NOTE 5 — INCOME TAXES:

The income tax provision and the effective income tax rate for the first six months of 2015 and 2014 were as follows ($ in millions):

	2015			2014
Income tax provision	$	286.2		$	429.9
Effective income tax rate	33.3		%	39.8		%

These provisions include income taxes for Peru, Mexico and the United States. Some of the principal reasons for the change in the effective tax rate in the two six-month periods, include the Mexican royalty tax instituted beginning in 2014, and which increased the 2014 rate by approximately 4.6%, the impact on the 2015 rate was 2.6%. In addition, a reduction in dividends from the Company’s Mexican operations decreased the 2015 effective rate by 1.3%. Also, the Peru special mining tax had a positive variance in the 2015 period of 0.5%.

Components of the income tax provision for the six month periods of 2015 and 2014 include the following ($ in millions):

	2015		2014
Statutory income tax provision	$	249.8	$	361.6
Peruvian royalty	2.9		2.1
Mexican royalty	22.3		46.6
Peruvian special mining tax	11.2		19.6

Total income tax provision	$	286.2	$	429.9

Peruvian royalty and special mining tax: In 2011, the Peruvian congress approved an amendment to the mining royalty charge. The new mining royalty charge is based on operating income margins with graduated rates ranging from 1% to 12% of operating profits, with a minimum royalty charge assessed at 1% of net sales. If the operating income margin is 10% or less, the royalty charge is 1% and for each 5% increment in the operating income margin, the royalty charge rate increases by 0.75%, up to a maximum of 12%. The minimum royalty charge assessed at 1% of net sales is recorded as cost of sales and those amounts assessed against operating income are included in the income tax provision. The Company has accrued $13.7 million and $14.4 million of royalty charge in the first six months of 2015 and 2014, respectively, of which $2.9 million and $2.1 million, respectively, were included in income taxes.

Also in 2011, the Peruvian government enacted a special mining tax. This tax is based on operating income and its rate ranges from 2% to 8.4%. It begins at 2% for operating income margin up to 10% and increases by 0.4% of operating income for each additional 5% of operating income until 85% of operating income is reached. The Company has accrued $11.2 million and $19.6 million of special mining tax as part of the income tax provision for the first six months of 2015 and 2014, respectively.

Mexican mining royalty: In December 2013, the Mexican government enacted a new law which, among other things, established a mining royalty charge of 7.5% on earnings before taxes as defined by Mexican tax regulations and an additional royalty charge of 0.5% over gross income from sales of gold, silver and platinum. The Company has accrued $22.3 million and $46.6 million of royalty taxes as part of the income tax provision for the first six months of 2015 and 2014, respectively.

Income tax rate: In 2014, the Peruvian government enacted tax law changes to both the income tax and dividend tax rates that became effective on January 1, 2015. The rate in effect for 2014 was 30%, with a 4.1% dividend tax rate. The new rates are as follows:

Year	Income Tax Rate		Dividend Tax Rate
2015- 2016	28	%	6.8	%
2017- 2018	27	%	8.0	%
2019 and later	26	%	9.3	%

Accounting for uncertainty in income taxes: In the second quarter and first six months of 2015, there were no changes in the Company’s uncertain tax positions.