NOTE 7 — RELATED PARTY TRANSACTIONS:

The Company has entered into certain transactions in the ordinary course of business with parties that are controlling shareholders or their affiliates. These transactions include the lease of office space, air transportation, construction services and products and services related to mining and refining. The Company lends and borrows funds among affiliates for acquisitions and other corporate purposes. These financial transactions bear interest and are subject to review and approval by senior management, as are all related party transactions. It is the Company’s policy that the Audit Committee of the Board of Directors shall review all related party transactions. The Company is prohibited from entering or continuing a material related party transaction that has not been reviewed and approved or ratified by the Audit Committee.

Receivable and payable balances with related parties are shown below (in millions):

	At September 30, 2015		At December 31, 2014
Related parties receivable current:
Compania Perforadora Mexico S.A.P.I. de C.V. and affiliates	$	0.6	$	0.2
Grupo Mexico	0.7		0.7
Mexico Generadora de Energia S. de R.L. (“MGE”)	30.6		31.9
Mexico Proyectos y Desarrollos, S.A. de C.V. and affiliates	0.1		—

	$	32.0	$	32.8


Related parties receivable non-current:
MGE	$	161.2	$	161.2


Related parties payable:
Asarco LLC	$	13.6	$	13.8
Breaker S.A. de C.V. and affiliates (“Breaker”)	0.6		0.7
Eolica El Retiro, S.A.P.I. de C.V.	0.1		1.6
Ferrocarril Mexicano S.A. de C.V.	1.7		1.8
Grupo Mexico	7.7		2.8
Higher Technology S.A.C.	—		0.2
MGE	22.8		45.2
Mexico Proyectos y Desarrollos, S.A. de C.V. and affiliates	4.0		1.7
Mexico Transportes Aereos S.A. de C.V. (“Mextransport”)	1.0		1.3

	$	51.5	$	69.1

Purchase and sale activity:

Grupo Mexico and its affiliates:

The following table summarizes the purchase and sales activities with Grupo Mexico and its affiliates in the nine months ended September 30, 2015 and 2014 (in millions):

	2015		2014
Purchase activity
Asarco LLC	$	23.9	$	39.5
Compania Perforadora Mexico S.A.P.I. de C.V and affiliates	0.3		2.6
Eolica El Retiro, S.A.P.I. de C.V.	7.1		—
Ferrocarril Mexicano S.A de C.V.	17.8		17.3
Grupo Mexico	10.4		10.4
MGE	97.1		137.2
Mexico Proyectos y Desarrollos, S.A. de C.V. and affiliates	44.2		76.8

Total purchases	$	200.8	$	283.8


Sales activity
Asarco LLC	$	71.7	$	22.1
Compania Perforadora Mexico S.A.P.I. de C.V and affiliates	0.4		0.4
Grupo Mexico	0.1		—
MGE	64.3		75.5
Mexico Proyectos y Desarrollos, S.A. de C.V. and affiliates	0.7		0.6

Total sales	$	137.2	$	98.6

Grupo Mexico, the parent and the majority indirect stockholder of the Company, and its affiliates provide various services to the Company. These services are primarily related to accounting, legal, tax, financial, treasury, human resources, price risk assessment and hedging, purchasing, procurement and logistics, sales and administrative and other support services. The Company pays Grupo Mexico for these services and expects to continue requiring these services in the future.

The Company’s Mexican operations paid fees for freight services provided by Ferrocarril Mexicano S.A de C.V., for construction services provided by Mexico Proyectos y Desarrollo S.A. de C.V. and its affiliates, and for drilling services provided by Compania Perforadora Mexico S.A.P.I. de C.V. All of these companies are subsidiaries of Grupo Mexico.

The Company’s Mexican operations purchased scrap and other residual copper mineral from Asarco, and power from MGE. Both companies are subsidiaries of Grupo Mexico.

In 2005, the Company organized MGE, as a subsidiary of Minera Mexico, for the construction of two power plants to supply power to the Company’s Mexican operations. In May 2010, the Company’s Mexican operations granted a $350 million line of credit to MGE for the construction of the power plants. That line of credit was due on December 31, 2012 and carried an interest rate of 4.4%. In the first quarter of 2012, Controladora de Infraestructura Energetica Mexico, S. A. de C. V., an indirect subsidiary of Grupo Mexico, acquired 99.999% of MGE through a capital subscription of 1,928.6 million of Mexican pesos (approximately $150 million), reducing Minera Mexico’s participation to less than 0.001%. As consequence of this change in control, MGE became an indirect subsidiary of Grupo Mexico. Additionally, at the same time, MGE paid $150 million to the Company’s Mexican operations partially reducing the total debt. At December 31, 2012, the outstanding balance of $184.0 million was restructured as subordinated debt of MGE with an interest rate of 5.75%. MGE will repay its debt to the Company using a percentage of its profits until such time as the debt is satisfied. At September 30, 2015 the remaining balance of the debt was $161.2 million and was recorded as non-current related party receivable on the condensed consolidated balance sheet. Related to this loan the Company recorded interest income of $7.0 million in the nine months of 2015 and 2014.

In 2012, the Company signed a power purchase agreement with MGE, whereby MGE will supply some of the Company’s Mexican operations with power through 2032. MGE completed construction of its first power plant in June 2013 and the second plant, in the second quarter of 2014. MGE has the authorization for interconnection with the Mexican electrical system to start operations at the second plant. MGE began supplying power to the Company in December 2013. MGE is supplying a portion of its power output to third-party energy users. See also Note 9 “Commitments and Contingencies - Other commitments”.

On August 4, 2014, Mexico Generadora de Energia Eolica S. de R.L. de C.V, an indirect subsidiary of Grupo Mexico, located in Oaxaca, Mexico; acquired Eolica el Retiro. Eolica el Retiro is a windfarm that has 37 wind turbines. This company started operations in January 2014 and started to sell power to IMMSA and other subsidiaries of Grupo Mexico in the third quarter of 2014.

The Company sold copper cathodes, rod and anodes, as well as sulfuric acid, silver, gold and lime to Asarco. In addition, the Company received fees for building rental and maintenance services provided to Mexico Proyectos y Desarrollos, S.A. de C.V. and its affiliates and to Perforadora Mexico S.A.P.I de C.V., and for natural gas and services provided to MGE, all subsidiaries of Grupo Mexico.

Companies with relationships with the controlling group:

The following tables summarize the purchase and sales activities with other Larrea family companies in the nine months ended September 30, 2015 and 2014 (in millions):

Mextransport:	2015		2014
Purchase activity	$	1.1	$	2.1

Sales activity	$	0.3	$	0.2

The Larrea family controls a majority of the capital stock of Grupo Mexico, and has extensive interests in other businesses, including aviation and real estate. The Company engages in certain transactions in the ordinary course of business with other entities controlled by the Larrea family relating to the lease of office space and air transportation.

Companies with relationships with SCC executive officers:

The following table summarizes the purchase activities with companies with relationships with SCC executive officers in the nine months ended September 30, 2015 and 2014 (in millions):

	2015		2014
Breaker	$	3.8	$	5.7
Higher Technology S.A.C.	1.1		2.1
Pigoba S.A. de C.V.	—		0.4
Sempertrans and affiliates	0.5		0.9
Servicios y Fabricaciones Mecanicas S.A.C.	0.5		1.1

Total purchases	$	5.9	$	10.2

The Company purchased industrial materials from Higher Technology S.A.C and paid fees for maintenance services provided by Servicios y Fabricaciones Mecanicas S.A.C. Mr. Carlos Gonzalez, the son of SCC’s Chief Executive Officer, has a proprietary interest in these companies.

The Company purchased industrial material from Sempertrans and its affiliates, which employed Mr. Alejandro Gonzalez as a sales representative, through August 4, 2015. Also, the Company purchased industrial material from Pigoba, S.A. de C.V., a company in which Mr. Alejandro Gonzalez has a proprietary interest. Mr. Alejandro Gonzalez is the son of SCC’s Chief Executive Officer.

The Company purchased industrial material and services from Breaker, S.A. de C.V., a company in which Mr. Jorge Gonzalez, son-in-law of SCC’s Chief Executive Officer, has a proprietary interest; and from Breaker Peru S.A.C., a company in which Mr. Jorge Gonzalez, son-in-law and Mr. Carlos Gonzalez, son of SCC’s Chief Executive Officer have a proprietary interest.

Equity Investment in Affiliate: The Company has a 44.2% participation in Compania Minera Coimolache S.A. (“Coimolache”), which it accounts for on the equity method. Coimolache owns Tantahuatay, a gold mine located in the northern part of Peru. To support the cost of the development of Tantahuatay, the Company loaned $56.6 million to Coimolache. The repayment of this loan was completed in August 2014.

It is anticipated that in the future the Company will enter into similar transactions with these same parties.