NOTE 4 — INCOME TAXES:

The income tax provision and the effective income tax rate for the first quarter 2016 and 2015 consisted of ($ in millions):

	2016			2015
Statutory income tax provision	$	82.6		$	111.2
Peruvian royalty	—			0.5
Mexican royalty	9.3			13.7
Peruvian special mining tax	0.4			3.8

Income tax provision	$	92.3		$	129.2


Effective income tax rate	33.8		%	31.5		%

These provisions include income taxes for Peru, Mexico and the United States. In addition, a Mexican royalty tax, a portion of the Peruvian royalty tax and the Peruvian special mining tax are included in the income tax provision. The increase in the effective tax rate for the first quarter of 2016 from the same period in the prior year is primarily due to an increase of forecasted dividends from Mexico, which caused an increase of approximately 1%. The remaining increase in the rate is due to lower permanent differences, including depletion, in comparison to the first quarter of 2015.

Peruvian royalty and special mining tax: In 2011, the Peruvian congress approved an amendment to the mining royalty charge. The 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 $4.1 million and $5.7 million of royalty charge in the first quarter 2016 and 2015, respectively, of which $0.5 million was included in income taxes in 2015; no amounts were included in income tax in the first quarter 2016, as the royalty for the quarter was assessed at 1% of net sales.

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 $0.4 million and $3.8 million of special mining tax as part of the income tax provision for the first quarter 2016 and 2015, respectively.

Peruvian 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	%

Mexican mining royalty: In December 2013, the Mexican government enacted a 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 $9.3 million and $13.7 million of royalty taxes as part of the income tax provision for the first quarter 2016 and 2015, respectively. In the first quarter of 2016, the Company has paid $33.9 million for year 2015 mining royalty.

Accounting for uncertainty in income taxes: In the first quarter 2016, there were no changes in the Company’s uncertain tax positions.