NOTE 4 — INCOME TAXES:

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

	2016			2015
Statutory income tax provision	$	175.5		$	249.8
Peruvian royalty	—			2.9
Mexican royalty	13.7			22.3
Peruvian special mining tax	5.0			11.2

Total income tax provision	$	194.2		$	286.2


Effective income tax rate	32.7		%	33.3		%

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.

Peruvian royalty tax: 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 $8.1 million and $13.7 million of royalty charge in the first six months of 2016 and 2015, respectively, of which $2.9 million was included in income taxes in 2015; no amounts were included in income tax in the first six months of 2016.

Peruvian special mining tax: This tax is based on operating income at rates ranging 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 $5.0 million and $11.2 million of special mining tax as part of the income tax provision for the first six months of 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 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 $13.7 million and $22.3 million of royalty taxes as part of the income tax provision for the first six months of 2016 and 2015, respectively.

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