NOTE 4 – INCOME TAXES:

The income tax provision and the effective income tax rate for the first quarter 2019 and 2018 consisted of ($ in millions):


	2019			2018
Statutory income tax provision	$	214.7		$	212.3
Peruvian royalty		0.4			1.7
Mexican royalty		16.7			16.1
Peruvian special mining tax		6.1			6.5
Income tax provision	$	237.9		$	236.6

Effective income tax rate		38.1	%		33.6	%

These provisions include income taxes for Peru, Mexico and the United States. In addition, the Mexican royalty, the Peruvian royalty 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 2019 from the same period in the prior year is primarily due to the movement in exchange gain or loss from the appreciation in 2019 of the Mexican peso versus the U.S. dollar measured against the devaluation of the Mexican peso in the same period of 2018, and a SAB 118 adjustment to the valuation allowance in the first quarter of 2018, which is not applicable for the first quarter of 2019.

Peruvian royalty and special mining 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 $6.0 million and $7.1 million of royalty charge in the first quarter 2019 and 2018, respectively, of which $0.4 million and $1.7 million were included in income taxes in 2019 and 2018, respectively.

The special mining 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 $6.1 million and $6.5 million of special mining tax as part of the income tax provision for the first quarter 2019 and 2018, respectively.

Mexican mining royalty: Mexico has 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 $16.7 million and $16.1 million of royalty taxes as part of the income tax provision for the first quarter 2019 and 2018, respectively. In the first quarter of 2019, the Company has paid $85.9 million for year 2018 mining royalty.

Accounting for uncertainty in income taxes: In the first quarter of 2019, there were no changes in the Company’s uncertain tax positions.