Buenaventura Announces Approval of Deferral and Fractioning Process Request

Compañia de Minas Buenaventura S.A.A. (“Buenaventura” or “the Company”) (NYSE: BVN; Lima Stock Exchange: BUE.LM), Peru’s largest publicly-traded precious metals mining company, is pleased to announce that on January 28, 2021 the Deferral and Fractioning approval process with the Peruvian National Customs and Tax Administration Superintendence (“SUNAT”), associated with Buenaventura’s ongoing tax dispute concluded. Said dispute is related to the SUNAT´s refusal to recognize the company´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.

Per the Company’s 6-K filings between November 2020 and January 2021, Buenaventura modified its gold client contracts during 2007 and 2008; shifting from a fixed to a variable price scheme and enabling the Company to appropriately benefit from improved market prices. This change incurred significant expenses for Buenaventura during the two-year 2007 to 2008 transition period, which also impacted the income tax payable 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 states that the Company should disregard the additional expenses incurred related to the variable price scheme shift when calculating income tax for 2007 and 2008. SUNAT stipulates that said payments correspond to a prior settlement of financial derivative contracts for which the Company did not establish the purpose or risks covered by said instruments. Additionally, SUNAT does not recognize the tax losses offset during 2009 and 2010 related to the 2007 and 2008 fiscal years.

The claim for the years 2007, 2008, 2009 and 2010 initially amounted to 373.3 million soles (US$ 103.7 million) which, according to SUNAT, now amounts to 2,107.5 million soles (US$ 585.4 million) when including penalties and accrued interest.

On November 26, 2020, SUNAT began its collection process following the Peruvian tax court’s ruling to dismiss Buenaventura’s appeal against certain SUNAT Administrative Resolutions. Buenaventura therefore filed a request for deferral and fractioning in order to make said tax payments. The purpose of the request is to pay the outstanding amount, or 2,107.5 million soles, over a six year period, with interest paid in installments.