dividends are paid to the Depositary in Soles and, except as otherwise described under the Amended and Restated Deposit Agreement, are converted by the Depositary into U.S. Dollars and paid to owners of ADRs net of currency conversion expenses. Under the Amended and Restated Deposit Agreement, the Depositary may, and will if we so request, distribute stock dividends in the form of additional ADRs evidencing whole ADSs resulting from a dividend or free distribution of Common Shares by us received by the Depositary. Amounts distributed with respect to ADSs were subject to a Peruvian withholding income tax of 6.8% for profits earned during 2016, which was the withholding tax rate applicable to distributions in respect of Common Shares during 2016. The withholding tax rate decreased to 5% for dividends paid out of our accumulated net profits after December 31, 2016. See “Item 10. Additional Information—E. Taxation—Peruvian Tax Considerations.”

We issue stock dividends for value per share of our stock. The book value of our share capital is based on the nominal (par) value of each share but is adjusted to account for inflation; thus, in inflationary periods, our book value will increase while the nominal value will remain constant. To adjust the book value of each share to equal or approximate the nominal value, we periodically issue new shares that are distributed as stock dividends to each existing shareholder in proportion to such shareholder’s existing holdings, unless it increases the nominal value of the existing shares. These stock dividends (which under the Peruvian income tax law are not considered dividends) do not change a stockholder’s percentage of interest in us. In addition, we may from time to time capitalize profits and, in such case, must distribute stock dividends representing the profits capitalized.

Dividends not collected within 10 years will be retained by us, increasing our legal reserve, and the right to collect such dividends will expire. 

Under Peruvian law, each company may make formal cash distributions only out of net distributable income (calculated on an individual, unconsolidated basis and demonstrated by a statement of financial position at any given time). We, however, may pay provisional dividends. Payment of provisional dividends will be approved on the basis of consolidated financial statements which show the existence of net distributable income obtained during the current fiscal year. If, following such an interim provisional payment, we suffer a loss or if we finish the fiscal year with a net income that is lower than the amount of provisional dividends paid during such fiscal year, we could legally require all shareholders (including holders of ADRs) to return such payment to us with interest. However, it has been and continues to be our policy not to require shareholders to return such payment of provisional dividends, but rather to cover such contingency through a “dividends paid in advance” account to be offset by future net distributable income.

The following table sets forth the amounts of interim and final cash dividends and the aggregate of cash dividends paid with respect to the years 2017 to 2020. Dividends with respect to the years 2017 to 2020 were paid per Common Share and ADS.

Year ended December 31, (1)	Per Common Share						Per ADSs						Per Investment Share
	Interim		Final		Total		Interim		Final		Total		Interim		Final		Total
2017		0.030		0.030		0.060		0.030		0.030		0.060		0.030		0.30		0.60
2018		0.060		0.060		0.120		0.060		0.060		0.120		0.060		0.060		0.012
2019		0.027		0.027		0.054		0.027		0.027		0.054		0.027		0.027		0.054
2020		0.000		0.000		0.000		0.000		0.000		0.000		0.000		0.000		0.000

(1) Interim and final dividend amounts are expressed in U.S. Dollars.

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Non-controlling Shareholders

Law No. 28370, published on October 30, 2004, included in the Peruvian Companies Law certain provisions for the protection of non-controlling shareholders of public companies that are sociedades anónimas abiertas such as us and that were formerly contained in Law No. 26985, which was abrogated. Legislative Decree No. 1061, effective since June 29, 2008, Law No. 29782, effective since July 29, 2011, and most recently Law No. 30050, effective since June 27, 2013, have abrogated or amended certain of these provisions. Pursuant to Article 262-A of the Peruvian Companies Law, we will furnish on our website and on the SMV’s website, upon the earlier to occur of (1) sixty days after the Annual Mandatory Meeting, or (2) the expiration of the three-month period after the end of the prior fiscal year in which such Annual Mandatory Meeting is required to be held, the information regarding total number and value of any shares not claimed by shareholders, the name of such shareholders, the share quote in the securities market for such shares, the total amount of uncollected dividends, the name of shareholders having uncollected dividends and where shares and dividends pending claim are available for the non-controlling shareholders. Article 262-B describes the procedure to request share certificates and/or dividends, that the holder of the shares can instruct us to deposit the dividends in a specific bank account, and that delivery of such share certificates and/or dividends is to be made within 30 days from the request. Article 262-F describes the procedure for handling any claim that the non-controlling shareholders may file, such claims to be resolved by the SMV. SMV may apply warnings and fines between approximately US$ 1,300 and US$32,500 in case the Company fails to comply such provisions for the protection of non-controlling shareholders.

B. Significant Changes

No significant change in our financial affairs has occurred since the date of the annual consolidated financial statements included in this Annual Report.

ITEM 9. The Offer and Listing

A. Offer and Listing Details

Trading Information

The table below sets forth the trading volume and the high and low closing prices of the Common Shares and Investment Shares in Soles. The table also includes the trading volume and the high and low closing prices of the ADSs representing the Common Shares in U.S. Dollars for the same periods.

	Common Shares(1)						ADSs(2)						Investment Shares(1)
	Trading Volume		High		Low		Trading Volume		High		Low		Trading Volume		High		Low
	(in millions)		(in nominal S/. per share)				(in millions)		(in US$ per ADS)				(in millions)		(in nominal S/. per share)
Annual highs and lows
2017		0.47		48.10		35.95		350.69		14.96		10.87		0.01		24.50		22.10
2018		0.85		54.94		39.00		325.87		16.80		11.67		0.01		22.15		19.60
2019		0.80		57.05		45.30		295.27		17.85		13.77		0.01		17.00		16.00
2020		0.59		44.80		25.00		407.18		15.36		5.12		0.00		0.00		0.00
Quarterly highs and lows 2019
1st quarter		0.08		57.00		50.75		77.43		17.78		14.80		0.01		17.00		16.80
2nd quarter		0.05		57.05		49.00		68.15		17.71		14.15		0.00		16.80		16.00
3rd quarter		0.04		55.80		47.30		82.52		17.85		13.91		0.00		0.00		0.00
4th quarter		0.63		51.10		45.30		67.16		15.83		13.77		0.00		0.00		0.00
2020
1st quarter		0.01		42.50		25.00		106.11		15.36		5.12		0.00		0.00		0.00
2nd quarter		0.11		29.00		26.00		113.82		9.50		6.68		0.00		0.00		0.00
3rd quarter		0.46		43.45		42.60		121.94		14.32		8.89		0.00		0.00		0.00
4th quarter		0.01		44.80		40.20		65.31		13.44		10.22		0.00		0.00		0.00
Monthly highs and lows 2020
October		0.00		44.80		43.74		17.53		13.44		11.88		0.00		0.00		0.00
November		0.00		40.72		40.20		26.63		13.06		10.22		0.00		0.00		0.00
December		0.00		43.80		43.80		21.15		13.28		11.38		0.00		0.00		0.00
2021
January		0.00		44.80		36.62		26.37		12.83		9.81		0.00		0.00		0.00
February		0.00		0.00		0.00		23.49		11.88		9.85		0.00		0.00		0.00
March		0.00		37.02		37.02		20.38		11.80		9.92		0.00		0.00		0.00

(1) Source: Lima Stock Exchange 

(2) Source: Bloomberg; Yahoo Finance

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 As of March 31, 2021, the share capital with respect to the Common Shares was S/.2,748,899,240 represented by 274,889,924 shares and the share capital with respect to the Investment Shares was S/.7,446,400 represented by 744,640 shares. The Common Shares represent 100% of our outstanding share capital and treasury shares. The Investment Shares have no voting rights and are not, under Peruvian law and accounting rules, characterized as share capital. As of March 31, 2021, there were 979 owners of record of the Common Shares and 886 owners of record of the Investment Shares.

B. Plan of Distribution

Not applicable.

C. Markets

The Common Shares and ADSs representing the Common Shares (each ADS representing one Common Share) have been listed and traded on the New York Stock Exchange under the symbol “BVN.” In addition, the Common Shares and Investment Shares are listed and traded on the Lima Stock Exchange.

D. Selling Shareholders

Not applicable.

E. Dilution

Not applicable.

F. Expenses of the Issue

Not applicable.

ITEM 10. Additional Information

A. Share Capital

Our capital stock comprises Common Shares and investment shares. Common Shares have full voting rights while investment shares do not. As of December 31, 2020, there were 253,715,190 Common Shares outstanding, exclusive of 21,174,734 Common Shares held in treasury. In the case of Investment Shares, there were 271,677 Investment Shares outstanding, exclusive of 472,963 Investment Shares held in treasury. In total there are 253,986,867 outstanding shares, and this number has not changed throughout the year 2020. The capital stock is fully subscribed and paid. Additionally, the par value per share (for both Common Shares and Investment Shares) is S/.10.

B. Memorandum and Articles of Association

Organization and Register

 We were formed on September 7, 1953 by public deed as a Peruvian sociedad anónima. However, in May of 1998, our By-laws were changed to conform with the new Peruvian Companies Law. The term of existence is indefinite and our principal place of business is Lima, Peru. We are registered under file number 02136988 at the Companies Registry of Lima.

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We are managed by the General Meeting, the Board and the management.

 Objectives and Purposes

 Our legal purpose, as set forth in our Articles of Association and By-laws, is to engage in mining operations and related activities either directly or through majority-owned subsidiaries and controlled companies. Likewise, we may hold shares of companies performing mining operations.

Directors

The Board, which must be composed of seven members, is elected at the Annual Mandatory Meeting. Any changes in the Board require the approval of the shareholders. The removal of the Board must be approved at a shareholders’ meeting, attended by holders of 75% of the Common Shares in the first summons and 70% of the Common Shares in the second summons, by resolution approved by at least two thirds of the total number of Common Shares outstanding. In the case of resignation of directors, the Board may appoint substitute directors who will serve until the next shareholders’ meeting.

 Members of the Board (“Directors”) are elected as a group for a term of three years and may be reelected indefinitely. Pursuant to Article 29 of our By-laws, Directors are not required to be shareholders. The Board, in its first meeting after the Annual Mandatory Meeting during which elections are held, must choose from among its members a Chairman and a Vice Chairman. The Peruvian Companies Law requires that all companies (sociedades anónimas) provide for the representation of non-controlling shareholders on their Boards of Directors. To that effect, each of our Common Shares gives the holder the right to as many votes as there are directors to be elected. Each holder may pool his votes in favor of one person or distribute them among various persons. Those candidates for the Board who receive the most votes are elected directors.

 The Board of Directors meets when called by the Chairman of the Board, who is appointed by the Board. The Board of Directors is validly convened when all Directors are present and unanimously agree to carry out the meeting for the purpose of transacting the business that has been proposed. Pursuant to Article 177 of the Peruvian Companies Law, Directors may be jointly and severally liable to us, the shareholders and third parties for their actions if they act with willful misconduct, gross negligence, or abuse their powers. In addition, Article 3 of Law No. 29720, which has been in force since June 26, 2011, as amended by Law No. 30050 in force since June 27, 2013, provides that directors and managers are liable for economic damages or any other kind of damages caused to us by any transaction they have approved that favors such director’s, or a related party’s, interest instead of the Company’s, when: (i) one of the parties involved in the transaction is a company whose shares are listed in the local stock exchange, as in our case; (ii) the shareholder controlling such listed company also controls the other party involved in the transaction; and (iii) the transaction is not made under arm’s-length conditions and represents at least 10% of such company’s assets. Directors not participating in the Board meeting or that voted against the transaction are not liable.

In addition, Article 51 of the Securities Market Law contains additional prohibitions for directors and managers of companies whose shares are traded in the stock exchange. Pursuant to Article 51(a) of such law, directors and managers are forbidden to receive loans from listed companies and from using goods and services of the listed company without the Board’s authorization for their own use, in their own profit or to benefit persons related to the directors and managers. Additionally, subsection (b) thereof further provides that directors and managers are forbidden from using their positions to obtain improper benefits for them or for persons related to them. Our By-laws do not contain any provisions related to a director’s power to vote on matters in which the director is materially interested. However, Article 180 of the Peruvian Companies Law requires a director with an interest that conflicts with an interest of ours on a specific matter to disclose such interest to us and abstain from participating in the deliberation and decision of the said matter. A director that contravenes such requirement is liable for the damages suffered by us and can be removed by the Board or a shareholders’ meeting upon the request of any shareholder or any member of the Board.

 Our By-laws also do not contain any provisions with respect to the power of the directors to vote upon matters relating to their own compensation. Nevertheless, Article 30 of the By-laws requires that the Board receive compensation of no more than 4% of the profits of each fiscal year after making deductions for workers’ profit sharing, taxes, reinvestment of profits for tax benefits and legal reserves. This amount will be submitted for ratification by the General Meeting during the Annual Mandatory Meeting, at which time it approves the statement of financial position, taxes, reinvestment of profits for tax benefits and legal reserves.

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  Our By-laws contain no provision relating to the directors’ power to borrow from us. However, Article 179 of the Peruvian Companies Law provides that directors of a company may enter into an agreement with such company only if the agreement relates to operations the Company performs in the regular course of business and in an arms-length transaction. Furthermore, a company may provide a loan to a director or grant securities in his favor only in connection with operations that the Company usually performs with third parties. Agreements, credits, loans or guarantees that do not meet the requirements set forth above require prior approval from at least two thirds of the members of the Company’s Board. Directors are jointly liable to the Company and the Company’s creditors for contracts, credit, loans or securities executed or granted without complying with Article 179 of the Peruvian Companies Law. In addition, as mentioned above, Article 3 of Law No. 29720, as amended, provides that directors and managers are liable for economic or other damages that they may cause because of the approval of resolutions that favor such director’s, or a related party’s, interest instead of the Company’s, when: (i) one of the parties involved in the transaction is a company whose shares are listed in the local stock exchange, as in our case; (ii) the shareholder controlling such listed company also controls the other party involved in the transaction; and (iii) the transaction is not made under arm’s-length conditions and represents at least 10% of such Company’s assets.

Neither our By-laws nor the Peruvian Companies Law contain age limit requirements for the retirement or non-retirement of directors.

Shares and Voting Rights

 We have two classes of shares, the Common Shares and the Investment Shares. The Common Shares represent 100% of our outstanding share capital. The Investment Shares have no voting rights and are not, under Peruvian law and accounting rules, characterized as share capital. The Common Shares and the Investment Shares may be either physical share certificates in registered form or book-entry securities in the CAVALI ICLV S.A. book-entry settlement system, also in registered form.

 Holders of Common Shares are entitled to one vote per share, with the exception of the election of the Board, where each such holder is entitled to one vote per share per nominee. Each holder’s votes may all be cast for a single nominee or they may be distributed among the nominees at the holder’s discretion. Holders of Common Shares may attend and vote at shareholders’ meetings either in person or through a proxy. Additionally, holders of Common Shares have the right to participate in the distribution of dividends and shareholder equity resulting from liquidation. Our By-laws do not establish a maximum time limit for the payment of the dividends. However, according to Article 232 of the Peruvian Companies Law, the right to collect past-due dividends in the case of public companies that are sociedades anónimas abiertas, as we are, expires at 10 years from the date on which the payment was due in accordance with the dividend declaration.

 Our share capital may be increased by holders of Common Shares at a shareholders’ meeting. Capital reductions may be voluntary or mandatory and must be approved by holders of Common Shares at a shareholders’ meeting. Capital reductions are mandatory when accumulated losses exceed 50% of capital to the extent such accumulated losses are not offset by accumulated earnings and capital increases within the following fiscal year. Capital increases and reductions must be communicated to the SMV, the Lima Stock Exchange and the SUNAT and published in the official gazette El Peruano and in a widely circulated newspaper in the city in which we are located.

 The Investment Shares do not represent our stock obligations. Holders of Investment Shares are neither entitled to exercise voting rights nor to participate in shareholders’ meetings. However, Investment Shares confer upon the holders thereof the right to participate in the dividends distributed according to their nominal value, in the same manner as Common Shares, as well as to participate in increases of the Investment Shares account. 

Changes in the Rights of Shareholders

 Our By-laws do not contain special provisions relating to actions necessary to change the rights of holders of the classes of shares. However, Article 88 of the Peruvian Companies Law establishes that all shares of a same class must have the same rights and obligations, and that if we decide to establish different rights and obligations we must create a different class of shares, which creation will be agreed upon by the General Meeting in accordance with the requirements for modification of the By-laws. The Common Shares are the only class of shares representing 100% of our share capital, and, therefore, each Common Share has the same rights and obligations of each other Common Share. These requirements are described under “—Shares and Voting Rights” above.

 The rights of any class of shares may not be reduced except in accordance with the Peruvian Companies Law.

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Shareholders’ Meetings

 Pursuant to Peruvian law and our By-laws, the Annual Mandatory Meeting must be held during the three-month period after the end of each fiscal year. Additional General Meetings may be held during the year. Because we are a sociedad anónima abierta (publicly held corporation), we are subject to the special control of the SMV, as provided in Article 253 of the Peruvian Companies Law, to determine whether we have incurred any breach of the Peruvian Companies Law or regulations of the SMV and to impose sanctions. Shareholders’ meetings are convened by the Board when deemed convenient for us or when it is requested by the holders of at least 5% of the Common Shares, provided that such Common Shares do not have their voting rights suspended. If, at the request of holders of at least 5% of the Common Shares, the shareholders’ meeting is not convened by the Board within 15 business days of the receipt of such request, such holders of at least 5% of the Common Shares may request a notary public or a judge to convene the meeting. The Board is deemed to have implicitly refused to convene the meeting if the Board (a) does not convene a shareholders’ meeting within 15 business days of receipt of the request, (b) suspends or amends the terms of the agenda or in any other way amend the terms of the summons already made upon the request of at least 5% of the Common Shares or (c) schedules the shareholders’ meeting more than 40 days after the date on which the summons is published. The notary public or the judge of the domicile of the Company shall call for the shareholders meeting. Resolución CONASEV No. 111-2003-EF-94.10, as amended by Resolución CONASEV No. 078-2010-EF/94.01.1, approved provisions related to the right of the non-controlling shareholders to obtain information regarding a sociedad anónima abierta (publicly held corporation) such as ourselves. Notwithstanding the notice requirements as described in the preceding two sentences, any shareholders’ meeting will be deemed called and legally commenced, provided that the shareholders representing all of the voting shares are present, and provided that every present shareholder, whether or not such shareholder has paid the full price of such shareholder’s shares, agrees to hold the shareholders’ meeting and accepts the business to be discussed therein. Holders of Investment Shares have no right to request the Board to convene shareholders’ meetings.

 Since we are a sociedad anónima abierta (publicly held corporation), notice of shareholders’ meetings must be given by publication of a notice, with the publication occurring at least 25 days before any shareholders’ meeting, in El Peruano and in a widely circulated newspaper in the city in which we are located. The notice requirement may be waived at the shareholders’ meeting by holders of 100% of the outstanding Common Shares. According to Article 25 of our By-laws and Article 257 of the Peruvian Companies Law, shareholders’ meetings called for the purpose of considering a capital increase or decrease, the issuance of obligations, a change in our By-laws, the sale in a single act of assets with an accounting value that exceeds 50% of our capital stock, a merger, division, reorganization, transformation or dissolution, are subject to a first, second and third quorum call, each of the second and third quorum to occur upon the failure of the preceding one. A quorum for the first call requires the presence of shareholders holding 50% of our total voting shares. For the second call, the presence of shareholders holding at least 25% of our total voting shares constitutes a quorum, and for the third call there is no quorum requirement. These decisions require the approval of the majority of the voting shares represented at the shareholders’ meeting. General Meetings convened to consider all other matters are subject to a first and second quorum call, the second quorum call to occur upon the failure of the first quorum.

 In the case of shareholders’ meetings called for the purpose of considering the removal of members of the Board, at least 75% and 70% of the total number of Common Shares outstanding are required to be represented at the shareholders’ meeting on the first quorum call and second quorum call. Provided such quorum is attained, the affirmative vote of no less than two thirds of the total number of Common Shares outstanding is required to effect the removal of members of the Board. The special quorum and voting requirements described above cannot be modified at a shareholders’ meeting called for the purpose of considering the removal of members of the Board.

Under our By-laws, the following actions are to be taken at the Annual Mandatory shareholders’ meetings: approval of our statements of financial position, profit and loss statements and annual reports; the approval of management performance; the allocation of profits; the election of external auditors; the election of the members of the Board; and any other matters submitted by the Board. The following actions are to be taken at the same annual shareholders’ meetings if the quorum and majority requirements are met or at any other shareholders’ meeting: any amendment of our By-laws; any decision to increase or reduce capital; any decision to issue debt; initiating investigations or requesting auditor’s reports; liquidating, spinning-off, merging, consolidating, dissolving, or changing our business form or structure.

  In accordance with Article 21 of the By-laws, only those holders of Common Shares whose names are inscribed in our share register not less than 10 days in advance of a meeting will be entitled to attend shareholders’ meetings and to exercise their rights.

Limitations on the Rights of Nonresident or Foreign Shareholders

 There are no limitations in our By-laws or the Peruvian Companies Law on the rights of nonresident or foreign shareholders to own securities or exercise voting rights on our securities.

Change in Control 

There are no provisions in our By-laws that would have the effect of delaying, deferring or preventing a change in control.

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Disclosure of Share Holdings

 There are no provisions in our By-laws governing the ownership threshold above which share ownership must be disclosed. However, according to Regulation No. 009-2006-EF.94.10 of the SMV, which became effective on May 3, 2006, as amended by Regulation No. 020-2006-EF.94.10, Regulation No. 05-2009-EF-94.01.1 and Regulation No. 034-2025-SMV-01.of the SMV, when, an individual or financial group acquires, in one act or various successive acts, a significant percentage (more than 25%) of the voting shares of a company with shares listed in a stock exchange, as well as upon any person or group increasing its ownership above the 50% and 60% thresholds, a procedure known as Oferta Pública de Adquisición, or a “Takeover Bid,” must be followed. This has the effect of alerting other shareholders and the market that an individual or financial group has acquired a significant percentage of a company’s voting shares, and gives other shareholders the opportunity to sell their shares at the price offered by the purchaser. The purchaser is obliged to launch a Takeover Bid unless it is exempt pursuant to Regulation No. 009-2006-EF.94.10 of the SMV, as amended. The purchase of ADRs is exempted from the Takeover Bid unless the holders: (i) exercises the voting rights of the Common Shares underlying the ADSs evidenced by such ADRs, or (ii) requests the delivery of such underlying Common Shares. In addition, the SMV and the Lima Stock Exchange must be notified of any transfer of more than 5% of our paid-in capital.

 Changes in Capital

 Our By-laws do not establish special conditions for increases or reductions of capital that are more stringent than required by the Peruvian Companies Law. Furthermore, the Peruvian Companies Law forbids sociedades anónimas abiertas, such as us, from including in their By-laws stipulations limiting the transfer of their shares or restraining their trading in other ways. We cannot recognize a shareholders’ agreement that contemplates limitations, restrictions or preferential rights on the transfer of shares, even if such agreement is recorded in our share register (matrícula de acciones) or in CAVALI ICLV S.A., unless they refer to shares that are nor listed in a stock exchange, which is not the of our shares

Economic Group

On January 1, 2017 new Regulations on Indirect Property, Relation and Economic Groups (Reglamento de Propiedad Indirecta, Vinculación y Grupos Económicos) (the “Regulations”) approved by Regulation No. 019-2015-SMV-01 became effective, replacing the prior Regulations that were in effect since 2006. The new Regulations, which have been amended by Regulations 048-2016-SMV-01 and 026-2017-SMV-01, define more precisely who are considered independent directors, increase the standards of information we are required to provide, require us to identify the individuals that control our economic group, require us to report related individuals and entities; reduce the number of shareholders required to determine that there exists a “representative participation” from 10% of the total capital stock to 4% of voting shares and extend the definition of control. The “representative participation” definition is mainly used by listed companies such as us to determine the existence of indirect property. Regulation No. 083-2016-SMV-01 approved the new forms to be used to provide the SMV all the information about our economic group.

Criminal liability of companies 

 On April 2016, Law No. 30424 was enacted to establish the administrative liability of legal entities, such as us, in connection with transnational active bribery. The law has been amended by Legislative Decree No. 1352, which was published on January 7, 2017 and became effective on January 1, 2018. Regulations to this law have been recently approved by Supreme Decree No,. 002-2019-JUS. The amendment expanded the definition of bribery beyond transnational active bribery to include asset laundering, illegal mining and organized crime. The law provides rules to be followed in case of a merger or spin-off and states that a legal entity is administratively liable for the above crimes when they have been committed in its name or for its benefit by its shareholders, directors, managers or employees that are subject to the control and authority of the legal entity. Several sanctions can be imposed on a company as result of such crimes, including fines, prohibitions on performing certain activities, cancellation of permits and even dissolution. A legal entity is not liable if its shareholders, directors, managers or employees engage in bribery or related crimes solely for their own benefit or for the benefit of third parties other than the legal entity. The Company will be exempted from any liability for such crimes if it adopts within its organization, and before the crime is committed, a so-called prevention model consistent with the Company’s nature, risks, necessities and characteristics, consisting in control, monitoring and surveillance measures suitable to prevent such crimes. Such model includes the appointment by the Board of a person in charge of prevention that must perform autonomously. In order to file a criminal accusation against the Company, a technical report from the SMV that analyzes the prevention model is required. We have prepared the prevention model required under Law No. 30424, as amended, in addition to the other compliance measures and policies we currently have. The regulations contain, among other provisions, several definitions, types of risks and the criteria to identify them, as well as the minimum elements a prevention model must contain.

Dividends and Dividend Policy

We can distribute three kinds of dividends: (i) cash dividends, which are paid out of our net distributable income for each year, (ii) stock dividends that are akin to stock splits rather than distributions of earnings, which are issued for the purpose of adjusting the book value per share of our stock and (iii) stock dividends for the purpose of capitalizing profits, in each case as described in more detail below. All shares outstanding and fully paid are entitled to share equally in any dividend declared based on the portion of our capital represented by such share. No cash dividend may be declared in respect of a given year unless we have earned net distributable income in respect of such year. However, we may declare dividends during the year. We may make interim provisional payments to shareholders in respect of net distributable income for the current fiscal year, which are referred to as “provisional dividends,” as explained below.

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 The Board, following the end of each fiscal year, makes a recommendation at the Annual Mandatory Meeting regarding the amount and timing of payments, if any, to be made as dividends on our Common Shares and Investment Shares. The Shareholders Meeting can delegate to the Board the approval to pay interim dividends.

 The dividend policy establishes that Buenaventura will distribute an annual cash dividend of at least 20% of net income generated by majority-owned operations and subsidiaries. In the case of Buenaventura’s Associates (Coimolache, Cerro Verde and Yanacocha), 20% of attributable to Buenaventura’s net income will be included if they distribute cash dividends to Buenaventura. In principle there are two kinds of dividend payments: interim dividends, which are approved by the Board and are generally paid during the fourth quarter of the year, and the final dividend payment, which will be paid in accordance with the general shareholders’ meeting resolutions. However, the amount and timing of such payments is subject to the final approval at such Annual Mandatory Meeting and Board meeting, as well as to the availability of earnings to distribute. According to the Peruvian Companies Law, holders of at least 20% of the total Common Shares outstanding can request a dividend of 50% or less of the previous year’s after-tax profits, net of amounts allocated to the legal reserve.

 Available earnings are subject to the following priorities. First, the mandatory employee profit sharing of 8% of pre-tax profits (which may differ from pre-tax profits determined under IFRS due to different depreciation treatment and different adjustments of non-taxable income and/or non-deductible expenses) is paid.

 Next, remaining earnings are taxed at the standard corporate income tax rate, which is 29.50%. Not less than 10% of such after-tax net profits must then be allocated to a legal reserve, which is not available thereafter except to cover future losses or for use in future capitalizations, in which case it must be replenished again. Amounts reserved are nevertheless included in taxable income. The obligation to fund this reserve continues until the reserve constitutes 20% of the paid-in share capital. In addition, the holders of Common Shares can agree to allocate any portion of the net profits to any special reserve. The remainder of the net profits is available for distribution to shareholders.

 Dividends are subject to an additional withholding tax for shareholders that are either (i) individuals, whether domiciled or non-domiciled in Peru, or (ii) non-domiciled companies or entities. For dividends paid out of our accumulated net profits, the withholding tax rate is 5%, when the dividend originated from profits earned on or after January 1,2017. If any tax or other governmental charge will become payable by Scotiabank Peru, as custodian, the Depositary or us with respect to any ADR or any deposited securities represented by the ADSs evidenced by such ADR, such tax or other governmental charge will be payable by the owner or beneficial owner of such ADR to the Depositary.

Dividends paid to domiciled companies or entities are not subject to such withholding tax. If any tax or other governmental charge will become payable by Scotiabank Peru, as custodian, the Depositary or us with respect to any ADR or any deposited securities represented by the ADSs evidenced by such ADR, such tax or other governmental charge will be payable by the owner or beneficial owner of such ADR to the Depositary.

 Dividends on issued and outstanding Common Shares and Investment Shares are distributed in accordance with the proportion of the total capital represented by such respective shares. Dividends are distributed pro rata in accordance with the number of Common Shares or Investment Shares. Accordingly, any dividend declared would be apportioned 99.73% to the holders of Common Shares and 0.27% to the holders of Investment Shares. This proportion will not change in the future except and to the extent holders of Common Shares and Investment Shares exercise their preemptive rights disproportionately in any future issuance of Common Shares and Investment Shares, or we issue Common Shares without preemptive rights in accordance with Article 259 of the Peruvian Companies Law.

 Holders of Common Shares and Investment Shares are not entitled to interest on dividend payments.

Holders of ADRs are entitled to receive dividends with respect to the Common Shares underlying the ADSs evidenced by such ADRs, subject to the terms of the related Amended and Restated Deposit Agreement, to the same extent as owners of Common Shares.

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  To the extent that we declare and pay dividends on the Common Shares, owners of the ADSs on the relevant record date are entitled to receive the dividends payable in respect of the Common Shares underlying the ADSs, subject to the terms of the Amended and Restated Deposit Agreement. Cash dividends are paid to the Depositary in Soles and, except as otherwise described under the Amended and Restated Deposit Agreement, are converted by the Depositary into U.S. Dollars and paid to owners of ADRs net of currency conversion expenses. Under the Amended and Restated Deposit Agreement, the Depositary may, and will if we so request, distribute stock dividends in the form of additional ADRs evidencing whole ADSs resulting from a dividend or free distribution of Common Shares by us received by the Depositary. Amounts distributed with respect to ADSs were subject to a Peruvian withholding income tax of 6.8% for profits earned during 2016, which was the withholding tax rate applicable to distributions in respect of Common Shares during 2016. The withholding tax rate decreased to 5% for dividends paid out of our accumulated net profits after December 31, 2016. See Item 10. Additional Information—E. Taxation—Peruvian Tax Considerations.”

 We issue stock dividends for value per share of our stock. The book value of our share capital is based on the nominal (par) value of each share but is adjusted to account for inflation; thus, in inflationary periods, our book value will increase while the nominal value will remain constant. To adjust the book value of each share to equal or approximate the nominal value, we periodically issue new shares that are distributed as stock dividends to each existing shareholder in proportion to such shareholder’s existing holdings, unless it increases the nominal value of the existing shares. These stock dividends (which under the Peruvian income tax law are not considered dividends) do not change a stockholder’s percentage of interest in us. In addition, we may from time to time capitalize profits and, in such case, we have to distribute stock dividends representing the profits capitalized.

Dividends not collected within 10 years will be retained by us, increasing our legal reserve, and the right to collect such dividends will expire.

Under Peruvian law, each company may make formal cash distributions only out of net distributable income (calculated on an individual, unconsolidated basis and demonstrated by a statement of financial position at any given time). We, however, may pay provisional dividends. Payment of provisional dividends will be approved on the basis of consolidated financial statements which show the existence of net distributable income obtained during the current fiscal year. If, following such an interim provisional payment, we suffer a loss or if we finish the fiscal year with a net income that is lower than the amount of provisional dividends paid during such fiscal year, we could legally require all shareholders (including holders of ADRs) to return such payment to us with interest. However, it has been and continues to be our policy not to require shareholders to return such payment of provisional dividends, but rather to cover such contingency through a “dividends paid in advance” account to be offset by future net distributable income.

Non-controlling Shareholders

 Law No. 28370, published on October 30, 2004, included in the Peruvian Companies Law certain provisions for the protection of non-controlling shareholders of public companies that are sociedades anónimas abiertas, such as us, and that were formerly contained in Law No. 26985, which had been abrogated. Legislative Decree No. 1061, effective since June 29, 2008, Law No. 29782, effective since July 29, 2011, and most recently Law No. 30050, effective since June 27, 2013, have abrogated or amended certain of these provisions. Pursuant to Article 262-A of the Peruvian Companies Law, we will furnish on our website and on the SMV’s website, upon the earlier to occur of (1) sixty days after the Annual Mandatory Meeting, or (2) the expiration of the three-month period after the end of the prior fiscal year in which such Annual Mandatory Meeting is required to be held, the information regarding total number and value of any shares not claimed by shareholders, the name of such shareholders, the share quote in the securities market for such shares, the total amount of uncollected dividends, the name of shareholders having uncollected dividends and where shares and dividends pending claim are available for the non-controlling shareholders. Article 262-B describes the procedure to request share certificates and/or dividends, that the holder of the shares can instruct us to deposit the dividends in a specific bank account, and that delivery of such share certificates and/or dividends is to be made within 30 days from the request. Article 262-F describes the procedure for handling any claim that the non-controlling shareholders may file, such claims to be resolved by the SMV. SMV may apply warnings and fines between approximately US$ 1,300 and US$ 32,500 in case the Company fails to comply such provisions for the protection of minority shareholders.

C. Material Contracts

Not Applicable.

D. Exchange Controls

Since August 1990, there have been no exchange controls in Peru and all foreign exchange transactions are based on free market exchange rates. Before August 1990, the Peruvian foreign exchange market consisted of several alternative exchange rates. Additionally, during the 1990s, the Peruvian currency has experienced a significant number of large devaluations, and Peru has consequently adopted and operated under various exchange rate control practices and exchange rate determination policies, ranging from strict control over exchange rates to market determination of rates. Current Peruvian regulations on foreign investment allow the foreign holders of equity shares of Peruvian companies to receive and repatriate 100% of the cash dividends distributed by such companies. Such investors are allowed to purchase foreign exchange at free market currency rates through any member of the Peruvian banking system and transfer such foreign currency outside Peru without restriction.

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E. Taxation

The following summarizes the material Peruvian and U.S. federal income tax consequences under present law of the purchase, ownership and disposition of ADSs or Common Shares. The discussion is not a full description of all tax considerations that may be relevant to a decision to purchase ADSs or Common Shares. In particular, this discussion deals only with holders that hold ADSs or Common Shares as capital assets and that have the U.S. Dollar as their functional currency. The summary does not address the tax treatment of certain investors that may be subject to special tax rules, such as partnerships and other entities classified as partnerships for U.S. federal income tax purposes, banks, dealers and traders in securities or foreign currencies, insurance companies, tax-exempt entities, persons that will hold ADSs or Common Shares as a position in a “straddle” or “conversion transaction” for tax purposes, holders who actually or constructively own 10% or more of our shares by either vote or value, certain taxpayers who file applicable financial statements required to recognize income no later than when the associated revenue is reflected on such financial statements and holders who acquired our ADSs or Common Shares pursuant to the exercise of any employee stock option or otherwise as compensation. This discussion does not address all aspects of U.S. federal income taxation that may be applicable to a U.S. Holder (as defined below), including gift, estate, any U.S. state or local taxes, non-U.S. taxes, other than Peruvian taxes as provided below, the U.S. federal alternative minimum tax or the U.S. Medicare tax on net investment income. There is no tax treaty currently in effect between Peru and the U.S., except for a treaty to exchange tax information. The information to be exchanged is defined in such treaty as any data or declaration that may be relevant or essential to the administration and application of taxes. Accordingly, the discussions below of Peruvian and U.S. tax considerations are based on the domestic law of each of Peru and the U.S. which are subject to change and possibly with retroactive effect.

“U.S. Holder” means a beneficial owner of ADSs or Common Shares that is (i) a U.S. citizen or resident, (ii) a domestic corporation, (iii) a trust subject to the control of one or more U.S. persons (as described in Section 7701(a)(30)) of the U.S. Internal Revenue Code of 1986, as amended, “Code”) and the primary supervision of a U.S. court or that has validly elected to be treated as a U.S. person or (iv) an estate the income of which is subject to U.S. federal income taxation regardless of its source.

If a partnership or other entity taxable as a partnership for U.S. federal income tax purposes holds ADSs or Common Shares, the tax treatment of a partner will generally depend on the status of the partner in such partnership and the activities of the partnership. Partners of partnerships holding ADSs or Common Shares should consult their tax advisors.

Peruvian Tax Considerations

Cash Dividends and Other Distributions

Cash dividends paid with respect to Common Shares and amounts distributed with respect to ADSs are subject to Peruvian withholding income tax, at a rate of 5% for dividends paid or to be paid beginning January 1, 2017, when the dividend originated from profits earned on or after January 1, 2017. If the dividend originated from profits earned between January 1, 2015 and December 31, 2016, the withholding income tax rate for the dividend is 6.8%. If the dividend originated from profits earned as of December 31, 2014, the withholding income tax rate for dividends is 4.1%. The dividends distribution is related to prior accumulated results. This regime is applicable on dividends that are paid to shareholders that are: (i) individuals, whether resident or nonresident in Peru or (ii) nonresident entities. As a general rule, the distribution of additional Common Shares representing profits, distribution of shares which differ from the distribution of earnings or profits, as well as the distribution of preemptive rights with respect to Common Shares, which are carried out as part of a pro rata distribution to all shareholders, will not be subject to Peruvian Income Tax or withholding taxes. 

Capital Gains

Pursuant to Article 6 of the Income Tax Law (the “ITL”), individuals and entities resident in Peru are subject to Peruvian Income Tax on their worldwide income while non-resident individuals or entities are subject to Peruvian Income Tax on their Peruvian source income only.

Furthermore, the ITL states that income deriving from the disposal of securities issued by Peruvian entities is considered Peruvian source income subject to the Income Tax.

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With respect to this matter, Article 2 of the ITL, as amended by Legislative Decree 945, defines: (i) capital gains as any revenue deriving from the disposal of capital goods; and (ii) capital goods as those whose purpose is not to be traded in the regular course of a business. Moreover, Article 2 of the ITL states that income deriving from the disposal of shares and similar securities is considered a capital gain.

Accordingly, capital gains deriving from the disposal of securities issued by legal entities incorporated in Peru are considered Peruvian source income subject to Peruvian Income Tax.

Currently, regardless of whether or not the transferor is domiciled in Peru, the ITL establishes that taxable income resulting from the disposal of securities is determined by the difference between the sale price of the securities and its tax basis. However, before December 31, 2009, capital gains resulting from the disposal of ADSs or Common Shares issued by legal entities incorporated in Peru were exempt from Peruvian Income Tax if: (i) in the case of non-regular individuals (i.e., individuals who do not frequently trade securities), the transaction was carried out before December 31, 2009; and (ii) in the case of shareholders other than individuals, the transaction was carried out on the Lima Stock Exchange (floor session) before December 31, 2009.

Effective January 1, 2010, the exemption was repealed and, as such, capital gains resulting from the disposal of ADSs or Common Shares issued by legal entities incorporated in Peru became subject to Peruvian Income Tax, or the “Income Tax.” For non-resident entities or individuals, capital gains will be subject to an Income Tax rate of either 5% or 30%, depending where the transaction takes place. If the transaction is consummated within Peru, the Income Tax rate is 5%; if the transaction is consummated outside of Peru, capital gains are taxed at a rate of 30%.

The ITL Regulations have defined transactions consummated within Peru to mean that the securities at issue are transferred through the Lima Stock Exchange. In contrast, the transaction is considered to have been consummated abroad when (i) the securities at issue are not registered on the Lima Stock Exchange or (ii) registered securities are not transferred through the Lima Stock Exchange.

Before December 31, 2012, for nonresident individuals, the first five tax units (approximately US$6,800) of capital gains deriving from the transfer of securities were exempted from the Income Tax. Effective January 1, 2013, this exemption was repealed. If the transferor is a resident entity, capital gains deriving from the disposal of securities will be treated as any other taxable income subject to the 30% corporate Income Tax rate.

Furthermore, before December 31, 2012, if the transferor was a resident individual, the first five tax units (approximately US$6,800) of capital gains deriving from the transfer of securities were exempted from the Income Tax. Effective January 1, 2013, such exemption was repealed. Any capital gain earned by a resident individual is subject to the 5% annual Income Tax rate regardless of whether or not the transaction is carried out on the Lima Stock Exchange and regardless of how many transactions are carried out by such individual. In this case, the 5% Income Tax rate will be applicable over the annual net capital gain, which is calculated by deducting from the annual gross capital gain of the annual losses resulting from the disposal of shares during the same fiscal year.

Moreover, if the transferor, either a resident or nonresident individual or entity, acquired the ADSs or Common Shares that were exempt from the Income Tax before January 1, 2010, pursuant to a special provision of the ITL, the tax basis is the higher of: (i) the acquisition cost; (ii) the face or nominal value of the shares; or (iii) the stock market value at closing on December 31, 2009.

If the transferor, whether resident or nonresident in Peru, acquires the ADSs or Common Shares on or after January 1, 2010, the tax basis is: (i) for shares purchased by the transferor, the acquisition price paid for the shares; (ii) for shares received by the transferor as a result of a capital stock increase because of a capitalization of net profits, the face or nominal value of such shares; (iii) for other shares received free of any payment, the stock market value of such shares if listed on the Lima Stock Exchange or, if not, the face or nominal value of such shares; and (iv) for shares of the same type acquired at different opportunities and at different values, the tax basis will be the weighted average cost.

The aforementioned rules are also applicable to ADSs or Common Shares acquired before January 1, 2010 that were not exempt from the Income Tax as of December 31, 2009.

On December 31, 2010, Law No. 29645 was promulgated and took effect from January 1, 2011. This law states that in any transaction of Peruvian securities through the Lima Stock Exchange, CAVALI ICLV S.A. (the Peruvian clearing house) will act as withholding agent. As a result of this amendment, the nonresident will no longer have to self-assess and pay its Income Tax liability directly to the Peruvian Tax Administration.

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Law No. 29645 has technically been in force since January 1, 2011. Implementing regulations were enacted in July 2011, and CAVALI ICLV S.A. began acting as a withholding agent on November 1, 2011. As a result, with regard to securities transferred through the Lima Stock Exchange by a nonresident transferor after November 1, 2011, such nonresident transferor is no longer obliged to self-assess and pay its Income Tax liability directly to Peruvian tax authorities within the first 12 working days following the month in which Peruvian source income was earned.

If the purchaser is a resident in Peru and the sale is not performed through the Lima Stock Exchange, the purchaser will act as withholding agent, except in cases in which the transferor is a resident individual.

However, if the transferor is a resident entity, such transferor is solely responsible for its Peruvian Income Tax on capital gains resulting from the disposal of ADSs or Common Shares, regardless of whether such securities are listed on the Lima Stock Exchange or elsewhere.

On September 12, 2015 Law No. 30341 was published. This law entered into effect on January 1, 2016 and states that capital gains from the disposal of ADSs or Common Shares through December 31, 2018 issued by legal entities incorporated in Peru, executed through the Lima Stock Exchange, are exempt from Peruvian Income Tax if: (i) within a period of twelve (12) months the holder and its related parties do not transfer 10% or more of the issued shares of the legal entity in one or more transactions; and (ii) the Common Shares issued by such legal entity shall have been continuously traded in the stock market (the rules to determine if such shares are continuously traded are set forth in Law No. 30341, as amended). Law No. 30341 was amended by Legislative Decree No. 1262, published on December 10, 2016 and effective since January 1, 2017, which introduced minor amendments related to capital gains deriving from the disposal of ADSs and Common Shares and extended this income tax exemption through December 31, 2019. Law No. 30341 was amended for a second time by Urgent Decree No. 005-2019, published on October 24, 2019 and effective on January 1, 2020, which introduced minor amendments regarding to the rules to determine when shares are continuously traded; and extended this income tax exemption through December 31, 2022.

Exchange Transactions

No Peruvian estate or gift taxes are imposed on the gratuitous transfer of ADSs or Common Shares. No stamp, transfer or similar tax applies to any transfer of Common Shares, except for commissions payable by seller and buyer to the Lima Stock Exchange (0.021% of value sold), fees payable to the SMV (0.0135% of value sold), brokers’ fees (about 0.05% to 1% of value sold) and VAT (at the rate of 18%) on commissions and fees. Any investor who sells its Common Shares on the Lima Stock Exchange will incur these fees and taxes upon purchase and sale of the Common Shares.

Other Considerations

As explained in Item 10. Memorandum and Articles of Association – Final Beneficial Owners, on August 2, 2018, Legislative Decree No. 1372 was published. This law entered into effect on August 3, 2018 and its regulations were enacted by Supreme Decree No. 003-2019-EF, published on January 8, 2019. According to this law and its regulations, legal entities domiciled or established in Peru must report the identity of its ultimate beneficial owners, as a tool for law enforcement agencies to confront tax evasion, money laundering and terrorist financing. For this reporting obligation, legal entities include any corporation, partnership or similar entity, trust, investment fund or joint venture. This obligation is also applicable to legal entities which are not domiciled in Peru but have a branch, subsidiary, joint venture or permanent establishment in Peru or, in the case of trusts, which have a grantor, settlor, beneficiaries or trustees domiciled in Peru. Ultimate beneficial owner is defined as the individual that effectively owns or controls a legal entity. For this purpose, ownership is when at least 10% of the capital of the legal entity is directly or indirectly under the ownership of an individual and its related parties. On September 25, 2019, the Tax Authority issued Superintendence Resolution No. 185-2019/SUNAT, establishing rules for this mandatory report and, for the legal entities that qualify as principal taxpayers as of November 30, 2019, the first deadline for filing this mandatory report was established within the first half of December 2019. The first deadline to present the affidavit with information regarding the final beneficiaries as of November 30, 2019 was set in the first half of December 2019.

Peruvian law was amended with the objective to grant greater guarantees to the taxpayers through application of the general anti-evasive rule (Rule XVI of the Preliminary Title in the Tax Code) and with the objective of providing more tools to the Tax Administration for effective implementation of the rule.

U.S. Federal Income Tax Considerations

Assuming the obligations contemplated by the Amended and Restated Deposit Agreement are being performed in accordance with its terms, holders of ADSs (or ADRs evidencing ADSs) generally will be treated for U.S. federal income tax purposes as the beneficial owners of the Common Shares represented by those ADSs. U.S. Holders should be aware that the U.S. Internal Revenue Service (the “IRS”) has expressed concerns that parties to whom ADSs are pre-released before common shares are delivered to the depositary, or intermediaries in the chain of ownership between holders of ADSs and the issuer of the security underlying the ADSs, may be taking actions that are inconsistent with the claiming of foreign tax credits by holders of ADSs. Accordingly, the creditability of any Peruvian taxes could be affected by actions taken by such parties or intermediaries.

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Cash Dividends and Other Distributions

In general, distributions with respect to the ADSs or Common Shares will, to the extent made from our current or accumulated earnings and profits, as determined under U.S. federal income tax principles, constitute dividends for U.S. federal income tax purposes. If a distribution exceeds the amount of our current and accumulated earnings and profits, as so determined under U.S. federal income tax principles, the excess will be treated first as a non-taxable return of capital to the extent of the U.S. Holder’s tax basis in the ADSs or Common Shares, and thereafter as capital gain. We do not intend to maintain calculations of our earnings and profits under U.S. federal income tax principles and, unless and until such calculations are made, U.S. Holders should assume all distributions are made out of earnings and profits and constitute dividend income. As used below, the term “dividend” means a distribution that constitutes a dividend for U.S. federal income tax purposes.

Cash dividends paid with respect to Common Shares or Common Shares represented by ADSs generally are includible in the gross income of a U.S. Holder as ordinary income. Dividends generally are treated as foreign source income. Dividends paid to a U.S. Holder that is a domestic corporation are not eligible for the dividends received deduction available to such corporations. Under current law, a reduced U.S. tax rate is imposed on the dividend income of an individual U.S. Holder with respect to dividends paid by a domestic corporation or “qualified foreign corporation” if certain holding period requirements are met. A qualified foreign corporation generally includes a foreign corporation that is not a passive foreign investment company (“PFIC”) (as discussed below) and either (i) its shares are readily tradable on an established securities market in the United States or (ii) it is eligible for benefits under a comprehensive U.S. income tax treaty. Clause (i) should apply with respect to the ADSs as long as the ADSs are traded on the New York Stock Exchange. As a result, we believe that we should be treated as a qualified foreign corporation and, therefore, dividends paid to an individual U.S. Holder with respect to ADSs for which the minimum holding period requirement is met should be taxed at a reduced rate. In the case of our Common Shares held directly by U.S. Holders and not underlying ADSs, it is not clear whether dividends paid with respect to such shares will represent “qualified dividend income.” U.S. Holders holding our Common Shares directly and not through an ADS are urged to consult their own independent tax advisors.

Dividends paid in Soles are includible in a U.S. dollar amount based on the exchange rate in effect on the date of receipt (which, in the case of ADSs, will be the date of receipt by the Depositary) whether or not the payment is converted into U.S. dollars at that time. Any gain or loss recognized upon a subsequent sale or conversion or other taxable disposition of the Soles for a different amount of U.S. dollars will be U.S. source ordinary income or loss for U.S. federal income tax purposes. Distributions to U.S. Holders of additional Common Shares or preemptive rights with respect to Common Shares that are made as part of a pro rata distribution to all of our shareholders generally will not be subject to U.S. federal income tax but in other circumstances may constitute a taxable dividend.

A U.S. Holder will generally be entitled to claim a U.S. foreign tax credit in respect of any Peruvian taxes imposed on dividends received on our Common Shares or Common Shares represented by ADSs, subject to generally applicable limitations and restrictions. In the case of U.S. individuals for whom the reduced rate of tax on dividends applies, such limitations and restrictions will appropriately take into account the rate differential under rules similar to section 904(b)(2)(B) of the Code. U.S. Holders who do not elect to claim a credit for foreign taxes may instead claim a deduction in respect of such Peruvian taxes. Dividends received with respect to our Common Shares or Common Shares represented by ADSs will be treated as foreign source income for U.S. federal income tax purposes, and will be “passive category income” for purposes of calculating foreign tax credits in most cases, subject to various limitations. The rules governing foreign tax credits are complex and U.S. Holders should consult their tax advisors regarding their application to the particular circumstances of such holder.

A non-U.S. Holder generally is not subject to U.S. federal income or withholding tax on dividends paid with respect to Common Shares or Common Shares represented by ADSs, unless such income is effectively connected with the conduct by the non-U.S. Holder of a trade or business within the United States.

Capital Gains

U.S. Holders will recognize taxable gain or loss on the sale or other taxable disposition of ADSs or Common Shares (or preemptive rights with respect to such shares) held by the U.S. Holder or by the Depositary in an amount equal to the difference between the amount realized on the sale or other taxable disposition and the U.S. Holder’s adjusted tax basis in the ADSs or Common Shares. Generally, such gain or loss will be a long-term capital gain or loss if the U.S. Holder’s holding period for such Common Shares or ADSs exceeds one year. Long-term capital gain for an individual U.S. Holder is generally subject to a reduced rate of U.S. federal income tax. The deductibility of capital losses is subject to limitations under the Code. Any gain recognized by a U.S. Holder generally will be treated as U.S. source income for U.S. foreign tax credit purposes. Consequently, in the case of a sale or other taxable disposition of Common Shares or ADSs in a transaction subject to Peruvian tax, the U.S. Holder may not be able to claim a U.S. foreign tax credit for any Peruvian tax imposed on the gain unless it has sufficient foreign source income from other sources against which it can apply the credit.

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For U.S. federal income tax purposes, U.S. Holders will not recognize gain or loss on deposits or withdrawals of Common Shares in exchange for ADSs or on the exercise of preemptive rights.

A non-U.S. Holder of ADSs or Common Shares will not be subject to U.S. federal income or withholding tax on gain from the sale or other disposition of ADSs or Common Shares unless (i) such gain is effectively connected with the conduct of a trade or business within the United States or (ii) the non-U.S. Holder is an individual who is present in the United States for at least 183 days during the taxable year of the disposition and certain other conditions are met.

Passive Foreign Investment Company

Based on our audited financial statements as well as relevant market and shareholder data, we believe that we were not a PFIC for U.S. federal income tax purposes with respect to our 2020 taxable year. In addition, assuming no substantial change in our future operations, based on our audited or projected financial statements and current expectations regarding the value and nature of our assets, the sources and nature of our income, and relevant market and shareholder data, we do not anticipate becoming a PFIC for our 2021 taxable year. However, because this determination is based on our income, assets and the nature of our business, as well as the income, assets and business of entities in which we hold at least a 25% interest, from time to time, involves the application of complex tax rules, including the application of proposed United States Treasury Regulations, on which we are entitled to rely until they are finalized, and since our view is not binding on the courts or the IRS, no assurances can be provided that we will not be considered a PFIC for the current, or any past or future tax year. The potential application of the PFIC rules is further discussed below.

A foreign corporation is a PFIC in any taxable year in which, after taking into account the income and assets of certain subsidiaries pursuant to the applicable look-through rules, either (i) at least 75% of its gross income is passive income or (ii) at least 50% of the average value of its assets is attributable to assets that produce passive income or are held for the production of passive income. Passive income generally includes interest, dividends, rents, royalties and certain gains (including certain commodity related gains), but active business gains from the sale of commodities is not considered “passive income” for purposes of determining whether a company is a PFIC. Our PFIC status for any taxable year is likely to depend upon the extent to which our gross profit from our mining activities is considered active business gains.

If we were a PFIC in any year during which a U.S. Holder owned ADSs or Common Shares, we would not be treated as a “qualified foreign corporation” for purposes of qualifying dividends paid to a U.S. Holder for the reduced U.S. tax rate noted above. A U.S. Holder would also be subject to additional taxes on any excess distributions received from us and any gain realized from the sale or other disposition of ADSs or Common Shares (regardless of whether we continued to be a PFIC) unless such U.S. Holder makes an election to be taxed currently on its pro rata portion of our income, whether or not such income is distributed in the form of dividends, or otherwise makes a “mark-to-market” election with respect to the ADSs or Common Shares as permitted by the Code. A U.S. Holder has an excess distribution to the extent that distributions on ADSs or Common Shares during a taxable year exceed 125% of the average amount received during the three preceding taxable years (or, if shorter, the U.S. Holder’s holding period for the ADSs or Common Shares). To compute the tax on an excess distribution or any gain, (i) the excess distribution or the gain is allocated ratably over the U.S. Holder’s holding period for the ADSs or Common Shares, (ii) the amount allocated to the current taxable year is taxed as ordinary income and (iii) the amount allocated to other taxable years is taxed at the highest applicable marginal rate in effect for each year and an interest charge is imposed to recover the deemed benefit from the deferred payment of the tax attributable to each year.

If we were a PFIC, U.S. Holders of interests in a holder of ADSs or Common Shares may be treated as indirect holders of their proportionate share of the ADSs or Common Shares and may be taxed on their proportionate share of any excess distribution or gain attributable to the ADSs or Common Shares. An indirect holder also must treat an appropriate portion of its gain on the sale or taxable disposition of its interest in the actual holder as gain on the sale or taxable disposition of the ADSs or Common Shares.

U.S. Holders are urged to consult their own independent tax advisors regarding the potential application of the PFIC rules and related reporting requirements to the Common Shares or ADSs and the availability and advisability of making an election to avoid the adverse tax consequences of the PFIC rules should we be considered a PFIC for any taxable year.

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Information Reporting and Backup Withholding

Dividends in respect of the ADSs or Common Shares and the proceeds from the sale, exchange, redemption or other disposition of the ADSs or Common Shares may be reported to the IRS and a backup withholding tax may apply to such amounts unless the holder (i) is a corporation (which may be required to establish its exemption by certifying its status on IRS Form W-9), (ii) in the case of a U.S. Holder other than a corporation, provides an accurate taxpayer identification number in the manner required by applicable law, (iii) in the case of a non-U.S. Holder, provides a properly executed IRS Form W-8BEN or W-8BEN-E or other applicable Form W-8, or (iv) otherwise establishes a basis for exemption. The amount of any backup withholding from a payment to a U.S. Holder generally may be allowed as a credit against the U.S. Holder’s U.S. federal income tax liability.

“Specified Foreign Financial Asset” Reporting

U.S. Holders of “specified foreign financial assets” with an aggregate value in excess of US$50,000 (and in some circumstances, a higher threshold), may be required to file an information report with respect to such assets with their U.S. federal income tax returns. “Specified foreign financial assets” generally include any financial accounts maintained by foreign financial institutions as well as any of the following, but only if they are not held in accounts maintained by financial institutions: (i) stocks and securities issued by non-U.S. persons, (ii) financial instruments and contracts held for investment that have non-U.S. issuers or counterparties and (iii) interests in foreign entities.

F. Dividends and Paying Agents

Not applicable.

G. Statement by Experts

Not applicable.

H. Documents on Display

We are subject to the informational requirements of the Exchange Act. Accordingly, we are required to file reports and other information with the SEC, including annual reports on Form 20-F and reports on Form 6-K. The SEC maintains an Internet website that contains reports and other information about issuers, like us, that file electronically with the SEC. The address of that website is www.sec.gov.

I. Subsidiary Information

See “Item 4. Information of the Company Buenaventura—C. Organizational Structure”

ITEM 11. Quantitative and Qualitative Disclosures About Market Risk

The following discussion contains forward-looking statements that are subject to risks and uncertainties, many of which are outside of our control. Our primary market risks are related to fluctuations in the prices of gold, silver, zinc and lead. To a lesser extent, we are subject to market risk related to fluctuations in US$/ Sol exchange rates and to market risk related to interest rate fluctuation on our cash balances.

Commodity Contracts

Gold, silver, lead and copper hedging and sensitivity to market price

Our revenues and earnings are to a great extent influenced by world market prices for gold, copper, silver, zinc and lead that fluctuate widely and over which we have no control. We and our wholly-owned subsidiaries are completely unhedged as to the price at which our gold and silver will be sold. See “Item 3. Key Information—D. Risk Factors—Factors Relating to the Company—Our financial performance is highly dependent on the prices of gold, silver, copper and other metals.”

As of March 31, 2021, we had no silver derivative contracts or gold convertible put option contracts in place.

From January to December 2021, El Brocal had outstanding hedging commitments amounting to 22,750 fines tons of copper at an average fixed price of US$7,150 per ton.

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Yanacocha and Cerro Verde have informed us that they have generally not engaged in, and are currently not engaged in, gold or copper price hedging activities, such as forward sales or option contracts, to minimize their exposure to fluctuations in the prices of gold or copper.

Normal Sales

We had no normal sales contracts with fixed or capped prices outstanding as of March 31, 2021.

Foreign currency risk

We buy and sell our products and obtain capital facilities and investment in U.S. Dollars. The assets and liabilities in different currencies from the U.S. Dollar (Soles) are not significant. We estimate that the future exchange rate fluctuations of Peruvian currency versus the U.S. Dollar will not significantly affect the results of our future operations.

Interest Rate Sensitivity

We reduce our exposure to the risks due to variations in interest rates by engaging in financial obligations and capital leasing with fixed interest rates. See Note 33(a.3) to the Consolidated Financial Statements. Consequently, we do not use derivative instruments to manage this risk and we do not expect to incur significant losses based on interest risks.

ITEM 12. Description of Securities Other Than Equity Securities

A. Debt Securities

Not applicable.

B. Warrants and Rights

Not applicable.

C. Other Securities

Not applicable.

D. American Depositary Shares

The Depositary collects its fees for delivery and surrender of ADSs directly from investors depositing shares or surrendering ADSs for the purpose of withdrawal or from intermediaries acting for them. The Depositary collects fees for making distributions to investors by deducting those fees from the amounts distributed or by selling a portion of distributable property to pay the fees. The Depositary may collect its annual fee for depositary services by deductions from cash distributions or by directly billing investors or by charging the book-entry system accounts of participants acting for them. The Depositary may generally refuse to provide fee-attracting services until its fees for those services are paid. The following table summarizes the fees and expenses payable by holders of ADSs:

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Persons depositing or withdrawing shares must pay:	Payable to:	For:
US$5.00 (or less) per 100 ADSs (or portion of 100 ADSs)	Depositary	Issuance of ADSs, including issuances resulting from a distribution of shares or rights or other property
US$5.00 (or less) per 100 ADSs (or portion of 100 ADSs)	Depositary	Cancellation of ADSs for the purpose of withdrawal, including if the deposit agreement terminates
A fee equivalent to the fee that would be payable if securities distributed to you had been shares and the shares had been deposited for issuance of ADSs	Depositary	Distribution of securities distributed to holders of deposited securities which are distributed by the depositary to ADS registered holders
Registration or transfer fees	Depositary	Transfer and registration of shares on our share register to or from the name of the Depositary or its agent when you deposit or withdraw shares
Expenses of the Depositary	Depositary	Cable, telex and facsimile transmissions (when expressly provided in the deposit agreement)
Expenses of the Depositary	Depositary	Converting foreign currency to U.S. Dollars
Taxes and other governmental charges the Depositary or the custodian have to pay on any ADS or share underlying an ADS, for example, stock transfer taxes, stamp duty or withholding taxes	Depositary	As necessary

Fees Incurred in Past Annual Period

From January 1, 2019 to April 29, 2021, we received no fees from the Depositary related to our ADR facility, including continuing annual stock exchange listing fees, standard out-of-pocket maintenance costs for the ADRs (consisting of the expenses of postage and envelopes for mailing annual and interim financial reports, printing and distributing dividend checks, electronic filing of U.S. federal tax information, mailing required tax forms, stationery, postage, facsimile, and telephone calls), any applicable performance indicators relating to the ADR facility, underwriting fees and legal fees.

Fees to be Paid in the Future

The Depositary has agreed to reimburse us for expenses we incur that are related to establishment and maintenance expenses of the ADS program. The Depositary has agreed to reimburse us for our continuing annual stock exchange listing fees. The Depositary has also agreed to pay the standard out-of-pocket maintenance costs for the ADRs, which consist of the expenses of postage and envelopes for mailing annual and interim financial reports, printing and distributing dividend checks, electronic filing of U.S. federal tax information, mailing required tax forms, stationery, postage, facsimile and telephone calls. It has also agreed to reimburse us annually for certain investor relationship programs or special investor relations promotional activities. In certain instances, the Depositary has agreed to provide additional payments to us based on any applicable performance indicators relating to the ADR facility. There are limits on the amount of expenses for which the Depositary will reimburse us, but the amount of reimbursement available to us is not necessarily tied to the amount of fees the Depositary collects from investors.

The Depositary collects its fees for delivery and surrender of ADSs directly from investors depositing shares or surrendering ADSs for the purpose of withdrawal or from intermediaries acting for them. The Depositary collects fees for making distributions to investors by deducting those fees from the amounts distributed or by selling a portion of distributable property to pay the fees. The Depositary may collect its annual fee for depositary services by deduction from cash distributions or by directly billing investors or by charging the book-entry system accounts of participants acting for them. The Depositary may generally refuse to provide fee-attracting services until its fees for those services are paid.

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PART II

ITEM 13. Defaults, Dividend Arrearages and Delinquencies

Not applicable.

ITEM 14. Material Modifications to the Rights of Security Holders and Use of Proceeds

Not applicable.

ITEM 15. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

As of December 31, 2020, we carried out an evaluation under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures. There are inherent limitations to the effectiveness of any system of disclosure controls and procedures, including the possibility of human error and the circumvention or overriding of the controls and procedures. Accordingly, even effective disclosure controls and procedures can only provide reasonable assurance of achieving their control objectives. Based upon and as of the date of our evaluation, our Chief Executive Officer and Chief Financial Officer concluded that the disclosure controls and procedures are effective to provide reasonable assurance that information required to be disclosed in the reports we file and submit under the Exchange Act is recorded, processed, summarized and reported as and when required.

Management’s Annual Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of consolidated financial statements for external reporting purposes in accordance with generally accepted accounting principles. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Our management has assessed the effectiveness of our internal control over financial reporting as of December 31, 2020. In making its assessment, management has utilized the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) in Internal Control—Integrated Framework. Our management concluded that based on its assessment, our internal control over financial reporting was effective as of December 31, 2020.

Our independent registered public accounting firm Paredes, Burga & Asociados S. Civil de R.L., has issued an attestation report on our internal control over financial reporting, which is included below.

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Report of Independent Registered Public Accounting Firm

To the Shareholders and the Board of Directors of Compañia de Minas Buenaventura S.A.A. and subsidiaries

Opinion on Internal Control over Financial Reporting

We have audited Compañia de Minas Buenaventura S.A.A. and subsidiaries internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), (the COSO criteria). In our opinion, Compañia de Minas Buenaventura S.A.A. and subsidiaries (the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2020, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated statements of financial position of the Company as of December 31, 2020 and 2019, the related consolidated statements of profit or loss, other comprehensive income, changes in equity and cash flows for each of the three years in the period ended December 31, 2020, and the related notes and our report dated April 29, 2021, expressed an unqualified opinion thereon.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Annual Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the 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 in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.

Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control Over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance International Financial Reporting Standards as issued by the International Accounting Standard Board. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance International Financial Reporting Standards as issued by the International Accounting Standard Board, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Paredes, Burga & Asociados S. Civil de R.L.

A member practice of Ernst & Young Global Limited

/s/ Katherine Villanueva

Lima, Peru.

April 29, 2021

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Changes in Internal Control Over Financial Reporting

There has been no change in our internal control over financial reporting during 2020 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

ITEM 16A. Audit Committee Financial Expert

The Board of Directors has determined that Mr. Marco Antonio Zaldívar is the Audit Committee financial expert as defined in Item 16A of Form 20-F. The Board of Directors has also determined that Mr. Zaldívar and each of the other members of the Audit Committee are “independent directors” as defined in Section 303A.02 of the New York Stock Exchange’s, (“NYSE”), Listed Company Manual.

ITEM 16B. Code of Ethics

We have adopted a written code of business conduct and ethics that applies to our principal executive officer, principal financial officer, principal accounting officer, or persons performing similar functions, as well as all other employees. Our code of business conduct and ethics is posted on, and within five days following the date of any amendment or waiver we intend to disclose any amendments to or waivers from our code of business conduct and ethics on, our website, which is located at http://www.buenaventura.com. The information on our website is not a part of, nor incorporated into, this document.

ITEM 16C. Principal Accountant Fees and Services

The Audit Committee proposed at the General Meeting that Paredes, Burga & Asociados S. Civil de R.L., a member firm of Ernst & Young Global Limited, be elected as the independent auditor for 2020. Paredes, Burga & Asociados S. Civil de R.L. has served as our independent public accountant for each of the fiscal years in the two-year period ended December 31, 2019 and 2020, for which audited consolidated financial statements appear in this annual report on Form 20-F.

The following table presents the aggregate fees for professional services and other services rendered by Paredes, Burga & Asociados S. Civil de R.L. for 2019 and 2020.

	Year ended December 31,
	2019		2020
Audit Fees	US$	1,019,361		1,162,253
Tax Fees	US$	26,000		120,788
All other fees	US$	34,024		-
Total	US$	1,079,385		1,283,041

Audit Fees. Audit fees in the above table are the aggregate fees billed by Paredes, Burga & Asociados S. Civil de R.L. in connection with the audit of our annual consolidated financial statements, the review of our quarterly consolidated financial statements and statutory and regulatory audits. In addition, the amounts in the above table includes fees that were incurred in connection with the audit of internal control over financial reporting in 2019 and 2020.

Tax Fees. Tax fees in the above table are fees billed by Paredes, Burga & Asociados S. Civil de R.L. in connection with review of income tax filings.

Audit Committee Pre-approval Policies and Procedures

Our Audit Committee is responsible for the oversight of the independent auditor. The Audit Committee has adopted a policy regarding pre-approval of audit services provided by our independent auditors, or the “Policy.” In accordance with the Policy, the Audit Committee must pre-approve the provision of services by our independent auditor for all audit and non-audit services before commencement of the specified service. The Audit Committee approved all audit and tax fees in 2019 and 2020.

ITEM 16D. Exemptions from the Listing Standards for Audit Committees

Not applicable.

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ITEM 16E. Purchases of Equity Securities by the Issuer and Affiliated Purchasers

For the year ended December 31, 2020, neither we nor any person acting on our behalf made any purchase of our Common Shares.

ITEM 16F. Change in Registrant’s Certifying Accountant

None.

ITEM 16G. Corporate Governance

There are significant differences in the corporate governance practices followed by us as compared to those followed by U.S. domestic companies under the NYSE, listing standards. The NYSE listing standards provide that the board of directors of a U.S. domestic listed company must consist of a majority of independent directors and that certain committees must consist solely of independent directors. Under Peruvian corporate governance practices, a Peruvian company is not required to have a majority of the members of the board of directors be independent.

 The listing standards for the NYSE also require that U.S. domestic companies have an audit committee, a nominating/corporate governance committee and a compensation committee. Each of these committees must consist solely of independent directors and must have a written charter that addresses certain matters specified in the listing standards. Peruvian corporate governance practices permit the board of directors of a Peruvian company to form special governance bodies in accordance with the needs of such company and do not require that these special governance bodies be composed partially or entirely of independent directors. We maintain three committees, which include the Audit Committee, the Compensation Committee and the Nominating/Corporate Governance Committee. Our Board has determined that our Audit Committee is composed entirely of independent directors, as defined in the NYSE’s Listed Company Manual.

The NYSE’s listing standards also require U.S. domestic companies to adopt and disclose corporate governance guidelines. In July 2002, the SMV and a committee composed of regulatory agencies and associations prepared and published a list of suggested corporate governance guidelines called “Principles of Good Governance for Peruvian Companies.” These principles are disclosed on the SMV’s website at http://www.smv.gob.pe. Our code of business conduct and ethics establishes our principles of good corporate governance and, as indicated in “Item 16B. Code of Ethics,” is posted on our website. 

ITEM 16H. Mine Safety Disclosure

Not applicable.

 132 

 PART III

ITEM 17. Consolidated Financial Statements

Not applicable.

ITEM 18. Consolidated Financial Statements

Please refer to Item 19.

ITEM 19. Exhibits

	Page
(a)         Index to Consolidated Financial Statements and Schedules
COMPAÑÍA DE MINAS BUENAVENTURA S.A.A. AND SUBSIDIARIES	F-1
MINERA YANACOCHA S.R.L.	F-134
SOCIEDAD MINERA CERRO VERDE S.A.A.	F-216

(b) Index to Exhibits  

1.1 By-laws (Estatutos) of Compañía de Minas Buenaventura S.A.A., as amended April 30, 2002 (incorporated by reference from Compañía de Minas Buenaventura S.A.A. Annual Report on Form 20-F for the year ended December 31, 2002, filed on June 25, 2003).

1.2 By-laws (Estatutos) of Minera Yanacocha S.R.L., as amended October 18, 1999 (incorporated by reference from Compañía de Minas Buenaventura S.A.A. Annual Report on Form 20-F for the year ended December 31, 2002, filed on June 25, 2003).

2.1 Credit and Guaranty Agreement, dated as of June 27, 2016 among Compañía de Minas Buenaventura S.A.A., as Borrower, Banco de Crédito del Perú, as Administrative Agent, Compañía Minera Condesa S.A., Inversiones Colquijirca S.A. and Consorcio Energético de Huancavelica S.A., as Guarantors, and BBVA Banco Continental, Banco de Crédito del Perú, Corpbanca New York Branch, Banco Internacional del Perú S.A.A. – Interbank, Industrial and Commercial Bank of China, Dubai (DIFC) Branch, Banco Latinoamericano de Comercio Exterior, S.A. and Banco de Sabadell, Miami Branch, as Lenders (incorporated by reference from Compañía de Minas Buenaventura S.A.A. Annual Report on Form 20-F for the year ended December 31, 2016, filed on May 1, 2017).

2.2 Amendment No. 3 and Waiver to Credit and Guaranty Agreement, dated as of April 28, 2021 among Compañía de Minas Buenaventura S.A.A., as borrower, Compañía Minera Condesa S.A., Inversiones Colquijirca S.A. and Consorcio Energético de Huancavelica S.A., as guarantors; the lenders party to the Syndicated Term Loan and Banco de Crédito del Perú, as administrative agent.†

4.1 Shareholders Agreement among SMM Cerro Verde Netherlands B.V., Sumitomo Metal Mining Co., Ltd., Sumitomo Corporation, Summit Global Management B.V., Compañía de Minas Buenaventura S.A.A., Cyprus Climax Metals Company, Phelps Dodge Corporation and Sociedad Minera Cerro Verde S.A.A., dated June 1, 2005 (incorporated by reference from Compañía de Minas Buenaventura S.A.A. Annual Report on Form 20-F for the year ended December 31, 2005, filed on June 6, 2006).

11 Code of Conduct and Ethics (incorporated by reference from Compañía de Minas Buenaventura S.A.A. Annual Report on Form 20-F for the year ended December 31, 2013, filed on April 30, 2014).

12.1 Certification of Chief Executive Officer of Compañía de Minas Buenaventura S.A.A. pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.†

 133 

12.2 Certification of Chief Financial Officer of Compañía de Minas Buenaventura S.A.A. pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.†

13.1 Certification of Chief Executive Officer of Compañía de Minas Buenaventura S.A.A. pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.†

13.2 Certification of Chief Financial Officer of Compañía de Minas Buenaventura S.A.A. pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.†

101 Interactive Data Files†

† Filed herewith.

 134 

SIGNATURE

The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this annual report on its behalf.

COMPAÑÍA DE MINAS BUENAVENTURA S.A.A.
By:	/s/ Daniel Domínguez
	Daniel Domínguez
	Chief Financial Officer

Dated: April 30, 2021

 135 

Exhibit Index

Exhibit No.	Document Description
1.1	By-laws (Estatutos) of Compañía de Minas Buenaventura S.A.A., as amended April 30, 2002 (incorporated by reference from Compañía de Minas Buenaventura S.A.A. Annual Report on Form 20-F for the year ended December 31, 2002, filed on June 25, 2003).
1.2	By-laws (Estatutos) of Minera Yanacocha S.R.L., as amended October 18, 1999 (incorporated by reference from Compañía de Minas Buenaventura S.A.A. Annual Report on Form 20-F for the year ended December 31, 2002, filed on June 25, 2003).
2.1	Credit and Guaranty Agreement, dated as of June 27, 2016 among Compañía de Minas Buenaventura S.A.A., as Borrower, Banco de Crédito del Perú, as Administrative Agent, Compañía Minera Condesa S.A., Inversiones Colquijirca S.A. and Consorcio Energético de Huancavelica S.A., as Guarantors, and BBVA Banco Continental, Banco de Crédito del Perú, Corpbanca New York Branch, Banco Internacional del Perú S.A.A. – Interbank, Industrial and Commercial Bank of China, Dubai (DIFC) Branch, Banco Latinoamericano de Comercio Exterior, S.A. and Banco de Sabadell, Miami Branch, as Lenders (incorporated by reference from Compañía de Minas Buenaventura S.A.A. Annual Report on Form 20-F for the year ended December 31, 2016, filed on May 1, 2017).
2.2	Amendment No. 3 and Waiver to Credit and Guaranty Agreement, dated as of April 28, 2021 among Compañía de Minas Buenaventura S.A.A., as borrower, Compañía Minera Condesa S.A., Inversiones Colquijirca S.A. and Consorcio Energético de Huancavelica S.A., as guarantors; the lenders party to the Syndicated Term Loan and Banco de Crédito del Perú, as administrative agent.†
4.1	Shareholders Agreement among SMM Cerro Verde Netherlands B.V., Sumitomo Metal Mining Co., Ltd., Sumitomo Corporation, Summit Global Management B.V., Compañía de Minas Buenaventura S.A.A., Cyprus Climax Metals Company, Phelps Dodge Corporation and Sociedad Minera Cerro Verde S.A.A. dated June 1, 2005 (incorporated by reference from Compañía de Minas Buenaventura S.A.A. Annual Report on Form 20-F for the year ended December 31, 2005, filed on June 6, 2006).
11	Code of Conduct and Ethics. (incorporated by reference from Compañía de Minas Buenaventura S.A.A. Annual Report on Form 20-F for the year ended December 31, 2013, filed on April 30, 2014).
12.1	Certification of Chief Executive Officer of Compañía de Minas Buenaventura S.A.A. pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.†
12.2	Certification of Chief Financial Officer of Compañía de Minas Buenaventura S.A.A. pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.†
13.1	Certification of Chief Executive Officer of Compañía de Minas Buenaventura S.A.A. pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.†
13.2	Certification of Chief Financial Officer of Compañía de Minas Buenaventura S.A.A. pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.†
101	Interactive Data Files†

† Filed herewith.

Exhibits

 136 

Compañía de Minas Buenaventura S.A.A. and Subsidiaries

Consolidated Financial Statements for the years 2020, 2019 and 2018, together with the Report of Independent Registered Public Accounting Firm

F-1

Compañía de Minas Buenaventura S.A.A. and Subsidiaries

Consolidated Financial Statements for the years 2020, 2019 and 2018, together with the Report of Independent Registered Public Accounting Firm

Content
Report of Independent Registered Public Accounting Firm	F-3
Consolidated Financial Statements
Consolidated statements of financial position	F-9
Consolidated statements of profit or loss	F-10
Consolidated statements of other comprehensive income	F-11
Consolidated statements of changes in equity	F-12
Consolidated statements of cash flows	F-13
Notes to the consolidated financial statements	F-14

F-2

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Shareholders of Compañía de Minas Buenaventura S.A.A.

Opinion on the Financial Statements

We have audited the accompanying consolidated statements of financial position of Compañía de Minas Buenaventura S.A.A., and Subsidiaries (together the Group) as of December 31, 2020 and 2019, and related consolidated statements of profit or loss, other comprehensive income, changes in equity and cash flows for each of the three years in the period ended December 31, 2020, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Group at December 31, 2020 and 2019, and the consolidated results of its operations and its cash flows for each of the three years in the period ended December 31, 2020, in conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB) the Group´s internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated April 29, 2021 expressed an unqualified opinion thereon.

Basis for Opinion

These consolidated financial statements are the responsibility of the Group ‘s management. Our responsibility is to express an opinion on the Group ‘s consolidated financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Group 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 consolidated financial statements are free of material misstatement, whether due to error or fraud. 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 regarding the amounts and disclosures in the consolidated 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 consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

F-3

Report of Independent Registered Public Accounting Firm (continued)

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Impairment of mining concessions, development costs, right-of-use asset, property, plant and equipment

Description of the Matter

At December 31, 2020, the net carrying value of the Group mining concessions, development costs, right-of-use asset, property, plant and equipment is US$1,650 million. Related disclosures are included in Note 2.4(n) and Note 11(b) to the consolidated financial statements. The Group reviews and evaluates its mining concessions, development costs, right-of-use asset, property, plant and equipment for impairment at least annually, or when events or changes in circumstances indicate that the related carrying amounts may not be recoverable at the Cash Generating Unit level (CGUs). When the Group determines the existence of significant impairment indicators, management performs an assessment to determine whether an impairment has occurred. An impairment exists when the carrying value of an asset or cash generating unit (CGU) exceeds its recoverable amount, which is the higher of its fair value less costs to sell and its value in use. The Group identified impairment indicators for its GCU of (i) Buenaventura, (ii) Sociedad Minera El Brocal and (iii) La Zanja and as a result of performing its impairment test, it did not record any impairment for the year ended as of December 31, 2020. As a result of the analysis of the recoverable amount as of December 31, 2020, Buenaventura recognized a reversal for impairment of long-lived assets for US$2.1 million derived from the evaluation of its Julcani mining unit (a CGU of Buenaventura).

F-4

Report of Independent Registered Public Accounting Firm (continued)

The impairment tests required the use of significant assumptions. These assumptions are described in note 11(b) of the consolidated financial statements, and are based on, among others, production volumes, current life of mine plans, market based commodity price assumptions, operating and capital costs, discount rates that reflect the current market assessments of the time value of money and the risks specific to the CGU, estimated quantities of recoverable minerals and residual value. Auditing the above-noted CGUs is complex; accordingly, we have determined this to be a critical audit matter.

How We Addressed the Matter in Our Audit

We performed the following procedures, among others, to audit the impairment assessment of the CGUs noted above. We obtained an understanding, evaluated the design, and tested the operating effectiveness of controls over the impairment review assessment. We tested controls over the Group’s process for identifying and evaluating potential impairment indicators, management´s review of the significant assumptions, projected financial information and methodology used to develop such estimates. During our audit we evaluated and tested significant assumptions, judgments and operating data used in the GCU’s of (i) Buenaventura, (ii) Sociedad Minera El Brocal and (iii) La Zanja analysis to determine the recoverable amounts.. We involved our valuation specialists to assist in comparing market based commodity price assumptions against market data including a range of analysts forecasts. We also involved our valuation specialists to evaluate the discount rates against current industry and economic trends as well as Group-specific risk premiums. We also involved our valuation specialists to perform sensitivity analyses over changes in the discount rates and commodity price assumptions to the recoverable amounts of the CGUs. To evaluate the estimated quantity of recoverable minerals used in the impairment analyses, we obtained reports from external specialists hired by management which validate mineral reserves determination performed by management’s qualified persons. We evaluated the competency and objectivity of the external specialists and management’s qualified persons through the consideration of their professional qualifications, experience and their use of accepted industry practices.

F-5

Report of Independent Registered Public Accounting Firm (continued)

	We also assessed the future cash flows by comparing forecasted commodity prices to available market information and future planned cash flows to internal business plans to assess the projected financial information. Furthermore, we evaluated management´s estimated quantities of recoverable minerals by comparing these estimates with the historical operating performance of the CGUs. The estimated operating and capital costs as well as the future production levels used in the impairment analyses are based on life of mine plans. To assess the accuracy of the Group’s ability to estimate future costs and future production levels for the CGUs of (i) Buenaventura, (ii) Sociedad Minera El Brocal and (iii) La Zanja, we compared historical estimates against actual results and reviewed supporting analyses underlying the estimates used within the discounted cash flows. We also involved our valuation specialists to assist in comparing operating and capital costs against current market data and historical information relating to the performance of the mentioned-above CGUs. Furthermore, we evaluated the disclosure of this matter in Note 2.4(n) and Note 11(b) to the consolidated financial statements.
	Uncertain tax positions
Description of the Matter	As discussed in Note 29(e) to the consolidated financial statements, Buenaventura has disclosed it has certain tax-related contingencies related to the tax years 2007 through 2010. In these years, relevant taxing authorities have challenged the application of income tax regulations by the Company. Buenaventura has disclosed, but not recorded at December 31, 2020, as the criteria for recognition has not been met, that it is subject to uncertain tax positions related to income tax assessments of US$560.4 million, including penalties and interest. In addition, Buenaventura has recognized an income tax receivable for an amount of US$53.6 million, resulting from payments made to the tax authorities that are being disputed as part of this assessment. Uncertainty in a tax position may arise because tax laws are subject to interpretation. The Company uses significant judgment to (1) determine whether, based on the technical merits, a tax position is more likely than not to be sustained and (2) measure the amount of tax benefit that qualifies for recognition.

F-6

Report of Independent Registered Public Accounting Firm (continued)

Auditing the recognition and measurement of uncertain tax positions and the related recoverability of income tax receivables requires a high degree of auditor judgment and significant audit effort because management’s assessment is highly judgmental and based on interpretations of tax laws and legal rulings: accordingly, we have determined this to be a critical audit matter.

How We Addressed the Matter in Our Audit

We performed the following procedures, among others, to audit uncertain tax positions, income tax contingencies and income tax receivables. We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over Buenaventura’s accounting process for income taxes, including uncertain tax positions and tax contingencies. This included testing controls over management’s review of the technical merits of tax positions and disputed tax assessments. We evaluated Buenaventura’s accounting for these tax positions specifically taking into consideration relevant local income tax laws. We inquired of Company management responsible for tax matters and inspected internal and external supporting documentation, including obtaining opinions from external counsel advising the Company in these matters, to evaluate the technical merits of the tax authority’s assessment against the Company, and to determine if the Company is more likely than not to sustain the treatment of these specific items in its 2007 through 2010 tax returns. We analyzed management’s assumptions, its analysis of relevant tax laws and case law and data used to determine the accounting treatment of these tax assessments and tested the accuracy of the calculations.

F-7

Report of Independent Registered Public Accounting Firm (continued)

We involved our tax specialists to assess the technical merits of the Company’s tax position and to evaluate the application of relevant tax law and accounting guidance in assessing the Company’s recognition and recoverability of income tax receivables.

Furthermore, we evaluated the disclosure of this matter in Note 29(e) to the consolidated financial statements.

Paredes, Burga & Asociados S. Civil de R.L.

A member practice of Ernst & Young Global Limited

/s/ Katherine Villanueva

We have served as the Group‘s auditor since 2002

Lima, Peru

April 29, 2021

F-8

Compañía de Minas Buenaventura S.A.A. and Subsidiaries

Consolidated statements of financial position

As of December 31, 2020 and 2019

	Notes		2020			2019
			US$(000)			US$(000)
Assets
Current assets
Cash and cash equivalents		6		235,449			210,046
Trade and other receivables, net		7(a)		230,830			287,712
Inventories, net		8(a)		77,327			97,973
Income tax credit				19,837			31,919
Prepaid expenses		9(a)		25,709			20,969
				589,152			648,619
Non-current assets
Trade and other receivables, net		7(a)		102,347			88,515
Inventories, net		8(a)		23,637			394
Investments in associates and joint venture		10(a)		1,488,775			1,488,247
Mining concessions, development costs, right-of-use asset, property, plant and equipment, net		11(a)		1,650,361			1,754,372
Investment properties, net				186			204
Deferred income tax asset		28(b)		73,850			74,556
Prepaid expenses		9(a)		24,806			25,692
Other assets, net		12(a)		26,503			26,675
				3,390,465			3,458,655
Total assets				3,979,617			4,107,274
Liabilities and shareholders’ equity, net
Current liabilities
Bank loans		13		65,793			55,000
Trade and other payables		14(a)		179,956			166,244
Provisions, contingent liabilities and other liabilities		15(a)		68,000			72,771
Income tax payable				3,162			5,650
Financial obligations		16(a)		25,086			265,692
Hedge derivative financial instruments		32		18,439			–
				360,436			565,357
Non-current liabilities
Trade and other payables		14(a)		–			616
Provisions, contingent liabilities and other liabilities		15(a)		252,338			221,736
Financial obligations		16(a)		506,567			305,996
Contingent consideration liability		27(b)		22,100			16,410
Deferred income tax liabilities		28(b)		38,319			28,959
				819,324			573,717
Total liabilities				1,179,760			1,139,074
Shareholders’ equity, net		17
Capital stock				750,497			750,497
Investment shares				791			791
Additional paid-in capital				218,450			218,450
Legal reserve				163,194			163,168
Other reserves				269			269
Retained earnings				1,503,785			1,639,658
Other reserves of equity				(9,526	)		(1,311	)
Shareholders ‘equity, net attributable to owners of the parent				2,627,460			2,771,522
Non-controlling interest		18(a)		172,397			196,678
Total shareholders’ equity, net				2,799,857			2,968,200
Total liabilities and shareholders’ equity, net				3,979,617			4,107,274

F-9

Compañía de Minas Buenaventura S.A.A. and Subsidiaries

Consolidated statements of profit or loss

For the years ended December 31, 2020, 2019 and 2018

	Notes		2020			2019			2018
			US$(000)			US$(000)			US$(000)
Continuing operations
Sales
Sales of goods		20(b)		637,619			821,930			1,106,329
Sales of services		20(b)		20,285			23,661			24,001
Royalty income		20(b)		18,638			22,297			20,385
Total sales				676,542			867,888			1,150,715
Operating costs
Cost of sales of goods, excluding depreciation and amortization		21(a)		(393,888	)		(512,874	)		(613,381	)
Unabsorbed cost due to production stoppage		1(f)		(27,758	)		–			–
Cost of sales of services, excluding depreciation and amortization		21(b)		(1,554	)		(3,378	)		(4,318	)
Depreciation and amortization				(189,620	)		(226,335	)		(238,879	)
Exploration in operating units		22		(28,044	)		(44,163	)		(89,730	)
Mining royalties		23		(11,749	)		(12,832	)		(21,388	)
Total operating costs				(652,613	)		(799,582	)		(967,696	)
Gross profit				23,929			68,306			183,019
Operating expenses, net
Administrative expenses		24		(67,185	)		(76,297	)		(77,099	)
Selling expenses		20(e)		(18,533	)		(24,313	)		(26,948	)
Write –off of stripping activity asset		11(g)		(11,633	)		–			–
Exploration in non-operating areas		25		(8,475	)		(11,879	)		(36,307	)
Reversal (provision) of contingencies and others				(4,150	)		2,968			11,248
Impairment recovery (loss) of long-lived assets		11(b)		2,083			(2,083	)		5,693
Other, net		26		2,690			(14,715	)		(1,308	)
Total operating expenses, net				(105,203	)		(126,319	)		(124,721	)
Operating profit (loss)				(81,274	)		(58,013	)		58,298
Finance income		27		2,411			9,675			9,685
Finance costs		27		(37,822	)		(42,173	)		(38,422	)
Share in the results of associates and joint venture		10(b)		(9,517	)		47,710			(1,144	)
Net loss from currency exchange difference				(4,116	)		(734	)		(1,384	)
Profit (loss) before income tax				(130,318	)		(43,535	)		27,033
Current income tax		28(c)		(9,924	)		(11,911	)		(16,882	)
Deferred income tax		28(c)		(15,506	)		37,501			(9,997	)
Total income tax				(25,430	)		25,590			(26,879	)
Profit (loss) from continuing operations				(155,748	)		(17,945	)		154
Discontinued operations
Net profit (loss) from discontinued operations attributable to equity holders of the parent		1(e)		5,409			(10,514	)		(11,808	)
Loss for the year				(150,339	)		(28,459	)		(11,654	)
Attributable to:
Equity holders of the parent				(135,718	)		(12,208	)		(13,445	)
Non-controlling interest		18(a)		(14,621	)		(16,251	)		1,791
				(150,339	)		(28,459	)		(11,654	)
Basic and diluted loss per share attributable to equity holders of the parent, stated in U.S. dollars		17(e)		(0.53	)		(0.05	)		(0.05	)
Loss for continuing operations, basic and diluted per share attributable to equity holders of the parent, expressed in US dollars		17(e)		(0.56	)		(0.01	)		(0.02	)

F-10

Compañía de Minas Buenaventura S.A.A. and Subsidiaries

Consolidated statements of other comprehensive income

For the years ended December 31, 2020, 2019 and 2018

	2020			2019			2018
	US$(000)			US$(000)			US$(000)
Net loss		(150,339	)		(28,459	)		(11,654	)
Other comprehensive profit (loss):
Other comprehensive income (loss) to be reclassified to profit or loss in subsequent periods
Net change in unrealized gain (loss) on cash flow hedges, note 32		(18,439	)		(2,759	)		31,464
Income tax effect, note 28(a)		5,440			813			(9,916	)
Unrealized gain on investments		264			(291	)		1,053
		(12,735	)		(2,237	)		22,601
Total other comprehensive profit (loss), net of income tax		(163,074	)		(30,696	)		10,947
Attributable to:
Equity holders of the parent		(143,933	)		(12,816	)		(260	)
Non-controlling interests		(19,141	)		(17,880	)		11,207
		(163,074	)		(30,696	)		10,947

F-11

Compañía de Minas Buenaventura S.A.A. and Subsidiaries

Consolidated statements of changes in equity

For the years ended December 31, 2020, 2019 and 2018

	Attributable to equity holders of the parent
	Capital stock, net of treasury shares
	Number of shares outstanding		Common shares		Investment shares		Additional paid-in capital		Legal reserve		Other reserves		Retained earnings			Other reserves of equity			Total			Non-controlling interest			Total equity
			US$(000)		US$(000)		US$(000)		US$(000)		US$(000)		US$(000)			US$(000)			US$(000)			US$(000)			US$(000)
As of January 1, 2018		253,715,190		750,497		791		218,450		163,071		269		1,728,847			(13,888	)		2,848,037			215,590			3,063,627
Net profit (loss)		–		–		–		–		–		–		(13,445	)		–			(13,445	)		1,791			(11,654	)
Other comprehensive income		–		–		–		–		–		–		–			13,185			13,185			9,416			22,601
Total other comprehensive income (loss)		–		–		–		–		–		–		(13,445	)		13,185			(260	)		11,207			10,947
Dividends declared and paid, note 17(d)		–		–		–		–		–		–		(22,860	)		-			(22,860	)		(5,560	)		(28,420	)
Change in investments, note 18(a)		–		–		–		–		–		–		(16,633	)		–			(16,633	)		–			(16,633	)
Expired dividends, note 17(c)		–		–		–		–		44		–		–			–			44			–			44
As of December 31, 2018		253,715,190		750,497		791		218,450		163,115		269		1,675,909			(703	)		2,808,328			221,237			3,029,565
Effect of new standards		–		–		–		–		–		–		(1,160	)		–			(1,160	)		(179	)		(1,339	)
As of January 1, 2019		253,715,190		750,497		791		218,450		163,115		269		1,674,749			(703	)		2,807,168			221,058			3,028,226
Net loss		–		–		–		–		–		–		(12,208	)		–			(12,208	)		(16,251	)		(28,459	)
Other comprehensive loss		–		–		–		–		–		–		–			(608	)		(608	)		(1,629	)		(2,237	)
Total other comprehensive loss		–		–		–		–		–		–		(12,208	)		(608	)		(12,816	)		(17,880	)		(30,696	)
Dividends declared and paid, note 17(d)		–		–		–		–		–		–		(22,098	)		–			(22,098	)		(6,500	)		(28,598	)
Change in investments, note 18(a)		–		–		–		–		–		–		(785	)		–			(785	)		–			(785	)
Expired dividends, note 17(c)		–		–		–		–		53		–		–			–			53			–			53
As of December 31, 2019		253,715,190		750,497		791		218,450		163,168		269		1,639,658			(1,311	)		2,771,522			196,678			2,968,200
Net loss		–		–		–		–		–		–		(135,718	)		–			(135,718	)		(14,621	)		(150,339	)
Other comprehensive loss		–		–		–		–		–		–		–			(8,215	)		(8,215	)		(4,520	)		(12,735	)
Total other comprehensive income (loss)		–		–		–		–		–		–		(135,718	)		(8,215	)		(143,933	)		(19,141	)		(163,074	)
Dividends declared and paid, note 17(d)		–		–		–		–		–		–		–			–			–			(5,140	)		(5,140	)
Other changes in equity		–		–		–		–		–		–		(155	)		–			(155	)		–			(155	)
Expired dividends, note 17(c)		–		–		–		–		26		–		–			–			26			–			26
As of December 31, 2020		253,715,190		750,497		791		218,450		163,194		269		1,503,785			(9,526	)		2,627,460			172,397			2,799,857

F-12

Compañía de Minas Buenaventura S.A.A. and Subsidiaries

Consolidated statements of cash flows

For the years ended December 31, 2020, 2019 and 2018

		2020			2019			2018
	Notes	US$(000)			US$(000)			US$(000)
Operating activities
Proceeds from sales			708,196			783,000			1,216,294
Recovery from value added tax and other taxes			42,967			45,712			106,656
Royalty received			18,954			23,001			20,013
Dividends received from related parties	30(a)		3,649			33,388			46,792
Dividends received from investments			2,500			–			–
Proceeds from insurance claim	26(b)		4,381			–			38,793
Interest received			1,658			4,265			2,383
Payments to suppliers and third parties, and other net			(454,140	)		(610,737	)		(861,282	)
Payments to employees			(129,353	)		(137,300	)		(151,602	)
Income tax and Royalties paid to Peruvian State			(25,708	)		(24,935	)		(30,898	)
Payments for tax litigation	7(g)		(22,386	)		(36,322	)		–
Interest paid			(21,653	)		(28,266	)		(27,699	)
Payments of royalties			(6,180	)		(4,741	)		(13,190	)
Net cash and cash equivalents provided by operating activities			122,885			47,065			346,260
Investing activities
Proceeds from sale of property, plant and equipment to third parties	7(h)		24,416			726			2,240
Additions to mining concessions, development costs, property, plant and equipment	11(a)		(71,546	)		(102,627	)		(111,270	)
Acquisition of investment in associate	10(c)		(13,453	)		–			–
Payments for acquisition of other assets	12(a)		(1,641	)		(3,700	)		(8,529	)
Net cash and cash equivalents used in investing activities			(62,224	)		(105,601	)		(117,559	)
Financing activities
Proceeds from bank loans	13		18,019			55,000			95,000
Payments of bank loans	13		(7,197	)		(95,000	)		(95,000	)
Proceeds from financial obligations	16(f)		–			161,894			–
Payments of financial obligations	16(f)		(38,994	)		(186,152	)		(45,222	)
Dividends paid to controlling shareholders	14(c)		–			(22,098	)		(22,860	)
Short-term and low value lease payments	16(f)		(4,080	)		(7,596	)		–
Decrease (increase) of bank accounts in trust	7(e)		2,134			(166	)		(410	)
Dividends paid to non-controlling shareholders	17(d)		(5,140	)		(6,500	)		(5,560	)
Net cash and cash equivalents used in financing activities			(35,258	)		(100,618	)		(74,052	)
Increase (decrease) in cash and cash equivalents for the year, net			25,403			(159,154	)		154,649
Cash and cash equivalents at beginning of year			210,046			369,200			214,551
Cash and cash equivalents at year-end			235,449			210,046			369,200
Financing and investing activities not affecting cash flows:
Changes in estimates of mine closures plans	15(b)		31,558			26,722			42,874
Change of the fair value for contingent consideration liability	27(b)		(5,690	)		(655	)		1,815
Accounts receivable from sale of assets	7(h)		8,233			21,648			2,715

F-13

Compañía de Minas Buenaventura S.A.A. and Subsidiaries

Notes to the consolidated financial statements

For the years 2020, 2019 and 2018

1. Identification and business activity

(a) Identification -

Compañía de Minas Buenaventura S.A.A. (hereafter “the Company” or “Buenaventura”) is a publicly traded corporation incorporated in Peru in 1953. The Company stock is traded on the Lima and New York Stock Exchanges through American Depositary Receipts (ADRs), which represent the Company’s shares deposited in the Bank of New York. The Company’s legal domicile is at Las Begonias Street N°415, San Isidro, Lima, Peru. The Company is the ultimate controlling party.

(b) Business activity -

The Company and its subsidiaries (hereinafter “the Group”) are principally engaged in the exploration, mining, concentration, smelting and marketing of polymetallic ores and metals.

The Company operates directly four operating mining units in Peru (Uchucchacua, Orcopampa, Julcani and Tambomayo), two discontinued mining units (Poracota and Shila-Paula), and one mining unit under development stage (San Gabriel). In addition, the Company has a controlling interest in (i) Sociedad Minera El Brocal S.A.A. (hereinafter “El Brocal”), which operates the Colquijirca mining unit; (ii) Minera La Zanja S.R.L. (hereinafter “La Zanja”), which operates La Zanja mining unit; (iii) El Molle Verde S.A.C. (hereinafter “Molle Verde”) which operates Trapiche, a mining unit at the development stage; and (iv) other entities dedicated to energy generation and transmission services, and other activities. All these activities are carried out in Peru. In addition, the Group has non-significant subsidiaries in Mexico and Chile related to exploration activities.

(c) Approval of consolidated financial statements -

The consolidated financial statements as of December 31, 2020 were approved and authorized for issue by the Board of Directors on April 29, 2021 and subsequent events have been considered through that date. They will then be presented for approval by the Company’s shareholders meeting. Those shareholders have the authority to approve and or otherwise modify the consolidated financial statements.

F-14

Notes to the consolidated financial statements (continued)

(d) The consolidated financial statements include the financial statements of the following companies:

			Ownership as of December 31,
	Country of		2020				2019
	incorporation		Direct		Indirect		Direct		Indirect
	and business		%		%		%		%
Mining activities:
Compañía de Minas Buenaventura S.A.A. (*)		Peru		100.00		-		100.00
Compañía Minera Condesa S.A.		Peru		100.00		-		100.00		-
Compañía Minera Colquirrumi S.A.		Peru		100.00		-		100.00		-
Sociedad Minera El Brocal S.A.A (**)		Peru		3.19		58.24		3.19		58.24
Inversiones Colquijirca S.A. (**)		Peru		89.76		10.24		89.76		10.24
S.M.R.L. Chaupiloma Dos de Cajamarca		Peru		20.00		40.00		20.00		40.00
Minera La Zanja S.R.L.		Peru		53.06		–		53.06		–
Minera Julcani S.A. de C.V.		Mexico		99.80		0.20		99.80		0.20
Compañía de Minas Buenaventura Chile Ltda. (***)		Chile		90.00		10.00		90.00		10.00
El Molle Verde S.A.C.		Peru		99.98		0.02		99.98		0.02
Apu Coropuna S.R.L.		Peru		70.00		—		70.00		–
Cerro Hablador S.A.C.		Peru		99.00		1.00		99.00		1.00
Minera Azola S.A.C.		Peru		99.00		1.00		99.00		1.00
Compañía Minera Nueva Italia S.A. (liquidated)		Peru		–		–		–		93.36
Energy generation and transmission services:
Consorcio Energético de Huancavelica S.A.		Peru		100.00		–		100.00		–
Empresa de Generación Huanza S.A.		Peru		–		100.00		–		100.00
Insurance brokerage:
Contacto Corredores de Seguros S.A.		Peru		99.98		0.02		99.98		0.02
Contacto Risk Consulting S.A.		Peru		–		98.00		–		98.00
Industrial activities:
Procesadora Industrial Río Seco S.A.		Peru		100.00		–		100.00		–

(*) Includes four operating mining units in Peru (Uchucchacua, Orcopampa, Julcani and Tambomayo), two discontinued mining units (Poracota and Shila-Paula), and one mining unit under development stage (San Gabriel)

(**) As of December 31, 2020 and 2019, the participation of the Company in the voting rights of El Brocal is 61.43 percent. Inversiones Colquijirca S.A. (hereafter “Colquijirca”), a Group’s subsidiary (99.99 percent as of December 31, 2020 and 2019), has an interest in El Brocal´s capital stock, through which the Company holds an indirect participation in El Brocal of 58.24 percent as of December 31, 2020 and 2019.

(***) On January 21, 2021, the Company sold 100% of its shares of Compañía de Minas Buenaventura Chile Ltda., which were presented as financial investments as of December 31, 2020. The sale value was US$30,000 which are fully collected as of the date of this report.

F-15

Notes to the consolidated financial statements (continued)

(e) Discontinued operations

During 2020, the Group sold its Mallay mining unit classified as discontinued during 2019 under IFRS 5 “Non-current Assets Held for Sale and Discontinued Operations”. The sale price was US$10 million (US$8.5 million plus VAT) with a related cost of US$3.6 million net of income from the reversal of provision for mining unit closure of US$5.1 million. As of December 31, 2020, the Group has collected US$2.0 million and the remaining balance will be paid in two settlements of US$4 million each in November 2021 and 2022.

The net cash flows used by the mining units with discontinued operations are presented below:

	2020		2019			2018
	US$(000)		US$(000)			US$(000)
Operating activities		-		(2	)		1,800
Investing activities		-		-			(1,817	)
Decrease in cash and cash equivalents for the year		-		(2	)		(17	)

F-16

Notes to the consolidated financial statements (continued)

The results of the discontinued operations mining units for the years 2020, 2019 and 2018 are presented below:

	2020			2019			2018
	US$(000)			US$(000)			US$(000)
Sales		(1	)		97			16,666
Cost of sales		-			(2	)		(15,261	)
Gross profit (loss)		(1	)		95			1,405
Operating income (expenses), net
Income from sale of development costs, property, plant and equipment (sale of Mallay mining unit)		7,976			-			-
Reversal of provision for closure of mining unit (sale of Mallay mining unit), nota 15(b)		5,093			-			-
Reversal of provision for impairment of value of inventory (sale of Mallay mining unit), note 8(c)		1,220			-			-
Income from sale of supplies (sale of Mallay mining unit)		606			-			-
Reversal (provision) of contingent and others		13			(134	)		(9	)
Cost of sale of development costs, property, plant and equipment, nota 11(a)		(3,099	)		(44	)		(5,100	)
Administrative expenses		(3,243	)		(8,048	)		(1,661	)
Cost of sale of supplies (sale of Mallay mining unit)		(1,711	)		-			-
Provision for impairment of value of inventory, note 8(c)		(377	)		(320	)		-
Changes in provision for closure of mining units		(58	)		(1,912	)		(6,013	)
Reversal of Impairment loss of long-lived assets, note 11(b)		-			-			2,837
Others, net		(846	)		117			(3,162	)
Total operating expenses, net		5,574			(10,341	)		(13,108	)
Operating profit (loss)		5,573			(10,246	)		(11,703	)
Finance costs, note 15(b)		(176	)		(266	)		(88	)
Net gain (loss) from currency exchange difference		12			(2	)		30
Profit (loss) before income tax		5,409			(10,514	)		(11,761	)
Income tax		-			-			(47	)
Profit (loss) from discontinued operations		5,409			(10,514	)		(11,808	)
Profit (loss) from the discontinued operations, per basic and diluted share, express in U. S. dollars		0.03			(0.04	)		(0.03	)

(f) COVID-19 (Corona Virus Disease 2019) in Peru

The Group’s 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 and concentrated in China during the year 2019 which was declared a pandemic by the World Health Organization on March 11, 2020, has already and will continue to have a negative effect on the 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.

F-17

Notes to the consolidated financial statements (continued)

On March 15, 2020, and by means of Supreme Decree No. 044-2020, the Peruvian State declared a State of National Emergency and mandatory social isolation for an initial period of fifteen calendar days, with subsequent extensions. During the first phases of this period, constitutional rights related to personal freedom and security, inviolability of the home and freedom of assembly were restricted, except for the provision and access to certain services and essential goods, such as those related to financial institutions, insurance and pensions, as well as complementary and related services. Operations at national level have been resumed according to a phase plan issued by the Peruvian State.

The Peruvian Government, through a supreme decree has authorized mining operators to gradually restart key activities, permitting mining companies in Peru to resume operations on May 11, 2020 that were scaled back sharply during the State of National Emergency. During this initial trial, companies are obligated to implement strict health and safety protocols approved by the Peruvian Mining Ministry to prevent the spread of infections. Health authorities will also conduct regular inspections in plants and mine sites to monitor compliance. In order to comply with these new regulations, the Group has elected to restart operations through a two-phased approach; prioritizing those mines with the most significant production. It is worth highlighting that Group has already presented the required documentation for restarting operations in all its mines:

Phase 1 (initiated on May 16, 2020)

• Tambomayo

• Uchucchacua

• El Brocal (Tajo Norte and Marcapunta)

Phase 2 (initiated on June 16, 2020)

• Orcopampa

• Julcani

• La Zanja

Considering that the start of the quarantine began in the second half of March, the Group’s mining units have operated below the planned volume for year 2020, which is reflected in the variation in sales. During 2020 sales decreased by US$191.3 million in relation to the previous year mainly explained by the suspension of dispatches, which resulted in lower sales, see note 20. In 2020, the Group’s unabsorbed cost due to production stoppage amounted to a total amount of US$27.8 million (net of intercompany eliminations), and is made up as follows:

F-18

Notes to the consolidated financial statements (continued)

	2020		2019
	US$(000)		US$(000)
Services provided by third parties		13,885		-
Direct labor		11,057		-
Supplies		2,816		-
		27,758		-

Depreciation and amortization incurred during the production stoppage amounts to US$10.8 million for the year 2020, which is included in “Depreciation and amortization” caption in the consolidated statements of profit or loss.

In January 2021, in response to the significant increase in the number of infections, the number of deaths and the saturation of the health system, the Peruvian Government decreed compulsory social immobilization in ten regions of the country, with the exception of some sectors such as agriculture, energy, hydrocarbons, mining, construction, etc., so it did not affect the Company’s operations. This second immobilization had an initial period of fifteen days from January 31, being extended by 14 days until February 28, 2021. Since March 1, 2021 and for the next 14 days, new measures will be applied to face the COVID-19 pandemic. The Peruvian Government established a curfew at nights, and mandatory social immobilization will be in force all day long on Sundays.

The ultimate severity of the Coronavirus outbreak is uncertain at this time and therefore the Group cannot predict the possible impact on the world, the Peruvian economy, the international financial markets, or ultimately on the Group financial condition. However, as part of the business continuity and progress of operations, the Group has been executing its business plan, which expects substantially that currently registered sales levels will increased in the short and medium term, considering: normal regularization of operations, commercial landscape and increase in metal prices.

2. 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 Standards Board (IASB).

The consolidated financial statements have been prepared on a historical cost basis, based on the records of the Company, except for the derivative financial instruments and financial assets and liabilities that have been measured at fair value and discontinued operations that have been valued at the lower of (i) their carrying amount and (ii) its fair value less cost to sell.

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 on the following note 3.

F-19

Notes to the consolidated financial statements (continued)

These consolidated financial statements provide comparative information in respect of prior periods.

2.2. Basis of consolidation -

The consolidated financial statements comprise the financial statements of the Company and its subsidiaries to the date of the consolidated statements of financial position.

Control is achieved when the Group 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 Group controls an investee if, and only if, the Group 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 Group has less than a majority of the voting or similar rights of an investee, the Group 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 Group’s voting rights and potential voting rights or a combination of rights.

The Group 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 Group obtains control over the subsidiary and ceases when the Group 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 Group gains control until the date the Group ceases to control the subsidiary.

Profit or loss and each component of other comprehensive income are attributed to the equity holders of the parent of the Group and to the non-controlling interests, even if this results in the non-controlling interests having a deficit balance. When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with the Group’s accounting policies. All intra-group assets and liabilities, equity, income, expenses and cash flows relating to transactions between members of the Group 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.

If the Group loses control over a subsidiary, it derecognizes the related assets (including goodwill), liabilities, non-controlling interest and other components of equity, while any resultant gain or loss is recognized in profit or loss. Any investment retained is recognized at fair value.

F-20

Notes to the consolidated financial statements (continued)

2.3. Changes in accounting policies and disclosures -

Certain standards and amendments applied for the first time in 2020; however, they did not have material impact on the annual consolidated financial statements of the Group and therefore, have not been disclosed. The Group has not early adopted any other standard, interpretation or amendment that has been issued but is not yet effective.

2.4. Summary of significant accounting policies -

(a) Foreign currencies -

The Group´s consolidated financial statements are presented in US dollars, which is also the parent company’s functional currency. For each entity, the Group determines the functional currency and the items included in the financial statements of each entity are measured using that functional currency. For consolidation purposes, each entity presents its financial statements in US dollars.

Transactions and balances 

Transactions in foreign currency are initially recorded by the Group at the exchange rates prevailing at the dates of the 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 foreign currencies are translated at the functional currency spot rates of exchange at the reporting date.

Differences arising from the settlement or translation of monetary items are recognized in profit or loss with the exception of monetary items that are designated as part of a hedge. These are recognized in other comprehensive income (OCI) until the hedge items are disposed of, at which time, the cumulative amount is reclassified to profit or loss. Tax charges and credits attributable to exchange differences on those monetary items are also recognized in OCI.

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.

F-21

Notes to the consolidated financial statements (continued)

(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 subsequently measured at amortized cost, fair value through OCI, and 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 Group’s business model for managing them. Except for trade receivables that do not contain a significant financing component, the Group 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.

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 “solely payments of principal and interest (SPPI)” on the principal amount outstanding. This assessment is performed at an instrument level.

The Group’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 assets, or both.

Purchases or sales of financial assets that require delivery of assets within a period established by regulation or convention in the marketplace (regular way trades) are recognized on the trade date.

Subsequent measurement -

For purposes of subsequent measurement, financial assets are classified in the following categories: 

-       Financial assets at amortized cost.

-       Financial assets at fair value through OCI.

-       Financial assets at fair value through profit or loss.

F-22

Notes to the consolidated financial statements (continued)

Financial assets at amortized cost -

The Group 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 hold financial assets in order to collect contractual cash flows, and

- The contractual terms of the financial 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 (EIR) method and are subject to impairment. Gains and losses are recognized in profit or loss when the asset is derecognized, modified or impaired.

This category generally applies to other receivables included in the “Trade and other receivables, net” caption.

Financial assets at fair value through OCI -

Financial assets are classified and measured at fair value through OCI if they are held in a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets.

This category generally applies to the “Hedge derivative financial instruments” caption.

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 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. 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. Notwithstanding the criteria for debt instruments to be classified at amortized cost or at fair value through OCI, as described above, debt instruments may be designated at fair value through profit or loss on initial recognition if doing so eliminates, or significantly reduces, an accounting mismatch.

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 recognized in the consolidated statements of profit or loss. 

This category generally applies to the trade receivables included in the “Trade and other receivables, net” caption.

F-23

Notes to the consolidated financial statements (continued)

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; or

- The Group 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 Group has transferred substantially all the risks and rewards of the asset or, (b) the Group has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.

When the Group has transferred its rights to receive cash flows from an asset or has entered a pass-through arrangement, it evaluates to what extent, it has retained the risk and rewards of ownership. When it has neither transferred nor retained substantially all the risks and rewards of the asset, nor transferred control of the asset, the Group continues to recognize the transferred asset to the extent of the Group´s continuing involvement. In that case, the Group 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 Group has retained.

Impairment of financial assets - 

The Group 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 Group 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 Group applies a simplified approach in calculating ECLs. Therefore, the Group does not track changes in credit risk, but instead recognizes a loss allowance based on lifetime ECLs at each reporting date. The Group 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.

F-24

Notes to the consolidated financial statements (continued)

The Group considers a financial asset in default when contractual payments are past due according to each contract. However, in certain cases, the Group may also consider a financial asset to be in default when internal or external information indicates that the Group is unlikely to receive the outstanding contractual amounts in full before taking into account any credit enhancements held by the Group. A financial asset is written off when there is no reasonable expectation of recovering the contractual cash flows.

(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, borrowings and payables, net of directly attributable transaction costs.

The Group’s financial liabilities include trade and other payables, financial obligations, bank loans, financial liabilities for contingent consideration liability and Hedge derivative financial instruments.

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 repurchasing in the near term. This category also includes derivative financial instruments entered by the Group 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 profit or loss.

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 Group has designated financial liabilities for contingent consideration liability as at fair value through profit or loss.

F-25

Notes to the consolidated financial statements (continued)

Financial liabilities at amortized cost (loans and borrowings) -

After initial recognition, interest-bearing loans and borrowing are subsequently measured at amortized cost using the effective interest rate method (EIR). Gains and losses are recognized in the profit or loss when the liabilities are derecognized as well as through the EIR amortization process.

Amortized cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. EIR amortization is included in the “Financial costs” caption in the consolidated statements of profit or loss. This category generally applies to interest-bearing loans and borrowings.

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 profit or loss.

(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.

F-26

Notes to the consolidated financial statements (continued)

(c) Cash and cash equivalents -

“Cash and cash equivalents” caption presented in the consolidated statements of financial position comprise cash at banks and on hand, and short-term highly liquid deposits with a current maturity and subject to an insignificant risk of changes in value.

For the purpose of the consolidated statements of cash flows, cash and cash equivalents consist of cash and short-term deposits as defined above, net of outstanding bank overdrafts as they are considered an integral part of the Group’s cash management. In addition, the Group has restricted cash. See Note 6.

(d) Inventories -

Inventories are valued at the lower of cost or net realizable value. Cost is determined using the average method.

In the case of finished goods and work in progress, cost includes the cost of materials and direct labor and a portion of indirect manufacturing expenses, excluding borrowing costs.

The current portion of the inventories is determined based on the expected amounts to be processed within the next twelve months. Inventories not expected to be processed within the next twelve months are classified as non-current.

Net realizable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and the estimated costs to make the sale.

Provision (or reversal) for losses on the net realizable value are calculated based on a specific analysis conducted annually by the Management and is charged to profit or loss in the period in which it determines the need for the provision (or reversal).

Any provision for obsolescence of spare parts and supplies is determined by reference to specific items of stock based on inventory turnover level. A regular review is undertaken to determine the extent of any provision for obsolescence.

(e) Business combinations and goodwill -

Business combinations are accounted for using the acquisition method. The cost of an acquisition is measured as the aggregate of the consideration transferred measured at acquisition date fair value and the amount of any non-controlling interest in the acquiree. For each business combination, the Group elects whether to measure the non-controlling interests in the acquiree at fair value or at the proportionate share of the acquiree’s identifiable net assets. Acquisition-related costs are expensed as incurred and included in “Administrative expenses” caption.

When the Group acquires a business, it assesses the financial assets and liabilities assumed for appropriate classification and designation in accordance with the contractual terms, economic circumstances and pertinent conditions as at the acquisition date. This includes the separation of embedded derivatives in host contracts by the acquire.

F-27

Notes to the consolidated financial statements (continued)

Any contingent consideration to be transferred by the acquirer will be recognized at fair value at the acquisition date. Contingent consideration classified as an asset or liability that is a financial instrument and within the scope of IFRS 9 Financial Instruments, is measured at fair value, with changes in fair value recognized in either profit or loss or as a change to other comprehensive income. If the contingent consideration is not within the scope of IFRS 9, it is measured under the fair value at the reporting date with changes in the fair value recorded in the consolidated statement of profit or loss.

Goodwill is initially measured at cost, being the excess of the aggregate of the consideration transferred and the amount recognized for non-controlling interests, and any previous interests held, over the net identifiable assets acquired and liabilities assumed. If the fair value of the net assets acquired is in excess of the aggregate consideration transferred, the Group re-assesses whether it has correctly identified again all of the assets acquired and all of the liabilities assumed and reviews the procedures used to measure the amounts to be recognized at the acquisition date. If the re-assessment still results in an excess of the fair value of net assets acquired over the aggregate consideration transferred, then the gain is recognized in the consolidated statements of profit or loss.

After initial recognition, goodwill is measured at cost less any accumulated impairment losses. For the purpose of impairment testing, this difference is allocated to each of the Group’s cash-generating units that are expected to benefit from the combination, irrespective of whether other assets or liabilities, of the acquiree, are assigned to those units.

Where goodwill has been allocated to a cash-generating unit and part of the operation within that unit is disposed of, the goodwill associated with the disposed operation is included in the carrying amount of the operation when determining the gain or loss on disposal. Goodwill disposed of in these circumstances is measured based on the relative values of the disposed operation and the portion of the cash-generating unit retained.

(f) Investments in associates and joint venture -

An associate is an entity over which the Group has significant influence. Significant influence is the power to participate in the financial and operating policy decisions of the investee, but not control over those policies.

A joint venture is a type of joint arrangement whereby the parties that have joint control of the arrangement have rights to the net assets of the joint venture. Joint control is the contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities require the unanimous consent of the parties sharing control.

The considerations made in determining significant influence or joint control are similar to those necessary to determine control over subsidiaries. The Group’s investments in associates and joint ventures are accounted for using the equity method.

F-28

Notes to the consolidated financial statements (continued)

Under this method, the investment in an associate or joint venture is initially recognized at cost. The carrying amount of the investment is adjusted to recognize changes in the Group’s share of net assets of the associate and joint ventures since the acquisition date. Goodwill relating to the associate is included in the carrying amount of the investment and is not tested for impairment individually.

The consolidated statement of profit or loss reflects the Group’s share of the results of operations of the associates and joint ventures. Any change in OCI of those investees is presented, as part of the Group’s other comprehensive income. In addition, when there has been a change recognized directly in the equity of the associate and joint ventures, the Group recognizes its share of any changes, when applicable, in the consolidated statements of changes in shareholders’ equity. Unrealized gains and losses resulting from transactions between the Group and the associate or joint venture are eliminated to the extent of the interest in the associate or joint venture.

The aggregate of the Group´s share of profit or loss of an associate and joint ventures is shown on the face of the consolidated statements of profit or loss outside operating profit and represents profit or loss after tax in the associates and joint ventures.

The financial statements of the associates and joint ventures are prepared for the same reporting period as the Group. When necessary, adjustments are made to bring the accounting policies in line with those of the Group.

After the application of the equity method, the Group determines whether it is necessary to recognize an impairment loss of its investment in associates and joint ventures. At each reporting date, the Group determines whether there is objective evidence that the investments in the associates and joint ventures are impaired. If there is such evidence, the Group calculates the amount of impairment as the difference between the recoverable amount of the associate and its carrying value, and then recognizes the loss in the consolidated statements of profit or loss.

Upon loss of significant influence over the associate and joint ventures, the Group measures and recognizes any retained investment at its fair value. Any difference between the carrying amount of the associate and joint ventures upon loss of significant influence and the fair value of the retained investment and proceeds from disposal is recognized in consolidated statements of profit or loss.

(g) Prepaid expenses -

Non-monetary assets, which represent an entity’s right to receive goods or services, are presented as prepaid expenses. The asset is subsequently derecognized when the goods are received, and the services are rendered.

(h) Property, plant and equipment - Property, plant and equipment is stated at cost, net of accumulated depreciation and accumulated impairment losses, if any.

F-29

Notes to the consolidated financial statements (continued)

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.

When significant parts of property, plant and equipment are required to be replaced at intervals, the Group depreciates them separately based on their specific useful lives. In addition, when a major inspection is performed, its cost is recognized in the carrying amount of plant and equipment as a replacement if the recognition criteria are satisfied. All other maintenance and repair costs are recognized in the consolidated statement of profit or loss as incurred.

Depreciation - 

Unit-of-production method:

In mining units with long useful lives, depreciation of assets directly related to the operation of the mine is calculated using the units-of-production method, which is based on economically recoverable reserves of the mining unit. Other assets related to these mining units are depreciated using the straight-line method with the lives detailed in the next paragraph.

Straight-line method: 

Depreciation of assets in mining units with short useful lives or used for administrative purposes is calculated using the straight-line method of accounting. The useful lives are the following:

	Years
Buildings, construction and other	6 to 20
Machinery and equipment	5 to 10
Transportation units	5
Furniture and fixtures	10
Computer equipment	4

The residual values, useful lives and methods of depreciation of property, plant and equipment are reviewed at each financial year-end, and adjusted prospectively, if appropriate.

Disposal of assets -

An item of property, plant and equipment and any significant part initially recognized is derecognized upon disposal, or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the consolidated statements of profit or loss when the asset is derecognized.

F-30

Notes to the consolidated financial statements (continued)

(i) Leases -

The Group 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 in exchange for consideration.

Group as a lessee -

The Group applies a single recognition and measurement approach for all leases, except for short-term leases with no renewal options and leases of low-value assets. The Group 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 Group recognizes right-of-use assets at the commencement date of the lease. 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 related assets.

If ownership of the leased asset transfers to the Group 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.

ii) Lease liabilities -

At the commencement date of the lease, the Group 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 Group and payments of penalties for terminating the lease, if the lease term reflects the Group 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. The Group does not have variable lease payments that depend on an index or a rate.

F-31

Notes to the consolidated financial statements (continued)

In calculating the present value of lease payments, the Group 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 or a change in the assessment of an option to purchase the underlying asset.

The Group’s lease liabilities are included “Financial obligation” caption.

iii) Short-term leases and leases of low-value assets -

The Group applies the short-term lease recognition exemption to its short-term leases of machinery and equipment without renew option. It also applies the lease of low-value assets recognition exemption to leases of office equipment, which are considered 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.

Group as a lessor –

Leases in which the Group does not transfer substantially all the risks and rewards incidental to ownership of an asset are classified as operating leases. Rental income arising is accounted for on a straight-line basis over the lease terms and is included in “Other, net” in the consolidated statement of profit or loss due to its operating nature. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognized over the lease term on the same basis as rental income. Contingent rents are recognized as revenue in the period in which they are earned.

(j) Mining concessions -

Mining concessions represent ownership of the right of exploration and exploitation to the Group on mining properties that contains ore reserves acquired. Mining concessions are irrevocable, provided the holder of a mining concession complies with the obligations set forth in the General Mining Law. Such concessions have an indefinite term, subject to payment of an annual concession fee per hectare granted and achievement of minimum annual production for each hectare. Mining concessions are stated at cost and are amortized on units of production method, using as the basis proven and probable reserves. If the Group leaves these concessions, the costs associated are written off in the consolidated statements of profit or loss.

Cost includes the fair value attributable to mineral reserves and the portion of mineral resources considered probable of economic extraction at the time of a business combination.

At year-end, the Group evaluates if there is any indicator of impairment. If any indicator exists, the Group estimates the mining concession’s recoverable amount.

Mining concessions are presented in the caption of “Mining concessions, development costs, right-of-use asset, property, plant and equipment, net”.

F-32

Notes to the consolidated financial statements (continued)

(k) Exploration and mine development costs -

Exploration costs –

Exploration costs are expensed as incurred. These costs primarily include materials and fuels used, surveying costs, drilling costs and payments made to the contractors.

Exploration and evaluation activity include:

- Researching and analyzing historical exploration data.

- Gathering exploration data through geophysical studies. 

- Exploratory drilling and sampling.

- Determining and examining the volume and grade of the resource.

- Surveying transportation and infrastructure requirements.

- Conducting market and finance studies.

Development costs –

When the Group’s Management approves the feasibility of the conceptual study of a project, the costs incurred to develop such property, including additional costs to delineate the ore body and remove impurities it contains, are capitalized as development costs under the “Mining concessions, development costs, right-of-use asset, property, plant and equipment, net” caption. These costs are amortized when production begins, on the units-of-production basis over the proven and probable reserves.

The development costs include:

- Metallurgical and engineering studies. 

- Drilling and other costs necessary to delineate ore body.

- Removal of the initial clearing related to an ore body.

Development costs necessary to maintain production are expensed as incurred.

(l) Stripping (waste removal) costs -

As part of its mining operations, the Group incurs waste removal costs (stripping costs) during the development and production phases of its mining operations. Stripping costs incurred in the development phase of a mine, before the production phase commences (development stripping), are capitalized as part of the cost of constructing the mine and subsequently amortized over its useful life using units of production method. The capitalization of development stripping costs ceases when the mine starts production.

Stripping costs incurred during the production phase (production stripping costs) are generally considered to create two benefits, being either the production of inventory or improved access to the ore to be mined in the future. Where the benefits are realized in the form of inventory produced in the period, the production stripping costs are accounted for as part of the cost of producing those inventories. Where the benefits are realized in the form of improved access to ore to be mined in the future, the costs are recognized as a non-current asset, referred to as a stripping activity asset, if the following criteria are met:

- Future economic benefits are probable.

- The component of the ore body for which access will be improved can be accurately identified.

- The costs associated with the improved access can be reliably measured.

F-33

Notes to the consolidated financial statements (continued)

To identify components of mineral deposit, the Group works closely with the operating personnel to analyze the mine plans. Mostly, an ore body can have several components. The mine plans, and therefore, the identification of components, will vary among mines for several reasons.

The stripping activity asset is initially measured at cost, which is the accumulation of costs directly incurred to perform the stripping activity directly incurred during the stripping activity. The production stripping cost is presented within “Mining concessions, development costs, right-of-use asset, property, plant and equipment, net” caption in the consolidated statements of financial position.

The production stripping cost is subsequently depreciated using the units of production method over the expected useful life of the component identified of the ore body that has been made more accessible by the activity. This production stripping cost is stated at cost, less accumulated depreciation and accumulated impairment losses, if any.

F-34

Notes to the consolidated financial statements (continued)

(m) Investment properties -

Investment properties are measured at cost, net of accumulated depreciation and impairment loss, if any. Depreciation of the investment properties is determined using the straight-line method with useful life of 20 years.

Investment properties are derecognized when either 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. The amount of consideration to be included in the gain or loss arising from derecognition of investment property is determined in accordance with the requirements for determining the transaction price in IFRS 15.

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.

F-35

 Notes to the consolidated financial statements (continued)

For non-financial assets, 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.

(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 recognized 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.

F-36

 Notes to the consolidated financial statements (continued)

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

(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 judgments, estimates and assumptions relating to revenue from contracts with customers are provided in Note 3.

Sales of goods (concentrates and metals) -

The Group recognizes revenue from sale of concentrates and metals at the point in time when control of the asset is transferred to the customer. Transfer of control is determined in accordance with the terms of each of the contracts entered with the Group’s customers; however, under such contracts, transfer of control generally occurs upon shipment or delivery of the goods, including transportation. The recognized revenue corresponds to an amount that reflects the consideration the Group expects to receive in exchange for those products.

Revenue from sale of concentrates and metals is recorded net of “Commercial deductions”. Commercial deductions correspond to adjustments in price for treatment and refining charges and can include certain penalties that, in accordance with the applicable contract, are deducted from the international fine metal spot price, and that are incurred after the time of sale of the applicable concentrate. The Group deems these deductions to be part of the transaction price. The normal credit term is 30 to 90 days of 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.

F-37

 Notes to the consolidated financial statements (continued)

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.

The Group´s sales of concentrates and metals 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 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 generally range between one and four months.

The Group’s sales of concentrates and metals are also subject to slight variations in yield that can occur while such goods are in transit to their destination due to variations in humidity, weight and ore grades. Such variations are recognized directly as part of “Sales of goods” once the Group reaches an agreement with the applicable customer in respect of final amounts sold.

Sales of concentrates and metals at provisional 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 “Sales of goods” caption as “fair value of accounts receivables”. See note 20(b).

For provisional pricing arrangements, any future change that occurs over the QP are embedded within the provisional 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 for each period and presented separately from revenue from contracts with customer as part of “fair value of trade receivables”. See note 20(b). 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.

F-38

 Notes to the consolidated financial statements (continued)

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.

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. As of December 31, 2020 and 2019, the Group has not contractual assets.

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. As of December 31, 2020 and 2019, the Group has not contractual liabilities.

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.

F-39

 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 -

Dividends from investments is recognized when the Group’s right to receive the payment is established, which is generally, when the investments’ 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.

F-40

 Notes to the consolidated financial statements (continued)

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 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.

Uncertain tax treatment –

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.

F-41

 Notes to the consolidated financial statements (continued)

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.

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 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.

F-42

 Notes to the consolidated financial statements (continued)

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.

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 interest rate risk. 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.

F-43

Notes to the consolidated financial statements (continued)

The documentation includes identification of the hedging instrument, the hedged item, the nature of the risk being hedged and how the Group will assess whether the hedging relationship meets the hedge effectiveness requirements (including the analysis of sources of hedge ineffectiveness and how the hedge ratio is determined). A hedging relationship qualifies for hedge accounting if it meets all the following effectiveness requirements:

- 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 hedges and the quantity of the hedging instrument that the Group actually uses to hedge that quantity of hedged item.

F-44

Notes to the consolidated financial statements (continued)

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 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” caption.

(w) Discontinued operations -

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.

(x) Other assets -

The “Other assets” caption includes 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.

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.

F-45

Notes to the consolidated financial statements (continued)

3. 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 affect the various accounting policies are described below and 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.

F-46

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 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.  

(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 applies judgement for determining the timing of satisfaction of services of revenue from contracts with customers. The Group has 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.

The Group has determined that the output method is the best method in measuring progress of the services mentioned above due to the 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 and resources are the part of a mineral deposit than can be economically and legally extracted or produced at the time of the reserve and resources 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 and resources requires the Group to determine the size, shape and depth of its ore bodies by analyzing geological data, such as sampling of drill holes, tunnels 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, including estimates of future commodity prices and demand, the mining methods the Group used and the related cost incurred to develop and mine its reserves and resources. The process to estimate proven and probable ore reserves and resources is audited by an independent consultant each year.

All estimated reserves and resources represent estimated quantities of mineral proven and probable that under current conditions can be economically and legally processed. 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 the depreciation of development costs, property, plant and equipment related directly to mining activity, the provision for mine closure, the assessment of the deferred asset’s recoverability and the amortization period for development costs.

F-47

Notes to the consolidated financial statements (continued)

(b) Units of production depreciation -

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

This results in a depreciation or amortization charge proportional to the depletion of the anticipated remaining life of mine production. Each mine’s life is assessed 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 are recorded prospectively.

(c) Provision for closure of mining units -

The Group assesses its provision for closure of mining units at each reporting date using a discounted future cash flow method. In determining the amount of the provision, it is necessary to make significant assumptions and estimates, because exist many factors that can affect the final amount of this provision. These factors include 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 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 closure costs required.

(d) Inventories -

Inventories are classified as current or non-current depending on the length of time that Management estimates will be needed to reach the production state of concentrate extraction for each mining unit.

F-48

Notes to the consolidated financial statements (continued)

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.

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 of Colquijirca mining unit 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 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-49

Notes to the consolidated financial statements (continued)

(f) 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.

4. Standards issued but not effective

Certain new accounting standards and interpretations have been published that are not mandatory for December 31, 2020 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 IAS 1: Classification of Liabilities as Current or Non-current -

In January 2020, the IASB issued amendments to paragraphs 69 to 76 of IAS 1 to specify the requirements for classifying liabilities as current or non-current. The amendments clarify:

- What is meant by a right to defer settlement.

- That a right to defer must exist at the end of the reporting period. 

- That classification is unaffected by the likelihood that an entity will exercise its deferral right. 

- That only if an embedded derivative in a convertible liability is itself an equity instrument would the terms of a liability not impact its classification. 

The amendments are effective for annual reporting periods beginning on or after January 1, 2023 and must be applied retrospectively. The Group is currently assessing the impact the amendments will have on current practice and whether existing loan agreements may require renegotiation.

F-50

Notes to the consolidated financial statements (continued)

Reference to the Conceptual Framework – Amendments to IFRS 3 -

In May 2020, the IASB issued Amendments to IFRS 3 Business Combinations - Reference to the Conceptual Framework. The amendments are intended to replace a reference to the Framework for the Preparation and Presentation of Financial Statements, issued in 1989, with a reference to the Conceptual Framework for Financial Reporting issued in March 2018 without significantly changing its requirements.

The Board also added an exception to the recognition principle of IFRS 3 to avoid the issue of potential ‘day 2’ gains or losses arising for liabilities and contingent liabilities that would be within the scope of IAS 37 or IFRIC 21 Levies, if incurred separately. At the same time, the Board decided to clarify existing guidance in IFRS 3 for contingent assets that would not be affected by replacing the reference to the Framework for the Preparation and Presentation of Financial Statements. The amendments are effective for annual reporting periods beginning on or after January 1, 2022 and apply prospectively.

Property, Plant and Equipment: Proceeds before Intended Use – Amendments to IAS 16 -

In May 2020, the IASB issued Property, Plant and Equipment — Proceeds before Intended Use, which prohibits entities deducting from the cost of an item of property, plant and equipment, any proceeds from selling items produced while bringing that asset to the location and condition necessary for it to be capable of operating in the manner intended by management. Instead, an entity recognizes the proceeds from selling such items, and the costs of producing those items, in profit or loss. The amendment is effective for annual reporting periods beginning on or after January 1, 2022 and must be applied retrospectively to items of property, plant and equipment made available for use on or after the beginning of the earliest period presented when the entity first applies the amendment. The amendments are not expected to have a material impact on the Group.

Onerous Contracts – Costs of Fulfilling a Contract – Amendments to IAS 37 –

In May 2020, the IASB issued amendments to IAS 37 to specify which costs an entity needs to include when assessing whether a contract is onerous or loss-making. The amendments apply a “directly related cost approach”. The costs that relate directly to a contract to provide goods or services include both incremental costs and an allocation of costs directly related to contract activities. General and administrative costs do not relate directly to a contract and are excluded unless they are explicitly chargeable to the counterparty under the contract. The amendments are effective for annual reporting periods beginning on or after January 1, 2022. The Group will apply these amendments to contracts for which it has not yet fulfilled all its obligations at the beginning of the annual reporting period in which it first applies the amendments.

Amendments to IFRS 7, IFRS 9 and IAS 39 Interest Rate Benchmark Reform -

The amendments to IFRS 9 and IAS 39 Financial Instruments: Recognition and Measurement provide several reliefs, which apply to all hedging relationships that are directly affected by interest rate benchmark reform. A hedging relationship is affected if the reform gives rise to uncertainty about the timing and/or amount of benchmark-based cash flows of the hedged item or the hedging instrument. These amendments have no impact on the consolidated financial statements of the Group as it does not have any interest rate hedge relationships.

5. Transactions in soles

Transactions in soles are completed using exchange rates published by the Superintendent of Banks, Insurance and A.F.P. As of December 31, 2020, the exchange rates for U.S. dollars published by this Institution were US$0.2764 for buying and US$0.2759 for selling (US$0.2968 for buying and US$0.2959 for selling as of December 31, 2019), and have been applied by the Group for the assets and liabilities accounts, respectively.

F-51

Notes to the consolidated financial statements (continued)

As of December 31, 2020 and 2019, the Group presents the following assets and liabilities originally denominated in soles by its equivalent in U.S. dollars:

	2020			2019
	US$(000)			US$(000)
Assets
Cash and cash equivalents		8,606			6,796
Trade and other receivables		159,099			139,624
Income tax credit		19,837			31,919
		187,542			178,339
Liabilities
Trade and other payables		(47,705	)		(60,311	)
Income tax payable		(3,162	)		(5,650	)
Provisions, contingent liabilities and other liabilities		(38,574	)		(41,515	)
		(89,441	)		(107,476	)
Net asset position		98,101			70,863

6. Cash and cash equivalents

(a) This caption is made up as follows:

	2020		2019
	US$(000)		US$(000)
Cash		173		304
Bank accounts (b)		185,276		37,836
Time deposits (c)		50,000		171,906
		235,449		210,046

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

(c) As of December 31, 2020 and 2019, time deposits were kept in prime financial institutions, which generated interest at annual market rates and have current maturities, according to the immediate cash needs of the Group.

F-52

Notes to the consolidated financial statements (continued)

7. Trade and other receivables, net

(a) This caption is made up as follows

	2020			2019
	US$(000)			US$(000)
Trade receivables, net (b)
Domestic clients		129,283			141,005
Foreign clients		46,612			78,860
Related entities, note 30(b)		6,073			6,247
		181,968			226,112
Allowance for expected credit losses (f)		(22,128	)		(22,016	)
		159,840			204,096
Other receivables
Tax claims (g)		62,373			44,014
Value added tax credit		44,389			54,328
Accounts receivables to third parties		28,277			31,478
Advances to suppliers		20,569			9,275
Tax deposits (d)		12,413			6,644
Due from for sales of assets (h) and note 1(e)		8,233			21,648
Interest receivable		2,648			3,244
Related entities, note 30(b)		2,312			2,967
Refund applications of value added tax (c)		581			1,657
Loans to personnel		408			1,128
Bank accounts in trust (e)		376			2,510
Dividends receivable		–			2,501
Other minor		475			743
		183,054			182,137
Allowance for expected credit losses (f)		(9,717	)		(10,006	)
		173,337			172,131
Total trade and other receivables, net		333,177			376,227
Classification by maturity:
Current portion		230,830			287,712
Non-current portion		102,347			88,515
Total trade and other receivables, net		333,177			376,227
Classification by nature:
Financial receivables		288,207			320,242
Non-financial receivables		44,970			55,985
Total trade and other receivables, net		333,177			376,227
Classification by measurement:
Trade receivables (not subject to provisional pricing)		33,287			38,550
Trade receivables (subject to provisional pricing)		126,553			165,546
Other accounts receivables		173,337			172,131
Total trade and other receivables, net		333,177			376,227

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

(c) Corresponds mainly to current year refunds applications that are pending as of December 31, 2020.

F-53

 Notes to the consolidated financial statements (continued)

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

(e) Corresponds mainly to collections that are deposited 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:

	2020			2019			2018
	US$(000)			US$(000)			US$(000)
Beginning balance		2,510			2,782			2,372
Increase		-			166			410
Decrease		(2,134	)		(438	)		-
Final balance		376			2,510			2,782

(f) Below is presented the movement in the allowance for expected credit losses:

	2020			2019			2018
	US$(000)			US$(000)			US$(000)
Beginning balance		32,022			32,102			32,184
Provision for trade receivables, note 24		126			-			18
Provision for other receivable, note 26		4			25			1,334
Provision of the period		130			25			1,352
Foreign exchange difference		(307	)		57			(173	)
Write off of the period		-			(162	)		(410	)
Reversals of the period, note 26		-			-			(45	)
Other minor		-			-			(806	)
Final balance		31,845			32,022			32,102
Trade receivables		22,128			22,016			22,013
Other receivables		9,717			10,006			10,089
		31,845			32,022			32,102

The allowance for expected credit losses of other receivables is related to accounts receivables from 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.

(g) Corresponds to forced payments of tax debts that are in litigation and that, in the opinion of Management and its legal advisors, a favorable result should be obtained in the judicial and administrative processes that have   been initiated, see note 29(d):

F-54

 Notes to the consolidated financial statements (continued)

	Disbursement	2020		2019
Detail	date	US$(000)		US$(000)
Buenaventura -
SUNAT seizure for payment on account from January to December 2009; January and February 2010.	December 2019		33,240		36,321
Forced payment of part of the tax liability debt for fiscal year 2007.	November and December 2020		19,918		-
Inminsur’s tax liability debt (absorbed by Buenaventura), by the inspection process for the years 1996-1997 and claimed in court.	May 2017		1,403		1,412
Payment of the tax liability debt imputed by SUNAT in the IGV inspection process January-December 2014 to benefit from the gradual nature of the fine.	November 2020		1,311		-
Forced payment of part of the tax debt for fiscal year 2010.	December 2020		498		-
			56,370		37,733
Rio Seco -
Forced payment of part of the VAT tax liability for 2012.	July to September 2019		3,279		3,398
El Brocal -
Payment under protest of the tax liability for fiscal year 2011.	June 2014		2,303		2,517
Payment of the fine for the benefit of reducing the fine for fiscal year 2015.	January 2020		402		-
Other minor	-		19		101
			2,724		2,618
Consorcio Energético de Huancavelica S.A. -
Payment of a fine for the benefit of reducing the fine for fiscal year 2011.	July 2016		-		265
			62,373		44,014

(h) On September 5, 2019, Consorcio Energético de Huancavelica S.A., entered into a contract for the sale of energy transmission systems in the areas of Huancavelica, Trujillo, Cajamarca, Callalli – Ares and Lorema with   Conelsur LT S.A.C. for US$21,023,000, which were collected during the first quarter of 2020.

F-55

Notes to the consolidated financial statements (continued)

8. Inventories, net

(a) This caption is made up as follows:

	2020			2019
	US$(000)			US$(000)
Finished goods		2,525			2,084
Products in process (b)		52,619			47,652
Spare parts and supplies		76,937			74,033
		132,081			123,769
Provision for impairment of value of inventory (c)		(31,117	)		(25,402	)
		100,964			98,367
Classification by use:
Current portion		77,327			97,973
Non-current portion		23,637			394
		100,964			98,367

(b) Products in process include mainly to mineral in process of El Brocal for 1,527,521 Dried Metric Ton (DMT) amounting to US$32.2 million (1,592,905 DMT amounting to US$31.2 million as of December 31, 2019).

(c) The provision for impairment of value of inventory had the following movement:

	2020			2019			2018
	US$(000)			US$(000)			US$(000)
Beginning balance		25,402			23,163			11,603
Continuing operations:
Provision for impairment of finished and in progress goods, note 21(a)		8,920			7,329			4,640
Reversal for impairment of finished and in progress goods, note 21(a)		(3,866	)		(9,472	)		(119	)
Provision for impairment of spare parts and supplies, note 26(a)		17,266			15,703			11,704
Reversal for impairment of spare parts and supplies, note 26(a)		(15,762	)		(11,641	)		(4,665	)
Sale of mining unit, note 1(e)		(1,220	)		-			-
Discontinued operations, note 1(e):
Provision for impairment of spare parts and supplies		1,220			843			-
Reversal for impairment of spare parts and supplies		(843	)		(523	)		-
Final balance		31,117			25,402			23,163

During 2020, the increase in the provision of finished products and in process was generated by the higher cost incurred as a consequence of the lower production of the Tambomayo and Uchucchacua mining units due to lower recoveries.

F-56

Notes to the consolidated financial statements (continued)

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.

9. Prepaid expenses

(a) This caption is made up as follows:

	2020		2019
	US$(000)		US$(000)
Prepaid energy services (b)		25,692		26,582
Prepaid insurance		15,794		13,568
Deferred costs of works for taxes		4,855		4,138
Other prepaid expenses		4,174		2,373
		50,515		46,661
Classification by maturity:
Current portion		25,709		20,969
Non-current portion		24,806		25,692
		50,515		46,661

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

10. Investments in associates and joint venture

(a) This caption is made up as follows:

	Share in equity
	2020		2019		2020		2019
	%		%		US$(000)		US$(000)
Associates
Sociedad Minera Cerro Verde S.A.A.		19.58		19.58		1,209,126		1,155,359
Minera Yanacocha S.R.L.		43.65		43.65		157,835		230,000
Compañía Minera Coimolache S.A.		40.10		40.10		104,833		98,426
Tinka Resources Ltd.		19.30		-		12,862		-
						1,484,656		1,483,785
Joint venture (d)						2,254		2,627
Other minor investments						1,865		1,835
						1,488,775		1,488,247

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

	2020			2019			2018
	US$(000)			US$(000)			US$(000)
Associates
Sociedad Minera Cerro Verde S.A.A.		53,767			76,451			23,444
Compañía Minera Coimolache S.A.		10,055			12,883			10,994
Minera Yanacocha S.R.L.		(72,219	)		(41,580	)		(35,582	)
Tinka Resources Ltd.		(868	)		-			-
		(9,265	)		47,754			(1,144	)
Joint venture		(252	)		(44	)		-
		(9,517	)		47,710			(1,144	)

F-57

Notes to the consolidated financial statements (continued)

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 significant in relation to profits (losses) of the Group in the years 2020, 2019 and 2018. The following relevant information on these investments is as follows:

Investment in Minera Yanacocha S.R.L.-

The 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.M.R.L. Chaupiloma Dos de Cajamarca (subsidiary of the Group), with which signed a contract of use of mineral rights.

The Quecher Main project of Yanacocha, an oxide deposit, which is a new open pit within the existing footprint of Yanacocha which began operating in October 2019. This project will add oxide production at Yanacocha and will extend the life of the Yanacocha operation to 2027. During 2020, the ounce production of the project was 55,413 ounces.

In addition, Yanacocha owns the Conga project which consists in two deposits of gold and porphyry of copper located at northeast of 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.

F-58

Notes to the consolidated financial statements (continued)

In February 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(d)) 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 potential outstanding liability in this matter amounts to US$61 million. During 2020, Yanacocha registered an amount of US$2.1 million related to workers participation related to this resolution. Yanacocha´s Management concluded that is not possible to fully predict the outcome of this litigation.

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

	2020			2019
	US$(000)			US$(000)
Statements of financial position as of December 31:
Current assets		1,099,590			1,060,455
Non-current assets		1,213,848			1,251,617
Current liabilities		(282,986	)		(190,577	)
Non-current liabilities		(1,706,066	)		(1,631,783	)
Shareholders’ equity, net		324,386			489,712
Groups’ interest		141,594			213,759
Goodwill		16,241			16,241
		157,835			230,000

	2020			2019			2018
	US$(000)			US$(000)			US$(000)
Statements of profit or loss for the years ended December 31:
Sales of goods		620,162			739,302			680,618
Other comprehensive profit (loss):		123			1,246			(91	)
Net loss from continued operations		(165,449	)		(95,257	)		(81,517	)
Share in results		(72,219	)		(41,580	)		(35,582	)

During the years 2020, 2019 and 2018, the Yanacocha´s Management evaluated and concluded that there are no indicators of impairment of its long-lived assets; in addition, the Group’s management determined that there was no objective evidence that its investment in Yanacocha is impaired as of December 31, 2020 and 2019.

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.

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

	2020			2019
	US$(000)			US$(000)
Statements of financial position as of December 31:
Current assets		1,754,888			1,614,928
Non-current assets		6,012,571			6,194,496
Current liabilities		(450,680	)		(420,786	)
Non-current liabilities		(1,681,451	)		(2,029,315	)
Shareholders’ equity, net		5,635,328			5,359,323
Group’s interest		1,101,363			1,047,596
Goodwill		107,763			107,763
		1,209,126			1,155,359

F-59

Notes to the consolidated financial statements (continued)

	2020		2019		2018
	US$(000)		US$(000)		US$(000)
Statements of profit or loss for the years ended December 31:
Sales of goods		2,538,593		2,896,894		3,061,930
Profit for the year		274,544		390,377		119,710
Share in results		53,767		76,451		23,444

The Group’s management determined that there was no objective evidence that its investment in Cerro Verde is impaired as of December 31, 2020 and 2019.

Market capitalization:

As of December 31, 2020 and 2019, total market capitalization of shares maintained by the Group in Cerro Verde was US$1,434 million and US$1,323 million, respectively (market capitalization value by each share of US$20.92 and US$19.30, respectively).

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:

	2020			2019
	US$(000)			US$(000)
Statements of financial position as of December 31:
Current assets		205,893			145,692
Non-current assets		213,073			234,223
Current liabilities		(45,589	)		(34,028	)
Non-current liabilities		(104,873	)		(91,069	)
Shareholders’ equity, net		268,504			254,818
Adjustments to conform to the accounting policies of the Group		(7,037	)		(9,330	)
Equity, adjusted		261,467			245,488
Group’s interest		104,833			98,426

F-60

Notes to the consolidated financial statements (continued)

	2020		2019		2018
	US$(000)		US$(000)		US$(000)
Statements of profit or loss for the years ended December 31:
Sales of goods		203,163		241,173		225,447
Net income from continued operations		22,786		28,459		25,584
Adjustments to conform to the accounting policies		2,293		3,674		1,837
Net income, adjusted		25,079		32,133		27,421
Share in results		10,055		12,883		10,994

The Group’s management determined that there was no objective evidence that its investment in Coimolache is impaired as of December 31, 2020 and 2019.

(c) In January 2020, Buenaventura acquired 19.30 per cent of common shares on a non-diluted basis from Tinka Resources Ltd. (hereinafter “Tinka”), through private placement financing, which represented 65,843,620 common shares of Tinka at a price of C$0.243 per common share, for gross proceeds to Tinka of C$16 million (equivalent to US$13.4 million). The Common Shares issued under the Buenaventura Subscription have a twenty-four-month equity lock-up expiring on January 14, 2022 as well as certain customary standstill provisions. The Common Shares issued pursuant to the Private Placement were subject to a four-month hold period pursuant to Canadian securities laws that expired on May 14, 2020.

Assets acquired and liabilities assumed

The fair values of the identifiable assets and liabilities of Tinka as at the date of acquisition were as follows:

	On acquisition
	US$(000)
Current assets		16,548
Non-current assets		53,769
Current liabilities		(612	)
Total identifiable net assets at fair value		69,705
Consideration transferred		13,453

Investment in Tinka Resources Ltd. (Tinka) -

Tinka is a Canadian junior exploration and development mining company with its flagship property being the project of Ayawilca. Ayawilca is carbonate replacement deposit (CRD) in the zinc-lead-silver belt of central Peru, in Cerro de Pasco, 200 kilometers northeast of Lima. Tinka is listed on the Lima and Canada Stocks Exchanges.

F-61

Notes to the consolidated financial statements (continued)

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

	2020
	US$(000)
Statements of financial position as of December 31:
Current assets		14,075
Non-current assets		50,464
Current liabilities		(876	)
Shareholders’ equity, net		63,663
Adjustments to conform to the accounting policies of the Group		2,982
Shareholders’ equity, net, adjusted		66,645
Group’s interest		12,862

F-62

Notes to the consolidated financial statements (continued)

	2020
	US$(000)
Statements of profit or loss for the years ended December 31:
Sales of goods	-
Net loss from continued operations		(2,311	)
Adjustments to conform to the accounting policies		(2,189	)
Net loss, adjusted		(4,500	)
Share in results		(868	)

The Group’s management determined that there was no objective evidence that its investment in Tinka is impaired as of December 31, 2020 and 2019.

Market capitalization:

As of December 31, 2020, total market capitalization of shares maintained by the Group was US$11.9 million (market capitalization value by each share of US$0.18).

(d) The Group, through its subsidiary El Brocal, has an interest of 8 percent in Transportadora Callao S.A., a joint venture which 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.

F-63

Notes to the consolidated financial statements (continued)

The table below presents the key financial data from the joint venture under IFRS:

	2020			2019
	US$(000)			US$(000)
Statements of financial position as of December 31:
Current assets		12,946			11,090
Non-current assets		93,847			100,106
Liabilities		87,005			88,608
Shareholders’ equity, reported		19,788			22,588
Group interests		2,254			2,627
Statements of profit or loss for the years ended December 31:
Revenue		20,571			24,521
Interest income		-			101
Interest expense		(5,252	)		(5,694	)
Income tax expense or income		311			186
Net loss from continued operations		(2,800	)		(665	)
Share in results		(252	)		(44	)

F-64

Notes to the consolidated financial statements (continued)

11. Mining concessions, development costs, right-of-use asset, property, plant and equipment, net

(a) Below is presented the movement:

	Balance as of January 1, 2019		Additions		Disposals			Sales			Reclassifications and transfers			Implementation IFRS 16		Balance as of December 31, 2019		Additions			Disposals			Sales (note 1(e))			Reclassifications and transfers			Balance as of December 31, 2020
	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:
Lands		21,761		630		-			(135	)		(4,739	)		-		17,517		133			-			-			-			17,650
Mining concessions (f)		151,873		-		-			-			-			-		151,873		-			-			-			-			151,873
Development costs		743,259		46,047		(443	)		-			(819	)		-		788,044		33,233			-			(8,657	)		612			813,232
Buildings, constructions and other		1,342,621		39		(3,559	)		(5,380	)		26,120			-		1,359,841		99			(132	)		(45,624	)		28,876			1,343,060
Machinery and equipment		958,466		12		(30,235	)		(38,322	)		22,783			-		912,704		4			(419	)		(42,319	)		13,222			883,192
Transportation units		10,885		33		(540	)		(1,856	)		370			-		8,892		-			-			(577	)		94			8,409
Furniture and fixtures		13,306		2		(1,310	)		(1	)		13			-		12,010		3			(74	)		(408	)		206			11,737
Units in transit		2,682		-		(1	)		-			1,073			-		3,754		-			(373	)		-			-			3,381
Work in progress		56,662		44,319		(1,168	)		(78	)		(49,370	)		-		50,365		27,322			(325	)		(30	)		(42,398	)		34,934
Stripping activity asset (g)		141,726		11,545		-			-			819			-		154,090		10,752			(11,633	)		-			(612	)		152,597
Right-of-use asset (e)		-		3,721		(10,897	)		-			-			18,528		11,352		6,221			(1,314	)		-			-			16,259
Mine closure costs		284,162		26,722		-			-			-			-		310,884		31,558			-			(6,788	)		-			335,654
		3,727,403		133,070		(48,153	)		(45,772	)		(3,750	)		18,528		3,781,326		109,325			(14,270	)		(104,403	)		-			3,771,978
Accumulated depreciation and amortization:
Mining concessions (f)		40,249		10		-			-			-			-		40,259		11			-			-			-			40,270
Development costs		298,553		29,964		-			-			-			-		328,517		21,139			-			(8,657	)		-			340,999
Buildings, construction and other		591,643		83,274		(3,391	)		(3,569	)		(638	)		-		667,319		74,719			(53	)		(44,096	)		435			698,324
Machinery and equipment		665,357		66,020		(28,619	)		(35,459	)		638			-		667,937		60,034			(265	)		(40,805	)		(435	)		686,466
Transportation units		8,599		744		(538	)		(1,779	)		-			-		7,026		607			-			(550	)		-			7,083
Furniture and fixtures		10,123		653		(1,172	)		-			-			-		9,604		614			(46	)		(348	)					9,824
Stripping activity asset		70,518		18,405		-			-			-			-		88,923		22,532			-			-			-			111,455
Right-of-use asset (e)		-		7,778		(2,611	)		-			-			-		5,167		5,145			(1,231	)		-			-			9,081
Mine closure costs		168,471		15,373		-			-			-			-		183,844		14,785			-			(6,789	)		-			191,840
		1,853,513		222,221		(36,331	)		(40,807	)		-			-		1,998,596		199,586			(1,595	)		(101,245	)		-			2,095,342
Provision for impairment of long-lived assets:
Mine closure costs		13,207		2,083		-			-			-			-		15,290		(2,083	)		-			-			-			13,207
Development costs		10,153		-		-			-			-			-		10,153		-			-			-			-			10,153
Property, plant and other		2,915		-		-			-			-			-		2,915		-			-			-			-			2,915
		26,275		2,083		-			-			-			-		28,358		(2,083	)		-			-			-			26,275
Net cost		1,847,615															1,754,372														1,650,361

F-65

Notes to the consolidated financial statements (continued)

(b) Impairment of long-lived assets

In accordance with its accounting policies and processes, each asset or 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.

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 (i) the CGU’s fair value less costs of disposal (FVLCD) and (ii) its 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 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 2020, Buenaventura identified impairment indicators in its Julcani, Orcopampa, and Uchucchacua. The Group evaluated and concluded that there is no impairment as a result of the analysis of the recoverable amount of said units based on their value in use. The main factors considered in the impairment analysis were reserves, prices and mining useful lives.

As a result of the analysis of the recoverable amount as of December 31, 2020, Buenaventura recognized a reversal for impairment of long-lived assets for US$2.1 million derived from the evaluation of its Julcani mining unit (recognized a provision for impairment for US$2.1 million as of December 31, 2019). The main factors considered in the impairment analysis were the increase in metal price projections and the useful lives of the mine. The recoverable amounts of the Julcani mining unit are based in Managements estimations of the value in use.

As a result of the analysis of the recoverable amount as of December 31, 2019, La Zanja has determined not to recognize a provision or recovery for impairment of long-lived assets. As of December 31, 2018, the La Zanja recognized a reversal for impairment of long-lived assets for US$5.7 million.

During 2018, as a result of derecognition of assets in Shila mining unit, Buenaventura recorded a reversal in the provision for impairment for US$2.8 million previously recorded in 2016. In addition, La Zanja recorded a reversal for the impairment provision for US$5.7 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.

F-66

Notes to the consolidated financial statements (continued)

Key assumptions

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

– Production volumes

– Commodity prices

– Discount rate

– Residual value

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 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 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 cash flows are as follows:

	2021			2022-2024
	US$			US$
Gold		1,800	/Oz		1,747	/Oz
Silver		23.0	/Oz		21.2	/Oz
Copper		7,250	/TM		7,083	/TM
Lead		1,850	/TM		2,056	/TM

F-67

Notes to the consolidated financial statements (continued)

Discount rate: In calculating the value in use, a discount rate after tax of 5.25%, 7.91% and 5.96% (equivalent to pre-tax rate of 8.09%, 12.18% and 9.19%) were applied to the post-tax cash flows of Buenaventura, El Brocal and La Zanja, respectively. These discount 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 factors are evaluated annually based on publicly available market data.

(c) The book value of assets held under finance leases, and assets under trustworthy equity, amounted to US$187.8 million as of December 31, 2020 (US$313.3 million as of December 31, 2019) and is presented in various items of property, plant and equipment. During 2020 and 2019, no acquisitions of assets under lease agreements were made. Leased assets are pledged as security for the related finance lease liabilities.

(d) During 2020 and 2019, no borrowing costs were capitalized.

(e) The net assets for right-of-use assets maintained by the Group correspond to the following:

	2020		2019
	US$(000)		US$(000)
Buildings		3,370		4,602
Transportation units		3,330		1,112
Machinery and equipment		478		471
		7,178		6,185

During 2020, the additions to the right-of-use assets were US$6.2 million and the disposals were US$1.3 million (US$3.7 million and the disposals were US$10.9 million during 2019).

(f) Mining concessions includes goodwill of El Brocal for an amount to US$34.0 million.

(g) In December 2020, as a result of the review of the mineral reserve balances, the subsidiary El Brocal wrote off the phase 9 for a total of 1,102,117 DMT at a value of US$11,633,000. The write-off corresponds to a loss of reserves due to variation in technical and economic parameters such as: decrease in estimated prices; increased cut-off; percentage decrease in payable items; and new block model. The current balance of this phase is 307,302 DMT valued at US$3,244,000 and is expected to be produced during the first months of 2021.

F-68

Notes to the consolidated financial statements (continued)

12. Other assets, net

(a) Below is presented the movement:

	Balance as of January 1, 2019		Additions		Transfers			Balance as of December 31, 2019		Additions		Disposals			Balance as of December 31, 2020
	US$(000)		US$(000)		US$(000)			US$(000)		US$(000)		US$(000)			US$(000)
Cost:
Patents and industrial property (b)		11,723		2,139		-			13,862		1,014		(167	)		14,709
Rights-of-use (c)		12,292		1,319		-			13,611		109		-			13,720
Software licenses		10,168		242		(92	)		10,318		518		(22	)		10,814
		34,183		3,700		(92	)		37,791		1,641		(189	)		39,243
Accumulated amortization:
Rights-of-use (c)		5,948		1,486		-			7,434		731		-			8,165
Software licenses		2,974		820		(112	)		3,682		897		(4	)		4,575
		8,922		2,306		(112	)		11,116		1,628		(4	)		12,740
Cost net		25,261							26,675							26,503

(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.

(c) Corresponds to the mineral servitude agreements signed with the communities surrounding the Group’s operations, through which the Group is authorized to carry out exploration, development, exploitation and general work activities.

13. Bank loans

The movement is presented below:

	2020			2019			2018
	US$(000)			US$(000)			US$(000)
Beginning balance		55,000			95,000			95,000
New loans		18,019			55,000			95,000
Payments		(7,197	)		(95,000	)		(95,000	)
Exchange difference		(29	)		-			-
Final balance		65,793			55,000			95,000

F-69

Notes to the consolidated financial statements (continued)

As of December 31, 2020 and 2019, bank loans were obtained for working capital purposes, have current maturity and accrue interest at market annual rates ranging from 1.65% to 3.7% as of December 31, 2020 (2% to 2.95% as of December 31, 2019).

14. Trade and other payables

(a) This caption is made up as follows:

	2020		2019
	US$(000)		US$(000)
Trade payables (b)
Domestic suppliers		149,305		131,278
Related entities, note 30(b)		141		29
		149,446		131,307
Other payables
Taxes payable		9,663		12,043
Remuneration and similar benefits payable		8,860		11,522
Interest payable		3,020		5,318
Royalties payable to the Peruvian State		2,441		2,132
Hedge instruments accounts payables		1,569		-
Dividends payable (c)		638		604
Related entities, note 30(b)		328		51
Other liabilities		3,991		3,883
		30,510		35,553
Total trade and other payables		179,956		166,860
Classification by maturity:
Current portion		179,956		166,244
Non-current portion		-		616
Total trade and other payables		179,956		166,860
Classification by nature:
Financial payables		167,852		152,686
Non-financial payables		12,104		14,174
Total trade and other payables		179,956		166,860

(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.

F-70

Notes to the consolidated financial statements (continued)

(c) The movement of dividends payable is presented below:

	2020			2019			2018
	US$(000)			US$(000)			US$(000)
Beginning balance		604			663			730
Declared dividends to controlling shareholders, note 17(d)		-			22,098			22,860
Dividends paid to controlling shareholders, note 17(d)		-			(22,098	)		(22,860	)
Declared dividends to non-controlling shareholders, note 17(d)		5,140			6,500			5,560
Dividends paid to non-controlling shareholders, note 17(d)		(5,140	)		(6,500	)		(5,560	)
Expired dividends		(26	)		(53	)		(44	)
Other minor		60			(6	)		(23	)
Final balance		638			604			663

15. Provisions, contingent liabilities and other liabilities

(a) This caption is made up as follows:

	As of January 1, 2020		Changes			Accretion expense		Disbursements			Sale of mining unit			As of December 31, 2020
	US$(000)		US$(000)			US$(000)		US$(000)			US$(000)			US$(000)
Closure of mining units and exploration projects (b)		252,305		32,200			6,848		(8,571	)		(5,093	)		277,689
Bonus to employees and officers		19,226		13,106			-		(15,119	)		-			17,213
Environmental liabilities		6,305		(211	)		-		(1,056	)		-			5,038
Safety contingencies		5,205		(598	)		-		(71	)		-			4,536
Labor contingencies		3,777		442			-		(139	)		-			4,080
Obligations with communities		3,509		96			-		-			-			3,605
Tax contingencies		382		2,728			-		-			-			3,110
Environmental contingencies		1,500		1,640			-		(266	)		-			2,874
Board of Directors’ participation		1,594		1,493			-		(1,500	)		-			1,587
Workers’ profit sharing payable		69		57			-		-			-			126
Other provisions		635		(155	)		-		-			-			480
		294,507		50,798			6,848		(26,722	)		(5,093	)		320,338
Classification by maturity:
Current portion		72,771													68,000
Non-current portion		221,736													252,338
		294,507													320,338

F-71

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:

	2020			2019
	US$(000)			US$(000)
Beginning balance		252,305			225,877
Additions in estimates
Continuing mining units, note 11(a)		31,500			26,722
Exploration projects, note 26(a)		642			4,020
Discontinued mining units		58			1,912
Accretion expense
Continuing mining units, note 27(a)		6,424			10,266
Exploration projects, note 27(a)		248			124
Discontinued mining units, note 1(e)		176			266
Sale of mining unit, note 1(e)		(5,093	)		-
Disbursements		(8,571	)		(16,882	)
Final balance		277,689			252,305
Classification by maturity:
Current portion		32,462			35,280
Non-current portion		245,227			217,025
		277,689			252,305

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 2021 and 2040. The Group recognizes the provision of closure of mining units and explorations projects based on estimates of studies and activities that meet the environmental regulations in effect and that will be approved by the Ministry of Energy and Mines. The Group recognizes the provision of continued operations based on its analysis and estimates prepared by independent advisors and reviewed by the Group´s Management. Provisions related to discontinued operations are based on estimates 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.

F-72

Notes to the consolidated financial statements (continued)

As of December 31, 2020, the future value of the provision for closure of mining units and exploration projects was US$309.3 million, which has been discounted using annual risk-free rates from minimums of 0.31 to 2.77 percent, in periods of 1 to 20 years (as of December 31, 2019, the provision was US$252.3 million, which has been discounted using annual risk-free rates from minimums of 1.79 to 3.12 to a maximum percent in periods of 1 to 22 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, 2020, the Group has constituted letters of credit in favor of the Ministry of Energy and Mines for US$140.0 million (US$121.4 million as of December 31, 2019) to secure current mine closure plans of its mining units and exploration projects up to date.

16. Financial obligations

(a) This caption is made up as follow:

	2020			2019
	US$(000)			US$(000)
Compañía de Minas Buenaventura S.A.A. (b)
Banco de Crédito del Perú		66,667			61,667
BBVA Banco Continental		61,667			61,667
CorpBanca New York Branch		61,666			61,666
ICBC Perú Bank		40,000			25,000
Banco Internacional del Perú		30,000			30,000
Banco de Sabadell, Miami Branch		15,000			15,000
Banco Latinoamericano de Comercio Exterior S.A.		-			20,000
		275,000			275,000
Debt issuance costs		(2,715	)		(2,504	)
		272,285			272,496
Sociedad Minera El Brocal S.A.A.
Banco de Crédito del Perú – Financial obligation (c)		140,309			161,894
Debt issuance costs		(600	)		(709	)
		139,709			161,185
Empresa de Generación Huanza S.A.
Banco de Crédito del Perú – Finance lease (d)		113,096			130,504
Debt issuance costs		(1,276	)		-
		111,820			130,504
Lease liabilities (g)		7,839			7,503
Total financial obligations		531,653			571,688
Classification by maturity:
Current portion		25,086			265,692
Non-current portion (e)		506,567			305,996
Total financial obligations		531,653			571,688

F-73

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 plus 3%.

- Term: 5 years since June 30, 2016, with final maturity in June 30, 2021.

- Grace Period: Two years.

- Amortization: six semiannual installments of US$39,285,714 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.

In 2018, Buenaventura signed a first amendment to the Syndicated Term Loan. On April 2, 2020, Buenaventura entered into a second amendment and restructured its financial obligation by modifying some of the clauses as follows:

- Annual interest rate: LIBOR of three months plus 1.9% (LIBOR of three months plus 2.15% as of December 31, 2019)

- Term: 5 years from April 2020, due in April 2025 (4 years from April 2018, due in April 2022 as of December 31, 2019)

- Amortization of credit: five semi-annual installments of US$41.2 million each since as of October 2022, and one final payment of US$68,750,000 in April 2025 (on which date all amounts outstanding shall be payable) (five semi-annual installments of US$55 million each since as of April 2020 as of December 31, 2019).

As part of the commitments, the Group must meet certain consolidated financial ratios as defined in the Agreements, being the main as follows:

(i) Debt service coverage ratio: Higher than 4.0x.

(ii) Leverage ratio: Less than 3.0x.

(iii) Consolidated equity value: Higher than US$2,711 million.

For the calculation of (i) and (ii), the financial obligations and Earnings Before - Interest Depreciation and Amortization (EBITDA) of Huanza (see note 29(e)).

F-74

Notes to the consolidated financial statements (continued)

Additionally, there are non-financial obligations that restrict, among others, the following: i) granting of liens (security interests), ii) related to the distribution of dividends (until December 31, 2018: up to 20% of the available net income for the previous period; and starting January 1, 2019: up to the total of net income for the previous period), according to the execution of the dividend policy of the Buenaventura and iii) incur additional debt.

On December 29, 2020, Buenaventura signed a “Forebearance Agreement” with seven banks in Peru and abroad, through which the financial leverage ratio as well as the obligations of not incurring in additional debt and restriction of the granting of liens are temporarily modified until February 26, 2021 with an additional period of 45 days.

On April 28, 2021, Buenaventura entered into an amendment and waiver to the Syndicated Term Loan which superseded the Forbearance Agreement, pursuant to which the lenders under the Syndicated Term Loan agreed to amend certain terms of the Syndicated Term Loan. Through this amendment and waiver the covenants that were temporarily modified by the Forebearance Agreement were permanently amended and any compliance issues related to such covenants permanently waived.

(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 as defined in the Agreeement:

(i) Debt service coverage ratio: Higher than 1.3.

(ii) Leverage Ratio: Less than 1.0 times.

(iii) Indebtedness ratio: Less than 2.25 times.

In April and July 2020, El Brocal arranged with the Banco de Crédito del Perú to defer the payment of the second and third installment, scheduled for April 30, and July 30, 2020 for an amount of US$5,396,000 each installment (only capital) through 2 new promissory notes to a 180 days. The initial due dates of these promissory notes were October 27, 2020 and January 26, 2021. On October 27, 2020, El Brocal rescheduled the first promissory notes for 180 additional days with a new due date on April 24, 2021.

The sum of both amounts for a total of US$10,793,000, are presented under “Bank loans” caption. This deferring of the second and third installment does not represent changes in terms and conditions of the original loan.

F-75

Notes to the consolidated financial statements (continued)

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 occurred for the last quarter of 2020.

(d) On December 2, 2009, Huanza entered into a finance lease contract with Banco de Crédito del Perú. On October 29, 2020, as part of the Group its strategy of preserving cash, Huanza negotiated a reduction of the fixed rate of interest and agreed a modification of the following terms and conditions:

- Principal: final installment of US$44,191,000 (original amount of US$119,000,000).

- Annual interest rate: LIBOR 30 days plus 2.10 percent (three-month LIBOR plus 2.75 percent as of December 31, 2019).

- Term: 18 months since November 2, 2020, with final maturity in May 2022 (6 years since August 2014, with final maturity in November 2020 as of December 31, 2019).

- Guarantee: Leased equipment.

- Amortization: a final installment of US$44,191,000.

On June 30, 2014, Banco de Credito del Perú extended the finance lease contract above mentioned, through the addition of a new tranche. On October 29, 2020, as part of the Group its strategy of preserving cash, Huanza negotiated a reduction of the fixed rate of interest and agreed a modification of the following terms and conditions:

- Principal: final installment of US$68,905,000 (original amount of US$103,373,000)

- Annual interest rate: LIBOR 30 days plus 2.10 percent (three-month LIBOR plus 2.75 percent as of December 31, 2019).

- Term: 18 months since November 2, 2020, with final maturity in May 2022 (6 years since August 2014, with final maturity in November 2020 as of December 31, 2019).

- Guarantee: Leased equipment.

- Amortization: a final installment of US$68,905,000.

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 equity of US$30,000,000.

Management performed an analysis to determine if the modification of the terms and conditions on October 2020 were substantially different terms and shall be accounted for as an extinguishment of the original financial liability and the recognition of a new financial liability. The Group concluded that the terms are not substantially different, due to the discounted present value of the cash flows under the new terms, including any fees paid net of any fees received and discounted using the original effective interest rate were less than 10 per cent different compared to the discounted present value of the remaining cash flows of the original financial liability.

F-76

Notes to the consolidated financial statements (continued)

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:

- 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.

- 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.

- 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.

- Letters of Guarantee, by means of which, Buenaventura is constituted as Huanza’ s solidarity guarantor, guaranteeing in favor of the Bank the fulfillment of the obligations breached by Huanza.

As of December 31, 2020 and 2019, Huanza complied with these assumed commitments, including that related to the channeling of all the cash flows received for commercial income through a collection account.

F-77

Notes to the consolidated financial statements (continued)

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

	2020			2019
	US$(000)			US$(000)
Between 1 and 2 years (Year 2022)		176,665			133,091
Between 2 and 5 years (Years 2023 to 2025)		327,036			127,463
More than 5 years (Years 2026 hereinafter)		6,071			48,566
		509,772			309,120
Debt issuance costs		(3,205	)		(3,124	)
		506,567			305,996

(f) Below is presented the movement of the debt excluding interest:

	2020			2019			2018
	US$(000)			US$(000)			US$(000)
Beginning balance		571,688			587,062			633,083
New financial obligations		-			161,894			-
New lease obligations		5,213			19,885			-
Disposals of lease obligations		(977	)		(5,079	)		-
Payments of financial obligations		(38,994	)		(186,152	)		(45,222	)
Payments of obligations for leases		(4,080	)		(7,596	)		-
Amortization of debt issuance costs in results, note 27(a)		976			2,109			1,024
Accretion expense for leases related to rights in use, nota 27(a)		180			293			-
Effect of amortized cost, note 27(a)		(361	)		-			-
Increase of debt issuance costs		(1,992	)		(728	)		(2,207	)
Other minor		-			-			384
Final balance		531,653			571,688			587,062

(g) Lease liabilities related to the right in use are as follows:

	2020		2019
	US$(000)		US$(000)
Buildings		3,971		5,296
Transportation units		3,186		1,429
Machinery and equipment		682		778
		7,839		7,503

Classification by maturity:
Current portion	3,609	3,692
Non-current portion	4,230	3,811
	7,839	7,503

Lease payments are presented in the consolidated statements of cash flows in the Short-term lease payments caption as part of the financing activities. Interest’s expense related to the lease liabilities for the years 2020, 2019 and 2018 is presented in the “Financial costs” caption, note 27.

F-78

Notes to the consolidated financial statements (continued)

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.

	2020		2019
	US$(000)		US$(000)
Within one year		1,470		1,470
After one year but not more than five years		2,227		3,697
		3,697		5,167

Transportation units -

The Group has lease contracts for 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.

17. Shareholders’ equity, net

(a) Capital stock -

The Group’s share capital is stated in soles and 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, 2020 and 2019:

	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/43.80 per share as of December 31, 2020 (S//47.77 per share as of December 31, 2019). These shares present trading frequencies of 5 and 25 percent in the years 2020 and 2019, 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 dividend’s distribution. The table below presents the composition of the investment shares as of December 31, 2020 and 2019:

F-79

Notes to the consolidated financial statements (continued)

	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

The market value of the investment shares amounted to S/16.00 per share as of December 31, 2020 and 2019. These shares did not have a trading frequency in 2020 and 2019.

(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.

Although, the balance of the legal reserve exceeded the limit mentioned above, the Group increased its legal reserve by US$26,000 in the year 2020 (US$53,000 and US$44,000 in the years 2019 and 2018 respectively) as a result of the expired dividends. According to the General Corporate Law, dividends expire ten years after the payment due.

(d) Dividends declared and paid -

Due to the State of National Emergency declared in the country and the restrictions to the mining industry, which limit it only to the execution of critical activities, the Board agreed in a non-face-to-face session on April 15, 2020, to exclude distribution of dividends from the agenda of the call to the Annual Mandatory Meeting initially scheduled for March 2020, which took place in July 15, 2020.

F-80

Notes to the consolidated financial statements (continued)

The table below presents the dividends declared and paid in 2019 and 2018:

Meetings	Date	Dividends declared and  paid			Dividend per share
		US$(000)			US$
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 29		7,442			0.03
Less - Dividends of treasury shares			(584	)
			6,858
			22,098
2018 Dividends
Mandatory Annual Shareholders’ Meeting	March 27		8,269			0.03
Less - Dividends of treasury shares			(648	)
			7,621
Board of Directors’ Meeting	October 25		16,538			0.06
Less - Dividends of treasury shares			(1,299	)
			15,239
			22,860

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$5,140,000, US$6,500,000 and US$5,560,000 for the years 2020, 2019 and 2018, respectively.

(e) Basic and diluted loss per share -

Loss per share is calculated by dividing net loss for the period by the weighted average number of shares outstanding during the year. The calculation of loss per share attributable to the equity holders of the parent is presented below:

	2020			2019			2018
Loss for the year (numerator) - US$		(135,718,000	)		(12,208,000	)		(13,445,000	)
Total common and investment shares (denominator)		253,986,867			253,986,867			253,986,867
Loss per basic share and diluted - US$		(0.53	)		(0.05	)		(0.05	)

F-81

Notes to the consolidated financial statements (continued)

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

	2020			2019			2018
Loss for the year (numerator) - US$		(141,135,000	)		(1,694,000	)		(1,637,000	)
Total common and investment shares (denominator)		253,986,867			253,986,867			253,986,867
Loss per basic share and diluted - US$		(0.56	)		(0.01	)		(0.02	)

The common and investment shares outstanding at the close of 2020, 2019 and 2018 were 253,986,867.

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	2020, 2019 and 2018
		%
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

	2020			2019			2018
	US$(000)			US$(000)			US$(000)
Accumulated balances of material non-controlling interest:
Sociedad Minera El Brocal S.A.A.		144,501			161,917			176,978
Minera La Zanja S.R.L.		26,121			33,026			42,295
S.M.R.L. Chaupiloma Dos de Cajamarca		1,648			1,587			1,800
Apu Coropuna S.R.L.		127			148			164
		172,397			196,678			221,237
Profit (loss) allocated to material non-controlling interest:
Sociedad Minera El Brocal S.A.A.		(12,895	)		(13,432	)		2,880
Minera La Zanja S.R.L.		(6,905	)		(9,090	)		(6,346	)
Apu Coropuna S.R.L.		(22	)		(14	)		(410	)
S.M.R.L. Chaupiloma Dos de Cajamarca		5,201			6,286			5,667
Other minor		-			(1	)		-
		(14,621	)		(16,251	)		1,791

F-82

Notes to the consolidated financial statements (continued)

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

Statements of financial position as of December 31, 2020:

	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)
Current assets		166,396			104,076			6,814			2,064
Non-current assets		553,754			30,486			-			169
Current liabilities		(170,896	)		(22,329	)		(2,694	)		(1,071	)
Non-current liabilities		(195,809	)		(56,587	)		-			(740	)
Shareholders’ equity, net		353,445			55,646			4,120			422
Attributable to:
Shareholders of the Group		208,944			29,525			2,472			295
Non-controlling interests		144,501			26,121			1,648			127
		353,445			55,646			4,120			422

Statements of financial position as of December 31, 2019:

	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)
Current assets		149,945			112,420			6,252			2,141
Non-current assets		576,028			26,038			-			185
Current liabilities		(118,965	)		(20,170	)		(2,286	)		(1,094	)
Non-current liabilities		(210,904	)		(47,930	)		-			(740	)
Shareholders’ equity, net		396,104			70,358			3,966			492
Attributable to:
Shareholders of the Group		234,187			37,332			2,379			344
Non-controlling interests		161,917			33,026			1,587			148
		396,104			70,358			3,966			492

F-83

Notes to the consolidated financial statements (continued)

Statements of profit or loss for the years 2020, 2019 and 2018:

	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 2020 -
Revenues		255,275			33,033			18,638		-			-
Profit (loss) for the year		(31,541	)		(14,712	)		13,004		(44	)		-
Attributable to non-controlling interests		(12,895	)		(6,905	)		5,201		(22	)		-
Year 2019 -
Revenues		299,252			43,520			22,297		-			-
Profit (loss) for the year		(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		-			-
Profit (loss) for the year		6,305			(13,519	)		14,168		(1,369	)		-
Attributable to non-controlling interests		2,880			(6,346	)		5,667		(410	)		-

Statements of cash flow for the years 2020, 2019 and 2018:

	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 2020 -
Operating activities		53,304			(5,751	)		13,738			(74	)
Investing activities		(24,699	)		(825	)		-			-
Financing activities		(1,954	)		-			(12,850	)		-
		26,651			(6,576	)		888			(74	)
Year 2019 -
Operating activities		1,545			(908	)		16,040			-
Investing activities		(28,259	)		(1,629	)		-			-
Financing activities		(405	)		(763	)		(16,250	)		1,032
		(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-84

Notes to the consolidated financial statements (continued)

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° 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 has been obtained. The rate will be considered 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 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.

On March 31, 2020, Superintendency Resolution 066-2020 / SUNAT was published in which new default interest rates were established in force since April 1, 2020. The default interest rate in national currency went from 1.2% to 1% and in the case of foreign currency it went from 0.6% to 0.5%. Likewise, interest rates for the return of undue or excess payments in national currency went from 0.50% to 0.42% while the foreign currency went from 0.30% to 0.25%. In the case of interest for return due to withholding and / or non-applied perceptions of VAT, it went from 1.2% to 1%.

F-85

Notes to the consolidated financial statements (continued)

Through Legislative Decree No. 1488, published on May 10, 2020, a special depreciation regime is established, exceptionally and temporarily, for taxpayers of the General Income Tax Regime, the main aspects of which are the following:

- As of fiscal year 2021, buildings and constructions acquired in fiscal years 2020 to 2022, will be depreciated applying an annual percentage of 20% until their total depreciation, provided that the following conditions are met:

(i) Are totally affected by the production of third category taxable income.

(ii) Construction would have started as of January 1, 2020. For these purposes, the beginning of construction is understood to be the moment when the building license or other document established by the Regulation is obtained.

(iii) Until December 31, 2022, the construction has a work progress of at least 80%. In the case of constructions that have not been completed until December 31, 2022, it is presumed that the work progress to that date is less than 80%, unless the taxpayer proves otherwise. It is understood that the construction has been completed when the approval of the work or other document established by the Regulation has been obtained from the municipality.

- As of fiscal year 2021, assets acquired in fiscal years 2020 to 2021, affected by the production of taxed income, will be depreciated by applying the following annual percentages until they are fully depreciated:

- Data processing equipment: 50%

- Machinery and equipment: 20%

- Land transport vehicle (except railways) with EURO IV, Tier II and EPA 2007 technology, used by authorized companies: 33.3%

- Hybrid or electric land transport vehicle (except railways): 50%.

F-86

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:

Entity	Years open to review by the Tax Authorities
Compañía de Minas Buenaventura S.A.A.	2015-2020
Compañía Minera Condesa S.A.	2015-2020
Compañía Minera Colquirrumi S.A.	2015-2020
Consorcio Energético de Huancavelica S.A.	2015-2020
Contacto Corredores de Seguros S.A.	2015-2020
El Molle Verde S.A.C.	2015-2020
Empresa de Generación Huanza S.A.	2015-2020
Inversiones Colquijirca S.A.	2015-2020
Minera La Zanja S.R.L.	2015-2020
Sociedad Minera El Brocal S.A.A.	2015-2020
S.M.R.L. Chaupiloma Dos de Cajamarca	2015-2020
Procesadora Industrial Río Seco S. A.	2015-2020
Apu Coropuna S.R.L.	2015-2020
Cerro Hablador S. A. C.	2015-2020
Minera Azola S. R. L.	2015-2020

Due to the possible interpretations that the Tax Authorities may give to legislation in effect, it is not possible to determine whether 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, 2020 and 2019.

The open tax process of the Group and its associates are described in note 29(d).

(c) Tax-loss carryforwards -

As of December 2020 and 2019, the tax-loss carryforward determined by the Group amounts to approximately S/2,469,226,000 and S/1,950,896,000, respectively (equivalent to US$681,354,000 and US$588,151,000 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. See note 28.

(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, 2020 and 2019.

F-87

Notes to the consolidated financial statements (continued)

20. Sales

(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. Set out below is the disaggregation of the Group’s revenue from contracts with customers:

	2020		2019		2018
	US$(000)		US$(000)		US$(000)
Revenues by geographic region:
Metal and concentrates sales -
Peru		389,854		476,978		521,017
America – other than Peru		163,500		171,769		370,624
Europe		42,210		60,475		100,792
Asia		39,110		105,645		120,519
		634,674		814,867		1,112,952
Services -
Peru		20,173		23,501		23,712
America  – other than Peru		92		130		289
Europe		20		30		-
		20,285		23,661		24,001
Royalties -
Peru		18,638		22,297		20,385
		673,597		860,825		1,157,338

Revenues by type of good or services:
Sales by metal -
Silver	230,498		298,171		362,122
Gold	229,590		254,194		411,877
Copper	181,311		238,304		274,761
Zinc	120,546		149,317		164,666
Lead	48,426		89,141		85,555
Manganese sulfate	4,051		6,046		6,655
	814,422		1,035,173		1,305,636
Commercial deductions, note 2.4(q)	(179,748	)	(220,306	)	(192,684	)
Sales of goods, note 20(b)	634,674		814,867		1,112,952
Sales of Services, note 20(b)	20,285		23,661		24,001
Royalties income, note 20(b)	18,638		22,297		20,385
Total revenue from contracts with customers	673,597		860,825		1,157,338

F-88

Notes to the consolidated financial statements (continued)

	2020		2019		2018
	US$(000)		US$(000)		US$(000)
Revenues by type of recognition:
Goods transferred at a point in time		634,674		814,867		1,112,952
Services transferred over time		20,285		23,661		24,001
Royalties at a point of time		18,638		22,297		20,385
		673,597		860,825		1,157,338

(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:

	2020			2019		2018
	US$(000)			US$(000)		US$(000)
Contracts with customers for sale of goods (a)		634,674			814,867		1,112,952
Fair value of accounts receivables		5,154			2,347		(6,013	)
Adjustments to prior period liquidations		4,255			394		788
Hedge operations, note 32(a)		(6,464	)		4,322		(1,398	)
Sale of goods		637,619			821,930		1,106,329
Sale of services, note 20(a)		20,285			23,661		24,001
Royalty income, note 20(a)		18,638			22,297		20,385
		676,542			867,888		1,150,715

(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.

(d) Concentration of sales -

In 2020, the four customers with sales of more than 10 percent of total sales represented 26, 23, 16 and 15 percent from the total sales of the Group (three customers by 25, 16 and 11 percent during 2019 and three customers by 32, 13 and 11 percent during 2018). As of December 31, 2020, 65 percent of the accounts receivable correspond to these customers (84 percent as of December 31, 2019). These customers are related to the mining business.

The Group’s sales of gold and concentrates are delivered to its customers (investment banks and national and international well-known companies). Some of these customers have long-term sales contracts with the Group that guarantee supplying them the production from the Group’s mines.

F-89

Notes to the consolidated financial statements (continued)

(e) Sales expenses -

Sales expenses represent 3%, 3% and 2% of the total operating income for the years 2020, 2019 and 2018, respectively. Sales expenses corresponds mainly to transportation services and shipping costs. Transportation services represent 64%, 58% and 58% of the caption for the years 2020, 2019 and 2018, respectively. Shipping services and expenses represent 13%, 22% and 21% of the caption for the years 2020, 2019 and 2018.

21. Cost of sales, without considering depreciation and amortization

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

	2020			2019			2018
	US$(000)			US$(000)			US$(000)
Beginning balance of finished goods and products in process, net of depreciation and amortization		31,938			49,206			37,640
Cost of production
Services provided by third parties		143,652			196,895			243,410
Consumption of materials and supplies		70,942			96,351			133,961
Direct labor		62,885			79,076			93,122
Electricity and water		36,504			44,583			50,215
Maintenance and repair		22,235			19,729			24,415
Short-term and low-value lease		16,289			20,784			23,539
Transport		12,234			16,341			30,819
Insurances		12,036			12,235			11,311
Provision (reversal) for impairment of finished goods and product in progress, note 8(c)		5,054			(2,143	)		4,521
Other minor		11,916			11,755			9,634
Total cost of production of the period		393,747			495,606			624,947
Final balance of products in process and finished goods, net of depreciation and amortization		(31,797	)		(31,938	)		(49,206	)
Cost of sales of goods, without considering depreciation and amortization		393,888			512,874			613,381

F-90

Notes to the consolidated financial statements (continued)

(b) The cost of services is made up as follows:

	2020		2019		2018
	US$(000)		US$(000)		US$(000)
Electricity and water		668		589		249
Direct labor		371		1,231		2,128
Services provided by third parties		189		331		382
Transport		87		148		50
Insurances		81		163		86
Maintenance and repair		55		186		543
Consumption of materials and supplies		20		497		675
Short-term and low-value lease		6		89		92
Other minor		77		144		113
		1,554		3,378		4,318

22. Exploration in operating units

This caption is made up as follows:

	2020			2019			2018
	US$(000)			US$(000)			US$(000)
Beginning balance of finished goods and products in process, net of depreciation and amortization		444			2,837			5,157
Services provided by third parties		20,406			33,591			71,513
Direct labor		3,361			1,747			2,349
Purchase of land		2,162			-			-
Consumption of materials and supplies		1,426			3,712			8,594
Short-term and low-value lease		766			1,186			2,065
Electricity and water		471			905			1,337
Transport		12			71			192
Maintenance and repair		9			10			450
Other minor		283			548			910
Total exploration in operating units		28,896			41,770			87,410
Final balance of products in process and finished goods, net of depreciation and amortization		(1,296	)		(444	)		(2,837	)
		28,044			44,163			89,730

As of December 31, 2020, 2019 and 2018, disbursements of exploration in operating amount to US$28.0 million, US$44.2 million and US$89.7 million, respectively, which are presented in the “Payments to suppliers and third parties, and other net” caption of the consolidated statements of cash flows.

F-91

Notes to the consolidated financial statements (continued)

23. Mining royalties

This caption is made up as follows:

	2020		2019		2018
	US$(000)		US$(000)		US$(000)
Sindicato minero de Orcopampa S.A., note 29(b)		6,180		4,741		12,122
Royalties paid to the Peruvian State		5,569		8,091		9,266
		11,749		12,832		21,388

24. Administrative expenses

This caption is made up as follows:

	2020		2019		2018
	US$(000)		US$(000)		US$(000)
Personnel expenses		34,500		38,566		34,656
Professional fees		10,517		13,924		15,324
Sundry charges		7,766		7,489		3,965
Depreciation and amortization		3,700		3,825		1,295
Board of Directors’ compensation		2,178		2,202		3,252
Software licenses		1,731		1,706		1,824
Subscriptions and quotes		1,405		1,492		1,938
Insurance		1,272		720		645
Communications		973		1,296		1,512
Donations		708		1,030		1,617
Short-term and low-value lease		611		1,011		5,818
Maintenance and repairs		579		953		2,732
Consumption of materials and supplies		393		422		436
Canons and tributes		318		410		388
Transport		255		878		1,212
Travel and mobility		153		373		467
Allowance for expected credit losses, note 7(f)		126		-		18
		67,185		76,297		77,099

F-92

Notes to the consolidated financial statements (continued)

25. Exploration in non-operating areas

This caption is made up as follows:

	2020		2019		2018
	US$(000)		US$(000)		US$(000)
Services provided by third parties		3,326		3,611		22,764
Personnel expenses		1,705		3,632		4,830
Services provided by third parties		1,538		766		1,211
Lands		420		1,528		1,867
Short-term and low-value lease		327		415		1,524
Consumption of materials and supplies		201		328		1,420
Other minor		958		1,599		2,691
		8,475		11,879		36,307

During 2020, disbursements of exploration in non-operating areas amount to US$8.5 million mainly focused in Emperatriz and general explorations (US$11.9 million in 2019 mainly focused in Yumpag and Marcapunta exploration projects, US$36.3 million during 2018 mainly focused in Yumpag, Marcapunta and Emperatriz exploration projects), which are presented in the “Payments to suppliers and third parties, and other net” caption of the consolidated statements of cash flows.

F-93

Notes to the consolidated financial statements (continued)

26. Other, net

(a) This caption is made up as follows:

	2020			2019			2018
	US$(000)			US$(000)			US$(000)
Other income
Sale of supplies and merchandise to third parties		19,581			32,228			46,128
Reversal for impairment of spare parts and supplies, note 8(c)		15,762			11,641			4,665
Sale of services to third parties		5,626			6,415			3,512
Insurance claim recovery (b)		4,381			-			33,735
Revenue from commercial claims		3,800			2,098			-
Sale of assets to third parties		1,356			19,405			3,863
Sale of supplies to related parties, note 30(a)		890			1,259			27
Income from previous years		475			1,311			1,504
Sale of investment in subsidiary		250			-			7,097
Sale of assets to related parties, note 30(a)		-			11			30
Changes in provisions for exploration projects		-			-			2,433
Recovery of expenses from previous years		-			-			81
Income from rental of investment properties		-			-			45
Expiration of allowance for expected credit losses, note 7(f)		-			-			45
Other minor		1,646			2,632			(566	)
		53,767			77,000			102,599
Other expenses
Disposal cost of sale of supplies and merchandise to third parties		(26,463	)		(33,664	)		(57,897	)
Provision for impairment of spare parts and supplies, note 8(c)		(17,266	)		(15,703	)		(11,704	)
Direct expenses		(3,311	)		(15,992	)		(9,867	)
Expenses from previous years		(1,402	)		(2,240	)		(1,831	)
Disposal cost of sale of supplies and merchandise to related parties		(1,211	)		(2,944	)		(257	)
Changes in provisions for exploration projects, note 15(b)		(642	)		(4,020	)		-
Withdrawals and disposals of property, machinery and equipment, note 11(a)		(586	)		(2,926	)		(6,626	)
Net cost of property, machinery and equipment to third parties, note 11(a)		(192	)		(4,965	)		(626	)
Allowance for expected credit losses, note 7(f)		(4	)		(25	)		(1,334	)
Net cost of transfer of investments (c)		-			-			(11,178	)
Other minor		-			(9,236	)		(2,587	)
		(51,077	)		(91,715	)		(103,907	)
		2,690			(14,715	)		(1,308	)

(b) For the year 2020, corresponds to the income of the subsidiary El Brocal related to the indemnity for the insurance claim of US$4,381,000 as a result of the insurance compensation for the damage suffered by the fire in the electric motor of the 16x22 Dominium Mill located on the first plant that occurred in August 2019. During the year ended December 31, 2020, the amount was collected.

For the year 2018, 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.

F-94

Notes to the consolidated financial statements (continued)

(c) On April 30, 2018, the Company sold its investment in Buenaventura Ingenieros S.A. for US$7.1 million with a related sale costs of US$11.2 million. The transaction generated a net loss of US$4.1 million.

27. Finance costs and finance income

(a) This caption is made up as follows:

	2020		2019		2018
	US$(000)		US$(000)		US$(000)
Interest on time deposits		1,074		4,971		5,176
Interests on third parties loans		355		460		561
Interests on tax claims		352		16		1,701
Interests on loans to related parties, note 30(a)		114		86		92
Dividends income		-		3,625		-
Other minor		155		517		340
		2,050		9,675		7,870
Financial obligations amortized costs, note 16(f)		361		-		-
Unrealized change of the fair value related to contingent consideration liability (b)		-		-		1,815
Total finance revenues		2,411		9,675		9,685

F-95

Notes to the consolidated financial statements (continued)

	2020		2019		2018
		US$(000)		US$(000)		US$(000)
Finance costs:
Interest on borrowings		19,249		28,418		31,538
Commission for restructuring financial obligations, note 16		3,929		-		-
Interest on commercial obligations		626		-		-
Settlement of hedging financial instruments, note 32(b)		146		-		-
Tax on financial transactions		107		166		173
Interest on loans		55		1		2
Other minor		37		141		703
		24,149		28,726		32,416
Accretion expense for mine closure, note 15(b)		6,672		10,390		4,982
Unrealized change of the fair value related to contingent consideration liability (b)		5,690		655		-
Accrual of debt issuance costs, note 16(f)		976		2,109		1,024
Accretion expense for leases related to rights in use, nota 16(f)		180		293		-
Other minor		155		-		-
		37,822		42,173		38,422

(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.

As of December 31, 2020, it is highly probable that the Group reaches the projected future sales. The fair value of the contingent consideration determined as of December 31, 2020 reflects this assumption and changes in metal prices.

F-96

Notes to the consolidated financial statements (continued)

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

	2020		2019		2018
		US$(000)		US$(000)		US$(000)
Beginning balance		16,410		15,755		17,570
Variation of the fair value in profit and loss		5,690		655		(1,815	)
Final balance		22,100		16,410		15,755

Significant unobservable valuation inputs are provided below:

	2020		2019
Annual average of future sales of mineral (US$000)		222,238		190,815
Useful life of mining properties		14		14
Pre-tax discount rate (%)		9.30		10.00

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

F-97

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, 2019			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			Credit (debit) to consolidated statement of profit  or loss			Credit (debit) to consolidated statements of other comprehensive income		As of December 31, 2020
	US$(000)			US$(000)			US$(000)		US$(000)		US$(000)			US$(000)			US$(000)		US$(000)
Deferred asset for income tax
Tax - loss carryforward		105,462			25,866			-		-		131,328			27,185			-		158,513
Difference in depreciation and amortization rates		61,390			(103	)		-		-		61,287			2,616			-		63,903
Provision for closure of mining units, net		11,829			3,684			-		-		15,513			(1,313	)		-		14,200
Provision for impairment of value of inventory		6,833			661			-		-		7,494			(195	)		-		7,299
Contingent consideration liability		4,648			193			-		-		4,841			1,671			-		6,512
Impairment loss of long-lived assets		7,472			576			-		-		8,048			(6,118	)		-		1,930
Other minor		9,200			(432	)		-		400		9,168			207			-		9,375
		206,834			30,445			-		400		237,679			24,053					261,732
Derivative financial instruments		-			-			-		-		-			-			5,440		5,440
		206,834			30,445			-		400		237,679			24,053			5,440		267,172
Deferred assets for mining royalties and special mining tax		36			(6	)		-		-		30			(30	)		-		-
Total deferred asset		206,870			30,439			-		400		237,709			24,023			5,440		267,172
Deferred liability for income tax
Effect of translation into U.S. dollars		(61,271	)		14,995			-		-		(46,276	)		(31,853	)		-		(78,129	)
Differences in amortization rates for development costs		(65,988	)		(3,357	)		-		-		(69,345	)		4,509			-		(64,836	)
Difference in depreciation and amortization rates		(36,468	)		(7,539	)		-		-		(44,007	)		(3,028	)		-		(47,035	)
Fair value of mining concessions		(12,745	)		(238	)		-		-		(12,983	)		(1,915	)		-		(14,898	)
Other minors		(22,700	)		3,367			-		-		(19,333	)		(7,036	)		-		(26,369	)
		(199,172	)		7,228			-		-		(191,944	)		(39,323	)		-		(231,267	)
Derivative financial instruments		(813	)		-			813		-		-			-			-		-
Deferred liability for mining royalties and special mining tax		(2	)		(166	)		-		-		(168	)		(206	)		-		(374	)
Total deferred liability		(199,987	)		7,062			813		-		(192,112	)		(39,529	)		-		(231,641	)
Deferred income tax asset, net		6,883			37,501			813		400		45,597			(15,506	)		5,440		35,531

F-98

Notes to the consolidated financial statements (continued)

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

	2020			2019
	US$(000)			US$(000)
Deferred income tax asset		73,850			74,556
Deferred income tax liability		(38,319	)		(28,959	)
		35,531			45,597

(c) The following is the composition of the provision for income taxes shown in the consolidated statement of income for the years 2020, 2019 and 2018:

	2020			2019			2018
	US$(000)			US$(000)			US$(000)
Income tax expense
Current		(8,446	)		(11,851	)		(12,433	)
Deferred		(15,270	)		37,617			(10,029	)
		(23,716	)		25,766			(22,462	)
Mining Royalties and Special Mining Tax
Current		(1,478	)		(60	)		(4,449	)
Deferred		(236	)		(116	)		32
		(1,714	)		(176	)		(4,417	)
Total income tax		(25,430	)		25,590			(26,879	)

(d) Below is a reconciliation of tax expense and the accounting profit (loss) multiplied by the statutory tax rate for the years 2020, 2019 and 2018:

	2020			2019			2018
	US$(000)			US$(000)			US$(000)
Profit (loss) before income tax		(130,318	)		(43,535	)		27,033
Profit (loss) for discontinued operations		5,409			(10,514	)		(11,808	)
Profit (loss) before income tax		(124,909	)		(54,049	)		15,225
Theoretical gain (loss) for income tax		36,848			15,944			(4,491	)
Permanent items and others:
Effect of translation into U.S. dollars		(31,853	)		14,995			(15,248	)
Non-deductible expenses		(11,789	)		(6,877	)		(1,095	)
Foreign exchange difference of permanent items		(10,524	)		(3,081	)		(2,371	)
Share in the results of associates and joint ventures		(2,808	)		14,074			(337	)
Unrecognized deferred tax asset		(2,342	)		(9,265	)		(2,038	)
Deferred stripping cost		(2,521	)		-			-
Mining royalties and special mining tax		1,273			(24	)		3,118
Income tax income (expense)		(23,716	)		25,766			(22,462	)
Mining Royalties and Special Mining Tax		(1,714	)		(176	)		(4,417	)
Total income tax		(25,430	)		25,590			(26,879	)

F-99

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$64.2 million as of December 31, 2020, originated by the difference between the financial and taxable basis of these investments (US$60.4 million as of December 31, 2019). 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).

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.

Contingencies

(c) 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.

The possible contingencies amount to US$5.4 million and US$3.0 million as of December 31, 2020 and 2019, respectively. See note 15(a).

F-100

Notes to the consolidated financial statements (continued)

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. Yanacocha 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 Agency in charge of conducting environmental evaluations and audits is the OEFA, the Environmental Assessment and Enforcement Agency, this institution conducts periodic supervision of the Yanacocha mine. From 2011 to 2020, the OEFA issued notifications of alleged breaches of Yanacocha's environmental standards and environmental management instruments, related to past supervisions. OEFA has resolved identified findings that do not translate into environmental deterioration as a result of some bad practice in the Yanacocha operation. The experience with OEFA, in the case of finding administrative responsibility to Yanacocha, results in a corrective action, in addition to imposing a fine that is calculated by the avoided cost capitalized on the date of issuance of the directorial resolution, multiplied by potential factors of environmental impact. The presumed offenses identified by the OEFA currently range from zero to 3,667 tax units (UIT), each tax unit being equivalent to approximately US$1,210 based on the current exchange rate with a potential fine for matters pending resolution from zero to US$4.45 million. Yanacocha is responding to all notifications of alleged violations, but cannot reasonably predict the outcome of the agency's allegations.

Yanacocha has not established a provision in the financial statements for a loss arising from this contingency, which it does not consider probable.

F-101

Notes to the consolidated financial statements (continued)

(d) Open tax procedures –

Buenaventura –

- During 2012 and 2014, the Superintendencia Nacional de Aduanas y de Administración Tributaria (SUNAT) reviewed the income tax for 2007 and 2008. As a result, SUNAT does not recognize tax declared deductions by S/1,056,310,000 (equivalent to US$291,476,000) in the year 2007 and S/1,530,985,000 (equivalent to US$422,457,000) 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.

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. The Company's Management with the support of its legal advisers initiated various administrative and judicial actions to present their arguments and defend their rights.

On November 10, 2020, the Tax Court confirmed the reliquidation of the tax debt determined by SUNAT corresponding to 2007 and 2008. With this ruling, on November 13, 2020, SUNAT notified the Company of the start of the compulsory collection of such taxes for S/1,567,297,000 (equivalent to US$432,477,000), composed of S/192,049,000 (equivalent to US$52,994,000) of income tax and S/1,375,248,000 (equivalent to US$379,483,000) of interest and penalties.

The Company made payments under protest during the months of November and December 2020 for S/72,065,000 (equivalent to US$19,918,000), which are recorded in the caption “Trade and other accounts receivable, net”, note 7(g). Based on the opinion of legal advisors who indicate that there are elements to obtain favorable results in the legal proceedings initiated.

The Company requested to SUNAT for an installment payment program that deferred payment for six months and thereafter satisfies the amount via 66 equal monthly payments, amounting to S/1,505,948,000 (equivalent to US$415,549,000), for which has been delivered, as a guarantee, letters of guarantee for the total debt plus 5% according to the tax requests for a total of S/1,580,126,000 (equivalent to US$436,017,000). The application was approved by SUNAT on January 5, 2021 and payments will begin to be made from July 2021.

F-102

Notes to the consolidated financial statements (continued)

On December 19, 2018, the Company and its sponsoring attorneys have filed contentious administrative lawsuits before the Judiciary regarding the controversy of taxable years 2007 and 2008.

On December 30, 2020, the Company was notified that the claim corresponding to fiscal year 2007 has been declared unfounded by the Nineteenth Administrative Litigation Court with a Subspecialty in Tax and Customs Issues. On January 11, 2021, the Company and its sponsoring attorneys have filed an appeal against said judgment, which will be submitted to the Superior Court.

The lawsuit referring to fiscal year 2008 is pending resolution in the Twenty-Second Administrative Litigation Court.

In January 2019, the Company and its sponsoring attorneys submitted the requests for precautionary measures in order to suspend the collection actions of the tax debt for the 2007 and 2008 fiscal years.

In August 2019, the Company was notified of the resolution that decided to reject the precautionary request referring to fiscal year 2007. In December 2019, a new request for precautionary measure was presented that has been rejected by the Nineteenth Administrative Litigation Court with Subspecialty in Tax and Customs Issues, which has been appealed and is pending resolution in the Superior Court.

In April 2019, the Twenty-Second Administrative Litigation Court with a Subspecialty in Tax and Customs Issues required the Company to offer an injunction for 60% of the tax debt for fiscal year 2008. In compliance with said mandate, the Company delivered the letter of guarantee for S/511,030,000 (equivalent to US$141,013,000) with a validity of twelve months, until April 2020. In October 2020, the Company was notified of the resolution that resolved to reject the precautionary request referring to fiscal year 2008 and the letter of guarantee delivered has been without effect and will be returned to the Company.

In December 2019, a new request for a precautionary measure was submitted to the Twenty-Second Administrative Litigation Court with a Subspecialty in Tax and Customs Issues in order to suspend collection actions for 2008. Said Court has required the Company to offer Precautionary for 60% of the tax debt, updated as of January 31, 2020, of S/892,682,000 (equivalent to US$246,325,000). In compliance with said mandate, the Company has delivered the letter of guarantee for S/535,609,000 (equivalent to US$147,795,000) with a validity of twelve months, until July 2021. To date, the said precautionary request is pending resolution.

- 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$20,978,000) and the compensation of tax losses for S/561,758,000 (equivalent to US$155,010,000). 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. In the opinion of Management and its legal counsel, Buenaventura should get a favorable result in the initiated claim process.

F-103

Notes to the consolidated financial statements (continued)

In December 2018, the Tax Court resolved the appeal files confirming reparations for S/70,277,000 (equivalent to US$19,378,000) related to the provision for collection of doubtful debts as an expense and unfounded income unduly deducted. To date, the Company's Management, with the support of its legal advisors, has initiated administrative and judicial actions to present its arguments and make its rights prevail.

In December 2019, SUNAT 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$33,240,000). 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 recognized in the heading “Trade and other accounts receivable, net”, see note 7(g).

On December 4, 2020, the Tax Court confirmed the reliquidation of the tax debt determined by SUNAT for the year 2010. With this ruling, on December 11, 2020, SUNAT has notified the Company of the initiation of the compulsory collection of the taxes for fiscal year 2010 for S/340,074,000 (equivalent to US$93,839,000).

The Company made payments under dispute in December 2020 for S/1,800,000 (equivalent to US$498,000) which are recorded in the caption “Trade and other receivables, net”, see note 7(g). Based on the opinion of the legal advisers who point out that there are elements to obtain a favorable result in the judicial process initiated.

On January 5, 2021, the Company requested to SUNAT for an installment payment program that deferred payment for six months and thereafter satisfies the amount via 66 equal monthly payments, amounting to S/339,928,000 (equivalent to US$93,799,000), for which has been delivered, as a guarantee, letters of guarantee for the total debt plus 5% according to the tax requests for a total of S/357,944,000 (equivalent to US$98,770,000). The application was approved by SUNAT on January 14, 2021 and payments will begin to be made from July 2021.

On December 14, 2020, the Tax Court confirmed the reliquidation of the tax debt determined by SUNAT for fiscal year 2009. With this ruling, on December 17, 2020, SUNAT notified the Company of the initiation of the compulsory collection of the debt for fiscal year 2009 for S/202,614,000 (equivalent to US$55,909,000).

The Company made payments under protest in January 2021 for S/18,807,000 (equivalent to US$5,190,000) which will be recorded in the caption “Trade and other receivables, net”. Based on the opinion of the legal advisers who point out that there are elements to obtain a favorable result in the judicial process initiated.

F-104

Notes to the consolidated financial statements (continued)

On January 14, 2021, the Company requested to SUNAT for an installment payment program that deferred payment for six months and thereafter satisfies the amount via 66 equal monthly payments, amounting to S/184,922,000 (equivalent to US$51,027,000) for which has been delivered, as a guarantee, letters of guarantee for the total debt plus 5% according to the tax requests for a total of S/194,398,000 (equivalent to US$53,642,000). The application has been approved by SUNAT on January 28, 2021 and payments will begin to be made from July 2021.

On March 5, 2019, the Company and its sponsoring attorneys have filed contentious-administrative lawsuits before the Judiciary regarding taxable years 2009 and 2010.

The lawsuit referring to the 2009 taxable year is pending resolution in the Twenty-Second Administrative Litigation Court.

On November 1, 2020, the Company was notified that the lawsuit corresponding to fiscal year 2010 filed before the Nineteenth Administrative Litigation Court with a Subspecialty in Tax and Customs Issues has been declared founded in relation to the unsupported income unduly deducted from taxable income. On November 9, 2020, the Company and its sponsoring attorneys filed a partial appeal against said judgment, which has been submitted to the Superior Court.

On January 7, 2021, the Company was notified with the second instance judgment, issued by the Sixth Superior Chamber declaring the first instance judgment null ordering the Court to issue a new judgment. On January 21, 2021, the Company and its sponsoring lawyers have presented the Appeal for Cassation that must be raised to the Supreme Court.

In April 2019, the Company and its sponsoring attorneys submitted the requests for precautionary measures in order to suspend the collection actions for the tax debt for the 2009 and 2010 fiscal years.

In May 2019, the Twenty-Second Administrative Litigation Court with a Subspecialty in Tax and Customs Issues required the Company to offer an injunction for 60% of the tax debt for fiscal year 2009. In compliance, the Company delivered the letter of guarantee for S/171,791,000 (equivalent to US$47,404,000) with a validity of twelve months, until May 2020. Said letter has been renewed with a new letter for 60% of the tax debt for fiscal year 2009, updated as of May 14, 2020, from S/196,485,000 (equivalent to US$54,218,000) with a guarantee letter of S/117,891,000 (equivalent to US$32,531,000) valid until May 2021. To date, the precautionary request is pending resolution.

In August 2020, the Company was notified of the judicial resolution that decided to reject the precautionary request related to the tax debt for 2010.

F-105

Notes to the consolidated financial statements (continued)

- During the year 2018, SUNAT 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$26,186,000). 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.

On November 12, 2020, the Tax Court (last administrative instance) resolved the appeal, declaring founded, in part, the repair of bonds by contractors and confirming the no recognition of compensation for tax losses. The Company's Management with the support of its legal advisors are initiating administrative and judicial actions to present their arguments and make their rights prevail. As of December 31, 2020, the total possible contingencies related to this audit amount to S/43,462,000 (equivalent to US$11,993,000).

- During the year 2019, SUNAT 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$41,040,000). 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. As of December 31, 2020, the total possible contingencies related to these audits amount to S/65,751,000 (equivalent to US$18,143,000).

- During the year 2019, SUNAT reviewed the income tax of the year 2014. As a result, SUNAT did not recognize Buenaventura declared tax deductions related to the non-deductibility of bonus paid to contractors for S/2,067,000 (equivalent to US$570,000). In the opinion of Management and its legal counsel, Buenaventura should get a favorable result in the initiated claim process.

F-106

Notes to the consolidated financial statements (continued)

On November 17, 2020, SUNAT has resolved the claim appeal, confirming the objections made in the inspection process. The Company has paid the tax debt for S/4,744,000 (equivalent to US$1,311,000) to take advantage of the gradualness in the amount of the fines and has been recorded in the caption “Trade and other accounts receivable, net ”, see note 7(g), based on the opinion of the legal advisors who indicate that there are arguments to obtain a favorable result in the appeal process that has been initiated before the Tax Court.

The Company's Management and 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 –

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. They do not recognize the deduction of the loss in derivative financial instruments, the expense in mining royalties and the expenses of feeding of third parties 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$2,303,000) so it can have access to a discount benefit of the fine. This payment has been recorded as part of account receivables in the caption “Trade and other accounts receivable, net”, see note 7(g).

- On January 8, 2015, SUNAT notified to the subsidiary El Brocal a tax assessment for the 2012 income tax, which was claimed by the subsidiary and rejected by SUNAT. In addition, SUNAT notified a tax assessment for income tax pre-payments from January to December 2012, which amounts to S/4,030,000 (equivalent to US$1,112,000). El Brocal has filed an appeal to the Tax Court, which is pending resolution.

- On June 14, 2017, SUNAT 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.

F-107

Notes to the consolidated financial statements (continued)

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, 2020, the possible contingencies held by El Brocal amount to S/5,220,000 (equivalent to US$1,445,000).

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.

During the year 2019, SUNAT has reviewed the income tax statement 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$3,844,000) determining a debt of S/3,412,000 (equivalent to US$942,000). 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$402,000) has been recorded in the caption “Trade and other accounts receivable, net ”, see note 7(g).

On December 18, 2020, SUNAT has resolved the claim resource, leaving without effect the observation referred to the deduction of the development costs of the Tajo Smelter Project and has confirmed the repair for the depreciation of the tailings for S/6,108,000 (equivalent to US$1,661,000). The Management of El Brocal and its legal advisors consider that the objection has no basis, so on January 12, 2021 they have started the appeal process before the Tax Court.

During 2020, SUNAT has reviewed the income tax return for the year 2014. As a consequence of this review, SUNAT has notified on December 30, 2020 the Determination Resolutions and the Fine where it questions the depreciation rate of two tailings dams, the deduction of the development costs of the Tajo Smelter Project and operating expenses for a total of S/16,582,000 (equivalent to US$4,576,000) determining a debt of S/10,902,000 (equivalent to US$3,008,000). El Brocal's management and its legal advisors consider that the objections have no basis, so they are starting the claim process.

On January 7, 2021, El Brocal has canceled the tax debt in order to benefit from the reduction of the fine. The amount disbursed of S/7,871,000 (equivalent to US$2,172,000) has been recorded in the caption “Trade and other accounts receivable, net ”, see note 7(g).

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 payments of profit sharing of ceased workers, payments for police protection, balance of profit sharing and the difference in exchange referred to provision of closure of mining unit. On November 20, 2020, the Tax Court has confirmed the repair of the profit sharing and the difference in exchange. The possible contingencies for these unrecognized deductions amount to S/3,185,000 (equivalent to US$879,000) as of December 31, 2020 (S/2,952,000 equivalent to US$815,000 as of December 31, 2019). In Management´s opinion and its legal advisors, this interpretation is not supported and La Zanja would obtain a favorable result in the claim process that will begin in February 2021.

F-108

Notes to the consolidated financial statements (continued)

Empresa de Generación Huanza S.A. -

During 2015, SUNAT audited the 2014 income tax of the subsidiary Huanza. As a result, a portion of the depreciation of its fixed assets is not recognized for S/27,532,000 (equivalent to US$7,597,000). The possible contingency amounts to S/7,532,000 (equivalent to US$2,080,000) as of December 31, 2020 (S/6,999,000 equivalent to US$2,071,000 as of December 31, 2019). In the opinion of 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$501,000) 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.

On May 17, 2019, SUNAT 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$3,279,000). 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”, see note 7(g).

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, SUNAT has issued tax assessments as a result of the audit of income taxes of other subsidiaries for S/9,485,000 (equivalent to US$2,617,000). 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

F-109

Notes to the consolidated financial statements (continued)

On June 23, 2004, Law N ° 28528 - Law of Mining Royalty was approved by which the owners of the mining concessions had to be paid, as financial compensation for the exploitation of metallic and non-metallic mineral resources, a mining royalty that was determined applying rates that change between 1% and 3% on the value of the concentrate or its equivalent, according to the price quotation of the international market published by the Ministry of Energy and Mines. Based on the contract of the guarantee signed in 1998, Cerro Verde determined that the payment of mining royalties was not applicable, because it was the contribution after the signing of the contract of the Law of Conquest of the Peruvian Government. However, under the terms of its new guarantee contract, which became effective on January 1, 2014, Cerro Verde began to pay mining royalties and special mining tax for all its production based on Law No. 29788, which it is calculated on the operating profit with rates that fluctuate between 1% and 12%. The amount to be paid for the mining royalty will be the highest amount that results from comparing the result of applying on the quarterly operating profit (the rate is established based on the operating margin for the quarter) or one percent (1%) of revenues generated by sales made in the calendar quarter.

SUNAT 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 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.

Since 2017, Cerro Verde has recorded charges for S/2.8 billion (approximately US$771.2 million at closing exchange rate as of December 31, 2020, including interest, deferral interest and penalties for US$496.5 million) related to the tax observations for mining royalties and special tax on mining for the period December 2006 to December 2013. Since 2014, Cerro Verde has been paying these disputed assessments for the period from December 2006 to December 2013 through fractionation programs (granted through a schedule equivalent to 66 installments monthly), all under protest. As of December 31, 2020, Cerro Verde has made payments for fractionation for a total of S/1.6 billion (equivalent to US$476.7 million based on the exchange rate on the payment date and US$435.2 million based on the closing exchange rate at the December 31, 2020).

On July 13, 2020, Cerro Verde requested acceptance of the deferral payment, approved by Legislative Decree No. 1487 that includes an interest rate reduction by the debts administered by SUNAT related to the current installments of the Special Mining Tax for the period October 2011 until December 2013. The request considers six months deferral and thirty installments. This application was approved by SUNAT in August 2020.

On February 2020, Cerro Verde filed arbitration proceedings to International Centre for Settlement of Investment Disputes (CIADI).

F-110

Notes to the consolidated financial statements (continued)

Other assessments received from SUNAT

Cerro Verde has also received assessments from SUNAT for additional taxes (other than the mining royalty), 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	US$(000)		US$(000)		US$(000)
2003 - 2005		8,780		39,700	48,480
2006		11,206		51,769	62,975
2007		12,821		21,177	33,998
2008		16,906		16,859	33,765
2009		56,000		51,606	107,606
2010		53,700		117,880	171,580
2011		41,063		67,932	108,995
2012		869		9,477	10,346
2013		48,401		65,902	114,303
2014 - 2020		44,864		-	44,864
		294,610		442,302	736,912

As of December 31, 2019, Cerro Verde has paid US$432.7 million from which US$190.5 million which are included in the financial statements of Cerro Verde, for these file objections. Cerro Verde considers will be recovered.

Yanacocha -

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, 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.

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. Yanacocha will file an action objecting to the fines and interest associated with the underlying decision of the Peru Supreme Court. As a result of the resolution, during 2019 Yanacocha recorded a liability for said process for tax payable of US$8 million and it additionally recorded interest and penalties for US$16.8 million and US$4 million, respectively. The potential liability in this matter is in the form of fines and interest in an amount up to US$61 million. In addition, during 2020, Yanacocha registered an amount of US$2.1 million related to workers participation related to this resolution. It is not possible to fully predict the outcome of this litigation.

F-111

Notes to the consolidated financial statements (continued)

(e) Letters of credit –

Letters of credit with financial entities -  

With the objective that Buenaventura can benefit from the fractionation with respect to its tax debt, Buenaventura delivered letters of guarantee for S/1,780,126,238 (equivalent to US$491.0 million) as of December 31, 2020 issued by financial entities. Likewise, in order to guarantee the obligations, Buenaventura granted in favor of the financial entities the following guarantees:

(i) Security interest on the 68,556,629 shares owned by Buenaventura in Sociedad Minera Cerro Verde S.A.A. that represent the totality of its participation as well as the shares that Buenaventura acquires or receives in the future from said company.

(ii) Security interest on the 558,044,001 indirectly owned shares of Buenaventura - through Compañía Minera Condesa S.A. - in Minera Yanacocha S.R.L., which represent the totality of its participation, as well as on the shares that Condesa acquires or receives in the future of said society.

(iii) Security interest on one share owned by Buenaventura in Empresa de Generación Huanza S.A., and on 186,413,288 shares owned by Consorcio Energético de Huancavelica S.A. in Empresa de Generación Huanza S.A., which represent all of Buenaventura's direct and indirect participation in said company, as well as the shares that Buenaventura and Consorcio Energético de Huancavelica S.A. acquire or receive in the future from said company.

(iv) Security interest on 4,965,941 shares owned by Buenaventura in Sociedad Minera El Brocal S.A.A., and on 90,846,185 shares owned by Inversiones Colquijirca S.A. in Sociedad Minera El Brocal S.A.A., which represent all of Buenaventura's direct and indirect participation in said company, as well as the shares that Buenaventura e Inversiones Colquijirca S.A. acquire or receive in the future from said company.

F-112

Notes to the consolidated financial statements (continued)

(v) Security interest on 21,130,260 shares currently held by Compañía Minera Condesa S.A. in Buenaventura, as well as on the shares that Buenaventura may issue in the future in the name of Compañía Minera Condesa S.A.

(vi) Corporate guarantee subject to New York law, granted by the following Buenaventura group companies, which are also guarantors under the Syndicated Loan: Compañía Minera Condesa S.A., Inversiones Colquijirca S.A. and Consorcio Energético de Huancavelica S.A.

In addition to complying with the payment of the tax debt in accordance with the fractionation, Buenaventura assumes within the agreement with the financial entities (“secured creditors”) the following specific obligations:

- Not to incur, or allow any of its subsidiaries to incur, additional financial debt or grant additional liens on its assets or those of its subsidiaries except for (i) those guarantees that must be established by legal mandate, (ii) loans between Buenaventura and its subsidiaries up to a sum that, together, does not exceed US$50 million, and provided that with respect to them a subordination agreement to the guaranteed obligations is entered into, on terms satisfactory to the secured creditors, and (iii) for what is regulated in the guarantee letter contracts. For the purposes of this obligation, a financial debt shall be understood to be any payment obligation with financial or capital market institutions, as well as any other payment obligation that accrues interest.

F-113

Notes to the consolidated financial statements (continued)

- To allocate any dividend, profit or income that Buenaventura receives as a result of the shares and participations affected with the guarantees exclusively to the attention of the development of its ordinary operating activities according to the line of its business, to the payment of its current debts with the tax administration and / or to the amortization of the debts that Buenaventura has with financial entities.

- Maintain a minimum coverage ratio of 1.6x reported on a quarterly basis. The coverage ratio is defined as the quotient that results from dividing the value of the guarantees by the guaranteed debt.

Additionally, letters of guarantee were established for S/653.5 million (equivalent to US$180.3 million) in order to guarantee the payment of the tax debt for tax years 2008 and 2009 in the event of obtaining precautionary measures by the Judicial Power and while the contentious administrative claims on the merits.

Letters of credit with regional governments and others -

In addition to the guarantee letters related to the plans for the closure of mines and projects, mentioned in the note 15(b), The Group maintains letters of credit with regional governments and others for US$852,000 as of December 31, 2020 (US$361,000 as of December 31, 2019).

F-114

Notes to the consolidated financial statements (continued)

30. Transactions with related companies

(a) The Group has carried out the following transactions with its related companies in the years 2020, 2019 and 2018:

	2020		2019		2018
	US$(000)		US$(000)		US$(000)
Associates -
Revenues from:
Royalties		18,638		22,297		20,385
Energy		3,173		3,181		3,002
Supplies, note 26(a)		890		1,259		27
Mineral		211		683		1,321
Mining concessions, property, plant and equipment, note 26(a)		-		11		30
Purchase of:
Supplies		55		9		44
Services rendered to:
Administrative and Management services		672		359		214
Services of energy transmission		320		287		393
Operation and maintenance services related to energy transmission		280		287		290
Constructions services		72		4		-
Engineering services		-		-		348
Dividends received and collected from:
Compañía Minera Coimolache S.A.		3,649		4,011		7,623
Sociedad Minera Cerro Verde S.A.A.		-		29,377		39,169
Joint Venture -
Interest income:
Transportadora Callao S.A., note 27(a)		114		86		92
Non-controlling shareholders -
Dividends paid to:
Newmont Peru Limited - Sucursal del Perú		5,140		6,500		5,560

F-115

Notes to the consolidated financial statements (continued)

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

	2020		2019
	US$(000)		US$(000)
Trade and other receivables, note 7(a)
Minera Yanacocha S.R.L.		5,604		5,920
Compañía Minera Coimolache S.A.		469		327
		6,073		6,247
Other receivables, note 7(a)
Transportadora Callao S.A.		2,035		1,951
Compañía Minera Coimolache S.A.		277		1,016
		2,312		2,967
		8,385		9,214
Trade and other payables, note 14(a)
Compañía Minera Coimolache S.A.		141		27
Sociedad Minera Cerro Verde S.A.A.		-		2
		141		29
Other payables, note 14(a)
Compañía Minera Coimolache S.A.		292		-
Other minor		36		51
		328		51

For the year ended December 31, 2020, 2019 and 2018, there is no allowance for expected credit losses related to related parties accounts.

(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) Key officers -

As of December 31, 2020 and 2019, loans to employees, directors and key personnel amounts to US$7,000 and US$31,000, 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-116

Notes to the consolidated financial statements (continued)

The Group’s key executives’ compensation (including the related income taxes assumed by the Group) for the years 2020 and 2019 are presented below:

	2020		2019
	US$(000)		US$(000)
Accounts payable:
Directors’ remuneration		1,797		1,746
Salaries		856		1,020
Bonus to officers		5,828		6,205
Total		8,481		8,971
Disbursements:
Salaries		11,586		12,690
Directors’ compensations		1,797		1,746
Total		13,383		14,436

(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 projects.

- Energy generation and transmission services.

- Insurance brokerage.

- Rental of mining concessions.

- Holding of investment in shares (mainly in the associate company Minera Yanacocha S.R.L.).

- 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. 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.

Corporate information mainly includes the following:

F-117

Notes to the consolidated financial statements (continued)

In the segment information of profit 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 Tambomayo).

- 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.

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 that are directly owned by the Parent company and are accounted for using the equity method; see note 10 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 the segment information of consolidated statements of profit 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 20(a) to the consolidated financial statements for disclosures related to revenues from external customers for each product and service, and revenues from external customers attributed to Peru and foreign countries. Revenue information is based on the locations of customers.

Refer to note 20(d) to the consolidated financial statements for information about major customers (representing more than 10 percent of the Group’s revenues). All non-current assets are located in Peru.

F-118

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		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.		Tinka Resources Ltd.		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 2020 Results:
Continuing operations
Sales:
Sale of goods	90,420		77,825		32,034		142,833		255,275		33,033		-		-		-		-		-		36,541		-		592,394		2,538,593		203,163		-		4,002,111		(3,364,492	)	637,619
Sale of Services	-		-		-		-		-		-		-		48,254		14,753		-		607		15,335		-		27,768		-		-		-		106,717		(86,432	)	20,285
Royalty income	-		-		-		-		-		-		-		-		-		18,638		-		-		-		-		-		-		-		18,638		-		18,638
Total operating income	90,420		77,825		32,034		142,833		255,275		33,033		-		48,254		14,753		18,638		607		51,876		-		620,162		2,538,593		203,163		-		4,127,466		(3,450,924	)	676,542
Operating costs
Cost of sales of goods, excluding depreciation and amortization	(100,097	)	(37,139	)	(16,679	)	(64,107	)	(170,148	)	(31,978	)	-		-		-		-		-		(38,607	)	-		(666,456	)	(1,809,255	)	(148,122	)	-		(3,082,588	)	2,688,700		(393,888	)
Unabsorbed cost due to production stoppage	(9,630	)	(3,849	)	(5,167	)	(822	)	(10,216	)	(203	)	-		-		-		-		-		(597	)	-		(1,247	)	-		-		-		(31,731	)	3,973		(27,758	)
Cost of services, excluding depreciation and amortization	-		-		-		-		-		-		-		(17,868	)	-		-		-		(5,075	)	-		-		-		-		-		(22,943	)	21,389		(1,554	)
Depreciation and amortization	(16,752	)	(8,102	)	(6,412	)	(72,714	)	(59,433	)	(6,595	)	-		(9,347	)	-		-		-		(10,876	)	-		-		-		-		-		(190,231	)	611		(189,620	)
Exploration in operating units	(6,731	)	(5,198	)	(3,167	)	(7,157	)	(5,790	)	(1	)	-		-		-		-		-		-		-		-		-		-		-		(28,044	)	-		(28,044	)
Mining royalties	(1,068	)	(6,943	)	(278	)	(1,228	)	(1,902	)	(330	)	-		-		-		-		-		-		-		-		-		-		-		(11,749	)	-		(11,749	)
Total operating costs	(134,278	)	(61,231	)	(31,703	)	(146,028	)	(247,489	)	(39,107	)	-		(27,215	)	-		-		-		(55,155	)	-		(667,703	)	(1,809,255	)	(148,122	)	-		(3,367,286	)	2,714,673		(652,613	)
Gross profit (loss)	(43,858	)	16,594		331		(3,195	)	7,786		(6,074	)	-		21,039		14,753		18,638		607		(3,279	)			(47,541	)	729,338		55,041		-		760,180		(736,251	)	23,929
Operating expenses, net
Administrative expenses	(9,140	)	(7,948	)	(3,288	)	(14,548	)	(7,536	)	(2,434	)	(1,649	)	(2,863	)	(10,939	)	(112	)	(398	)	(1,498	)	(5,965	)	(1,227	)	-		(4,043	)	(2,311	)	(75,899	)	8,714		(67,185	)
Selling expenses	(3,806	)	(436	)	(438	)	(3,862	)	(9,070	)	(104	)	-		(784	)	-		-		-		(687	)	-		(1,922	)	(97,680	)	(1,290	)	-		(120,079	)	101,546		(18,533	)
Write –off of stripping activity asset	-		-		-		-		(11,633	)	-		-		-		-		-		-		-		-		-		-		-		-		(11,633	)	-		(11,633	)
Exploration in non-operating areas	(27	)	-		-		-		(86	)	(4,769	)	-		-		-		-		-		-		(3,623	)	-		-		-		-		(8,505	)	30		(8,475	)
Reversal of contingent and others	28		(322	)	(195	)	10		(1,145	)	173		33		501		-		-		-		9		(3,242	)	-		-		-		-		(4,150	)	-		(4,150	)
Impairment recovery (loss) of long-lived assets	-		-		2,083		-		-		-		-		-		-		-		-		-		-		-		-		-		-		2,083		-		2,083
Other, net	2,776		(1,922	)	(212	)	(1,376	)	4,547		(712	)	(593	)	796		-		63		(10	)	989		1,186		(34,322	)	(32,327	)	188		-		(60,929	)	63,619		2,690
Total operating expenses, net	(10,169	)	(10,628	)	(2,050	)	(19,776	)	(24,923	)	(7,846	)	(2,209	)	(2,350	)	(10,939	)	(49	)	(408	)	(1,187	)	(11,644	)	(37,471	)	(130,007	)	(5,145	)	(2,311	)	(279,112	)	173,909		(105,203	)
Operating profit (loss)	(54,027	)	5,966		(1,719	)	(22,971	)	(17,137	)	(13,920	)	(2,209	)	18,689		3,814		18,589		199		(4,466	)	(11,644	)	(85,012	)	599,331		49,896		(2,311	)	481,068		(562,342	)	(81,274	)
Finance income	-		-		-		-		257		780		1		1,622		27		9		-		38		1,405		8,100		2,350		411		-		15,000		(12,589	)	2,411
Finance costs	(268	)	(913	)	(636	)	(390	)	(9,175	)	(1,484	)	(387	)	(4,690	)	(55	)	(2	)	(1	)	(175	)	(21,322	)	(36,699	)	(142,675	)	(2,532	)	-		(221,404	)	183,582		(37,822	)
Share in the results of associates and joint venture	-		-		-		-		(253	)	-		-		4,331		-		-		(67,018	)	-		(28,861	)	-		-		-		-		(91,801	)	82,284		(9,517	)
Net loss from currency exchange difference	(72	)	126		78		130		(404	)	(306	)	(808	)	(402	)	65		(49	)	91		(984	)	(1,576	)	1,180		52,464		(1,267	)	-		48,266		(52,382	)	(4,116	)
Profit (loss) before income tax	(54,367	)	5,179		(2,277	)	(23,231	)	(26,712	)	(14,930	)	(3,403	)	19,550		3,851		18,547		(66,729	)	(5,587	)	(61,998	)	(112,431	)	511,470		46,508		(2,311	)	231,129		(361,447	)	(130,318	)
Current income tax	(60	)	(55	)	(16	)	(93	)	(1,483	)	(17	)	-		(780	)	(1,475	)	(5,543	)	(177	)	(171	)	-		(53,018	)	(236,926	)	(24,801	)	-		(324,615	)	314,691		(9,924	)
Deferred income tax	-		-		-		-		(3,346	)	235		-		(9,388	)	172		-		-		(347	)	(2,888	)	-		-		1,079		-		(14,483	)	(1,023	)	(15,506	)
Profit (loss) from continuing operations	(54,427	)	5,124		(2,293	)	(23,324	)	(31,541	)	(14,712	)	(3,403	)	9,382		2,548		13,004		(66,906	)	(6,105	)	(64,886	)	(165,449	)	274,544		22,786		(2,311	)	(107,969	)	(47,779	)	(155,748	)
Net profit (loss) from discontinued operations																																							5,409
Loss for the year																																							(150,339	)
Total assets	145,287		47,855		45,999		329,384		720,150		134,562		425,731		357,830		15,932		6,813		362,419		90,337		2,343010		2,313,438		7,767,459		418,966		64,539		15,589,711		(11,610,094	)	3,979,617
Total liabilities	62,024		46,787		34,431		38,923		366,705		78,916		22,695		166,396		5,569		2,694		340		13,025		410,197		1,989,052		2,132,131		150,463		876		5,521,224		(4,341,464	)	1,179,760
Other segment information
Investment in associates and joint ventures	-		-		-		-		2,374		-		-		94,117		-		-		159,529		-		2,040,598		-		-		-		-		2,296,618		(807,843	)	1,488,775
Capital Expenditures	10,443		1,064		1,059		3,531		23,955		825		24,648		371		106		-		-		4,611		933		-		-		-		-		71,546		-		71,546
Changes in estimates of mine closures plans	11,745		5,042		771		1,186		2,437		9,569		808		-		-		-		-		-		-		-		-		-		-		31,558		-		31,558
Fair value for contingent consideration liability	-		-		-		-		-		-		-		-		-		-		-		-		(5,690	)	-		-		-		-		(5,690	)	-		(5,690	)
Accounts receivable from sale of assets	-		-		-		-		-		-		-		-		-		-		-		-		8,233		-		-		-		-		8,233		-		8,233

F-119

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		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 2019 Results:
Continuing operations
Sales:
Sale of goods	186,016		58,902		40,082		188,175		299,252		43,520		-		-		-		-		-		6,046		-		734,526		2,896,894		241,173		4,694,586		(3,872,656	)	821,930
Sale of Services	-		-		-		-		-		-		-		59,690		15,687		-		615		19,557		-		4,776		-		-		100,325		(76,664	)	23,661
Royalty income	-		-		-		-		-		-		-		-		-		22,297		-		-		-		-		-		-		22,297		-		22,297
Total operating income	186,016		58,902		40,082		188,175		299,252		43,520		-		59,690		15,687		22,297		615		25,603		-		739,302		2,896,894		241,173		4,817,208		(3,949,320	)	867,888
Operating costs
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	)	(1,961,577	)	(187,156	)	(3,400,337	)	2,887,463		(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	(8,917	)	(9,040	)	(5,864	)	(11,613	)	(8,727	)	(2	)	-		-		-		-		-		-		-		-		-		-		(44,163	)	-		(44,163	)
Mining royalties	(1,955	)	(5,220	)	(418	)	(1,857	)	(2,953	)	(429	)	-		-		-		-		-		-		-		-		-		-		(12,832	)	-		(12,832	)
Total operating costs	(160,448	)	(76,562	)	(42,046	)	(173,954	)	(310,013	)	(49,227	)	-		(32,284	)	-		-		-		(26,663	)	-		(693,881	)	(1,961,577	)	(187,156	)	(3,713,811	)	2,914,229		(799,582	)
Gross profit (loss)	25,568		(17,660	)	(1,964	)	14,221		(10,761	)	(5,707	)	-		27,406		15,687		22,297		615		(1,060	)	-		45,421		935,317		54,017		1,103,397		(1,035,091	)	68,306
Operating expenses, net
Administrative expenses	(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	)	(109,483	)	(1,163	)	(137,461	)	113,148		(24,313	)
Exploration in non-operating areas	(2,534	)	-		-		-		(2,011	)	(2,784	)	(90	)	-		-		-		-		-		(4,492	)	-		-		-		(11,911	)	32		(11,879	)
Reversal (provision) of contingent and others	(183	)	1		(148	)	127		2,079		(98	)	(40	)	166		-		-		-		-		1,067		-		-		-		2,971		(3	)	2,968
Impairment recovery (loss) of long-lived assets	-		-		(2,083	)	-		-		-		-		-		-		-		-		-		-		-		-		-		(2,083	)	-		(2,083	)
Other, net	(4,147	)	(8,104	)	(776	)	(3,767	)	(6,568	)	(1,119	)	(419	)	13,813		-		135		79		341		(2,686	)	(35,987	)	(37,436	)	(5,667	)	(92,308	)	77,593		(14,715	)
Total operating expenses, net	(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	)	(146,919	)	(11,468	)	(324,510	)	198,191		(126,319	)
Operating profit (loss)	(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	)
Finance income	-		-		-		-		417		2,006		14		263		15		30		10		277		7,751		18,430		10,356		549		40,118		(30,443	)	9,675
Finance costs	(532	)	(733	)	(1,002	)	(505	)	(11,440	)	(3,715	)	(561	)	(7,483	)	(89	)	(4	)	(6	)	(990	)	(16,249	)	(57,629	)	(115,877	)	(3,598	)	(220,413	)	178,240		(42,173	)
Share in the results of associates and joint ventures	-		-		-		-		(44	)	-		-		10,374		-		-		(53,143	)	-		45,778		−		-		-		2,965		44,745		47,710
Net gain (loss) from currency exchange difference	(124	)	76		3		(12	)	(191	)	14		(156	)	62		(119	)	(9	)	(9	)	208		(481	)	2,902		5,574		277		8,015		(8,749	)	(734	)
Profit (loss) before income tax	(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		(30,329	)	688,451		39,777		609,572		(653,107	)	(43,535	)
Current income tax	-		-		-		-		(25	)	(35	)	-		(4,044	)	(1,223	)	(6,546	)	(39	)	-		-		(64,928	)	(298,074	)	(26,335	)	(401,249	)	389,338		(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
Loss from discontinued operations																																					(10,514	)
Loss for the year																																					(28,459	)
Total assets	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		2,312,072		7,809,424		379,915		15,761,637		(11,654,363	)	4,107,274
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		1,853,644		2,450,101		125,097		5,618,322		(4,479,248	)	1,139,074
Other segment information
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

F-120

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		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
Sales
Sale of goods	257,282		153,003		34,104		225,281		333,560		96,611		-		-		-		-		-		6,655		-		658,653		3,061,930		225,447		5,052,526		(3,946,197	)	1,106,329
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		-		680,618		3,061,930		225,447		5,193,347		(4,042,632	)	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	)	-		(619,424	)	(2,018,876	)	(170,866	)	(3,469,209	)	2,855,828		(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	)	-		(621,641	)	(2,018,876	)	(170,866	)	(3,855,858)		2,888,162		(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		1,043,054		54,581		1,337,489		(1,154,470	)	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	)	(137,008	)	(1,135)		(168,242	)	141,294		(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	)	(68,683	)	(325	)	(127,823	)	126,515		(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	)	(205,691)		(7,104	)	(417,146)		292,425		(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
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	)
Share in the results of associates and joint ventures	-		-		-		-		-		-		-		8,589		-		-		(25,517	)	-		15,081		-		-		-		(1,847	)	703		(1,144	)
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	)
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

F-121

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:

	2020			2019			2018
	US$(000)			US$(000)			US$(000)
Segments profit (loss)		(107,969	)		260,842			64,138
Elimination of profit of equity accounted investees, not consolidated (owned by third parties)		(129,570	)		(323,578	)		(63,777	)
Elimination of intercompany sales		(89,006	)		(71,951	)		(74,637	)
Elimination of cost of sales and operating expenses intercompany		89,593			71,697			76,780
Elimination of share in the results of subsidiaries and associates		82,284			44,745			1,582
Others		(1,080	)		300			(3,932	)
Consolidated profit (loss) from continued operations		(155,748	)		(17,945	)		154

Reconciliation of segment assets

The reconciliation of segment assets to the consolidated assets follows:

	2020			2019			2018
	US$(000)			US$(000)			US$(000)
Segments assets		15,589,711			15,761,637			15,369,524
Elimination of assets of equity accounted investees, not consolidated (owned by third parties)		(10,564,402	)		(10,501,411	)		(9,963,853	)
Elimination of the subsidiaries and associates of the Parent company		(1,005,368	)		(1,111,454	)		(1,184,240	)
Elimination of intercompany receivables		(57,810	)		(64,708	)		(32,444	)
Others		17,486			23,210			28,234
Consolidated assets		3,979,617			4,107,274			4,217,221

Reconciliation of segment liabilities

The reconciliation of segment liabilities to the consolidated liabilities follows:

	2020			2019			2018
	US$(000)			US$(000)			US$(000)
Segments liabilities		5,521,224			5,618,322			5,248,748
Elimination of liabilities of equity accounted investees, not consolidated		(4,272,522	)		(4,428,842	)		(4,034,896	)
Elimination of intercompany payables		(68,961	)		(50,395	)		(27,822	)
Others		19			(11	)		1,626
Consolidated liabilities		1,179,760			1,139,074			1,187,656

F-122

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)		Orcopampa (Operation)		Julcani (Operation)		Tambomayo (Operation)		Colquijirca (Operation)		La Zanja (Operation)		Energy generation and transmission	Insurance brokerage	Rental of mining concessions	Holding of investment in shares	Industrial activities		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)
Year 2020
Revenues by type of customers:
Sales by customers -
External	91,007		77,907		31,663		143,233		251,974		2,554		-	-	-	-	36,336		634,674		-		634,674
Inter-segment	-		-		-		-		(160	)	30,470		-	-	-	-	-		30,310		(30,310	)	-
	91,007		77,907		31,663		143,233		251,814		33,024		-	-	-	-	36,336		664,984		(30,310	)	634,674
Services -
External	-		-		-		-		-		-		5,532	14,753	-	-	-		20,285		-		20,285
Inter-segment	-		-		-		-		-		-		42,722	-	-	607	15,335		58,664		(58,664	)	-
	-		-		-		-		-		-		48,254	14,753	-	607	15,335		78,949		(58,664	)	20,285
Royalties -
External	-		-		-		-		-		-		-	-	18,638	-	-		18,638		-		18,638
	91,007		77,907		31,663		143,233		251,814		33,024		48,254	14,753	18,638	607	51,671		762,571		(88,974	)	673,597
Revenues by geographic region:
Metal and concentrates sales -
Peru	77,077		7,097		3,238		81,058		216,481		32,886		-	-	-	-	2,327		420,164		(30,310	)	389,854
America - other than Peru	-		70,810		-		60,273		-		138		-	-	-	-	32,279		163,500		-		163,500
Europa	11,503		-		28,425		552		-		-		-	-	-	-	1,730		42,210		-		42,210
Asia	2,427		-		-		1,350		35,333		-		-	-	-	-	-		39,110		-		39,110
	91,007		77,907		31,663		143,233		251,814		33,024		-	-	-	-	36,336		664,984		(30,310	)	634,674
Services -
Peru	-		-		-		-		-		-		48,254	14,641	-	607	15,335		78,837		(58,664	)	20,173
America - other than Peru	-		-		-		-		-		-		-	92	-	-	-		92		-		92
Europa	-		-		-		-		-		-		-	20	-	-	-		20		-		20
	-		-		-		-		-		-		48,254	14,753	-	607	15,335		78,949		(58,664	)	20,285
Royalties -
Peru	-		-		-		-		-		-		-	-	18,638	-	-		18,638		-		18,638
	91,007		77,907		31,663		143,233		251,814		33,024		48,254	14,753	18,638	607	51,671		762,571		(88,974	)	673,597
Revenues by type of good or services:
Sales by metal -
Silver	97,903		185		33,631		32,766		63,312		2,241		-	-	-	-	2,337		232,375		(1,877	)	230,498
Gold	14		77,964		14		105,359		13,667		32,672		-	-	-	-	30,023		259,713		(30,123	)	229,590
Copper	-		-		48		-		181,007		-		-	-	-	-	-		181,055		256		181,311
Zinc	8,356		-		-		9,513		102,677		-		-	-	-	-	-		120,546		-		120,546
Lead	6,760		-		529		10,688		30,449		-		-	-	-	-	-		48,426		-		48,426
Manganese sulfate	-		-		-		-		-		-		-	-	-	-	4,051		4,051		-		4,051
	113,033		78,149		34,222		158,326		391,112		34,913		-	-	-	-	36,411		846,166		(31,744	)	814,422
Commercial deductions	(22,026	)	(242	)	(2,559	)	(15,093	)	(139,298	)	(1,889	)	-	-	-	-	(75	)	(181,182	)	1,434		(179,748	)
	91,007		77,907		31,663		143,233		251,814		33,024		-	-	-	-	36,336		664,984		(30,310	)	634,674
Services -	-		-		-		-		-		-		48,254	14,753	-	607	15,335		78,949		(58,664	)	20,285
Royalties income -	-		-		-		-		-		-		-	-	18,638	-	-		18,638		-		18,638
	91,007		77,907		31,663		143,233		251,814		33,024		48,254	14,753	18,638	607	51,671		762,571		(88,974	)	673,597

F-123

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	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)
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
Europe	27,848		135		-		22,590		-		5,885		-	-	-	-	4,017	60,475		-		60,475
Asia	13,622		27,365		-		6,598		58,060		-		-	-	-	-	-	105,645		-		105,645
	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	)	(203	)	(3,234	)	(154,500	)	(104	)	-	-	-	-	-	(220,365	)	59		(220,306	)
	184,982		186,664		58,796		39,639		294,904		43,894		-	-	-	-	6,046	814,929		(62	)	814,867
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

F-124

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	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)
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
Europe	57,472		2,760		-		9,488		-		26,074		-	-	-	-	4,998	100,792		-		100,792
Asia	29,382		-		-		9,115		82,022		-		-	-	-	-	-	120,519		-		120,519
	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
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-125

Notes to the consolidated financial statements (continued)

32. Derivative financial instruments –

This caption is made up as follows:

	2020			2019
	US$(000)			US$(000)
Copper prices hedge (a)		(15,804	)		-
Interest rate hedge (b)		(2,635	)		-
		(18,439	)		-

(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 contracts are 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.

During 2020, 2019 and 2018, the effect in profit or loss was a loss of US$6,464,000, gain of US$4,322,000 and loss of US$1,398,000, respectively, and it is show in the “Sales of goods” caption, see note 20(b).

As of December 31, 2019, there are not any hedge contract. The table below presents the composition of open transactions included in the hedge derivative financial instruments as of December 31, 2020:

			Quotations
Quotation period	Concentrate	Metric tone		Fixed US$/DMT	Futures US$/ DMT	Fair value US$(000)
January 2021	Copper	1,250		6,500	7,758	(1,572	)
February 2021	Copper	1,250		6,500	7,762	(1,577	)
March 2021	Copper	2,250		6,633	7,767	(2,549	)
April 2021	Copper	2,000		6,750	7,769	(2,036	)
May 2021	Copper	3,000		6,897	7,769	(2,615	)
June 2021	Copper	3,000		6,967	7,770	(2,408	)
July 2021	Copper	2,000		7,025	7,768	(1,483	)
August 2021	Copper	2,000		7,100	7,765	(1,327	)
September 2021	Copper	2,000		7,500	7,762	(523	)
October 2021	Copper	2,000		7,900	7,757	286
		20,750				(15,804	)

The variation in the fair value of the caption generated an expense US$18.4 million, an expense of US$2.8 million and an income of US$31.5 million in the years 2020, 2019 and 2018, which are included within the consolidated statement of other comprehensive income and in the ”Other reserves of equity”.

F-126

Notes to the consolidated financial statements (continued)

(b) In order to reduce the exposure to the risk of the variation of the interest rate related to its financial obligations, on April 2, 2020, the Company's Management decided to sign future contracts in relation to the LIBOR of three months with the banks BBVA Banco Continental, Banco de Credito del Peru, Banco Internacional del Peru and Itaú, which are recorded under cash flow accounting.

There is an economic relationship between the hedged assets and the hedging instruments as the terms of the futures contracts are the same as the terms of the highly probable future transactions. The Company has established a hedging ratio of 1: 1 for hedging relationships as the underlying risk of interest rate futures contracts are identical to the hedged risk components. In order to evaluate the effectiveness of the hedges, the Company uses the hypothetical derivative method, by which it compares the changes in the fair value of the hedging instruments against the changes in the fair value of the hedged items attributed to the hedged risks.

As of December 31, 2020, the effect on results was a loss of US$146,000, and is presented in the caption of “Financial costs and financial income” see note 27(a). The following is the composition of the operations to be settled that are part of the liability for hedging derivative instrument as of December 31, 2020:

			LIBOR of three months
Maturity	Amount US$(000)		Fixed			Futures		Fair value US$(000)
October 2022		81,666		2.632	%		2.06% - 2.14%		(785	)
October 2022		74,167		2.632	%		2.06% - 2.14%		(712	)
October 2022		74,167		0.732	%		0.16% - 0.24%		(706	)
July 2022		45,000		2.632	%		2.06% - 2.14%		(432	)
		275,000							(2,635	)

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. A committee that advises on financial risks supports it. This committee provides assurance to management that the 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, 2020, 2019 and 2018.

F-127

Notes to the consolidated financial statements (continued)

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 four types of risk: exchange rate risk, commodity risk, interest rate 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, 2020 and 2019 and have been prepared considering that the proportion of financial instruments in foreign currency are constant.

(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. The Group mitigates the effect of exposure to exchange-rate risk by carrying out almost all of its transactions in its functional currency.

Excluding loans in soles, Management maintains smaller amounts in 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 profit (loss) before income tax
		US$(000)
2020
Exchange rate	10%	9,282
Exchange rate	(10%)	(9,282)
2019
Exchange rate	10%	4,053
Exchange rate	(10%)	(3,545)
2018
Exchange rate	10%	1,695
Exchange rate	(10%)	(1,681)

F-128

Notes to the consolidated financial statements (continued)

(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 affected by numerous factors beyond its control.

The Group manages its commodity price risk primarily 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 consolidated 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 under “Other reserves of equity”. The deferred amounts were reclassified to the “sales of goods” when the production was sold. See note 33(a) and note 20(b).

(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.

A table showing the effect in profit or loss of the variations of interest rates:

	Increase/decrease of LIBOR	Effect on profit (loss) before income tax
	(percentage rates)	US$(000)
2020
Interest rate	10%	(81)
Interest rate	(10%)	81
2019
Interest rate	10%	(306)
Interest rate	(10%)	306
2018
Interest rate	10%	(277)
Interest rate	(10%)	277

(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 20(b). An impairment analysis is performed on an individual basis.

F-129

Notes to the consolidated financial statements (continued)

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.

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, 2020 -
Trade receivables		159,840			-			-			22,128			181,968
Other receivables		172,116			-			1,221			9,717			183,054
		331,956			-			1,221			31,845			365,022
Expected credit loss rate		0	%		0	%		0	%		100	%		-
Expected credit loss		-			-			-			(31,845	)		(31,845	)
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
		329,505			42,390			4,332			32,022			408,249
Expected credit loss rate		0	%		0	%		0	%		100	%		-
Expected credit loss		-			-			-			(32,022	)		(32,022	)

(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-130

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		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, 2020 -
Bank loans – capital		65,793		-		-		-		65,793
Bank loans – interest		1,156		-		-		-		1,156
Trade and other payables		167,852		-		-		-		167,852
Financial obligation – capital		21,587		175,932		324,815		6,071		528,405
Financial obligation – interest		14,868		13,289		14,911		203		43,271
Lease – capital		3,609		2,010		2,220		-		7,839
Lease – interest		74		143		145		-		362
Hedge derivative financial instruments		15,804		2,635		-		-		18,439
Contingent consideration liability		-		-		9,924		36,746		46,670
Total		290,743		194,009		352,015		43,020		879,787
As of December 31, 2019 -
Bank loans – capital		55,000		-		-		-		55,000
Bank loans – interest		486		-		-		-		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

(d) Capital management -

For purposes of the 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 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.

The Group monitors capital using a consolidated net worth minimum. As required by the Company’s covenants of the Syndicated term Loan of US$2,711,389. No changes were made in the objectives, policies or processes for managing capital during the years 2020 and 2019

F-131

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)		Observable inputs (Level 2)		Unobservable inputs (Level 3)
	US$(000)		US$(000)		US$(000)		US$(000)
As of December 31, 2020 -
Assets and liabilities measured at fair value:
Fair value of account receivable (subject to provisional pricing)		126,553		-		126,553		-
Bank loans		65,793		-		65,793		-
Financial obligations		531,745		-		531,745		-
Contingent consideration liability		22,100		-		-		22,100
Hedge instruments		18,439		-		18,439		-
As of December 31, 2019 -
Assets and liabilities measured at fair value:
Fair value of account receivable (subject to provisional pricing)		165,546		-		165,546		-
Bank loans		55,000		-		55,000		-
Financial obligations		571,688		-		571,688		-
Contingent consideration liability		16,410		-		-		16,410
Hedge instruments		-		-		-		-

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 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 fair value of the assets and financial liabilities as of December 31, 2020 and 2019.

There were no transfers between Level 1and Level 2 during 2020 and 2019.

As of December 31, 2020, the fair value of the investment property amounted to US$842,000 (US$544,000 as of December 31, 2020). There is not an independent valuation for investment property.

F-132

Notes to the consolidated financial statements (continued)

Fair value measurements using significant unobservable inputs (level 3) –

The following table summarizes the quantitative information about the significant unobservable inputs used in level 3 fair value measurements:

Description	Fair value as of December 31, 2020		Unobservable inputs	Range of inputs			Relationship of unobservable inputs to fair value
Contingent consideration liability		22,100	Rate before tax		9.30	%	A change in the discount rate by 10% (rate of 0.93%) higher/lower, the fair value would increase/decrease in US$1.5 million.
			Expected revenues annual average (US$000)		222,238		If expected sales change by 10% higher/lower, the fair value would increase/decrease in US$2.2 million.

35. Events after the reporting period

Since March 2021, Buenaventura has been assessing different possibilities, such as the issuance of bonds or the disposition of certain assets (including its participation in associates and subsidiaries), in order to satisfy its financial obligations and expansion requirements. As of the date of this report, the Company’s board of directors has not approved any such transactions or asset dispositions, and therefore there is no effect on any of Buenaventura’s financial reporting as of and for the period ended December 31, 2020.

In accordance with International Financial Reporting Standards - IFRS, the accompanying financial statements were prepared based on the conditions existing as of December 31, 2020 and considering those events that occurred after that date that provided evidence of conditions that existed at the end of the reporting period. Given that the social immobilization measures were decreed after December 31, 2020, their impact is considered an event that is indicative of conditions that arose after the reporting period and, consequently, no adjustments have been made to the financial statements as of December 31, 2020.

F-133

Minera Yanacocha S.R.L. and Subsidiary

Consolidated Financial Statements for the years 2020, 2019 and 2018, together with the Report of Independent Auditors Registered Public Accounting Firm

F-134

Minera Yanacocha S.R.L. and Subsidiary

Consolidated Financial Statements for the years 2020, 2019 and 2018, together with the Report of Independent Registered Public Accounting Firm

Content
Report of Independent Auditors	F-136
Consolidated Financial Statements
Consolidated statements of financial position	F-138
Consolidated statements of comprehensive income	F-139
Consolidated statements of changes in equity	F-140
Consolidated statements of cash flows	F-141
Notes to the consolidated financial statements	F-142

F-135

Report of Independent Registered Public Accounting Firm

To the Partners and the Board of Directors of Minera Yanacocha S.R.L.

Opinion on the Financial Statements

We have audited the accompanying consolidated statements of financial position of Minera Yanacocha S.R.L. and subsidiary (the Company) as of December 31, 2020 and 2019, and related consolidated statements of comprehensive income, changes in equity and cash flows for each of the three years in the period ended December 31, 2020, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Company at December 31, 2020 and 2019, and the consolidated results of its operations and its cash flows for each of the three years in the period ended December 31, 2020, 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 26 and 27 to the consolidated financial statements).

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated 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 consolidated 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 the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

F-136

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 regarding the amounts and disclosures in the consolidated 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 consolidated 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/ Mayerling Zambrano R.

We have served as the Company’s auditor since 2015.

Lima, Peru,

April 29, 2021

F-137

Minera Yanacocha S.R.L. and Subsidiary

Consolidated statements of financial position

As of December 31, 2020 and 2019

	Note		2020			2019
			US$(000)			US$(000)
Assets
Current assets
Cash and cash equivalents		5		870,929			818,503
Trade and other receivables, net		6		28,044			18,962
Value added tax credit				25,214			32,831
Inventories, net		7		52,297			54,245
Stockpiles and ore on leach pads, net		8		121,515			134,923
Prepaid expenses				1,591			991
Total current assets				1,099,590			1,060,455
Non-current assets
Restricted cash		14		48,752			48,617
Trade and other receivables, net		6		21,676			23,648
Financial instruments at fair value		9		25,168			24,417
Stockpiles and ore on leach pads, net		8		69,687			105,023
Property, plant and equipment, net		10		1,039,579			1,038,294
Intangible assets, net		2.4(k)		7,915			10,547
Deferred tax asset		16(g)		1,071			1,071
Total non-current assets				1,213,848			1,251,617
Total assets				2,313,438			2,312,072
Liabilities and partners’ equity
Current liabilities
Trade and other payables		11		68,645			72,806
Income tax payable		16(j)		42,029			23,153
Provisions		12		101,786			45,317
Other accruals and liabilities		13		70,526			49,301
Total current liabilities				282,986			190,577
Non-current liabilities
Debt instruments		14		45,423			43,927
Provisions		12		1,660,603			1,587,551
Other accruals and liabilities		13		40			305
Total non-current liabilities				1,706,066			1,631,783
Total liabilities				1,989,052			1,822,360
Partners’ equity
Partners’ contributions		15		378,505			378,505
Additional paid-in-capital				(21,758	)		(21,758	)
Retained (losses) earnings				(32,134	)		133,315
Other reserves				(227	)		(350	)
Total equity				324,386			489,712
Total liabilities and partners’ equity				2,313,438			2,312,072

The accompanying notes are an integral part of this consolidated financial statement

F-138

Minera Yanacocha S.R.L. and Subsidiary

Consolidated statements of comprehensive income

For the years ended December 31, 2020, 2019 and 2018

	Note	2020			2019			2018
		US$(000)			US$(000)			US$(000)
Revenue from contracts with customers
Sales	17		592,394			734,526			658,653
Other operating revenue	17		27,768			4,776			21,965
Total revenue from contracts with customers			620,162			739,302			680,618
Costs applicable to sales	18		(666,456	)		(692,721	)		(619,424	)
Other operating costs			(1,247	)		(1,160	)		(2,217	)
Total operating costs			(667,703	)		(693,881	)		(621,641	)
Gross profit (loss)			(47,541	)		45,421			58,977
Operating expenses
Operating expenses, net	19		(34,322	)		(35,987	)		(76,155	)
Administrative expenses	20		(1,227	)		(1,744	)		(2,783	)
Selling expenses	21		(1,922	)		(1,722	)		(2,627	)
Total operating expenses			(37,471	)		(39,453	)		(81,565	)
Operating profit (loss)			(85,012	)		5,968			(22,588	)
Finance income	2.4(n)(iv)		8,100			18,430			11,448
Finance costs	22		(36,699	)		(57,629	)		(39,024	)
Net gain (loss) from currency exchange difference			1,180			2,902			(2,056	)
Loss before income tax			(112,431	)		(30,329	)		(52,220	)
Income tax expense	16(h)		(53,018	)		(64,928	)		(29,297	)
Loss for the year			(165,449	)		(95,257	)		(81,517	)
Comprehensive loss:
Loss for the year			(165,449	)		(95,257	)		(81,517	)
Other comprehensive (loss) income to be reclassified as profit or loss in subsequent periods:
Fair value of financial instruments			123			1,246			(91	)
Total comprehensive loss for the year			(165,326	)		(94,011	)		(81,608	)

The accompanying notes are an integral part of this consolidated financial statement

F-139

Minera Yanacocha S.R.L. and Subsidiary

Consolidated statements of changes in equity

For the years ended December 31, 2020, 2019 and 2018

	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, 2018		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 15(a)		(19,711	)		19,711			-			-			-
Proceeds from sale of shares, note 14		19,471			28,440			-			-			47,911
Acquisition of debt instruments, note 14		(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
Loss for the year		-			-			(165,449	)		-			(165,449	)
Other comprehensive income for the year		-			-			-			123			123
Total comprehensive loss		-			-			(165,449	)		123			(165,326	)
As of December 31, 2020		378,505			(21,758	)		(32,134	)		(227	)		324,386

The accompanying notes are an integral part of this consolidated financial statement

F-140

Minera Yanacocha S.R.L. and Subsidiary

Consolidated statement of cash flows

For the years ended December 31, 2020, 2019 and 2018

	Note	2020			2019			2018
		US$(000)			US$(000)			US$(000)
Cash flow from operating activities
Loss for the year			(165,449	)		(95,257	)		(81,517	)
Adjustments to reconcile profit after income tax to net cash flows from operating activities:
Current income tax expense	16		53,018			64,928			29,297
Deferred income tax benefit	16(f)		-			-			(1,071	)
Depreciation and amortization	18		140,252			144,862			156,212
Provision for mine closure	18		124,780			142,129			16,285
Unwinding of present value of the provision for mine closure	12(b)		32,049			36,709			36,015
Unwinding of discount of debt instruments	22		1,497			1,497			735
Write-off of fixed assets	19		460			1,204			-
Loss (gain) for fixed asset sales	19		(10	)		(5,996	)		624
Write-down of ore inventories to realizable value	8(b)		37,880			33,464			90,365
Reversal of the write-down of ore inventories to realizable value	8(b)		(72,518	)		(74,666	)		(63,778	)
Allowance for obsolescence of materials and supplies	7(b)		497			(1,417	)		439
Changes in working capital:
Net (increase) decrease in operating assets:
Trade and other receivables			(7,110	)		13,290			(7,580	)
Value added tax credit and other taxes			(6,439	)		(16,491	)		7,616
Inventories and stockpiles and ore on leach pads			84,833			42,326			7,120
Prepaid expenses			(600	)		(238	)		(345	)
Financial assets at fair value	9		(628	)		(561	)		299
Net increase (decrease) in operating liabilities:
Trade and other payables			(3,706	)		(8,231	)		2,028
Provisions			(982	)		10,051			(2,617	)
Other accruals and liabilities			20,753			21,282			(197	)
Closure of mining units paid	12(b)		(22,656	)		(23,889	)		(19,842	)
			215,921			284,996			170,088
Income tax paid			(20,066	)		(12,600	)		(8,863	)
Net cash and cash equivalents provided by operating activities			195,855			272,396			161,225
Cash flow from investing activities
Purchase of property, plant and equipment	10		(143,489	)		(184,403	)		(117,636	)
Restricted cash	14		(135	)		(490	)		(48,127	)
Proceeds from sale of property, plant and equipment	19		460			8,088			4,821
Net cash and cash equivalents used in investing activities			(143,164	)		(176,805	)		(160,942	)
Cash flow from financing activities
Proceeds from sale of shares	13		-			-			47,911
Payment of principal portion of lease liabilities	2.3		(265	)		(296	)		-
Net cash and cash equivalents provided by (used in) financing activities			(265	)		(296	)		47,911
Net increase in cash and cash equivalents			52,426			95,295			48,194
Cash and cash equivalents at beginning of year			818,503			723,208			675,014
Cash and cash equivalents at end of year			870,929			818,503			723,208
Transactions with no effects in cash flows:
Addition (deductions) of asset retirement cost	10		(4,125	)		158,967			27,275
Increase of right-of-use assets	10		-			1,045			-

The accompanying notes are an integral part of this consolidated financial statement.

F-141

Minera Yanacocha S.R.L. and Subsidiary

Notes to the consolidated financial statements

For the years 2020, 2019 and 2018

1. 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, exploration and development of gold under the mining concessions it owns or that are owned by S.M.R.L. Chaupiloma Dos de Cajamarca (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 Corporation (“Newmont”, the ultimate Parent company), 43.65% owned by Compañía Minera Condesa S.A., which is 100% owned by Compañía de Minas Buenaventura S.A.A. (Buenaventura) and 5% owned by Summit Global Management II VB, a wholly-owned subsidiary of Sumitomo Corporation, see note 14.

The controlling Partners of the Company (or their affiliates) also own the 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 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 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.

F-142

Notes to the consolidated financial statements (continued)

The Company’s operations are located approximately 375 miles (604 kilometers) north of Lima and 30 miles (48 kilometers) north of the city of Cajamarca and are primarily accessible by paved roads. The Yanacocha property began production in 1993 and consists of the following open pit mines: (i) the La Quinua Complex, (ii) the Yanacocha Complex, (iii) the Carachugo Complex and Maqui Maqui. In addition, The Company has (i) four leach pads (La Quinua, Yanacocha, Carachugo and Maqui Maqui), (ii) three gold processing plants (Pampa Larga, Yanacocha Norte and La Quinua), one limestone processing facility (China Linda) and (iv) one mill (Yanacocha Gold Mill).

The La Quinua Complex includes mined material from the La Quinua Sur and the Tapado Oeste Layback and is scheduled to finish mining operations in 2021.

The Yanacocha Complex includes mined material from the Yanacocha Layback and Yanacocha Pinos, which are scheduled to finish mining operations in 2021, respectively. The Yanacocha Complex began operations in 1997 and has had limited mining operations in recent years.

The Carachugo Complex and Maqui Maqui includes mined material from multiple mines that are no longer in operation and continued residual gold leaching. In addition, the Carachugo Complex includes processed material from the Quecher Main project, which is a new open pit within the existing footprint of Yanacocha which began operating in October 2019. This project will add oxide production at Yanacocha and will extend the life of the Yanacocha operation to 2027. During 2020, the ounce production of the project was 55,000 oz.

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 the Yanacocha Gold Mill processes high-grade gold ore to produce a gold-bearing solution for treatment at the La Quinua processing plant, followed by Merrill - Crowe zinc precipitation and smelting where a final 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 of specialized facilities and technology. The Company relies heavily on such facilities and technology to maintain production levels. Also, the cash flows and profitability of the Company’s operations are significantly affected by the market price of gold. Gold prices can fluctuate widely and are affected by numerous factors beyond the Company’s control. During 2020, 2019 and 2018 the Company produced 340,000, 527,000 and 515,000 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, the Company continues to evaluate the potential for mining sulfide gold and copper mineralization.

F-143

Notes to the consolidated financial statements (continued)

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) development of new reserves, the reserve balances reported for Conga in 2014 were reclassified to mineralized material in 2015.

The Conga project has been the target of local political and community protests, some of which blocked the road between the Yanacocha mine and Conga project complexes and the City of Cajamarca in Peru and resulted in vandalism and equipment damage. While recently roadblocks and protests have diminished and focused on local political activism and labor disputes, the Company cannot predict whether similar or more significant incidents will occur in the future. The recurrence of significant political or community opposition or protests could continue to adversely affect the Conga Project’s development, other new projects in the area and the continued operation of Yanacocha.

Construction activities on the Conga project were suspended in 2011, at the request of Peru’s central government following protests in Cajamarca by anti-mining activists led by the regional president. At the request of the Peruvian central government, the environmental impact assessment prepared in connection with the project was reviewed by independent experts in an effort to resolve allegations around the environmental viability of Conga. This review concluded that the environmental impact assessment complied with international standards and provided recommendations to improve water management. Based on the Company’s internal project portfolio evaluation process, the Company does not anticipate developing Conga in the next ten years. Due to the uncertainty surrounding the project’s development timeline, the Company have allocated our exploration and development capital to other projects in its portfolio. As a result, the Conga project is currently in care and maintenance and the Company continues to evaluate opportunities to sell or find alternative uses for equipment and assets originally acquired for the Conga project. Should the Company be unable to develop the Conga project or conclude that future development is not in the best interest of the business, the Company may consider sale of the project to a third-party or other alternative for the project, which may result in a future impairment charge.

The Central Government of Peru continued to support responsible mining as a vehicle for the growth and future development of Peru in 2020. However, the Company is unable to predict whether the Central government will continue to take similar positions in the future.

F-144

Notes to the consolidated financial statements (continued)

Previous regional governments of Cajamarca and other political parties actively opposed the Conga project in the past. The Company is unable to predict the positions that will be taken in the future and whether such positions or changes in law will affect new projects at Yanacocha or Conga. Such changes may include increased labor regulations, environmental and other regulatory requirements, and additional taxes and royalties, as well as future protests, community demands and road blockages. The Company cannot predict future positions of either the Central or regional government on foreign investment, mining concessions, land tenure or other regulation. Any change in government positions or laws on these issues could adversely affect the assets and operations of Yanacocha or Conga, which could have a material adverse effect on the Company‘s results of operations and financial position.

Should the Company be unable to develop the Conga project, the Company may have to consider other alternatives for the project, which may result in a future impairment charge. The total assets at Conga as of December 31, 2020 and 2019 were US$449.8 million and US$458.2 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 final feasibility stage, and the Company expects to begin with the development stage of the project in the second half of the year 2021.

(c) Approval of consolidated financial statements - 

The financial statements for the year ended December 31, 2020 were approved by Company’s Management on April 29, 2021 and the subsequent events have been considered through those dates.

The consolidated financial statements as of December 31, 2019 were approved by the Partners’ Meeting held on July 13, 2020.

(d) Covid 19 outbreak - 

Covid-19, an infectious disease caused by a new coronavirus, was declared a global pandemic by the World Health Organization on March 11, 2020. Measures to decrease the spread of Covid-19 have had a significant impact on the Global economy.

On March 15, 2020, the Peruvian Government declared a state of emergency at the national level, closing all businesses considered non-essential (the exceptions were the production and marketing of food, pharmaceutical products, financial services and health). Despite the fact that the state of emergency remained in force until October 31, 2020, the Peruvian Government has allowed the early restart of the economic activities of certain industries.

The Company has taken various measures to preserve the health of its employees and to prevent contagion in the administrative and operational areas of each subsidiary, such as remote work, reorganization of its facilities, rigorous cleaning of work environments, distribution of equipment personal protection, preventive tests before access to the mining unit and body temperature measurement.

Likewise, after the interruption of operations for 61 days, the Company resumed near normal operations as of the month of September 2020.

F-145

Notes to the consolidated financial statements (continued)

2. 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).

The consolidated financial statements have been prepared under the historical cost basis, except for 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.

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 the 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.

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.

F-146

Notes to the consolidated financial statements (continued)

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.

2.3. Changes in accounting policies and disclosures -

Below is a summary of the changes in accounting policies and disclosures applicable for the year 2020:

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 are not expected to have a significant impact on the Company’s consolidated financial statements.

Conceptual Framework for Financial Reporting issued on 29 March 2018 -

The Conceptual Framework is not a standard, and none of the concepts contained therein override the concepts or requirements in any standard. The purpose of the Conceptual Framework is to assist the IASB in developing standards, to help preparers develop consistent accounting policies where there is no applicable standard in place and to assist all parties to understand and interpret the standards. This will affect those entities which developed their accounting policies based on the Conceptual Framework. The revised Conceptual Framework includes some new concepts, updated definitions and recognition criteria for assets and liabilities and clarifies some important concepts.

F-147

Notes to the consolidated financial statements (continued)

Amendments to IFRS 16 Covid-19 Related Rent Concessions -

On 28 May 2020, the IASB issued Covid-19-Related Rent Concessions - amendment to IFRS 16 Leases. The amendments provide relief to lessees from applying IFRS 16 guidance on lease modification accounting for rent concessions arising as a direct consequence of the Covid-19 pandemic. As a practical expedient, a lessee may elect not to assess whether a Covid-19 related rent concession from a lessor is a lease modification. A lessee making this election record any change in lease payments that result from the Covid-19-related rental concession in the same way that it would recognize the change under IFRS 16, if the change were not a lease modification.

Several other amendments and interpretations were applied for the first time in 2020, but they did not have an impact on the Company’s consolidated financial statements and therefore have not been disclosed. The Company has not early adopted any standard, interpretation or amendment that has been issued but is not yet effective.

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 in foreign currency

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 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, 2020, the exchange rates for U.S. dollars published by this Institution were US$0.2764 for buying and US$0.3020 for selling (US$0.3020 for buying and US$0.3015 for selling as of December 31, 2019), and have been applied by the Company for the assets and liabilities accounts, respectively.

F-148

Notes to the consolidated financial statements (continued)

As of December 31, 2020 and 2019, the Company presents the following assets and liabilities originally denominated in Soles by its equivalent in U.S. dollars:

	2020			2019
	US$(000)			US$(000)
Assets
Cash and cash equivalents		6,242			5,140
Trade and other receivables		7,584			27,990
Value added tax credit		25,214			32,831
Total assets		39,040			65,961
Liabilities
Trade and other payables		48,200			13,085
Income tax payable		37,779			23,153
Provisions, other accruals and liabilities		25,774			29,633
Total liabilities		111,753			65,871
Net asset (liability) position		(72,713	)		90

For the year ended December 31, 2020, the Company recognized a net gain from currency exchange difference for US$1,180 (net gain for US$2,902 and loss for US$2,056 as of December 31, 2019 and 2018; respectively) in the 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, and subsequently measured at amortized cost, fair value through other comprehensive income (OCI), and 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 or for which the Company has applied the practical expedient, 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 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.

F-149

Notes to the consolidated financial statements (continued)

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 solely payments of principal and interest (SPPI) on the principal amount outstanding. This assessment is referred to as the 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 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 marketplace (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 financial assets at fair value through OCI with recycling of cumulative gains and losses and financial assets at fair value through profit or loss.

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.

F-150

Notes to the consolidated financial statements (continued)

Financial assets at fair value through OCI with 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, 2020 and 2019.

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.

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, 2020, the Company has nominal investments related to the San Jose Reservoir Trust as financial assets at fair value through profit or loss.

F-151

Notes to the consolidated financial statements (continued)

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 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:

- 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 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.

F-152

Notes to the consolidated financial statements (continued)

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.

(ii) Financial liabilities -

Initial recognition and measurement -

Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss, financial liabilities at amortized cost (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.

F-153

Notes to the consolidated financial statements (continued)

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.

Financial liabilities at amortized cost (Loans and borrowings, trade payables) -

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.

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.

F-154

Notes to the consolidated financial statements (continued)

(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.

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 14) and is excluded from cash and cash equivalents being included in other current assets or long-term assets depending on restrictions.

F-155

Notes to the consolidated financial statements (continued)

(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.

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.

F-156

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. 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.

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.

F-157

Notes to the consolidated financial statements (continued)

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. The 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 (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

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.

F-158

Notes to the consolidated financial statements (continued)

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.

F-159

Notes to the consolidated financial statements (continued)

(h) Mine development costs -

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.

F-160

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.

F-161

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 assets including computer 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.

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.

For the years ended December 31, 2020, 2019 and 2018, the amortization amount of intangible assets amounted to US$3 million, US$3 million and US$4.1 million, respectively.

F-162

Notes to the consolidated financial statements (continued)

(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 mine closure -

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 mine closure or “reclamation obligations” are recognized when incurred and recorded as liabilities at the best estimate of the expenditure required to settle the obligation.

F-163

Notes to the consolidated financial statements (continued)

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.

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.

F-164

Notes to the consolidated financial statements (continued)

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.

(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 recognized 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 recognized as revenue when the Company performs under the contract.

As of December 31, 2010 and 2019, 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.

F-165

Notes to the consolidated financial statements (continued)

(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 gold 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.

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 recognized. A trade receivable is recognized 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.

F-166

Notes to the consolidated financial statements (continued)

(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 Company considers whether there are other commitments in the contract that involve separate performance obligations to which a portion of the transaction price must be allocated. The performance obligation is the delivery of the concentrate at 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.

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.

Revenue is recognized at the amount the entity expects to be entitled. The price expected to be received at the end of the quotation period is generally set at the 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 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 -

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 comprehensive income.

F-167

Notes to the consolidated financial statements (continued)

As of December 31, 2020, 2019 and 2018 this caption mainly includes interest from short-term money market funds and interest from current bank accounts for an amount of US$8,100, US$18,430 and US$11,448, 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.

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. 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.

(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 18.

(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.

F-168

Notes to the consolidated financial statements (continued)

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.

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.

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 Company expects to reverse temporary differences.

Value added 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.

The net amount to be recovered, or payable, to the Tax authority is included as a sale receivable or payable in the consolidated statements of financial position.

F-169

Notes to the consolidated financial statements (continued)

Uncertainty over Income Tax Treatment –

The Company determines whether it considers each uncertain tax treatment separately or in conjunction with one or more other uncertain tax treatments based on the approach that best predicts the resolution of the uncertainty.

The Company perform judgments and estimates when there is uncertainty regarding the income tax treatments.

The Company considers that it has uncertain tax positions, particularly those related to the depreciation of fixed assets outside the scope of the feasibility study, sales commissions with unrelated companies and various computer services.

The Company determined, based on its tax compliance and transfer pricing study, that its tax treatments are likely to be accepted by the tax authorities.

(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.

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 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.

F-170

Notes to the consolidated financial statements (continued)

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.

(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.

F-171

Notes to the consolidated financial statements (continued)

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.

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 re-measured 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.

F-172

Notes to the consolidated financial statements (continued)

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 –

The Company reclassified Other accruals and liabilities for US$49 million in years 2019; respectively. Such items were presented together with Provision and they are now presented as a separate item “Other accruals and liabilities”. Also, the Company reclassified Provision for US$3.6 million, now it is presented in the item Trade and other payable.

	2019 As previously reported		Reclassifications			2019 Modified
	US$(000)		US$(000)			US$(000)
Consolidated Statements of financial position
Current liabilities
Trade and other payables		76,484		(3,678	)		72,806
Provision		90,940		(45,623	)		45,317
Other accruals and liabilities		-		49,301			49,301
Non-current liabilities
Provision		1,587,856		(305	)		1,587,551
Other accruals and liabilities		-		305			305

F-173

Notes to the consolidated financial statements (continued)

In addition, the Company reclassified Other accruals and liabilities for US$21 million and US$0.2 million in the statement of cash flows and also a reclassification to present in other line the income tax expense:

	2019 As previously reported			Reclassifications			2019 Modified
	US$(000)			US$(000)			US$(000)
Consolidated Statements of cash flows
Operating activities
Provisions		30,082			(20,031	)		10,051
Trade and other payables		(6,980	)		(1,251	)		(8,231	)
Other accruals and liabilities		-			21,282			21,282
Value added tax credit and other taxes		(3,003	)		(13,488	)		(16,491	)
Income tax collected (paid)		19,239			(19,239	)		-
Income tax payable		32,201			(32,201	)		-
Current income tax expense		-			64,928			64,928
Net cash and cash equivalents provided by operating activities		34,419			-			34,419

	2018 As previously reported			Reclassifications			2018 Modified
	US$(000)			US$(000)			US$(000)
Consolidated Statements of cash flows
Operating activities
Provision		(2,494	)		(123	)		(2,617	)
Trade and other payables		1,708			320			2,028
Other accruals and liabilities		-			(197	)		(197	)
Current income tax expense		-			29,297			29,297
Value added tax credit and other taxes		13,856			(6,240	)		7,616
Income tax payable		8,897			(8,897	)		-
Income tax collected (paid)		14,160			(14,160	)		-
Net cash and cash equivalents provided by operating activities		78,519			-			78,519

3. 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 -

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.

F-174

Notes to the consolidated financial statements (continued)

(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.

(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 -

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 (f) for useful lives.

F-175

Notes to the consolidated financial statements (continued)

(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.

(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 mine closure.

(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.

F-176

Notes to the consolidated financial statements (continued)

(c) Provision for mine closure -

The Company assesses its provision for mine closure 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.

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 or the reversal of impairment previously recorded (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.

F-177

Notes to the consolidated financial statements (continued)

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.

4. 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: Classification of Liabilities as Current or Non-current

In January 2020, the IASB issued amendments to paragraphs 69 to 76 of IAS 1 to specify the requirements for classifying liabilities as current or non-current. The amendments clarified:

- What is meant by a right to defer settlement.

- That a right to defer must exist at the end of the reporting period.

- That classification is unaffected by the likelihood that an entity will exercise its deferral right.

- That only if an embedded derivative in a convertible liability is itself an equity instrument would the terms of a liability not impact its classification.

The amendments are effective for annual reporting periods beginning on or after January 1, 2023 and must be applied retrospectively.

Property, Plant and Equipment: Proceeds before Intended Use – Amendments to IAS 16

In May 2020, the IASB issued Property, Plant and Equipment — Proceeds before Intended Use, which prohibits entities deducting from the cost of an item of property, plant and equipment, any proceeds from selling items produced while bringing that asset to the location and condition necessary for it to be capable of operating in the manner intended by management. Instead, an entity recognizes the proceeds from selling such items, and the costs of producing those items, in profit or loss.

The amendment is effective for annual reporting periods beginning on or after January 1, 2022 and must be applied retrospectively to items of property, plant and equipment made available for use on or after the beginning of the earliest period presented when the entity first applies the amendment.

Onerous Contracts – Costs of Fulfilling a Contract – Amendments to IAS 37:

In May 2020, the IASB issued amendments to IAS 37 to specify which costs an entity needs to include when assessing whether a contract is onerous or loss-making.

F-178

Notes to the consolidated financial statements (continued)

The amendments apply a “directly related cost approach”. The costs that relate directly to a contract to provide goods or services include both incremental costs and an allocation of costs directly related to contract activities. General and administrative costs do not relate directly to a contract and are excluded unless they are explicitly chargeable to the counterparty under the contract.

The amendments are effective for annual reporting periods beginning on or after January 1, 2022. The Group will apply these amendments to contracts for which it has not yet fulfilled all its obligations at the beginning of the annual reporting period in which it first applies the amendments.

IFRS 9 Financial Instruments: ’10 percent ’test fee for derecognition of financial liabilities:

As part of its 2018-2020 annual improvement process to IFRS, the IASB issued an amendment to IFRS 9. The amendment clarifies the fees that an entity includes when assessing whether the terms of a new or modified financial liability are substantially different. of the terms of the original financial liability. These fees include only those paid or received between the borrower and the lender, including fees paid or received by the borrower or lender on behalf of the other. An entity applies the amendment to financial liabilities that are amended or exchanged on or after the beginning of the annual reporting period in which the entity first applies the amendment.

The amendment is effective for annual reporting periods beginning on or after January 1, 2022 and early adoption is permitted. The Group will apply the modifications to financial liabilities that are modified or exchanged on or after the beginning of the annual reporting period in which the Company applies the modification for the first time.

The management has evaluated the impact and expects that these modifications will not have a significant impact on the Company’s consolidated financial statements.

5. Cash and cash equivalents

(a) This caption is made up as follows:

	2020		2019
	US$(000)		US$(000)
Petty cash		22		22
Bank accounts		51,279		56,822
Term deposits (b)		819,628		761,659
		870,929		818,503

F-179

Notes to the consolidated financial statements (continued)

(b) The term deposit balance is made up as follows:

	2020		2019
	US$(000)		US$(000)
JP Morgan		404,319		501,916
Citibank		215,073		214,282
Santander		50,114		–
BNP Paribas		50,080		45,461
Standard Chartered		50,031		–
MUFG Bank		50,011		–
		819,628		761,659

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.

6. Trade and other receivables, net

(a) This caption is made up as follows:

	2020			2019
	US$(000)			US$(000)
Trade receivables, net
Foreign clients (subject to provisional pricing)		16,919			683
Other receivables
Credit of tax on net assets		21,676			23,648
Advances to suppliers		7,095			9,872
Related entities, note 24(c)		2,300			598
Tax claims		386			3,946
Other		2,728			5,247
		34,185			43,311
Allowance for expected credit losses (b)		(1,384	)		(1,384	)
		32,801			41,927
Total trade and other receivables, net		49,720			42,610
By maturity:
Current		28,044			18,962
Non-current		21,676			23,648
Total		49,720			42,610

F-180

Notes to the consolidated financial statements (continued)

Classification by nature:
	2020		2019
	US$(000)		US$(000)
Financial receivables		27,658		15,016
Non-financial receivables		22,062		27,594
		49,720		42,610

The trade receivables are related to concentrate sold (copper and silver by-products). At December 31, 2020 and 2019 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.

(b) The allowance for expected credit losses had the following movement during the years 2020, 2019 and 2018:

	2020		2019		2018
	US$(000)		US$(000)		US$(000)
Opening balance		1,384		1,384		1,384
Additions/Deductions		–		–		–
Ending balance		1,384		1,384		1,384

7. Inventories, net

(a) This caption is made up as follows:

	2020			2019
	US$(000)			US$(000)
Precious metals		12,559			8,021
Leach in-circuit		3,117			5,158
Mill in-circuit		2,093			1,332
Materials and supplies		41,123			45,832
		58,892			60,343
Allowance for obsolescence of materials and supplies (b)		(6,595	)		(6,098	)
		52,297			54,245

F-181

Notes to the consolidated financial statements (continued)

(b) The allowance for obsolescence of material and supplies had the following movement during the years 2020, 2019 and 2018:

	2020			2019			2019
	US$(000)			US$(000)			US$(000)
Opening balance		6,098			7,515			7,076
Provision for impairment of materials and supplies		1,459			1,898			1,887
Reversal of provision for impairment of materials and supplies		(962	)		(3,315	)		(1,448	)
Ending balance		6,595			6,098			7,515

Reversals of impaired materials are due to disposals of impaired materials that offset the accumulative provision in each period.

8. Stockpiles and ore on leach pads, net

(a) This caption is made up as follows:

	2020			2019
	US$(000)			US$(000)
Current portion -
Stockpiles		7,363			23,769
Ore on leach pads		124,364			139,991
Net realizable value adjustment (b)		(10,212	)		(28,837	)
		121,515			134,923
Non-current portion -
Stockpiles		33,088			35,888
Ore on leach pads		39,674			88,223
Net realizable value adjustment (b)		(3,075	)		(19,088	)
		69,687			105,023

(b) The provision for net realizable value adjustment had the following movement during the years 2020, 2019 and 2018:

	2020			2019			2018
	US$(000)			US$(000)			US$(000)
Opening balance, note 18		47,925			89,127			62,540
Provision		37,880			33,464			90,365
Reversal of provision		(72,518	)		(74,666	)		(63,778	)
Ending balance, note 18		13,287			47,925			89,127

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.

F-182

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, 2020 and 2019, the assets in the trust amount to US$25,168 and US$24,417, respectively and are represented by financial instruments at fair value. 

During the years ended December 31, 2020, 2019 and 2018, an increase in fair value of the debt instruments was recognized in other comprehensive income for the amount of US$123, and an increase of US$1,246 and a decrease US$91 during 2019 and 2018, respectively. During the years ended December 31, 2020 and 2019 the change in fair value of the investments in marketable stocks for US$(207) and US$821, respectively, were recognized as Finance income and Finance costs in the consolidated statements of comprehensive income.

F-183

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 deductions			Transfer/Other changes			Final balances
	US$(000)		US$(000)		US$(000)			US$(000)			US$(000)
Year 2020
Cost-
Land		17,053		-		-			269			17,322
Land improvements		28,982		-		-			-			28,982
Building and constructions		271,554		-		-			4,510			276,064
Machinery and equipment		216,872		-		(20,844	)		14,187			210,215
Leach pads		1,817,226		-		-			12,253			1,829,479
Vehicles		9,402		-		(98	)		951			10,255
Furniture and fixtures		2,556		-		-			-			2,556
Other equipment		59,262		-		-			2,232			61,494
Work in progress		436,699		143,489		-			(69,829	)		510,359
Mining rights		37,521		-		-			-			37,521
Right of use asset		1,045		-		-			-			1,045
Asset retirement and mine closure		693,365		-		(4,125	)		-			689,240
Stripping activity asset		151,494		-		-			35,045			186,539
Mine development		824,156		-		-			-			824,156
		4,567,187		143,489		(25,067	)		(382	)		4,685,227

Accumulated depreciation and amortization
Land improvements	28,315	80	-		-	28,395
Building and constructions	226,129	6,981	-		-	233,110
Machinery and equipment	184,030	18,029	(20,385	)	-	181,674
Leach pads	1,694,288	40,197	-		-	1,734,485
Vehicles	8,828	49	(98	)	-	8,779
Furniture and fixtures	2,560	4	-		-	2,564
Other equipment	54,132	2,291	-		-	56,423
Mining rights	29,457	-	-		-	29,457
Right of use asset	461	268	-		-	729
Asset retirement and mine closure	478,826	61,882	-		-	540,708
Stripping activity asset	147,725	1,769	-		-	149,494
Mine development	674,142	5,688	-		-	679,830
	3,528,893	137,238	(20,483	)	-	3,645,648
Net cost	1,038,294					1,039,579

F-184

Notes to the consolidated financial statements (continued)

	Opening balance		Additions		Sales and deductions			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

Additions to work in progress is primarily related to development of the Sulfides Project in 2020 and development of the Quecher Main project in 2019. As of December 31, 2020, the Company does not have material commitments related to these projects.

The depreciation and amortization expense for the year ended December 31, 2020 and 2019 was recorded in the “Cost applicable to sales” caption in the consolidated statement of comprehensive income.

F-185

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 2018, the Company performed a formal evaluation of its cash generating units and concluded that there were no impairment indicators to such date.

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 determined 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 December 2020, the Company performed a formal evaluation of its cash generating units and concluded that there are indicators of reversal of impairment of its Yanacocha CGU and impairment indicators in its Conga CGU, therefore it determined the recoverable value of both CGUs. As a result of this analysis the Company concluded that no reversals of impairment loss on either of its’ CGU as the recoverable amount was slightly higher to the carrying amount of the CGU’s assets; however, due to de sensitive of the cash flows to the discount rate, long term prices and the term of the cash flows, the Management has concluded that there is not appropriate recognized a reversal for the CGUs.

In assessing whether impairment or reversal of impairment was required, the carrying value of the asset or CGU was compared with its recoverable amount. The recoverable amount is the higher of (i) the CGU’s fair value less costs of disposal (FVLCD) and (ii) 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, business plan and CGU-specific studies.

Key assumptions used for the impairment testing as of December 31, 2020:

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

- Production volumes.

- Commodity prices.

- Discount rate.

- Cost/operating income

F-186

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)		1,876		1,500
Copper (per pound)		3.1		3.0

Discount rate: In calculating the value in use, a pre-tax discount rate in a range of 8. 9% to 9.4% was applied to the Yanacocha pre-tax cash flows, as for the Conga pre-tax cash flows a discount rate in a range of 9.38% to 10.36%. 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.

Cost/operating income

For Yanacocha’s CGU, costs are determined based on the Company’s cost structure and the mining plan for the following years and based on the approved prefeasibility model of Sulfides project. For Conga the cost are determined according to the prefeasibility model.

F-187

Notes to the consolidated financial statements (continued)

Sensitive Analysis

When determining the value-in-use of the CGUs’ Yanacocha and Conga, management estimated a pre-tax discount rate between 8.9%-9.4%, and 9.4%-10.4%, respectively. WACC is a key assumption in the determination of the recoverable amounts, and changes in WACC would impact the recoverable amounts as follows:

Yanacocha (in millions of US Dollars)

WACC	8.9%	9.4%
-0.5%	125	54.5
+0.5%	(14)	(77)

Conga (in millions of US Dollars)

WACC	9.4%	10.4%
-0.5%	132	(30)
+0.5%	(33)	(158)

11. Trade and other payables

(a) This caption is made up as follows:

	2020		2019
	US$(000)		US$(000)
Trade payables (b)
Domestic suppliers		44,977		45,671
Related entities, note 24(c)		12,374		11,426
		57,351		57,097
Other payables
Remuneration and similar benefits payable		4,649		7,818
Other taxes payable		4,097		5,195
Royalties payable to the Peruvian State		2,548		2,696
		11,294		15,709
		68,645		72,806

(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:

	2020		2019
	US$(000)		US$(000)
Provisions
Provision for mine closure and exploration projects (b)		1,738,428		1,608,380
Provision of social responsibility (c)		16,609		18,326
Other provisions		7,352		6,162
		1,762,389		1,632,868

F-188

Notes to the consolidated financial statements (continued)

	2020		2019
	US$(000)		US$(000)
Classification by maturity:
Current portion		101,786		45,317
Non-current portion		1,660,603		1,587,551
		1,762,389		1,632,868

(b) Provision for mine closure 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 mine closure 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 mine closure for 2020, 2019 and 2018 is broken down as follows:

	2020			2019			2018
	US$(000)			US$(000)			US$(000)
Opening balance		1,608,380			1,294,464			1,234,731
Additional provisions		120,655			301,096			43,560
Payments		(22,656	)		(23,889	)		(19,842	)
Unwinding of discount, note 22		32,049			36,709			36,015
Ending balance		1,738,428			1,608,380			1,294,464
Classification by maturity
Current portion		92,706			39,156			19,325
Non-current portion		1,645,722			1,569,224			1,275,139
		1,738,428			1,608,380			1,294,464

The provision for mine closure and exploration projects represents the present value of the closure costs that are expected to be incurred between the years 2020 and 2070.

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.

F-189

Notes to the consolidated financial statements (continued)

During the years ended December 31, 2020, 2019 and 2018, the Company recorded an increase to the reclamation liability of US$121 million, US$301 million and US$44 million, respectively. The update to the reclamation obligation resulted in an decrease to the recorded asset retirement cost asset of (US$4) million (US$159 million and US$27.2 million in 2019 and 2018, 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, 2020 of US$124 million (US$142 million and US$16.3 million as December 31, 2019 and 2018, respectively) related to the areas of Carachugo, Yanacocha, Maqui Maqui and Cerro Negro operations no longer in production (see note 18). The increase of the 2020 reclamation obligation is mainly due to higher water treatment costs, whereas in 2019 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, 2020, 2019 and 2018 were between 0.4% and 6.0%.

(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 2020, 2019 and 2018 is broken down as follows:

	2020			2019			2018
	US$(000)			US$(000)			US$(000)
Opening balance		18,326			18,010			21,689
Additional provisions		-			888			-
Payments		(6	)		(572	)		(3,679	)
Corrections		(1,711	)		-			-
Ending balance		16,609			18,326			18,010
Classification by maturity
Current portion		1,728			761			8,351
Non-current portion		14,881			17,565			9,659
		16,609			18,326			18,010

13. Other accruals and liabilities

(a) This caption is made up as follows:

	2020		2019
	US$(000)		US$(000)
Accrual of capital expenditure		20,147		8,139
Workers’ profit sharing payable (b)		17,311		12,793
Interests payable, see note 23		16,840		16,840
Accrual of operating costs (c)		15,938		11,238
Lease liabilities		330		596
		70,566		49,606
Classification by maturity:
Current portion		70,526		49,301
Non-current portion		40		305
		70,566		49,606

F-190

Notes to the consolidated financial statements (continued)

(b) 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.

(c) 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.

F-191

Notes to the consolidated financial statements (continued)

14. 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, 2020 and December 31, 2019, the Company holds US$48,752 and US$48,617, 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, 2020 and December 31, 2019 amounts to US$45,423 and US$43,927, respectively. For the years ended December 31, 2020, 2019 and 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, US$1,497 and US$1,497, respectively, see note 22.

15. Partners’ equity

(a) Partners’ contributions -

As of December 31, 2020 and December 31, 2019, 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 14.

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.

F-192

Notes to the consolidated financial statements (continued)

(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 -

During the years 2020, 2019 and 2018, no dividend distribution was made.

16. Tax Situation

(a) Current tax regime -

The Company and its subsidiary are subject to the Peruvian tax regime. The main tax regulations issued in recent years were the following:

- On March 31, 2020, Superintendence Resolution 066-2020/SUNAT was published in which new default monthly interest rates were established effective April 1, 2020. The default interest rate in national currency changes from 1.2% to 1% and in the case of foreign currency it changes from 0.6% to 0.5%. Likewise, interest rates for the return of undue or excess payments in national currency (soles) change from 0.50% to 0.42% and in the case of foreign currency (US Dollars) change from 0.30% to 0.25%. Finally, the interest rate on returns due to withholding and/or non-applied perceptions of VAT changes from 1.2% to 1%.

- Peru’s Executive Power issued Supreme Decree 086-2020-EF on April 21, 2020, modifying the requirements for deducting “wasted goods” for income tax purposes. The Company compliance the requirements of the law about destructions for year 2020.

- On May 10, 2020, Peru’s Executive Power enacted Legislative Decree 1488, establishing special depreciation rules. This measure responds to the COVID-19 crisis. Legislative Decree 1488 is effective January 1, 2021.

F-193

Notes to the consolidated financial statements (continued)

In Law 31107, published in the Official Gazette on 31 December 2020, the Peruvian Government permits taxpayers to elect to apply the 20% depreciation rate (rather than the 5% rate) under the special depreciation regime for buildings and construction. Under prior law (Legislative Decree 1488), the 20% rate automatically applied if the following requirements were met: (i) the construction began January 1, 2020 and (ii) 80% or more of the work was completed by December 31, 2020. Once made on the annual tax return, the election to apply the 20% rate is irrevocable.

In addition, for data processing equipment, machinery and equipment and ground transport vehicles acquired in 2020 and 2021, the law has stated that

i. For data processing equipment (Slot machines excluded) a maximum tax depreciation rate of 50%.

ii. Machinery and equipment (mining equipment not included) a maximum tax depreciation rate of 20%.

iii. In the case of vehicles used by companies authorized to provide the service of transport of persons and/or goods, ground transport vehicles (except railways) which have a technology of higher environmental requirement than that provided for vehicles with EURO IV, Tier II and EPA 2007 technology are included in the new regimen a maximum tax depreciation rate of 33.3%.

iv. Ground transport vehicles (except railways) of natural gas are included in the new regimen a maximum tax depreciation rate of 50%.

This law takes effect from January 1, 2021. This changed law will be applied to Company.

- 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 agreement with a term of 15 years:

Mine	Effective	Date of the Tax Agreement	Tax Regimes in Force
La Quinua	January 1, 2004	August 25, 2003	August 25, 2003

F-194

Notes to the consolidated financial statements (continued)

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, which expired on January 1, 2019.

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.

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%.

(c) Years open to tax review -

As general rule , 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.

However,  in year 2020 the prescription period was suspended due to the declaration of the state of emergency and social isolation (quarantine), this issue was confirmed by the Tax Authority in reports No. 031-2020 and No. 039.2020, considering this tax return of fiscal year 2015 is still be open for examination until March 2021.  In that regard, the tax returns of the years 2015 to 2020 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. 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 2020, 2019, and 2018, the amounts included in cost of production related to mining royalties were US$6,167 US$7,360 and US$1,273, respectively. During 2020 and 2019, the amount included in mining tax expense related to mining royalties were US$55 and US$1,563 and during 2018 there was no amount 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.

F-195

Notes to the consolidated financial statements (continued)

The rate varies depending on the level of operating profit. During the years ended December 31, 2020, 2019 and 2018 the amounts included in income and mining tax expense were US$5,065, US$9,702 and US$592, 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. 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. Due to that the tax stabilization agreement expired on January 1, 2019, Special Mining Burden was not declared in 2019 and 2020.

(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, 2020, 2019 and 2018 the amounts included in Income and mining tax expense amounted to US$868, US$728 and US$39, respectively.

F-196

Notes to the consolidated financial statements (continued)

(f) Peruvian income tax -

The Company's income tax provision consisted of the following:

	2020			2019			2018
	US$(000)			US$(000)			US$(000)
Current Peruvian income tax		51,197			42,978			12,701
Royalties and mining taxes		5,065			11,444			8,888
Income tax from prior years (refunds)/payments		(1,712	)		8,459			8,269
Other taxes		1,363			993			510
Income tax prior years refunds (*)		(2,895	)		(3,002	)		-
Fines from previous years		-			4,056			-
Current income tax expense		53,018			64,928			30,368
Deferred income tax benefit		-			-			(1,071	)
Income tax expense		53,018			64,928			29,297

(*) Tax refunds were obtained through tax courts resolutions regarding to outstanding tax claims of the income tax payments performed on year 2008 recognized in 2020 and performed on year 2004 recognized in 2019.

(g) Deferred income tax asset -

As of December 31, 2020 and 2019, 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. The Company has temporary differences that make up a deferred income tax asset for US$1.1 billion, this deferred income tax asset has not been recognized as management believes that there are no probable sufficient taxable profit in future periods nor evidence of tax planning opportunities to support the recognition of this temporary differences as income tax assets.

The Company has temporary differences that make up a deferred income tax asset for US$1.1 billion, this deferred income tax asset has not been recognized as management believes that there are no probable sufficient taxable profit in future periods nor evidence of tax planning opportunities to support the recognition of this temporary differences as income tax assets.

F-197

Notes to the consolidated financial statements (continued)

(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 2020, 2019 and 2018:

	2020			2019			2018
	US$(000)			US$(000)			US$(000)
Loss before income tax		(112,431	)		(30,329	)		(52,220	)
Peruvian statutory tax rate		29.5	%		29.5	%		29.5	%
Income tax income		(33,167	)		(8,947	)		(15,405	)
Valuation allowance on deferred tax asset		57,131			46,473			23,771
Effect of change in translation to US dollars		23,075			(4,217	)		-
Royalties and Mining taxes		5,065			11,444			8,888
Credit of Royalties  and Mining taxes		(1,494	)		(3,376	)		(2,622	)
Non-deductible expenses		7,015			13,837			6,572
Ruling on a tax case from 2007-2009		(2,895	)		-			-
Income tax prior years (refunds) / payments		(1,712	)		8,459			8,269
Difference in income tax rate applicable to La Quinua at 29%		-			-			(176	)
Ruling on a tax case from 2004		-			(2,801	)		-
Fines from prior years, note 24		-			4,056			-
Total income tax expense		53,018			64,928			29,297

(j) As of December 31, 2020, the Company determined a current income tax payable of US$39,604 (Income tax payable of US$20,276 as December 31, 2019) and mining taxes payable for US$2,425 (US$2,877 as December 31, 2019). The current income tax payable of year 2020 includes the current income tax offset by the credits of the period. No contingencies were recognized in 2020.

17. Revenue from contracts with customers

(a) The Company’s revenues are mainly from sales of gold ounces. The table below presents the sales to customers by geographic region:

	2020		2019		2018
	US$(000)		US$(000)		US$(000)
Sales and services by geographic region:
Metal sales
Europe (Switzerland)		590,002		734,526		518,664
America		1,135		-		139,989
Singapore		1,257		-		-
		592,394		734,526		658,653

(b) Other operating revenue is made up as follows:

	2020		2019		2018
	US$(000)		US$(000)		US$(000)
Copper and silver in concentrate		27,765		4,098		20,442
Others		3		678		1,523
		27,768		4,776		21,965

F-198

Notes to the consolidated financial statements (continued)

For the year ended December 31, 2020, 2019 and 2018, the amount of the subsequent changes in fair value of the trade receivable were US$583, US$176 and US$15, respectively and are presented as part of the caption “Copper and silver in concentrate”.

(c) Concentration of sales -

In 2020, the 100% of Dore sales were performed to Royal Bank of Canada consigned to Argor Hereaus (Switzerland), the 100% of concentrate sales performed to Ocean Partners, and, during the last quarter of 2020, carbon fines sales to Trafigura. As of December 31, 2019, 100% of sales was performed to Royal Bank of Canada consigned to Argor Hereaus (Switzerland) and no copper concentrate sales performed during the period.

The Company’s sales of gold and silver and copper 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.

F-199

Notes to the consolidated financial statements (continued)

18. Costs applicable to sales

(a) This caption is made up as follows:

	2020			2019			2018
	US$(000)			US$(000)			US$(000)
Beginning balance of finished goods and in-process		302,382			341,213			345,489
Beginning balance of provision for net realizable value, note 8(b)		(47,925	)		(89,127	)		(62,540	)
Royalties to related parties, note 1(a) and note 24		18,638			22,297			20,385
Mining royalties to the government		7,570			9,255			2,875
Consumption of supplies		138,041			200,036			215,863
Personnel expenses		61,298			72,325			82,645
Other services		31,864			41,120			43,671
Maintenance		17,415			26,645			22,585
Power		20,241			23,619			24,203
Depreciation and amortization, note 2.4(k) and note 10		140,252			144,862			156,212
Workers' profit sharing		17,199			12,804			3,837
Incremental costs related to COVID-19 pandemic and care and maintenance (c)		43,672			-			-
Provision for mine closure, note 12(b)		124,780			142,129			16,285
Ending balance of provision for net realizable value, note 8(b)		13,287			47,925			89,127
Ending balance of finished goods and in-process		(222,258	)		(302,382	)		(341,213	)
		666,456			692,721			619,424

(b) For the years ended December 31, 2020, 2019 and 2018, the cost of inventories recognized in cost of sales was US$299,955, US$326,790 and US$327,459, respectively.

(c) The Company recognized charges totaling US$43.7 million for the year ended December 31, 2020, associated with the COVID-19 pandemic and revised operating plans. These charges, none of which were capitalized into inventory, are made up as follows

	For the year ended to December 31, 2020
	US$(000)
Incremental costs (i)		27,157
Personnel expenses (i)		11,446
Labor expenses (ii)		5,069
		43,672

(i) Represents incremental costs associated with care and maintenance status as part of Peru’s declaration of a National Emergency as a result of the COVID-19 outbreak, which restricted the Company’s operations. The costs primarily include labor costs (US$14.3 million), services (US$9.5 million) and other costs (US$3.3 million).

F-200

Notes to the consolidated financial statements (continued)

(ii) Expenses associated to the implementation of the Surveillance, Prevention and Control Plan as part of gradual resumption of operations. Refer to Note 1(c) for additional information.

(iii) Represents mainly payroll premiums distributed to employees.

19. Operating expenses, net

This caption is made up as follows:

	2020			2019			2018
	US$(000)			US$(000)			US$(000)
Exploration and advanced projects		19,279			33,669			62,643
Severance program		4,454			2,210			8,678
Social responsibility commitments		6,730			250			-
Write-off of fixed assets		460			1,204			-
Cost of sales from the sale of fixed assets		30			2,092			5,445
Tax fine		11			2,019			3,954
Revenue from sale of fixed assets		(40	)		(8,088	)		(4,821	)
Others, net		3,398			2,631			256
		34,322			35,987			76,155

20. Administrative expenses

This caption is made up as follows: 

	2020		2019		2018
	US$(000)		US$(000)		US$(000)
Management expenses, note 24		874		1,341		1,317
Other		353		403		1,466
		1,227		1,744		2,783

F-201

Notes to the consolidated financial statements (continued)

21. Selling expenses

This caption is made up as follows: 

	2020		2019		2018
	US$(000)		US$(000)		US$(000)
Selling expenses		1,412		1,719		1,551
Other		510		3		1,076
		1,922		1,722		2,627

22. Finance costs

This caption is made up as follows: 

	2020		2019		2018
	US$(000)		US$(000)		US$(000)
Unwinding of the discount of the provision for mining closure, note 12(b)		32,049		36,709		36,015
Commissions of guarantee letters		3,153		2,485		2,113
Unwinding of debt instruments, note 14		1,497		1,497		735
Interests on tax contingency and others, see note 23		–		16,938		161
		36,699		57,629		39,024

23. 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 usufruct 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.

F-202

Notes to the consolidated financial statements (continued)

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.

Environmental -

The Peruvian Agency in charge of conducting environmental evaluations and audits is the OEFA, the Environmental Assessment and Enforcement Agency, this institution conducts periodic supervision of the Yanacocha mine. From 2011 to 2020, the OEFA issued notifications of alleged breaches of Yanacocha's environmental standards and environmental management instruments, related to past supervisions. OEFA has resolved identified findings that do not translate into environmental deterioration as a result of some bad practice in the Yanacocha operation. The experience with OEFA, in the case of finding administrative responsibility to Yanacocha, results in a corrective action, in addition to imposing a fine that is calculated by the avoided cost capitalized on the date of issuance of the directorial resolution, multiplied by potential factors of environmental impact. The presumed offenses identified by the OEFA currently range from zero to 33,676 units (UIT), each tax unit being equivalent to approximately US$1,194 based on the current exchange rate with a potential fine for matters pending resolution from (US$0 to US$40,209). Yanacocha is responding to all notifications of alleged violations, but cannot reasonably predict the outcome of the agency's allegations.

The Company has not established a provision in the accompanying consolidated financial statements for a loss arising from this contingency, which it does not consider probable.

F-203

Notes to the consolidated financial statements (continued)

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 2016 through 2019 are open to examination by the tax authorities. However, due to the fact that SUNAT could not carry out its inspection tasks during the quarantine period, the calculation of the statute of limitations was suspended for the 2015 period; In this sense, the prescription for this period (2015) would expire the last week of March 2021, approximately. For value added tax, the periods open for examination are December 2016 through 2020. Regarding the referred quarantine period, the calculation of the statute of limitations related to the value added tax also was suspended for December 2015 to November 2016; In this sense, the prescription for those periods would expire the last week of March 2021, approximately. To date, National Tax Supervisor “SUNAT” has concluded its review of the Company’s tax exams through the year 2013. Fiscal year 2014 is under review by the tax authority (SUNAT). For years 2002 -2003, 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.

F-204

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. As a result of the decision, the amount of US$29 was recognized as of December 31, 2019 (see note 16(f) and note 22) , but Yanacocha filed two actions objecting to potential excessive interest and duplicity of criteria of up to US$60 and US$81, respectively. 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.

	2020		2019		2018
	US$(000)		US$(000)		US$(000)
Scotiabank		259,027		253,317		235,000
Pacífico Zurich		200,000		200,000		-
La Positiva		70,000		70,000		-
Rimac (Travelers)		60,000		60,000		-
Santander		25,000		-		-
MUFG Bank		25,000		-		-
Banco de Credito del Peru (a)		-		-		114,251
BBVA Continental		-		-		190,000
		639,027		583,317		539,251

(a) Letters of guarantee of Banco de Credito del Peru include US$6,321 related to San Jose Reservoir Trust in 2017. In 2020 and 2019 letters of guarantee were not required.

Letters of guarantee shall come into force if the Company fails to execute in whole or in part the mine closure plan.

F-205

Notes to the consolidated financial statements (continued)

24. Transactions with related parties 

(a) The main transactions carried out by the Company with its related parties in the years 2020, 2019 and 2018 were:

	2020		2019		2018
	US$(000)		US$(000)		US$(000)
Royalties accrued:
Affiliates:
S.M.R.L. Chaupiloma Dos de Cajamarca, note 18 and 1(a)		18,638		22,297		20,385
Services rendered by:
Affiliates:
Newmont Peru S.R.L. (management services) (b)		9,017		10,729		12,837
Newmont International Services		5,264		10,822		5,181
Newmont USA Limited		10,214		4,118		5,381

(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:

	2020			2019
	US$(000)			US$(000)
Balance receivable from related parties, note 6
Newmont International Services Limited		1,431			168
Newmont USA Limited		435			144
Oroplata S.A.		254			-
Suriname Gold Company		-			135
NVL, USA Limited, Delaware		156			102
Newmont Peru S.R.L.		22			26
Newmont Global Employment Limited		5			20
Others		(3	)		3
		2,300			598
Balance payable for related parties, note 11
S.M.R Chaupiloma Dos de Cajamarca		4,596			4,863
Newmont International Service Limited		4,227			3,297
Newmont Peru S.R.L.		1,033			1,101
Newmont Technologies Limited.		142			1,042
Newmont USA Limited.		2,366			1,034
Newmont US Carlin Limited		-			3
Others		10			86
		12,374			11,426

AII the balances above are of current maturity, have no specific guarantees and are not interest bearing.

For the years ended December 31, 2020, 2019 and 2018, there is no allowance for expected credit losses related to related parties accounts.

F-206

Notes to the consolidated financial statements (continued)

25. 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 gold dore) 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.

F-207

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, 2020
Trade receivables		-			21,274			2,797			4,971			29,042
Expected credit loss rate		-	%		-	%		-	%		27.84	%		4.77	%
Expected credit loss		-			-			-			(1,384	)		(1,384	)
Total		-			21,274			2,797			3,587			27,658
As of December 31, 2019
Trade receivables		-			5,047			7,976			3,377			16,400
Expected credit loss rate		-	%		-	%		-	%		40.98	%		8.44	%
Expected credit loss		-			-			-			(1,384	)		(1,384	)
Total		-			5,047			7,976			1,993			15,016

(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.

F-208

Notes to the consolidated financial statements (continued)

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):

	2020
	Less than 1 year		Between 1 to 2 years		Between 2 to 5 years		Total
	US$(000)		US$(000)		US$(000)		US$(000)
Trade accounts payable – domestic suppliers		44,977		-		-		44,977
Debt instruments		-		-		45,423		45,423
Trade accounts payable - Related parties		12,374		-		-		12,374
Leases liabilities		290		40		-		330
		57,641		40		45,423		103,104

	2019
	Less than 1 year		Between 1 to 2 years		Between 2 to 5 years		Total
	US$(000)		US$(000)		US$(000)		US$(000)
Trade accounts payable – domestic suppliers		45,671		-		-		45,671
Debt instruments		-		-		43,927		43,927
Trade accounts payable - Related parties		11,426		-		-		11,426
Leases liabilities		291		305		-		596
		57,388		305		43,927		101,620

(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.

F-209

Notes to the consolidated financial statements (continued)

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. The financial position of the Company is as follows:

	2020			2019
	US$(000)			US$(000)
Debt and accounts payables		226,333			188,896
Leasing		330			596
Less cash and short-term deposits		(870,929	)		(818,503	)
Net debt		(644,266	)		(629,011	)
Total liquidity		870,929			818,503

(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 model uses valuation techniques to determine the WACC. 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.

F-210

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
	2020		2019		2020		2019
	US$(000)		US$(000)		US$(000)		US$(000)
Financial assets:
Trade and other receivables, net		27,658		15,016		27,658		15,016
Restricted cash		48,752		48,617		49,042		50,353
Financial assets at fair value		21,676		23,648		21,676		23,648
		98,086		87,281		98,376		89,017

	Carrying amount				Fair value
	2020		2019		2020		2019
	US$(000)		US$(000)		US$(000)		US$(000)
Financial liabilities:
Debt instrument		45,423		43,927		47,479		45,633
		45,423		43,927		47,479		45,633

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.

26. Summary of significant differences between accounting principles followed by the Company and U.S. Generally Accepted Accounting Principles (U.S. GAAP)

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 27 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 (i) the fair value less costs of disposal and (ii) 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.

F-211

Notes to the consolidated financial statements (continued)

Under IFRS, the Company recorded in 2013 and 2016 an impairment loss related to its Conga and Yanacocha CGU for US$1,126,543 and US$1,342,645, respectively. In 2020, 2019, and 2018, the Company did not recognize any impairment losses.

Under U.S. GAAP, the Company used undiscounted cash flows to perform an impairment evaluation. In December 2020, the Company performed a formal evaluation of its cash generating units and concluded that there are indicators of reversal of impairment of its Yanacocha CGU and impairment indicators in its Conga CGU, therefore it determined the recoverable value of both CGUs. As a result of this analysis the Company concluded that no reversals of impairment loss on either of its’ CGU as the recoverable amount was slightly higher to the carrying amount of the CGU’s assets; however, due to de sensitive of the cash flows to the discount rate, long term prices and the term of the cash flows, the Management has concluded that there is not appropriate recognized a reversal for the CGUs. In 2019 and 2018, 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$933,200.

For reconciling the net income/loss and net equity from U.S. GAAP to IFRS, the Company eliminates the higher depreciation recorded under U.S. 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(l).

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 U.S. 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 U.S. 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.

F-212

Notes to the consolidated financial statements (continued)

Under U.S. GAAP, the cost of inventory is affected by a different depreciation since the impairment recognized under U.S. GAAP is different than the one recognized under IFRS. According to U.S. 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.

For the purposes of IAS 37, “probable” is defined as more likely than not and refers to a probability of greater than 50%.

Under U.S. 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 U.S. GAAP, 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, under IFRS 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 23.

Under U.S. GAAP, 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 litigation 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 U.S. 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 based on its recoverability analysis, there is no differences to reconcile.

F-213

Notes to the consolidated financial statements (continued)

(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 U.S. 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.

As the Company does not recognize deferred workers’ profit sharing assets based on its recoverability analysis in U.S. GAAP, there is no differences to reconcile.

27. 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, 2020, 2019 and 2018, and to partners' equity as of December 31, 2020, 2019 and 2018 that would be required if U.S. GAAP had been applied instead of IFRS in the consolidated financial statements:

	2020			2019			2018
	US$(000)			US$(000)			US$(000)
Loss for the year under IFRS		(165,449	)		(95,257	)		(81,517	)
Items increasing (decreasing) reported net profit:
Reversal of depreciation of assets impaired under IFRS, note 24(a)		(97,352	)		(205,653	)		(320,424	)
Reversal of depreciation of assets impaired under U.S. GAAP, note 24(a)		104,108			204,276			254,006
Stripping activity asset, note 24(b)		(32,169	)		7,533			18,227
Reclamation and mine closure, note 24(c)		(61,555	)		54,873			(20,537	)
Asset retirement costs, note 24(c)		16,702			14,504			89,280
Inventories, note 24(d)		(929	)		(7,740	)		(10,217	)
Contingencies, note 24(e)		-			-			1,228
Debt instrument interest, note 24(f)		1,497			1,497			735
Interest regarding tax claim, note 24(g)		(16,496	)		16,839			-
Income tax payable, including fines, note 24(g)		(11,920	)		12,168			-
Others		20			276			151
		(98,094	)		98,573			12,449
Income (loss) for the year under U.S. GAAP		(263,543	)		3,316			(69,068	)

F-214

Notes to the consolidated financial statements (continued)

	2020			2019			2018
	US$(000)			US$(000)			US$(000)
Partners' equity under IFRS		324,387			489,712			583,723
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)		(1,297,689	)		(1,200,337	)		(994,684	)
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)		800,296			696,188			491,912
Stripping activity asset, note 24(b)		(40,409	)		(8,240	)		(15,773	)
Asset retirement cost, note 24(c)		(29,149	)		(59,160	)		(1,026	)
Reclamation and mine closure, note 24(c)		64,971			139,834			12,323
Inventories, note 24(d)		(5,766	)		(4,837	)		2,903
Debt instruments, note 24(f)		45,424			43,927			42,430
Contingencies, note 24(e)		1,228			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		3,681			3,072			2,776
		1,078,575			1,176,679			1,078,077
Partners' equity under U.S. GAAP		1,402,962			1,666,382			1,661,800

28. New U.S. GAAP Accounting Pronouncements

Accounting Standards Update-2016-13—Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments

In June 2016, the Financial Accounting Standards Board (FASB) issued an ASU that requires entities to estimate all expected credit losses for most financial assets held at the reporting date based on an expected loss model, which requires consideration of historical experience, current conditions, and reasonable and supportable forecasts. The Company adopted this ASU effective January 1, 2020, and the adoption of this ASU did not have a material impact on its financial statements.

Accounting Standards Update 2020-04—Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting

In March 2020, the Financial Accounting Standards Board (FASB) issued an ASU provides temporary optional expedients and exceptions to the U.S. GAAP guidance on contract modifications in light of the expected market transition from the London Interbank Offered Rate (LIBOR). Banks that report information used to set LIBOR will no longer be required to do so after 2021. Under the guidance, an entity that makes an optional election would present and account for a modified contract as a continuation of the existing contract. Contracts will need to be modified to replace LIBOR with new rates. For all entities, this ASU was effective upon issuance (March 12, 2020) and generally can be applied through December 31, 2022. The Company does not expect this ASU to have an impact on its accounting or financial statements.

Accounting Standards Update 2020-06—Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity

In August 2020, the Financial Accounting Standards Board (FASB) issued an Accounting Standards Update (ASU) simplifies accounting for convertible instruments by eliminating two of the three models in ASC 470-20 that require separate accounting for embedded conversion features and requires use of the “if-converted method” for all convertible instruments in diluted EPS calculations. For public entities, this ASU is effective for fiscal years ending after December 15, 2021, and interim periods within those fiscal years, with early adoption permitted, including adoption in an interim period. The Company does not expect this ASU to have an impact on its accounting or financial statements.

29. Subsequent Event

The Company continues to monitor the evolution of the pandemic situation and the guidance of national and international authorities, as events beyond the control of Management may arise that require adjustment of the business plan. A new outbreak or further spread of COVID-19 and the consequent steps taken to limit the spread of the disease could affect the Company's ability to conduct business in the usual way and therefore affect the financial condition and operating result of the Company.

F-215

Sociedad Minera Cerro Verde S.A.A.

    Financial Statements for the years 2020, 2019 and 2018
   together with the Report of Independent Auditors

F-216

Sociedad Minera Cerro Verde S.A.A.

Financial Statements for the years 2020, 2019 and 2018
together with the Report of Independent Auditors

Content

Report of Independent Auditors	F-218
Financial Statements
Statement of financial position	F-220
Statements of comprehensive income	F-221
Statements of changes in equity	F-222
Statements of cash flows	F-223
Notes to the financial statements	F-225

F-217

Report of Independent Auditors

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, 2020 and 2019, 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, 2020, 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, 2020 and 2019, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2020, 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 23 and 24 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.

F-218

Report of Independent Auditors (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 29, 2021

F-219

Sociedad Minera Cerro Verde S.A.A.

Statement of financial position

As of December 31, 2020 and 2019

	Note	2020		2019
		US$(000)		US$(000)
Assets
Current assets
Cash and cash equivalents	2(d),3		533,730		481,491
Trade accounts receivable, net			124		1,887
Other accounts receivable, net	2(d)		5,540		6,529
Trade accounts receivable - Related parties	2(d),4,21		594,409		453,070
Other non-financial assets	6		41,360		105,680
Inventories, net	2(f),5		566,794		552,197
Prepayments			12,931		14,074
Total current assets			1,754,888		1,614,928
Non - current assets
Property, plant and equipment, net	2(g,h),7		5,495,976		5,690,851
Inventories, net	2(f),5		301,075		255,123
Intangible assets, net	2(i)		8,385		9,337
Other non-financial assets	6		205,627		239,185
Prepayments			1,508		-
Total non-current assets			6,012,571		6,194,496
Total assets			7,767,459		7,809,424
Liabilities and equity, net
Current liabilities
Trade accounts payable	2(e),8		207,625		252,865
Accounts payable - Related parties	2(e),4		3,446		4,014
Income tax payable	2(m),13(b)		43,584		13,505
Benefits to employees	2(n)		49,712		34,249
Other accounts payable	2(e),9		126,465		99,380
Other financial liabilities	2(e),10		10,223		8,855
Provisions	2(k),11		9,625		7,918
Total current liabilities			450,680		420,786
Non - current liabilities
Other accounts payable	2(e),9		285,392		379,724
Other financial liabilities	2(e),10		592,445		902,820
Benefits to employees	2(n)		27,320		15,249
Provisions	2(k),11		307,974		278,419
Income tax liabilities	2(m),13(b)		72,246		83,314
Deferred income tax liability, net	2(m),13(g)		396,074		369,789
Total non-current liabilities			1,681,451		2,029,315
Total liabilities			2,132,131		2,450,101
Shareholders’ equity
Capital stock	12 (a)		990,659		990,659
Other capital reserves	12 (b)		198,132		198,132
Other equity contributions	12 (d)		11,535		10,074
Retained earnings			4,435,002		4,160,458
Total shareholders’ equity			5,635,328		5,359,323
Total liabilities and shareholders’ equity			7,767,459		7,809,424

The accompanying notes are an integral part of these financial statements.

F-220

Sociedad Minera Cerro Verde S.A.A.

Statements of comprehensive income

For the years ended December 31, 2020, 2019 and 2018

	Note	2020			2019			2018
		US$(000)			US$(000)			US$(000)
Revenues	14		2,538,593			2,896,894			3,061,930
Cost of sales	15		(1,809,255	)		(1,961,577	)		(2,018,876	)
Gross Margin			729,338			935,317			1,043,054
Operating expenses
Selling expenses	16		(97,680	)		(109,483	)		(137,008	)
Other operating expenses	17		(38,484	)		(38,116	)		(68,683	)
Other operating income			6,157			680			-
			(130,007	)		(146,919	)		(205,691	)
Operating Profit			599,331			788,398			837,363
Financial income			2,350			10,356			28,089
Financial expenses	18		(142,675	)		(115,877	)		(426,733	)
Foreign exchange gain differences, net			52,464			5,574			6,161
Profit before income tax			511,470			688,451			444,880
Income tax expense	13(b)		(236,926	)		(298,074	)		(325,170	)
Net Profit for the year			274,544			390,377			119,710
Basic and diluted profit per share (in US$)	19		0.784			1.115			0.342

The accompanying notes are an integral part of these financial statements.

F-221

Sociedad Minera Cerro Verde S.A.A.

Statements of changes in equity

For the years ended December 31, 2020, 2019 and 2018

	Note		Capital stock		Other capital reserves		Other capital contributions		Retained earnings			Total
			US$(000)		US$(000)		US$(000)		US$(000)			US$(000)
Balance as of January 1, 2018				990,659		198,132		-		4,000,371			5,189,162
Reclassification of stock-based compensation		12		-		-		8,147		-			8,147
Reclassified balance as of January 1, 2018				990,659		198,132		8,147		4,000,371			5,197,309
Cash dividends declared				-		-		-		(200,000	)		(200,000	)
Stock-based compensation		12(d)		-		-		713		-			713
Net profit for the year				-		-		-		119,710			119,710
Reclassified balance as of December 31, 2018		12		990,659		198,132		8,860		3,920,081			5,117,732
Cash dividends declared				-		-		-		(150,000	)		(150,000	)
Stock-based compensation		12(d)		-		-		1,214		-			1,214
Net profit for the year				-		-		-		390,377			390,377
Balance as of December 31, 2019		12		990,659		198,132		10,074		4,160,458			5,359,323
Stock-based compensation		12(d)		-		-		1,461		-			1,461
Net profit for the year				-		-		-		274,544			274,544
Balance as of December 31, 2020				990,659		198,132		11,535		4,435,002			5,635,328

The accompanying notes are an integral part of these financial statements.

F-222

Sociedad Minera Cerro Verde S.A.A.

Statements of cash flows

For the years ended December 31, 2020, 2019 and 2018

	Note		2020			2019			2018
			US$(000)			US$(000)			US$(000)
Operating activities
Net profit for the year		19		274,544			390,377			119,710
Adjustments to reconcile net profit for the year with the cash provided from operating activities for:
Income tax expense		13		235,613			317,205			366,998
Depreciation and amortization		15		484,237			535,000			512,298
Accretion on remediation and mine closure provision		11		4,196			4,048			4,322
Net (gain) loss on sale of property, plant and equipment				(11	)		279			964
Provision of mining royalties dispute		13		33,176			66,123			379,282
Provision (gain) for uncertainty about treatments of income taxes				1,313			(13,781	)		-
Profit sharing update		15(a), 17,18		42,041			-			-
Capital project canceled				6,255			-			-
Other adjustments				5,201			-			-
Net changes in assets and liabilities
Trade accounts receivable				(139,577	)		(39,300	)		67,475
Other accounts receivable				623			3,535			1,954
Inventories		5		(60,549	)		(63,871	)		(49,371	)
Other non-financial assets				(17,380	)		(3,040	)		(76,186	)
Trade accounts payable				(26,418	)		20,796			29,419
Other accounts payable				47,419			44,573			48,130
Benefits to employees				18,178			(8,276	)		(50,440	)
Other provisions				(18,905	)		12,164			(11,561	)
Mining royalties dispute payments		13		(138,904	)		(186,953	)		(56,186	)
Interest paid (not included in the financing activities)				(21,260	)		(37,226	)		(47,442	)
Interest lease payments		10(a)		(4,875	)		(5,242	)		-
Income tax paid				(86,610	)		(216,369	)		(430,810	)
Net cash and cash equivalents provided by operating activities				638,307			820,042			808,556

F-223

Statements of cash flows (continued)

	Note		2020			2019			2018
			US$(000)			US$(000)			US$(000)
Investing activities
Proceeds from the sale of property, plant and equipment				189			1,243			109
Purchases of property, plant and equipment		7,8		(178,991	)		(283,459	)		(280,183	)
Stripping activity asset				(92,890	)		(197,038	)		(177,327	)
Net cash and cash equivalents used in investing activities				(271,692	)		(479,254	)		(457,401	)
Financing activities
Payments of loans		10(b)		(305,000	)		(200,000	)		(250,000	)
Dividends		12(c)		-			(150,000	)		(200,000	)
Lease principal payments		10(a)		(9,376	)		(10,479	)		-
Net cash and cash equivalents used in financing activities				(314,376	)		(360,479	)		(450,000	)
Net increase (decrease) in cash and cash equivalents				52,239			(19,691	)		(98,845	)
Cash and cash equivalents at beginning of year				481,491			501,182			600,027
Cash and cash equivalents at the end of the year		3		533,730			481,491			501,182
Transactions with no effects in cash flows:
Changes on the provision for remediation and mine closure		11(b)		(37,569	)		(59,964	)		29,293

The accompanying notes are an integral part of these financial statements.

F-224

Sociedad Minera Cerro Verde S.A.A.

Notes to the Financial Statements

As of December 31, 2020, 2019 and 2018

1. 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) COVID-19 outbreak in Peru -

On March 15, 2020, the Peruvian government issued a Supreme Decree and declaration of a National Emergency in its efforts to contain the outbreak of COVID-19. The order was initially for fifteen days but was subsequently extended for different periods through May 31, 2021. To comply with the government’s requirements, Cerro Verde temporarily transitioned to a care and maintenance status and adjusted its operations to prioritize critical activities.

During the second quarter 2020, the Company restored operations following COVID-19 restrictions imposed by the Peruvian government in March 2020. On May 4, 2020, the Peruvian government updated its State of Emergency authorizing the restarting of economic activities to allow major mining operations to gradually increase activities. During the second half of May 2020, the Peruvian government approved the Surveillance, Prevention and Control Plan of COVID-19 at Work, which establishes the guidelines for the surveillance, prevention and control of the health of workers at risk of exposure to the virus. The implementation of these measures and actions for prevention, early detection and response helps to control the risk of spread and health impacts caused by COVID-19 during the development of operational activities in order to protect the health of workers and contractors and allow for the gradual resumption of normal operations.

Because of the significant negative impacts of the COVID-19 pandemic on the global economy, in April 2020 Cerro Verde revised its operating plans. Cerro Verde assessed its near-term operating plans with a focus on maximizing cash flow and protecting liquidity in a weak and uncertain economic environment and to preserve asset values for anticipated improved copper prices as economic conditions recover. Cerro Verde continued to make progress toward restoring operations during third and fourth-quarter 2020. The Company will continue to closely monitor health and market conditions and make further adjustments to mine plans as required. Refer to Note 15(b) for a discussion of idle facility costs associated with the temporary shutdown and incremental expenses related to the COVID-19 pandemic.

In conjunction with the revised operating plans, the Company implemented a series of initiatives to reduce costs including employee retirement programs, third-party service costs, facilities costs, travel and other expenses (refer to Note 15(b)).

In addition to the implementation of operational protocols, the Company also continues to work closely with communities where it operates and has provided support and in-kind contributions of medical supplies and equipment in its efforts of prioritizing health and safety.

(d) Financial statements approval -

The financial statements for the year ended December 31, 2020 were approved by Company’s Management on April 29, 2021 and the subsequent events have been considered through those dates.

The financial statements for the year ended December 31, 2019, were approved at the Board of Directors and Shareholders’ Meetings on February 26, 2020.

F-225

Notes to the Financial Statements (continue)

2. 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).

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, 2020 and 2019. 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, 2020 and 2019, and the amounts of reported revenues and expenses for the years ended December 31, 2020, 2019 and 2018.

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 waste removal cost is included as part of the costs of inventory, while the production stripping costs are capitalized as a stripping activity asset, as part of the “property, plant and equipment” caption, if certain criteria are met.

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.

F-226

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 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.

If any change in the estimate results in an increase to the provision for remediation and mine closure and related ARC, the Company considers whether or not this is an indicator of impairment of the assets and applies impairment tests in accordance with IAS 36, “Impairments of Assets.”

F-227

Notes to the Financial Statements (continue)

(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.

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.

F-228

Notes to the Financial Statements (continue)

(c) Functional and reporting currency -

The financial statements are presented in United States (US) dollars, which is also the Company’s functional currency.

Transactions and balances in foreign 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 statements of comprehensive income of the period.

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/3.618 for US$1 for buying and S/3.624 for US$ 1 for selling as of December 31, 2020, and S/3.311 for US$1 buying and S/3.317 for US$ 1 for selling as of December 31, 2019. 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 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.”

F-229

Notes to the Financial Statements (continue)

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 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 marketplace (regular way trades) are recognized on the trade date.

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).

- Financial assets at fair value through profit or loss.

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

- The contractual terms of the financial 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.

F-230

Notes to the Financial Statements (continue)

Financial assets at fair value through profit or loss -

Financial assets at fair value through profit or loss include financial assets held for trading, financial assets designated upon initial recognition at fair value through profit or 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. 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 statements of financial position at fair value with net changes in fair value recognized in the statements of comprehensive income.

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 recognizes revenues and invoices customers when it transfers control, which is at the time of shipment, based on then-current LME prices, which results in an embedded derivative that is required to be separated from the main contract. The Company’s embedded derivatives from sales are measured at fair value (based on LME spot copper prices) and presented as gains/losses on provisionally priced trade receivables.

Molybdenum Sales -

The Company’s molybdenum sales are also provisionally priced at the time of shipment. The Company recognizes revenues and invoices customers when it transfers control, which is at the time of shipment, based on the arithmetic mean of the high and low Metals 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.

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; 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.

F-231

Notes to the Financial Statements (continue)

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 for all debt instruments not held at 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 has not been a significant increase in credit risk since initial recognition, expected credit losses are provided for credit losses that 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 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 (lifetime expected credit losses).

For trade receivables and contract assets, the Company applies a simplified approach in calculating expected credit losses. Therefore, the Company does not track changes in credit risk, but instead recognizes a loss allowance based on the financial asset’s lifetime expected credit losses at each reporting date.

The Company considers a financial asset in default when contractual payments are 180 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.

(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 payables and other financial liabilities.

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 statements of comprehensive income when the liabilities are derecognized as well as through the amortization process.

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 statements of comprehensive income.

F-232

Notes to the Financial Statements (continue)

Derecognition -

A financial 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 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 are recognized in the statements of comprehensive income.

(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 tests of saleable products and in-process inventory are performed at each reporting date and represent the estimated future sales price using 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 current portion of 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 as of December 31, 2020 and 2019.

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.

(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 closure, 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.

F-233

Notes to the Financial Statements (continue)

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 2 and 30
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 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 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 -

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.

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-234

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.

The Company did not identify any indicators of impairment for the years ended December 31, 2020 and 2019.

(h) Leases -

The Company assesses all arrangements, at contract inception, to determine whether they are, or contain, a lease. A contract containing a lease conveys the right to control the use of an identified asset for a period of time in exchange for consideration. The Company is a lessee but is not a lessor in any transactions.

The Company applies a single recognition and measurement approach for all leases, except for short-term leases and low-value assets. The Company recognizes lease liabilities representing obligations to make future lease payments and right-of-use assets representing the right to use the underlying assets.

(i) Right-of-use assets -

The Company recognizes a right-of-use asset at the commencement date of the lease (i.e., the date when 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 re-measurement of lease liabilities. Right-of-use assets are depreciated on a straight-line basis over the shorter of the lease term or the estimated useful lives of the assets, as follows:

	Years
Land	10
Buildings and other constructions	Between 1 and 14
Machinery and equipment	Between 3 and 14

The right-of-use assets are also subject to impairment. The Company did not make any impairment adjustments as of December 31, 2020 and 2019.

F-235

Notes to the Financial Statements (continue)

(ii) Lease liabilities -

At the commencement date of the lease, the Company recognizes a lease liability measured at the present value of lease payments to be made over the lease term. The lease liability is re-measured when there is a change in future lease payments arising from a change in an index or a 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. Variable lease payments that do not depend on an index or a rate are recognized as expenses in the period in which the event or condition that triggers the payment occurs.

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 generally not readily determinable. After the commencement date, lease liabilities are increased to reflect the accretion of interest and reduced for the lease payments made.

(i) Intangible assets -

Intangible assets are recorded at cost less accumulated amortization. After the initial recognition, the intangible assets are recorded at their cost less accumulated amortization and any accumulated loss for impairment of use, if applicable.

The Company’s intangible assets primarily consist of concessions related to the operation of the port terminal, which are amortized over 20 years. For the years ended December 31, 2020 and 2019, amortization expense was US$1.0 million in both periods.

(j) 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.

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 2 (b.1) and 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 component of the ore body benefitted.

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Notes to the Financial Statements (continue)

(k) 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 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 over the 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 are recorded in the statements of comprehensive income.

(l) 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. 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 Company expects to be entitled in exchange for those goods.

The Company has concluded that it acts as the principal in its revenue contracts because it normally controls the goods before transferring them to its customers.

The transfer of control is determined in accordance with the terms of each of the contracts entered into with the Company's customers; generally, under such contracts, the transfer of control occurs at the time of shipment or delivery of the goods, including transportation.

F-237

Notes to the Financial Statements (continue)

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 of copper concentrates and copper cathode, the Company considers the effect of variable consideration and the existence of significant financing components.

Revenues from the sale of copper concentrates and cathodes are recorded net of commercial deductions. Commercial deductions include price adjustments for treatment and refining charges and may include certain penalties that, according to the applicable contract, are deducted from the international spot price, and that are incurred after the time of sale of the applicable concentrate. The Company considers these deductions as part of the transaction price. The normal credit term is within 30 days after the fulfillment of the terms of the contract.

Variable consideration -

If the consideration in the contract includes a variable amount, the Company 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 in the amount of cumulative revenue recognized will not occur when the associated uncertainty with the variable consideration is subsequently resolved.

The Company's sales of copper concentrates and cathodes allow for price adjustments based on the market price at the end of the trading period stipulated in the contract. These are called provisional pricing agreements in which the selling price of the copper is settled in a contractually specified future month based on quoted monthly average copper settlement prices. Sales price adjustments occur based on movements in quoted market prices until the end of the trading period. The period between provisional billing and the end of the listing period can generally range from three to six months.

In addition, the Company's sales of copper concentrates and cathodes are also subject to slight variations in their amount that may occur while the goods are in transit to their destination as a result of variations in moisture, weight and mineral grades. These variations are recognized directly as part of “Revenues” once the Company reaches an agreement with the corresponding customer regarding the final amounts sold.

Sales of copper concentrates and cathodes at provisional prices include a gain (loss) to be received at the end of the trading period; this is considered a variable consideration. Changes in price during the listing period are recognized within “Revenues.”

F-238

Notes to the Financial Statements (continue)

For provisional pricing arrangements, any future changes to the QP (Quotation Period) are embedded within provisionally priced trade receivables and therefore are within the scope of IFRS 9, “Financial Instruments” and not within the scope of IFRS 15. Given the exposure to the price of raw materials, trade receivables with a provisional price will not pass the test of cash flow characteristics within IFRS 9 and will be required to be measured at fair value with changes in the statement of comprehensive income from the initial recognition and until the settlement date. Subsequent changes in fair value are recognized in the statement of comprehensive income for each period. Changes in fair value during and until the end of the trading period are estimated by reference to the updated forward market prices for copper, as well as taking into account other relevant fair value considerations established in IFRS 13, “Fair Value Measurement,” including adjustments for interest rate and credit risk.

Revenue is recognized at the amount the entity expects to be entitled. The estimated price that is expected to be received at the end of the quotation period is generally the shipping or delivery month price, according to the terms of the contracts and 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 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 Company transfers goods or services to a customer before the customer pays for those goods or services or before payment is due, a contract asset is recognized 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 (i.e., only the passage of time is required before payment of the consideration is due). Refer to Note 2(d) for accounting policies for financial assets.

F-239

Notes to the Financial Statements (continue)

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 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 recognized as revenue when the Company performs under the contract.

(m) 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 ended December 31, 2020, 2019 and 2018, 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 each period and are recognized when it is more likely than not that those future taxable earnings will allow the deferred tax asset to be recovered.

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, 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.

F-240

Notes to the Financial Statements (continue)

Mining Taxes -

On September 29, 2011, Law 29788 (which amended Law 28528) was enacted creating a new mining tax and royalty regime in Peru. Under the new regime, companies are subject to the payment of royalties and a special mining tax. 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 amount to be paid for the mining royalty will be the greater of a progressive rate of the quarterly operating income or 1% of quarterly sales. Mining royalties calculated on sales is presented in “Other operating expenses.”

Supplementary Retirement Fund -

On July 9, 2011, Law 29741 was enacted and established 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.

Uncertainty about the treatment of income taxes -

The Company determines whether it considers each uncertain tax treatment separately or in conjunction with one or more other uncertain tax treatments based on the approach that best predicts the resolution of the uncertainty.

The Company makes judgments and estimates when there is uncertainty regarding the income tax treatments.

The Company has uncertain tax positions, particularly those related to the depreciation of fixed assets outside the scope of the feasibility study, tailing dam, sales commissions with non-related companies and miscellaneous IT services.

The Company determined, based on its tax compliance and transfer pricing study, that its tax treatments are likely to be accepted by the tax authorities (See Note 6(a) and 11(e)).

(n) Benefits to employees -

Salaries and wages, bonuses, severance, vacation benefits, separations benefits and post-employment benefits are calculated in accordance with IAS 19, "Employee Benefits" and current Peruvian 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 base of the current year. According to Peruvian law, the limit in the worker's profit sharing that an employee 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 (FONDOEMPLEO). The Company’s worker’s profit share is recognized as a liability in the statements of financial position and as an operating expense in the statements of comprehensive income.

The long term portion of “Provision related to benefits to employees” in the statement of financial position, is the best estimate of the liability that resulted from the application of the tax limits determined by the Tax Administration in the review of the income tax calculation of previous years. This liability will be paid once the claim process has concluded in the corresponding legal instances.

F-241

Notes to the Financial Statements (continue)

(o) Borrowing cost -

Borrowing costs directly attributable to the acquisition, construction or production of a qualifying asset are capitalized as finance 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) Fair value measurement -

The Company measures embedded derivatives at fair value as of each date presented in the 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 Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data is available to measure fair value, maximizing the use of relevant observable inputs and minimizing the use of unobservable inputs.

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.

- 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 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.

(q) 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 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 ended December 31, 2020, 2019 and 2018, 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-242

Notes to the Financial Statements (continue)

(r) Changes in accounting policies and disclosures -

Below is a summary of the changes in accounting policies and applicable disclosures for the year 2020:

- 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 had no impact on the Company’s financial statements.

- Conceptual Framework for Financial Reporting -

The Conceptual Framework is not a standard, and none of the concepts contained therein override the concepts or requirements in any standard. The purpose of the Conceptual Framework is to assist the IASB in developing standards, to help preparers develop consistent accounting policies where there is no applicable standard in place and to assist all parties to understand and interpret the standards.

The revised Conceptual Framework includes some new concepts, provides updated definitions and recognition criteria for assets and liabilities and clarifies some important concepts.

These amendments had no impact on the Company’s financial statements.

- Amendments to IFRS 16 COVID-19 Related Rent Concessions -

On May 28, 2020, the IASB issued an amendment to IFRS 16, “Leases” for COVID-19 related rent concessions. The amendment provides relief to lessees on applying IFRS 16 guidance on lease modification accounting for rent concessions arising as a direct consequence of the COVID-19 pandemic. As a practical expedient, a lessee may elect not to assess whether a COVID-19 related rent concession from a lessor is a lease modification. A lessee that makes this election accounts for any change in lease payments resulting from the COVID-19 related rent concession the same way it would account for the change under IFRS 16, if the change were not a lease modification. This amendment had no impact on the Company’s financial statements.

F-243

Notes to the Financial Statements (continue)

Several other amendments and interpretations were first applied in 2020, but they had no impact on the Company's financial statements and therefore have not been revealed. The Company has not early adopted any standard, interpretation or amendment that has been issued but is not yet effective.

(s) Standards issued but not effective -

Below is a summary of the improvements and / or modifications to IFRS that are not yet effective, but would be applicable to the Company:

- Amendments to IAS 1: Classification of Liabilities as Current or Non-current -

In January 2020, the IASB issued amendments to paragraphs 69 to 76 of IAS 1 to specify the requirements for classifying liabilities as current or non-current. The amendments clarify:

· What is meant by a right to defer settlement

· That a right to defer must exist at the end of the reporting period

· That classification is unaffected by the likelihood that an entity will exercise its deferral right

· That only if an embedded derivative in a convertible liability is itself an equity instrument would the terms of a liability not impact its classification

The amendments are effective for annual reporting periods beginning on or after January 1, 2023, and must be applied retrospectively. The Company is currently assessing the potential impact the amendments will have on current practice and whether existing loan agreements may require renegotiation.

- Property, Plant and Equipment: Proceeds before Intended Use - Amendments to IAS 16 -

In May 2020, the IASB issued “Property, Plant and Equipment - Proceeds before Intended Use,” which prohibits entities from deducting from the cost of an item of property, plant and equipment, any proceeds from selling items produced while bringing that asset to the location and condition necessary for it to be capable of operating in the manner intended by management. Instead, an entity recognizes the proceeds from selling such items, and the costs of producing those items, in profit or loss.

The amendment is effective for annual reporting periods beginning on or after January 1, 2022, and must be applied retrospectively to items of property, plant and equipment made available for use on or after the beginning of the earliest period presented when the entity first applies the amendment. The Company is evaluating the potential impact of this amendment on its financial statements.

- Onerous Contracts – Costs of Fulfilling a Contract - Amendments to IAS 37 -

In May 2020, the IASB issued amendments to IAS 37, “Provisions, Contingent Liabilities and Contingent Assets,” to specify which costs an entity needs to include when assessing whether a contract is onerous or loss-making.

F-244

Notes to the Financial Statements (continue)

The amendments apply a “directly related cost approach.” The costs that relate directly to a contract to provide goods or services include both incremental costs and an allocation of costs directly related to contract activities. General and administrative costs do not relate directly to a contract and are excluded unless they are explicitly chargeable to the counterparty under the contract.

The amendments are effective for annual reporting periods beginning on or after January 1, 2022. The Company will apply these amendments to contracts for which it has not yet fulfilled all its obligations at the beginning of the annual reporting period in which it first applies the amendments. The Company is evaluating the potential impact of this amendment on its financial statements.

- IFRS 9 Financial Instruments: fees in the ’10 percent’ test to assess whether to derecognize a financial liability -

As part of the annual improvements to IFRS Standards 2018-2020, the IASB issued an amendment to IFRS 9. The amendment clarifies the fees that an entity includes when assessing whether the terms of a new or modified financial liability are substantially different from the terms of the original financial liability. These fees include only those paid or received between the borrower and the lender, including fees paid or received by the borrower or lender on behalf of the other. An entity applies the amendment to financial liabilities that are amended or exchanged on or after the beginning of the annual reporting period in which the entity first applies the amendment.

The amendment is effective for annual periods beginning on or after January 1, 2022, with early application permitted. The Company will apply the modifications to financial liabilities that are modified or exchanged on or after the beginning of the annual reporting period in which the entity applies the modification for the first time. The Company is evaluating the potential impact of these modifications in its financial statements.

(t) Reclassifications of comparative information -

Management has made reclassifications to the financial statements as of December 31, 2019, in order to be consistent in the presentation of the financial statements for the year 2020, which are summarized below:

Statement of financial position and statements of changes in equity

- From “Accounts payable - Related entities” to “Other capital contributions,” US$10.1 million was reclassified relating to the presentation of stock-based compensation of the ultimate parent company (Freeport) granted by the Company to its employees, of which US$8.9 million corresponds to the balance as of January 1, 2019, and US$1.2 million for the annual period 2019. This reclassification is also shown in the statements of changes in equity.

- From "Provisions, short term" to "Accounts payable," US$27.9 million was reclassified relating to current provisions for services and freight not billed.

F-245

Notes to the Financial Statements (continue)

- From “Provision related to benefits to employees” to “Other accounts payable” US$17.3 million was reclassified relating to the excess of the limit in workers profit sharing to be transferred to the Regional Government and the National Fund of Employment’s Promotion and Training.

Statements of comprehensive income

- The Company reclassified expenses for contributions to government entities OSINERGMIN (Organismo Supervisor de la Inversión en Energía y Minería) and OEFA (Organismo de Evaluación y Fiscalización Ambiental) for US$6.8 million in 2019. These contributions were originally presented as a reduction of revenues in the "Sales of goods" and are now presented as part of "Cost of sales" because the performance obligations are not directly related to the payment of these contributions.

3. Cash and cash equivalents

This item is made up as follows:

	December 31, 2020		December 31, 2019
	US$(000)		US$(000)
Cash in banks		3,910		10,119
Cash equivalents (a)		529,820		471,372
		533,730		481,491

(a) Cash equivalents as of December 31, 2020, includes short-term deposits with Scotiabank Peru of US$125.0 million, Citibank NY of US$92.3 million and a portfolio of investments in highly marketable liquid investments (investments classified as “AAA” by Standard & Poor’s and Moody’s) of US$312.5 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-246

Notes to the consolidated financial statements (continued)

4. Related parties

Accounts receivable from related parties and accounts payable to related parties are made up as follows:

	December 31, 2020		December 31, 2019
	US$(000)		US$(000)
Accounts receivable from related parties
Parent Company
FMC (a)		462,304		401,211
Other related parties
Sumitomo (b)		16,352		10,760
Climax Molybdenum Marketing Corporation (c)		14,319		5,022
Embedded derivatives
Embedded derivatives (d)		101,434		36,077
Total accounts receivable from related parties		594,409		453,070
Classification by measurement
Accounts receivables from related parties (not subject to provisional pricing)		116,740		121,995
Accounts receivables from related parties (subject to provisional pricing)		376,235		294,998
Embedded derivatives (d)		101,434		36,077
		594,409		453,070
Accounts payable to related parties
Parent Company
FMC		-		367
Other related parties
Freeport-McMoRan Sales Company Inc.		2,883		3,086
Minera Freeport-McMoRan South America Ltda		402		561
Freeport Cobalt OY		161		-
Total accounts payable, short term		3,446		4,014

(a) Accounts receivable from FMC mainly correspond to sales of copper concentrate and copper cathode. The Company has a long-term agreement with FMC through which it has committed to sell between 70% and 80% of its annual copper concentrate production through December 31, 2021. Terms of the contract are reviewed annually.

(b) The Company has a long-term agreement with Sumitomo through which it has committed to sell 21% of its annual copper concentrate production through December 31, 2021. Terms of the contract are reviewed annually.

F-247

Notes to the consolidated financial statements (continued)

(c) The Company has a new long-term agreement with Climax Molybdenum Marketing Corporation (a wholly owned subsidiary of FMC) through which it has committed to sell 100% of its annual molybdenum concentrate production, at a price based on MWDO and under a delivery type known as CIF (cost, insurance and freight) from February 1, 2020, through January 31, 2022.

(d)	Reflects the embedded derivative adjustment associated with accounts receivable from related parties (see Note 2(d) and 21).
Short-term and long-term employee benefits are recognized as expenses during the period earned. Benefits received by key management personnel represent 0.45% of total revenues for the year 2020 (0.42% for the year 2019). For years, 2020, 2019 and 2018, Freeport granted stock-based compensation to certain key management personnel, see Note 12(d). As of December 31, 2020 and 2019, the Company did not have any other long-term benefits.
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 account receivables from related parties. As of December 31, 2020, 2019 and 2018, the Company had not recorded any expected credit loss in accounts receivable from related parties.
The following is a summary of the transactions with related entities that affected results (not including copper and molybdenum sales described in Note 14) for the year ended December 31, 2020 and 2019:

	December 31, 2020		December 31, 2019		December 31, 2018
		US$(000)		US$(000)		US$(000)
Revenues
Supplies		768		-		-
Demurrage		226		688		524
Reimbursement		-		491		76
		994		1,179		600

	December 31, 2020		December 31, 2019		December 31, 2018
		US$(000)		US$(000)		US$(000)
Expenses
Reimbursement of information technology services		15,900		11,533		11,836
Commissions		7,801		8,953		8,292
Stock-based compensation (a)		2,259		1,560		1,174
Management fee		2,159		2,923		2,743
Supplies		492		908		1,133
Fixed assets and spare parts						14,265
		28,611		25,877		39,443

(a) As indicated in the table above, during 2020, 2019 and 2018 stock-based compensation expense totaled US$2.3 million, US$1.6 million and US$1.2 million and the related payments/vesting totaled US$0.8 million, US$0.4 million and US$0.5 million respectively (net impact in “Other capital contributions” of US$1.5 million, US$1.2 million and US$0.7 million in 2020, 2019 and 2018, respectively).

F-248

Notes to the consolidated financial statements (continued)

5. Inventories, net

This item is made up as follows:

	December 31, 2020			December 31, 2019
	US$(000)			US$(000)
Current
Materials and supplies		368,996			348,035
Work-in-process (WIP) (a)		176,813			173,190
Finished goods:
Copper concentrate		16,563			23,890
Copper cathode		3,826			6,321
Molybdenum concentrate		700			1,268
Less: Provision for obsolescence of materials and supplies		(104	)		(507	)
		566,794			552,197
Non-current
Work-in-process (WIP) (a)		301,075			255,123
Total inventories		867,869			807,320

(a) 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.

F-249

Notes to the consolidated financial statements (continued) 

6. Other non-financial assets

This item is made up as follows:

	December 31, 2020		December 31, 2019
	US$(000)		US$(000)
Current
Value added tax (VAT) credit		40,300		27,414
Other taxes to be recovered		1,060		2,745
Income tax prepayments and/or benefits (a)		-		75,521
		41,360		105,680
Non-current
Other receivables (b)		190,501		186,626
Income tax prepayments and/or benefits (a)		13,669		52,559
Other taxes to be recovered		1,457		-
		205,627		239,185
Total other non-financial assets		246,987		344,865

(a) The balance as of December 31, 2020, represents income tax benefits from the years 2015 and 2016 determined in accordance with the IFRIC 23, “Uncertainty over Income Tax Treatments”.

The balance as of December 31, 2019, represents disbursements made by the Company for the prepayment of income tax, which the Company expects to use to offset future tax obligations (see Note 13(b)) also includes income tax benefits from the years 2013 to 2018 as part of the adoption of IFRIC 23. During 2020, the Company applied a portion of this balance against the income tax payable as determined by the tax authority.

(b) Represents disbursements made under protest by the Company in connection with disputed tax assessments related to reviews by SUNAT (Superintendencia Nacional de Administración Tributaria) from the years 2003 to 2012 (see Note 13(c) and 13(e)). According to current tax procedures and the timeframe for resolving these types of claims, management and its legal advisors expect resolution of this matter will be favorable to the Company and amounts will be recoverable.

F-250

Notes to the consolidated financial statements (continued)

7. Property, plant and equipment, net

Property, plant and equipment consist of owned and leased assets (right-of-use assets), and cost and accumulated depreciation accounts as of December 31, 2020 and 2019 are shown below:

	December 31, 2018		IFRS 16 adoption		Additions			Adjustments			Disposals			Transfers			December 31, 2019		Additions			Adjustments			Disposals			Transfers			December 31, 2020
		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		24,663		-		-			-			(80	)		322			24,905		-			-			-			-			24,905
Buildings and other constructions		2,449,577		-		-			544			(4,769	)		102,772			2,548,124		-			(1	)		(14	)		40,895			2,589,004
Machinery and equipment		4,694,050		-		-			(544	)		(30,482	)		191,589			4,854,613		-			1			(12,814	)		143,949			4,985,749
Transportation units		23,251		-		-			-			(32	)		3,146			26,365		-			-			-			3,733			30,098
Furniture and fixtures		949		-		-			-			-			-			949		-			-			-			-			949
Other equipment		25,491		-		-			-			(594	)		203			25,100		-			-			-			5,865			30,965
Construction in progress and in-transit units		185,928		-		271,364	(a)		(1,192	)		-			(298,032	)		158,068		161,059	(a)		(6,255	)		-			(194,442	)		118,430
Stripping activity asset (see Note 2(i))		655,709		-		197,038			-			-			-			852,747		92,890			-			-			-			945,637
Asset retirement costs (see Note 11(b))		107,034		-		59,964			-			-			-			166,998		37,569			-			-			-			204,567
Right-of-use assets (b)		-		95,728		1,342			(700	)		(929	)		-			95,441		3,328			-			(2,318	)		-			96,451
		8,166,652		95,728		529,708			(1,892	)		(36,886	)		-			8,753,310		294,846			(6,255	)		(15,146	)		-			9,026,755
Accumulated depreciation
Buildings and other constructions		321,920		-		76,199			513			(4,722	)		-			393,910		62,317			-			(14	)		-			456,213
Machinery and equipment		1,786,326		-		284,097			(513	)		(29,091	)		-			2,040,819		277,384			-			(12,635	)		-			2,305,568
Transportation units		13,972		-		1,928			-			(28	)		-			15,872		1,826			-			-			-			17,698
Furniture and fixtures		858		-		23			-			-			-			881		23			-			-			-			904
Other equipment		18,796		-		1,543			-			(594	)		-			19,745		1,495			-			-			-			21,240
Stripping activity asset		398,202		-		155,530			-			-			-			553,732		124,309			-			-			-			678,041
Asset retirement costs		23,676		-		3,239			-			-			-			26,915		4,611			-			-			-			31,526
Right-of-use assets (b)		-		-		11,488			-			(903	)		-			10,585		11,320			-			(2,316	)		-			19,589
		2,563,750		-		534,047			-			(35,338	)		-			3,062,459		483,285			-			(14,965	)		-			3,530,779
Net cost		5,602,902																5,690,851														5,495,976

(a) As of December 31, 2020, additions to construction in progress primarily relate to (i) the purchase of a new shovel and the rebuild of another shovel (US$37.9 million), (ii) the purchase of haul trucks (US$24.6 million), (iii) projects associated with the capitalization of main components of the mine heavy equipment (US$17.6 million), (iv) projects for the optimization of the Company’s operating processes (US$14.8 million), (v) the mine maintenance truck shop (US$13.4 million), (vi) the purchase of rollers (US$11.0 million), (vii) tailing dam projects related to drain expansion and jacking header extension (US$10.4 million) and (viii) the purchase of stators for ball mills (US$7.0 million).

For the year ended December 31, 2019, additions to construction in progress primarily relates to (i) the 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 (vii) the staged flotation reactor engineering project (US$6.2 million).

As of December 31, 2020, additions to construction in progress include capitalized interest primarily related to projects for the mine maintenance truck shop (US$1.4 million), tailing dam drain expansion and jacking header extension (US$0.4 million), the purchase of stators for ball mills (US$0.2 million) and other projects (US$0.5 million).

F-251

Notes to the consolidated financial statements (continued)

(b) Set out below are the carrying amounts of right-of-use assets recognized and the movements as of December 31, 2020 and 2019:

	January 1, 2019		Additions		Adjustments			Disposals			December 31, 2019		Additions		Disposals			December 31, 2020
		US$(000)		US$(000)		US$(000)			US$(000)			US$(000)		US$(000)		US$(000)			US$(000)
Cost
Land		11,008		-		(700	)		(457	)		9,851		-		-			9,851
Buildings and other constructions		55,114		1,192		-			(370	)		55,936		2,880		(2,222	)		56,594
Machinery and equipment		29,606		150		-			(102	)		29,654		448		(96	)		30,006
		95,728		1,342		(700	)		(929	)		95,441		3,328		(2,318	)		96,451
Accumulated depreciation
Land		-		1,712		-			(457	)		1,255		1,642		-			2,897
Buildings and other constructions		-		6,613		-			(344	)		6,269		6,526		(2,220	)		10,575
Machinery and equipment		-		3,163		-			(102	)		3,061		3,152		(96	)		6,117
		-		11,488		-			(903	)		10,585		11,320		(2,316	)		19,589
Net cost		95,728										84,856							76,862

F-252

Notes to the consolidated financial statements (continued)

8. 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 US dollars, have current maturities and do not accrue interest. No guarantees have been granted. As of December 31, 2020, trade accounts payable includes US$12.4 million related to capital projects (US$30.3 million as of December 31, 2019).

9. Other accounts payable

This item is made up as follows:

	December 31, 2020		December 31, 2019
	US$(000)		US$(000)
Current
Royalties and mining taxes in dispute (a)		87,499		95,120
Income tax assessment (b)		34,716		-
Other		4,250		4,260
Total current		126,465		99,380
Non-current
Royalties and mining taxes in dispute (a)		248,537		362,464
Excess of salaries limit of workers profit sharing (c)		36,855		17,260
Total non-current		285,392		379,724

(a) The balance as of December 31, 2020, corresponds to the remaining balance from the monthly payments of the installment programs for disputed mining royalties for the period January 2009 through September 2011 and for the years 2012 and 2013 and special mining tax for the period October 2011 through December 2013, totaling US$336.0 million (US$457.6 million as of December 31, 2019), including interest and penalties of US$186.5 million (US$256.1 million as of December 31, 2019) (see Note 13(d)).

(b) Corresponds to interest and penalties related to income tax assessments for the year 2013, which will be paid in the first quarter of 2021.

(c) As of December 31, 2020, represents the excess salaries limit in workers profit sharing to be transferred to the Regional Government and the National Fund for Employment’s Promotion and Training (FONDOEMPLEO). This is related to adjustments of previous years income tax assessments (recognized in 2020 mainly as a result of the international arbitration proceeding initiated by the Company (see Note 13(d)). This amount includes interest of US$16.6 million.

F-253

Notes to the consolidated financial statements (continued) 

10. Other financial liabilities (debt)

This item is made up as follows:

	December 31, 2020			December 31, 2019
	US$(000)			US$(000)
Current debt:
Lease liabilities (a)		10,223			8,855
Non-current debt:
Senior unsecured credit facility (b)		525,000			830,000
Lease liabilities (a)		68,994			76,944
Less: Debt issuance cost		(1,549	)		(4,124	)
Total non-current debt		592,445			902,820
Total other financial liabilities		602,668			911,675

(a) The lease liability consists of leased land, buildings and other constructions, and machinery and equipment which are used in mine operations.

	2020			2019
		US$(000)			US$(000)
Balance at beginning of the year		85,799			95,728
Additions		3,328			550
Accrued interest		4,875			5,242
Payments		(9,376	)		(10,479	)
Interest payments		(4,875	)		(5,242	)
Exchange rate effect		(534	)		-
Total lease liabilities		79,217			85,799

The following are the amounts recognized in profit or loss:

	2020		2019
		US$(000)		US$(000)
Depreciation charge of right-of-use assets (see Note 15)		11,320		11,488
Expenses related to variable lease payments, low-value and short-term leases (see Note 15)		7,399		7,069
Interest expense on lease liabilities (see Note 18)		4,875		5,242
		23,594		23,799

F-254

Notes to the consolidated financial statements (continued)

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 disbursements were mainly used to finance a portion of the Company’s expansion project.

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, 2020, the Company had repaid US$975 million after the additional repayment of US$305 million in December 2020. For the year ended December 31, 2020, the Company recognized in the statements of comprehensive income, interest expense in the amount of US$22.4 million (US$39.1 million for the year ended December 31, 2019 and US$49.6 million for the year ended December 31, 2018) (see Note 18).

The credit facility calls for amortization in four installments, with 15% of the total facility due on December 31, 2020 (fully repaid as of December 31, 2020), 15% due on June 30, 2021 (fully repaid as of December 31, 2020), 35% due on December 31, 2021 (fully repaid as of December 31, 2020) and 35% due on June 19, 2022 (US$525 million).

Interest on the 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.

For the year ended December 31, 2020, the Company recognized charges of US$0.9 million in the statements of comprehensive income for issuance costs related to debt extinguishment caused by the early December 2020 payment (US$1.3 million for the year ended December 31, 2019 and US$1.9 million for the year ended December 31, 2018) (see Note 18).

No letters of credit were issued and there are no guarantees provided for the credit facility as of December 31, 2020.

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, 2020, the Company was in compliance with all of its covenants.

F-255

Notes to the consolidated financial statements (continued)

Following is the movement of the changes derived from the financing activities for the year ended December 31, 2020 and 2019:

	January 01, 2019			Additions		Payments			Long term to short term transfers			Others		December 31, 2019			Additions		Payments			Long term to short term transfers			Others			December 31, 2020
	US$(000)			US$(000)		US$(000)			US$(000)			US$(000)		US$(000)			US$(000)		US$(000)			US$(000)			US$(000)			US$(000)
Current:
Lease liabilities, see Note 10 (a)		8,119			464		(10,479	)		10,751			-		8,855			1,477		(9,376	)		9,402			(135	)		10,223
Non-current:
Senior unsecured credit facility		1,030,000			-		(200,000	)		-			-		830,000			-		(305,000	)		-			-			525,000
Debt issuance cost (a)		(7,190	)		-		-			-			3,066		(4,124	)		-		-			-			2,575			(1,549	)
Lease liabilities, see Note 10 (a)		87,609			86		-			(10,751	)		-		76,944			1,851		-			(9,402	)		(399	)		68,994
Total liabilities from financing activities		1,118,538			550		(210,479	)		-			3,066		911,675			3,328		(314,376	)		-			2,041			602,668

(a) For the year ended December 31, 2020, includes amortization of debt issuance cost of US$1.7 million (US$1.8 million for the year ended December 31, 2019) and extinguishment debt issuance cost of US$0.9 million (US$1.3 million for the year ended December 31, 2019).

F-256

Notes to the consolidated financial statements (continued)

11. Provisions

This item is made up as follows:

	December 31, 2020		December 31, 2019
	US$(000)		US$(000)
Current:
Provision for social commitments (a)		9,469		7,677
Provision for remediation and mine closure (b)		156		241
Total current		9,625		7,918
Non–current:
Provision for remediation and mine closure (b)		237,387		195,659
Provision for disputed mining royalties (c)		44,982		62,797
Other long-term liabilities (d)		22,455		12,117
Provision for legal contingencies (e)		1,924		4,800
Provision for social commitments (a)		1,226		3,046
Total non-current		307,974		278,419

(a) The provision for social commitments is associated with repaving Alata-Congata Road (US$6.3 million) and an irrigation project in La Joya (US$4.4 million).

(b) 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 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 closure 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.

The closure plans for its mine site was approved by Resolution No 302-2009 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, 2020, pursuant to legal requirements, the Company has issued a letter of credit to the Ministry of Energy and Mines totaling US$59.4 million to secure mine closure plans.

F-257

Notes to the Financial Statements (continue)

The estimate of remediation and mine 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:

	2020			2019
	US$(000)			US$(000)
Beginning balance		195,900			131,888
Accretion expense		4,196			4,048
Additions (see Note 7)		37,569			59,964
Progressive mine closure payments in hydrometallurgy process		(122	)		-
Final balance		237,543			195,900

As of December 31, 2020, the Company’s provision for remediation and mine closure was US$237.5 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 1.56%). As of December 31, 2019, the Company’s provision for remediation and mine closure was US$195.9 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 2.28%). The Company considers this liability sufficient to meet the current environmental protection laws approved by the Ministry of Energy and Mines.

As of December 31, 2020 and 2019, additions (US$37.6 million and US$60.0 million respectively) mainly corresponded to changes in estimates due to changes in the escalation ratio.

(c) As of December 31, 2020, represents interest and penalties associated with income tax related to disputed mining royalties for the year 2010 of US$45.0 million.

As of December 31, 2019, represents the non-current portion of 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.

(d) As of December 31, 2020, mainly represents SUNAT assessments for prior years related to income tax interest and penalties and non-income tax contingencies in which the Company expects to obtain an unfavorable result of US$9.6 million. This balance also includes interest and penalties related to income tax for the years 2014, 2017 through 2019, determined in accordance with the IFRIC 23, “Uncertainty over Income Tax Treatments” of US$12.9 million.

F-258

Notes to the Financial Statements (continue)

As of December 31, 2019, mainly represents interest and penalties related to tailing dam income tax for the year 2010 and 2012 of US$4.3 million. This balance also includes SUNAT assessments for prior years related to income and non-income tax contingencies in which the Company expects to obtain an unfavorable result of US$3.8 million.

(e) The provision for legal contingencies is associated with OSINERGMIN and SUNAFIL (Superintendencia Nacional de Fiscalización Laboral) fines, which have been appealed by the Company.

12. Shareholders’ equity

(a) Capital stock -

As of December 31, 2020, 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$20.92 per share as of December 31, 2020 (US$19.30 per share as of December 31, 2019).

As of December 31, 2020, the Company’s capital stock structure is as follows:

Percentage of individual interest in capital	Number of shareholders		Total percentage interest
Up to 1.00		2,844		4.39
From 1.01 to 20.00		2		21.05
From 20.01 to 30.00		1		21.00
From 30.01 to 60.00		1		53.56
		2,848		100.00

(b) Other capital reserves -

Other capital reserves include 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 10, 2016, Legislative Decree 1261 was enacted reducing the withholding tax rate to 5.0% beginning January 1, 2017.

F-259

Notes to the Financial Statements (continue)

At the non-presential annual mandatory shareholders meeting held on July 3, 2020, shareholders approved that no dividends would be distributed as a result of possible tax payments associated with arbitration proceedings and concerns about the price of copper due to the global uncertainty caused by the COVID-19 pandemic.

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%).

(d) Stock-based compensation -

In accordance with the Senior Executive Plan (SEP), stock-based compensation in the ultimate parent (Freeport) is granted to the Company's senior executives. Amounts presented in “Other capital reserves” in the statement of change in equity totaled US$11.5 million as of December 31, 2020, US$10.1 million as of December 31, 2019 and US$8.9 million as of December 31, 2018. The fair value of stock options is determined using the Black-Scholes-Merton option pricing model. The fair value of restricted share units (RSUs) is based on Freeport's share price on the grant date. Shares of Freeport’s common stock are issued at the vesting date of RSUs settled in shares. The fair value of performance share units (PSUs) are determined using Freeport's stock price and a Monte-Carlo simulation model.

Stock options granted under such plans generally expire 10 years after the grant date. Stock options granted prior to 2018 generally vest in 25 percent annual increments; beginning in 2018, awards granted vest in 33 percent annual increments beginning one year from the date of grant. Stock option agreements provide that participants will receive the following year’s vesting upon retirement. Therefore, on the grant date, the Company accelerates one year of amortization for retirement-eligible employees. Stock options provide for accelerated vesting only upon certain qualifying terminations of employment within one year following a change of control.

The Company recognizes the compensation cost in the statement of comprehensive income during the award period according to the fair value of the instruments granted. The cost is recognized as an equity contribution in “Other equity contributions.”

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.

F-260

Notes to the Financial Statements (continue)

(b) Under its current 15-year tax stability agreement, the Peruvian income tax rate applicable to the Company is 32%. As of December 31, 2020, the Company has recorded income tax prepayments and/or benefits which it expects to use to offset future income tax provisions or will be refunded by SUNAT, totaled US$13.7 million (see Note 6).

For the year ended December 31, 2020, the Company recognized current income tax expense of US$210.6 million (including US$17.3 million for special mining, US$14.9 million of mining royalties, and US$2.6 million for the SRF), and a deferred income tax expense of US$26.3 million, resulting in a total income tax expense of US$236.9 million that has been included in the statements of comprehensive income.

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.

(c) SUNAT has the right to examine, and if necessary, amend the Company’s income tax return for the last four years. The Company’s income tax for the years 2014 through 2019 are open to examination by the tax authorities and the years 2014 through 2016 are currently being examined. To date, SUNAT has concluded its review of the Company’s income tax through the year 2013 and the Company is in the claim and/or appeal process for the years 2003 through 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 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 material to the financial statements.

(d) Royalties and special mining taxes –

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, the Company determined that these royalties were not applicable 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 under its current 15-year tax stability agreement, which became effective January 1, 2014. The amount to be paid for the mining royalty will be the greater of a progressive rate of the quarterly operating income or 1% of quarterly sales.

F-261

Notes to the Financial Statements (continue)

SUNAT 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 2013. The Company contested each of these assessments because it considers 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 the Company began paying royalties on all of its production in January 2014 under its new 15-year stability agreement.

Since 2017, the Company recorded charges of S/2.8 billion (approximately US$771.2 million based on the December 31, 2020, exchange rate, including deferred interest, interest and penalties of US$496.5 million) for the royalty and special mining tax assessments for the period December 2006 through the year 2013. Since 2014, the Company has been paying the disputed assessments under protest for the period from December 2006 through December 2013 under installment payment programs. Through December 31, 2020, the Company has made payments totaling S/1.6 billion under these installment programs (US$476.7 million based on the date of payment exchange rate and US$435.2 million based on the December 31, 2020, exchange rate).

On July 13, 2020, the Company requested the application of the Deferral and / or Installment Regime, approved by Legislative Decree No. 1487, which contemplates a reduced interest rate on the debts administered by SUNAT related to the current installment payment programs of special mining tax for the period October 2011 through December 2013. The request includes a six month of deferred interest and thirty installment payments. This request was approved by SUNAT in August 2020.

During February 2020, the Company requested the initiation of an arbitration proceeding against the Republic of Peru before the International Centre for Settlement of Investment Disputes (ICSID).

On March 31, 2020, Superintendence Resolution 066-2020/SUNAT was published in which new default monthly interest rates were established effective April 1, 2020. The default interest rate in national currency changes from 1.2% to 1% and in the case of foreign currency it changes from 0.6% to 0.5%. Likewise, interest rates for the return of undue or excess payments in national currency (soles) change from 0.50% to 0.42% and in the case of foreign currency (US Dollars) change from 0.30% to 0.25%. Finally, the interest rate on returns due to withholding and/or non-applied perceptions of VAT changes from 1.2% to 1%.

F-262

Notes to the Financial Statements (continue)

(e) Other assessments received from SUNAT and other regulatory entities -

The Company has also received assessments from SUNAT for additional taxes (other than the mining royalty and special mining tax explained in Note 13(d) above), including penalties and interest. The Company has filed 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)
2003 – 2005		8,780		39,700		48,480
2006		11,206		51,769		62,975
2007		12,821		21,177		33,998
2008		16,906		16,859		33,765
2009		56,000		51,606		107,606
2010		53,700		117,880		171,580
2011		41,063		67,932		108,995
2012		869		9,477		10,346
2013		48,401		65,902		114,303
2014 –2020		44,864		-		44,864
		294,610		442,302		736,912

As of December 31, 2020, the Company has paid US$432.7 million of which US$190.5 million is included in “Other non-financial assets, non-current” (see Note 6) in the statements of financial position for these disputed tax assessments. The Company believes this amount is recoverable.

Assessments for the year 2014 through 2020 correspond to contribution payments to other regulatory entities.

(f) As of December 31, 2020 and 2019, the Company has issued letters of credit to secure tax obligations amounting to S/1,370.3 million (equivalent to US$378.1 million) and S/1,643.9 million (equivalent to US$495.6 million), respectively, which are primarily related to installment programs for the royalty dispute matter.

F-263

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, 2020		December 31, 2019		December 31, 2018
	US$(000)		US$(000)		US$(000)
Deferred Income tax
Asset
Cost of net asset for the construction of the tailing dam		125,621		30,033		26,449
Royalty accrual		83,570		84,546		109,505
Provision for remediation and mine closure		19,937		17,309		15,131
Unpaid vacations		7,015		6,618		5,937
Provision for mining taxes		6,124		3,737		4,120
Leases		931		406		-
Development costs		59		72		122
SUNAT Assessments		-		-		4,055
Other provisions		10,826		10,276		10,450
		254,083		152,997		175,769
Liability
Property, plant and equipment depreciation		545,636		458,307		361,453
Stripping activity asset		43,187		33,661		27,464
Embedded derivatives for price adjustment of copper concentrate and cathode		37,862		10,742		(6,050	)
Valuation of inventories		18,479		14,885		16,605
Debt issuance costs		412		933		1,894
		645,576		518,528		401,366
Deferred liabilities, net		391,493		365,531		225,597
Supplementary retirement fund
Deferred liability		4,581		4,258		2,651
Total deferred income tax liability, net		396,074		369,789		228,248

F-264

Notes to the Financial Statements (continue)

Reconciliation of the income tax rate -

For the years ended December 31, 2020, 2019 and 2018, 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:

	2020			2019			2018
	US$(000)			US$(000)			US$(000)
Profit before income tax		511,470			688,451			444,880
Income tax rate		32	%		32	%		32	%
Expected income tax expense		163,670			220,304			142,362
Moratorium interest		24,652			4,052			1,367
Non - deductible expenses		16,925			24,129			23,985
Income tax true – ups		7,293			(10,255	)		(10,312	)
IFRIC 23 adoption		-			20,767			-
Royalty case		-			-			143,728
Special mining tax and mining royalties		(10,305	)		(15,660	)		(25,165	)
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 30.85%)		(2,750	)		(2,746	)		(1,958	)
Others		4,348			7,620			4,896
Current and deferred income tax charges to results		203,833			248,211			256,569
Mining taxes charged to results		31,535			48,036			65,055
Supplementary retirement fund charged to results		1,558			1,827			3,546
		236,926			298,074			325,170
Effective income tax		46.32	%		43.30	%		73.09	%

Income tax -

The income tax expense for the years ended December 31, 2020, 2019 and 2018 is shown below:

	2020		2019		2018
	US$(000)		US$(000)		US$(000)
Income tax
Current		175,870		107,666		254,767
Deferred		25,962		139,934		61,483
		201,832		247,600		316,250
Mining taxes
Current mining royalty and special mining tax		32,203		47,032		6,661
Supplementary retirement fund
Current		2,568		1,835		1,499
Deferred		323		1,607		760
		2,891		3,442		2,259
Income tax expense reported in the statements of comprehensive income		236,926		298,074		325,170

F-265

Notes to the Financial Statements (continue)

14. Revenues

(a) This item is made up as follows:

	For the year ended December 31, 2020				For the year ended December 31, 2019				For the year ended December 31, 2018
	Pounds (000)		US$(000)		Pounds (000)		US$(000)		Pounds (000)		US$(000)
Copper in concentrate		743,274		2,088,167		912,974		2,294,249		962,113		2,458,088
Copper cathode		83,870		241,808		88,875		244,277		86,346		251,908
Other (primarily silver and molybdenum concentrate)				208,618				358,368				351,934
Total revenues				2,538,593				2,896,894				3,061,930

Revenues with related parties totaled US$2.4 billion for the year ended December 31, 2020 (US$2.7 billion for the year ended December 31, 2019 and US$2.9 billion for the year ended December 31, 2018).

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 increases in revenues totaling US$64.7 million for the year ended December 31, 2020, US$56.8 million for the year ended December 31, 2019, and a decrease of US$88.8 million for the year ended December 31, 2018.

(b) The following table shows sales by geographic region based on the final destination port:

	For the year ended December 31, 2020		For the year ended December 31, 2019		For the year ended December 31, 2018
	US$(000)		US$(000)		US$(000)
Asia		2,096,084		2,374,350		2,404,530
Europe		207,954		77,716		209,894
North America		120,865		265,599		295,448
South America (primarily Peru)		106,489		168,077		136,400
Central America		7,201		11,152		15,658
		2,538,593		2,896,894		3,061,930

(c) Concentration of sales -

For the year ended December 31, 2020, 94% of the Company’s sales were to related entities (FMC, Sumitomo Metal Mining Company and Climax Molybdenum). For the year ended December 31, 2019, 92%, and for the year ended December 31, 2018, 94% of the Company’s sales were to these related entities.

F-266

Notes to the Financial Statements (continue)

15. Cost of sales

This item is made up as follows:

	For the year ended December 31, 2020			For the year ended December 31, 2019			For the year ended December 31, 2018
	US$(000)			US$(000)			US$(000)
Materials and supplies		581,658			693,292			693,316
Depreciation and amortization (see Note 7 and 2(i))		451,001			523,512			512,298
Labor (a)		288,104			285,081			357,692
Energy		200,794			228,853			254,243
Third-party services		164,590			181,215			159,514
Incremental costs related to COVID-19 pandemic (b)		95,702			-			-
Depreciation for right-of-use assets (see Note 7 and 10(a))		11,320			11,488			-
Change in finished goods inventory		10,391			(2,290	)		(5,723	)
Variable lease payments, low-value and short-term leases (see Note 10(a))		7,399			7,069			-
OEFA and OSINERGMIN contributions (c)		5,889			6,828			7,904
Management Fees		2,000			2,923			2,743
Change in work in process inventory		(49,575	)		(23,427	)		(8,513	)
Other costs		39,982			47,033			45,402
		1,809,255			1,961,577			2,018,876

(a) The year ended December 31, 2020, includes US$28.9 million related to profit sharing for 2020 and US$8.3 million as a result of the recognition of contingent liabilities for prior years that are open for inspection for the tax authority (US$32.2 million for the year ended December 31, 2019 and US$60.2 million for the year ended December 31, 2018).

(b) The Company recognized charges totaling US$95.7 million for the year ended December 31, 2020, associated with the COVID-19 pandemic and revised operating plans. These charges, none of which were capitalized into inventory, are made up as follows:

	For the year ended December 31, 2020
	US$(000)
Incremental costs (i)		51,071
Labor and other employee expenses (ii)		29,705
Severance costs (iii)		7,485
Capital project write-off		6,255
Exceptional contributions and donations		1,186
		95,702

F-267

Notes to the Financial Statements (continue)

(i) Represents incremental costs associated with care and maintenance status as part of Peru’s declaration of a National Emergency as a result of the COVID-19 outbreak, which restricted the Company’s operations. The costs primarily include depreciation (US$21.9 million, see Note 7), labor costs (US$13.8 million), services (US$8.6 million) and other costs (US$6.8 million). Refer to Note 1(c) for additional information.

(ii) Represents labor costs and other expenses associated to the implementation of the Surveillance, Prevention and Control Plan as part of gradual resumption of operations. Refer to Note 1(c) for additional information.

(iii) Includes severance costs associated with employee retirement programs of US$7.1 million as part of the cost saving initiatives planned in the Company’s revised operating plans. Refer to Note 1(c) for additional information.

(c) The Company is subject to OSINERGMIN and OEFA royalties. The calculation for the OSINERGMIN royalty is 0.14% of invoiced sales for the year 2020 (0.13% for the year 2019 and 0.14% for the year 2018), and the calculation for the OEFA royalty is 0.10% of invoiced sales for the year 2020 (0.11% for the year 2019 and 2018).

In compliance with corporate policies, the Company recognizes administrative costs as an inventory cost (approximately US$35.6 million for the year ended December 31, 2020, US$32.0 million for the year ended December 31, 2019, and US$30.7 million for the year ended December 31, 2018). The effect of this policy is immaterial to the financial statements as a whole.

16. Selling Expenses

This item is made up of as follows:

	For the year ended December 31, 2020		For the year ended December 31, 2019		For the year ended December 31, 2018
	US$(000)		US$(000)		US$(000)
Copper concentrate freight		89,241		98,933		126,670
Commissions		4,935		5,588		6,048
Cathode freight		2,019		1,890		1,831
Other		1,485		3,072		2,459
		97,680		109,483		137,008

F-268

Notes to the Financial Statements (continue)

17. Other operating expenses

This item is made up as follows:

	For the year ended December 31, 2020		For the year ended December 31, 2019		For the year ended December 31, 2018
	US$(000)		US$(000)		US$(000)
Excess of salaries limit in workers profit sharing (a)		17,146		-		-
Royalty non-income tax (b)		10,780		-		-
Optimization and prefeasibility/feasibility studies (c)		8,429		14,919		450
Other expenses		1,425		2,895		2,434
Tax contingencies		704		6,119		10,711
Fines and penalties (d)		-		14,183		-
Royalties, ITAN and penalties (e)		-		-		55,088
		38,484		38,116		68,683

(a) Corresponds to the excess of salaries limit in workers profit sharing to be transferred to the Regional Government and the National Fund for Employment’s Promotion and Training (FONDOEMPLEO), and it’s related to adjustments of previous years income tax assessments (recognized in 2020 primarily as a result of the international arbitration proceeding initiated by the Company (See Note 13(d)).

(b) Represents current year mining royalties calculated based on revenues according to applicable tax rules (see Note 13(d)).

(c) Represents charges related to projects for the optimization of the Company’s operating processes.

(d) For the year ended December 31, 2019, primarily represents land right penalties with INGEMMET (US$6.8 million), SUNAT penalties related to 2012 income tax audit (US$4.7 million) and OSINERGMIN fine (US$2.7 million), which in September 2020, was declared closed and archived in favor of the Company.

(e) For the year ended December 31, 2018, 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.

F-269

Notes to the Financial Statements (continue)

18. Financial expenses

This item is made up as follows:

	For the year ended December 31, 2020			For the year ended December 31, 2019			For the year ended December 31, 2018
	US$(000)			US$(000)			US$(000)
Interest on disputed mining royalties (a)		43,838			68,107			370,159
Tax contingencies (b)		54,098			2,488			4,273
Interest on senior unsecured credit facility (see Note 10(b))		22,351			39,083			49,551
Excess of salaries limit in workers profit sharing (c)		16,591			-			-
Interest for leases (see Note 10(a))		4,875			5,242			-
Amortization debt issuance cost (See Note 10(b))		1,673			1,768			2,419
Extinguishment of debt - debt issuance cost (see Note 10(b))		902			1,298			1,902
Capitalized Interest associated to capital projects (see Note 7(a))		(2,544	)		(4,504	)		(3,790	)
Other financial expenses		891			2,395			2,219
		142,675			115,877			426,733

(a) For the year ended December 31, 2020, primarily represents charges of interest related to (i) the installment payment programs for disputed mining royalties for the period January 2009 through September 2011 and for the years 2012 and 2013 and SMT for the period October 2011 through December 2013 of US$38.2 million and (ii) other taxes related to disputed mining royalty of US$5.6 million.

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.

(b) For the year ended December 31, 2020, primarily represents interest related to (i) the income tax assessment for the year 2013 of US$31.4 million, (ii) uncertain income tax treatments (IFRIC 23) associated primarily to tailing dam income tax of US$13.1 million, (iii) SUNAT assessments for prior years related to income and non-income tax contingencies in which the Company expects to obtain an unfavorable result of US$8.7 million.

(c) Represents interest associated to the excess of salaries limit in workers profit sharing to be transferred to the Regional Government and the National Fund for Employment’s Promotion and Training (FONDOEMPLEO). This is related to adjustments of previous years income tax assessments (recognized in 2020 primarily as a result of the international arbitration proceeding initiated by the company (See note 13(d)).

F-270

Notes to the Financial Statements (continue)

19. 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, 2020		For the year ended December 31, 2019		For the year ended December 31, 2018
Profit for the period (US$)		274,544,000		390,377,000		119,710,000
Weighted average number of share outstanding (Note 12(a))		350,056,012		350,056,012		350,056,012
Basic and diluted earnings per share (US$)		0.784		1.115		0.342

20. 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: (i) the risk arising from changes in market prices of minerals, (ii) liquidity risk, (iii) credit risk and (iv) 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:

(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 between three and six months after the shipment’s arrival 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).

The table below summarizes the estimated impact on the Company’s profit before income tax for the year 2020, 2019 and 2018 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$/pound 3.524 to US$/pound 3.876 (US$/pound 2.865 to US$/pound 3.085 for the year 2019 and US$/pound 2.974 to US$/pound 2.979 for the year 2018), and the 10% decrease is based on copper prices ranging from US$/pound 2.884 to US$/pound 3.172 (US$/pound 2.344 to US$/pound 2.524 for the year 2019 and US$/pound 2.433 to US$/pound 2.437 for the year 2018).

F-271

Notes to the Financial Statements (continue)

	Effect on profit before income tax
	US$(000)
December 31, 2020
10% increase in future copper prices		112,080
10% decrease in future copper prices		(112,080	)

	Effect on profit before income tax
	US$(000)
December 31, 2019
10% increase in future copper prices		99,219
10% decrease in future copper prices		(99,219	)

	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	)

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 balances related to tax 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.

F-272

Notes to the Financial Statements (continue)

(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-273

Notes to the Financial Statements (continue)

The following tables show the expected aging of maturity of the Company’s obligations, excluding taxes, accruals and benefits to employees, as of December 31, 2020 and 2019:

	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, 2020
Trade accounts payable		-		197,855		9,770		-		-		207,625
Accounts payable - related parties		-		3,446		-		-		-		3,446
Other financial liabilities		-		1,551		8,672		560,750		31,695		602,668
Other accounts payable		-		57,637		68,828		285,392		-		411,857
Total		-		260,489		87,270		846,142		31,695		1,225,596
As of December 31, 2019
Trade accounts payable		-		245,463		7,402		-		-		252,865
Accounts payable - related parties		-		4,014		-		-		-		4,014
Other financial liabilities		-		3		8,852		825,877		76,943		911,675
Other accounts payable		-		40,357		59,023		90,019		289,705		479,104
Total		-		289,837		75,277		915,896		366,648		1,647,658

F-274

Notes to the Financial Statements (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 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, 2020.

F-275

Notes to the Financial Statements (continue)

21. 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, 2020 and 2019, information about the Company’s embedded derivatives is as follows:

					As of December 31, 2020
	Pounds payable		Maturity		Provisional pricing		Forward pricing	Fair value provision
	(000)				US$/Pound		US$/Pound	US$(000)
Copper Concentrate		267,872		January 2021 to May 2021		Between 2.908 and 3.545	Between 3.519 and 3.524	98,424
Copper Cathode		3,964		January 2021		Between 3.535 and 3.612	3.519	(235)
Molybdenum		3,382		January 2021 to February 2021		Between 7.360 and 7.884	8.658	3,245
								101,434(a)

					As of December 31, 2019
	Pounds payable		Maturity		Provisional pricing	Forward pricing		Fair value provision
	(000)				US$/Pound	US$/Pound		US$(000)
Copper Concentrate		246,441		January 2020 to May 2020	Between 2.567 and 2.774		Between 2.793 and 2.804		39,727
Copper Cathode		4,410		January 2020	2.791		2.793		9
Molybdenum		5,370		January 2020 to February 2020	Between 7.857 and 9.724		8.025		(3,031	)
									36,705	(a)

(a) Embedded derivatives are recorded on the statement of financial position in “Trade account receivable – related parties” (US$101.4 million as of December 31, 2020, and US$36.1 million as of December 31, 2019) and “Trade accounts receivable (net)” (US$0.6 million as of December 31, 2019).

22. Hierarchy and fair value of financial instruments

Hierarchy:

As of December 31, 2020 and 2019, the only financial assets carried at fair value are embedded derivatives, included in trade accounts receivable and related parties, which are generated by the sale of copper and molybdenum and measured at fair value based on commodity prices. The net value of this embedded derivative as of December 31, 2020, was an asset of US$101.4 million (asset of US$36.7 million as of December 31, 2019). 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.

F-276

Notes to the Financial Statements (continue)

Financial instruments at fixed and variable rates -

Financial assets and liabilities with fixed or 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, 2020 and 2019.

23. Summary of significant differences between accounting principles followed by the Company and U.S. generally accepted accounting principles (U.S. GAAP)

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) Stripping Cost

Under IFRS, the 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 waste removal cost is included as part of the cost of inventory, while the production stripping costs are capitalized as a stripping activity asset, if certain criteria are met, and amortized based on proved and probable reserves of each ore body (component) identified in the open pit. See note 2b.

Under U.S. GAAP, the costs of clearing removal (production stripping costs) 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.

(b) Inventories

Under IFRS, the cost inventory includes the amortization of production-stripping costs. Also, inventories are valued using the weighted average method and includes a lower the stripping activity asset and worker’s profit sharing.

Under U.S. GAAP, the cost inventory excludes the amortization of production-stripping cost and the inventories are determined using the Last-In-First-Out (LIFO) method, the worker’s profit sharing is excluded of the inventory costing.

(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).

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 temporary differences.

(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 (l), the Company has to account for such differences.

F-277

Notes to the Financial Statements (continue)

(e) Remediation 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).

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 book value of the asset retirement cost (ARC) and the remediation liability.

Under U.S. 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 U.S. GAAP, there is no requirement to update the discount rate.

24. 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, 2020, 2019 and 2018 and to shareholders' equity as of December 31, 2020, 2019 and 2018 that would be required if U.S. GAAP had been applied instead of IFRS in the financial statements:

	2020			2019			2018
	US$(000)			US$(000)			US$(000)
Net profit under IFRS		274,544			390,377			119,710
Items increasing (decreasing) reported net profit:
Stripping activity asset, net of amortization, note 23 (a)		31,419			(41,508	)		(64,452	)
Inventories valuation, note 23 (b)		(906	)		(53,424	)		(29,515	)
Remediation and mine closure, note 23 (e)		23			23			1,351
Deferred workers´ profit sharing, note 23 (c)		(24,255	)		(23,449	)		(7,079	)
Lease activity		1,597			2,071			-
Deferred income tax, note 23 (d)		(6,514	)		45,759			33,291
Other		(222	)		(134	)		(26	)
Net income under U.S. GAAP		275,686			319,715			53,280

	2020			2019			2018
	US$(000)			US$(000)			US$(000)
Shareholders’ equity under IFRS		5,635,328			5,359,323			5,117,732
Items increasing (decreasing) reported shareholder’s equity:
Stripping activity asset, net of amortization, note 23 (a)		(267,596	)		(299,015	)		(257,507	)
Inventories valuation, note 23 (b)		(217,707	)		(216,801	)		(163,377	)
Remediation and mine closure, note 23(e)		(5,480	)		(5,503	)		(5,526	)
Deferred workers´ profit sharing note 23(c) and 24 (a)		(87,415	)		(63,160	)		(39,711	)
Lease activity		3,668			2,071			-
Deferred income tax, note 23d		189,073			195,587			149,828
Other		(144	)		78			212
Shareholders’ equity under U.S. GAAP		5,249,727			4,972,580			4,801,651

F-278

Notes to the Financial Statements (continue)

(a) As a result of additional analysis of the amounts performed in 2020, the Company identified additional reconciling differences; consequently, the related amounts for 2019 and 2018 originally reported were updated and retrospectively adjusted to be consistent to 2020 amounts. Equity for those years was retrospectively adjusted from US$5,066,565 to US$4,972,580 and US$4,896,850 to US$4,801,651, respectively. Net income for 2019 and 2018 had no changes. These changes were mainly caused by US$55 million in inventories valuation, US$53 million in stripping activity asset, net of amortization; and US$38 million in deferred workers' profit participation.

25. New U.S. GAAP Accounting Pronouncements

Accounting Standards Update-2016-13—Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments

In June 2016, the Financial Accounting Standards Board (FASB) issued an ASU that requires entities to estimate all expected credit losses for most financial assets held at the reporting date based on an expected loss model, which requires consideration of historical experience, current conditions, and reasonable and supportable forecasts. The Company adopted this ASU effective January 1, 2020, and the adoption of this ASU did not have a material impact on its financial statements.

Accounting Standards Update 2020-04—Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting

In March 2020, the Financial Accounting Standards Board (FASB) issued an ASU provides temporary optional expedients and exceptions to the U.S. GAAP guidance on contract modifications in light of the expected market transition from the London Interbank Offered Rate (LIBOR). Banks that report information used to set LIBOR will no longer be required to do so

after 2021. Under the guidance, an entity that makes an optional election would present and account

for a modified contract as a continuation of the existing contract. Contracts will need to be modified to replace LIBOR with new rates. For all entities, this ASU was effective upon issuance (March 12, 2020) and generally can be applied through December 31, 2022. The Company does not expect this ASU to have an impact on its accounting or financial statements.

Accounting Standards Update 2020-06—Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity

In August 2020, the Financial Accounting Standards Board (FASB) issued an Accounting Standards Update (ASU) simplifies accounting for convertible instruments by eliminating two of the three models

in ASC 470-20 that require separate accounting for embedded conversion features and requires use of the “if-converted method” for all convertible instruments in diluted EPS calculations. For public entities, this ASU is effective for fiscal years ending after December 15, 2021, and interim periods within those fiscal years, with early adoption permitted, including adoption in an interim period. The Company does not expect this ASU to have an impact on its accounting or financial statements.

26. Subsequent Events

Since December 31, 2020, and through the date these financial statements were issued, no material events have occurred that may affect the interpretation of these financial statements.

F-279