ASSET RETIREMENT OBLIGATION:

12 Months Ended

Dec. 31, 2024

ASSET RETIREMENT OBLIGATION:

ASSET RETIREMENT OBLIGATION:

NOTE 10—ASSET RETIREMENT OBLIGATION:

Peruvian operations:

The Company maintains an asset retirement obligation for its mining properties in Peru, as required by the Peruvian Mine Closure Law. In accordance with the requirements of this law the Company’s closure plans were approved by the Peruvian Ministry of Energy and Mines (“MINEM”). The closure cost recognized for this liability includes the cost, as outlined in its closure plans, of dismantling the Toquepala and Cuajone concentrators, the Ilo smelter and refinery, and the shops and auxiliary facilities at the three units. As part of the closure plans, the Company is required to provide annual guarantees over the estimated life of the mines, based on a present value approach, and to furnish the funds for the asset retirement obligation. This law requires a review of closing plans every five years. Currently, the Company has pledged the value of its Lima office complex for 27% of the guarantee and with a stand-by letter of credit for the other 73% as security for this obligation. Through January 2025, the Company has provided total guarantees of $98.5 million.

On July 20, 2021, the Peruvian Government published Law 31347, which requires companies in the production stage to set aside additional guarantees for progressive closure of its operations. The resources that back these guarantees will be returned to the Company when activities cease and the regulatory agency verifies that all closure measures have been satisfactorily completed. Under this Law, companies must include activities for environmental remediation within the closure schedule and assume costs associated with environmental impacts that are identified during audits. As of December 31, 2024, the regulation attached to this Law had yet to be published. The Company is currently evaluating the possible financial impact of the Law but cannot fully estimate the magnitude until the Law’s regulation is published.

In April 2024, the Company adjusted its estimate for the asset retirement obligation due to an update to the closure plan for its Ilo facility. The effect was a decrease of $3.2 million in the asset retirement obligation.

Mexican operations:

The Company has recognized an estimated asset retirement obligation for its mining properties in Mexico as part of its environmental commitment. Even though there is currently no enacted law, statute, ordinance, written or oral contract requiring the Company to carry out mine closure and environmental remediation activities, the Company believes that an obligation presently exists based on historical government requirements for the closure of any facility. The overall cost recognized for mining closure in Mexico includes the estimated costs of dismantling concentrators, smelter and refinery plants, shops and other facilities.

In December 2024, the Company adjusted its estimate for the asset retirement obligation for its Mexican operations, mainly due to a detailed review of the closing activities required and an update to life-of-mine plans for the Buenavista operations. The effect was a decrease in the asset retirement obligation to the order of $119.2 million.

The following table summarizes the asset retirement obligation activity for the years ended December 31, 2024 and 2023 (in millions):

	2024		2023
Balance as of January 1	$	612.5	$	585.3
Changes in estimates		(116.6)		0.2
Additions		24.6		1.0
Closure payments		—		(0.3)
Accretion expense		25.7		26.3
Balance as of December 31,	$	546.1	$	612.5